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Being Profit First with Mike Michalowicz

Mission Driven Business

Release Date: 05/11/2021

Guide for Your Midyear Business Review show art Guide for Your Midyear Business Review

Mission Driven Business

It’s hard to believe that 2021 is halfway over. Things have changed so much since the beginning of the year, and it’s the perfect time to take a step back and reflect. In this special episode, Brian provides insight and advice for conducting a midyear review for your business. You’ll learn steps to gain awareness, evaluate your business purpose, and take corrective action while there’s still time to change things.   Episode Highlights: How to Conduct A MidYear Business Review 1. Have a personal check-in Paradoxically, the first action item is to take a break from the action, as...

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In this very special episode, host Brian Thompson opens up like never before. He shares why he started his own mission-driven business, and some of his highs and lows he encountered in the process. You’ll also learn the difference between strategy and tactics, and why entrepreneurship isn’t necessarily more risky than being a W-2 employee. If you’ve wanted to know more about Brian and his own story, this episode, hosted by Latarsha Stewart, is for you.

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Being Profit First with Mike Michalowicz show art Being Profit First with Mike Michalowicz

Mission Driven Business

Brian chats with Mike Michalowicz, the mastermind behind Profit First Professionals and author of books for entrepreneurs and small business owners. Mike shares his experience growing several multi-million dollar companies only to lose almost everything. He then details how hitting rock bottom became the foundation upon which he built the Profit First method, which has yielded him 14 years of profitable quarters and is now used by more than 500,000 small businesses.

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Brian chats with Ron Saharyan, co-founder and managing partner of Profit First Professionals, an exclusive community of accounts, bookkeepers, and business coaches who help their clients build profitable businesses. Ron discusses the merits of using an envelope-based budget system for business. He also preaches the strengths of running a profitable business and breaking the entrepreneurial doctrine of sacrifice in the process.

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More Episodes

Brian chats with Mike Michalowicz, the mastermind behind Profit First Professionals and author of books for entrepreneurs and small business owners. Mike shares his experience growing several multi-million dollar companies only to lose almost everything. He then details how hitting rock bottom became the foundation upon which he built the Profit First method, which has yielded him 14 years of profitable quarters and is now used by more than 500,000 small businesses.

 

Episode Highlights

Make profit a priority.

The Profit First method developed by Mike rewrites the classic accounting formula from Sales - Expenses = Profit to Sales - Profit = Expenses. Why? Because when something is a priority, it doesn’t come last, Mike noted.

“It’s human nature that when something comes first, it’s the priority. When something comes last, it’s the mañana syndrome,” he said. “That’s when I said, ‘I think the formula is flipped.’”

Profitability brings stability.

One of the problems with the original profitability formula is that increasing sales isn’t always the driver of sustainable growth, Mike said. More sales can translate to more stress, more dysfunction, and less organization.

“It starts actually causing a business to crumble because it doesn’t have runway,” Mike said.

Profit, on the other hand, can bring stability to an organization by buying a small business owner time. When small businesses have one to two months in cash reserves, they don’t have to take on stressful panic sales.

“When a business takes its profit first, they actually grow faster, profit-wise, than their contemporaries,” Mike said. “They are much more calculated in their growth.”

Don’t change yourself. Channel yourself.

Since flipping the formula, Mike has achieved 48 profitable quarters in a row. That’s because the revised formula is designed to manage human behavior. Or as Mike said in the episode, “We can’t change ourselves. We channel ourselves.”

Mike learned this lesson first for exercise. He put his gym shoes on top of the toilet seat as an intervention, so he would have to pick them up first thing in the morning. For business owners, the Profit First method sets up a similar intervention in the owner’s bank account.

“By pre-allocating business to these different accounts, or envelopes, now you know what money is intended for what purpose, and you behave within the confines of what’s available,” Mike said.

 

Resources + Links

 

About Brian and the Mission Driven Business Podcast 

Brian Thompson, JD/CFP, is a tax attorney and certified financial planner who specializes in providing comprehensive financial planning to LGBTQ+ entrepreneurs who run mission-driven businesses. The Mission Driven Business podcast was born out of his passion for helping social entrepreneurs create businesses with purpose and profit.

 

On the podcast, Brian talks with diverse entrepreneurs and the people who support them. Listeners hear stories of experiences, strength, and hope and get practical advice to help them build businesses that might just change the world, too.