Implementing Profit First with Mitch Bowler #EEP #228 Entrepreneurship Elevated Podcast

In today's episode, we're going to talk about implementing Profit First in a business. We have Mitch Bowler here today who's going to come in and share how Profit First served him and the challenges he faced. You're about to hear that and so much more on today's episode of the Profit First Podcast. Hello! Not feeling it.

There you go.

That's right, Amy.

Thanks.

When's the last time you were told to grunt?

Never.

What about when you had babies? Don't they tell you?

I didn't go into labor with either of my kids.

You didn't go into labor? Who are you?

I was super old.

Did you have a C-section?

I just popped them right out of my stomach.

You had no labor?

No labor. Actually, I had like one massive contraction, but that was bad because I had a stent in my kidney at the time and I wasn't supposed to be going into labor.

Oh my gosh.

But all is well now.

Well, your son—

Moving on.

Your oldest son, I assume he's a big boy. Was he a big baby?

He wasn't that big. He was only 8 pounds, 4 ounces. Now he's a little bit more, just a little.

You're like, where am I listening to? Well, you're listening to the Profit First Podcast with a couple of people you should know by now. My name is Mike Michalowicz. I am the author of Profit First and Clockwork and some other stuff, some other books like The Pumpkin Plan and so forth. And you, you are listening to the Profit First Podcast. This is the only show that puts the bottom line into your top focus. I'm joined in studio by my my colleague, Amy Cartelli. Welcome, Amy.

Thank you. Hi everybody. You can find us on iTunes, Stitcher, TuneIn Radio, Google Play, Spotify, profitfirstpodcast.com, any podcatcher, anywhere you hear a podcast, and screenshot your review and we'll mail you Profit First for free.

Now where do they have to send that screenshot to make their big claim, Amy?

Send that to kelsey@mikemcallewitz.com and I will personally send that out.

Total bribery. But we want reviews. I was at Podcast Movement, Amy, a few weeks back, and I learned the importance of reviews. Like, we always said it'd be nice if you review our site, but I learned, like, actually these podcasts determine where you get presented when people do searches on their podcast based on the number of reviews you have. So when people type in the word "profit," we were going— we weren't up on the list. We had like one review.

Nobody's seeing you unless they scroll to the next.

Yeah. So everyone's like, at Podcast Movement said, oh, it's real simple. Just bribe people. I'm like, what? And they're like, no, just bribe them. Like, people will say, oh, when, when you do a review, we'll send you like a little gift, a free PDF or something. I said, I'm going to go to the highest level of bribery. I'm sending books out, baby.

There you go. That's like, you upped the game.

$20.

That's serious. That's serious bribery.

That's serious bribery.

Serious bribery.

Um, you can get that. And then while you send that into Kelsey, that little screenshot, get that done. Boom. You got your free book coming. You can get another free book. Book online at MikeMikalewicz.com. That's my website. So you can read a book while you wait for your next book. That book is Surge. It's a book about catching market momentum to drive the ultimate in profitability. And I literally have it for free for you right now at MikeMikalewicz.com. There's a shortcut to get there. In Google, type in Mike and then spacebar, Mic, M-I-C, the long Polish name. That's, that's me. Uh, just pick it. Or you can go to MikeMotorbike.com. And Amy, you knew me in high school. I never rode a motorcycle.

No, how did you get the Mike of the Month?

You're the one who called me that, I think.

No, I called you something else.

What'd you call me? Oh, McCalla Shits.

Yes.

You called me McCalla Shits.

I called you McCalla Shits.

Are you the originator of that?

I am the originator of McCalla Shits, and you are the originator of Gumperson.

I fell in love with you the day I saw you. I walked into Miss— it was Miss Strucco's class.

Yes.

I sat behind you.

Yes.

And you just started busting my chops, and I loved it. I loved it. Um, was it?

We were meant to be.

I think we were meant to be. It was like two ships in the night, just never connected, you know. Um, but hanging out a lot.

Yeah.

And, uh, we are now— just so our listeners know— we are now coordinating the Booton High School class reunion. I want to thank you publicly for the, the amount of work you're doing, because while I'm quote unquote leading the effort, you are doing all the work and the effort.

Well, I'd just like to remind you we still do not have a venue for this affair.

I know, I know, I know.

Don't praise me too much, but we'll get there. We will get this done.

Big news, we can record this publicly, Chris Forti volunteered his house. I'm not kidding.

Are you kidding?

I'm not kidding. He said, oh, we can do it in my house. That would be so fun. Jay Bone, his property is, I think it's 50 acres. It's gorgeous. It's the biggest house in Boontown.

I thought you were doing Amy's basement.

Yeah, well, I want to do it in her basement.

That could be the retro version. That could be the warm-up.

Yeah, so Chris said he— but the thing is we still have to get the patents, so it may not be worth it. I know.

It may not be, but that's such a nice offer.

Such a nice gesture. So now we have it publicly stated. Alright, let's get to the business at hand. We are— actually, do we have any listener mail that came in? A shout-out.

A shout-out. Yes, we do, from Echo Pro LLC. This was on iTunes. As an entrepreneur, profit is a huge priority in our actions. I love how this show is far from stuffy, yet so relevant in business strategies. "Keep up the great interviewing content." Echo Pro, you guys rule. You rock.

Ah!

Uh!

Uh!

Yeah, we love you. Yeah, we're gonna have a little fun when you're talking about profitability, right?

Yes.

It doesn't need to be an NPR show. Wait, I was on NPR once.

You were on NPR?

Yeah.

I really love NPR.

I love NPR.

I really love them.

Their stories are so funny. There was, oh my God, there's a story I'll tell you offline. Oh my God, it was the best. I was listening to it with my son, he was maybe 10 years old at the time, and it was just, They are such good storytellers on that show. It wasn't The Moth, but it was like an interview about fairies and mystical stuff. And it was— they made it a funny one. It was hysterical. So go listen. Okay.

Okay.

So today, um, before we talk with our, uh, thank our sponsors, uh, we are going to be talking about a business that implemented Profit First. So get your notepads ready. Also write down Nextiva and write down Receipt Bank because those are two companies I'm sure you're going to want to check out. All right. Mitch Bowler. Let me tell you about him. He worked in Hollywood working as a digital artist on blockbuster films like Superman and X-Men. Awesome. So cool. So badass, right?

So cool.

So coolest guy ever already. He went on to build 3 art outsourcing operations in Shanghai, China with notable projects like Call of Duty, one of J Bone's favorites.

See, see?

Raise it. Yeah, say something. You love that.

Yeah, World War II.

World War II, baby. Sleeping Dogs. Oh, another favorite of yours. And Marvel Ultimate Alliance. Oh, a triple for J Bone. Oh, he's doing the shan shan.

He's like, I'm right here.

Mitch has turned his attention more to the business side where he's working to build the infrastructure to bring the breakthrough Evolve Art Education program that can teach anyone the skills to become an artist. Now that is a cool business.

That's really cool.

You may not know this, but Mitch lived in China for 10 years from 2002 to 2011, and now he's here with us in this moment. Mitch, welcome to our show.

Welcome.

Thanks for having me.

Oh, it's a pleasure. So, uh, what inspired you to become an entrepreneur in the first place?

I think it's, it's always been in my family. I had an uncle who, he was like a real estate developer and he had a private jet and a helicopter and all these toys in the '80s when I was a kid. And I was just like, I want to do that. That looks pretty awesome. And there's been a lot of entrepreneurs in the family. So I think it was just something that's always been there and kind of been around on the periphery. But my, my parents aren't entrepreneurs though. So, um, Yeah.

So were your folks a little bit surprised when you became an entrepreneur?

I think so, yeah. They've never really understood what I've done because I wanted to be an artist. And of course, you know, there's the whole starving artist myth. So no parent really wants their kid to be an artist. It's like, yeah, Mom and Dad, I want to be an artist and make a career of that. It's not really a good day, I think, for the parents. So they tried to persuade me into different things. Once they saw that I could make it work, then they're like, "Oh, being an artist is awesome." Then once I started my own business, they're like, "Well, maybe you should go back and be an artist because that was going pretty good and this business thing is kind of scary." I still haven't turned the corner there with the business, but I think with Profit First, that was a huge, huge help. Things are starting to pick up speed and things are really looking good for the future.

That's awesome.

That's wonderful.

Amy just highlighted the starving artist myth.

I love that it's a myth. I love that you call it a myth.

Why does that myth exist and how did you overcome that belief?

It's weird but I never had that belief. I always knew that it was possible. It's just that I grew up in a time when it was kind of weird. Video games were just coming up and nobody really knew what it was. There's no colleges that taught video games at the time. It was a real unknown for my parents as well as anybody else. It's just something different. I think as parents, you just want— want your kids to be safe and to have a good life. And so when you're doing something that seems risky that they don't understand, then they try and direct you in other ways. But I always knew that it was possible, that there's, you know, there's art that touches everything that we do. You know, you just look around on your walls, your phone, there's art everywhere. And so, yeah, I knew it would always be a good path for me.

That's interesting. I bet you that's common for everyone listening. Your parents aren't used to it.

Yeah, my parents— I was gonna be an artist before I went to culinary school.

Oh really? And did your parents get it?

No, same thing, that you're gonna be a starving artist, don't do it.

The safety issue for parents.

Yeah, yeah. So my father's like, oh Mike, you know, go to an engineering school, which I did, Virginia Tech. He's like, you gotta, you gotta go to the engineering school, become an engineer, get one job for the entirety of your life, and that's what you're gonna do. And then I became an entrepreneur, and he's like, I don't get this. He still doesn't get it. He's like, what the hell are you doing?

It's very scary for them.

He told me 6 years ago, he said, even when you were having a conversation with him and you were doing really well, he's like, when are you gonna, when are you gonna go get a job?

So just a quick story, I sold my, I sold couple companies.

I sold my second company. It was a lot of money. It was the most money I've ever made. I made more money in one minute than my dad did for his entire career, right? So I come home and I proudly show him this, and he was great. He's like, this is so amazing. I'm so proud of you. He's like, are you gonna get a job now?

Does this mean you could go get a real job now?

There was no association with that, which is so fascinating. So Mitch, you decide to become an artist. Tell us a little about the career, and I want to see how it turned into your own company.

Yeah, so I, I knew that I wanted to work in video games, but there was no video game companies nearby where I lived. And so that's how I got into film, and luckily there was a film studio. So I did a lot of special effects work, like explosions and designing action sequences. Um, and then from there I said, well, I want to do something of my own. I want to work in video games. I'm just going to take this and, and without having any experience in video games, I opened a video game art outsourcing studio in Shanghai. But the skills were fairly translatable, so that was the beginning of entrepreneurship. Then we were building these studios. The first one that I built, I was in charge of that one. Learned a lot of lessons there. Then the second one was— that was funded, and so I was poised to take over the studio eventually, but I was never the business guy there. I was high up, but I was never the one making the final decision. I got to see sort of how things were working on the inside. Then the third time that I did it, I was working for Activision, where I got to try— work on the Call of Duty projects and that kind of stuff. But there I was a technical art director, so I was very much not in the business decisions. It was more about the production pipeline. So when I came out of that, then it was like, okay, let's— I want to have more freedom in my life. In about 2006, so 12 years ago, one year I came home, I was like, how do people make money in their sleep? Which is kind of a, maybe a dumb way to start, but it's a way to start. And that's what led me to learning about internet business and how you could teach people online and set up websites that have advertising on them and sell products through that. So that was sort of the start of it in 2006. And then I eventually left video games in 2011. And then that's when I started on this path of running websites to teach other artists around the world. skills to, to get their careers going.

That's interesting. So it sounded like you heard the opportunity in education. Um, you learned a very technical skill, you'd mastered the skill, and a lot of this stuff was now teachable, and you're one of the guys who took it online and, and sold that service, right?

Yep. Yeah, exactly.

Yeah. That's amazing. That is. So that sounds like, I've seen other business people do this, is that sounds like a, uh, a webpreneur or info marketer, some times they're called, seems like it's extremely profitable. Was it wildly profitable for you? Was it wildly profitable from day one? What were the numbers like?

No, the numbers, like, they slowly grew, and it can be a very fickle business. So for example, the very first business that I ran, not that I was doing anything bad, but I got caught up in algorithm updates, and so 70% of my business disappeared in one day. So imagine you like one month you're making $10,000 a month and then you wake up, you go to bed, you're like, "Cool, everything will be good." You wake up and then now you make $3,000 a month. So that's kind of what can happen online if you build your business with one leg. So you know, I've learned a lot of important lessons along the way, that being one of the really important ones. So when I built my second business, it was a lot slower but it was built a lot more, in a way more robust way. So now we have an email list, we own the email list, Google can't change their algorithm and, you know, bad things can still happen, but we're set up a lot better. And to speak specifically to numbers, for a long time, you know, I'm an artist, so I almost feel like there's a spectrum of, you could say like artists are on one side and bookkeepers and accountants are on the other. And so I'm on the extreme bad with numbers spectrum. Like I have a problem with numbers. But if you want me to make something look pretty, I can do that all day long. I was never good with numbers and it was always an Achilles heel. Eventually I just said, "Okay, I need to get better with these numbers." When I started this year, Q1 this year, so January to— January, February to the end of March, I was making $67 a week in profit, $67 US. That was after I paid myself, but it's hard to do anything with $67 a week. To grow anything.

Yeah.

And so, but I mean, even that was better than where I was before because before I was just like an ostrich. I just had my head in the sand, wasn't really paying attention to anything. And as long as I could basically afford to live, then I was okay. But I had never had any kind of a system or anything before, let's say, like 2 years ago. Things are thankfully getting a lot better now.

Well, I want to learn how you turned it. I got to ask about that $67,000. How do you define profit? Was that all of your income or was that after your living expenses?

That was after living expenses, but again, I'll say that living overseas and I live a very frugal lifestyle, so it allows me to live more in like what I would even call what I do is a passion business. I definitely wouldn't recommend what I do to someone like if a competitor is out there like, "I'm going to do what Mitch does." Don't do it, man. There's way easier ways to make money. But if you want to have a passion business and you really care about what you— about the arts, then there's room for other people to come and play and help each other out in the space.

But you also said starving artists is a myth, and it sounds like you're starting to make the starving entrepreneur a myth too. You turned this around, or turned up the heat I should say. What did you do? I know you implemented Profit First. I think it's a little part of it, right?

Yeah, so it really came from just this idea of like talking with other business owners and just saying like, "Here's where I'm at," and them not just sort of saying like, "Well, maybe you should just quit," or either like go all in for a set period of time, and if it doesn't work, then you quit, or just quit now. That was kind of the two trains of thought. I just had kind of— I didn't do either one. I took the middle path. I was kind of being a wimp about it and not being definite. But I came out of the year and just saying that, what if everything that I'm approaching in the business is wrong? So what if— which is kind of a scary thought because it's saying that your thought process is a failure. And maybe failure is the wrong word, but something along those lines that you have to change everything. Like you almost need a lobotomy. If you're going to turn this thing around because it's not that I wasn't working hard but when I looked around and saw what my friends were doing, I mean a lot of different entrepreneur groups, I could see them having wild success and not that I needed wild success but I needed something, something that looked like it was going to lead somewhere. And so I came up with this list which I called Killing Myself for Fun and Profit which is, you know, a little hat tip to Tim Ferriss' first book title but I wrote the old me and I had 6 points of things that I didn't like. And bad with numbers was one of those things. So this is around December of last year. And then the new me, what I wanted to become was eats numbers for breakfast. And so what I, what I did then was I went on to Upwork and put up a post asking for, uh, I said I want a fun upbeat bookkeeper because again, I'm bad with numbers. I don't like numbers. So if at least it's something that I don't like doing, I want to do it with someone who's fun to work with. I interviewed someone and they were pretty good. Then I interviewed the next person and it was just, "That's it. This is the person. She's amazing." Her name is Sibylla. I was going to go in with a different book because I wanted her to help me implement— I think you've mentioned it before, Mike, Simple Numbers, Straight Talk.

Oh yeah, by Greg Crabtree. Yep.

Yeah. I recommended— that was the book that I wanted to do and she said, "Well, I've got this "This other book that I help people with is called Profit First. Why don't you check it out and read it?" As soon as I read the subtext of "turn your cash-eating monster of a business into a profit machine." I know I just butchered that, but it's the cash-eating monster.

I guess I'll tell it better actually.

Yeah, the cash-eating monster, that was the part that really— as soon as I read that, I was like, "Okay, we're speaking the same language," because that's what my business was. Yeah. And so she helped me really just start slashing expenses like crazy because I'd been of the school of thought of just like, you know, grow, grow, grow, work hard, work hard, work hard. But there was never a time to optimize in there. And I feel like this bookkeeper, Sibylla, she helped me to optimize my finances. And yeah, I'll just stop right there if you have any questions, because there's a couple other points. But before I keep rambling on.

I wanna go through it all. So let's talk about, um, your implementation of Profit First. So what I'm hearing is before Profit First, you have a profit of about $67 a week. Uh, you, you have enough money to survive, but there's a little— that's, that's your cushion. That's your, your fun money is $67 a week. Uh, you hire a Profit First professional, Sybille is one, and she suggests you implement Profit First. How does she go about implementing it? What do you do? Did you set up the accounts? Tell us what you did.

She just gave me— she just suggested that I read the book and then I just started implementing it immediately. So as soon as I was reading, I was just, "Okay, it's saying here to look at all your expenses." So I got out— I already was up with Xero, was the accounting software that we used in the cloud. So I just went through the expenses and started listing things out and just saying like, "Okay, do I really need this? Can I get rid of this?" That was the start of it, but then she pushed me to get the account set up. I don't know if there's a ton more than that that we have done. It was very straightforward. It took a little time to get over it, but I mean, it really has changed my thinking. Just this week I got a new Visa card so that I could get 1% cash back because I'm celebrating 1% wins now. I realize that all these 1% wins stack up into— Nice. 5% wins into 10% wins, then all of a sudden it's like, hey, this employee is just free now, like, or whatever it is, or I can pay myself more. And it's really amazing.

Yeah. So, so Profit First is a, it's a behavioral shift and it's a process of these, this collection of small wins. So, and it's very simple, right? You set those accounts. It sounds like you had this mind shift almost immediately. At least that's my interpretation. How did your mind, is that true? And then if so, how did your mind change?

So, Mike, I, I had already knew this system. I think that's maybe why it was easy for me to get on board with it, because when I had first started out as an artist when I was, uh, 18 or so, I had this saying that I need to keep myself poor to make myself rich. Meaning that if I had a lot of money and I could see it on the ATM machine when I put my bank card into the machine, I take some fun money out, you know, 18 years old, go to the bar or whatever, uh, if I had a lot of money, I would tend to spend a lot of money. But as long as I kept myself, you know, air quotes here, poor, meaning under $400, that was kind of my line where I was like, whoa, I'm in the red right now. Then I didn't have a problem saving. So I just needed to keep the money away from me. So this idea that you had of, you know, smaller plates and keeping the money in different places so you don't see it necessarily accumulating where you're always looking, it was really easy to adopt and it kind it made me angry that I had forgot that lesson when I started a business that I had intuitively known as an employee.

Yeah, that that would work. So I love it. So you start tucking money away into these different accounts. Did that cause you to start cutting these costs? It sounds like you kind of scorched some earth here on costs.

Yeah, like I just tried to cut as many costs as I could. And so being a bit of a technologist and in the internet space, there's a lot of monthly charges that you can incur with different, you know, this thing helps you with your bookkeeping and this thing helps you with managing your advertising and this thing does your 1-800 numbers. And what I found was that even if some of the costs I couldn't necessarily cancel, I could downgrade the plans. So for, you know, and often saving 50% of what I was paying on a monthly basis. So, and, and again, it, I used to look at it like, well, I could downgrade that anytime, you know, it's only going to save me $30 a month though, so it's not worth my time to do it, but it's totally worth your time to go and do it and examine these expenses and just cut them all down. Especially, I feel like for people who are maybe in the same situation as I was, where you're, you're able to pay yourself, but there's like literally nothing left over at the end of the day for anything else. And like your business is just gasping for air. And so anything that you can do to cut expenses, uh, ends up being huge. Like it just almost immediately is all of a sudden like, oh, there's $300 just this week. And it did take some time and a little bit pain to disconnect from some of these services. Um, so it's not like it was just clicking a button. There was work involved with it as well. But it all started to add up, and, and now it's, it's starting to hum to the point where it's like, okay, well, what are we, what are we going to do now? We, we can actually do something. We can actually hire someone to help us grow our business properly.

Interesting. Did you feel it was compromising you as you start cutting these costs? You said a $300 a month for example. Did that cut into your business? Did it slow you down at all?

No. That was another thing that I looked at was if everything that I was— if every way that I was approaching my business was wrong, then everything was up for kind of a negotiation or being examined. So there's something like one of the things that I looked into was social media and was like, well, what is the value of social media? So I just stopped stopped doing it, stopped doing all social media. We had one channel that was automated, so our Twitter feed was automated, but the rest of it we just stopped. We were doing it one day and then we weren't doing it the next day, and no real difference in the business. We just keep humming along. The customers that know about us, they keep coming back. The ones that love us, love us. The ones that we're not a good fit for, they were never going to be a good fit for. and we just, we just keep going. It's just, now we're running way leaner and the business works finally.

I think it's interesting that we do social media because we think we need to, or we do different things because we think we need to. It sounds like you said, no, maybe we don't, and no consequence.

Well, if you stop social media, then you're out of here. So let's keep doing social media.

That's a good point, Jeremy. Um, but you were able to, to challenge that notion Mitch, with, with what if I'm— with everything I'm doing is wrong? How did you have the courage to actually challenge yourself? Like, that's a real gutsy thing for an entrepreneur to do.

I think it was just being in limbo for so long, being plateaued for 3 or 4 years. And once I had talked to enough friends who had, you know, surpassed me, that we all kind of came up around the same time and their businesses continue to grow and just being a little bit of a broken record. And I could almost see with some of them, they were tired of me talking about it. They're like, dude, just stop doing this. It's not, it's not that you're a bad person or anything, it's just that you're in the wrong car, so change your car. And interesting that, like, I, I have changed my car now. Now this, this business that we've been talking about, it's mostly automated now, and it's just a little cash machine, uh, and there's people staffing it, and we still attend to all the customers' needs and it's just going through clockwork. But I have a feeling that there's still some more optimizations that I can make to continue to have it grow after reading Clockwork. But it's a cash machine and it's allowed me now by doing a lot less in the business and having a lot less to manage because there's a lot less expenses is a big part of it. Then I can focus on a new business that, you know, you talked about a little bit at the beginning of the call, Evolve, where that's a completely new business and we're really trying to change the art education system. Another passion business, but this one is a new car. If I was to compare them, the old one is like a Ford Tempo or something, and this new business is like a Ferrari. It's really amazing, and what we're doing is really amazing. It all came about, all the lessons learned from kind of like what not to do or how to change the thinking from the original business into the new one.

I think the worst car name ever is the Tempo. It just sounds like you're just keeping pace.

You're just going.

I'm with the Tempo here. I can do 55. Um, you— what blew me and Amy away, Mitch, was your, uh, in the show notes here, it says after implementing the first quarter with, with— after implementing Profit First in the first quarter, you had over a 1600% rise in profitability. Did I read that right or do we have a typo here?

No, you read it right. And, and as you heard, I mean, it's a bit of a headline grabber, uh, title.

Wait, because it went from $67 bucks, right?

Well, you go from $67, you can do the math. It's not like I'm talking about I'm making millions and billions of dollars here, but to me it's really life-changing. So yeah, we went from $67, and I was going to click here to pull up the next quarter.

Sounds like over a quarter, right? If I'm running the numbers right in my head.

The next quarter, we went from $67 bucks a month to $900— or a week, $67 a week to $967 a week. Week average.

Okay.

Um, and then that's incredible. This week, this quarter, we have continued to grow it, and it's looking like we're trending towards about $1,300 a week. Uh, yeah. So amazing.

So if we do 67 times 52 weeks, was that $4,000 a year versus $1,300 times 52? We're talking $65,000 if I'm doing the numbers right from $4,000 in profit to $65,000 on an annual basis. Does that sound right?

Damn, dude! That's phenomenal.

That's amazing. How's that make you feel?

You might laugh here, but it actually made me feel angry in the beginning. Like, once I read it, it all just instantly made sense. But once I read it, I was really angry because, you know, A, why isn't this taught in high school? But I mean, the book wasn't around when I was in high school, so that's fair enough. But it should be taught today. And why isn't this more talked about in business circles where it's all just like grow, grow, grow, grow, grow instead of, "Hey dummy," the dummy being me, "Why don't you start using this system to optimize this thing? I know you're not a numbers person. I know numbers aren't fun. It's not necessarily," air quotes here again, "fun work for you, but this is really going to change your life." Once it's set up and running, and this is the other beautiful sexy thing about what you've done is that it runs. I don't have to manage it. It's just all set up and it works perfectly like exactly how it's supposed to.

Amazing. So what, what do you think is the reason why isn't this— and there's so many great systems out there that we have to discover on our own ultimately— why do you think they're not taught in schools or, or entrepreneurial camps, or I don't know, why do you think it's not out there?

Uh, I'm not sure, but I, I've talked to a handful now of bookkeepers and accountants about this, and some of them know about it and they don't like it. They're like, well, they really poopoo the concept. They're like, well, it doesn't fit with this system or something. I'm like, dude, this Profit First is making me money. You are just costing me money. And then there's also the bookkeepers who don't know about it, which maybe that's just an education problem, but I could see the same kind of old thinking where they're just kind of ingrained into this, like, well, my job is to make sure the numbers balance. Whereas I looked at it as, as, you know, when I hired Sibylla, if she comes in and can help me implement this, she will be a profit center instead of being just a liability. So, you know, somebody that's costing me money every month. I look at my bookkeeper as someone who's making me money, which is— I never looked at it like that before.

Yeah, yeah, yeah, that's what we're gonna say.

Yeah, I think it's a, it's a paradigm shift. Like, you know, in business school they teach you all this stuff that looks good on paper, but then in reality, like, the first thing they teach, write a business plan, right? It's like a big huge waste of time.

Yeah, I hate traditional business plans. Actually, that last guest we had a few weeks ago, Derek, was talking about how the best way to go into business is without an idea of what you're gonna do. Yeah, because you'll be more successful that way. That's a Princeton Yeah, um, I, I agree, Mitch. It's so funny. So Amy, I thought you were kind of surprised. Look, you wouldn't believe the amount of resistance we get about Profit First. I'd say for every person that comes a member, there's about 10 people saying it's BS, Profit First, it's, it's snake oil, right? And it's like, really? But I think the reason is, is these people were raised up being trained on a certain methodology, and then we're, we're spitting in its face and saying, you know, I know profit's been the bottom line and the year-end It's wrong. It's not the bottom line. It's the first thing now.

And it goes against everything they've been taught. Everything they learned. Yeah.

Yeah.

But what keeps coming back to me is the need to be fluid in all of this, the need to be able, like even as Mitch said, to assess even the smallest steps if your numbers aren't working right. And as business owners, being able to assess everything you're doing, even when your ego takes a hit, which you've commented on before too.

Yeah, I think we really have to keep our ego in check. Um, so Mitch, uh, before we let you go, uh, just as the kind of final question, what's your advice to any of our listeners here that are considering Profit First or getting started with it? What's your advice to them to have a successful outcome?

Well, I think if they're just to do it and to allocate time for each week, because I think it's something that's easy to push off and to say, well, next week I'll get to it, or next week, or next week. But start to think about it as if you let's say you start with cutting some expenses and reviewing your finances, that an expense that you cut this week is not going to come around next week or next month whenever it gets billed again. So it is worth it to take action right now because it just keeps paying you back over and over and over again into the future. So start immediately.

Awesome. Mitch Baller, it was a joy speaking with you. Congratulations on all your profitability.

Congratulations.

Yeah, where can our listeners check out what you got going on and, you know, use your service?

Yeah, so I'd love, uh, if anybody's interested in art or creatively bent or has a family member, go and check out evolveartist.com, one word, E-V-O-L-V-E-A-R-T-I-S-T. We've got an amazing program. It originated in New Jersey, I imagine, not too far from you, Mike, and we're hoping to change art education the way that you've changed business finance with Profit First. So thanks for having me.

I wonder if that's that place in Dover.

I was about to say the Joe Kubrick School of Art, right?

Yeah, very famous school, right, right where we live. And also Pencil Kings. We'll have these links here. Check out what Mitch is doing and follow his lead. Make your business permanently profitable. Mitch, thanks again for joining us today.

Take care.

All right, and we got to discuss what we learned. I got a full page of notes here. And I know I'm good. I'm a good note-taker. I like your feigned surprise. Ooh, that's a surprise, Mike. We're gonna go over our corporate partners too, and then we are gonna do the listener mail for the day. First, let me hit the punch. There. I don't know why we do that every time, but it does put it kind of close.

Yeah.

Yeah. All right, so let's start off with Nextiva. Okay. It's a voice over IP phone system. It's probably the best I've ever— I know it's the best I've ever experienced. Probably the best anyone will experience on the show, if you try it out.

So user friendly.

So user friendly!

I know nothing about technology, and I can call them up and they can get me a phone line set up, or an extension set up, or change a mailbox, or change a price.

You've done everything! Did you record the voicemail here?

I think I did.

Because I was just listening, like, that's not a— That's Gumperson's voice!

Yeah, that was me.

That was awesome! Like, I didn't even know. When did you do that?

A couple months ago.

Jeremy, you don't understand. It used to be you'd hire a speaker, a voice professional. You had to have like a recording studio, a thousand technicians. Now you have Amy. It sounds flawless. It's— you did it all yourself?

Yeah.

Well, I mean, next, Eva.

My boss Kelsey told me to, right?

The boss gal.

My boss lady told me to do it.

But she lights her cigar. All right, here's what you're gonna do. You're gonna set the phone up on the desk. Yeah, don't mess it up. Some people might get hurt if you mess it up. Just use Nextiva, they'll take care of you. I got good friends over there.

Your voice just changed to like 5 accents.

I'm smoking cigars, it just does these different voices. I don't know what's happening. Yeah, and now Receipt Bank. Receipt Bank. I know neither— both you're like, Receipt Bank? I never even heard of this. It's because you're not living the fullest part of life right right now. You're sitting, you're trying to sell your house, you're trying to, you know, eliminate whatever that shit is that was falling off your basement. The asbestos.

Asbestos.

That's what you— that's where you guys are living.

Yeah.

You want to really live life? Receipt Bank.

Okay.

You know what happens?

Tell us.

They send you luggage tags. We have one right there. Luggage tag right behind Jeremy, right behind J-Bone. Luggage tags. Their system, it connects with your cell phone or smartphone phone. You can scan in your receipts. It links up with your accounting system. All of your receipts are tracked forever. And as a bonus, they then send you a luggage tag.

That is really awesome. And does it organize your receipts as well?

It does organize them, yeah.

That's phenomenal.

It's actually pretty cool. So much like— so I go to the sushi house across the street. Have you been there, J Bone?

Uh, yeah, I think I— yeah, when we were Myrtle. Yeah.

Yeah. Okay, we went to the sushi house and you go there regularly, right? You go there, scan it in, and they put writing in Chinese sometimes. This software translates, not necessarily the Chinese all the time, but translates what it says on the receipt. It says, oh, you were at Sushi House this time. It says, who were you with? I'll say I was with Ron, my business partner.

Wow.

So you can do all the notes that you need to take.

All the notes, everything. It's incredible.

You know sushi's Japanese, right?

Yeah, but they're— good point. But you are right. They are Chinese-owned, which is bizarre. Jeremy's so happy about that. He's like, ah. That's a good point. Dick. Um, but they are Chinese. Uh, but I was saying not because I knew they were Chinese, I was saying it because I didn't know. All right, so after Jeremy razzed me there, what do we got for, uh, what you learned today?

Oh, I think that—

get a little closer to the microphone, please. Sorry. That's great.

Stop the procrastination and take even the smallest steps if it means cutting numbers that you need to cut.

Yes.

I also love, uh, the artist myth.

I love that.

Yeah, you know what I'm trying to say.

It's because it's bull.

Yeah, and I have a son who's artistic.

John Henry?

Yes, extremely artistic. And I— he's already said, as a sweet little kid, he's already said, I already know I can't go into art because it's not going to be profitable. That's not— it's not going to be. Yes, I'm gonna go home and tell him about this myth.

Yeah, and I think the key is we're looking at evolveartist.com. Com. Yeah, totally. And I think, you know, the key is to be the most elite in your category. Just be the best of who you are. There was a guy who's a rock stacker who I met. I don't know if you know what this is.

The guys who balance the rocks in the streams.

And he's like, I'll never make money at it. I'm like, okay. I said, who's the most famous rock stacker you know? He's like, oh, there's one guy. I said, how much do you think he makes? He's like, oh, he's actually a millionaire. Because he makes, you know, presidential displays and stuff like that. So I think you can become the best in your category or the most unique in your category. I think every artist has a chance. So I love that.

Me too.

Uh, my takeaway was what if everything I'm doing is wrong? Like that's a ballsy question to ask. And I think, I don't, I don't ask myself that. I gotta start asking what if everything I'm doing is wrong just to challenge my perspective and find a new way. I thought it was funny that he got mad himself after he increased his profit to $50,000. Right, right, right. He takes a $50,000 bonus check. Check. He's taking a $4,000 bonus check, and he takes a $50,000-plus bonus check, and he gets mad.

That's—

which I get it, it's frustration.

Yeah, it's like when you see how a magician does a trick and you're like, oh, why didn't I think of that?

Yes, so obvious. SpongeBob.

The lost time and money has to hurt. I mean, that's just it.

Oh yeah, but now he's on it, so I'm psyched. All right, um, do we have any—

so what is—

oh damn it, microphone button. Do we have any listener mail?

Got mail.

Pattern baldness. Do we have it?

I have male pattern baldness. Yes, we do. From John Colbassa: "Do I understand correctly the tax distribution is based on the gross revenue amounts? This seems like too much to allocate if I use an assumed tax rate based on my tax bracket for earnings (net profit). So I feel like I'm misunderstanding something.

Any clarification you can provide would be great." All right, John, we're going to a technical one here, so I'm going to try to keep it real basic because I think I'm I'm getting a little confused, and our listeners maybe too. The TAPs— that stands for Target Allocation Percentages— that are specified in Profit First, in the book, uh, says to allocate 15% of your gross income for taxes. That's based upon most income taxes are in 35% tax bracket. Now, I did a global average. Yes, countries are different, um, so that's not exact. But 15%, if you you have, say, 50% taxes, and say your income is $1 million, 15% of that would be $150,000. Half of that money goes to expenses, which is not taxable. The other half, $500,000, is taxed at 35%. Multiply 35% times that $500,000, now we're talking, I don't know, $170,000, whatever. We've reserved $150,000. So we're pretty close. So you're going to tweak tweak it. It may be too high, it may be too low. Just go through an iteration, see how much taxes you actually have due after talking to your tax accountant and minimizing your taxes as best you can. See if the percentage was right and then tweak it. The TAPs in the system are simply a starting point, but you have to find the appropriate allocation percentage for you, which we call the CAPs, the current allocation percentages. Hope that answers your question, John. Um, Amy, uh, you gotta take us out of the show here. It's your last episode for the day.

Okay, guys, leave a comment and rate ratings on iTunes, Stitcher, or any podcatcher, and, uh, send us a screenshot of your review and we'll mail you, uh, Profit First for free. Just send that screenshot to kelsey@mikemikalowicz.com.

Now, Amy, what a way to wrap up this show. Every single detail. Do that, get your free book.

Don't forget to subscribe on YouTube.

Oh, listen to Jay Bone. That keeps him in business. That keeps his life, life right now. So yeah, go on YouTube, We post this once a week now. You can see me waving on the video. There's Amy. She'll wave. There's Amy. You can sign up there and subscribe. And wow, we got so many goodies for you. You can go to MikeMotorbike.com. That's my personal website. Check out all my books, all the work I'm doing over there. Plus I got a free copy of Surge up there so you can get that immediately and get a hardcover of Profit First mailed to you. Just follow these simple instructions. Oh, and you can hire a Profit First professional like Mitch did.

Yes.

Go to ProfitFirstProfessionals.com to find that or just Google Profit First Professional and we'll introduce you to somebody. All right. We're done for the day. You're not done. You're just getting started on profit. Talk to you later.

Ciao.