Here is the entire gist of the book: use envelope-based budgeting (as made famous by, at least in my life, You Need A Budget) for your business. Allocate, say: 45% of your business towards owner's compensation, 10% towards profit, 15% towards tax, 30% towards operating expenses. Use these target percentages to back your way into sustainable salaries / cost structures and grow your business within these parameters, rather than shoveling any liquidity back into the business (because that will cause you to lose discipline and line-of-sight on actual business health.)
I think the book's thesis is good, and even though the true business model of the book is upselling you towards a professional consulting network (not unlike The E-Myth Revisited) it's a quick and easy read — a rare business audiobook where the reader (the author!) enhances rather than dulls the whole thing. I also don't think I'm quite the right target reader, which is not the fault of the book nor its writer.
Of course, there are quibbles:
- The author literally says to throw away the entire institution of GAAP because it's "funny money" and then has to spend the back third of the book re-building GAAP from first principles to handle things like recognized revenue and capital expenditures;
- The business tactics that the author tries to emphasize will emerge from the "Profit First Mentality" are thin-to-threadbare, the best (worst?) example of which being "you absolutely can double your output at half the cost: an example is how I did it in my business, which I cannot elaborate on due to Trade Secrets" [1]
- Mike totally mischaracterizes not just the tragedy of Frankenstein's monster but perhaps the entire message of Frankenstein [2]
All in all, I can't fault this book too much — it was quick, entertaining, and responsible for me making a positive change in my business (I am going to split out my omnibus checking account in Mercury into a bunch of sub-accounts!) I do not think you will get better at business strategy after reading this book, but it is something I would recommend to people who are losing sleep over their business's cash flow.
★★★
