RR 421: Mike Michalowicz: Making Profitability a Habit – Inside his book ‘Profit First’
Mike Michalowicz is the entrepreneur behind three multimillion-dollar companies and is the author of Profit First, The Pumpkin Plan and what BusinessWeek deemed the entrepreneur’s cult classic, The Toilet Paper Entrepreneur. Mike is a former small business columnist for The Wall Street Journal and the former business makeover specialist on MSNBC. Today Mike travels the world as an entrepreneurial advocate speaking to groups just like aftermarket professionals. He is globally recognized as the guy who “challenges outdated business beliefs” and teaches us what to do about it. https://www.amazon.com/gp/product/073521414X/ref=as_li_ss_il?ie=UTF8&linkCode=li3&tag=remarkableres-20&linkId=14aa6c38ef90e54a7035822caf1ff868&language=en_US () Carm Note: I loved this book and believe it should be required reading for all aftermarket professionals if you own a shop or not. The principles in this book will help set you free from the ‘I’ve run out of cash and I can’t pay myself’ syndrome. Mike’s father-in-law is a shop owner so he does understand the challenges of our profession. I’ve heard from your industry peers who have implemented ‘Profit First’ and they are well on their way of making the kind of profits indicative of the investment they make in their business. Make Profit First a way of doing business. You deserve to be incredibly successful but you must implement this system or something similar to control your spending. You’ll soon find where your weak area is, yet still profit from your hard work. Key Talking Points: Actions of owners trigger profitability or lack thereof Cash flow management system The money will flow into the shop Then allocated to the profitability of the company Pay owner/operator, taxes, parts, operations of a business Now can see what money is available for what purpose before spend it Revenue Profitability trap- if profitability down then will revert to sell more, if you want to be profitable then you need to reallocate money to profit. Every transaction has a piece allocated to profit. Money taken out stored away, business runs off of the remainder. 5 core fundamental accounts Income- the inflow of cash Profit- reward shareholders (owning stock in your own company) Owner compensation- owner salary Taxes- business pays for taxes The account that manages operations of the business “Profitability isn’t an event, it’s a habit.” – not bottom line not year end Sales-profit= expenses (new formula) Support networkFind support with another shop, accountability partner Profit First Professionals- trainer Efficiency- the secret sauce Always Improve Piggy bank Had nonprofitable computer technology businesses. Sold first company and made money Started a second company- sold to Fortune 500 Started third company- went into debt in 2008. Had to tell the family they were going to lose house and possessions. Told 9-year-old daughter he wouldn’t be able to pay for horseback riding lessons. Daughter ran to the bedroom and brought the piggy bank back to Mike to help support the family. Awakening and turning point- learned how to create a successful business and make profit a habit Healthy business Can run with the complete absence of owner- 4 full weeks physical and digital disconnect Resources: Thanks to Mike Michalowicz for their contribution to the aftermarket’s premier podcast. Mike Michalowicz web site https://www.mikemichalowicz.com/ (HERE). Link to the ‘BOOKS‘ page highlighting all books discussed in the podcast library https://remarkableresults.biz/books/ (HERE). Leaders are readers. Leave me an honest review on https://airtable.com/tblOgQmbnkHekpl0L/viwSbPkieMNhLOmtK/recQNomCKr1D5I9x4 (iTunes). Your ratings and reviews really help and I read each one of them. http://eepurl.com/bhqME9...