Paper Napkin Wisdom - Podcast And Blog For Entrepreneurs, Leaders And Difference-makers

The business math equation S (sales) – E (expenses) = P (profit) has been widely accepted for years. However, entrepreneur and author Mike Michalowicz doesn’t quite see it that way. “83% of small businesses in the US are surviving check to check, some of whom follow this model. From a behavioral perspective, what happens last matters least,” Mike says, “Take your profit first and you will reverse engineer your profit forever.” While some may scoff at this notion, in today’s Paper Napkin Wisdom, he explains how a shift in thought process and subsequent actions can revolutionize small businesses forever. This concept is best compared to Parkinson’s Law, which states that our behavior adjusts around the supply. Take toothpaste, for example. Upon purchasing a new tube of toothpaste, most people are less frugal with it than when they’re on their last squeeze of the same tube. To apply this theory to business, Mike argues that if companies follow a different equation – S- P = E – they will reduce spending and maxim