Prioritize profit over reinvestment from "summary" of Profit First by Mike Michalowicz
When we talk about prioritizing profit over reinvestment, we are essentially focusing on the idea of taking care of ourselves first before we start pouring money back into the business. It may seem counterintuitive to some, especially those who have been taught that the key to business success lies in constant reinvestment and growth. However, the reality is that if we don't take care of our own financial needs first, we run the risk of burning out or even worse, going out of business altogether. By prioritizing profit over reinvestment, we are making a conscious decision to ensure that our businesses are sustainable in the long run. This means setting aside a portion of our revenue for ourselves before we start allocating funds for things like expansion or new equipment. It may feel uncomfortable at first, especially if we are used to plowing all of our profits back into the business, but in the end, it is a more secure way of operating. When we prioritize profit over reinvestment, we are also acknowledging the importance of our own well-being. Running a business is a stressful endeavor, and it is crucial that we are able to take care of ourselves both financially and emotionally. By setting aside a portion of our revenue for profit, we are giving ourselves a safety net in case of emergencies or downturns in the market. This can provide a sense of security that is invaluable when it comes to running a business. Furthermore, prioritizing profit over reinvestment forces us to become more disciplined in our spending habits. When we know that a certain percentage of our revenue is set aside for profit, we are more likely to think twice before making unnecessary purchases or investments. This can lead to a more efficient use of resources and ultimately, a more profitable business in the long run.- Prioritizing profit over reinvestment is not about being greedy or short-sighted. It is about taking care of ourselves first so that we can better take care of our businesses. By setting aside a portion of our revenue for profit, we are creating a more sustainable and secure financial future for both ourselves and our companies.
