Far too many people are foregoing paying themselves in the hopes of a payout someday in the future. And Mike Michalowicz, author of Profit First and co-host part deux, tells us why this is a pipe dream for 99% of all businesses and how we should pay ourselves today so we can profit first.
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A lot of people building small businesses and start-ups dream of the day when they’ll be bought out by the Googles and Apples of the world. And they often sacrifice everything til that magical day arrives. The reality is less than 1% of start-ups actualize this fantasy. So what do you do if you’re not in that 1%? How do make sure you’re paid properly and you run a healthy, thriving business?
There is the old-fashioned route of sales minus expenses = profits? Or do go the new path and pay ourselves first before doing anything else with our money?
Mike says to pay ourselves first, then take out expenses and set aside those profits to pay ourselves later! He believes solopreneurs should be only spending about 10-20% on operating expenses (staff, advertising, other overhead). And we should be taking up to 60% for income and for profits!
The finer details of this show include:
- Mnemonics: what is it and how does he use it?
- The Porsche branding lesson and how to be memorable.
- What does he do to compete against his internal Imposter?
- What will make his new book a success in his eyes?
- The audiobook double dip lesson: what it will teach you about your business.
- And so very much more!
Mike’s reasoning for doing it this way is two-fold: 1. You are an employee of your business so you need to be paid as such. 2. You are an owner and a shareholder in your business, therefore you deserve to receive profits.
Mike says we need to focus on making profit a DAILY habit! We should create small successes daily as well as making small sacrifices (instead of not paying ourselves for 10 years while we wait for Google to notice us). And when we do that, we’ll string together a very healthy lifestyle, financially and personally.
And his newest book, Profit First, is all about how to do this.
But why is he someone we should listen to? As we discussed on his first visit to the show, he has successfully built and sold previous businesses. And then he lost it all. As Mike will tell you, he has seen both sides of the coin: the highs of financial highs and the lowest of financial lows.
We chat about the content of his book, of course, but also what it’s like for him to write and market it. This is his third book and he’s got the rhythm down! He says it takes him about 2 years to write a book and then he leans heavily on the influencers in his network to help him promote it, including speaking publicly which is another of his passions.
Mike was a terrific second-time visitor to the show; he’s always so much fun and full of awesome knowledge. Enjoy and pick up a copy of his Profit First book any day after July 7th!
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Resources from this episode:
Mike’s web site
Mike on Twitter
Profit First, his latest book
The Pumpkin Plan, his second book
The Toilet Paper Entrepreneur, his first book
Episode 109, Mike’s first visit to the show
Rahmit Sehti and Tim Ferriss on finances
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