Best Of: Profit First with Mike Michalowicz
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Did you know that 83% of small businesses around the world are not profitable? Business owners are living month-to-month and are desperately struggling. Today’s episode dives into how to never live paycheck-to-paycheck again.
Mike Michalowicz is the author of several books including The Toilet Paper Entrepreneur, Surge, and Profit First. He is also the Owner of Profit First Professionals, his third million-dollar venture.
Why did Mike decide to write Profit First? Mike had grown his companies to multi-million dollar businesses but was not profitable at all. He had refinanced his house multiple times and was not making ends meet.
He thought if he could run the business long enough, they’d eventually hit their ‘big break’ and become profitable. After selling his businesses, he decided to become an angel investor with this mindset and — guess what — the 10 businesses he invested in all tanked. Within two years, he lost every penny that he had ever made.
After he told his family that he had failed them, he went through two years of ‘functional’ depression. It was not a proud moment in his life. Through this journey, he was able to ask himself some hard questions and those hard questions lend to a lightbulb moment. How can I make my businesses profitable, always?
Keep in mind, it’s also a lifestyle problem for many entrepreneurs as well. As they’re trying to live a good life and create a profitable company, in the back of their mind they’re worried about whether or not they can afford their car or their home tomorrow. The amount of stress this puts on someone makes it very hard to see the bigger picture.
Mike’s accountant was trying to help him by showing him the real numbers, by showing him the metrics, and Mike would brush him off and not listen to his advice. If Mike saw he had money in the bank, then he had money in the bank! But it isn’t always so simple.
Mike knew that he had to change somehow, but changing your behavior right off the bat is a very difficult thing to do. So, what he did was he decided to put a percentage of his money into a ‘profit’ bank account and run his business on the remaining cash. By making this simple shift, he was able to see things from a bigger perspective and he was forced to reverse engineer his business so it would survive on the remaining cash no matter what.
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Scaling Up is the best-selling book by Verne Harnish and our team for Gazelles Coaching, on how the fastest growing companies succeed where so many others fail. My name is Bill Gallagher, host of the Scaling Up business podcast and a leading Gazelles Coach. Gazelles is the term we use for fast-growing companies.
We help leadership teams with 4 Decisions around People, Strategy, Execution, and Cash so that they can Scale Up successfully and beat the odds of business growth success. Scaling Up for Gazelles companies is based on the Rockefeller Habits 2.0 (from Verne’s original best-selling business book, Mastering the Rockefeller Habits).