Profit First (by Michalowicz) - Does it work?

[Scot]

This concept may work if you have an extremely simple business, but I would argue that this mindset of profit entitlement is not a good one.

Let's say you import product to sell on Amazon. You order $500 of product and project that you will make $200 profit if they all sell so you put $200 to your profit account and spend it on other things. What if a new competitor forces you to lower your prices and you have more returns than expected? You either cough up the money or your customers that want returns are getting screwed.

It's nice to talk about expenses as if they are easily removed and flexible. Most of the time they're not, especially in small businesses. Most of the expenses are payroll and cost of goods. These things require cash-flow planning. If you decide you can't afford product or staff once your bank account hits $0, it's way too late and your entitlement is screwing someone else over when you can't pay.

You profit last. Wishful thinking doesn't change that.

Yeah, this really does make sense. For a simple business with straight forward cash flow, it would probably work.

However, I'm thinking about my business and what it will look like once I get products into retail, this system would fall apart in a week when dealing with payments and chargebacks from distributors and stores.

 

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[MJ DeMarco]

What I have found when it comes to working with the banks is explaining the Profit First method that you are doing and in turn whenever it comes time for others to implement the method you

Can you please disclose your business relationship if you're going to comment like a bystander. Thank you.

 

[MJ DeMarco]

Can you please disclose your business relationship if you're going to comment like a bystander.

If you folks from NJ who all share the same IP's don't disclose your "conflict of interest" here your posts will be removed.

 

[G-Man]

Just gonna leave this here.

 

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[Scot]

Just gonna leave this here.

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Ugh.

@MJ DeMarco feel free to kill this thread if you want to. NOT my intention to plug this dudes book.

 

[MJ DeMarco]

feel free to kill this thread if you want to. NOT my intention to plug this dudes book.

I don't mind a discussion about the book or the concepts, I mind when the thread is brigaded by biased parties pretending to be innocent forum bystanders.

 

[OldFaithful]

Thank you @MJ DeMarco for your efforts to keep this forum free from spam and spammers!

 

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[MJ DeMarco]

, I mind when the thread is brigaded by biased parties pretending to be innocent forum bystanders.

Their posts have been deleted due to being prejudiced parties. If they want to add to the convo, they need to reveal their relationship first.