Danielle and Mike Michalowicz discuss the eleventh step of Profit First, which is celebrating profit distribution at the end of every quarter. They explain that at the end of every quarter, entrepreneurs should check the balance in their profit hold account and take out 50% of that profit account to distribute to shareholders. This money that stays in the business is called cash equity, and the profit distribution can be used for anything that rewards the shareholder. They warn against the idea of plowing back or reinvesting the money into the business, as it is not a cash distribution to shareholders but rather an expense. The idea of profit, in the truest entrepreneurial sense, is a cash distribution to shareholders.
Profit First Nation