How to Put Profit First with Mike Michalowicz

Entrepreneurship can be hard work (but it’s also totally worth it). Over many years of working with entrepreneurs and talking with a plethora of industry experts, I’ve discovered that two roadblocks often stand in the way of fully reaping the benefits of entrepreneurship, battling entrepreneurial poverty, and not fully stepping into their zone of genius. The good news? If either of these resonates with you, you can overcome both challenges with the right mindset shifts and actions.

“I was always talking about the revenue that we made, but never really thinking about profitability and what I was paying myself. I thought it was good for me to pay myself as little as possible, not really recognizing that was detrimental to my mental health. I was putting in all of this effort and not thinking about what I was actually making.” -Emily Williams

One of the people I admire most regarding both of those topics is Mike Michalowicz. Mike has an impressive entrepreneurial past (becoming a self-made millionaire in his early thirties), having created and sold several businesses. He has since switched gears and now spends his days writing amazing books aimed at eradicating what he calls entrepreneurial poverty. Having read all of his books and witnessed the powerful message he delivers on a stage, I know he has so much insight and wisdom to offer the IHML community. I was thrilled to have him join me for this episode, and I can’t wait for you to give it a listen.

Follow along as Mike walks us through his journey from entrepreneur to author, including the bankruptcy (and piggy bank) that planted the seed for change in his life by illuminating the path toward his true calling. Having learned from his past mistakes, he is now on a mission to eradicate entrepreneurial poverty by helping entrepreneurs understand the foundational elements of running successful businesses. I’m telling you, there’s so much to learn from Mike.

Mike believes there is a fundamental flaw in how most entrepreneurs view profits and, therefore, explains how you can build a system that channels your habits and the results you want. So, listen as we talk about his behavioral approach to cash management, a method he calls Profit First. He shares the method’s basic principles and reveals the first steps you can take to begin implementing Profit First in your business ASAP. Be sure to listen for the part when he reviews the five foundational accounts we should all have to build strong habits around properly distributing profits. For those of you who struggle with debt in your business, he shares his advice regarding paying that off with profits too.

The episode continues as we dive into the importance of working in your zone of genius within your business. Follow along as we talk about how you can (and why you should) remove yourself from your business’s day-to-day operations and step into your true zone of genius. For Mike, that means going into full-blown author mode– and it’s done wonders for him and his various businesses. As it turns out, there are three elements of making this transition. Don’t worry. You can hear all about them when you tune into this episode.

So grab your notebook, find a comfortable seat, and get ready to dive in.

P.S. Don’t miss my episode with one of Mike’s incredible business partners, Adrienne Dorison, where we discuss all the things regarding how to run your business like clockwork, so you can confidently step away (vacation, anyone?) without worrying about all the things. Listen to the episode here.

In this episode…

[03:19] Welcome, Mike! He shares his journey from entrepreneur to full-time author.

[06:08] How bankruptcy led Mike to discover the profit first method.

[09:50] Basic principles of Profit First and how you can begin implementing the method in your business.

[13:48] Mike’s advice on handling debt.

[18:12] Mike talks about how his ideas became books that became businesses.

[20:50] How to live in your zone of genius in your businesses (3 elements).

[24:29] Why you need to check your ego and step into your zone of genius.

[26:00] Hear what’s next for Mike and his businesses (psst… a new book!).

[27:54] Mike’s advice for living a life better than your dreams.

Quotes:

“I was always talking about the revenue that we made, but never really thinking about profitability and what I was paying myself. I thought it was good for me to pay myself as little as possible, not really recognizing that was detrimental to my mental health. I was putting in all of this effort and not thinking about what I was actually making.” -Emily Williams

“The big thing is not to change who we are. It’s to build a system that channels who you already are [to help] get the results we want.” -Mike Michalowicz

“The day will come. I don’t know if it’s six months or six years, but the day will come that all that [debt] is eradicated. You keep chipping away at it with this profit account. Then the next profit distribution is all yours. It’s a glorious day. And the beautiful thing is you built a profit habit.” -Mike Michalowicz

“I used to call myself an entrepreneur, and I love that word, but it is also associated with hustle and grind, doing everything– which is a horrible association. Our job is to create a vision and to organize resources, [and then] to make that vision a reality. It’s not to work like animals for anybody. So, I changed my title to ‘shareholder.’” -Mike Michalowicz