Do you make any profit in your business? If you are not sure or want to make more of it then you need to listen to our interview with Mike Michalowicz.
Mike Michalowicz is the entrepreneur behind three multi-million dollar companies and is the author of Profit First, Clockwork, The Pumpkin Plan, and his newest book, Fix This Next. Mike is a former small business columnist for The Wall Street Journal and regularly travels the globe as an entrepreneurial advocate.
To learn more about Mike and get access to a treasure trove of entrepreneurial tips, visit www.MikeMichalowicz.com.
Or visit: www.MikeMotorbike.com
If you are ready to talk about franchising your business you can schedule your free, no-obligation, franchise consultation online at: https://bigskyfranchiseteam.com/contact or by calling Big Sky Franchise Team at: 855-824-4759.
Tom DuFore, Big Sky Franchise Team:
You’ve worked hard to built your business, and now it’s time to grow. Welcome to the Multiply Your Success Podcast. I’m your host, Tom DuFore, CEO of Big Sky Franchise Team, and a serial entrepreneur. And as we get started on today’s episode, I have a quick question for you and it is all about your profit. Do you make any? I’m just curious. Do you really make any profit in your business? Do you even know if you make any profit in your business? What is it? When do you take that profit? You take it at the end of the year, end of a quarter if it may be sometimes ever comes around?
Tom DuFore, Big Sky Franchise Team:
Well, if you’ve ever found yourself in that position, you are in for a treat today with our guest Mike Michalowicz. Mike is the entrepreneur behind three multi-million dollar companies, and he’s the author of Profit First, Clockwork, The Pumpkin Plan and his newest book Fix This Next. Mike is also a former small business columnist for The Wall Street Journal, and he regularly travels the globe as an entrepreneurial advocate. Mike is someone that I followed for many years. I’ve read his books. He is really one of the world leaders in entrepreneurship and how to effectively run a small business. So you are in for a treat today. So without further ado, here’s my interview with Mike Michalowicz.
Mike Michalowicz, Entrepreneurship Simplified:
Tom, thanks for having me. I’m Mike Michalowicz, I’m the author of some books, if you’re watching the video strategically positioned behind me for marketing purposes, but I’ve written Profit First, Fix This Next, Clockwork, a group of books to help business owners achieve their definition of success.
Tom DuFore, Big Sky Franchise Team:
Well, that’s great. Well, and I’m a huge fan, so I’m not going to try to be shy and hide that. I love your work and your books are fantastic. And as an entrepreneur, one of the things that I like about it is that it’s easy, it’s simple, it makes sense. And it’s one of the first, it was actually the first business book I had read that just made sense. It was applicable and easy to follow. And you’ve kind of become this, I’ve been following you, you use this phrase now I follow it on your website, entrepreneurship simplified or something in that regard. Can you talk a little bit about that and what led you to it?
Mike Michalowicz, Entrepreneurship Simplified:
Yeah, so I’m an entrepreneur my entire adult life, ever since college and I’ve experienced ups and downs, but it always seemed that entrepreneurship was fraught with complexity. Like I needed to master everything to be successful. And I had an event in my life that I looked at it a whole new way. I said, what if everything should be simplified as opposed to dressed with complexity? And that started my endeavor to research and learn and simplify every element I can think of in entrepreneurship.
Mike Michalowicz, Entrepreneurship Simplified:
So far I’ve written, I think it’s six or seven books and I have about 25 I need to write. I’m actively writing one right now. It’s coming out in 2021. And I take subjects that there’s so much information that becomes information overwhelm and boil it down to the core essence of what drives results in that category. That’s how Profit First came about. My new book’s on marketing. I’ve simplified the whole marketing process into three steps. That’s what I like to do.
Tom DuFore, Big Sky Franchise Team:
Great. Great. Well, and I’ve seen it live and in action and impact our business and other companies so grateful to you for that. And one of the things we like to ask our guests here, Mike, is we talk about misses, makes, and multipliers. And is there a miss or two you could share in your career or something that happened that you learned from that you wouldn’t mind sharing with our audience, especially if they’re not familiar with you or, and haven’t read your books?
Mike Michalowicz, Entrepreneurship Simplified:
Sure, sure. So I started two tech companies. My first business was in tech services. My second one was in computer crime investigation and I was in the right place right time. I was able to sell both companies. One was a private equity deal. One was a Fortune 500 exit. And I thought I was it, I was Midas. I became so arrogant, full of myself. I thought I was the best entrepreneur ever to walk on this planet. And it was my third business that was the miss. I became an angel investor. I sucked at it. I started businesses that were falling and collapsing left and right. Seven angel investor, I actually called myself the angel of death in retrospect. I was so bad at it. And I wipe myself out financially.
Mike Michalowicz, Entrepreneurship Simplified:
That was the biggest miss of my entrepreneurial journey so far, hopefully never again. But I also learned from that. I’m so grateful for that period of time because that’s where I learned I didn’t know much about entrepreneurship and I needed to start this journey of simplifying it for myself and hopefully for others.
Tom DuFore, Big Sky Franchise Team:
Interesting. And that was the I don’t want to say incident, but the event that led you down this path to start writing books and becoming an author?
Mike Michalowicz, Entrepreneurship Simplified:
Yeah. Because I lost everything. And as a result, I had a family, three children, we lost our house, we lost our cars, we lost everything. It was a total restart. The only thing that stayed with me was my family. And I remember I started journaling, which is a guy’s term for a diary. A friend of mine told me to do that. And he says, “Write down anything, any thoughts you have not just, don’t do positive affirmations, write down anything.” So I started writing down all these things and I said, why do I struggle making profit? Why do I have this hustle and grind mentality? And then I said, what if? So the whys turned to what if, what if. What if profit didn’t come last? What if it was the first thing that you got? What if you didn’t have to work like an animal for your business? And I started writing these questions down and that’s when I started researching it. And that diary started to be the inception for the books I wrote.
Tom DuFore, Big Sky Franchise Team:
Interesting. That’s really, really interesting. And I’m sure a lot of our listeners can relate to the struggles and challenges of being entrepreneurs and going through the grind. Well, how about a make or two? Certainly, you’ve become a great author selling lots of business books. Talk about a make or two you can share with our audience.
Mike Michalowicz, Entrepreneurship Simplified:
Yeah. So I guess one thing was becoming a spokesperson and redefining a couple identities or terms for myself. So I used to say, I’m an author and, or I’m an entrepreneur, but I also had clear identity with that, I mean, if I was an entrepreneur, I had to work ridiculous hours. If I said I’m an author, it’s all about writing books constantly. So I started to reframe things. So instead of being an author, I said, Oh, I’m really a spokesperson because what I do is I do write my books, but I do speaking engagements and I do this. This is all the work I do, right. I like to present on topics like we’re doing right now on the stage or over a podcast. And I like to write books.
Mike Michalowicz, Entrepreneurship Simplified:
A spokesperson is someone who has to represent a company. And that term became much more empowering for me of my role. And it also started a transition in my business. I no longer… Like an author is someone behind the keyboard, he’s got to keep cranking away all the time. And they got to hold everything in. It’s all on their shoulders. And, like Stephen King, for example, is extraordinary. People can have extraordinary. JK Rowling has extraordinary success, but I think my perception is they carry the burden. When I became a spokesperson, that meant that I was representing a group of people.
Mike Michalowicz, Entrepreneurship Simplified:
The other thing that was important to me was changing from the term entrepreneur, which I love that word and what it means, but it’s become so bastardized with hustle and grind that I think it’s failing us. So I changed my label to shareholder. So when people ask me what I do, I say, I’m a shareholder in multiple small businesses, and I’m a spokesperson for my companies. And what I mean by a shareholder, like I own stock in Ford, as example. I don’t work for Ford. When they send their distribution check to me for the quarterly distributions. I don’t say, Oh my gosh, I have to earn this off now and work at the factory. No, I took risk of investing in their company. They’re rewarding me. And I do render opinion. I send in my votes for the leadership team, or if there’s significant decisions they ask the shareholders.
Mike Michalowicz, Entrepreneurship Simplified:
Well, that’s what I want to do for my small business. So when I label myself a shareholder, when profit comes out, that’s because I took risk of starting the business. It’s a reward to me. I don’t plow it back or return it to the company. That’s for me. I don’t work for, or in my business. I don’t work the line. I render my opinion. I assemble the team. We have a president and leaders of our company. I influence who they are, but they lead the company. So by changing those terms, those have been major makes for me in how I see myself and how I behave accordingly.
Tom DuFore, Big Sky Franchise Team:
Interesting. That’s really, really interesting. Thank you for sharing that. And this idea of Profit First, that’s a book to me, that’s a monumental book. It’s a game changer.
Mike Michalowicz, Entrepreneurship Simplified:
Thank you.
Tom DuFore, Big Sky Franchise Team:
And it’s one, by the way, for our audience if you are unsure on profit, you’ve got to read the book. And it’s one that I recommend to our clients to train their franchisees with, if they’re looking for something. So, I know we have a short window of time here, as concise of a manner as you can, maybe just give a quick overview of Profit First and talk through the general idea of the book.
Mike Michalowicz, Entrepreneurship Simplified:
Yeah. So there was a statistic that just opened my eyes to how many businesses struggle with profit. There was a study by the US Bank and US Bank identified that there’s 30 million small businesses in the US, there’s 300 globally. Small business according the SBA is becoming there’s $25 million in annual revenue or less. That’s absolutely my businesses and that’s a lot of businesses, I think like 97-98% of business is small business. Of the 300 million globally, 83% according to this study are in a cash crunch, immediate cash crunch, check to check survival. If they don’t get money in today, they can’t pay the rent or payroll or any expenses tomorrow. So there’s panic survival.
Mike Michalowicz, Entrepreneurship Simplified:
And what confronted me was how come we as entrepreneurs start a business in part for financial freedom. Like, I think we all want financial freedom, not to worry about bills. If we start our business not to worry about bills, how come we’re all failing at it, at least 83% of us? And then I looked at the formula and the formula we’re told around profitability I argue is a complete abject lie. We’re told sales minus expenses equals profit. And logically, it makes sense. You have to have revenue, sales. You subtract the expense you incur and what’s left over is profit. Logically it’s right. But it’s a lie in regards to how we behave around it.
Mike Michalowicz, Entrepreneurship Simplified:
It’s human nature when something comes last, profit, anything it gets delayed. Is the manana syndrome. Like if you love your family, you don’t say I put my family last. You say, I put my family first. If you care about your health, you don’t say I’m going to start putting my health last. You put your health first. But profit is we’re told comes last. And so we ignore it. It is so pervasive in our vernacular we call it the bottom line, the year end, terms that mean it can wait. So that’s why businesses in my belief are not profitable because they don’t consider it until the end of the year. And it didn’t happen right? Well, maybe next year.
Mike Michalowicz, Entrepreneurship Simplified:
So in the Profit First formula, we flip it over. It’s sales minus profit equals expenses. And what I mean in practice is every time we have revenue coming to the firm, our company, we take a predetermined percentage of that money, allocate it toward profit, hide it away from the business and run the business off the remainder, which is the expenses. It’s the pay yourself first principle applied to business. That’s what Profit First is.
Tom DuFore, Big Sky Franchise Team:
Great summary. And thank you. And it really is a game changer. I know I’m sure you speak to entrepreneurs frequently that just don’t do that. And I know I was one too for a long time.
Mike Michalowicz, Entrepreneurship Simplified:
I didn’t do it. I always thought that profit would be an event that one day would happen, but profit is not an event. Profit is a habit. You need to bake into the business. Every single transaction, a percentage of profit comes out first.
Tom DuFore, Big Sky Franchise Team:
That’s right. That’s right. And well, one of the other topics that comes up, and one of the things that our audience is doing when they’re looking at franchising their business, they’re thinking about legacy and talking about this idea of legacy. And would you mind sharing kind of your ideas around legacy and some of the things in the writing you’re doing that you could share your thought on that?
Mike Michalowicz, Entrepreneurship Simplified:
Sure. I wrote a book called Fix This Next. And I actually studied the trajectory or the path that businesses follow and legacy is a part of it. It got redefined for me, as I was doing the research. I thought legacy was, Oh, the next generation could own it, but it’s really about the impact. At least that’s what I found out. That legacy is that the next generation will benefit from it. Not the next generation of owners, the next generation of customers, something that continues on into perpetuity because it’s of such great service to the clients and customers of that company. Something that must continue on because of the benefit it delivers.
Mike Michalowicz, Entrepreneurship Simplified:
I remember being with a business owner, he owned a company called Enviro Filtro, they’re based out of Guatemala. And he pulled me aside and they’re doing an extraordinary thing with this business. It’s of such service to their community, to our globe. And he came up to me. He says, “You know what, Mike, my whole life, I was a business owner I thought, because I woke up one day and realized I’ve never been a business owner. I’ve always been a business steward.” And what he meant was that he didn’t own this. He had a responsibility for this business to be of contribution. That he was a cog in the wheel quite frankly, he was an important facilitator, but it was more about the containment of the business than his involvement in it. He raised something that truly was out there to continue on it. It wasn’t about him. It was about it.
Mike Michalowicz, Entrepreneurship Simplified:
That was what legacy, that’s when the legacy was redefined for me. I want to have something that can impact the world through the work I do, the businesses that I’m a shareholder in. That they’ll continue to be a service. And my involvement of it is of no significance compared to the message and the impact continuing on. I’ve been part of the journey, but I’m not. It’s not about me. It’s about it.
Tom DuFore, Big Sky Franchise Team:
Great. Well, thank you. Thank you for sharing that. I think for our audience, it’s an important topic. Part of the reason they’re looking at franchising certainly is impact, legacy, all of these different things as they’re trying to think about growing. So Fix This Next is a great book for them to be reading up on here.
Mike Michalowicz, Entrepreneurship Simplified:
Yeah. I hope they enjoy it. Yeah. I think you’ll see new paradigms for your business. What I explored in Fix This Next is many business owners we address all the apparent issues like right now, if we weren’t doing an interview, either of us could hop on our email and there’s like 50 or 100 things that can be tackled right now. There’s a list of stuff waiting for us. So we go to the next thing that presents itself. If we put importance in, that’s the thing we start tackling. But the question is, is that what the business really needs? We have a feeling we’re doing this to benefit the business. What’s the business really need?
Mike Michalowicz, Entrepreneurship Simplified:
The analogy I use in Fix This Next is, Tom, if there was a chain between me and you. And we’re pulling as hard as we can. That chain will break, but it always breaks in the same spot, which is the weakest link. The mistake we make, if we want to strengthen that chain is to just randomly go to different links and strengthen it. If we don’t improve the strength of the weakest chain, it’ll keep snapping just as easily at the weakest spot. So Fix This Next is a tool to pinpoint what’s the weakest link at this moment in your business. Maybe something you don’t even know exists or not aware it exists that needs to be resolved. But once you strengthen that one link, the entire chain becomes stronger. And the next weakest link will present itself. And we focus on that. So Fix This Next is a way to sequence what to fix within your business. The weakest link always gets addressed next.
Tom DuFore, Big Sky Franchise Team:
Great. Well, thank you for sharing that. And Mike, one of the questions we always like to ask everyone is this idea of multipliers. Our show is Multiply Your Success and everyone kind of interprets it differently sometimes personally, professionally, different viewpoints on that. Would you mind sharing with our audience a multiplier or two that you’ve used in your career?
Mike Michalowicz, Entrepreneurship Simplified:
Yeah. I’ll give you the big one for me. It’s been doing licensing deals, not franchising necessarily, but a flavor of that in the author community. It seems to be relatively atypical, but serving me extraordinarily well. And when I write a book, I will find a partner to take the responsibility, the license, to teach the book. Many readers when they read a book that serves them, they found something they can do, and will do it. A portion of the readers will say, I want to make sure I’m doing it right. And for those people, they want the additional services behind it. So every book I have a licensee who delivers the services behind it.
Mike Michalowicz, Entrepreneurship Simplified:
Those relationships have been extraordinary. And what it allows me to do is continue to do my primary function, which is being a spokesperson. Keep speaking about the concepts we’re talking about now, hopefully it’s of service. They decide to buy a book and explore it further. And some of those people will then work with a licensee. It’s been a great way to expand the collective platform very quickly without me carrying all the burden on my shoulders.
Tom DuFore, Big Sky Franchise Team:
Oh, that’s great. Yeah. And from an author standpoint, it is kind your version of being able in our world and franchising, it’s the same kind of idea.
Mike Michalowicz, Entrepreneurship Simplified:
Same exact same thing. It’s a flavor of that. Yeah.
Tom DuFore, Big Sky Franchise Team:
Yeah, no, that’s brilliant. And now you have these people around the country that can help others who want to implement your teachings or learn more and be more effective at it. You have experts that can now do that for them.
Mike Michalowicz, Entrepreneurship Simplified:
That’s exactly right. So with Profit First is a great example. Profit First has I heard, I think we just surpassed 500 licensees that are out there using it as a service to their clients. And just like the most classic franchisees, at least that comes to mind for me is McDonald’s. Every time a new McDonald’s store opens, not only does that store benefit because it’s delivering their product, that store is furthering the exposure for everybody else. So we experienced that same effect. Every time a new licensee comes on board, it only strengthens the brand for everybody else.
Tom DuFore, Big Sky Franchise Team:
Great. Well, and our final question we always like to ask every guest is what does success mean to you?
Mike Michalowicz, Entrepreneurship Simplified:
I think success it’s kind of a one-two punch for me. Phase one is leaning into one’s life purpose. The process I do is simple financial entrepreneurship, if you’re watching the video on the wall here behind that light says eradicate entrepreneurial poverty. I’m trying to fix the struggle of entrepreneurs. That for me clearly is my life’s purpose. That’s what I’ve defined for myself. The other part is to do it joyfully. So living one’s life’s purpose and doing it where it brings yourself joy and others joy for me, that is, that is success at its finest.
Tom DuFore, Big Sky Franchise Team:
Wonderful. Thank you for sharing that. And is there anything you’d like to share with the audience, leave with them before we end today?
Mike Michalowicz, Entrepreneurship Simplified:
Sure. You know, if people want to learn more about what I have to offer, there’s tons of free resources. You can go to mikemichalowicz.com. One caveat, no one can spell Michalowicz. So don’t even try it. The shortcut is mikemotorbike.com. That was my nickname in high school from some people, and I’ve never actually driven a motorcycle. So there you go. But it rhymes, it rhymes. So mikemotorbike.com. My books are there, free chapter downloads. I used to write for The Wall Street Journal. You can get that content. And I have my own podcast called Mike Up In Your Business, and you can get all through my site, mikemotorbike.com.
Tom DuFore, Big Sky Franchise Team:
Well, great. Well, thank you so much. We’ll make sure we link everything in the show notes to all of your books, your free downloads. Mike has awesome tools, and really grateful for your time. Thank you for being here. It’s an honor. We’re so grateful for it and really appreciate it, Mike.
Mike Michalowicz, Entrepreneurship Simplified:
Tom, thank you.
Tom DuFore, Big Sky Franchise Team:
Mike, thank you again so much for being here. It’s really an honor and a privilege to have the opportunity to have you on as a guest. And for those of you that are tuning in, please make sure you take a look at Mike’s books and implementing them in your system, especially if you’re struggling or trying to figure out finances, or why budgets are always tight. His books, especially Profit First really, really works. And I’m speaking from personal experience of having implemented that. So let’s go ahead and jump into today’s key takeaways.
Tom DuFore, Big Sky Franchise Team:
So the first key takeaway, well, you probably guessed it, profit first. And so it’s Mike’s formula for how you actually factor and figure out profit. And it is sales minus profit equals expenses, sales minus profit equals expenses. So make sure that you pay yourself first. Number two, don’t be your own angel of death. Don’t be your own angel of death. I thought that was a really great takeaway to make sure that you are focused on not being your own worst enemy, essentially. Think about it. And I thought that was a really great takeaway. Number three is to identify yourself for what you do. And Mike had mentioned that he identifies himself now as a spokesperson and a shareholder, not just an entrepreneur or not just the company owner or not just a writer. He describes himself as a spokesperson and a shareholder. And I think that’s a really interesting takeaway.
Tom DuFore, Big Sky Franchise Team:
And now it’s time for today’s win-win. So today’s win-win is pay yourself first and pay the profit first out of your business. When you get the financial stability and get your business in strong financial health, it makes your business more fun. And it’s a reminder for why you went into business for yourself anyway. So that’s today’s episode, folks. Thanks for tuning in. Please subscribe. Please refer us to your friends and we’ll see you back here on the next edition of the Multiply Your Success Podcast.
