Today on Pawn Leaders, I have Mike Michalowicz, author of the books Profit First, Surge, The Pumpkin Plan and his newest release, Clockwork. By his 35th birthday Mike had founded and sold two companies, a bunch of private equity and another two Fortune 500 companies. Today he’s running his 3rd multi-million dollar venture; Profit First Professionals. Mike is a former small business columnist for the Wall Street Journal and a former business makeover specialist on MSNCB. He has travelled far and wide, speaking with thousands of entrepreneurs.
[02:14] What is Entrepreneurial Poverty? “The misperception about how successful and the amount of money entrepreneurs have or earn.”
[03:51] “The next time someone asks ‘how big is your pawn shop?’ Say, ‘Let’s talk about how healthy it is!’”
[04:06] We have been told that profit is the bottom-line, but if that’s the case, it means that consideration can wait.
[04:48] Sales – Profit = Expenses
[06:39] The core concept is that when revenue comes into your business, we take a pre-determined percentage of that money and allocate it towards profit.
[07:59] We have to force in this gap of removing the profit, hiding it away from ourselves and forcing our business to thrive off the remainder.
[08:29] Most people say they’re starting a business to be rich, but how do you define what success is and when is the next plateau?
[11:44] What can we do to dictate a higher margin?
[12:52] Thinking about your reason for growth is looking at being more profitable. You must focus on what drives that profit.
[14:08] People who focus on profit first grow faster than their competition, because they focus on the things that drive profitability.
[17:02] When there is a lack of profitability, we go into survival mode
[19:15] How can a pawn broker think profit first? “Determine how you manage your finances.”
[20:08] Setup different accounts for different purposes (The Foundational 5):
- An Income Account
- Profit Account
- Owner’s Compensation
- Taxes Account
- Operating Expenses Account
[22:14] We need to vet our customers.
[25:45] The Profit First system presents problems before they become issues.
[26:41] Having a financial heart attack opens your eyes to what you need to change in your business and managing your finances. However, it never has to get that far.
[28:25] Allocate 1% of your income to your profit account and over time you will build your financial muscle.
[30:00] Suffering is a sign that there is something wrong with your business.
[30:39] It is easier to do things that aren’t working, that you’re familiar with, than to do something new that will bring better results.
[31:22] Try something new; buy the book Profit First and see how it changes your life.
Visit MikeMichalowicz.com or search for “Mike Motorbike” and the first result will lead you to the website.