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IAM669- Author Helps Make Entrepreneurship Paths Simpler

Podcast Interview with Mike Michalowicz

Mike mi-KAL-o-wits is the author of Profit First, Clockwork, Surge, The Pumpkin Plan, and his newest release Fix This Next. By his 35th birthday, Mike had founded and sold two companies – one to private equity and another to a Fortune 500. Today he is running his third multi-million dollar venture, Profit First Professionals.

Mike is a former small business columnist for The Wall Street Journal and the former business makeover specialist on MSNBC. Over the years, Mike has travelled the globe speaking with thousands of entrepreneurs and is here today to share the best of what he has learned.

  • CEO Hack: Asking about the one-step prior
  • CEO Nugget: Listen to wallets, not to words
  • CEO Defined: Empathetic leader, one who leads with understanding and care

Website: https://mikemichalowicz.com/

Facebook: https://www.facebook.com/MikeMichalowiczFanPage/
Twitter: https://twitter.com/MikeMichalowicz
Instagram: https://www.instagram.com/mikemichalowicz/
LinkedIn: Mike Michalowicz


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Transcription

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Intro 0:02

Do you want to learn effective ways to build relationships, generate sales, and grow your business from successful entrepreneurs, startups, and CEOs without listening to a long, long, long interview? If so, you've come to the right place. Gresham Harkless values your time and is ready to share with you precisely the information you're in search of. This is the I AM CEO Podcast.

Gresham Harkless 0:29

Hello. Hello. Hello. This is Gresh from the I AM CEO podcast and I have a very special guest on the show today. I have Mike Michalowicz of Profit First Professionals. Mike, it's awesome to have you on the show.

Mike Michalowicz 0:38

Gresh, it's an honour to be here. Thanks for having me.

Gresham Harkless 0:41

Definitely, the honour is all ours. And what I wanted to do before we jumped in was read a little bit more about Mike again and hear about all the awesome things that he's doing. Mike is the author of Clockwork, Surge, The Pumpkin Plan, and his newest release Fix This Next. By His 35th birthday, Mike had founded and sold two companies one to private equity and another to Fortune 500. Today he's running his third multimillion-dollar venture Profit First for Professionals. Mike is a former Small Business columnist for The Wall Street Journal and the former business makeover specialist on MSNBC. Over the years, Mike has travelled the globe speaking with 1000s of entrepreneurs and is here today to share the best of what he has learned. Mike, are you ready to speak to the I AM CEO community?

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Mike Michalowicz 1:21

Yeah, I totally am. Let's do this.

Gresham Harkless 1:23

Let's make it happen. So they kick everything off. I guess I wanted to rewind the clock a little bit and hear a little bit more about how you got started here story. And what led you kind of start all the awesome things you're doing?

Mike Michalowicz 1:33

Sure, sure. It's fine. When you read my resume there. Read them. I kinda sound like a dick, actually. So I think the act was the interesting part of my journey was, I have built and sold some companies. I built one company that was a disaster, and I wiped out all my wealth. So I sold the business to a Fortune 500. My second company was in computer crime investigation was acquired by Robert Half International. And after I was like, Oh my God, I'm such a genius. I know nothing about entrepreneurship. And I started letting it rain money, because you know, I'm worth it. And I became an angel investor, I sucked at it, I should call myself now the angel of death. It was so bad.

Business after business collapsed, and I lost everything, I lost my home, I lost my possessions, but I didn't lose my family. And that was my wake-up call that I don't know much about entrepreneurship, and I have a lot to learn. And I'm not invincible, not Midas, and became an author. And so that's why I wrote these books, really to explore what I don't know about entrepreneurship. And that satisfied my own needs to simplify the journey and hopefully do it for others. While I've been doing that, I've been blessed to have other opportunities come my way and start new businesses. But I'm a full-time author now for small business owners to help make the entrepreneurial path simpler.

Gresham Harkless 2:48

Yeah, that makes so much sense. And I appreciate you for sharing that. And I say sometimes say, you know, it's great that you know, a lot of entrepreneurs and business owners that go through kind of the trial by fire, a lot of times are going through that so that they're able to give back to the community. And a lot of times if you didn't go through that, you might say, or your book might have been, you know, the Midas session, why, you know, so many great things, but it's great that you've been able to give back.

Mike Michalowicz 3:12

Thank you.

Gresham Harkless 3:13

Awesome. Awesome. Awesome. So I know I touched on a little bit when I read your bio, I wanted to hear a little bit more about profit-first professionals. Can you take us through exactly what you're doing to support the clients there?

Mike Michalowicz 3:22

Yeah, so this was like the discovery discoveries. There's a statistic that came out that there are 180 million small businesses in the world. I mean, it's a lot of small businesses are the backbone of our economy. And what we're going through now with this recession, small businesses are more important than ever, and small businesses must be profitable. And that's the irony. Gresh is where we started our business, specifically to have financial freedom and personal freedom. And yet, it seems like the two things we start our business for never happens, we don't make money, and we're working our asses off. So what I discovered was, that I thought there was a flaw in us like what's wrong with humankind, and then I came to conclude that there's no problem with us the formula, the foundational formula we use for profit is wrong. We're told that sales minus expenses equals profit.

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And that's wrong. Because profit comes last meaning we don't think about it, we wait till the end of the year and say, Oh, my God, not this year, maybe next. So I teach them profit. The first is to flip the formula. It's sales minus profit equals expenses. In practice, every time revenue comes into our business, we pay ourselves we pay the business first take a piece out, and allocate it toward profit. So Profit First professionals, is a collection of accountants, bookkeepers, and coaches who use this method I teach in the book, but just take it to the next level, they become the ultimate trainer. Like if you join a gym, you can work out on your own, but you may hurt yourself or do the exercises wrong, where you can get a trainer who is going to keep you accountable to the process and make sure you do the exercises. Right.

Gresham Harkless 4:47

Yeah, that makes so much sense. I appreciate you for obviously writing the book, but definitely working it down for us as well, too. Because I think so many times as you said when you're running a business, we don't think that we have enough profits or any profits to be able to pay ourselves or even pay the business, and I think to our detriment, it kind of handicaps the business so it's not able to grow. And then, of course, we're frustrated and angry. And all those things happen because we haven't focused on that methodology.

Mike Michalowicz 5:13

Yeah, then I've just right this way, right? And, as your listeners to know that it ain't you it's not and you're not the one the problem. This is a systemic problem means the system, that's the problem, and it's global. But when you start taking your Profit First, your business will start to adjust, it almost seems too good or too easy to be true. I'm happy to say we have over 350,000 businesses successfully doing this right now. So we now have the empirical data, and it works. Because it's a behavioural system. It's not, it's not an accounting system. It manages our cash, but our behaviour is just when $1,000 comes in, we say we have 1000 hours to spend. Now 1000 hours come in, and 200 bucks are set aside for profit, the remaining $100 Now you know what you have to work with? And you do.

Gresham Harkless 5:57

Yeah, it may make so much sense that I don't know if it speaks to the idea of constraints because I think that you have the opportunity to really create and be creative as we are as entrepreneurs and business owners. When you have those quote unquote, constraints, and you're not using 1000, you're using the 800 instead.

Mike Michalowicz 6:11

Now, it's exactly what it is. It is a natural, psychological response, that we work within the confines of what's available. And it's also normal psychology that as a resource expands its availability, we consume more, the day you make more money, you start spending more because I got the means now, if you have a small house you live within, you know, that small house if you have a big house, all of a sudden you have shit everywhere because you have a bigger house. So we expand into the capacity of what's available. So intentionally constraining how much money is available to spend, will work within it.

Gresham Harkless 6:44

Right? Absolutely not. It's extremely powerful. And I love that, you know, you've devoted, obviously the book to it, but definitely helping out so many entrepreneurs and business owners. So I wanted to ask you now for what I call your secret sauce. And it can be for you personally or your business. But what do you feel kind of sets you apart and makes you unique?

Mike Michalowicz 7:02

So I think what it does is really this focus on simple. So everything I write about in virtually everything I do in my business is simple, like, funny, as a piece of paper brainwashing video, this is what I call rapid growth analysis. I tried to figure out over this past week, what allows businesses to grow, and what's the essence of it. And basically, it's an evaluation of what is working, and what is not working. So this is now our internal system. I tried to boil things down to one piece of paper to simplify processes. So I think that's, that's the secret sauce is I think is natural, the natural human tendency to bring complexity when things are difficult. And it actually just makes things more difficult. What is the if we can boil it down to the raw essence, these systems aren't the panacea. They don't make everything work, but they make big steps forward. So what are the fewest things you can do that have the greatest impact? That's the secret sauce we use here. And I try to teach through all my books.

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Gresham Harkless 7:55

Yeah, that is extremely powerful. And I think that so many times, I've heard the quote, and I said the quote from Steve Jobs is he's more focused on design. But he says, to get too simple, you really have to work at simple to be able to get there.

Mike Michalowicz 8:07

And yeah, it's not easy.

Gresham Harkless 8:08

Yeah, exactly. But it's the fact that you have that experience. And that empirical data she's spoken to now to where you're able to get to the simplicity. And you're able to teach so many people how to do that because it sounds like you've been able to kind of distil that down.

Mike Michalowicz 8:22

Yeah, no. And it was so funny it's hard to believe that simpler things are more effective. It's almost contrary to how we think it's like, no, it can't be that easy. And I think then the way to convince ourselves is to test things out. So just back to private first, people here probably take your Profit First as that's, that's a shell game, it's not going to work. And I encourage people I get scepticism because I feel that way. Just take it as distortion, start with 1%. Try a small amount and see how it works for you. And if it does work for you amplify it if it doesn't abandon it. And I think that's how simple things work is, let's dip the toe in the water on these things, just to prove to ourselves, it's working or not. And if it's not, it's not for you. And if it is, go with it.

Gresham Harkless 9:07

Awesome. So I wanted to switch gears a little bit. And I wanted to ask you for what I call a CEO hack. So this could be like an apple book or habit that you have or something that makes you more effective and efficient.

Mike Michalowicz 9:17

Oh, here's a real simple technique when it comes to introducing new offerings, particularly actually, in times like this right now, where we used to do isn't as easy to sell, what's the new thing? I call it the one-step-back technique. So what I do is I look at the final offering and I start rewinding step by step to see if there new offerings in there. Ultimately, a final offering is a culmination of a lot of steps that are offerings and is best explained through examples. So there are restaurants right now that are struggling. And a restaurant by law has been shut down. You can't you can't do your final offering which is putting food on the table. So we simply start asking what happens one step back, a restaurant right one step before going through the table, carrying the food to the table. Okay, so carry-out takeout is an obvious solution. Many restaurants have done that one restaurant in our neighbourhood amplified that. Then they collaborated with a food truck. And a food truck is doing runs to neighbourhoods, doing food delivery.

And now this former restaurant is a kitchen that's prepping food for delivery. So we asked, you know, what happens one step before that? Well, one step before carrying food to the table foods prepared in the kitchen. Okay, well, what are your 10 most popular menu items? Why not sell those recipes? Or why not sell a class explaining and having your chef demonstrate how to prepare these foods, or why not have a cooking class where you can go live on Zoom or something like that and do teleconferences with your customer base? Now they can cook this at home but also enjoy the experience. There is new so often, what happened one step prior to that was the procurement of meats and vegetables. Well, why not still purchase those but carve them up? And now you become a Blue Apron for your local community? You know what happens when step prior to that. So you keep on asking this one step prior, and you start to notice you have all these new offerings that have always been there.

Gresham Harkless 11:00

Awesome. So I want to ask you now for what I call a CEO nugget. So that could be like a word of wisdom or a piece of advice or something you might tell yourself if you were to happen to a time machine.

Mike Michalowicz 11:11

Listen to while it's not two words, you know when I start something or start a new business, I ask my friends you want they're like, Oh, my God, man. Sounds awesome. I'm all in, right? And then and then you got to sell it and like, Hi, bro, I'm out. I'm like, what is the app? You know, people will say things because it's socially appropriate. It's nice to say that it's nice to be supportive. But what really matters for the sustainability of an entrepreneur is whether are people willing to depart with money. So instead now I asked, Hey, I have this idea. Are you willing to pay for it? And if people say, No, that means my idea is no good. I have to be able to get people to open their wallets.

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Gresham Harkless 11:47

Yeah, it's a powerful thing. It's so funny because I had like outside sales jobs. And I remember going through all the training and everything. One of the first things they said, if somebody said that they definitely want to do business, have them right, you know, sign the contract and put the deposit down right there and now determine if they're really interested in it.

Mike Michalowicz 12:05

Exactly.

Gresham Harkless 12:06

Yeah. And I want to ask you now my absolute favourite question, which is the definition of what it means to be a CEO, and we're hoping to have different, quote-unquote, CEOs on the show. So Mike, what does being a CEO mean to you?

Mike Michalowicz 13:22

Yeah, a CEO is an empathetic leader for me.

Gresham Harkless 13:23

It's extremely powerful. And I think, as you said, you know, so many times we forget, kind of like the quote says that, if you help a lot of people get what they want, then it helps you get what you want. And when you have that, and when we focused on that group and that team, then you forget that those are often your, I guess, ambassadors, the people that connect with your clients, and do so many things in different ways that when you take care of them, help them to get their house, or whatever that might be, then all of a sudden, they're more entrenched in everything, and then it starts to manifest itself.

Mike Michalowicz 13:51

That's exactly right. This is the little tip that is discovered it's not about doing for others, it's about supporting them in their own journey. It's interesting if you give someone a house, which is an extremely generous offer, the value is less significant to them if they are opposed to acquiring their own house. Right. We appreciate what we have to earn. So my job is not to be a great giver in that regard. It's to be a contributor to their journey.

Gresham Harkless 14:19

Yeah, absolutely kind of quote-unquote teaching a man to fish so to speak. Yeah, they have an opportunity to do that. Absolutely. Well, awesome. Well, Mike, I truly appreciate all the awesomeness that you provide. I appreciate your time even more. What I wanted to do is pass you the mic so to speak, just to see if there's anything additional you can let our readers and listeners know and of course where we can get a copy of all your books and all the awesome things you're doing and and get in contact with you.

Mike Michalowicz 14:42

Thanks, Gresh you know, what I want to share as a final thought is what we're going through right now I know we're entering the summer and the world is the world's punched CEOs and small business owners in the face. And we have a bloody nose, a black eye, and while the world's doing that, it's also saying save It's the weirdest situation ever. So I'm just encouraging everyone, it's not going to be an easy path, but we need you, the world needs your success. So stand up, step forward and kick ass, do whatever it takes to sustain. It's necessary, it's important. So stick in there. And one tool that may help you and is totally free, is fix this next.com That's the site for my book. But there is an evaluation site where you can click on a single button and evaluate where your business is right now and it will pinpoint exactly what you need to do next. And it's a download it's not even a download it just presents the screen so you don't need to download anything. Just click and analyse and takes maybe less than five minutes and you'll be able to pinpoint what you should do right now.

Gresham Harkless 15:42

Awesome. Awesome. Awesome. Well, thank you so much again, Mike. We will definitely have the links and information in the show notes so that everybody can click through and follow up with you but we definitely, you know, appreciate the reminder you gave us well on how important small businesses, entrepreneurs and business owners are to the world and how it's kind of our charge to be the superhero, so to speak, to be able to make the world a better place. I appreciate you for doing the same and reminding us of that.

Mike Michalowicz 16:05

Thank you, my brother.

Outro 16:06

Thank you for listening to the I AM CEO Podcast powered by Blue 16 Media. Tune in next time and visit us at iamceo.co I AM CEO is not just a phrase, it's a community. Be sure to follow us on social media and subscribe to our podcast on iTunes Google Play and everywhere you listen to podcasts, SUBSCRIBE, and leave us a five-star rating grab CEO gear at www.ceogear.co. This has been the I AM CEO Podcast with Gresham Harkless. Thank you for listening.

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Mercy - CBNation Team

This is a post from a CBNation team member. CBNation is a Business to Business (B2B) Brand. We are focused on increasing the success rate. We create content and information focusing on increasing the visibility of and providing resources for CEOs, entrepreneurs and business owners. CBNation consists of blogs(CEOBlogNation.com), podcasts, (CEOPodcasts.com) and videos (CBNation.tv). CBNation is proudly powered by Blue16 Media.

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