In his introduction, Michalowicz explains that there are about 28 million small businesses in the US. Unfortunately, many small business owners struggle to make a stable income from their ventures; about eight out of every ten small businesses close due to lack of profitability. Michalowicz has personal experience with running a failing business: He recalls the constant stress of living on little income before ultimately selling it. Michalowicz laments that, like he used to, many small business owners use old accounting methods, which make “mathematical sense” but not “human sense” (5). Michalowicz urges the reader to think beyond fear of change and be open to his method of “Profit First” thinking.

He claims he has guided over 1,000 businesses to success using this method, and that many others have read the first edition of this book and emailed him their success stories. He asks the reader to not only read this book, but follow its instructions. He hopes that as more people discover this method, everyone can eradicate “entrepreneurial poverty” (9).

Of his early business, Michalowicz remembers, “I continued to sink month in month out. Year after year. Constant stress. In fact, I survived check to check from the day I started my business until the day I sold it and cashed in” (5). In sharing this memory, the author builds the reader’s trust and adds substance to his big claims about the efficacy of the “Profit First” method. He blames traditional business methods for his struggles and contrasts them sharply with his own ideas, writing, “The old profit formula creates monsters of businesses. Cash-eating monsters. But we stay loyal to the formula, and things get worse” (6). He promises readers that “[l]iterally today” (9) his method will begin to fix their problems.

In this introduction, the author does not acknowledge that businesses’ structures and expenses can vary greatly, nor does he explain if this method may be more relevant to some business owners than others. His admission that the old accounting ways make “mathematical sense” acknowledges that his method is mostly about creating intuitive understanding and spending discipline rather than accounting more accurately. In all, Michalowicz’s introduction creates high expectations about how entrepreneurs can apply his unique methodology but lacks a critical perspective.

Chapter Lessons

• Old accounting methods are mathematically sound, but unhelpful
• Many small business owners struggle to generate profits
• The Profit First mentality may seem strange or scary at first, but it works instantly

Reflection Questions

• What accounting method have you used to manage your business’s finances so far? How did you decide to use that method?
• Think of a monthly or yearly profit goal for your small business and write it down. Can you achieve that goal with your present accounting method? Why or why not?