Note From Donna... I wouldn't share the 1% Challenge with you without telling the story of how it changed my business. It's such a monumentally powerful system I knew immediately that I needed to become a certified Profit First professional.
In 2014, I was introduced to the Profit First system through Mike Michalowicz’s book. At first, it seemed overwhelming—the idea of managing multiple bank accounts felt complex and unnecessary. By 2018, when the book gained traction among my clients, I tried to help someone implement the system but failed, partly because I wasn’t certified. It wasn’t until 2020 that I revisited the book and decided to take on its most accessible experiment: “The 1% Challenge.”

Cash Flow Management made easy!
The premise of the 1% Challenge is simple but profound: set aside 1% of all income while reading the book. It’s not just about salary—every source of income counts, whether it’s dividends, interest payments, checks, or subscriptions. This money is moved to a dedicated savings account, and you’re left to operate with the remaining 99%.
This seemingly small commitment taught me discipline and sparked significant changes. To make the 99% work, I had to reevaluate my spending, eliminate unnecessary expenses, and get creative about managing resources. By the time I finished reading, I realized the impact of small, consistent steps—and I wasn’t ready to stop.
Becoming a Profit First professional.
I continued the challenge, increasing the percentage month by month. Before long, 12% of my income was going into savings. The accumulated funds began to open new possibilities. Though I was tempted to splurge, I took a more strategic route: I invested part of the money with my financial advisor and divided the rest into the specific accounts Michalowicz describes in Profit First. That decision was a turning point—it cemented my belief in the system and inspired me to become certified to help others implement it.
The lessons I learned from the 1% Challenge are multifaceted:
Small Steps Create Big Change Starting with just 1% made the challenge feel manageable and sustainable. Over time, small, incremental changes led to significant financial growth and a mindset shift.
Discipline Unlocks Creativity Living on 99% of my income forced me to identify waste and prioritize spending. This exercise revealed how much money I had been mismanaging and helped me find innovative ways to operate within my means.
Accumulation Breeds Opportunity Watching my savings grow gave me a new appreciation for financial planning. When you see your hard-earned money accumulate, it’s easier to think long-term and make purposeful decisions.
Systems Empower Success Profit First isn’t just about saving; it’s about creating clarity and control. Dividing money into accounts for taxes, operating expenses, investments, and other specific needs gives businesses a clearer picture of their financial reality and fosters better decision-making.
Profit First works for businesses of all sizes, whether they’re struggling with cash flow or sitting on surplus funds without a plan. The system’s flexibility allows for customization, making it a powerful tool for achieving diverse financial goals. For example, you might create an account to fund a new venture or ensure a steady income when you step away from daily operations.
The 1% Challenge taught me that even the smallest steps toward financial discipline can lead to transformative outcomes. If you’re curious about Profit First, start with this challenge. And when you’re ready to take the next step, I’d be delighted to guide you.
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