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Episode Summary
On this episode of The Wealthy Wellthy Podcast, I welcome guest Mike Michalowicz. Mike is the entrepreneur behind three multimillion-dollar companies and is the author of Profit First, The Pumpkin Plan and what BusinessWeek deemed the entrepreneur’s cult classic, The Toilet Paper Entrepreneur. Profit First is one of my favorite books so I am very excited Mike joined me on this episode.
In this conversation we take a closer look into the “profit first” model and fiscal responsibility. I have taught so many of my clients about personal finance and how to use the profit that they take from their business into their household, but Mike points out one area entrepreneurs historically fall short is establishing how much profit they are going to take from their business first.
According to the Small Business Administration, 83% of small businesses are in check-to-check survival, and Mike notes that if your business is operating this way, you are not taking care of yourself and likely not listening to what your business is telling you about your margins. Mike speaks from experience on this subject, having evaporated all of his personal wealth at one point in his entrepreneurial journey due to “arrogance and ignorance”, his books and teachings are a guiding light for many new and seasoned business owners getting started on the path to profit.
Be sure to listen until the end as Mike gives us a sneak peek of his newest book, which will be hitting shelves in 2020. The topic surrounds the necessity hierarchy for business progression, which is based on research from businesses both big and small and always includes these steps: (1) Sales process, (2) Predictable profit, (3) Efficiency, (4) Impact, and (5) Legacy.
Listen Now
You can also click on the timestamps below to jump to those specific points in the conversation.
What We Covered
- [1:45] – What are the problems with the traditional profit model and what is the “profit first” philosophy?
- [6:52] – Mike’s definition of the relationship between you and your business.
- [9:18]– How does Mike start to implement the “profit first” model?
- [12:04] – Mike gives context for his book “Toilet Paper Entrepreneur.”
- [14:19] – What are the main mistakes entrepreneurs make?
- [18:23] – Mike’s advice for capitalizing your company.
- [22:23] – The phenomenon of entrepreneurs writing too many things off as “business expenses.”
- [24:42] – A discussion of fiscal responsibility.
- [29:50] – Mike talks about his latest book, “Clockwork”, and what it looks like to remove yourself from your business.
- [37:03] – How much of a factor in business health is personal health?
- [39:02] – Mike’s myth-busting, which has to do with the topic of his next book.
Tweetables
[Tweet “Entrepreneurs can figure out the hundreds or even thousands of pieces of our business, but the one piece we just can’t is profit.”]
[Tweet “Profit is not an event – it is a habit.”]
[Tweet “Our relationship with our business is not that of a parent-child but of conjoined twins.”]
[Tweet “Profit is a cash bonus above and beyond normal compensation for the owner.”]
[Tweet “The best capital raises were my own money because every time I spent it it was painful.”]
[Tweet “It’s never about how much you make, it’s about how much you take.”]
[Tweet “It’s a shame that the entrepreneurship game has been about the top line.”]
Links Mentioned
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