In this episode of TubbTalk, Richard talks to Mike Michalowicz, entrepreneur, international speaker and author of multiple best selling books including: The Toilet Paper Entrepreneur, Pumpkin Plan, Surge, Profit First, Clockwork and the next book on the way Fix This Next.
Starting his career as an IT business owner, Mike has been on a rollercoaster complete with highs and lows and is now on a mission to share his knowledge, failures, research and learnings to other entrepreneurs to eradicate entrepreneur poverty.
An interview with Mike Michalowicz
Who is Mike Michalowicz?
Mike Michalowicz started his first business in computer systems after being unable to get a ‘good’ job after college. With no idea what he was doing, but motivated by fear, he was getting up at 5am and working till 5am the next day, driven by the need to make money.
Over the next 10 years he started and sold two companies, the first being this IT business, the second being a computer forensics business which was then sold to a fortune 500 company after just 2 and a half years.
But, the real interesting part of Mike’s story isn’t his success. It was his subsequent failures. He openly admits he became cocky. He had started two companies and sold two companies, in his own words: “I thought I was God’s gift to entrepreneurship”. Shortly after his successes he started a third company as an angel investor and it was a calamity. He lost everything. His house and possessions. The only thing he didn’t loose was his family. And that was the restart of his life where he came to realise that there’s two ways to be successful as an entrepreneur.
Mike says: “The first is dumb luck. And it happens more than you would think. The second way is by really mastering the fundamental elements of financial management, sales, lead generation, all those components.”
Mike has made it his mission to investigate what really makes a successful entrepreneur and is now a full time author researching entrepreneurship and trying to simplify it for himself and for his fellow entrepreneurs of the world.
A mission to eradicate entrepreneur poverty
Mike is on a mission to eradicate entrepreneur poverty. There is a perception of entrepreneurship that exists. People believe entrepreneurs are multi millionaires, they barely work and just sit at resorts in Santa Barbara all the time drinking mai tais.
But the reality of entrepreneurship is a struggle, a financial struggle, this grinding it out all the time. This can lead to us resenting our business. That gap is what Mike calls entrepreneur poverty and helping to close that gap is his calling.
Getting through the tough business periods
Mike talks about journaling and how his perspective shifted from focusing on appreciating the good moments in an otherwise difficult time to writing down any feelings and emotions he had, including anger. Mike credits writing about his struggles as the biggest factor in helping him through them. He said that when he wrote down his frustrations, it would give him this moment to focus again and it gave him clarity to move forward and not be stuck in that anger and depression.
To find out more about journalling, listen to my interview with Geoff Nicholson where we talked about How Journaling and Trying New Things can Improve Your Business and Your Life
Mike’s says mental health is his number one priority and physical health is his second because once those two are addressed, he believes he can deliver his best to his clients in his work, and to his family.
What are the most common mistakes small business owners make?
Mike shares a concept from a colleague and author Barry Moltz. Mike explains that small businesses in particular go into a mode of either selling or doing. A concept called the double helix trap. Many business owners get stuck in this trap forever.
‘To solve this, business owners need to fragment themselves. They need to look at the work they are doing that’s driving the business forward in regards to delivering on promises, and then fragment that into different segments.’ Mike says.
Mike explains with his own examples, ways in which business owners can get themselves out of this trap through fragmenting work or niching, resulting in being able to charge premium costs too. “By focussing on one niche, you are building a reputation and skillset that serves that niche”
What is the concept of ‘Profit First’
Mike talks about the primary reason for going into business as doing something that brings us joy. The second reason is to make money. Everyone that starts a business wants to make money. But for a lot of entrepreneurs, these reasons are not being fulfilled.
And that was the epiphany behind Profit First. Traditionally profit comes last. You have sales, you subtract your expenses with leftovers, leftover is profit. If we put profits last then the bottom line is that they are insignificant – that’s absurd.
Mike explains: “the basic premise of Profit First is, instead of sales minus expenses equals profit – it’s sales minus profit equals expense. So, every time a business makes a sale they take a predetermined percentage of that money as profit.”
He then says that this is what must be used to operate off of. If the business can’t survive on this then they are incurring too many expenses or the margins aren’t strong enough. Effectively Profit First is the ‘pay yourself first’ system in personal finances applied to business.
Let’s talk about ‘Clockwork’
Mike is on a mission to eradicate entrepreneur poverty as mentioned. The first vantage point of this is financial poverty. But there’s other forms of poverty. There’s emotional poverty. And the most defeating version is time poverty, where business owners become trapped in their business. So, this time poverty is what Clockworks sets out to resolve.
Mike explains that Clockwork looks at the stages of separation and then challenges you as a business owner to take a four week vacation. If an owner can leave their business for four consecutive weeks, physically and digitally disconnected, and the business continues to operate and even grow in their absence, they likely have achieved a business that can grow into perpetuity.
“Business owners need to move from Superhero syndrome where business owners swoop in and fix everything – to a super visionary, someone that has a clear vision for the future of a business and can also serve the dreams of their employees in marching toward that vision”.
So Clockwork is this journey toward the four week vacation.
Fix This Next, Mike’s next book.
Mike says “Most business owners don’t know what their biggest problem is. They get stuck between sales, service, delivery, staff.” That’s where the inspiration for this book ‘Fix this Next’ comes from.
‘Fix this Next’ is about the urgency of fixing the next thing and it will bring clarity to entrepreneurs to know what to do next through the business hierarchy of needs.
It’s not solution focussed. It is the compass to help business owners figure out what needs to be done so they can address that blockage, the impactful issue and move forward. Then they can use other books or a consultant to fix the problem.
Mike explains that most owners address urgent and apparent issues instead of focussing on the impactful. They will spend all day in their inbox as it creates a sense of accomplishment. Impactful challenges often play out over time and there is no immediate gain. So it’s easy to revert to these quick fixes and dopamine releases of quick fixes.
Fix this Next, aims to create a process to remove business owners from concentrating on these apparent and urgent issues and identifying the one thing that will really move them forward in a big way.
Connect with Mike:
Mentioned in this Episode:
Mike’s Best Selling Books
- Book: The Toilet Paper Entrepreneur: The tell-it-like-it-is guide to cleaning up in business, even if you are at the end of your roll.
- Book: Surge: Time the Marketplace, Ride the Wave of Consumer Demand, and Become Your Industry's Big Kahuna
- Book: The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field
- Book: Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine
- Book: Clockwork: Design Your Business to Run Itself
- Book: Fix This Next: Make the Vital Change That Will Level Up Your Business
Mike’s TEDx Talks
- The World’s Best
- ‘Profit First’ is better for entrepreneurs than ‘G.A.A.P’
- Productive companies don’t use productivity hacks
- App: Headspace
- Book: Talking to Strangers: What We Should Know about the People We Don’t Know
- Book: Blink: The Power of Thinking Without Thinking
- Book: What the Dog Saw: And Other Adventures
- Book: Purple Cow: Transform Your Business by Being Remarkable
- Book: Made to Stick: Why some ideas take hold and others come unstuck
- Book: The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It
- Book: Influence: The Psychology of Persuasion (Collins Business Essentials)
- Book: Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing
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