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Private Practice Startup Podcast
Episode 119: How to Make Your Business Profit First
00:34:49
Mike Michalowicz
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- [00:03]
A
Welcome to the Private Practice Startup, where we inspire you from startup to mastery. We chat with entrepreneurs, experts in the mental health and business arenas, and successful private practitioners to give you the tools needed to make your dream practice a reality. Visit theprivatepracticestartup.com for awesome resources, free trainings, and so much more. Here are your hosts, Dr. Kate Campbell and Katie Lemieux.
- [00:28]
B
Hey there, Startup Nation. Welcome back to another episode of the Private Practice Startup podcast. I am one of your hosts, Katie Lemieux, and we are here with my co host.
- [00:37]
A
Hey, everybody, it's Dr. Kate Campbell. We're so excited about today's episode.
- [00:41]
B
Yay. We're beyond excited, actually. So I was like totally calm until I realized the countdown was on about when we're gonna hit record and have our guests on today. So I'm managing my anxiety a little bit.
- [00:52]
A
So, you know, just saying we're a little starstruck.
- [00:55]
B
Yeah. We've been looking forward to this podcast for quite some time and really happy that he said yes. So actually. But before I announce who our guest is today, we hope you listened last week as we had Uriah Guilford on talking about how to. Excuse me. How to design your practice to run without you. So that was a really good, helpful episode. And Uriah really practices what he preaches. He actually took a three week European vacation with his family and only checked email to do payroll. That's it. So you want to check that out for sure. So today our guest is Mike Michalowicz, who is the author of Profit first and recently released a new book called Clockwork. If you guys know, we have been talking about Profit first for a long time. It sneaks into many of our conversations. We actually read the book last year and totally utilized its system to customize our business. And it's been a hashtag gamechanger. And many of you know Michael was actually on Maureen Warbach's podcast as well as Gordon Brewer. We also did a podcast about Profit first with Ernesto Segismundo and Laura Long. So we'll put that in the show notes. But. But why bother with that podcast? I mean, we got Mike here, so that's way more important. So before we get started, if you're new to Startup Nation, we want to say welcome you. We want to welcome you to the family. We have a special gift for you. Head over to private practicestartup.com head over to the Resources tab, and there you'll see the A to Z cheat sheet, the essentials for building and growing your dream practice so go ahead and opt in for that because you'll also get five days of practice building emails with the A to Z cheat sheet to really help you grow and accelerate your practice. And before we actually get started with today's guest, we want to take a quick break for our sponsor.
- [02:34]
A
Yes, we want to thank Gusto for their sponsorship for today's episode. If you're in private practice, you probably wear a lot of hats. And some of those hats are totally great. But some, like filing taxes and running payroll, for example, are not so great. And that's where Gusto comes in. Gusto makes your payroll, taxes and HR actually easy for small businesses. And it also has fast, simple payroll processing, benefits and expert HR support all in one place. Gusto automatically pays and files your federal, state and local taxes, so you don't have to worry about it. Plus, they make it easy for you to add on health benefits or even a 401k for your team. So let them wear one of your many hats and you focus on the other aspects of your practice that you love or that are more important. Time wise listeners get three free months when they run their first payroll. So go ahead and try a demo and see how you like Gusto for yourself. That's gusto.com pps, as in private Practice Startup. We'll also have the link for you on the show. Notes. There are so many ways to keep your practice organized, but TherapyNotes is by far the best. They're easy to use, secure platform, lets you not only do billing, scheduling and progress notes, but also create a client portal to share documents and request signatures. Plus, they offer amazing unlimited phone support. So when you have a question, they're there so you can get help fast. Get started with TherapyNotes today, trusted by over 60,000 professionals. Go to therapynotes.com and enter promo code PPS, as in Private Practice Startup and you'll get two months for free. Also, you can listen to episode 54 where we interviewed Brad Pleiner and took an in depth view into their ehr. So let's dive in. Welcome, Mike.
- [04:24]
C
Thank you so much for having me. And by the way, I use Gusto. I love them. I call him Gusto. I never knew it was Gusto, but yes, Gusto.
- [04:31]
A
Like gust of wind.
- [04:32]
C
Yeah, that totally makes sense. Gusto sounds like. Yeah, Gusto.
- [04:35]
A
How you doing exactly?
- [04:38]
B
We did call them Gusto at first, but it's funny because when they sent over the sponsorship, they like actually put how they're supposed to say it. So we've had to work it Out a few times, like, and that's what Kate always says, Like. Gust.
- [04:49]
A
Gust of wind. Yes, gusto. See, I almost flipped up.
- [04:53]
B
Gusto. I just want to share with you guys briefly about Mike. If this is the first time you're hearing about him, I'm saying, why? Because we do talk about him a lot. But Mike Michalowicz is the author of Profit first, the Pumpkin Plan, and his newest release, clockwork. By his 35th birthday, Mike had founded and sold two companies, one to a private equity and another to a Fortune 500. Today, he's running his third multimillion dollar venture, Profit First Professionals. Mike is a former small business columnist for the Wall Street Journal and the former business makeover specialist on msnbc. Over the years, Mike has traveled the globe speaking with thousands of entrepreneurs, and is here today to share the best of what he has learned. Please join us in welcoming Mike Michalowicz.
- [05:38]
C
Boom. Wow.
- [05:39]
B
Where's all the fanfare? Oh, that's right. We're on a podcast. We'll do the applause.
- [05:46]
C
Thank you.
- [05:46]
B
So thank you for saying yes to being here with us on the podcast, Mike. Like we had said before, we started the podcast, Kate, and have read Profit for us and have totally implemented your system into our business, and it's been a huge game changer, and we actually got to have our biggest bonus the end of this past quarter. So we're super grateful to you for that.
- [06:07]
C
I love hearing that. The therapist community, I think, is such a critical community. You're serving, such an extraordinary service you're providing, and it's a shame that so many therapists I've met with. This is true for all startup businesses are struggling with profitability and become disenchanted by their own business. So to hear that you had that profit distribution. Kudos. Kudos to you.
- [06:29]
A
I love bonus time. I'm like, yes. What are we gonna get this time around?
- [06:33]
C
Nice.
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A
It always feels good.
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B
This last time, I really wanted to surprise her, but she had asked before and I was like, I can't tell a lie. I can't. You know, I can't keep it from her. So that was really exciting.
- [06:44]
C
That's cool.
- [06:45]
B
So kind of share with the audience a little bit about profit first. I actually am curious as to, like, how did it come to be?
- [06:51]
C
Yeah, that's probably the interesting. You were kind enough to share my bio in the beginning. I think the best or most important part of my bio, though, is left out because it's the darkest period. I did sell a couple companies and just got full of ego. I should have gone through a session with you all just to figure out what's going on here, because I thought I was God's gift to entrepreneurship. And I found that a combination of arrogance and ignorance is a deadly combination. One business that wasn't on the resume I ran was called Obsidian, but it was a angel investment company. I invested in all these different startup businesses and had no right to be in that space. I literally destroyed myself financially. It was interesting because I actually saw my bank account dwindling as I was investing this money. And even though logically I saw it dwindling emotionally, I didn't accept it until I hit rock bottom. I had to come home to my family, I have three children, and just share that we were about to lose our house, which we lost, and our possessions, which we did. I didn't declare bankruptcy, but we were in such a devastated financial state, we had to resolve by doing a massive cutback and digging my way out. That was only 2008. That's like, you know, 10 years ago, 11 years ago. And what came out of that, though, was an awareness that I really didn't know anything about entrepreneurship. I attributed luck to smarts and strategy. And what I realized my biggest challenge was I didn't really understand how finances worked. Even though my accountant told me, read the income statement and balance sheet, I never did. And what I've concluded is that even though I've been told that for years I should do it, it's human nature for me and for most people never to do that. We revert to a certain behavioral pattern. And at least when it comes to finances, many entrepreneurs, myself in particular, I log into my bank account sometimes multiple times a day to see my balance. And based on the balance I have, I'll take action. Well, I decided I need a system that didn't require me to change because I don't have the discipline to stick with it. I try to remove the temptation of just logging my bank account and following what the processes of my accountant was telling me. I cave into that. It's like a muscle kind of fatigues. So I decided to set up a system that I don't have to change a thing about how I behave, but to capture that behavior and now channel to a result I wanted, which was profit. So that's how the profit first system came about. It's my own need.
- [09:14]
A
Cool.
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B
And how did you develop the system specifically?
- [09:17]
C
Well, it was a combination of a lot of things. So the interesting thing I think about profit first is it's nothing New it's an established mix of processes which are very successful. I just simply combine them together and then applied it to business where it hadn't been done before. One of the systems is called the envelope system. It's been around like forever. And my own mother, she came from Germany, she brought that system over from Germany to our family. And we grew up with the profit. The envelope system which was literally an envelope for food, an envelope for the mortgage, an envelope for different things. When she worked, she worked part time, she would cash in her money and she'd divide it up into these different accounts. My father would do the same. And when she went food shopping, for example, she'd grab the food envelope, drive to the food store and only shop with what was in there. And that was the lesson is that our business, if we have one source of cash, that one primary checking account, every time you log into your bank account you'll see all the money you have. And then we make decisions based on that money on what is urgent, like oh, we need that new computer system. We have just enough money I need to cover payroll or whatever. And we constantly are going to the next urgent task and depleting all our money. The real way we need share business is to have that money divided up or pre allocated to its purpose envelopes. So what we do is we set up bank accounts at your bank, divide the money up into multiple accounts. One is to pay the most important employee you'll ever have, which is yourself, the owner, to take care of your tax responsibilities, to take care of your profit, which is different than pay. Profit is a reward for being a shareholder, taking risk and starting the business. An account for your operating expenses to run the business and. And when we pre allocate money to his purpose and now log into the bank account like we always have that same behavior. You now know what money is intended for what purpose before you spend it. And you'll stay within the confines of that money. At least you'll likely stay within the confines. There's other ways to enforce that.
- [11:14]
A
I love hearing that story because I can remember my mom growing up having the envelope system and very same strategy, but it is so old school and using that what's worked for so many people in the whole online sphere and the way that you have, it's really incredible. And then being able to focus on the profit first because so many people just take care of all of the expenses and they end up not even taking out a profit. And they pour their heart and soul into their business and helping so Many people. So to focus on that first is really cool.
- [11:46]
C
Yeah. So Profit first is a behavioral based system. And I'm like a part time hack behavioral psychologist. I have no degree in it. Every book you'll see here is related to behavioral psychology and I have it at home. I'm fascinated by it really, just to understand myself. And one behavior I found is true for most of us is when something comes last is less likely, by far less likely to occur. It's the perpetual manana syndrome. There's a study about exercise. If you want to exercise, exercise first thing in the morning, you have a much greater likelihood of pulling it off if you put off for the last thing of the day. Some people can pull it off, but you'll be too tired or there'll be a reason not to do it. It keeps getting delayed. The same thing happens with money. We are told, literally the foundational formula for profit is that profit comes last. It's sales minus expenses equals profit. So we're told profit. We've used vernacular like it's the bottom line or the year end, the final take. It's all about putting it off. And when we put something off, it's likely never to occur. So what I did was I flipped the formula. So instead of sales minus expenses equals profit, it's sales minus profit equals expenses. To your point, Kate, what happens is when money comes in now, we're immediately gonna take a piece of that, a predetermined percentage, and take that as profit first, hide it away from ourselves, and then the rest of the accounts will get funded also, owners pay and so forth. And that last thing now is expenses. Expenses get addressed last. And what we're doing is now you see what you really have available to run your business. If you want to have, we'll say 10% profit and take that first. If you want to pay yourself well, if you never want to worry about taxes again, the remainder, the operating expenses is what you have to run your business off of. We're doing is reverse engineering profitability.
- [13:35]
B
And I love the different categories. And interestingly enough, a lot of times, and what's happened last year, and I know it's going to happen this year, is that tax. The account for taxes almost becomes a second bonus, right? Because we've been saving so much, right? Like saving the amount. And so it's almost like double bonus time. And it's super exciting.
- [13:54]
C
I am blown away by the emails and calls I get. People send videos now, they're like, oh my gosh, it's tax time. I Can't wait.
- [14:00]
B
I'm like, yes, can't wait.
- [14:03]
C
Who's ever said that in the history of business? So here's another behavioral trick. It's called loss aversion. And loss aversion works like this. Once we possess something, our grip onto it is almost like talons. We don't want to lose it. Classic case study would be that nice red sports car or whatever that you want to buy, you see in the window of the auto dealer when you drive by. You may pine for it, you may want it, but you won't do anything extraordinary to get it, necessarily. But the day you buy it. Now we do extraordinary things. If we can't afford to make a payment on the car and the lease, they call in, say, we're going to repossess the car. Unless you make a payment, we will work a second job. I might as well become an Uber driver. You know, I will. I'll keep the car in my garage so I can drop the insurance. I won't drive it because it's my baby. I want it protected, literally. I'll do extraordinary things to retain it or keep it once I possess it, but I won't do extraordinary things to gain it in the first place. Well, there's an interesting thing about taxes. Once we make income, we classify as income for ourselves and then taxes are due. We cling on to it. We do sometimes crazy things. Oh, we'll just incur more expenses so that we can reduce our taxes lose. Businesses are told to not become profitable, lose your money, which is absurd, but we do that to retain the money we possessed. So in the profit first system, we pre allocate money to our taxes, therefore we never take possession of it. Loss aversion doesn't kick in. And therefore when taxes are due, we're like, hey, my company's paying it for me. We feel good, particularly if there's a little bit left over as a secondary bonus.
- [15:35]
B
Yeah, it is really awesome. It's just, you know, it's interesting. A few years ago I had gone to a millionaire mind intensive through T harv eckers program through Success Resources. And they introduced the jar system, which is similar to the envelope system, but it's a little bit different because money is allocated towards education and training, towards giving as well as passive income. Of course there's, you know, debt expenses and things like that. And I had always wanted to like, give more charitably. But you're right, like, it was like, well, this is my money and if I give it away, then there won't be enough for me or I won't have extra. But being able to allocate and say, oh, I have $100 this week to give or 200, it's just. It's so liberating. And also with the profit first system, it is just so liberating because everything goes into its right, right area. And what's interesting is, so Kate and I, this business is an online business. So overall, our expenses are pretty low. You know, we don't have brick and mortar and things like that, which is great. So with the emergency fund, tell me what you call it, because I know we call it our own names.
- [16:37]
C
Well, I have an account called the Vault.
- [16:39]
B
The Vault. Okay.
- [16:40]
C
You can call whatever you want. Like the nicknames are just suggested, but pick whatever resonates with you.
- [16:46]
A
Right.
- [16:46]
B
So interestingly enough, I thought to myself, I'm like, well, we won't really need this emergency fund because we're online. And interestingly enough, so we started your system July of last year, and then we got hit with Hurricane Irma. So the entire state of Florida, which usually like crosses across the state. No, it went like straight up the state. So the entire state either evacuated or stayed. And we had a training, and it was a training that we, I think, brought in about $18,000 during that time. So I was like, oh, my gosh. And then I remembered we have the emergency fund. And oh my gosh, if we have to refund everybody and we can't. You're okay, we're okay. And it wasn't going to be this like you said, well, I guess we can't pay ourselves for the next few months. So it was just really like. It just brought such a peace of mind. Luckily we were able to reschedule it for a month later. People who couldn't initially come where everything balanced out, so we're able to keep everything but just to have that safety net again. When I think of money, money to me as a vehicle for freedom and convenience and being able to systemize how your relationship with money, it really creates that freedom and convenience. So it's just amazing.
- [17:54]
C
One thing I find interesting, I call it the survival trap. I talk about it in both prop first and clockwork. But the concept is this. If you can see on the screen like this is. I guess it's flipped for you. This is my left side. And what I'm pointing to right here would be point A where I am in my business. The interesting thing about point A is any action you take if you're in survival mode, Any direction you go in, left, up, down, right, diagonal, any direction you take gets you out of point A. And that's actually how most businesses are operating. Point A is panic mode. Oh, my gosh, hurricane came through. You know, we don't have the money to refund, sell something to anybody quickly, just get revenue in. And we make these very impromptu panic decisions. And the funny thing is, or the interesting thing is it gives us immediate relief. Now you're out of the struggles of today. You can breathe through one day you got out of it. But we very quickly get back into point A. We need to have a clear vision or destination of where we're going, where we want to go. And if we make a decision, if you don't know where point B is, your vision, any decision you make gets you out point A. But some decisions, actually about half the time, we're making decisions that are actually moving us away from point B. So we need to get out of this panic mode. Well, what I found with Profit first is when you have a cushion, it allows that breath, that extra breath, say, okay, stocks, we're going to lose money on this because the hurricane came through, but at least we have the cushion. What decision should we make that gets us back on track and gets us consistent with that vision by having that extra beat of what also moves us toward that vision? I see businesses making sounder and sounder decisions and we need that security of extra cash in the bank, that emergency fund.
- [19:35]
B
And because you're a behavioral psychologist by nature. Right, Exactly. What happens is we go into fight, flight or freeze when we're in that scarcity survival mode and we can't make clear, rational decisions. And I love how you just positioned it that way because that's exactly what happens. So if we're making decisions constantly out of survival or scarcity or fear, then we aren't going anywhere. We can't really be clear. And like you said, it's so nice to just be like, okay, we're okay. And so then the logic, analytical mind can kick back in and say, okay, if this is the worst that would happen, we're covered. Right. Okay, now we can keep moving and. Or we can do both. Right. Like, okay, how can we recoup and where are we going? It's just like a beautiful thing.
- [20:12]
C
Yeah. And you know, it points to something interesting too. With Profit first is what I just shared in the beginning was the five. We call it the five foundational accounts. An income account I didn't actually really mention, but that's like account where you store your inbound cash flow. You never spent a dime from it. Then we talked about your profit. Owners pay taxes and operating expenses, but those are the five foundational. As businesses move along the system, and I don't suggest from day one doing this, but you can add additional accounts for specific things. Maybe you do want to get a brick and mortar space down the road. Why not set up that account to actually start paying rent? Here's an example we do with our own building here. We're looking at buying a building, and we decided that we'd want to do this about a year or two ago. And so we started saying, well, can we afford it in our cash flow? So what we did is we started making payments for a new building, which we haven't identified yet, but we started making payments to see if we can manage cash flow. And now we have confidence because we've been doing this for about a year and a half of saving money that, oh, my gosh, we are in a position to buy. And by the way, we have accumulated cash to put down a significant deposit. So that's just a little vignette to explain that in our businesses, if you have specific financial requirements that are in the future that you may want to invest in, you're not sure if you can do it or not. You can set up more than just the five foundational accounts. Set up other accounts, nickname them for their intended purpose, and see if your business can handle the cash flow and you build up this reserve.
- [21:38]
A
I love that concept because it really allows clinicians to think about, even with, like, bringing on a VA or an assistant to think about, okay, if I bring this person on here, let me start building in this account so that I can actually afford their salary before I can bring them on, so I can afford them when I'm really ready to grow my practice to that point. So that's just such a cool concept. Or even investing in training or a marketing workshop or E course or coaching program or something like that that you really want to invest in yourself in to really start building towards that so it doesn't feel like this huge, stressful undertaking all at once.
- [22:14]
C
Yeah, because I think when you're exactly right. I think when we have a single account, how most people run their business is we look at something like, oh, I need to take training. And then we say, either we have enough money, we do it, but then the next minute we're like, oh, my gosh, I don't have enough money for something else. So that's one scenario that we act reactively and forget about other things. Another thing is we get in this analysis paralysis, right? I could spend it here, I could spend it there. I could spend it here. I don't know what to do. And we take no action. So when we set up these other accounts, like a training account, the money that's in there is intended for that purpose. So you know exactly what you have available for that. And you also know when you spend that money that it's not detrimental. It's not detrimental. You're not pulling it from another intended use.
- [22:57]
A
So good.
- [22:58]
B
So good. You got my mind actually, like, thinking of other stuff. Kate and I are releasing a marketing e course.
- [23:03]
C
You can, you know, send Mike a check account. I wouldn't bitch and moan about that.
- [23:10]
B
Well, we praise your name everywhere. So I'm sure, like, in that I.
- [23:13]
C
Appreciate that I should actually, I should set an account for the Kate and Katie account to fund you for saying stuff about me.
- [23:20]
A
We're marketing on the street for you for sure.
- [23:23]
C
Yeah, I love it. I love it. You know, it actually reminds me though, you were talking about the want, the desire to give back. And I think as all businesses grow, we are in a better position to give back. But I think from day one, we want to give back. Whoever said you have to sacrifice yourself to give effectively was a real jerk because that's not true. And it's a shame. I see businesses do this, that they are trying to give so much that they actually compromise themselves. It's hurtful to give. That's not good contribution. I truly believe we need to put on our oxygen mask first. But we got to make sure that we're sustainable so we can give in the biggest way. I was in business for quite a few years using the profit first system before I set up an account. We call it family. And family is for my colleagues here. I think they're my front line if they have a challenge or an issue that financially, if someone else could address it for them would be remarkable. That's what this accounts for. And I don't make it super public like, hey, who needs money? But I now feel I'm in a position to give. I could only get there when I cared for myself. I think all of us can do the same. And you don't have to do from day one, but over time, maybe set up an account, the giving account, and it puts you in that position to contribute. But don't do that first. Take care of yourself first, really, to build that muscle.
- [24:45]
B
You know, I love that you have that in Regards to family. Kate and I, we have our marketing extraordinaire, and we have a VA in Africa that really support us, and they are our team, and they're amazing, and, you know, we couldn't do what we do without them. And they are part of our team. There's. There's no distinction, you know, between, oh, it's us and them. And I just. I love that you have that. That's just. That's so cool.
- [25:06]
C
Yeah. Yeah. And, you know, but. Because I used to not. And I used to say, oh, I want to give to someone like this would really have an impact for them. But then I was thinking, I actually need that money, or I don't have the money in the first place. And it would actually. It would be painful. Now with this account set up, it's. It's ready to go. And I keep contributing to it. It's just, again, it changes the psychology.
- [25:27]
A
Yeah, it's really a cool concept because as therapists, you know, we're in the caring. We're caring professionals. We're in the helping profession. We like to help people. We like to contribute. We'd like to make a difference. And when we're able to actually put ourselves first and we're profiting first, we have this whole foundational system that allows us to actually give more and give more meaningfully and contribute and make a bigger difference in a different kind of a way. So it just really, like, changes the whole relationship with it.
- [25:56]
C
Yes, it surely does. And that's what all these accounts do. It just changes your perspective. I think it gives us the extra beat. And the beautiful thing is we don't need to change ourselves. If anyone watching does bank balance accounting, which means you log into your bank account, see how much money you have, and then you make decisions based upon what you see, I want you to know that is a typical normal behavior. That's almost how all small business entrepreneurs run their business, at least from what I've experienced. And the beautiful thing is, you don't need to change now. It's. You log in to your bank always. Accounts are set up there. You change the nickname so you know what's intended use is. And you have such clarity. It gives you that extra beat, the extra breath, say, okay, I can do this, or to make prudent decisions. There'll be times to say, I can't afford that new. Whatever. I was gonna say leather chair, but that's so stereotypical, the new leather chair.
- [26:45]
A
Actually, I've been shopping for the perfect therapist chair, because I'm Building out a new group practice from that separate account that I've been, you know, adding all the money into over a long period of time. So I'm living it.
- [26:57]
C
There's a great. I don't know if you ever watched Curb youb Enthusiasm.
- [27:00]
A
Larry David.
- [27:00]
C
Larry David, that one. When they're shopping for a therapist chair, there's an episode. It's hysterical because Larry David wants to. I can't remember who the therapist was. It was played by Brian. I can't remember his name. But he goes shopping with him for a therapist chair is hysterical versus you don't want it to be too comfortable because you want people to leave after the 60 minute session.
- [27:23]
B
So Mike, just out of curiosity, what do you do for fun?
- [27:27]
C
I play guitar and I do. I occasionally do mud runs with my children. We just did one last week. So that's why it's top of mind. We did a zombie mud run and I'm 47 years old for the first time ever. This was an ego blow. Before the race starts out, they go, you know, who's the youngest person here? And there's like an 11 year old kid raises his hand and who's the oldest? And they go, anyone over 40? Like three hands go up. I'm like, oh, this is not looking good. Anyone over 45? Two hands go up and you're like 46. And that guy goes up and I'm like 47. I was the oldest runner there. Which first time in my life being the oldest guy. That sucked. But it was cool. I had a great time. I had a great time.
- [28:06]
B
So do you guys like wear makeup and stuff or you just talk?
- [28:09]
C
Oh yeah, it got totally corny. Yeah. My daughter was wearing like she was dressed as a pumpkin. My son was wearing like a business suit and stuff. And it gets crazy and you're just covered with mud and gunk. But it's so much fun.
- [28:24]
B
Yeah, that sounds like a lot of fun. So I know that we could talk a lot about this, but overall, what do you want people to take away from your message today?
- [28:31]
C
Mike, the one thing I haven't said yet and it says it starts slow. So there was a study of people looking to get physically fit. Exercise. And the first lesson, if you want to run a marathon, for example, is don't run a marathon. You don't start practicing for a marathon by running a marathon. You start by stretching and over time building it. The profit first system. The big failure point for it is when people try to go full throttle up all these accounts. So here's the big call to action if you want to bring permanent profitability to your business. I got such an easy two step process. Step one, call your bank today. Don't delay, don't waste time. Call your bank today and set the savings account and call profit. That's step one. Hopefully it's 30 minutes or less. Step two is allocate 1% of your income. And the reason I pick a number so low is that if you make, say today $100, I'm saying take $1 and put this account. If $1,000 comes in, I'm saying take 10 bucks. Because if you can run your business off $1,000, you can run off $990. I don't want to injure the way you're operating your business currently, but I also know you'll start building confidence in yourself and momentum because you'll start seeing small amounts of money pile up. Then two or three months from now, change that 1% to 2, 2 to 3 and keep building that muscle. You'll be running the, you know, the fiscal marathon pretty quickly if you start slow.
- [29:49]
B
And I love that because behavior change, it does need to be small. And I totally relate to what you're talking about with fitness. Interestingly enough, like throughout high school, college, and even into my 30s, like fitness was easy. And then at some point I just stopped and I went through a whole year of business coaching. And part of it was to get back on the fitness track. And it actually took me a year year make it a habit that I was good with. But it started with me, like fooling myself. This is what I would say. I was like, okay, all I'm going to do is put on the workout clothes and watch the video. I'm not even going to do anything else. I'm just putting on the workout clothes and I'd stand in front and of course, you know me and Shaun T from insanity, we do the workout together. But you know, what I'm saying is it's just making that behavior change and making it small. You don't have to jump into this right away. Maybe it's picking up the book, you know, maybe that's exactly just 10 pages of the book. And I love that whole like 1% thing because that is doable. Anybody can do that. So thank you for that advice that's just so helpful.
- [30:47]
C
You're very welcome.
- [30:48]
B
Before we say goodbye for today, I really want the audience also to know just kind of briefly about your newest book, Clockwork, and share a little bit about that.
- [30:54]
C
Yeah, sure. I'D love to. So it's interesting. I've been studying Maslow's hierarchy of needs and found that there is, you know, these different stages for our personal needs that we need to ascend to get to the highest level he calls self actualization. I've translated that into business. I'm actually going to be writing a book about this too. And realized that after we achieve profit, there's something before profit. Once you get the profit, the next thing we need is actually time. You can have a business that makes all the money in the world, but if you're carrying the business on your back and working like a mad person, it's not serving you. So now we want to bring it back. That true balance and what it is or how you pull it off is through organizational efficiency, not productivity. Productivity is where we actually pile more on ourselves. Organizational efficiency is where we leverage the resources of our organization, software and people and different things to elevate the business to run on its own. That's what Clockwork is about. How do you, even if you're a business of 1 1/4, like as a part time virtual assistant, you can start bringing around Clockwork principles and have that business ultimately run itself. That's what the book's about.
- [31:56]
B
Those are some of my favorite words. Tax, write offs, outsourcing. Those are my systems. I love systems.
- [32:02]
C
Mai tai's, margaritas on the beach.
- [32:05]
A
Yes, exactly. All of that sounds really sexy.
- [32:07]
C
Yeah. Yeah.
- [32:09]
B
Well, so you have to have those things to be able to do more of that, right?
- [32:12]
C
Touche.
- [32:13]
B
Exactly. So, Mike, it's been such a pleasure to have you here today and we totally appreciate you saying yes and being on the podcast with us and really sharing about profit first. And I know Kate's in the middle.
- [32:24]
A
Of Clockwork and I look, I am, I'm loving it.
- [32:27]
C
Thank you.
- [32:28]
A
Really enjoying it. And now I just want to, you know, on air, invite you in for round two so we can focus on Clockwork.
- [32:34]
C
F and A. Yeah. No. Hell yeah. I would be privileged to be back on your show to talk about Clockwork. It'd be fun.
- [32:41]
A
Awesome.
- [32:42]
B
Awesome. Well, let me get. Let me finish it and then we'll have you back on the show.
- [32:45]
C
You got a deal.
- [32:46]
B
And also too, I just got to say, I love your website. It's a lot of fun. If you guys have enjoyed mine today, his website is as fun. But of course it's better to have him here. You can always find him at Mike Michalowicz, it's M I C H A L O W I C z dot com so check it out and get Profit first. Read it. Even if it's ten pages a day, read it. Just start to get the information and knowledge and start one of those behavior changes. It could just be one behavior change to help you and your business. Profit first of course. Kate and I always committed to you guys being successful therapists, whatever that means to you, and also living a dream lifestyle. So this is part of that money mindset. Stuff that really needs to happen for you guys to live your dream lifestyle. So we hope you'll join us next time. Actually, as we have another author on our show, we're really excited to have Jeb Blunt on our show. Jeb is going to be talking about the psychology behind sales. So luckily we don't have to cold call people as therapists, but we do get potential callers and that can be a lot of times nerve wracking. So he's going to speak right to us about our language and all the psychology behind sales and rejection and all the reasons why we freak out or we don't and what to do to overcome that. So we look forward to you guys joining us next week for that. And as always, Startup Nation. Thank you for allowing us to inspire you. From Startup to Mastery. If you found this podcast really helpful, share it with a friend or colleague. I'm sure they're going to find it helpful too. So have an amazing and inspired day and we'll see you next time.
- [34:09]
A
See you next time. Thanks for joining us on the Private practice startup. Visit theprivatepracticestartup.com for awesome resources, free trainings, attorney approved private practice paperwork, and so much more.
- [34:40]
C
Sam.