Aug. 21, 2025

PROFIT FIRST - Why Most Shopify Stores Fail. (It's Not Bad SEO, Bad Products, or Even Bad Marketing)

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PROFIT FIRST - Why Most Shopify Stores Fail. (It's Not Bad SEO, Bad Products, or Even Bad Marketing)

If you’ve ever told yourself “I’ll be profitable one day,” this conversation will flip that belief upside down. Most Shopify businesses don’t fail because of bad products — they fail because they run out of money. In this episode, I sit down with bestselling author Mike Michalowicz (Profit First, Clockwork, The Money Habit) to uncover why profitability isn’t an event but a habit, and how Shopify entrepreneurs can build businesses that thrive without burning out.

Most Shopify entrepreneurs don’t fail because of bad products or weak SEO. They fail because of one thing: they run out of money. In fact, 83% of businesses are not profitable, and yet the majority of Shopify stores never stop to address this until it’s too late. In today’s episode, I sit down with bestselling author Mike Michalowicz (Profit First, Clockwork, The Money Habit) to talk about eradicating “entrepreneurial poverty.”

We dive into money habits, why hustle culture is a scam, and the practical systems every Shopify store owner needs to build a sustainable business. Trust me — if you think profit is something you’ll “hit” one day, this episode will change the way you see entrepreneurship forever.

 

Key Take-aways

  • Why most Shopify businesses fail, and why it’s rarely because of the product.

  • The Profit First framework and why profitability isn’t an event, it’s a habit.

  • How founder burnout and poor money habits destroy great stores.

  • Why removing yourself from the business (Clockwork method) is a true measure of success.

  • The importance of constraints in sparking innovation and efficiency.

  • Why small business isn’t just the backbone of the economy — it IS the economy.

Resources & Links Mentioned in the Show

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Mike Michalowicz: [00:00:00] My big term is how I eradicate entrepreneurial

poverty. Yes, never aspired to be an entrepreneur. Didn't even really understand what it was, but became one just because necessity really 'cause of the deepest struggles I've had. I'm trying to redefine what successful

Jay Myers: entrepreneurship is. I would give a higher weight to someone who started a business and failed now is maybe in the job market, versus someone who did their three years of university.

Greatest disservice you can do. Your kid is not let them suffer, but in the third generation, they destroy it.

 : Mike Michalowicz is the entrepreneur behind four multimillion dollar companies and the author of bestselling business books, including Profit First, clockwork, and All in his newest book. The Money Habit is a groundbreaking approach to personal finance.

Mike Michalowicz: The job of a leader is to say, how do we achieve your goals through your job? And when you care for your colleagues' visions, reciprocity is, they'll care for your vision.

Jay Myers: I love that.

I have with me [00:01:00] today Mike Mitz. He is four time founder. He's a bestselling author and he was once humbled by a piggy bank. Can you believe that? Which I know we're gonna get into, and this is a little bit of a different episode than I would say like our typical Shopify 1% episodes, but this is going to be super, super relevant for those of you.

A lot of you probably know Mike Mitz. He's got a number of books. Is it seven, eight, be a 10, but, but who's counting? You know? Okay. I am. Okay. You know, we've worked with hundreds of thousands of Shopify stores and one of the main things that happen when they fail, it's not because they didn't have good products, it's not because they don't have good SEO or good product page optimization and landing pages that convert.

It's often because they run out of cash or they run out of money, or they're founder burnout, founder fallout between partners. Like it's always, it's often something other than the actual. Business itself, like the [00:02:00] mechanics of it. And I think this is super relevant to merchants who are running an online store and our audience of Shopify store owners.

You've been kind of at the forefront of, I would say this is how did you, oh, you've got a way that you, you term it, but like, taking care of the entrepreneur services. Yeah.

Mike Michalowicz: Yeah. So my, my big term is how I like to eradicate entrepreneurial poverty. Yes. That's it.

Jay Myers: Yes.

Mike Michalowicz: Yes. Mike. Gimme

Jay Myers: a quick backstory and we'll get right into it.

Mike Michalowicz: So, yeah. So quick bullet points. I graduated university and couldn't get a job. That's how I became an entrepreneur. I couldn't get a good job. I had him for a while.

Jay Myers: Yeah.

Mike Michalowicz: But never, like you hear stories like rags to riches. I was struggling, kicked outta my house. I grew this business to prove myself or came from an experienced entrepreneurial family and I'm the next generation.

Nothing of that, like, none of that for me, never aspired to be an entrepreneur, didn't really understand what it was, but became one. Just because of necessity and a little bit too much drinking. I, uh, one, I went out [00:03:00] after college, I was working for the computer store and I'm out with a buddy and we're throwing back some cold ones and he is like, you know, you think you're working hard than the bus.

I'm like, damn sure I'm working hard than the bus. He's like, well, you think you're better than the bus. I'm, I'm damn fat. I'm smarter. And he's like, whatcha gonna do about? I'm like, I'm gonna suck. Literally like a drunken stupor. I leave a voicemail for the boss. His name was Anthony. No, Anthony, kick your ass next morning.

I wake up in this like cold sweat from the hangover and my idiocy, it was like the worst drunk dial of all time. And I'm like, I was, I'm embarrassed. And that was not me. And the guy's like, you're, you're fired, like f you. And he goes like, if you try to do this business, I will destroy you. You ask. So that's how I started my business.

Not recommended. And what do they call, what do they

Jay Myers: call those in life force functions.

Mike Michalowicz: Yeah, that's right. I call it liquid courage. That's what I call it. Or, or both. But you're right, it's irrevocable to your point. Like there's no going back. [00:04:00] And I started the business, by the way, he sued me two days later 'cause I didn't know what to do.

I called clients of his saying, Hey, I started a new business. I didn't know that's illegal. And he starts a lawsuit against me and he's right. And we settled immediately. 'cause I didn't know I was doing, but I actually got a couple clients out of that and we agreed we'll leave it that way. Yeah. And fear became the best motivator of my life.

'cause I wake up at five in the morning. I work till five o'clock the next morning. 'cause I, I was in survival mode. I also had a wife and a child at this time. I got started early in life, but at a certain point that fear became confidence. And I grew that business. I fell in love with entrepreneurship in the journey and I ultimately sold it.

And then I started another business and I sold it to this time, a Fortune 500. And I thought I had everything figured out. That's when the piggy bank moment happened. I've been an entrepreneur my entire life today because of the wins, but really 'cause of the deep struggles I've had. I'm trying to redefine what successful entrepreneurship is.

Trying to find those little catalyst moments that actually serve you. What are the few [00:05:00] things you can do that have a big impact? And I write about 'em. So today I'm a business owner. I do invest in businesses, but my core function is I'm an author. Well, how do you define an entrepreneur? So an entrepreneur is someone who has a vision and activates resources to make that vision a reality.

I don't think an entrepreneur is, what we commonly hear is someone that hustles and grinds who does the work themselves. That's called a job. Yeah. And here's the context, Jay, if you look back into your class, did you grow up in Manitoba?

Ai voice: Yeah.

Mike Michalowicz: Okay, so small. I assume you had a small kindergarten class. 20 kids, maybe 25.

Um, yeah, probably. Yeah. Yeah, mine was a little bit bigger, but you know, most classes are about that. 17% of the world population ever attempts at starting a business. So let's just pretend there's 20 kids in your class. 20 times, 17%. That's three and a half kids. Three kids. Three or four kids. But here's the other stat, only 20% of people that start a business will sustain it [00:06:00] successfully, not constantly struggling, living check by check or just go out of business.

20% times, 17% is 3% times 20 kids is roughly one kid, and not even, which means 19 kids from your class, Jay, are looking for good jobs with good companies to do good things and live a good life.

Ai voice: Yeah.

Mike Michalowicz: The job of an entrepreneur is not to do the job. It's not to grind. The job of an entrepreneur is to create jobs.

That's our job. And the reward is profitability, the economy, the revenue coming in. We support the economy. So an entrepreneur is not a job doer by no such imagination. It's someone who organizes other people. And in that process of service to those individuals. Leverages technologies, resources, and tools, and makes the impossible possible.

That's what an entrepreneur is to me.

Jay Myers: Would you say you can be an A business owner, but not an entrepreneur and an entrepreneur, but not a business owner?

Mike Michalowicz: Yeah, that's a great question. Yes. I think you can be a business owner, not an entrepreneur. A [00:07:00] business owner is someone who's executing on process often is in inserting themselves in the business.

You know, you and I could buy a Chick-fil-A franchise. Are you an entrepreneur? I don't think so. Mm-hmm. I think you're a business owner. You're executing

Jay Myers: good. It's a good example.

Mike Michalowicz: Yeah. You're executing a very good process, right? Definitely a business owner, and you're maybe working in the business too, and entrepreneur is someone who manifests something that's never existed before or hasn't existed in that flavor.

I think entrepreneurship is the ultimate expression of ourselves, and I definitely don't think entrepreneurship's for everybody. I think there's other ways to express ourselves, other platforms for it, but for some people it truly is a calling like, I gotta do it and I gotta do it my way, as Frank said.

And, and if that's you, then you're an entrepreneur.

Jay Myers: I think one of the things we look for, like at our company when we're hiring is I like to look for people who I would consider entrepreneurial. Like I would give a higher weight to someone who started a business and failed and now is maybe in the job market [00:08:00] versus someone who did their three years of university.

And they come out and they have degree, but they degree, but they've never attempted anything.

Mike Michalowicz: Yeah.

Jay Myers: Actually I think Harvard, one time they did a study on this. I'm getting the numbers wrong, but what they did was they said, someone who lost $200,000 in a business, let's just, and then someone who spent $200,000 on a college degree in the, in, you know, four years.

Four years. And they took the same two people and then they said, no, there wasn't same two people. It was groups of people. But they said now they're both at the same point. One just. Lost $200, one spent $200, which one would you bet on?

Ai voice: Yeah.

Jay Myers: At that point, yeah. And the statistics were the person who had failed but hadn't gone to college, but they had gone through failure.

They'd experienced that. And so I, I often think about, 'cause I agree with you a hundred percent, I see some people who own a business but think they own their job, you know? Yeah, yeah. For sure. It's not, they're not an entrepreneur.

Mike Michalowicz: There's no question. You learn through the pain. I have a [00:09:00] friend, a good friend who just grew up in a very tough environment and he's been growing up as a kid.

It was in a lot of fights. And I know another guy who went to, uh, karate class and is now like a brown belt. Hmm. And so the question is the brown belt versus my buddy street fighter. Who'd you pick? Who would win? Yeah. Who's gonna win? I picked street fighter guy. Yeah. And it's so funny. One person's trained, but they're trained in a very specific, almost dance, the street fighter guy.

Knows when you're down and you have a broken fist, how to keep on fighting. They've been through that variability of the unexpected. And I think the MBA student goes through a very kinda linear training, but when something out of that alignment presents itself, it gets flustered because there's no experience.

It's that person's lost all that money that now had to navigate with a broken fist effectively and still was able to fight. Mm-hmm. How do you teach that? You can't, right? I mean, you can't, dude, and the funny thing is success jades [00:10:00] you to thinking that you are a genius. So rewinding my first two businesses, I built them not effectively.

I was focused on sales. They weren't profitable. I was playing a cashflow game of collecting money today and not paying bills to as late as possible, thinking that's how you run a business. And I was so lucky that I sold them because at a certain point, the house of cards was gonna come down. Then I'm like, oh my God, I'm a genius.

Like I can start businesses and grow and sell. No one's. I'm Midas. It's only one got my ass handed to me that I realized, oh my God, the volumes of ignorance and arrogance that I have and I need to fix it. You could have smack me in the face a hundred times, say, Mike, you're an idiot, how you're running your business.

And I had all the proof that I was right until I got my ass handed to me. So I think you can't teach it. You gotta feel it and get the burn. Yeah. Hopefully it's not devastating and takes you out of the game though.

Jay Myers: This is me selfishly asking, you know, 'cause I think we have similar young kids. Mine are 12 and eight years are Oh my.

My young kids 32, so no. Oh my [00:11:00] goodness. I thought you had a younger one in there. 'cause my youngest is 24, but I did that for dramatic effect. Yeah. Yeah. Okay. Well I heard someone say one time, the greatest disservice you can do, your kid is not let them suffer. As a parent. As a parent, we want to fix everything we want.

If they're sad, we wanna make them happy. If they're hurt, we want to help them not hurt. If they have a friend that I don't know, picked on them at school, we wanna tell, let's pick, I dunno, solve every problem. And I'm thinking right now as we're talking about this, like we have to may maybe letting them fail.

Feel that hurt is a, is the beginning of that entrepreneurial spirit in a way. Maybe.

Mike Michalowicz: Yeah, man, learn to burn. So my oldest, his name was Tyler, when he was in high school, we moved, and this is part of my arrogance, we, I sold my second business and I become a millionaire in my early thirties. And I'm like, oh, I'm hot potatoes.

So my wife and I decide to move to an affluent town in New Jersey. It's more of like an old money town. It's called [00:12:00] Mountain Lakes. The irony is there's no mountains and no lakes. It's like the, the proper term is like hilly puddles, you know? But, so we move into mountain lakes and, uh, my sons like, Hey dad.

My friends are getting cars like, you know, A BMW or whatever, and we're like, oh, so what are you gonna get? He is like, well, I wanna like, no, no, what, what are you gonna get yourself? And he's like, what? And because, and the reason I did this is not that we couldn't have helped him or done it for him because I had to buy my own car.

So like paybacks to my child. Well, fast forward a few years later, he buys this like beat up Illumina. He, he works at a deli. He makes $2,000 and once he gets to that 2000 point, he buys the most beat up disgusting car on the planet. It stinks, like smells bad. Two years later, I asked him, I said, how do you feel about buying your own car?

And he starts welling up. He's like, dad, I'm so proud of me. Mm-hmm. It was this Snoop dog when he was, he got his star on the thing and he is like, lastly, I wanna thank me. Yeah. Friday has, there, there's imaginary. And that, that became a [00:13:00] moment for my wife and I and that we gotta be very careful about being helicopter or lawnmower parents.

We, they, we need to learn through burn and, and us entrepreneurs. I know people who've been gifted businesses because the prior generation built it, and sometimes they're successful, but more than not, they didn't go through the burn of building. And there is these calamities that happen that never should have.

Jay Myers: Yeah, they say most businesses will, if the kid witnessed their parents struggle to build the business, it will continue. But in the third generation, they destroy it. That's where they fall apart because they never, they didn't see what it take to That's exactly right. To get built. So, yeah. Okay. Can you take, take us back to, we've mentioned the piggy bank moment a couple times, but I'm sure there's a piggyback story in there probably somewhere too.

Tell me about how that changed your trajectory as an entrepreneur and then I want to, what this means for defining wealth and for the modern entrepreneur.

Mike Michalowicz: Yeah, [00:14:00] so the context. I sell my first businesses in computer systems. I sell privately and made a good chunk of money. Then I sell my second business, which was in commuter crime investigation, sell to a Fortune 500.

I become a millionaire and I'm in like 31. I'm like, oh my God. Did you buy like four, four cars or something? Oh dude. Dude. I bought a BMW Land Rover. I buy a Dodge Viper because I always promised myself when I have arrived, it was introduced when I was in college. I'm like, I'm gonna get a Dodge Viper one day.

I had one in

Jay Myers: one of those cars so bad when I was younger too.

Mike Michalowicz: Yeah, I got GTS. Yeah, like I gotta have it super loud. You know? It had like all these different things to get the horsepower up to six 50. And I say to myself, I'm building my car stable. Like all these douche, can I say the word douchie?

Exciting. All these like douche canoe moves and I think I'm a genius. Well, I found out that there is a word. It's in the Webster dictionary when someone's like arrogant and ignorant. What is it? The word is dick. Dude, I [00:15:00] was the biggest dick. I didn't think I was, but I'm like, ah, look at my success. We even went out to Lanai, which is a private island, lanai in Hawaii.

Larry El owns the island now, and we got a house to go on sabbatical, like just to live where I've arrived. But I also said, I gotta maintain this, so I'm gonna become an angel investor. I started investing all these businesses and I said, well, since I'm here, we're gonna be successful. I was horrible at it.

I was horrible at it, and so I call myself the angel of death. I destroyed businesses. I'll never forget. It was February 14th. It's Valentine's Day, 2008. My accountant calls me, this is two years after I had sold my business, and he goes, I've never seen someone lose so quickly. I don't know what's going on, Mike, but you got to declare bankruptcy.

I'm like, and the funny thing is, I had logically saw my bank accounts as wiping out, but emotionally, it's so amazing what the emotions can do. I'm like, I'm just one client away and I'm almost there, and I just couldn't admit it. Until that day. Mm-hmm.

Ai voice: Mm-hmm.

Mike Michalowicz: And I came home to my [00:16:00] fam, I'll never forget it, in Mountain Lakes, I came home to my wife and my three children.

They were preparing dinner for Valentine's Day. And I walk in the door and I was like a ghost. My wife is like, did someone die? Mike? What was going on? I'm like, we're losing the house. And she's like, and there's silence and sphere, and I'm crying. And we sit down and my kids are there, and I'm like, you and I, Jake, you're a provider for your, you got two children, your wife, you're a provider for your family.

You, you have to find that title as part of your identity. And so would I actually, that was my identity, the provider. And it's the one thing I couldn't do, I didn't do, I did the reverse. I stole the money effectively. And I remember, I'm telling my, we lost our house 30 days later and I'm, I decided not to declare bankruptcy by the way.

We, we liquidated to cover our tax bill and start a new. And my daughter, she was nine years old at the time. She said, daddy, can I still go to horseback riding lessons? And to give context, [00:17:00] this was like a group class. It was about $20 and six or seven kids would go for a half hour and learn. And she loved horses.

And I said, I'm so sorry, but for now we have to stop that too. And I'm crying. And she gets up and you see her face just starts bawling and like, I gotta get emotional now your boogers popping out. And she starts running away from me and I'm like, look at what I've become. And I hear her door just slam and I'm sitting there and you know, sometimes seconds feel like hours.

And I'm sitting near in such pain and embarrassment and shame and also understanding I wanted to run away too.

Ai voice: Mm-hmm.

Mike Michalowicz: But it was only a second later that door flings open. There was still a, there was still a dent when we moved outta the house. Ultimately there was a dent in the wall where she swung open behind the doors where she kept her pinky bank.

And she comes running down those steps, so like almost falling. She goes, daddy, daddy. She goes, I can fix this. She goes, I'll pay our bills.

Jay Myers: Wow. And wow,

Mike Michalowicz: I get so emotional about it. Wow. I'm so ashamed. And she offers her piggy bank and she was saving for a horse. [00:18:00] Wow. I remember that was like the rock bottom moment.

I said, what the hell the have I brought about? The other interesting thing is it wasn't like the next morning, I said, I'm gonna fix this her next morning. I'm like, I'm hitting the bottle. Like I went through depression for a couple years, self-diagnosed, never went to a therapist. I do now, and it's only in reflection years later because it be a couple years.

I said, that was the most important, important moment of my life because I finally had to admit I'm not a good entrepreneur. I don't understand what it means to be successful. I think luck is effort or knowledge. When it's luck, I don't know if I understand the principles. I'm gonna devote my life to understanding every element of entrepreneurship, what makes it truly successful.

I'm gonna challenge every notion I have and find what I believe to be the truth. I found that profitability isn't the bottom line. That that's bullshit. Profit has come first. I found that hustle and grind is, is total nonsense, and yet we hear echoed relentlessly. [00:19:00] It's actually removed from the business.

That's the most important catalyst. And when I find something that works for me, I test, I now invest in businesses successfully. Now I deploy those businesses and then if it works for everybody, all the Guinea pigs, if you will, I put in a book and anyone that wants to explore it, I hope it serves them deeply.

That 'cause that's my mission now.

Jay Myers: Wow. Thank you for sharing that story. That's, I, as someone who has kids, I would be moved too. Yeah. Like that's, I went through a similar point in my life and I've shared it on our podcast before as well too, where a, a business I had to shut down, got down to my last man and it, it, I was talking to another entrepreneur earlier today who had gone through bankruptcy as well.

And I think it's good to talk, it's more normal than more people think. Like no one. Yeah. Talks about all the times they failed, but they, they only, they post on social media all the successes and wins and everything else, but they don't see all the other times. And so I think it is, it's good to share.

It's good to share that. And [00:20:00] I think, you know, for those listening, like one, one thing that I've learned over the years, you'll probably attest to this, is that I heard one time this quote that has stuck with me that nothing grows on the top of mountains stuff. Mm-hmm. Only grows in the valleys. That's great.

And when we're in our valleys of life, that's when the best growth happens. And it's often we can skip by numbing that in whatever way we numb it. Yeah. Through, there's not any plethora of ways. But if you don't, and if you take it for what it is, that's growth and it's just beautiful what grew out of that experience.

And so Thank you. I'm sure your daughter's proud of when she looks back on it. She must be. Like, I'm sure she has good, a better memory of it now, right? Like, yeah. But here, here's what's

Mike Michalowicz: interesting. So she now is 27. This goes back, you know, 18 years. And I asked her recently, I said, remember that day when you, it was the most important day of my life.

When you [00:21:00] put that piggy bank down? She goes, no. And I'm like, it's like a balloon. You know when you put a needle and it goes, yeah. I'm like you. I'm like, hold on. I wrote this book about it and you don't remember it. I know. I wrote, I wrote about it. I'm like, you don't remember any of it? She goes, no. And then it hit me.

I was like, oh my gosh, this is just who you are. Like this is how you're wire. She, she's such a good kid. I still call her our kids. She's such a good person. I'm like, oh, you just give everything, you've got to care for someone else. It's like, yeah. So it's interesting the, the memories, how they're different for people because of the importance in that moment.

But when you're really capable at something, when you're really good, in natural at it. It becomes almost unmemorable. The the best entrepreneurs I have are so in the default of being good entrepreneurs, however, that's defined that they don't even realize that, that that's their talent. I think we all had our moments.

The, the beauty of that is in the next day, for a very few of us, [00:22:00] can be inspirational. It's only in reflection. Once you're past it, the pain and the desperation part. Once that wound is healed, the scar remains. But now you can look at that scar and say, okay, what can I, how can I leverage this to my advantage?

Or what has it meant for me? Or has it redefined my character? And I believe the greatest entrepreneurs use something like that as the platform for expression. So I'm on this relentless mission now to eradicate entrepreneurial poverty. Entrepreneurial poverty is this perception of success, this desire of success.

But the reality of struggle, I, I wanna be rich. I have no money. I don't wanna work. I work my ass off. That gap is the calling from poverty. Once you or I have a pain that's so visceral, we've experienced it as opposed to gone to an MBA course, but lived it. Now it becomes part of me and I'm on this path to res to resolve it every day.

I'm like, how do I help people not experience entrepreneurial poverty? But here's the ultimate lesson behind that. The reason I'm on that [00:23:00] path, it's very self selfish. It's very selfish. The true reason of why I do what I do is I need to learn this. What we teach is in fact what we need to learn and what I'm trying to do to serve others is because I really need to resolve this for myself.

Jay Myers: Wow. So true. I, I wanna talk about Profit first. Is, has that been, that's the your best selling? That's,

Mike Michalowicz: yeah, that's my Bell Cow. Yeah.

Jay Myers: It's When I mentioned you were coming on the podcast to a friend of mine, they said, oh, I read Profit First. Oh, I've read Profit First. Yeah, yeah, yeah. But there's a, there's a girl I know quite well.

She's a coach. What? Do what? She's like a business coach or? No, she teaches the system like Profit First. Oh, she's

Mike Michalowicz: a profit First. Professional.

Jay Myers: Yeah, that's what we call 'em. Yeah, so I didn't know the term for it, but she Oh, yeah, yeah, yeah. That book resonated with me a lot because the company that failed for me, actually it was right around the same time as yours.

It was 2008. 2008? Yeah, 2009. What a tough year, man. Yeah. It had nothing to do with the housing collapse or anything else. I [00:24:00] ran an online e-commerce business, and you know, I grew up in a family business actually, that my dad started, and I grew up as a kid working with him. Yeah. But then eventually we sold archery supplies.

Oh, that's cool. Right outside my window here. Oh, do you? Yeah, yeah, yeah. Well, I was the National Archery Champion like four years ago when I like, dude, if you're ever down this

Mike Michalowicz: way.

Jay Myers: Or shooting. Okay. I love it. I love it. Uh, yeah, we had a indoor range, 24 lanes pro shop, and I would teach lessons and do birthday parties and all that.

But in later on I ended up starting to sell the stuff online. And then eventually, you know, my dad's dream was always that I would take over the store, but then I started selling stuff online. So I said, why don't you make this your own business? And so I rented a, a big warehouse and I started stocking up with inventory and selling.

And sales were going well, like I was every month. Our sales were getting more and more and more, but I was like, inventory is expensive and hiring employees and everything. I was never profitable, like, but like sales were growing and I [00:25:00] always kind of. What I told myself was I compared it to a hotdog stand.

And I would say in my head, there's this efficiency or economy of scale where like if you have a hotdog stand and you sell, it costs, whatever, let's say 500 bucks a day for your permit and Yeah, yeah, yeah. So the first hotdog you sell cost you $500. That's right. The, the second 1, 250, the third one, whatever that do the math.

Right. You don't make money until you're like 200 top dog. Yeah. Whatever. And so I was shipping 10 packages a day, then 15 a day, then 20 a day. And I had a lot of overhead because being in Canada, I had to go back and forth across the quarter or whatever. But it was kind of like when I got to 90 packages a day, I was going to be profitable.

That was what I, and I had just had to make it there. And so I maxed out every credit card, every line of credit terms with vendors. 'cause you get like net 30 and net 90 on everything. But eventually I couldn't do it. I, bill started, couldn't pay this one, [00:26:00] and then I had to pay something over here and juggle it and I ended up closing it down.

And there's a quote in your book, you said, I am probably gonna get it wrong, but it was sentenced to the extent of being profitability isn't an an event, it's a habit. Habit. And that really struck me. 'cause actually just this morning I got off a call with another founder. I angel invest in a lot of companies too.

And Nice. This other founder said to me, Hey, we're we just hit profitability? And it's been like four years. They started the company and they hit, and I'm like, I'm trying to balance this with, profitability isn't an event, it's a habit. And it's just ingrained in our language that like, I hit profitability, I have to reach profitability.

So this I think is something that probably 90% of our listeners. If this is language they use, I have to hit profitability, I have to get a certain scale. It's in it. It's, yeah. What do you say to [00:27:00] like all the e-commerce stores right now? They aren't paying themself. They're trying to grow. Yeah. But they're doing it.

I'm gonna give you a platform to talk about this because I think it's so relevant to our listeners. Yeah. And I'm radically

Mike Michalowicz: opinionated, but I'll give context and proof first. So we have over 1.1 million businesses that have deployed profit first. Wow. When I invest in businesses, I specifically invest in at risk businesses, meaning they are treading water and sometimes t trading water for years, they're laden with debt.

The vast majority return to permanent profitability within 30 days. And so the question of course is how can a business that's been in business for four years or 10 years, we run into one business 10 years and they never were profitable and we can make 'em profitable in 30 days. The reason it's behavioral.

The word event, a derivative of that is eventuality. So the belief is that profit is an eventuality that one day I'll get there and there's this belief that I need to grow my way to it. I need to grow my way to profit, [00:28:00] which profit we define as a healthy business. So I think get big enough to be healthy, and that's a perverted belief.

Growth of an organization is an amplification of what you're doing. So what most businesses do, they say, well, I'm selling this item. I need to sell more of it to be profit. Now I'm not selling 10 of them and being profitable, but if I sell 20, maybe I'll be profitable. But the thing is, if you can't be profitable at 10, growing into 20, actually in most cases, will amplify the costs.

So you'll actually be less profitable. Then they fall into a cash flow game. They say, well, if I collect the money sooner and spend it later, they'll be profitable. No, you're playing with cash flow. So you'll see more cash in your bank for a period of time, but those bills are coming and they're gonna wipe you out.

Mm-hmm. So here's what we do. We take the profit first. So we go into a business like that and we can do it with any Shopify business. And we actually have invested in e-commerce business is one that sold specifically Canada Candy. We went into it and we said, we're gonna start, we, we want a 20% bottom line.

And they're [00:29:00] like, well, it'll take me a long time to get there. We're like, no, no, we're gonna start there. So every time money comes in there, there's a transaction. We're gonna take 20%, put in a profit account, hide it away. Now if you took, if the average cart is $30 for them, you don't have $30, you now have, uh, $24 because we took $6 off the table.

How you do $24, what happens is we say that Profit first won't fix your business. Profit first will tell you what needs to be fixed within your business. When you take your profit first and you only have $25, you realize this is what I actually need to operate off of, where my incurring unnecessary expenses and the areas are common, usually underpriced, which means the value propositions off.

Secondly, uh, overstaffed unnecessary storage in businesses that sell inventory. My God, are they having way too much inventory that doesn't move? You know, we look at the turn ratio and it's like, why are you sitting on these ZOS candies that sit for six months because one customer wants it every [00:30:00] six months?

Why we even selling zos? Mm-hmm. Uh, we recategorize the profitable items, it triggers a cascade of consideration. But since most businesses don't take the profit first, they say $30 came in. I have $30. How many I get by $30? And they find a way to get there. The, the greatest irony, Jay, is this, if you can find a way to survive tread water for four years, what we're told is your business is on the verge of collapse.

The reality is it's not. Your business is on the verge of success because you've proven, no matter the circumstances, you keep treading water. So we're gonna change the circumstances to put you in a profit trajectory and. Since you've proven you can tread water, you're now gonna tread water at the appropriate size as we take your profit first.

So any of these businesses, anyone listening in right now, start taking your profit immediately. But my one tip is, if you're doing this alone without a profit first professional, you're just doing solo, just start really low. Just try it worth one or 2% toward profit, just to prove to yourself that you can take a [00:31:00] little skim off the top and store it away.

Then as you get results amplified at three or 4%, or I would definitely suggest, you know, get an expert in to really do it right, just like a trainer at a gym. Do it right, but start slow and let it grow

Jay Myers: if you're doing it alone. So this is completely backwards to the normal way we think about accounting.

Where a hundred percent it's, it's what's left over is the profit. Saying

Ai voice: there, there was a report

Mike Michalowicz: you're saying that came out from the SBA. It's a small business administration in the US they'd studied North America. All three of the major countries here. Well, I guess all three of the countries, period.

There's not a fourth country at least. Well, not yet, I'm sure if something wacky coming, but of our three countries, 83% of businesses are not profitable. 83% of businesses that exist today and between our three countries here is somewhere of like around 50 million businesses. 83% are just getting by. And that's true as a Shopify network too.

If you're an e-commerce business, you hear these success stories, but the majority of people, even though it's an amazing platform, are [00:32:00] dying in struggling. And so people say about profit first is backwards to accounting. No. Accounting is backwards to profitability. Yeah. It's a very logical system. You have sales, you subtract expenses and you see what your profit is.

That makes mathematical sense. But behaviorally, when something comes first, like profit. You actually do it. If I want to exercise, you have to exercise first. If I love my family, I don't say I put my family last. I say I put 'em first, but gets first, gets done. So I, this is my big opinion. I think accounting is backwards, traditional accounting and I think the right way is to take your profit and then see what you have available to operate a healthy business.

Jay Myers: I love, there's an analogy in your book actually just reminded me of it. Losing weight. There's the four principles of Yes. Small plates. The plate size order you eat, I can do, yeah. Vegetables first, remove 10 walk. Explain that. 'cause I thought that was a great framework of thinking about how that applies.

Mike Michalowicz: Yeah. So I'll, I'll do the small plates one first. It is fascinating. So just a quick background is plates in [00:33:00] North America, all three countries, plates have doubled in size over the last 300 years. So 300 years ago in the 17 hundreds, plates were what we consider a coffee saucer was a dining plate or a dessert plate we consider.

But now our plates doubled size. What's so interesting is humans haven't changed. Back then they filled up their plates and their mom said, clean up your plate. And they did. Today we fill up our plates and our moms say, clean up the plates. And we do. But since the plate has double in size, the servings double in size.

And now societally our waistline's doubled in size. This fitness instructor said, the simplest and most effective way to reduce and control your weight is actually to change the plates of your house to those little dining, those dessert plates, and that's your entree plate. 'cause it's portion control.

And I found in our business the exact same thing. We have one plate, which is our checking account. All the deposits go in there, and the more that's served, the more magically we consume. Mm-hmm. So what I teach in profit first is at your bank level, set up little plates, one for profitability. So [00:34:00] that's assured, but one for your tax liabilities, one for your inventory purchases, one for your payroll, and so forth.

And now when money comes in, instead of having one checking account, we divide the money up on a percentage basis, these little plates, and you see what's available for what. It's the effectively the envelope system, but at the bank level.

Jay Myers: Yeah. I love it. 'cause it, one thing that struck me when you talked about that was I often think for someone to innovate or to be innovative, you have to restrict time, restrict resources, restrict money is Parkinson's law.

It is. Exactly. But yeah, the A task will expand to, to the available resource. The available resources. Right. So will our spend essentially Is that, that's you're, it's Parkinson's law.

Mike Michalowicz: Yeah. And the flip side of Parkinson's law is when you constrain resources, it's forced frugality. You have to work with what you got, but you become innovative.

We see it play out all the time. And so in your personal life, I call the toothpaste [00:35:00] situation. When you have a full tube of toothpaste, look how much you use when you have an empty tube of toothpaste. Look how little you use. But how you stretch it for day after day after day until you get a new tube, it happens.

And on grand geopolitics, politic. The US says we're gonna stop shipping to China chips, the high-end chips to do their ai. So what does China do? They find a way to do deep seek or whatever it is, on these, on the micro economy, on cheapo chips, and they kick our butt. So when you constrain, innovation kicks in.

So with business owners, the default is like, I need all my money to get by. That's the bad side of Parkinson's law. When you take your profit first and hide it, you constrain the amount of cash available. The magic that happens is innovation. Our own office. So I, of course, every business I own does this, but my own office, we did this and we set aside very little for technology and we're a very technology oriented business.

So it came about that we needed to get new computers for our staff, 'cause our computers getting old. [00:36:00] And uh, I met our president, Kelsey, who you, you spoke with, and I said, Kelsey, we don't have enough to get computers. She's like, well how about we, we start making some phone calls. So one of the ideas that comes about is how do you get computers for nothing?

We call it a local. Pharma company, a large one called laroche and said, Hey, we're looking at computers. They said, oh, thanks for calling. Every three years, we rotate our computers and sell 'em to our employees for $50 a computer. If they don't take 'em all, then we junk 'em. We'll tell you when we have a junk set and you can take 'em.

They gave us 10 computers. They gave us. They had actually about 50 left over, so we took 20 of'em. These computers, we still run on 'em today. This is 10 years ago. They are so high end. We could have never afforded them, but it was junk. This big company. Yeah, but the funny thing is we never even thought of that.

If we had the cash, we'd say, let's hop on Amazon, or you know, let's hop on some computer site on Shopify and buy 'em up. We didn't. And so when you constrain cash, you start to think out of the box. If you don't constrain cash, you dumbify yourself.

Jay Myers: I wonder what the, I [00:37:00] mean, I don't know if you could calculate this, but the percentage of waste that is caused by not having constraints like it's.

Unbelievable that that number in America would be huge. Like

Mike Michalowicz: unbelievable. Astronomical. Unbelievable. Yeah. There's so many resources that are underutilized and just sit there. You know, I think Herb wants a study of vehicles. I think it was like 96 vehicle. 96% of vehicles right now are sitting static and won't be for at least another 24 hours.

That's crazy. Yes. You know, one car could serve 20 people in the neighborhood, for example. And, and the funny thing is, it may be coming about as autonomous technology comes about that might actually happen. Mm-hmm. So what can we do? What's the resources that we're buying that we don't use? And how's the way to get that resource only for when we need it so we get the same service out of it, but cut our costs by one 10th or one 100th?

We've gotta think that way. It's not natural to think that [00:38:00] way unless you don't have the money. That's why we gotta take it away first.

Jay Myers: Well, for those listening. I highly recommend reading Profit first. There's, we're, we're skimming the surface here, but I wanna touch on a couple things from some other books too.

'cause Sure. It's, I've had a number of people on the show that have written a book and we spend the whole time talking about the book. That's, that's, you've got 10, so we got Yeah. Now you're not, we gotta jump around a little bit. Yeah. Yeah. So you said something at the beginning that I really, really liked.

You said it's the, you know, hustle is not the measure of of success. It's can you remove yourself? Yeah. What, you know, something like that. So, your book Clockwork. Yeah. I wanna dive into, because I think that is very relevant. A lot of entrepreneurs running their, their business are working 12, 14 hour days.

Yeah. It's completely dependent on them. They can't remove themself. Some might say they just have a job with a really bad boss.

Mike Michalowicz: Yeah. Yeah.

Jay Myers: So tell me about the thesis behind Clockwork.

Mike Michalowicz: Yeah. So the thesis, uh, is around the, the, I call the [00:39:00] superhero syndrome, and that when you start a business and it's only you.

It mandates because you don't have any resources that you insert yourself. But then there's this perverted belief that, oh, I'm necessary and I can do this. I call it the, I can do syndrome, I can do the accounting, I can do the order fulfillment. I can, yeah, you can. 'cause you had to, but you suck that it.

And there's other individuals, other resources, other technology that's better at it. There's also this belief that I have a performance level of a certain standard and absent me, my team, my resources are a lower level, therefore it's necessary for me to keep on pulling the organization up. But that's a perverted belief.

What we need to do is actually extract ourselves from the business, find the homeostasis. What's the natural level of performance in my business? And if I the owner, not satisfied to build infrastructure below it, could you imagine Jeff Bezos of Amazon says, you know what? I gotta ship the packages. I don't like how they're wrapping those up, like how absurd that would be.

But there was a time he actually shipped the [00:40:00] packages when he had it out of his garage, but as fast as he could, he said, I will never do it again. We gotta build a list of all the things we do and start delegating those out absolutely fast. But I'll tell you the thing that most people delegate, it's the thing I don't like doing.

I don't like taking customer service calls. I'll delegate that. That's actually the wrong thing to delegate. Delegate the thing you love most because the love becomes the addiction. I love doing the customer interface. I love talking with customers and just chit-chatting it up. Do you know? As you get rid of the things you don't like, you'll do more and more of what you love and you start building this kind of callous around you and that becomes your fiefdom.

And that's a real problem. You have to have the wherewithal to remove the thing you love doing, delegate that out. And now over time, the things that remain for you are the things you like least, which will expedite your extraction from the company. The catalyst kinda like a problem first. I always look for a catalyst.

The catalyst is ultimately the, for vacation. We, [00:41:00] we just invested in a company that's septic installs, and the owner is the whole knowledge base. He's so technically oriented, and we said, Alan, we're getting you outta the business. We're taking you out for four weeks. And he almost had a heart attack hearing that.

Uh, and you don't do the next morning, but if you're gonna have a heart attack, that also means we don't have the systems in place. Well, as we removed him, sure enough, the business sunk down, but now we know the performance of the business and all the problems that he was always rushing around trying to fix.

They started popping up like, oh, we need to systematize that. Oh, we need a resource here, or a person there. Mm-hmm. So I, I invite your listeners right now, go to your calendar, put a four week vacation. Now this is a full physical and digital disconnect. No working remotely. That's not that stuff. You're out and you can schedule it for up to a year out, but no longer than that.

If you feel terrified about doing that, is ex your business screaming at you. We are too dependent on you. Now, the other thing that will happen, I do this for myself. This is my eighth, seventh, or eighth year consecutively of [00:42:00] taking for vacations. The very first time I did it, I left and I was terrified first, like my businesses collapsed.

Secondly, my ego's like, well, what do I do with my life if I'm not working inside my business? And finally, my mind went on vacation. When I came back, we had some problems, but my team navigated best they could and the problems we identified then that was my job to help build systems to fix it. And then I left again and again, the lesson here is the business doesn't, I mean, you don't need a vacation nearly as much as the business needs a vacation from you.

Ai voice: Mm-hmm. Mm-hmm.

Mike Michalowicz: But the final part of this story, Kelsey, our president, after two years of me taking for vacations, she said, Mike, I think we all need to take a for vacation. I'm like, what do you mean? She goes, as you leave, the work gets delegate to other people and they can do it now. But what if. Andrea who leads our marketing, she had to or what if, or Jake or Jeremy, you know, what if they, they aren't available.

They need redundancy too. So she is against my better wishes and she's right, she instituted a fortification for everybody and not like we, we take [00:43:00] all the same time. It's all over the place.

Ai voice: Mm-hmm.

Mike Michalowicz: And that is just redundancy. The, the thing is, your employees, you, yourself, things are gonna happen. You will take a for vacation.

Usually it's unplanned. We plan for it. And it's built redundancy. It's, it's like a fire drill in school. You, you do it enough times when the fire actually happens, you know where to march. And that's what's happening with our company.

Jay Myers: Andrea was telling me, you even go so far as to change passwords on emails to, so people can't, you physically can't check your email while you're away.

Mike Michalowicz: Yeah, exactly. It was funny. Today we have a sponsor, a major sponsor, and they wanted me to do a presentation this morning and they need to do a prep call half hour before. And Andrea leads that. So hop on. Well, Andrea's on vacation. And in comes another person, Amy, and she's like, okay, we're doing this. I'm like, oh, hey Amy.

Haven't seen you in a while. How you doing? Good. She was totally fluid. Well, we've rehearsed this so many times. It wasn't like Andrea left, here's your script. Andrea doesn't kind of cram things together. Amy's always exposed to about [00:44:00] 10% what Andrea's doing. So when Andrea steps aside, Amy can step up, but also Andrea covers Amy and so does Erin.

And it's all kind of like this web effect. So when anyone steps out, we naturally are ready for the next person to step up. Yeah, it's, I would say it's the strongest type of organization is not the traditional pyramid structure. It's this web-like structure.

Jay Myers: Mm-hmm. Agree a hundred percent. 'cause it's, we, you inherently think there's a ceiling of what you can't do and what's below you and it's Yeah, that's

Mike Michalowicz: right.

That's right. None of that. We even stripped away titles. I don't, you know, people like, what's your title? Like author guy thingy, I think. But I don't know. We, the only person, the title is Kelsey because a company needs a president. So we're like, okay, you're president.

Jay Myers: Yeah. Um,

Mike Michalowicz: and, and she's such a extraordinary human that she doesn't feel entitled by that.

She just feels that's a responsibility. But whatever the company needs, she'll fulfill that. So people have roles Yeah. But minus

Jay Myers: the titles. So on a real practical level here, if someone is running a [00:45:00] store by themself Yeah. I imagine you could automate a number of things through like VAs and AI tool, like you.

Could you, I mean, this is something that when you have a few employees, like most of our listeners are in that bucket. Sure. But there are some solopreneurs Yes. The solo. Yeah. So, so what does that look like as you at maybe like the different stages? So yeah, the o the obvious

Mike Michalowicz: and appropriate things are the va, the contractor vendors who have technology.

I'll tell you the unobvious, really powerful, best ally for you in getting work done is actually your own customers. No one thinks about that. It used to be, you know, I grew up in the day where if you wanted to order something, you couldn't go online. The internet didn't exist back in the eighties. So what we would do is you would get a catalog and you would call, and then this operator would say, well, what's the mailing address?

What's the credit card information? And you repeat it like 10 times over. Well then someone said, oh, let's do order taking over the internet. We're gonna have the [00:46:00] customer enter the data. So we don't have an operator do it. We're gonna tell the customer, you now have a job. Enter your address, enter your credit card information.

And sure enough, I'm click clacking away going, oh this is amazing. It's, I can do the work for this and it's accurate. Now send it to me. And I'm paying them to do it. The customer in the right positioning, will Gleefully do the work for you. They can help in areas that you never thought of. So ask, what is the challenge I have?

And before you say, how do I outsource it, how do I find resource saying, how can I have the customer gleefully do this work? On my, on their behalf through my company. And you may surprise yourself.

Jay Myers: That's so true. I'm thinking of multiple ways that this could implement. Like we, we do so many things, like from, from returns to support, to self-help, to tracking.

Like there so much can be automated that you Yeah, that's a fascinating one is I think you don't [00:47:00] have, if, if you can't leave your business, I would argue whether it is a business I agree or whether it's just a, a job and you are your own boss, which is okay, but it isn't a business. Like a business should be able to run if you're sick.

It goes on if it, if it dies, you had a job. Right. I a hundred percent

Mike Michalowicz: agree. One of my favorite experiences I went to, I often go to at McDonald's when I'm traveling and Mr. Health's nut here. Shame on honey, don't you exercise five days a

Jay Myers: week or something. Yeah,

Mike Michalowicz: gimme the largest Coke. So I'll go to McDonald's 'cause it is so convenient.

But I started a tradition for myself now about 10 years ago. When I go to a McDonald's, I'll say, Hey, may I speak to the owner real quick? I can't actually think of a single instance and an overthink times there where the cashier's like, oh yeah, the owner's in the back, right? Let me grab her. Yeah. I had one instance.

This my favorite, I go to cashier. I said, I like to talk to the owner. And it is not like I have a complaint. I just would like to learn [00:48:00] about this business. The cashier goes, I don't think I've ever met the owner. Oh no, no. He moved here about a month ago to pick up the money. To pick up the money. I was like, that's ownership.

You. What owner's doing is creating opportunities for others to live, you know, the job of an entrepreneur. Good lives to do good things to to, to achieve good outcomes. And our responsibility is to enable that as much as possible. At McDonald's. Maybe it's a transitional position, maybe someone's not gonna work there their entire life.

It's unlikely, but maybe they can stage it as a transition for that person. But if that owner is cooking the fries or flipping the hamburgers, they are blocking people for having that life experience to move to where they wanna go. So the owners gotta get the F outta the way. And I'll tell you that McDonald's owners, they've nailed it.

We, we gotta have that mentality as our, in our own business, is that franchise mentality is can we build it that can operate in our absence and then we can do the greatest gift of all, which is do more of it to employ more people and make it an environment that serves people [00:49:00] the greatest way. And if I see a business where the employees are be taken advantage of, they're the ones who are forced to grind it out.

They're the ones who are taking on the burden, then I have a responsibility as an owner to create a competing job, uh, company that does a better job to serve people way better than that. And those people then will flock to me. And that's the job of the owner, to create great environments not to work within one.

Jay Myers: Do you think. There's a lot of people don't leave because it's, they see themself as they need to be there, they need to inspire the team. Or if they leave, I need to be the hardest one working the first one in the last one out the, like, there's this sense of like, I personally have that for me. Like I feel that I do take time off.

I'm not, I'm, I would say I'm somewhat balanced, but I do also feel that I need to be present. I need to be like, that's probably a struggle for a lot of people.

Mike Michalowicz: Yeah. So that's a huge struggle. And they say, I have to demonstrate my expectation through my effort. And I think that's a very perverted [00:50:00] belief because what we're saying to people is, my presence is what I also expect of you.

If I'm here 20 hours a day or whatever it is, you better be here 19 hours a day. Is that what we want? Or is it the output? If we can demonstrate the success of our business without our input. Maybe we can encourage our colleagues to be highly productive, not sacrificing their time. If I say I prioritize my family and I wanna be there for my family, and I also expect the same of you, that changes it, right?

I'll tell you one, one thing that really changed things for me. My computer crime investigation business. I remember coming outta the office, we achieved $5 million. We were actually approaching 7 million at that time on a run for it. And I'm like, oh my gosh. Next year we hit 10 million. Up to that point, I never had a business achieve 10 million in revenue.

So I come out and I call, I had 30 colleagues at the time. I call everyone together and this room we had, and I said, I got a big reveal. And I had Patty, my assistant queue up survivor, whatever. I have the [00:51:00] tire. I the tire. Oh

Jay Myers: yo, my

Mike Michalowicz: yes, your total cheese. Total cheese. If I had a smoke machine, I would've rolled that out too.

And I had this big, uh, like flip chart and I wrote 10 million behind it by, have a piece of paper covered. And I'm like, this, here's the year we achieve. I rip it off $10 million in revenue and. There's this resounding sound of silence. Like people are like, okay. And people kind of slump away. I'm like, what the hell has happened?

Like this is the big vision. We have the goal. And Patty says, Mike, you get the new house, you get the new car. Why should we care? What about our visions? I was like, holy crap. And that's where I started to understand the corporate vision is nonsense. That is the dream of the owner. They don't care about where the corporation's going.

Everyone cares about where they're going. When I get to a certain goal, my corporation, that's my big fat ego being stroked. That's meaningful to me, to, to spit in someone's face that said, you'll never make it. I can prove I did. Mm-hmm. My, I have one colleague who wanted to move internationally. I had another person who's [00:52:00] trying to buy their first home.

I have another person who's coming over a life-threatening disease. That's their vision is to achieve that.

Ai voice: Mm.

Mike Michalowicz: The job of a leader is to say, how do we attend? How do we achieve your goals through your job? I'm not gonna, mm-hmm. I can't grant your wishes, and that's not my mission. But my mission is to know what your vision is and to somehow align your role to help you accomplish that, because that's why you're actually here.

And when you care for your colleagues' visions with your absolute core reciprocity is they'll care for your

Jay Myers: vision. The corporate vision. I love that. I don't, I wanna get to your new book. You're coming out, that's coming out soon. Is it out yet?

Mike Michalowicz: No, no. It comes out in January, but you reorder it right now that your favorite

Jay Myers: retailer, blah, blah, blah.

The money habit, right? The money habit, yeah. Yeah. Okay. I don't know much about it. I, I heard you talk about it on a podcast. Oh, tell me about it.

Mike Michalowicz: Oh yeah. I'll give you a big reveal. It's Brandon, my first book that's not only for entrepreneurs, so, uh, [00:53:00] it's profit first, but it's translated to personal finance.

So it's a personal finance book. But here's how it came about. I got a call from this guy, Tommy, and he's like, he, he has a garage door. I just told garage doors. And he read Profit First and he is like, dude, I am permanently profitable because of you. And he goes, I have one problem left though. And I said, okay.

He goes, my employees are struggling financially. He goes, they asked me to pay 'em more, and I try to, and I can only pay so much, but even when I pay them more, they struggle financially. They need a profit first for their lives. He goes, can you teach first? I said, I said, how many is like a handful of employees?

Like six or seven? It's 900, 900. I'm like, then 900. He goes, yeah, yeah, we're in it. We're national. We have 20 or 30 locations. We have 900 employees and they need to know this. I'm like, okay. So we did a beta with I think 30 people to start and then they expanded it and are teaching everyone and we transform these folks.

What was so interesting is financial independence doesn't come from earning more. It comes from being able to control your [00:54:00] money more. Yes, earning more helps, but only once you've control and there's, there's these distinct stages. First, we need to bring clarity to how you're managing your finances now.

Then we bring control, and once you have control, you have confidence. Once you have confidence, now you can roll forward. We gotta get rid of that financial worry and the vast majority of the human population has financial stress. I myself, I have's called tinnitus, which is ringing in the ears and I, I was born with it.

It's constant, it's this constant ringing in the background and it can be very stressful. And what I realized is, oh my gosh, we all have financial tinnitus. If you're struggling financially, you wake up in the morning and you just feel that pain. It just drains you. I live that. When you're at work and someone's like, Hey, can you go out to lunch?

You're just like, yeah, I can't afford, like, there's always that ringing. If we can put authority and control around that, the ringing might be able to go away. So I created a system that works with our natural habits. You don't have to change the thing about who you are. It's profit first principles plus a few that do it.

The the last thing I discovered as I was [00:55:00] teaching this to, to the garage company. Someone said, you know what, if I just won the lottery, if I just had, you know, a couple million dollars, everything would be fixed. And I'm like, I think you already have a couple million. They're like, what are you talking about?

The average North American three countries makes $50,000 a year on average. And so if you're listening right now and you make more than 50,000, you are actually outperforming folks. But the average person makes 50,000 a year. The average person works for 40 years. 40 years times 50,000 is $2 million.

Most people are gonna make millions of dollars in their lifetime on the aggregate. We have to know how to manage millions is the lesson here, because you're already gonna make millions. So millions isn't gonna serve you. It's knowing how to manage it, and that's what the money habit does.

Jay Myers: You know, we talked earlier about the global percentage of waste of yeah, spend I the global percentage of inefficiency like at work or in life because of that.

Sorry, [00:56:00] what was it with your ear? It is called tinnitus. Tinnitus, yeah. There's that low grade anxiety that, that people devastating business carry around. Yeah. And you know, you're in a meeting, you're talking to, you're on a sales call, but in the back of your head, like, I don't know how am I'm gonna pay rent on Friday.

This is that. Right? I need this. And, and you can't perform your best when you're worried about paying rent on Friday or making, paying your mortgage or if your kids what they're going to. That's, I said a webinar. Massive effect.

Mike Michalowicz: I did a webinar yesterday with entrepreneurs, all different sizes, and it was anonymous on the chat, and I said, what is your biggest financial worry?

Like every day? What, what's that? What's the ringing in your ears? The number one response was mortgage or rent. And these are, you know, entrepreneurs. It's funny, the outside world, most people are not entrepreneurs. Like, wow, you're rich, you're nailing it. No, we are just as worried, if not more so than everyone else about paying them.

And the consequence is how you perform at work. But the consequence is at home. Are you really [00:57:00] present when you can't, or you're concerned if you're not gonna be able to pay for the food on the table or for the rent? Of course not. I've been very lucky to experience both sides, and I really do consider it luck.

I've lived way too long knowing what's, like, not being able or being fearful that I'm not gonna be able to make something like rent and how devastating that is just to my attention. I've been on the flip side where, and I live that now and I hope to, but we'll see forever where I have financial confidence, absolute assurity of what I can do and what I can't do, and I can't do it.

I'm not buying that, that luxury boat or whatever. I'm not buying that jet and I have assurity. I'm not doing that 'cause my financials tell me no, but my financials also say yes to what I can do and living within those confines. Oh my God. Is it freeing? I, I don't worry. I sleep so well. I, I'm so present because I live within my means and this attraction.

There's always like dudes, these freaking broy, dude, I must have said the F word. These freaking broy dudes who [00:58:00] are like, look at my jet and my, the Lambo or the Bentley. This is success. Yo, that's Douchie man. That's not have you gotta show your success. First of all, that's not success in my opinion, but, but secondly, that's a perversion trying to perpetuate out there that you have to make more to get there.

You realize is you're already there. It's just managing with what you have right now is that, is the success.

Jay Myers: Yeah. Well, and there's always, there's always gonna be the guy has Lambo, someone's got a garage of them, or there's always gonna be something else. Totally. You can never,

Mike Michalowicz: and the funny thing is like it's, I know men and women who have that and it's really cool, but there's, I did find a subtle difference.

I play poker with my buddies every so often. The person with the weakest hand is the biggest bluffer. Every time the table like, ah, man, pushing all the chips in, you know, trying to scare a table and like, okay, you got the weakest hand. The guy with, this happens to be all guys in this case, but the guy with the [00:59:00] strongest hand, he's like, I don't know if I should stay in.

You know, I don't know because he knows he's gonna take the table. I find this in life too, is the people that gotta say they're successful there, there's something missing there. There's something really missing. It's the people who don't care about the comparison, who whatever their situation is, and some people financially could be, you know, perceivably off the charts, don't really care about whether think people think about, to me that's success.

Living within comfort of wherever you are, I think is the biggest necessity for all of us.

Jay Myers: That is so true for there's, uh, if I look back on my life, the percentage where. I, I feel similar to you. Like I've been in those times where, how am I paying rent next month? And I've been in those times where I feel very blessed.

Yeah. That it's not even a thought. And being able to be in both, you have perspective and it's, I'm excited for that book to come out. Awesome. Uh, we're getting close on time here and I'm going to be courteous. You've been so gracious with your time. What, what would you [01:00:00] like to leave our listeners who are entrepreneurs?

They're fighting the fight every day. They're, it's, e-commerce is such a competitive space. Yeah. There's a dozen other people selling the exact same products that are a click away on Google or Amazon. Yeah, yeah. Anywhere else, like it's, they're fighting hard. Anything that you can leave them with some wisdom, inspiration, perhaps, perhaps inspiration

Mike Michalowicz: and maybe not in a way you expect this.

There was a phrase that circulates around a lot saying, small business is the backbone of the economy. So I ran the analysis, the data behind it, and concluded small businesses is actually not the backbone of the economy. Small business is the entire economy. It's not. It's the backbone. It's the arms, it's the muscle, it's the brains, it's everything.

In fact, every business I looked at, including these mega businesses, started in the garage. Like Amazon started. Yeah, literally in a garage. So some of 'em get investors, but it's a seedling of an idea. It's a small concept that maybe comes quickly, but the vast majority of them are slow moving. So here it [01:01:00] is.

Holy crap. Do we need your success? Like Manitoba's counting on it, new Jersey's counting on it. The three great nations in North America kind. The whole globe is counting on your success like this for our listener. This is bigger than you. You gotta be successful for you. You gotta be successful for your family.

You gotta be successful for your community. You gotta be successful. For our globe, we are thirsting for it. And yes, it's gonna be very competitive. Yes, someone else is a click away from the same thing. But you can be different. You can find something that no one else can do because it's your story, your packaging.

Your innovation, you can use Parkinson's law to your benefit. The re reduction of resources can amplify intelligence and thought and innovation. So please buck up like I I know it's hard. Pash, we need you so badly. If small business goes away, stick a fork in all of us. We are done. So just put everything you got into it, you've got it and I've got your back.

Like if I can be a resource for anyone, email me, call [01:02:00] me. My team is there. I might not be able to get back to you personally, but some way, somehow we'll try to support you.

Jay Myers: I love it. Where would you like to send them? Where can they go to learn more about you? All those? Yeah.

Mike Michalowicz: My name's Mike Mitz, so of course I have mike mitz.com.

No one can spell it, but my nickname in grade school was Mike Motorbike. And the only reason it was Mike Motorbike is because of Rhyme. And I do have other nicknames and they are so foul and. X-rated. I can't share them. So mike motorbike.com. I bought the domain, I think when I was a kid. So go to mike motorbike.com and at that website I have all my books, chapter downloads, so you don't even have to buy them.

You can go into it. Shoot. I just found out today, you can listen to Profit First on audio for free by going to YouTube and say Profit First audiobook for free. Someone ripped it off and put it up there. I don't care that how you get it as much as that, you get it. Wow. But mike motorbike.com and I do have an email list.

I, I just send out a weekly [01:03:00] tip that's really concise, that hopefully you'll move your business forward. I used to write for the Wall Street Journal. I provide that content. I will everything to give you the resources to give you. To level you up, Mike motorbike.com.

Jay Myers: Wow. Thank you for all you're doing, Mike.

It's Ah, thank you buddy. It's incredible and the fact that you would mention that your book is on YouTube illegally. You care about the message, not the money and the fame. It's helping entrepreneurs, which is incredibly, just so much respect. Thanks, bro. Thanks. Thank you so much. This has been great. I wish you all the best and I'm excited for your book to come out.

And I will make sure to all the listeners that, all those links, well, the main mike motorbike com, Mike motorbike, yeah, Mike is in there, and everything else we talked about. And just thank you so much, Mike. Jay, this has been a joy. [01:04:00] Thanks.

Mike Michalowicz Profile Photo

Mike Michalowicz

Author / CEO / Investor

Mike Michalowicz (my-CAL-o-wits) is the entrepreneur behind four multi-million-dollar companies and the author of bestselling business books including Profit First, Clockwork, The Pumpkin Plan, and All In. His newest book, The Money Habit, is a groundbreaking approach to personal finance. Mike is the television host of an upcoming business makeover show and a former columnist for The Wall Street Journal. Mike now travels the world helping individuals grow thriving businesses and live richer lives.