Contributed by Jill Lemon, Co-Founder, Sandbox
At the VACEOs Spring Retreat in 2024, I sat in the front row to listen to our keynote speaker, Mike Michalowicz, talk about his book, Profit First. As the self-proclaimed non-money partner of my fractional consulting firm, I almost sat out. After all, Liz Doerr and I run a firm that does finance and accounting for other businesses. Surely our own financial planning was in order.
Turns out, maybe it wasn’t. Not in a dramatic, missing-payroll kind of way. Just the quiet thing that happens to a lot of us: we were so busy tending everyone else’s books that our own ran on whatever was left at the end of the month. Some months that was fine. Other months reminded us it wasn’t sustainable.
What Profit First Actually Changes
The concept that got me thinking: what if profit, our own pay, and the taxman’s share all came off the top first, and we ran the business on what was left? That’s the core idea behind Profit First: instead of the old formula of Sales minus Expenses equals Profit, you flip it. Profit gets taken first, and the business operates on what remains. I scribbled sloppy notes all over his handouts and carried them back to the office.
Here’s what stuck, and what I’d vouch for to this group:
- We stopped running everything through one operating account. That was our single biggest change. When every dollar lives in one account, every dollar feels spendable, and you make decisions in a fog. Giving money a job before it arrives, separating it by purpose, changed the quality of every spending decision we make. That one’s permanent.
- Tax season stopped being an ambush. We set tax money aside as it comes in, in its own untouchable account. When the bill arrives, the money’s already there. I can’t tell you how much mental space that simple, intentional tweak gave us back.
- We built a real bonus pool. It’s funded throughout the year on purpose, not scraped together at year-end out of whatever’s left. Our team shares in the profit because we decided, up front, that they would.
What our CEO Peer Group Learned Together
After we’d adopted these habits, I opened up to my Roundtable about what we were learning. Those conversations snowballed into a Profit First themed retreat later that year, where we shared best practices and reviewed P&Ls together.
By unanimous agreement afterward, it was one of the highest-ROI things our CEO peer group had done together. The real learning didn’t happen in the book. It happened in the room, with other Virginia CEOs willing to put their own numbers on the table.
The Honest Update
Fast forward to today, and like most hard-won habits, we’ve slipped. This year, Liz and I made a deliberate choice to reinvest most of what we’d normally take as distributions back into the business, in exchange for growing the team and our physical footprint. It’s an uncomfortable season-of-growth call, and one we stand behind. The honest footnote: “pay yourself first” works in the years it works, and it isn’t always going to be the top priority. Some seasons you take the profit off the top. Some seasons you bet it back on the business. The discipline is choosing on purpose.
So that’s where we really are: not a tidy success story, but a business that thinks about its money on purpose now, even when that means deviating from the script. For anyone running on “whatever’s left,” it’s worth a skim. And if your roundtable hasn’t put its own numbers on the table together, I’d genuinely recommend it.
Thanks to Jill Lemon for contributing this article. Jill sits on our VACEOs Executive Board, and we appreciate her willingness to be this open about her own numbers, not just the ones she manages for clients. If you’re running your business on whatever’s left at the end of the month, consider this your nudge to try something different.
Stories like Jill’s are what our Roundtables and Forums are built for. Virginia CEOs brings small groups of business owners together to work through decisions like this one out loud, with people who’ve faced the same numbers and the same hard calls. If you could use a CEO peer group willing to look at your P&L with you, see how a Virginia CEOs peer group works.
