{"id":1201,"date":"2025-06-02T12:10:37","date_gmt":"2025-06-02T12:10:37","guid":{"rendered":"https:\/\/niblits.com\/blog\/?p=1201"},"modified":"2025-06-04T18:17:44","modified_gmt":"2025-06-04T18:17:44","slug":"profit-first-the-money-formula-that-makes-you-poorer","status":"publish","type":"post","link":"https:\/\/niblits.com\/blog\/uncategorized\/profit-first-the-money-formula-that-makes-you-poorer\/","title":{"rendered":"Profit First – The Money Formula that Makes You Poorer"},"content":{"rendered":"\n\n\n
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The Money Formula That’s Robbing Your Bank Account<\/strong><\/h2>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Hi Reader,<\/p>\n

\ud83d\udca1 Today’s Niblit:<\/strong> In Profit First<\/em><\/a>, Mike Michalowicz exposes the fatal flaw in traditional business accounting. The standard formula “Sales – Expenses = Profit” relegates your financial success to whatever’s left over\u2014which, for most business owners, is nothing.<\/p>\n

\ud83d\udd11 Key Insight:<\/strong> The traditional accounting equation “Sales – Expenses = Profit” is fundamentally backward. When profit comes last in the equation, it becomes whatever scraps remain after expenses\u2014and those scraps are usually nonexistent because expenses always expand to consume available resources.<\/p>\n

Consider a plate of food at a buffet\u2014you’ll naturally fill it completely because the space is available. Similarly, in business, if all your revenue is available to spend, you’ll find ways to use it all, leaving nothing for profit. It’s not about discipline; it’s about human nature and the psychological pull to use what’s available.<\/p>\n

Why does this matter? Because this broken formula has created generations of hardworking entrepreneurs who run on the hamster wheel for years without building wealth. By flipping the formula to “Sales – Profit = Expenses,” you ensure profit isn’t an afterthought\u2014it’s a non-negotiable priority extracted before expenses even enter the picture.<\/p>\n

\ud83e\udd89 Nibble of Wisdom:<\/strong> “If you follow the traditional accounting principle, profit is an afterthought. If you run your business following Profit First, profit is the priority.” (Chapter 3)<\/p>\n

\ud83d\udee0\ufe0f Practical Tip:<\/strong> Rewrite your business formula on a sticky note: “Sales – Profit = Expenses” and place it where you’ll see it daily when handling finances.<\/p>\n

\ud83d\ude80 Quick Action:<\/strong> Calculate what your business would look like if you immediately reserved 5% of all income as profit. How would you adjust your expenses to operate on 95% of your current budget? Choose one expense to cut or reduce this week.<\/p>\n

\ud83d\udd0d Further Exploration:<\/strong><\/p>\n