Mike Michalowicz, Profit First – InnovaBuzz 218
Mike Michalowicz, Profit First
In this episode, it’s a privilege to have as my guest, Mike Michalowicz, who is the author of Profit First, The Pumpkin Plan, Clockwork, and The Toilet Paper Entrepreneur. He is the host of the Entrepreneurship Elevated podcast and Grow My Accounting Practice Podcast. He is also a popular speaker who has shared his insights on business and entrepreneurship at TEDx, creativeLIVE and others. His columns have appeared in the Wall Street Journal, Entrepreneur, Harvard Business Review, and more.
Mike’s mission is to eradicate entrepreneurial poverty, and his books look at various aspects of a business to provide a simple framework that helps a business grow profitably and sustainably and make a difference.
In our discussion, Mike talked to me about:
- What he means by entrepreneurial poverty – it’s not just money! And steps to eradicating it.
- Bio-mimicry – learning from nature
- The Entrepreneurial Hierarchy of Needs
Elicia and James Crook on episode 194 suggested we interview Mike.
Listen to the podcast to find out more.
Listen to the PodcastEntrepreneurship is hard but you can be successful as who you are and have a business that you enjoy. You can do it in your own terms. It just takes time and effort. @MikeMichalowicz on #InnovaBuzz podcast Click To Tweet
Show Notes from this episode with Mike Michalowicz, the author of Profit First
Key points and takeaways from this episode include:
- It is human nature to comply with our titles. A title is almost an ultimate form of an affirmation.
- There’s a lot of unnecessary complexities in entrepreneurship. Entrepreneurship is hard but you can be successful as who you are and have a business that you enjoy. You can do it in your own terms. It just takes time and effort.
- Never give a point without a story and never give a story without a point. These things work collaboratively.
- 20% of your clients generate 80% of your revenue and profit. Identify that narrow 20% and clone them.
- Focus on your best clients and evaluate them. Identify the clients that pay you best and that you love working with. Concentrate on them. Find out where they congregate, the communities where they acquire information, the podcasts they listen to and the conferences they go to and then start targeting your efforts there. Build these special skill sets for them and learn how to serve that community better than anyone else so you can start building a massive reputation.
- Pay yourself first and ensure profitability.
- A profit is different from compensation. A profit is a reward for being a shareholder. An owner’s compensation is the amount that the owner gets for being an owner or operator of a business.
- Rolling out the Profit First system slowly but deliberately and consistently achieves far greater results.
- The most devastating form of entrepreneurial poverty is time poverty.
- A successful business is not all about the hustle and grind. It is about being smart and strategic.
- Productivity is necessary but it is not the game changer. The game changer for entrepreneurship is the organisation of the resources around you. It is all about having a very clear vision of where you want to move your business and moving each piece in the right sequence to achieve that vision.
- You can extrapolate really effective strategies by just observing nature.
- Every business has a very specific key function. Everyone in the business regardless of what function they serve needs to know what their primary function is. Business owners need to identify that critical function that the business is hinging its success on and make sure that everyone is ready to serve and protect that.
- The biggest challenge that entrepreneurs face is not knowing what their biggest challenge is.
- The Entrepreneur’s Hierarchy of Needs
- Sales – the source of inbound cash flow, the fulfillment of an agreement
- Profit – the retention of cash that brings stability. Whilst sales is the creation of cash, profit is the stability of business through cash.
- Order – maximising efficiency in all elements of the business.
- Impact – having a business that is no longer about transaction but transformation. It’s how you are changing the lives of your customers and the greatest impact that you are having.
- Legacy – having a business that is designed to run in perpetuity and to deliver some form of goodness and impact to the community.
- Get to give. Put the health of your business first. You need to have consistent sales, profit, and efficiency within your business to be able to contribute, give impact, and achieve a legacy.
- Purpose is the biggest magnet of business. It pulls you forward.
The Buzz – Our Innovation Round
Here are Mike’s answers to the questions of our Innovation round. Listen to the interview to get the full scoop.
- #1 thing to be more innovative – Talk with your customers. Ask them what they need next.
- Best thing for new ideas – Taking a vacation from work. Leave your business while it’s operating and prepared accordingly, and when you return, find its weaknesses. Those are the areas where your business is starving for innovative solutions because it is still dependent on you.
- Favourite tool for innovation – The internet and Audible.
- Keep project / client on track – No news is still news. Always be in communication particularly when there is no need to communicate.
- Differentiate – Look at yourself. Leverage your idiosyncrasies and play into them. The opportunity for you to be different is not to be different for difference sake. You are different because it is consistent with who you inherently are. It is the personality trait that distinguishes our business.
To Be a Leader
Innovation is not about studying your industry. It is about studying industries outside of your own. Go to industries that will never have you there. It is where you will find the greatest innovations. Someone else is doing it right that is not in your industry. Take that. Bring it back to your industry and be the innovator of change.
Mike suggested I interview Malcolm Gladwell, the author of the books The Tipping Point, Blink, Outliers among many others. So Malcolm, keep an eye on your inbox for an invitation from us to the InnovaBuzz podcast, courtesy of Mike Michalowicz.
- Website – Mike Michalowicz
- Twitter – @MikeMichalowicz
- Profit First Professionals
- The Entrepreneurship Elevated Podcast
Get access to free chapters of Mike’s books, videos from his most popular speeches, his articles, and book resources. Get these tools now!
Cool things about Mike
- He launched three multi-million dollar companies before his 35th birthday.
- He was awarded the New Jersey SBA’s Young Entrepreneur of The Year when he was 26.
- His books have been translated into over 10 different languages.