Episode 09: A Healthy Business Profits First with Mike Michalowicz

During this episode of the Sam’s On Fire Podcast, host Sam Livingston, business coach and realtor, speaks with Mike Michalowicz, author, entrepreneur, and founder of several extremely successful companies about the Profit First model. Michalowicz shares how you can change your mindset around profit to create amazing results. He will inspire you to manage your backend finances in a whole new way.

 

Episode Highlights: 

Many people are good at selling but have large failure rates when it comes to backend finances.

Mike grew, and exited from, a few businesses but they were never profitable.

A healthy business is a calculated profit machine.

In healthy businesses, profitability is baked into every transaction.

Unfortunately, most people put profit last.

Mike’s formula is sales-profit = expenses.

Confirmation bias tells us this is hard to do, but it’s actually quite simple.

He took the pay yourself first principle and translated it into business.

Our behavior starts to adjust to what we have.

When you reduce the availability of supply, you consume less and become more innovative.

They discuss some habits 1099 workers can have when managing their income and expenses.

Mike explains loss aversion.

Profit First is a behavioral based cash management system, not an accounting system.

Mike estimates that over 200,000 businesses have implemented the Profit First system.

Some businesses take an extreme approach to implementation and the system collapses.

Mike is passionate about eradicating entrepreneurial poverty and he went through it himself.

Driving profitability to your business can drive stability to your life.

They discuss the tax implications of the model.

In Profit First, one of the allocations is your tax account. The business has reserved the money for taxes proactively.

They discuss Mike’s process for writing books.

He works on multiple books at a time, but each book takes around five years.

Instead of envying someone, ask how you can learn from them to step up your own game.

 

3 Key Points:

Profit First provides a surprisingly simple model for building profitability in your business by managing cash in an innovative way.  

Driving profitability to your business can drive stability to your life in general.

Mike writes books about challenges he has faced personally to help eradicate entrepreneurial poverty.

 

Resources Mentioned:

Sam Livingston website, Facebook, Twitter, Instagram, YouTube, LinkedIn

Mike Michalowicz website, Twitter, Facebook, podcast, Instagram, YouTube

Profit First (book)

Clockwork (book)

The Pumpkin Plan (book)

The Toilet Paper Entrepreneur (book)

Fix This Next (book)