This episode is sponsored by Cure Hydration. You know that moment for me, it’s around like 2 or 3pm when my ADHD brain just decides we’re done for the day. We’re done here. The afternoon slump hits, the lights go off upstairs and suddenly answering an email or doing basically anything feels like climbing a mountain. That’s when I reach for Cure Energy. It’s a clean plant based energy drink mix made with 100 milligrams of natural caffeine and electrolytes so I get the focus and hydration boost I need without jitters, without a crash and without that like I drink battery acid vi that some of the energy drinks have. The peach tea and acai berry flavors are my current go tos. Crisp, refreshing and they don’t taste fake y’. All. They don’t taste fake. I’ll drink one before recording a session or when I need to get help through like that afternoon drag. And honestly I I drink it anytime. My brain just needs to cooperate. What’s wild is that Cure Energy is only 25 calories and has zero added sugar. It actually helps me stay hydrated while giving me energy. Okay, I love coffee, but coffee could never Staying hydrated isn’t just about water. You also need electrolytes. And that’s why I love CUR Cure. It’s clean, it tastes great and it actually works. And remember, Cure is FSA HSA approved which is amazing. You can use that money to pay for cure and for I have ADHD listeners you can get 20% off your first order@curehydration.com I have ADHD with the code I have ADHD. And if you do get a post purchase survey, make sure to tell them that you heard about CURE right here on the podcast. It really helps to support the show. Don’t just drink more, upgrade it right with cure. Save over $200 when you book weekly. Stays with VRBO this winter if you need to work, why not work from a chalet? If you haven’t seen your college besties since, well college. You need a week to fully catch up in a snowy cabin. And if you have to stay in a remote place with your in laws, you should save over $200 a week. That’s the least we can do. So you might as well start digging out the long johns because saving over $200 on a week long snowcation rental is in the cards book now@verbo.com. Welcome to the I have ADHD podcast where it’s all about education, encouragement and coaching for adults with adhd. I’m your host, Kristen Carter, and I have adhd. Let’s chat about the frustrations, humor and challenges of adulting, relationships, working and achieving with this neurodevelopmental disorder. I’ll help you understand your unique brain, unlock your potential, and move from point A to point B. Hey, what’s up? This is Kristen Carter and you’re listening to The I have ADHD podcast, episode number 165. I am medicated, I, I am caffeinated times two and I am ready to roll. I am having so much fun recording, planning, interviewing for these ADHD entrepreneur podcasts. I hope that you are loving them just as much as I am. And even if you’re not an ADHD entrepreneur, I know that there are delicious takeaways from each episode to help you manage your ADHD life. So if you just like love this podcast but you’re not an entrepreneur, I bet you’re listening to these anyway and just taking away like the great stuff and applying it to your everyday life. And I love that so much. I’m so glad you’re here with me today on the show. Today, my friend, I have a superstar. Well, in my opinion, he’s a superstar. Mike Michalowicz. Now, I heard Mike talk about his book Profit first on a podcast about five years ago when I was running my tutoring business and I was looking for guidance as to how to manage the finances. It was my first six figure business and I gotta say, like, I was kind of floundering in the area of finances as the company grew, as we were bringing more revenue in, I was confused, how much should I be saving? How much should I be paying myself? What do I need to set aside for taxes? Like, I, I wanted a resource to help me figure it out and I just couldn’t find anything. Now, I have a theory that just like time blindness, we ADHDers experience what I like to call money blindness. We can’t really conceptualize money, just like we can’t conceptualize time. We struggle to understand that money is actually a real thing. Like it’s not imaginary, it’s real. It actually has cause and effect and it impacts our lives greatly. We struggle to, to really understand that. And so it feels so often like we’re dealing in theoreticals. I don’t even know if that’s a word, but I’m gonna use it here. Like, I’m looking at my account and I see X amount of money in it, but I don’t really know what that means. Like it feels like a Lot. So do I have enough money to cover my company’s expenses or taxes or payroll? I’m not quite sure. I think I do. I probably do. And also, like, it depends on when each of these expenses are withdrawn. Right? Like, it’s just confusing. And I found it to be very difficult. And I think that many of us ADHD entrepreneurs then avoid our company’s finances altogether, and we just kind of stick our heads in the sand and, like, cross our fingers and hope for the best. This is exactly how I was feeling when I was running beyond tutoring. I mean, I remember being so unsure about how much I could pay myself. Like, that was the big question. Like, okay, I know we can cover expenses, but, like, how much should I be taking for a paycheck this month? And also, like, taxes are a thing and they’re gonna happen soon. I don’t know. It just. It’s felt hard. And I went looking for help. Like, I was very proactive. Y’ all know me, I’m a proactive human. So I was trying to read books, I was looking on the Googles, and I even. This is so cute. When I think back, I’m like, oh, Kristen, you’re so cute. I took a class at my local community college called Accounting for Business. I was like, this class is going to be the thing. This is what’s going to help me. But I’ll tell you, it was not helpful. It was not helpful at all. Like, when I think about it, I get really annoyed. I get so annoyed. And secretly I fantasize about teaching that class myself. What I would teach all of the things that I wish that I knew five years ago, you know, growing a business and just not knowing any of these things anyway, if I could, like, you know, how, like, you’re focused on the stuff that you’re good at, but then there’s also these other things that you’re like, I wish I had time to do that thing. This is what I would love to do. I would love to go to my local community college, reading area community college, and I would like to teach this class and have a redo. Okay, sorry, I’m digressing. So then, I don’t know, providentially, I think I heard Mike on a podcast, and I bought the book immediately. And slowly but surely, I began to implement his profit first approach. And I’ll tell you, it was such a relief to have a blueprint for how to navigate the money coming in, money going out, and money that will feed my family. And listen, it wasn’t complicated it wasn’t overwhelming. It was doable. It was doable for me. So if you’re an ADHD entrepreneur who’s struggling to conceptualize your business’s finances, and especially if you feel like you’ve kind of created like a monster of a business, but you don’t know how to pay yourself and you don’t know how to prioritize your profitability, I really think that Mike’s work is going to be so helpful to you. So let’s get into it. I want to tell you a little bit about who Mike is before we get rolling. So here we go. By his 35th birthday, Mike Michalowicz had founded and sold two multimillion dollar companies. Confident that he had the formula to success, he became a small business angel investor and proceeded to lose his entire fortune. Then he started over again. Driven to find a better way to grow healthy, strong companies. Mike has devoted his life to the research and delivery of innovative, impactful entrepreneurial strategies. On a mission to serve you, he has created perennially top selling books. Listen up. These titles include the Pumpkin Plan, Clockwork, Fix this, Next, get different and Profit first, which has over a million readers and remains on Amazon’s best seller list after eight years. Like that’s a lot. That’s pretty good. Now Mike is here with us today to share his brilliance and to help you pay yourself well and prioritize your profitability. Please join me in welcoming Mike Michalowicz. Your book Profit first changed my life. Love it so much. For real. I went searching for entrepreneurial help and Mike, nobody helped me. I even took a class at my local community college because like I was committed. Sure. I was like, I am going to learn how to run this business properly and what to do with this revenue that’s coming in and nothing helps. And your book was the first thing that I was like, this makes sense for my brain. This makes sense for where I am in business. So I just want to say thank you so much, truly, truly thank you for the work. Well, you’re, you’re very welcome. You’re very welcome. That means the world to me to hear that. And I’m, I’m honored to be even an itty bitty part of your journey. I’m, I’m happy it served, it really did. And I think that entrepreneurs in general, but I think especially ADHD entrepreneurs who really struggle with just the meta concept of money like we, it’s hard for us ADHDers to grasp it as something tangible. It’s just this kind of like thing that’s like this play Monopoly. It doesn’t really exist. It doesn’t really impact my life. We struggle to manage the finances in our business. And so many of us are running companies but not paying ourselves, not taking a profit, not really having a sustainable lifestyle. And so I would love for you to share a little bit of your journey, if you don’t mind. Tell us about your kind of like, plunge into needing the profit first method, if you don’t mind me saying. And then, like, how was that birthed? Yeah. So I suck at numbers, too. I’ve had businesses ever since I graduated college. Never concerned myself with money because I assumed if I simply sold enough, like, I’d be rich. So I was at a duality of just ego and cockiness matched up with ignorance. And it’s like a deadly combination, actually. I looked up in the dictionary when someone has a fat ego and is totally ignorant but thinks are smart, like, what is it? The word is dick. I was a dick. I was like, I was just so full of myself. And so I was a dick. I love it. And I was growing businesses, but unhealthily. I think it’s the definition of cancer. Right? Uncontrolled growth. And. And that’s what I was experiencing. So after growing and selling a couple companies, sale the companies that I was able to sustain that I assumed, oh, to be successful, pump and dump, grow and get out quick. So I decided to start 10 companies simultaneously as an angel investor. And I was a calamity. I had no, no clue I was doing. All these businesses went under. They were led by great entrepreneurs with one, like, idiot there, because it was just cocky, me going, just do what I tell you to do. And so I wiped myself out. And the plunge, or the moment of reckoning was. I got a call from my accountant. I’ll never forget the day. It was February 14th, which is Valentine’s Day, 2008. My accountant calls and he’s like, I can’t believe I’m telling you this, because you’re such an entrepreneur. You just grow, grow, grow. He says, I recommend you declare bankruptcy immediately or liquidate your few remaining assets and pay your tax bill. But you’re. You’re done. And I. I had to go home to my family. I had three children at the time, still do. And my wife and I, I had to tell her that we’re going to lose our house. We lost it 30 days later, and we’re going to lose our possessions, our cars. That’s basically it. And I had been lying to my family by omission, I hadn’t told them what was really going on. When my wife asked me, how’s business? I’m like, it’s good. It’s really good. It’s almost there. So I come home. We celebrate Valentine’s Day a little bit like Thanksgiving. So my wife, my children had actually prepared a meal. We’re going to eat at 5 o’. Clock. I couldn’t bear to walk in. I was waiting outside just in agony. So now it’s like 5:30. I finally go in, food’s ice cold on the table, and I’ve been crying and my wife’s like, what’s going on? I’m like, we’re losing the house. And she’s like, what? I’m like losing everything. I’ve destroyed us. And I had to face my daughter. She was nine years old at the time. And she’s like. I told her, I said, you can’t go to horseback riding lessons. Like, we had to go to the Bare Bone. It was like $20, like a group session once every couple of weeks. I’m like, we’re broke. And my daughter stood up, she ran out of the room. And I thought she was running away. She was actually running to her bedroom to grab her piggy bank. I get emotional every time. I’ve told the story like a thousand times. I still can’t get over it. She ran back to me, she put on the table and she goes, daddy, since you can’t provide for our family, I’ll do it. This little girl, so emphatic. And I was just. I was so ashamed. And that became the realization and ultimately the declaration that I need to fix what I call entrepreneurial poverty. This gap between what we envision for ourselves, for wealth, experience, but not just financial time poverty, all that stuff. That’s. That was the inception and that’s why I write the books I do today. Can you tell us a little bit about your Profit first method? I know you’ve written several books. Profit First, I think is the one right now that I would love to chat about because it’s so. It’s so tangible, it’s so applicable. It is like immediately entrepreneurs can start making changes in a second. And it’s just a. It’s a mindset shift. So tell me, tell us about that mindset shift. Yeah, it’s rooted in behavioral psychology. And that is a side passion of mine, my side hobby. I’m not formally educated in it by any degree. I had the belief that if I can master my own mind, I’ve Optimized my potential. So one of the core tenants that I found is it is extremely hard to change ourselves. It is much easier to channel ourselves. So channel behavior. Don’t change behavior. If you can channel behavior to get the outcome you want, that’s my core belief. And sometimes you have to change, but that’s harder. Well, I experienced this in exercise, and I was like, oh, my gosh. This translates to not just physical fitness, but physical fitness. I always knew I need to exercise. I want to, you know, work out all the time. And I was actually telling myself, I work out three or four times a week. But when I tracked it, it was maybe once a week, and it was a bad workout. Well, I looked at my pattern of behavior, and I noticed what I would do is I’d wake up in the morning, go to the bathroom, make a cup of coffee, start scrolling through the news, and I’d be looking at my watch saying, I have to get to work and skip yet another workout. So I looked at that pattern. So what kind of channel I noticed, right, did all the time was get up and go to the bathroom. So I put my gym shoes on top of my toilet seat. My wife’s not happy about that. I don’t do it anymore until, you know, I change. But I put it there. So what happened was it was a pattern interrupt. I’d wake up. The only way I could use the toilet is by grabbing the gym shoes. And now they’re in my hand, and it starts momentum. I put my feet, and I’m like, just go to the gym. I’d lumber over to the gym, and I got a workout in, and it brought this consistency. I’ve exercised now consistently. I want to say 10, 10, 12 years, like, every day, five days a week. And I notice in my finances, even though my accountant had been telling me, don’t log into your bank account, Read the income statement, the balance sheet, the cash flow statement, know all these metrics. It was like this really heady stuff that I couldn’t. I couldn’t grasp. I did. I said, I got it. I didn’t. What I noticed, my pattern was my walking into the bathroom was I always log into my bank account, and I would do it sometimes manically, like five or six times a day. Like, did the deposit come in now? Now? And that’s where I always go. And in. In querying other entrepreneurs, I found the vast majority of us manage our finances through what I call bank balance accounting. How much bank balance is there? And if I have lots of money, I Feel good. If I had no money I panic. So I said I need a behavioral intercept there. So profit first is a, is setting up multiple accounts and it has to be at your bank. This is not on a spreadsheet where we don’t look. It’s not in the accounting system where we don’t log in. This is where we always go. This is the toilet seat. We set up the bank accounts there. We pre allocate money to its intended use before we spend it. So if a thousand dollars come in, I used to say I have a thousand dollars to spend. Now Kristen, I understand. Oh now I have a thousand dollars. Some of that’s to allocate toward profit. A reward for owning a business. Some is to owner’s compensation, the pay for the work I do within my business. Some of it’s for taxes because that tax bill is a common and then some for opex which is the operating expense of the business. So I have a thousand dollars to run my business. I may have actually 400. After this allocation I’ve secured my profit. I’m sure I’m getting paid appropriately and I’m sure I’m not going to get surprised by the tax bill on April 15. That’s the essence of the profit first system and that’s exactly what I implemented. So in my second company which was my first six figure company. Nice. Thank you so much. I was, you know, we were earning and I was looking at the bank account and I was. When it was high I felt great. When it was low I felt terrible. I was making decisions exactly the way you, you are describing and I always had the question how much do I pay myself? I have no idea. And I would literally like go to the Googles and try to find books and like how, how do I know how much to pay myself? I don’t want to rob the of its money but I also need to like put food on my table. So how do I find that balance? And your percentage method helped immensely because I did exactly. I mean I followed it to a T. You would be very happy and I would get all the gold stars. I’m not worthy. I’m not worthy. I’m proud of you. Thank you so much. Because it’s not easy to fall to the T. No it’s not. But I, I was that in need. It, it solved a problem for me because it gave me a blueprint to follow rather than guessing. Well I guess we could take X amount this month but then next month I’m not sure like it was like every Single check. I just, I did my percentages, I moved it to the bank accounts and it helped that business thrive and it helped me to have a predictable pattern of income for my family. So there’s a law called Parkinson’s law. It’s a behavioral theory. It’s probably a better choice of words. Parkinson was a theorist in the 1950s studying human behavior. And in his research we found is that as a resource expands its availability, we consume more of it. So if I have more closet space, I will buy more stuff to fill that space. If I have more time, his time. Are you rubbing your hands together? Right? I know it’s coming. I’m excited for it. So do you want to hear the toothpaste story? I want to hear all the stories. Okay. So the quick theory is that as time expands, we consume more. So if you’re given a week to do something, it’ll likely take the week. But if you give yourself the same parameters of completion, but, but you give yourself one day, you’ll likely get done in a day. And this applies to toothpaste. This is when I do a keynote, I’ll talk about toothpaste. It’s just, I’ll give you the summary of it, which is not nearly as fun. But the summary is a brand new tube of toothpaste. You’ll see we use larger beads, used excessively and we tear through that toothpaste in a month or so. But when it’s almost empty, we keep on squeezing and twisting stuff out. And it can last for a long time. And it’s our behavior is adjusting based upon supply. The theory of non profit first is a behavioral theory, not a logical theory. So it’s funny, there was just an accounting conference and I always get this resistance accounts and bookkeepers say you can’t force profit if you take your profit first. The numbers still work out the same. Doesn’t make logical sense. The goal is not logic. It’s to apply human behavior that then creates a new form of logic, if you will. So what happens is we constrain the amount of business money available to your business to operate. That forces you start squeezing and turning the business. Basically we do it through mind innovation. Oh, how do I get the same results in a different way? So we start reverse engineering that profitability. And since we’ve taken that profitability first, we’ve secured it. So I tell accounts it’s not logical, it’s not gonna work. I say, I get it. We have 600,000 businesses, 600,001 with you businesses have implemented this and they’re more profitable. They haven’t changed the fundamentals of their business. It wasn’t like they need to figure out this great hack. They just had to get profit first. And now it forced them to work within the confines what the business really has. And the funny thing is the exact same conference, these exact same people. I’m getting a little jacked up here. Said they have found in the research businesses that pay their bills fast, like when the bill arrives, and they pair are consistently more profitable than bill companies that delay payments. I’m like exactly. When we delay, we think that money sitting in the bank account is available for another purpose. So we do in our head, like dual or triple spending. A thousand dollars, I could use it for this or that or that. I did decide on this. But the money’s still there so I can do that too. It starts harming us. So they have found statistically the people that argue the logic that if we pay right away, we will run a healthier business. Profit first doesn’t say pay right away, it says allocate right away. So the money is constrained instantly. You have no other choice when you follow the system and you know what you have to work with and therefore it ensures profitability. We’ll be right back. If you’re an entrepreneur working full time in your business and you want to learn how to make your business more ADHD friendly, establish boundaries so that you’re not constantly overworking, hold your team accountable without drama and increase profit and revenue and scale without burning out. All while having my personal support and a very small group of like minded ADHD entrepreneurs around you. You’ve got to apply for my business mastermind. It’s the perfect hybrid of a mastermind where peers share ideas and hold each other accountable and group coaching where I have my eyes on you and your business every week, I will offer you my personal support as I help you to grow your revenue and scale sustainably without running yourself ragged. Conventional business advice, it doesn’t work for the ADHD brain. You need something different and this mastermind is that thing. Go to ihaveadhd.com mastermind to apply. And now back to the show. I would love to ask you or just have you talk about using smaller plates because I think that’s exactly what we do when we are allocating the money and constraining in our business. I’m pretty sure you told the story in profit for us of like when you are going to Thanksgiving table, you have options of plate sizes and if you take a smaller plate Size, you’re going to eat less food. And if that is something that’s important to you, then that’s what you should do. Right. And so I, that works with our finances too. Tell, tell me about that. Yeah, and ironically, or it’s coincidentally, I receive contact calls or usually email from people regularly that say I’ve lost weight because you’re a system. And that was my objective. And I’m like, oh, that’s, that’s a great bonus. That’s funny. And, but, but there’s interesting parallels between physical fitness and physical fitness, what I found in the American diet. Just to give context here, plates have doubled in size in the last 300 years. So what we consider a coffee saucer or maybe a dessert plate was considered an entree plate back when George Washington was president. But since plates have doubled size, our behavior stays the same. We still follow that pattern to fill up the plate. And it’s my mom said, maybe yours too. Clean off your plate, you know, and so you clean up your plate. So our caloric intake has increased and our waistlines have increased. Well, that behavior is replicated in our business. If we have a single plate, a big plate, what I call the primary checking account, where we put our deposits in and pay our bills from, we are putting the entire meal on that plate for the business. And the business goes, okay, clean it up. That’s what we’ve been told to do. It’s kind of like I compare it to Thanksgiving dinner. Oh, you pull that turkey out of the oven. Everyone does their stupid Instagram photos. Oh my God, like it’s the first turkey ever. I don’t say, hey, everyone, knife and fork everyone for themselves. Let’s fight for it. And a brawl breaks out. No, what we do is we carve the turkey just like everyone else. And then you put on a serving tray to give an apportionment each guest. So everyone’s fed and you pick the portion, you know that, that representative of your consumption. Some people take more, some take less, but everyone gets a piece. And you also notice people monitor others and say, hey, does anyone want seconds first before I dig into it? Like, that’s the protocol. But in our business, it’s like everyone for themselves. First one that’s hungry, eat it all. So what we do is we set these small plates, we set up a plate that is representative of the portion that that person, that part of the business should be consuming. The income account, which is the new name for the primary checking is becomes a depository only account for the business. It’s a serving tray. Money goes in the serving tray. We then carve it up. Every guest at the corporate table, if you will, gets a piece to consume, and they consume accordingly. That’s the concept of small plate. What I love about this concept is, is pretty simple. There’s only five accounts, right? So it’s. It’s really not like, it’s not overwhelming. It took, right, me a day to, like, get all the accounts worked out and like that. My bank was like, wait, what do you want to do? And I’m like, okay. Oh, yeah. The banks are always such a pain. Oh, they’re such a pain. They’re kind of like the accountants because they don’t get it. Yeah, they don’t get it. You know, the banks are trained in a certain way, just like accountants and bookkeepers. I. And I’m not diminishing the value that those individuals bring. Tremendous value. But they also bring, just like all of us, a protocol of their experience. The. And so. So it’s confusing. So the accountant says, but the reconciliations, it’s a nightmare. Keep doing the way you were doing it. My counterpoint to accountants and bookkeepers is, how’s it working for your other clients? Are they all wildly profitable? Are they making quarterly distributions? Are they making more money than ever before? Are they living their life of financial freedom? And the answer is always no. Then I’m like, well, then why do we keep doing this? If it’s not working for everyone, why do this? And the banks are the same way. The banks. I say, how many people max out their. Their checking? They have nothing left over. They’re getting penalized, which unfortunately, the banks love because that’s how they make some income. So overdrafted again. But they’re not used to this. The interesting thing is we have some banks now that have adopted this. And some say, oh, my gosh, our clients have more cumulative deposits by saying micro accounts or smaller accounts and having one big account, which gives the bank more leverage and stuff. So there is an educational process. And my point is when you get that resistance, understand, they just, like all of us, come from their context of experience. And you may have to educate them on something, but be insistent. Last thing I want to share about banks is a bank, in most cases, almost all cases, is a private institution. They’re a company too. And if they’re not willing to accommodate your needs, they’re basically saying, you’re not an important enough client to us to make changes. So if they ask for fees or something, say, I don’t want a Bank that charged me fees. What can you do to keep my business if they say we can’t do anything? Okay, you don’t want my business, I’ll go to the next regional bank down the road. You’ll be surprised how many accommodate that. One last little vignette. I had a reader email me and said, because I say that in the book, like I was expecting the bank to. Bankers resist it. The banker said, sorry, we have fees. This person literally took the book out. They had a section highlighted, said, could you read this real quick? And the banker said, hold on one second. Went to the manager and came back and said, we’re wiping the fees. That is incredible. Well, everyone, you heard it. You go buy his book, make some highlights, take it to your bank. There you go. Yeah. That’s amazing. I heard Mike’s a day. Or he was at least. So let him be the problem. I don’t have the courage to say this, but why don’t you just read this paragraph for me? Yeah, yeah. This guy, this schmuck. Yeah. I just have found it to be so helpful for my own company. And seeing those smaller plates, seeing that allocation, knowing predictably what to expect. I’m curious what advice you would give to someone who is in a situation where maybe they’re not paying themselves, they’re not profitable, they’re earning revenue, but they’re just like. I don’t even know. Like, how does somebody start small with this kind of way of thinking? So that that hypothetical situation happened, I would say with 90% of the people that implement profit first are in a position where they’re not paying themselves or they’re underpaying themselves, they surely don’t have a profit, which means a bonus. Above and beyond a normalized salary. Our accountant may say, you had a profit. Oh, Great, you had 20,000 last year. But what was your income as a salary? Oh, I made 22,000. Right. Okay, so you didn’t have a $20,000 profit. You made 22,000 in salary, all combined. What would be a normalized salary if we had to replace you? And people like, oh, a person doing this would probably get paid 100,000. Okay, we have to pay you 100,000 plus 20,000 above that, and that’s a profit. So the first thing is, be careful of the accounting voodoo that is played. A profit, in our definition, is cold, hard cash at your bank that is paid out to you on a quarterly basis above and beyond a normalized salary. It’s not the accounting profit. Listen, Enron was profitable until every employee had to get terminated because they collapsed the company. So profit on an accounting basis is a number that can be manipulated on a cash basis. You have it or you don’t. But the thing is, it’s overwhelming. People walk in, they haven’t historically had been profitable. They don’t pay themselves, they have debt, and they’re like, I. I can’t do this. It’s too much. That’s normal. Here’s how you start. Start with a slow approach and let it grow. What I mean by starting slow is you can do this in two steps. And literally, if you’re listening right now, you can be profitable starting tomorrow and forever more in two steps. Step one is call your bank. If you like them, keep working with them, set up one additional account. There’s five accounts in the full deployment, but we can start slow and let it grow, Set up in the savings account, business, savings, and call it profit. That’s step one. Step two is, any time a deposit comes in, allocate a mere 1% to the profit account and never touch it. And the power with 1% is this. It is so insequential, inconsequential in how you operate your business. That’ll cause no harm. So if $1,000 of deposits come in, 1%, 10 bucks. And if you can run your business off a thousand dollars in deposits, I am sure you’ll find a way to run your business off of 990. It’s inconsequential. But what is highly consequential is the fact that for the first time in your life, you have a cash profit sitting there, and it’s 10 bucks. And. And over time, as the 1% goes in there, maybe 20 or 30 or 40 bucks, then on a quarterly basis, that money is in there. We’re gonna take a distribution, and I have a whole system. You don’t have to take all of it. We take portion out. Here’s the power. This starts building that behavioral momentum. It’s like. It’s like that gym. The first time you go to gym and you haven’t been there in a year, I suggest you don’t hop on that treadmill and decide, hey, I’m gonna run five miles today. That’s what we’re working toward. Let’s just. Let’s just stretch. Actually, day one is stretching. Day two is maybe practicing form and stretching. Maybe it takes us six months to get there, but we’ll run five miles. But don’t start fully, because if you do, you’re likely to injure yourself. People who roll out profit first in its entirety from day one and go to the full percentages. In most cases cause harm to their business because it’s too abrupt of a change. And then they say the system’s failing me and they go back to the way that never worked in the first place. Start with 1%. One last little story about this. That’s how I started. I’ve been doing this for 15 years. I now have. Yeah. I’ve taken 58 to 60 consecutive quarters of profit distributions. Yes. Every single one. Yeah. It’s amazing. It’s been life changing above a salary, above my normal salary. And it’s been life changing and, and the experience has been great. The nice thing about doing this in 90 day increments, the profit is. It’s not something I expect. It’s not part of my normal salary. I don’t upgrade my lifestyle to live off profit. It’s a bonus above and beyond which is game changing. I’ll tell you, the most important profit I ever took was my first one, was $8. I had 16 bucks in the account. I took it. Eight dollars. I went to the bank too. I’m like, hey, can I get $8 in singles? Because I wanted to, you wanted to fan myself. I wanted to make that big wad of cash. And then it’s like, what can you do with $8? I’m like, Starbucks. I went to Starbucks. And I’m like, give me the best thing you can for $8. Which was a small coffee. That was about it. But when I was sipping that, I’ll tell you, Kristen, I was like, this is the best coffee I had. My life, first time, my life, business paid for it. I had. It wasn’t an expense. It was free cash. It was available for me to do whatever I wanted. My God, did I enjoy that. And it got me addicted maybe a bit to Starbucks coffee, but to doing this again and again and again. So it doesn’t matter how big that profit is. What matters is you start doing it immediately. What would you say to someone who is listening to this and thinking like, okay, well that sounds great, but like, this doesn’t. This isn’t really important for me. It’s okay if I don’t pay myself. It’s okay if I don’t take a profit. I, I feel like the resistance would be like, this sounds great, but also like, I’ll start next year, or that he doesn’t really understand my business or like that kind of line of thinking. Why is it important? Yeah, there’s. I found two outlets. Yeah. Go ahead. Yeah, I found there’s. There’s two paths. Some. Some people are playing the martyr game. It’s. It’s better to be a martyr than actually make a healthy business. So it’s easiest to say, I don’t really want profit. I can’t do it. I don’t deserve it. No, I don’t believe that. The second arena is I want you to be blatantly aware that the only way to make a business sustainable is through profitability. A business can’t live on forever on no cash. So it’s got to be depleting or consuming it somewhere. So we have to turn it, because profitability brings Runway to a business. If you care about your business, if you care how you serve your clients, if you feel that what you offer is superior to some of the alternatives or all the alternatives, damn it, you have a responsibility to be profitable. That’s the only way you can care for your customers. Listen, your customers want you to be profitable. Could you imagine, Say you have. I wish. It’s upon no one, but say you have a heart attack. And you. You get rushed into the hospital, and you have two choices. Two surgeons who can work on you. The first surgeon, doctor, comes to you and he says, hey, I’ve never done heart surgery before, but I’m ready to do this because I need some extra money. I’m actually struggling. I’m not profitable. I’m really, really kind of desperate. You ready to rock and roll? I bake. No. Because that doctor, you know, is worried about the next patient, isn’t focused on me. Now, surgeon number two, she comes to you and says, hey, this is all I do. I am very profitable. And I’ve done this procedure as a result hundreds and thousands of times before. 100% success ratio. I charge a premium because I’m profitable. Do you want me to do it? Yeah. I’ll choose profo doctor. I want her because she knows what to do and she isn’t rushed or panicked to generate income elsewhere. So I’ll get the best care for me. This is true for all of our businesses. We are caring for our customer in some capacity. And when a customer knows that we’re profitable, they know that we’re not cutting corners or rush. It’s ones that are just getting by who won’t care for you fully. Your customers want you to be profitable. I agree with that completely. And when I’ve worked with contractors or vendors who I can just tell that they are underpaid, they’re undercharging, they are also not very excited to do work for me. Totally. I can just tell there’s like this resentment. And so now it’s like I want to only work with people who are charging a premium because I know that they’re excited about their work. I know that they’re going to be like, I can hold them to a high standard and all of that. It’s not just about charging, but it’s also about how are you thinking about the money that’s coming in. It’s like you as the company owner deserve to take a fair market value wage for what you’re doing. And if you don’t, it’s a disservice to yourself and also to your company and the people that you’re working with. I believe that profit is a habit, not an event. A lot of people think, oh, I’ll make money on this big transaction or that one day profit is something that’s baked into your business. This is not about taking advantage of clients by any stretch of imagination. I’m not saying bang one client over the head so you can sustain. I’m saying charge an appropriate and fair profit margin so that every transaction is sustainable so you can care for your customers the best. And that’s what customers want. No one wants to be taken advantage of, but no one wants to corners cut on them either. They want to be cared for. So make profit a habit, don’t make it a one day event. So good. Thank you so much. Oh, it’s been a joy. The pleasure has been mine. Tell us how we can. Oh, it’s all mine. My gosh. Should we keep going? I don’t know. Maybe we should just stop. Tell us how we can find you. If people are loving this conversation, if they want more of Mike Michalowicz, how can they find you? Where can they get your books? All the things? Sure. So you could go to mike michalowicz.com but no one can spell it, few can pronounce. I’m impressed. So I have a shortcut. It’s my nickname from grade school. It was mikemotorbike.com Mike motorbike, by the way, is the only G rated nickname I had. So it’s the only way I can share. So if you go to mikemotorbike.com all my books, you can get free chapter downloads. I used to write for the Wall Street Journal for years. You can get those articles for free. Plus I have a podcast. Mikemotorbike.com Love it. Thank you so much. Appreciate you. Hey, ADHD entrepreneur. If you want my support with your business, but you’re not quite ready to apply for my Mastermind. You need to get your buns into Focus. Today, Focused is my group coaching program for adults with adhd. And so so so so many of our members are entrepreneurs. Because of this, I created the Inconsistent Entrepreneur. The Inconsistent Entrepreneur is a course inside Focus where I teach you how to grow your business even though you’ve got a distracted and inconsistent brain. The Inconsistent Entrepreneur is my signature course and it includes a workbook, four video classes taught by me, and tons of bingeable business coaching calls that’ll be so helpful to your business they’ll blow your freakin mind. Best of all, Inside of Focused, you will receive my coaching on your business and be surrounded by a community of ADHD entrepreneurs who will support you and give you great ideas on how you can grow. So go to ihaveadhd.com focused to join. And just a hint here, if you’re using Focused for your business, you should talk to your accountant about labeling it for as a business expense. Go to ihabadhd.com focused and I’ll see you inside.
