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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. Mike Michalowicz joins me a second time on the show, to address how never to 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.
On today’s episode, Mike shares his own experience with nonprofitable businesses, how he lost a lot of money on the formula that profit is the bottom line, and how he came to writing his book, Profit First.
“The ‘profit last’ line of thinking and approach to business nearly bankrupted me,” he says. “What I got from the experience is that profit needs to be a habit and not an event.”
Mike knew he had to change his approach, but changing his behavior right off the bat seemed difficult to do. He started by putting a percentage of his money into a ‘profit’ bank account and run his business on the remaining cash. This simple shift allowed him to see things from a bigger perspective. He then reverse engineered his business to survive on the remaining cash, no matter what.
Some takeaways from the episode:
- Why profit is not a bottom line for a business.
- Why entrepreneurs need a money system that works with their natural behavior, and not just logically.
- The small plates principle; why it’s essential to use multiple accounts and pre-allocating money for a purpose.
- The importance of the sequence in which we do things, or what is known as the Vegetables First Method.
- How to remove temptations and getting into a financial rhythm.
mikemichalowicz.com: For access to Mike’s Wallstreet journal articles, book excerpts, and entrepreneurial tips.
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Scaling Up is the best-selling book, by Verne Harnish and the team at Gazelles, 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 business coach with a Gazelles. We help leadership teams to get the 4 Decisions around People, Strategy, Execution, and Cash right so that they can Scale Up successfully and beat the odds of business growth success. Our 4 Decisions are all part of the Rockefeller Habits 2.0 (from the original best-selling business book, Mastering the Rockefeller Habits).