Risk & Business Magazine General Insurance Services - Fall 2020 | Page 18

PROFIT
Sales do not translate into profit because
we, as humans, spend what we make. If
you are smirking that you already know
this because you read and implemented
Profit First, then you know what I’m
talking about. You need an efficient
system in place to bring profitability
around.
To determine whether or not profit
is one of the problems you should be
focused on, I’m going to give you another
sneak peek at the five Core Needs—this
time, at the Profit level within The
Business Hierarchy of Needs:
NEED 1 – DEBT ERADICATION
Do you consistently remove debt, or do
you accumulate it?
NEED 2 – MARGIN HEALTH
Do you have healthy profit margins
within your offerings, and do you seek
ways to improve upon them?
NEED 3 – TRANSACTION FREQUENCY
Do your clients buy from you instead of
the other guy?
NEED 4 – PROFITABLE LEVERAGE
When debt is used, is it used to generate
predictable and increased profitability?
NEED 5 – CASH RESERVES
Does your business have enough cash
reserves to cover all expenses for three
months or longer?
Once you’ve fixed the right problem, you
start reviewing The Business Hierarchy
of Needs again from the bottom up.
Using The BHN will ensure you are
creating a solid foundation for your
business. You simply have to focus on
the fundamentals.
I hope that some of this has helped you
get some clarity on exactly what profit
is and the role it should have in your
business. I am sending you well wishes
not only for excellent physical
health but entrepreneurial
health as well.
Keep going, my
friends. The world
needs you to
succeed! +
Mike Michalowicz is the entrepreneur behind three multimillion dollar companies and is the
author of Profit First, Clockwork, The Pumpkin Plan, and his newest book, Fix This Next. Mike is
a former small business columnist for The Wall Street Journal and regularly travels the globe as an
entrepreneurial advocate.
MikeMichalowicz.com ProfitFirstBook.com
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