I used to read business books religiously. I wrote a blog post about it here along with all my tips for making reading for business a habit.

Then I got married.
Then I had a baby.
Then I moved across the country.
And I've been humbled. haha!

In the last 3 years while all of the above was happening, I have read a total of ONE business book.

I finished Profit First by Mike Michalowicz about a year ago and started implementing what I learned from it right away. And I'm here to tell you about how it has impacted my business.

I found this book to be a very nuts-and-boltz practical road map for business owners on how to structure their finances. I was able to follow Mike's recommended equations to figure out how much I have been spending on these four primary categories:

  • Profit
  • Owner's Compensation (my salary)
  • Tax
  • Operating Expenses

...and how much I SHOULD be allocating to each category. After finding out how much I WAS allocating and how much I SHOULD allocate to each of these categories, I was able to follow Mike's suggested path to, over time, shift my finances to where I SHOULD be so that I have a business that is set up to succeed financially.

For me, practically this looks like the following:

1 -- More balance/health throughout seasons
My business is seasonal to some extent, so instead of having a surplus in the 4th quarter and over-spending because of it, then suffering through a dry period in the spring, I am now able to pay myself a consistent salary and spend wisely on operating costs throughout the year.

2 -- Saving throughout the year so that my business can pay all of my taxes.
This is something I used to do well, but let wane. I am glad I'm back on track!

3 -- Wiser budgeting for non-essential expenses
Knowing how much I have to spend on my business helps me to make wise choices when it comes to advertising costs and other optional expenses. We all have operating costs that we HAVE TO PAY to be able to keep the business running, but looking back, there was a year where I spent too much on advertising for my other business -- Align Album Design. I didn't know it at the time because I didn't have a good sense of what I could afford to spend while simultaneously keeping my business healthy. But now I do.

4 -- Profit draw bonuses
I didn't realize this before reading this book, but business owners should not only be paid a regular salary from their businesses, they should get quarterly profit draws. These are rewards based on how well the business is doing. Our businesses should be profitable. And we should be rewarded by the profit.

After a year of implementing the system of Profit First, these are the percentages of my business income that are allocated to the following categories:

Profit -- 2%
Owner's Comp -- 28%
Tax -- 8 %
Operating Expenses -- 62%

Since I have a specific salary I want to pay myself monthly, I am able to figure out how much the business needs to take in in order for 28% of the total income of the business to be my desired salary. I can break that down to know how much we need to bring in weekly or even daily to meet our goals. This has been super-helpful as well as it has helped focus me on doing the tasks that will actually move the needle and bring in the income we need to sustain a healthy business.


I would definitely highly recommend this book to all small business owners! Finances are not fun for us creative types, but knowing your numbers is SO crucial for business success and you will feel empowered to meet your goals when you have a handle on them! This book will show you how!
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