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Why You Should Pay Yourself First in Business (And How to Do It Right)

This story originally appeared on Lewis Howes

If you've been in business long, you no doubt know the old profits adage: Sales – Expenses = Profits.

Today's guest on The School of Greatness turns this formula on its head in his new book, Profit First, by proposing a different formula (hint: the profits come before the expenses.)

Before you call him crazy, let me introduce Mike Michalowicz as the former small business columnist for The Wall Street Journal, as well as a frequent guest lecturer at major universities. He hosted the reality television program Bailout!, where he would turn around failing businesses in 24 hours, and he is the "Business Rescue" segment host for MSNBC's Your Business.

He is also known for his entrepreneurial strategy (and title of his previous book) The Toilet Paper Entrepreneur. Let's dive in to learn how to pay yourself profits first in Episode 93 with Mike Michalowicz.

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In This Episode, You Will Discover:

  • About the "Recency Effect"
  • The old formula for profits versus the new formula Mike proposes
  • TAPS (target allocation percentages) and how to use them
  • The importance of matching up with another entrepreneur for accountability
  • Why you should hire a book keeper or accountant who understands how to drive profits in your business
  • Why spending less in your business actually fuels the economy
  • The importance of being efficient with your business budget (I'm definitely shifting some things in my business based on this idea)
  • How to pay down debt Dave Ramsey's Debt Snowball method
  • Why efficiency is the magic sauce of profitability
  • Where most business owners fall apart in making profits
  • Plus much more…

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