Profit First: The System That Puts Your Business on Solid Ground

Most entrepreneurs focus on sales growth as the ultimate marker of success. But as Pam Jordan reminds us on Pivot to Profit, sales alone don’t guarantee financial stability. Profit—not revenue—is what determines your business’s value, sustainability, and impact. As Pam says often, “It’s not what you make, it’s what you keep.”

When the time comes to sell your business, buyers don’t ask about your systems, your culture, or even your growth rate first. They ask for your numbers. Specifically, they want to know about your EBITDA (earnings before interest, taxes, depreciation, and amortization). That means if your business isn’t profitable, it isn’t valuable to an outside buyer—no matter how strong your top-line revenue looks.

But profit isn’t just about selling one day. It’s also the fuel that pays down debt, funds investments, supports tax strategies, and allows you to make an impact in your community. Without profit, you’re stuck covering bills and hoping you’ll have cash left over at the end of the month. With profit, you gain flexibility, opportunity, and freedom.

That’s where the Profit First system comes in. Created by Mike Michalowicz and used by countless entrepreneurs worldwide, Profit First flips the traditional accounting equation. Instead of “Sales – Expenses = Profit,” it prioritizes “Sales – Profit = Expenses.” The shift is subtle but powerful. By taking profit off the top first, you force your business to run within what’s left, instead of relying on leftover scraps.

The system works through a simple, practical structure: separate bank accounts for income, operating expenses, owner’s compensation, taxes, and profit. Think of it like the old envelope system your grandparents used—only modernized with bank accounts. Each dollar has a clear purpose, so you’ll never mistake cash in the bank as “yours” when it actually belongs to payroll or taxes.

Pam has implemented this system for hundreds of entrepreneurs and seen remarkable transformations. Business owners who once struggled to make payroll now celebrate profit distributions. Clients who were drowning in debt have paid it down. Others have used their profit accounts to invest in real estate, fund new opportunities, or give generously to causes they care about.

The takeaway? Profit isn’t greedy—it’s the engine that drives sustainability, stability, and impact. If cash flow is a constant stressor, Profit First may be the mindset shift and system your business needs. Remember: It’s not about chasing bigger sales. It’s about keeping more of what you earn.