A guest post on the Freelancers Union blog explains the basics of the Profit First method from a namesake best-selling book on cash flow management by Mike Michalowicz.
It replaces the traditional counting method (Sales – Expenses = Profit) with a profit-seeking one (Sales – Profit = Expenses) and the article outlines how the money is allocated along the way into several categories (Profit, Owner’s pay, Tax, Operating expenses).
Some freelancers consider the Profit First method to be useful for turning in greater profits, while others see it as clumsy or have other business priorities before profit (not unusual among freelancers). Anyway, it’s great that more articles on freelance finance are popping up ahead of a probable recession.
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