Profit First: How to Prevent Small Business Failure


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We’re diving headfirst into the world of small businesses. Today, we’ve got some eye-opening insights for you on why businesses fail. But here’s the twist – we’re going to connect it all with the game-changing “Profit First” philosophy by Mike Michalowicz. If you haven’t heard of it, you’re in for a treat. We’ll also throw in some of our own knowledge along the way because, let’s be honest, we’re always one step ahead of the game.

The Small Business Landscape

Before we jump into the nitty-gritty, let’s set the stage. Small businesses, defined here as those with under 100 employees, make up a staggering 99.7% of all businesses in the United States. That’s nearly all of them! Even more impressive, these small businesses employ a whopping 56.8 million people, making up 48% of the workforce. So, it’s clear that small businesses are the heartbeat of America’s economy, and that’s the group we’re talking about today.

The Harsh Reality of Business Failure

Now, let’s address the issue that has been ignored – business failure rates. A staggering 70% of small businesses bite the dust within the first 10 years. And it gets worse – 50% throw in the towel within just five years. You might think the first year is the toughest, but with only a 20% failure rate, it’s not as daunting as you’d expect. Year two sees 34% falter, and by year five, half of these businesses are gone. Finally, after a decade, a whopping 70% are left with only memories.

Common Misconceptions

Now, let’s debunk some common misconceptions. One statistic claims that 42% of businesses fail because there’s no need for their products or services. We respectfully disagree. In our experience, it’s not the lack of demand; it’s the inability to sell effectively. We believe that many of these businesses are lost in the chaos of competition, struggling to communicate their value to customers.

The Power of Customer Service and Sales

In our opinion, the real issue lies in customer service and sales skills. Neglecting customers is a death sentence for businesses. If you can’t communicate with them or handle their needs effectively, you’re headed for trouble.

Remember, the simplest approach to beat out the competition is not to lower costs, but to provide excellent customer service. If you’re responsive, attentive, and genuinely care, you’ll stand head and shoulders above the rest.

The Cash Flow Problem

Now, let’s address the huge issue of cash flow. A staggering 82% of businesses suffer from cash flow issues, and 29% eventually run out of cash. This is where the Profit First philosophy comes into play. Traditional business models rely on sales to generate income, with profits being whatever’s left over. But Profit First flips the script, making profit a priority from the get-go. This approach ensures that profit, taxes, and owner pay come off the top before anything else. It’s a game-changer that prevents you from wasting your hard-earned money on unnecessary expenses.

Don’t Spend, Invest Wisely

We’ve seen it time and time again – business owners, flush with cash, invest it poorly. They buy extravagant office equipment or fancy chairs when more affordable options would suffice. The key to long-term success is wise cash flow management. It’s not about hoarding cash; it’s about spending wisely and ensuring your business thrives in the long run.

Profit First: Your Financial Lifesaver

If you’re serious about your business, Profit First is your financial lifesaver. It helps you take control of your cash flow, ensuring you’re always in a healthy financial position. To help you on this transformative journey, we’ve included a link where you can download the first two chapters of the Profit First book for free. Trust us; it’s a game-changer that can revolutionize your business.

Sustaining Success Over the Long Run

Lastly, let’s address the surprising fact that 70% of businesses fail even after being in operation for a decade. This is a clear sign of mismanagement in the later years, often stemming from poor cash flow management and customer service. If you’ve built a thriving business, don’t let it crumble in its prime. Implement Profit First strategies and prioritize customer service to ensure your business not only survives but thrives in the long run.


Folks, the road to small business success is filled with obstacles, but it’s also filled with incredible opportunities. Don’t become a statistic – embrace the Profit First philosophy, deliver exceptional customer service, and watch your business flourish. Remember, you’re not just in competition with others; you’re in competition with yourself. So, be the best version of your business, and success will follow.

How We Can Help

Visit now to access personal mentoring from our expert Matterhorn team. Complete a quick application on the site to get started on your journey towards success. See you there!

About Neil Winteregg

Neil started shadowing Greg during sales meetings when he was 16 years old. With braces and a face full of pimples, he started selling management training to dentists. He found a love, and skill, in sales and hasn’t looked back since. After a few years he also became a public speaker and you can often find him on the road speaking across the country. He’s our networking and sales monster, helping our clients increase their close rate like never before.

About Greg Wintereg

Greg founded Matterhorn Business Development to assist small business owners in growing their businesses and increasing profitability at the same time.
He was an internationally recognized lecturer, sales trainer, and management consultant who spent close to 30 years working with professionals and small business owners across the US and Canada.
In 2019, he authored his book “Fun at Work.”