Since being released in 2014, Profit First has become one of the most-popular books among business owners. As the full title states, it teaches how you to “transform your business from a cash eating monster to a money making machine.”
This book has shown many business people crucial financial management techniques that they may be lacking. You might be surprised to know that it can also help you become a better gambler.
How can a business book help you win more money through casino games, poker, and sports betting? I’ll discuss more on this book below along with how its advice can specifically be applied to gambling.
What Is Profit First About?
Profit First: Transform Your Business from a Cash Eating Monster to a Money Making Machine is a book by Mike Michalowicz. It discusses why many business owners mismanage their revenue and how to better handle profits.
The average businessperson reinvests whatever they make back into the company. They believe this heavy reinvestment model will pay off in the form of bigger profits down the road.
The tendency when putting money back into a business, though, involves spending some/most of it wastefully. One may not think carefully enough about where they’re spending money, because they have a surplus.
Here’s an example:
- A dress shop owner makes $10,000 in revenue.
- They pay their bills and have $2,000 left over.
- The shop owner could bank some of this money.
- However, they instead spend all $2k taking a chance on a risky dress line.
They probably wouldn’t have taken this chance if they really needed the money. But since the dress shop owner has an extra $2k, they feel comfortable doing so.
The problem here, though, comes when they need the cash later down the road. Unless the business owner is well-funded from the start, they could run into financial troubles at some point.
Michalowicz teaches people to essentially create a rainy day fund with their profits. Rather than reinvesting everything into the business, they should put some profits into a separate bank account—even if it’s as little as 1%—to have reserve funds.
What Should Business Owners Do With Saved Profits?
The idea behind banking profits is to have money for emergencies, expanding the business, and taking responsible risks.
Most businessmen and women don’t have this additional money. They spend everything extra when it comes available and scrape by afterward.
The best route is to first pay bills, sales tax, salaries, and any other expenses. Rather than spending everything that’s left over, one should put this additional money into a separate bank account.
These funds need to be separate from the operating and tax accounts. Owners should only dip into this money when they absolutely need it or want to pay themselves a salary.
Who Is Profit First Aimed Towards?
You’ve probably realized by this point that Profit First is specifically for business owners. However, it’s not just for anybody who owns a business.
Jeff Bezos or Warren Buffet won’t benefit much from reading this book. Both have teams of accountants working for them and are quite adept financially on their own.
Instead, this work is for business owners who struggle to manage the profits they bring in. You’ve likely heard that most businesses fail within the first few years.
Money mismanagement is one of the primary reasons why they fail so quickly. Michalowicz seeks to help remedy this problem by teaching struggling businesses how to better deal with their cash flow problem.
How Can a Business Book Help You With Gambling?
You can see how Profit First can be beneficial to business people. Now, I’ll cover the different ways in which it can be applied to gambling.
Taking Profits From Winnings
Most forms of gambling are negative expectation (-EV) games. You might experience hot streaks here and there, but you’re ultimately facing a house edge.
For example, blackjack gives you a great opportunity to beat the house. With the right rules and strategy, it can feature under a 1% house edge.
You aren’t necessarily going to earn “profits” from -EV games on a regular basis. But you can still take money out of your winnings in these cases.
Where Profit First benefits gamblers the most, though, is with positive expectation (+EV) games. Poker, sports betting, card counting (blackjack), and shuffle tracking (also blackjack) can bring guaranteed profits over time.
Of course, you need the skills to beat these games and win money. Assuming you are good enough, though, then you’ll want to put some profits into the bank.
Here’s an example:
- You’re a professional poker player.
- You earn $5,000 in profits per month on average.
- You have $1,000 remaining after paying bills and taxes.
- You could put all of this into your bankroll.
- Instead, you decide to put $800 into your roll and the remaining $200 in the bank.
Any successful gambler reinvests a portion of their winnings to building their bankroll. They can use these increased funds to eventually play/bet bigger stakes and, thus, profit more.
But like business owners, gamblers will also benefit by putting some of their profits into a special bank account. They can use this money in case they ever run into a jam.
Profit First is mainly about teaching the importance of not over-investing revenue back into a business. Thus, gamblers will get the most benefit out of simply holding some of their winnings back.
However, this book also helps with bankroll management from an overall perspective. It covers how to separate one’s revenue into various categories.
For the businessperson, this aspect means setting aside money for advertising, merchandise, overhead, employee salaries, and taxes. A gambler needs to tweak this model, though, to fit their personal situation.
Here’s an example:
- A professional sports bettor earns $6,000 per month on average.
- They must put $4,000 of this amount towards rent, food, utilities, and entertainment.
- They reinvest $1,000 into their bankroll.
- The bettor puts the remaining $1,000 into a separate bank account for profits.
Succeeding Where Others Have Failed
The world of pro gambling is filled with early success stories who later blew all of their money. Poor bankroll management is often the root cause of a success story gone wrong.
Pro gamblers have the talent to win serious money over the long run. However, many spend above their means and/or make unnecessarily big bets.
These money management problems are the main reasons why many pros fail. But the same winners could give themselves a second or even third chance by socking away money all along.
Again, Michalowicz teaches that business owners need a rainy day fund. Gamblers should also have one in case they make poor bankroll decisions and/or suffer a terrible downswing.
I find that reading just about any self-help book provides motivation. This thought is especially true when the book is entertaining and well-written.
Profit First definitely falls into the well-written and entertaining category. It dashes in Michalowicz’s intriguing personal stories with sound advice.
You may become more motivated by reading a work specifically about gambling. However, Profit First offers a nice breather if you’re tired of poker, sports betting, or casino gaming books.
At the very least, it’ll give you another perspective on managing your funds. Depositing some of your profits and forgetting about them for the time being can certainly be helpful.
Will Profit First Ultimately Make You a Better Gambler?
If you’re not a great gambler, then you should definitely seek out resources that’ll help you understand how gambling works. Once you get the success aspect down, though, you might consider non-gambling books and guides that still relate.
I’m a firm believer that Profit First can help you be better at handling winnings. This work provides a different perspective beyond normal bankroll management guides.
Perhaps you have business aspirations that go beyond just beating the bookies, poker opponents, or casinos. Profit First offers its biggest benefits to aspiring and current business owners.
One of the mistakes gamblers make is underestimating the importance of bankroll management. These same people, even when successful, often struggle to maintain their bankroll.
Profit First encourages you to overcome these pitfalls by depositing some of your profits into a special bank account. You essentially maintain this account as a rainy day fund in case you run into any problems.
Mike Michalowicz’s advice helps you avoid the dilemma of wastefully spending profits on yourself or by taking unnecessary risks.
This book is already beneficial from a gambling perspective. It gains even more value if you plan on opening a traditional business one day too.