What I liked:
- I won't use the system but the mindset is very attractive. It kicked me into gear to pay out this excess cash sitting around and check up on efficiencies in personal spending as well as business.
- His focus on cutting expenditure to increase innovation and argument that rampant spending to grow to the moon is not helpful or sustainable. Instead, this process and incremental adjustment of the percentages should encourage a more steady growth.
- Start with profitability. Do not focus on growth before profitability. Be profitable from the start and be able to pay yourself profits (even if it's 1%).
- His energy, his encouraging talk, and his irreverent humour. The combination rubbed off on me really well and I found it hard to put the book down.
- He genuinely seems passionate about financial freedom.
- Paying profit regularly and rigidly, and first is a compelling idea. I like the idea of being rewarded even if I don't do anything with the money.
- Focus on eliminating debt and not using it as a crutch to grow fast and dangerously.
- Action steps at the end of each chapter summarizing exactly what to do next.
- "Get twice the results with half the effort." is an interesting thought experiment. How would I do this with FDM? With FDM2 = scaling a single funnel with Facebook ads.
- Lock in your lifestyle.
- Keep living expenses at the same level for the next 5 years OR
- Wedge: Send 50% of the increasing income straight to savings.
- Profit first kids. Have them work, pay them for chores and apply the same habits themselves to build future discipline. Buckets could be:
- Big future dream
- Support the family (pay it back to bills).
- Vault (emergency funds)
- Toys and spending money
What I didn't like (doubts):
- I think he focused too much / oversold the idea of the struggling entrepreneur who never makes real profit. Maybe as a smart way to build connection with his audience (we're all the underdogs in it together), or maybe everyone really does struggle.
- Are online business owners just lucky? Neither FDM or FDM2 seem to really need this much careful shepherding. The chaos of random expenses, etc. Most of my expenses are variable and proportional to units sold.
Accounting is designed for emotionless, rational robots. Entrepreneurs are human and need routines or habits that account for our human side, so that we actually use the system to improve our business.
Key principles of profit first:
- Portion control
"When less money is available to run the business, you will find ways to get the same results or better with less. You will be forced to think smarter and innovate more."
Take the idea of smaller plates for forced portion control and apply to business.
Set these portion sizes (allocation percentages) in advance and force yourself to adhere to them.
- Primacy effect
Whatever comes first, gets more focus. So we switch from "Revenue - Expenses = Profit" to "Revenue - Profit = Expenses".
- Out of sight, out of mind
Knowing that what is at hand will get spent, set a system that makes money untouchable if it is not supposed to be touched.
- Enforce rhythm
Set percentages as incremental targets and improve over time. This is great for driving the correct focus on efficiency and reducing wasted expenses.
The idea of the split bank accounts as piggy banks for specific purposes is also compelling. I cannot implement as I can't easily open bank accounts, but it is tempting (my situation is not normal).