I’ve been an entrepreneur for many years, and like many others, I’ve operated under the principle of creating income first, then taking my profit after all my expenses were paid. The flaw in this formula was, and still is, that it makes no sense. Mike Michalowicz, a personal friend of mine, has made it his mission to disseminate a different formula for business owners that entails making money and paying yourself first. This idea appears a bit unusual at first, but it makes perfect sense with more consideration. See his TedX talk on this topic by clicking here.

In his talk he speaks about our livelihood and income being a piece of the leftovers in our business. Kind of takes the coolness out of being an entrepreneur! I could share more and more of the concepts about what Mike talks about, but he does a better job than I do, so check out his video. You may also want to grab a copy of his new book, Profit First.

So are you waiting to pay everyone else first and then settling for the leftovers? If so, how has this formula worked out for you? What would happen if you profited and paid yourself first?