This podcast episode is extra special, not just because of the number (we hit the 250 mark!) but because in this one, I’m pleased to bring you my conversation with the author of “Profit First,” then recent hit “Fix This Next” and author of several other business classics…Mike Michalowicz!
Mike and I dive right into:
How too many sales can potentially be a bad thing
How being an imposter in an industry can actually be a good thing
Challenges for accidental entrepreneurs
How not to be a stubborn dragonfly and more
I only had a half hour with Mike so this one went quickly but it’s loaded with some amazing insight from someone who’s worked with thousands of businesses all over the world.
I hope you enjoy this chat as much as I did!
PS – I typically get to know a guest a few minutes before going live but since I had limited time with Mike, I’ve decided to let you in on the entire call to see how I get to know a guest quickly before starting the interview.
In this episode:
00:00 – Introduction
03:12 – Greeting to Mike
05:39 – Some challenges
07:52 – Perspective of success
09:48 – “I suck” syndrome
11:47 – Competition is small
14:47 – Making problems worse
17:07 – Go for the walk
19:52 – DNA across industries
22:59 – Sales stress
24:22 – Right fix, wrong time
26:32 – Cater to the 4%
29:40 – Mike’s latest fixes
Connect with Mike:
Featured links mentioned:
Episode #250 Full Transcription
[00:00:00] Mike: So our radio is starting to add value to them. So realize when we think we’re an imposter, we’re usually comparing ourselves to the successful people that have gone in front of us, but we’re not looking at the people we’re catering to. So just changing that paradigm is important. The second thing is our job, I think to really be successful is not to clone the industry, but to challenge it.
[00:00:20] Mike: So there’s also this amazing strength in being an imposter is that you don’t know the rules of the industry, the unspoken rules, the ones that aren’t documented anywhere, and the ones if you’re willing to bust it wide open. You re redefine the industry. I’m, I’m not surprised that it, the founders of Uber and Lyft were not taxi cab drivers because that industry, if they were in the industry, they knew it so well, we’d keep walking down that path. It’s usually people from the outside that bust industry wide open.
[00:00:50] Josh: Who you heard from right there is Mike Michalowicz. You may know him as the author of one of the biggest books in business, prophet First. He’s also written a slew of other business books. One of my favorites that I recently read. Well, I’m almost done reading at the time of recording this there’s a book called Fix This Next.
[00:01:11] Josh: Uh, he’s also written Clockwork and The Pumpkin Plan, a classic marketing book. Anywho Mike, is the Real Deal. What an honor it was to have him on the podcast. In this interview, we go into quite a few different topics, mainly around some of the topics that he dishes out and fix this next. , but also some profit stuff, including one of the most challenging topics that I’ve heard explored, which is the fact that too many sales can actually be a really bad thing for your business.
[00:01:41] Josh: Um, Mike dives into why that is the case and so much more in this episode. I had an absolute blast getting a chance to talk with Mike, so we’re gonna dive right into it. Now I only a half an hour exactly with Mike. So what I’m gonna do here is I’m actually going to let you hear the entire call. So typically when I get on with somebody, particularly if they’re notable, like Mike, I try to get going in the interview pretty quick.
[00:02:08] Josh: I usually only talk for maybe a, a. Minute or two and then we’ll dive in. Uh, but I do try to build some rapport that way. At least they know a little bit about my audience and the show, just in case they haven’t had a chance to, to dig into the show, which most, you know, high profile on entrepreneurs and authors are busy, so they’re probably not gonna listen to 10 episodes and know my life story.
[00:02:29] Josh: So. It’s also another reason that sometimes I will share the like minute version of my story. So if you ever hear me interview an entrepreneur like Mike Malowitz, or recently with Derek Sivers or Amy Porterfield or somebody like that who is a, a notable entrepreneur, it’s one reason I generally recap my story pretty quickly to give some context as to my journey.
[00:02:50] Josh: And then of course, you as a listener, uh, that way we talk about something that’s gonna help you. So, Uh, I’m just gonna play the entire call so you’ll get a feel for how I start calls with guests and yeah, Mike, man, what an awesome guy. I had an absolute blast. I’m gonna stop talking. Let’s dive in.
[00:03:11] Mike: Hey Josh.
[00:03:12] Josh: Hey Mike. How are you doing, man? Good. How you doing, brother? Good. What an honor. I have been a fan of yours for many years now, so it’s an honor to have you on my podcast, man. Thanks. I’m
[00:03:22] Mike: well, I’m pumped to be with you. Thanks for having.
[00:03:25] Josh: I, I figured we’ll dive right in. I know I only have a, a half an hour with you, so just to give you some context my audience are primarily web designed business owners. Okay. Uh, and like, I’m not even kidding, man. A high percentage. Often talk about profit first. Oh, I love it that that book in particular seems to have really resonated and I can maybe explain why, but, um, yeah, it’s really interesting. A lot of web design business owners, uh, really, really get into the profit first end of things.
[00:03:55] Josh: I thought today it might be kind of interesting to hit on some topics from this one. Y’all love it? Yeah. So maybe just some, uh, some things around a, around that, because. I am an accidental entrepreneur. Okay. And I think the challenges are different for accidental entrepreneurs versus intentional entrepreneurs. Uh, so yeah, if that sounds good, figure, we’ll kind of dive into that kind of thing.
[00:04:16] Mike: Sounds perfect for me. I’m ready, man.
[00:04:18] Josh: Awesome. Let’s roll. Well, like I said, to give you some, just some context on my story, I’m not sure if you got to check out my show too much, but I essentially went from being a, uh, cabinet maker for a tour bus customizing shop and being a drummer and a metal band.
[00:04:32] Josh: And I got late, I got laid off in 2009 and got into the world of graphic design and website. And then eventually people started asking me to build their websites, and then next thing I know, I had a business. And then 12 years later, here we are, and now I’m teaching it. So by all I intents and purposes, I am an accidental entrepreneur.
[00:04:51] Josh: I would love to start out, Mike, with maybe why you feel like, or maybe what the challenges are for accidental entrepreneurs versus intentional entrepreneurs?
[00:05:01] Mike: Yeah. I gotta just tell you one thing about drumming. So I was asked, it was in a group and they’re doing these icebreaker questions. They said, use a word that no one else will know what it means. It’s gotta be a real word. Word. I said, Al. And they’re like, what? I’m like, Al, and you’re like, no such word. I’m like, oh. Oh, drummers. No.
[00:05:18] Josh: Al we know. We know the al. I can still do one even to this day.
[00:05:23] Mike: Oh yeah. I’m sure you can . I can’t. I can barely. So, um, yeah, so, so the journey of the Axon, my own journey of the accidental entrepreneur.
[00:05:32] Josh: Just kinda curious from your perspective. Yeah. What’s, what are some of the challenges that accidental entrepreneurs face? I guess maybe that’s a more concise way to, to frame that question.
[00:05:39] Mike: Yeah. Well, I mean, some of the challenges are is we’re entering a space where we perhaps got thrust into it because it’s a source of income. Many accidental entrepreneurs I know, which I would actually consider myself that too. I never intended to be one. I didn’t have like dreams one day I wanted to get a good corporate job. I couldn’t. We get put into it and we think that we need to do what we know we’re able to do, and that needs to be a vocation.
[00:06:06] Mike: And the the challenge is we’re pursuing the money, but maybe it doesn’t speak to our heartstrings. And that becomes a trap as the months and ultimately the years and perhaps even the decades grind on, we start to resent our business like, oh, I never wanted to do this. Why am I doing this? So I think that’s one challenge and I think we can overcome it even.
[00:06:24] Mike: Staying in the same kind of business. I think there’s techniques we can use to, uh, give it a a form of life that inspires us. I think other challenges are that we trying to follow the industry. So we go into an industry we don’t know what to do, so we’re like, well, what does everyone else do? Let me just do what they do.
[00:06:41] Mike: And I ironically, what brings about ultimately the best growth in businesses is challenging the industry norms, redefining the industry. So I think that’s another challenge we face. And then, you know, we also have the outside skepticism. When I start my business, my parents are like, what are you doing?
[00:06:55] Mike: Both my parents had corporate. Are you crazy? Um, you can’t make any money. Like this is a pipe dream. So there was a lot of nay saying from people that love me and, and care for me, and they were speaking from their heart, but they just couldn’t see what I had to do or thought would be a good idea. So those are some of the challenges I see. Specific to the accidental entrepreneur.
[00:07:15] Josh: A couple big ones there. Oh my gosh. Great stuff already, Mike. If we could take this whole conversation to each three of those areas, but yeah, community and imposter syndrome, two things that you hit on there. Yes, I totally agree. The importance of being in a like-minded community, especially in my field of web design, it is crucial because family members are not gonna understand what we do.
[00:07:35] Josh: So that’s a great reminder that if you are not in an online community, What a disservice. Right. Especially now, uh, and in the online world, I mean, I mean like people are more used to online entrepreneurs, but it still seems like the corporate world is catching up to what we’re doing, um, in the online business world.
[00:07:52] Mike: Yeah. I, I actually have a little hack I use when someone’s a naysayer. It’s like, what are you doing? You, you, when I became an author, I got all that feedback, like, authors don’t make money. Well, what I did is when someone says, you can’t be successful doing something, ask that person say, well, tell me how you did that thing.
[00:08:08] Mike: And most naysayers, well, I never tried it. So their perspective is of little value. But people who’ve done something that I want to do, like someone’s been an author, uh, says, don’t become an author. Oh, I’m gonna listen to every single word and take every single note of what they experience. But we have to also, uh, interview the people who’ve been very successful.
[00:08:27] Mike: I, I was lucky by happenstance I ran into Tim Ferris. There was a TV segment I was gonna be on. I got invited and he did too. And we’re sitting next to each other in the green room. I got a half hour of unabated time and I said to Tim, I said, you know, can you be successful being an author? And he kinda looked around like, like there was some kind of candid camera there.
[00:08:44] Mike: He’s like, Yeah. He goes, you can become a millionaire. Are you kidding? So the perspectives, uh, matter a lot. And when you have a community, an online community, or wherever your community exists, seek out the people who have been very successful in that space, get their stories. It’s very easy to find the people that struggled, and you should learn what mistakes they made, but get that counterpoint too, of what made people successful and maybe you’ll map a path for yourself.
[00:09:08] Josh: Mm, I love that. I love that tip. And speaking of mapping a path, I found that imposter syndrome. Well, nowadays we know it as imposter syndrome. Yeah. When I felt these feelings back in 2009 when I got started, we didn’t call it imposter syndrome, but that feeling like I’m not good enough or I have a background in my case that was a cabinet maker and a drummer.
[00:09:30] Josh: I got into web design and thought I’m, I don’t have a four year degree. How can I possibly explain this? That really set me back a lot of years. I wish somebody would’ve told me to fix that mindset quickly. Do you have any thoughts on fixing the challenges when maybe imposter syndrome and maybe it. I know a big part of it is community, but more specific.
[00:09:48] Mike: Yeah, there’s more. There’s more to it. Yeah. Yeah. I had to, I call it the I Suck syndrome. I don’t know what it was back then either, but I’m like, I suck. I do suck. I suck. But here’s the reality. I think I did suck as compared to my contemporaries who were established, but compared to the people I was serving.
[00:10:04] Mike: That was a big deal. I knew 99.9% more than any of the people I could serve within just a few days of entering my space. So my first business was in computer systems. I didn’t know anything about it. But I started to study and within just a couple days, I knew a few things that no one else that I would serve knew.
[00:10:21] Mike: So I already was starting to add value to them. So realize when we think we’re an imposter, we’re usually comparing ourselves to the successful people that have gone in front of us, but we’re not looking at the people we’re catering to. So just changing that paradigm’s important. The second thing is our job, I think to really be successful is not to clone the industry, but to challenge it.
[00:10:41] Mike: So there’s also this amazing strength in being an imposter is that you don’t know the rules of the industry, the unspoken rules, the ones that aren’t documented anywhere, and the ones if you’re willing to bust it wide open. You re redefined the industry? I’m, I’m not surprised that it, the founders of Uber and Lyft were not taxi cab drivers.
[00:11:01] Mike: you know, because that industry, if they were in the industry, they knew it so well. We’d keep walking down that path. It’s usually people from the outside that bus industry’s wide open.
[00:11:10] Josh: I love that point, Mike. That is such an important tip for everyone who hasn’t a background that is different, which quite honestly, one reason I love web design is generally everyone is from an odd background. It’s like, and, and a lot of musicians, a lot of people from different fields. There’s not too many people I know who went two, a four year degree, and our online business owner, web designers.
[00:11:32] Josh: a friend of mine said it so eloquently that you don’t need to be, in my case, the best web. You just need to be the best web designer in your client’s sphere. And I think that so perfectly nails that point of like, just be really good for your clients cuz you look like the expert.
[00:11:47] Mike: Yeah. W we meaning the collective humanity often has its view that when, when we’re competing, we think the entire world is our competition. But that’s not true. I, I’ll give you a quick story.
[00:11:58] Mike: I, uh, my son, this is, uh, many years back when he was six years old or something. So this is about 15 years ago, 16 years ago, uh, the Olympics were on and Michael Phelps was, I think it was the second or third Olympics. He’s winning all these gold medals and I had subsequently a non proud father moment. But I thought I was gonna teach my son what it is to be the world’s best.
[00:12:19] Mike: And as one particular race, Phelps was swimming, he’s in like in last place. Uh, as they’re, as they’re going along, then he’s in halfway through the pack. At the very end, he leaps outta the water, slaps the wall to win this race by 0.001 seconds or something wins a gold medal. I jump up out of the couch and I’m like, oh my gosh, Jake to my son.
[00:12:37] Mike: That’s the world’s best drive commitment. Practical, paid off and out of babe’s mouths. My six-year-old son looks up at me and goes, daddy, who? He’s not the world’s best. Jimmy Michaldorf is the world’s best. And I remember, and this, I’m gonna swear, I remember saying, I looked at Jake and. Who? Who the jimmy Mior which is, which is not a proud dad. I’m like embarrassed.
[00:12:58] Mike: Yeah. I’m gonna get a little red face now. I’m embarrassed to say that to my six year old son, but I said it and he goes, Jimmy is the kid who can swim across the lake in our town well, that was the realization, the eye opener. Oh my gosh the world is defined differently by every consumer. I was looking at the Olympic platform. He’s looking at his kindergarten class. Our customers, their world is a community, and if you can swim across that lake or make the biggest cannonball splash, you are the winner for that C.
[00:13:27] Mike: So the first thing we need to know is who is the world? Ask your customers. Where do you congregate? Where do you go? You know, where else do you learn? Where are your other vendors? Start learning what their world is and become the best as defined by your uniqueness. You don’t have to be the fastest web designer you could be. You don’t have to be the most intricate you could be.
[00:13:46] Mike: You could be the simplest, you could be the finest, you could be the most graphic. Just be the most of something for that community and you will be the best.
[00:13:55] Josh: Ah, so good, man. Um, before we got going here, I told you me and my audience are massive fans of Profit First. I think a lot of that is because we’re, there’s so many who are accidental entrepreneurs and yeah, terms like profit and sustainability are the the last things that we think about in the beginning.
[00:14:11] Josh: Uh, the other big book of yours that have changed my life recently, Right here. Fix this next. For anyone watching on YouTube, lot of great stuff in here. I know we don’t have too much time to dive into everything, but I would love if you would expand on the printer story, uh, because I think that’s the printer jam jamming story that you mentioned here.
[00:14:29] Josh: Can you expand on that? Cause I thought that so perfectly summed up what I see a lot of my students do where they’re just like stuck on one problem and they’re just trying to do it their way. Can you expand on that a little bit? Yeah.
[00:14:39] Mike: So, you know, when we, when we find that there’s a problem, I think rarely do we take pause to say what could be the causes.
[00:14:47] Mike: We just go after the common, um, suspects. Uh, or we go down the path we always follow. So I had an experience with this printer and I put it in there. Uh, all of a sudden the printer wasn’t printing. I’m like, oh my God, I have this big report to get done. What’s going on? So clearly it’s the tone where I pull it out, I shake it where you’re supposed to do the tone, jam it back in.
[00:15:05] Mike: It doesn’t. I’m like, what the hell? Oh, maybe it’s the, the holder mechanism, which is called a drum for the thing. I pull it out, but I’m getting frustrated cuz time’s working against me. I crunch it in, I flip it back, pull paper out if it’s jammed or not. All this stuff, I actually damaged the printer in the process.
[00:15:22] Mike: I made the problem worse. It ends up, there was a paper clip that was simply jamming the back. Just one little pluck of the paperclip and the whole thing was humming. The point is I tried to fix everything and nothing got fixed. And in some cases, and in that case too, I made the circumstances worse. So what I, what I try to teach.
[00:15:40] Mike: Myself and businesses is when a problem presents itself. We first want to, as best we can, identify the root cause, not by random testing, but just going, what’s the likely cause? Ironically, if I just looked at the panel, it said jam on it. So it wasn’t the toner. It wasn’t the drum. I could have just opened these different ports and at least I’ve been closer to finding the solution.
[00:16:02] Mike: In our business when something’s not working the way we want, let’s first take, pause, identify what the possible causes. Then often start off with the easiest, most likely fix. And if that doesn’t fix it, return it carefully to its prior state and go after the next easy, most likely fix. And within two or three iterations, in many cases, you’re gonna solve that problem, move forward.
[00:16:22] Mike: Yeah,
[00:16:23] Josh: I love that. I just love that story because I’ve heard different, um, Stories that are similar. I think one of my favorite directors is James Cameron, and he was, I think he was writing the first avatar when he talked about being stuck on a part of a script and he just stayed in his office and was just banging his head against the wall, literally trying to get this figured out.
[00:16:42] Josh: And then he said he looked up and saw a dragonfly that was like hitting a part of a window and he just would not stop. He was just trying to get through. And the dragonfly. A foot away. There was an opening, so, but the dragonfly was just not smart enough or aware enough to look at the opening right over there.
[00:16:57] Josh: So it just reminded me of something similar to where I feel like often the solution is right around us. We just need to take a step back and sometimes look with a different lens or direction.
[00:17:07] Mike: Yeah, little trick. My wife told me when I was getting frustrated at work or something, she’s like, go for the walk. And I’m like, what do you mean? She goes, just go for the walk. And there was a block I used to work outta the house around our house. It was a five minute walk. And it was unbelievable in just that physical change, um, would change my thinking sometimes just get me off the topic F for a little bit and come back with a fresh set of eyes and that could be the game changer.
[00:17:31] Josh: I’m so glad you mentioned that, Mike, because that is a key. Especially for my students, everyone listening right now. Yeah. For web designers like I, and I think this is tricky for those of us who have maybe a blue collar background, like myself, I’m used to get, I’m used to getting my, uh, work boots on and I feel like working is me behind a computer, and it took me years to figure out that some of the biggest, uh, needle movements in my business were when I was on a walk.
[00:17:56] Josh: Or I was in the shower and I thought of something and it hit me, or I’m shopping with my wife and I’m bored in Sephora, and then I’m like, oh my gosh, this is it. You know, like I, some of those moments happened away from the keyboard. Yeah. So I just wanted to, to back that point up with that idea. Yeah.
[00:18:12] Mike: Well, I got a counter story that I gotta share. Uh, I used to be a coder myself, not in web design, but coding in back in the day, and it was called Fox based. It was like de based. And I was telling my son the story. Once I got so frustrated, I developed this program and had this array in it, and I had to move this little square around this array to pick it.
[00:18:29] Mike: And like the problem I had was, it was always starting at spot one, one. I mean, it was always starting, uh, in row two, column two, and I needed to start in one, one. It was so frustrating. So I finally decepted array with a hack. I put in, start in its current spot, minus one, common minus one, and we push it back there.
[00:18:47] Mike: And then my son looked at me, um, and he goes, oh, it is because ever makes that mistake and eraser. It’s not at one, one starts at zero zero. If you simply said to at zero zero it would work. I’m like, oh my God, you figured out problem I had 35 years ago you, I wish I, I wish I asked someone. I was trying to force my well way through it. If I just asked someone else, they may have had the answer for me, like,
[00:19:10] Josh: Don’t be a dragonfly is what I need.
[00:19:12] Mike: Yeah. Thirty five years.
[00:19:16] Josh: Uh. It’s so good. I, I found myself saying this quote that you talk about and fix this next, which is, yeah, but. My business, in the case of web design is custom websites. So I couldn’t, in my case, like package my services. Yeah. I caused myself so many problems by saying, yeah, but my business is custom or different. Yeah. Can you share some highlights of that point of what, and I agree with you 100% in the book, you talk about how pretty much all of business problems, whether it’s a $2 million business or a $200,000 business, are so similar. Can you share some, uh, some,
[00:19:52] Mike: yeah. And across most industries. So what I did is I, I studied hundreds of businesses, but in all different industries to look for the common, what I call DNA n the common makeup, just to give a, a parallel for humanity. If you and I and, and everyone listening to the show say, we all lined, From the outside, you could distinguish this very quickly based upon our height or weight, our gender, our skin color, all these different things.
[00:20:17] Mike: But if you peel back the skin, our d n A is like 99.8%. I think the same in all humanity. So basically we’re all identical, but we judge from the outside. And there’s a reason why if any of us’ got rushed to the hospital, the doctor doesn’t sit there and say, oh my gosh, where is your heart? Is it in your foot?
[00:20:34] Mike: Like, I don’t know it. The makeup is basically the same, so it’s very easy to diagnose and know what to do. Well, in business it’s the same thing. I, I looked at, uh, web designers and, and, um, the backend stuff like S Q L, uh, and database, uh, backend developers, uh, to pizza shops. There is a common d n a and uh, there, what I put in the book is there’s 25 questions we need to consider.
[00:21:01] Mike: And, uh, I broke it down into this thing called the business harkey of needs. Every business fundamentally needs a flow of cash generated by sales. So sales creates cash, and uh, as long as you’ve adequate cash, then do we have to worry about the next problems? If you don’t have enough sales going on, mean there’s no cash coming in.
[00:21:16] Mike: Let’s just focus on that. The next level up is profitability. Profitability is the stability of a business. And what’s interesting is they’re linked, meaning you need sales to have profit, but you don’t need, uh, endless sales because profit needs to be extracted from some sales. Yet many business owners say, I don’t have any profit.
[00:21:35] Mike: I just need to keep selling more. No, you’re selling adequately. We need a profit system. So the these things linked together and at every level we simply need an adequate source of that. I need adequate sales for adequate profit, and if I have adequate profit, I can focus on the efficiencies of my business.
[00:21:51] Mike: Profit affords me time. I’m not panicked in the survival mode to generate more money, and uh, I can then start bringing more efficiencies, build systems higher. Then there’s what’s called impact. It’s how we serve clients. The highest level in the hierarchy is legacy. Legacy is the permanence of a business.
[00:22:07] Mike: Will this stick around beyond us? And I believe every business, if it’s doing something of nobility, if it’s truly of service to clients, we should really focus on the longevity of the business beyond us because it is a contribution to our society. And if the business is built that way. You will have the right and the opportunity to sell it one day cuz someone will see value in it and it could be a great source of future income beyond just the business itself.
[00:22:30] Josh: Yeah, and you kind of highlighted some of the biggest points that I took from Profit First. Shout out to, to that book again, like I said, it’s massively popular in in my audience. I think for that reason there’s so much focus on sales and then people realize, well, if I keep selling. Now there’s a whole slew of problems when you actually do get a flood of clients coming through the door.
[00:22:50] Mike: Here’s the funny thing about sales. Sales translates to organizational stress, meaning the more you sell, the more you’re responsible to deliver on what you sold, which puts stress in your organization. Now we need some, some stress is good. Like that’s how you build strength and muscle. Like you, you put resistance against it, but too much rips your muscles.
[00:23:10] Mike: It, it causes damage. Too much stress can literally kill you. Same thing with the business. If we simply keep selling, we’re putting more and more stress on the organization. If we don’t have an equilibrium of profitability, now the business is hand to mouth at at a high level, and if we have one bad week or two bad weeks of sales, the whole business can come crumbling down. So we have to see that more of any one thing isn’t necessarily good. They all have to work in equilibrium.
[00:23:36] Josh: You’ve talked to about the right fix at the wrong time. I find that idea fascinating. Uh, and I’ve heard it, I’ve heard some similar topics explored in the world of like athletes and stuff where, what works for, so I’m an n Hhl.
[00:23:51] Josh: I’m an N Hhl fan. I’m a hockey fan, so Oh, awesome. So what works for like Connor McDavid, uh, at where he is in his career as far as training and stuff may not work for an 18 year old who’s just on the scene, stuff like that. Terrible amount you Yeah. But the point is the right fix at the wrong time. What?
[00:24:07] Josh: Um, I don’t have an exact question on this, but your thoughts on that, especially for like web design business owners who may maybe in particular in this case are in that situation where there is a lot of sales and then again they think they just need to sell more. Um, yeah. Can you talk about right fix, wrong time?
[00:24:22] Mike: Of course. Of course. So if we look at that business hierarchy needs, I went through this five stages. The foundational need is sales and profit and so forth. I see some businesses focusing on efficiency. We gotta move more efficiently, uh, when they don’t have any sales. And what happens is now we’re negating the opportunity to create revenue for our company by trying to bring efficiency, which is a great fix cuz things will get done faster, but there’s nothing to do.
[00:24:44] Mike: And then the business collapses. I actually just had a, literally just had a call about two hours ago with someone I’m helping who said, uh, My business is struggling to, uh, thrive to the point where we’re in survival mode. And she said, so, uh, we’re thinking about, uh, improving our products. And I said, well, you’re, if you’re in survival mode, all we have to worry about is bringing in sales immediately.
[00:25:08] Mike: So even though niche specialization and focus and bringing efficiency, it’s very helpful for many businesses when you don’t have enough money to put food in the table. We’ve got sell, baby sell. So we’re going to actually diversify. We’re gonna go out to existing customers and we’re gonna introduce new products and services because we are, in this case, in a, not a panic, but pretty close to it, to making money.
[00:25:28] Mike: So we’d have to understand what stage we’re in. But the ironic thing is some businesses getting this panic to make money, not because they don’t, they need more money, but because they don’t have a profit system in place or whatever. So they’re not retaining the money. So money’s just flowing through and going back.
[00:25:44] Mike: So sometimes the same kind of problem presents itself not enough money, but the symptoms when we look in it, one is there’s actually no an inbound cash, and the other one, the symptom is there’s lots of inbound cash, but it’s going out so quickly we’re not capturing any of it, and then we focus on the right fix at the right time.
[00:26:01] Josh: Gotcha. I’m curious from your perspective, Mike, you work and talk to so many entrepreneurs and business owners have, what have you seen that’s common after the wake of Covid and stuff? Like, I know there’s just so much fear without looming recession and everything and Yeah, I’ve, I’ve seen in my industry that there’s.
[00:26:19] Josh: Back off on taking care of current clients in such a push for new clients, whereas I’ve always been of the mindset of take care of the people who you have. Right in your sphere, your current client base. Oh yeah. Uh, do you agree with me? Is there something I’m missing? What, what?
[00:26:32] Mike: No. Well guard your core business. So I believe, um, and I, I have a whole. Concept around this. I call it the preto overlap. I took the Preto principle a 20 rule and, and took, uh, clients and, and what we sell our offerings and matched them up and found that in the 80 20 rule, 20% of our clients are representing 80% of our revenue, but also 20% of our products, uh, or services yield 8% of the profitability.
[00:26:57] Mike: So then the question is, who are the best clients that 20% who are buying the best stuff, that 20%, well, 20% times 20% is 4%. Four, maybe 5% of your client, um, slash product mix is the heart of your organization. And we need to do everything to protect them and cater to them. So I agree with you a hundred percent, know who those key clients are, who are keeping your business most profitable, and always prioritize them.
[00:27:21] Mike: But there’s one component I want to add that many people ignore, particularly in a recess, you also have that lower 4%. You have that, that 20% of your bottom clients, these are the ones who never pay you on time. They’re always complaining. Um, they threaten you. If you don’t do this, I’m gonna sue you. I’m gonna give you a negative review.
[00:27:39] Mike: And they’re buying stuff from us that we’re not making money on. Now, the ironic thing is we lose sleep over them. We’re worried about them, and they’re, they’re consuming everything, but we’re not making any money. Well, that 20% of low clients times 20% of. Nonprofit offerings is 4%. There’s a low four, maybe 5% of clients that we shouldn’t be doing business with.
[00:27:58] Mike: I call them poison. Now, I’m not saying they’re bad people, I’m just saying they’re a really bad fit for our company. Even in a recession, or maybe particularly in recession, we need to eliminate that low 5% of customers. Fire them, get rid of them. Let your competition say, oh my God, we need to do new business.
[00:28:14] Mike: Let them swallow up poison. We need to get your business real healthy, so focus on your best. Get rid of the bottom feeders, if you will. I’m not trying to be negative here. It sounds negative. Get rid of, yeah. Get rid of those bottom clients and that will avail time. That emotional energy and new time is freed up to focus on more, acquiring more great clients. That’s what I think we should do.
[00:28:34] Josh: Oh, so much good stuff. Mike, I know we’re getting close on our time, so I got a couple things I wanna wrap up with. Speaking of one of the best things, one of the best contact pages I’ve ever seen is your contact page, I wanna personally, while I’m here with you, I wanna give you and your team a shoutout for your website because it is going to me, my gold standard for showing.
[00:28:56] Josh: My students how to show up as you on your, like your web. I was literally, I mean I’ve been on your website before, but I was literally like, laugh, not laughing. Like laughing at you, but laughing with you. Like smiling. It’s on your website. Hovering over your books and see like what mic is gonna pop up next when I scroll over.
[00:29:11] Josh: Yeah, yeah. Yeah. Yeah. Uh, and then your contact page in, in particular, everyone, I recommend going to mike baitz.com/contact. Just scroll over, uh, the icons for Mike, because it’ll be a good time, I promise. Um, so hats off to you and your team. Thank you, Mike for that. That’s, that’s really as a, as a fellow web designer, I say, Touche to the team.
[00:29:32] Josh: My last question for you, what is a recent fix that you’ve done and like, what’s one of the latest fixes that you’ve had to do in your business?
[00:29:40] Mike: Uh, we’re, we’re actually back on the sales level. So as we’re moving through the business hardship of needs, uh, there is a great opportunity for us to market, um, into this recession and interesting. Um, it’s profit first. Focusing more on that. So that book, uh, is now approaching its 10 year anniversary, the original edition of it. Is it really? Wow. Okay. Yeah. The new, the new book came out and I don’t know, it may be five years ago, but the original edition goes back to,
[00:30:05] Josh: which one do I have here?
[00:30:06] Mike: That’s the original. That’s the original.
[00:30:07] Josh: It’s the original. Oh, okay.
[00:30:09] Mike: That’s the rock and roll.
[00:30:10] Josh: That the big, I got this when I went through some business training in 2017. Okay. That’s what I got a hold of this one. So I don’t know.
[00:30:20] Mike: So I think that was published, I wanna say in, in, uh, 13 or 14. Okay. So, um, So, so what I was getting to is, uh, no, now I lost my train of thought.
[00:30:31] Josh: Sorry. What? Your
[00:30:32] Mike: latest ma your, your latest hits latest move. That’s right. So Prophet First, I consider it the Hotel California for the Eagles like that right now. That’s my hit song and we’ve been promoting other stuff and we’re realizing, oh my gosh, this is the time to double down on Prophet first. So we’re realigning to do a lot of aggressive market around profit.
[00:30:49] Mike: Because, you know, once, once the Hotel California is performed by the Eagles, people listen to all the B side songs. For me, as an author, I, I’m gonna promote that more aggressively now into 2023, and hopefully that’ll uplift the entire brand a little bit further than trying to just promote every new book. Go back to the classic.
[00:31:08] Josh: Interesting. Yeah. Cause I feel like fix this next. You’ve talked about it in there where you had said, I, I believe at one point you said like, you almost wish you would’ve wrote that first. Am I, am I remembering that right?
[00:31:17] Mike: That’s right. Cause that one’s the hub book. Um, when people say, Mike, what books should I read of yours? I’m like, well, what problem do you have? And I don’t know. I’m like, well, I can’t say read private first if you don’t have a private problem. So tell people, refix this next, let’s identify what you need. If you have a sales issue, I may not have the book for it, but you need to seek those solutions. If you have a different issue, maybe I do have a book for it. So I consider that my hub book, the starting point to find out what you need to
[00:31:41] Josh: fix. Ah, that’s beautiful. Well, we’re up on our time here, so everyone listening and watching, I recommend starting with Fix This Next and then definitely Profit first. Mike, thank you so much for your time, man. I’ve really enjoyed this chatting with you.
[00:31:52] Mike: It’s been a pleasure. Thanks, Josh.
[00:31:55] Josh: So as we close this one out, I want to thank Mike for coming onto the show Again, find firstname.lastname@example.org. We were just joking about it, but I highly recommend checking out his contact page, if anything, just for a nice smile, because his team has really done a good job with keeping his sight fun and based off his personality.
[00:32:14] Josh: I hope you enjoyed some of the topics we covered in this one. If you have, feel free to reach out to him. Let him know you heard him on the podcast again. Um, my favorite book of his is Profit First and Fix This Next. The next book I plan to personally get into is called The Pumpkin Plan of his. Um, I haven’t, I can’t believe I haven’t read that.
[00:32:33] Josh: I know it’s a marketing classic, so I’m excited about that one. Either way, check them. And again, I wanna thank Mike for being on the show. Thank you for listening. And again, make sure you subscribe and get ready for the next one cause we’ve got some awesome interviews coming up. If you did enjoy this episode, I would ask you that you’d please consider sharing it.
[00:32:49] Josh: If you know a friend who might benefit from this or another web design business owner or somebody you know as a colleague, send this episode over to ’em. Let ’em know to check it out, especially since the quicker episode. I only had a limited time with Mike. What an awesome guy. I can’t wait to have him on again one day in the future.
[00:33:04] Josh: Thank you again for being here. See you on the next episode.
Awesome interview and some great inspiration on his website! https://mikemichalowicz.com/
I remember the “Profit First” book mentioned in the Web Design Business Course. I put it on my reading list earlier but hearing directly from the author puts it on the top. 🙂
Let me know when you get around to reading it, John! It’s a game-changer. I’m about due for a re-read. Glad you enjoyed the chat 💪