Profit First-with Mike Michalowicz-EP 31

During this episode of the Lab Coat Agents Podcast, hosts Tristan Ahumada and Nick Baldwin speak with Mike Michalowicz, author of Profit First. In his book, Mike challenges the myth that profit comes last. Learn about his brilliant behavioral cash management system that enables you to pay yourself first and achieve greater organizational efficiency. This conversation will change how you look at business profitability and how you can create more wealth.   Episode Highlights:  People are focusing too much on gross commission without considering what they’re actually bringing home. The words we use around profitability often associate profit with being last or at the end. There’s a lot of emphasis being placed on hustle and grind. The goal instead should be efficiency. How can you drive better results by leveraging what you have? Leveraging is the new hustle. There are always resources around you that can be leveraged. Tristan asks which step in Clockwork is the hardest to implement. Mike explains how every company has a big promise it makes to customers. Once a company figures out that big promise, they can focus on their core competency in fulfilling that promise. In Profit First, Mike describes five foundational accounts. The first account is the income account, which is a depository only. The second account is the profit account, which functions as a reward for investing in a business. The third account is for owner’s compensation. The fourth account is for taxes. The fifth account is operating expenses. Sales minus profit equals expenses. Profit First describes a behavioral cash management system.  Take profit first. Then your money will tell you what you have left to run the business. There’s a difference between making money and taking money. Money does facilitate happiness to a certain degree because it amplifies our ability to do things. It makes things more accessible. Setting up behavioral intercepts is easier than changing habits. Mike describes examples of small behavioral intercepts he uses in his personal life. He’s clear on the outcomes and impact he wants to have. Whatever we feel called to in the moment that drives us, that's purpose, and I think that's a tool to be leveraged. They discuss how Profit First can be analogous to personal health case studies. Questions dictate outcomes. Mike encourages people to ask absurd questions and challenge standard notions. Thinking outside the box is how you’ll outpace your industry. They discuss a case study in Profit First about cost reduction.  Mike describes a case study about increasing margins.  You need to hire a personal assistant yesterday. They discuss opportunity costs associated with administrative tasks. Mike’s next book will be Fix This Next.  Once you pinpoint your challenge, then you can go for resources. Mike recommends some useful books.    3 Key Points: People hesitate to pay themselves first because they’ve been conditioned to think they have to work harder and hustle. When a company identifies the biggest promise it is making, then it can focus on the core competency that helps them deliver that promise. Setting up behavioral intercepts is easier than changing habits.   Resources Mentioned: LCA Marketing Center: LCAmarketingcenter.com Lab Coat Agents: LabCoatAgents.com Mike Michalowicz website, Twitter, Facebook, podcast, Instagram, YouTube Profit First (book) Clockwork (book) The Pumpkin Plan (book) The Toilet Paper Entrepreneur (book) Fix This Next (book) If You Give a Mouse a Cookie (book) Never Lose a Customer Again (book) The E Myth (book)   Connect with Lab Coat Agents: Lab Coat Agents on Facebook Lab Coat Agents on Twitter Lab Coat Agents on Instagram Lab Coat Agents Facebook Group