Mike Michalowicz — The Clockwork System

This is an intro. Intro, intro, intro.

Hustle and Floatshark with your boy, my boy, Matt Wolf. Joe. Hey, what's up, everybody? Welcome back to the Hustle and Flow Chart podcast.

Sure.

I didn't know if we were doing every syllable or every word, so I don't know, Matt. We'll have to discuss next time.

He was directing traffic with his hand, and I didn't know that was coming. As you know, these intros change every single time, and I never know what the hell it's going to be until we hit record.

Absolutely.

It's pretty much on the fly today.

On the Hustle and Flowchart podcast, brought to you by Evergreen Profits dot com.

Got to put that in there.

Got to put that in there. We've got. We've actually got one of my favorite authors. I think probably one of your favorite authors.

Yeah, he's a funny one. And he makes. He makes subjects that are seemingly boring from the outside. Finance systems, all that fun stuff. Yep, fun stuff in quotes, but he actually makes it fun. Like he is the guy that makes it. You want to keep turning the page. It's. It's freaking weird, actually, because, like, literally, this book, Clockwork, his newest one that just came out, is about taking yourself out of the business, but really it hinges on doing a lot of homework in your business and systems and optimizations and getting hiring, delegating from the outside. That's freaking boring sounding. But you've probably heard it a lot of times. You think, but this time it resonated.

Yeah, no, that is really. His skill set is taking these topics that you kind of go, oh, man, not this again.

And.

And he makes them really, really entertaining. And, you know, I had a lot of aha moments. I mean, you'll hear us throughout this episode say, this was another big aha moment that I had while reading your book. We discovered him through a book called Profit first. His name's Mike McCalowitz. I don't even think we've mentioned his name yet. So Mike Michalowicz is on the episode today. He's the author of Profit first, the toilet paper entrepreneur. Serge. The newest book, Clockwork.

Clockwork. Oh, my God.

There's one more that I'm missing.

A pumpkin plan.

The pumpkin plan.

Yeah.

Yeah.

So he's got cool names for his books. I let him know that.

So he's got a lot of. A lot of really, really great books. I think a lot of bestsellers in there. And, you know, Profit first really, really changed the game for me of, like, finances and Things like that.

Business.

Yeah, just like business finances and where my. How my money gets allocated and things like that. And this new book that just came out, Clockwork, you'll hear us discuss it. It's very much about systemizing and figuring out how to get yourself out of your damn business. And here's one really cool thing about this book and we're gonna talk about it on the episode, but I wanna give you a little teaser here. He gives basically a step by step process on how to get yourself out of your business within 18 months. And at the end of that 18 months, take a four week vacation without even checking in on your business. He's got a process, a step by step process that you do month by month to get yourself to that point where you feel comfortable. And he's gonna break down a lot of these systems and processes and how to delegate, how to automate, how to get things off your plate and just amazing conversation.

Yeah, this was one of those. We wanted to keep rolling and rolling and rolling. So definitely check it out, you're gonna love it. This book came to us. We found Mike at the right time for our business and that is not a joke. He bought one of the affiliate products we promote, ThriveCart and we'll say it in there. And we literally saw his name, reached out and boom, that's how the connection happened. And it's, it's really cool. So we're super stoked. Go check out the episode and also get Clockwork. You'll love it.

Let's dive in with Mr. Mike Michalwitz. Hey Mike, thanks so much for joining us today. How are you doing?

I'm doing well. So Joe and Matt, thank you to you.

Thank you, man.

Yeah, yeah. No, it's interesting how we cross paths actually.

I actually first heard your name because you were on a friend of ours, actually our business partners podcast, A guy named Brad Costanzo with his bacon wrapped business podcast. He's actually a business partner of ours in one of our other businesses. And I actually heard you on his show, I think maybe twice. But anyway, I got introduced to the Profit first book from that podcast. I went and bought it. I told Joe, you need this book, you better go buy it. Joe went and bought Profit First.

That's a wrong story. That's awesome.

Okay. Joe has a different story. He thinks he introduced it to me, but I'm taking credit.

My bookkeeper, and this is totally true, she's like a super fan of yours.

So.

So I'm sure when this comes out, I'll send It her way. She was the one that introduced profit first to me. And yeah, so it was probably both Brad and Isaac.

But anyway, so fast forward a couple years later. We're big affiliates of a product called ThriveCart. We actually saw your name come through and so we reached out and said, hey, we saw you grab ThriveCart. If you need any help, let us know. And that's how we got connected.

Super cool.

Which, by the way, we love and I love when you hear about affiliate relationships, it's like, oh, okay, so this is someone who's trying to sell you and that's it. I mean, we bought it, you sold us, but you've supported us above and beyond anything I've ever expected. Better, better than like, many companies support their own business. So I appreciate that tremendously.

You're welcome, man. And thank you. Because that's something we literally strive for every single day. That's kind of like where I'm heads down every day. So that's super cool. And you're not the first one to say that. When we're like, why are people not doing this right? So we'll just keep doing our thing. That's cool.

You're doing it right.

Yeah. So, yeah, you have a cool background and you've written a lot of books. They all seem to have really cool names too.

I don't know how you do it. Your writing style. It's funny because we were just talking to our ops manager, Shannon, yesterday, which we bought her a copy and we're like, rushed it to her, so it should be there today. I'm like, you need to read this. Oh, yeah. We're just like saying, yeah, it's. The concept isn't really the most entertaining, but the way you write it, the way you present it, you. It's always like, puts a smile on both of our faces every page. And it makes it fun.

Yeah, I, you know, because the topics that are in business are pretty many of them are pretty boring for me too. And so. But it was necessary. Like, we need to talk about the finances, we need to talk about systems and processes, but I do at the same time want to put a bullet in my own head. So when I write these books, I do it first from an analytical standpoint, but then I want to put some flavor into it. We need to have a fun time doing it. And if finances can be fun, if business efficiency can be fun, if all these things can be fun, then I think we're much more engaged. So that's the way I need to consume and that's why I write the books the way I do.

Yeah, you're doing it right for sure. Profit first, me not being the analytical finance guy. Typically you put it into friend terms. I'm like, ah, I get it. Okay. That actually seems simple and kind of fun. So. Yeah. And then Clockwork. So the newest book that just released, was it last week, I believe. Well, I don't know what the date is, but this will be going live. But recently the book came out and it goes down that same vein and it's all about, I mean, there's so many things there, but it's not productivity. I know that much.

It is.

Yeah, yeah. No, and that's a point I wanted to talk about. But how would you present Clockwork to the world here?

So the subtitle I think explains and I can give some details. Of course.

The subtitle is design your business to run itself. And the concept is. Well, the book actually is a seven step process. But what I do is I try to define what are the simplest steps that we can get to building business efficiency. And I also hope that people see it as a complement to some other fantastic books out there like Traction and Scaling Up. But one of my favorites of all time is E Myth. And I remember meeting with Michael Gerber in Mexico. We did a keynote back to back at this, this big event. And afterwards we, we decided to grab some dinner together. And I don't know if you ever met Michael Gerber. I see him speak, he's, he's a little bit, he's a little bit of an eccentric.

Yes, he is.

Yeah. He, he's wearing his signature outfit, that white, like, like the kfc. The Colonel from kfc.

Kind of reminds me of the Doctor from the first Jurassic park movie.

Yeah, yeah, yeah.

Actually, I can't think of his name, but the main doctor in that first movie, he looks exactly.

And he's always in that outfit. And so we're at the dinner and we're talking and I said, I love E Myth. And one of the challenges though I've seen entrepreneurs face after reading that book is that many people, including myself, thought that going from working in the business as opposed to on the business as he is, his basis of the book is based on. I noticed that most entrepreneurs think it's a switch. Like one day, one I'll have enough customers, I don't have to be in the business anymore. Or one day an investor will come in or they're looking, we're looking for this event or moment that switches us over all of a sudden. And now we're owners of a business, not slaves to a business. And that's why I wrote Clockwork is because I think, more than think, I know that approach of working on a business as opposed to in business is what we need to do. Michael Gerber nailed it. I hope that Clockwork now is the path to pulling it off. And what I teach in Clockwork is it is a throttle. You know, I was just saying, like, when you start a business, you're like the parent of the business. It's a parent child relationship. You know, I gave life to this business, and now I'm going to nurture it and feed it, and one day the business is going to give back to me. And I call BS on that. I don't think it's a parent child relationship. I think it's conjoined of twins. You know, like, we share a soul, we share organs, we share. We share legs, we share everything. And therefore, the separation of our conjoined twin situation is a very surgical and methodical process. You don't just pull the people apart. They'll both die. So what you do is you very slowly extract the entrepreneur from the business step by step. And the process can take a long period of time. But if you're staying with it persistently, a year, maybe two years, you're fully extracted from the business. And when the business can run itself, the entrepreneur is elevated to what I think their natural. Not their natural, but their most important talent is perhaps their natural talent, which is working on the design. It's something that we did before we started the business. It's the vision. We clearly knew what we wanted. Now when we're extracting the business, we can revisit that vision, but also make strategic and tactical decisions to navigate our team, the people that are working for us or the resources that we're using and the technology we're using to actually pull it off and get to that vision.

That makes sense. And I. And I love how you connected the E. Myth with your book, because I could totally see that being absolutely what this is. Clockwork.

No, it's funny because. So my. My dad is an entrepreneur, too. He runs a business here in San Diego. And I was talking to him over the weekend, and I told him, you got to go grab this book. And he's like, oh, what's it about? And my description to him was, oh, it's kind of like the E. Myth. But I feel like there's way more actionable steps where you can just go follow the process, that was my. That was my way of describing it. And that's not to knock Michael Gerber or anything. I love the E. Myth. One of, you know, one of my favorite books ever. But that was my description of your book.

It's perfect. Yeah.

Well, yeah. Thank you. Yeah. So his. His book. Just revisiting that. His book is. I think it's really motivational. And I know countless entrepreneurs have visited, have read the book, and they tried. They try it, but then they feel that they're lost. They feel they're kind of thrust into it and they very quickly revert back. It's normal of us to.

When we're struggling to go back to what's our habits, even though, you know, running a business may be uncomfortable. It's a lot of work, it's a lot of effort, it's very time consuming. But we very quickly revert back to our habit of doing the dirty work in the business because at least we're familiar with it. And when we try to make this sudden shift, it's not sustainable. It's kind of like if you wanna start running a marathon and never have before, like your first practice, you don't run a mar. Practice for a marathon. By running a marathon, you have to build to it. And so that's why I hope the transition is. Or the complement Clockwork is to E. Myth, but also all the other books out there about systems. I hope it shows you how to build the muscle and ultimately get you running the marathon over time.

I love it. And then you mentioned the comfort thing. So all of us right now have a safe zone as an entrepreneur, as a human. And you had a cool story in there. It was just like a few sentences. I'm sure you know where I'm going already is your mentor, Frank. And I thought it was just a hilarious visual. Kind of freaky too, sitting on that lawn chair in the future. Do you know that one off the top of your head? I'm sure. Can you just recite that one back to us?

Yeah. My mentor, Frank. So the rusty lawn chair. I'll never forget that.

He's my mentor now for 20 years. He's retired, actually. I still meet with him occasionally. And I met with him once, and he had a godfather like voice. He kind of talked like this. First met with him. I had my first company. It was a technology business. And he said.

He evaluated my business. He goes, for God's sake, Mike. He goes, if you keep doing what you're doing, one day you're gonna end up in A rusty lawn chair with your nut hanging out. And I remember him saying, oh, my God, it's still. It's the most bizarre thing. And I'm like, is this guy gonna say this or something? Like, what's he doing? Like, this is a business coach. And what he was doing was basically his version of shock therapy. He. He wanted to show me a new way of growing my business, but also knew that I was very stuck in a pattern, a habit, just as we talked about, and if I stayed stuck in that habit or pattern, that I wouldn't grow. So he was basically saying, if you keep repeating this process over and over again, I want to show you what your future looks like. And he tried to make it vivid and ugly so that I would be shocked into trying something new. And it really did wake me up. Now I laugh at it, but back then I was like, my God, what's this guy talking about? But it did get me thinking about our future. And surviving another day is very easy. I just work hard, put out that fire, you know, address that customer that's. That's bitching and moaning. At the end of the day, we're exhausted and tired, but we say, at least we got through the day. But soon we gotta realize if we keep on repeating that pattern over and over again, that is the definition of our life. And do we want that carrying us through every day of our life to the end? That's what Frank was trying to teach me. And I was like, no way. I want to have a business that's. That's running without me. And that's what I've. What I've hopefully achieved in my businesses now.

I love it now in that visual even. You know, it's. Obviously, it's probably locked in your brain forever now, but everybody who reads your book too, but it's probably great exercise. It's like, okay, where are you currently right now? Or maybe where are you working towards in your day to day? Is it where you want to be in 20, 30 years or 10 years.

Whatever it might be in the book? I don't know if you remember this or not, because it was very subtly mentioned, but you made a comment at one point in the book. Joe and I have both read Clockwork just for context, but you did make one point in the book where you said people don't really change. Kind of like once they're set in their ways, it's really hard to get people to change. And it was very subtle. It was mentioned in one sentence in the book somewhere. So I'm curious what kind of things need to happen to incite this change. That. Okay, you need to get on this path of systematizing and sort of working your way out of the business.

Yeah, there's a few ways I find that in sight change. One of them is the one we don't want, but is the most effective. And it's the heart attack, the proverbial heart attack. You know, it's like if someone's a smoker, every smoker knows how bad smoking is. Like, we don't need more education about how bad smoking is, hoping that will stop people. What they need, some people need is that heart attack. They smoke and all of a sudden they have a heart attack. And that is their wake up call. Because they really realize this isn't just a theoretical risk. This actually applies to me. And that will stop people from smoking. Problem is, of course, you don't want people to have a heart attack to stop smoking. So then you have to have a visual of your own future. And actually, you may even see in smoking commercials more recent times, they show like a blackened lung and they say, that's your lung. If you smoke, they show someone that's on a respirator in the hospital and they say, that's you. Those are much more visceral and therefore they connect much more. So if we can get a vivid image of our future, the one nut guy in the lawn chair, that's another way of doing. That's actually what Frank was trying to do with me. Another way, which is the more, I guess, joyful way, is to have a clear purpose, meaning a greater purpose that we're playing into. I think it's a life's purpose and defining how our business serves that because that becomes magnetic. As an example for me, it's very clear for me that my life's purpose is to eradicate entrepreneurial poverty. And entrepreneurial poverty is defined by this outside perception. The day you become an entrepreneur, everyone thinks you're a millionaire and everyone thinks you're on the beach drinking margaritas. The reality is most entrepreneurs are struggling to make a penny and they're working 24 by 7. So there's this kind of outward veneer of success when the reality is is in shambles. I want to fix that. That's became a clear life purpose for me. And as a result, it becomes a motivator. It magnetizes me, it pulls me toward it and I'm running toward an objective. And that momentum of moving towards something.

Makes me cognizant that if something is slowing me down or if I'm staying stuck in a pattern that that's no longer. That's not acceptable and I get through it quickly. So again, the three ways I found is have that financial. Have a heart attack of some sort. A proverbial heart attack. That's the worst case scenario. You don't want that. But some people, that's the only way to change. Other people, it's to see it in others so vividly that they reflect upon themselves and say, okay, that's my future, I need to change. Or third, which is the best is have a greater purpose that pulls you beyond the day to day minutiae and forces you to keep moving along because you have something greater that you're trying to serve.

I love it. And would you. So that wouldn't be considered your qbr, right? The queen B roll, that bigger purpose, that would be probably separate, I believe.

I'm sorry, cut out. Say it one more time.

Oh, so that vision, that bigger purpose, that wouldn't be your qbr, the queen B roll. Or would it?

Right. It's not. It's not so. But. But it kind of plays into it. So the queen bee role is something I explained in Clockwork. And here's how it works. The, the greater vision or purpose is as Simon Sinek says in his book stars why it's the it's your own personal why and may also. And I think it should convert into the businesses why. The one kind of element directly below that, or maybe above it depends how you want to say maybe why is the foundation. The next level up is called the brand promise. And what a brand promise is is the way you distinguish yourself in the market. What's the one biggest commitment you're making to your clientele? And I guess an example of that, like FedEx is a great example. Cause we all recognize the name. FedEx promises their brand promises to deliver your packages on time. They even have commercials. You know, if it absolutely, positively needs to be there tomorrow, we'll make it happen. That's their promise. The QBR that you're referring to is one step below that. If we peel back the onion, just one layer, we have to ask ourselves, what is the one singular activity that supports that brand promise? What's the one activity that makes that a reality? And that activity is a qbr. And now the reason I call it the queen bee role is because I looked at business efficiency or organizational efficiency and found that beehives were very efficient. The reason beehives are very efficient. Every bee knows the most critical role or function in the hive that its thrivability or survivability depends on is the production of eggs. So all the bees know that eggs need to be produced, happens that the queen bee produces it, but all the bees protect and serve that function. In our business, we have that key function. If we look at FedEx, their promise against deliver on time, and if we peel back the only one layer, the qbr, the function that supports that, is logistics. Every employee knows at FedEx, logistics is the most important thing. And the day FedEx says, you know what, screw logistics, you know, let's be a customer service place and let's not, let's not worry about package Delivery so much, FedEx will go out of business. You know, your packages aren't being delivered. So they know this so inherently that if logistics are ever threatened, if packages are being slowed down or whatever, that the rest of the team has to step up. And by the way, this happens every year at FedEx. Every year FedEx will have a seasonal influx. It's around the holiday season, in the winter. And what the managers do is they don't say, well, drivers drive faster and drive better. They say, you know what, we're getting the trucks too. And the management team helps out. They have an influx of part time help. It's the role of logistics that matters most. Now, for the folks listening in, it starts off with what's your why? You know, that, that vision, that grand purpose you have. But when it comes to the application of the business, we have to say, how does that translate into a promise? What's the big promise we're making for our community? So? Well, my why is to eradicate entrepreneurial poverty. My big promise to my community is to make complex and boring business subjects simple and engaging. Right? That's my promise. Then how do I do it? Well, it's through writing books. So that's my queen bee role. I have to write really good books and I have to invest the time to make it a reality. That is the most critical role and everyone in my organization knows it. Now, we're small, we have 10 people here, but they know if I'm doing a podcast interview like we're doing now, or I'm out speaking or whatever, I can never do it to a point where it's impeding on writing good books. Because if I'm not writing good books, the entire organization is compromised, just like FedEx is. So that's what the clean B role is, the most important activity.

I love it. Matt, you kind of did a Little motion. Right, Right. When Mike said his qbr. Yeah, qbr. Go into that really quick. We had a cool story last night. We were two minutes ago.

So Joe and I, we both actually read Clockwork separately. We, you know, we didn't sit there and read it together. So we read it separately. And we got together and met a couple nights ago. And we're like, all right, did you do the exercises in the book? Yep. Did you do them? Yep. All right, so what's our qbr? And we just kind of like. Like neither of us wanted to say what we came up with first. And when we finally said it, we were like, spot on with the exact same identical qbr. In our business. And in our business, it's creating educational content, right?

Yeah.

Yeah.

You know, there you go. Isn't it funny? Like, so you could have a business that.

I don't know, like, actually, here's a great example. I write about them in the book. Like a baseball team. I mean, if you look at baseball, some people say, well, it's very obvious what, what the core functions of the queen B role is. And what it is is winning games. So you gotta, you know, our job is to win games and do whatever it takes. So we gotta hire or recruit the best players. We got to pay the top salaries. It's all about winning. Well, there's one baseball team, it's actually the only baseball team that I'm aware of, and I think it's the only baseball team in history, or at least recent history, to sell out three consecutive seasons. Every single game, literally packed stadium. So not a sellout. Like they sold all the tickets, which is nonsense. That's brokers and stuff. But actually pack the stadium. And the team is called the Savannah Bananas. You got to check them out. What they decided, they said, you know what? Our brand promise is not going to be winning baseball. We're not going to win games. Our focus is to entertain our audience. It's going to be fun, family entertainment. Well, that's the promise. Peel back the onion, one layer. And the activity that supports that is ideating about new ways to entertain. So the owner of the baseball team, and he's got 100 employees, they have sessions where they just think of what's new. Fun, crazy, wacky entertainment we can do. Do they have the best team on the league, in the league? No way. They might be a.500 team overall. I don't know. Sometimes they're good, sometimes not. But no one even cares. What they care about is you're just going to be Having the time of your life, watching the antics going on at the stadium and the 5,000 people at this game show it. And by the way, this is a all star team. It's not a minors, it's not a majors, it's college recruits, a normal game. If you're an all star team, you're lucky to get 200 people in the audience. They get 5,000 because they define their QBR. The QBR is not something that's forced upon us. It's something we declare. Once we make our brand promise, the commitment, how we're going to differentiate ourselves to our customer base, we can define that and we can define the QBR that delivers on it.

Yeah, that's so interesting too because I mean, a team like what you're explaining. I remember this example from the book. There's basically turnover too. So it's not like anybody's coming out to see some superstar player. They don't know the players on the team. So the, you know, having this culture of we're here to entertain first, that's the goal. Whether the team wins or loses, it doesn't matter as long as the people in the crowd are entertained. And that's what people keep coming back for. I mean, we live in San Diego, so if winning is the QBR of any sports team, San Diego would never have any fans.

Yeah, yeah, we've, we've grown up here, so it's definitely a deeply ingrained in us.

That's fine.

That's funny. Well, you're in a beautiful part of the world, so don't complain about that part. But you know, I think what it boils down to is we can pick, we can pick the qbr and even, you know, the next baseball team can say, well, we can be entertainment, but that's already kind of taken. We could be winning, but we don't have a chance of that. We can just be the most lavish experience. We can just care for our customers so much. Could you imagine a baseball stadium that had the courage that every chair was a lazy boy chair? Kind of like some movie theaters are doing now. Like, I think there's opportunities to redefine it. It just takes courage to do that.

I love it. And then you're going to get people who actually don't like baseball to watch or go to a dog game, which are a lot of people do. But besides the point, I love it. So the QBR was actually a big aha for us. And it took us, Matt and I individually, probably half the book, to finally realize what it Is. And we individually got to it because we thought it was tactics at first, things like, okay, drive traffic, sell affiliate products or our own product. But yeah, at the core of it, it's cool. And you have some really good visuals of. Okay, so now that you know the QBR in the middle, you have these spokes of different roles that you do that your whole team does, that you work people through. I think it was just really mind opening. It was awesome.

Yeah. Thank you. Yeah. So just to play out that visual for the listeners is once you identify the qbr, you need to identify who's serving it. Now, often in small businesses, it's us, the owners, who are serving it. In bigger businesses, I think about a hospital, it's often not the hospital owner who's serving the qbr. And for most hospitals, the QBR is effective immediate patient care that's usually rendered by the doctors. And so the doctors are serving the qbr, but they aren't necessarily the owners of the hospital. So as your business grows, if you are serving the qbr, you can remove yourself. But what you do in this process is you write down that primary job function that you're serving the qbr and you put it as a bullseye in the middle of a piece of paper, you know, an eight and a half by 11 piece of white paper. You then put a circle around that qbr. So it could be, we'll pick on the savannah bananas, you know.

Defining extraordinary or creating extraordinary entertainment or ideating about extraordinary entertainment. That's what the owner, Jesse Cole, as his name, does. He then puts a circle around it. But he also may take care of vendor relations. He may.

You know, handle food logistics, he may hire people, he may fire people. HR guy. Yeah, all these other activities, what we do is we draw out on any given week, how much time do these other activities take? Maybe the HR takes only a few hours a week, but maybe the logistics for getting food in out there, for all these different games, Maybe that's like 10 hours a week of coordinating all that stuff.

So that QBR is the hub. Each spoke off there is each of these other tasks. And the length of the spoke represents the time. So that takes two hours is a segment that's say, you know, two, two inches long. And something that takes 10 hours, as this example would go, would then be 10 inches long or five times longer than the two. And it makes this visual that you can see what activities are taking you the furthest away from doing the most important task. And those are the things that take us furthest away that we need to find a way to assign to other people's to transfer those out. Ultimately, we want to remove all of the superfluous tasks and just focus on the QBR because that most elevates our business. That's our brand promise. And then the final stage of a clockwork business is to even remove the owner from doing that work in the first place so that other people are doing the work. And now the owner is functioning as a designer. They are overseeing the business, but they're not in the business.

And that is when the four week vacation comes into play. Huh? Oh yeah.

That'S a killer hook to this whole book is like it's pretty much the promise if folks commit to the clockwork to create a clockwork business is hey, in 18 months you're going to be able to go on a four week vacation because your stuff's going to be so dialed in and chat about that a little bit because I know you have some phases. It's not all or nothing.

So as I was so this book, it took me about six years to write it and good portion of that is research. In fact, I got to the point where I had written the manuscript about three years ago and I looked at it, I was like, this is, this is not it. Because we started testing it and didn't work for all businesses and had a as painful as it was, throw out an entire manuscript and start again. I pulled some good parts out, but the rest had to be redone as I reevaluated business. And one of the components I found is the ultimate test. In fact, the only effective test to see if a business can run itself is to extract the owner from the business entirely. And what I mean by this is to pull them from physically disconnect them from the business, but also pull them out so they're digitally disconnected from the business. And I also found that we need to do it for an extended period of time. Four weeks seems to be ideal. Now let me tell you what happens in four weeks for most businesses. Every cycle. Businesses cycle on a monthly basis. So they experience everything in that period of time. Like you know, invoicing new customer, customer complaints or challenges, hiring, firing, admin work, everything happens every single month. So if the owner is totally absent and the business can run during that month in their absence, it's proving that it can run without them. Now most owners, when they go on vacation or break from the business, they play a game. And what the game is, this is say, you know, I say I'm going To go away for a week for my business. And what I do is the week leading up to it, I start cramming more and more work in. In fact the day or two before I leave I pack in so much work hoping that will bridge me over until I return. I try to get all done in advance then so it's cram in the beginning I just. Cramming, cramming, cramming.

Sounds familiar.

Then, then when I return I'm like the, the oh shit moments happens like oh my God, I didn't, this problem happened. All these things. Now it's the scramble. So I call it the cram and scramble. We just try to bridge over this week. That's, that is not a business that's running independently of us by any stretch of the imagination. We're just playing a game with time. Now some entrepreneurs say well I'm going to take a two week vacation. But they, what I found typically do a work cation. That's where they, you know, they, they say well I'm just gonna check email at 6 in the morning. And they end up checking email till about noon and then they take a little vacation time here and there and then they're back to work while they're traveling somewhere. So that's not effective. What we do with the four week vacation is literally physically and digitally disconnect you for an entire four week period. The business is now without you and the business needs to survive on its own. Now to your point is, you know, it's not like tomorrow morning let's go on a four week vacation. See how we do that will probably devastate your business if you're not prepared. What we do is we're going to stage it, we're going to take a one week vacation maybe a few months from now and see how that goes. But a full digital disconnect. See if my, my team around me can support it. And even if you're a solopreneur, you can still disconnect by having a team of contractors that you work with or virtual help and automation that takes care of things. Then after we come back and we see what didn't work, whatever didn't work are the things you need to fix for the next vacation, which is now going to be a two week vacation that we take in the near future. Then we come back, see what didn't work, fix that. Then we try another one, maybe a three week vacation. We go through these tests and whatever doesn't work, you fix the final vacation being the four week vacation. And when you come back, whatever didn't work again, you fix. And then we go into these cycles of taking four week vacations until things go seamlessly. One of the people I wrote about in the book, her name is Cindy Thomason, she's returned from her four week vacation. This is maybe two months ago, right, right when the book was printed. So I couldn't put her final story in, but I wrote a blog post about it. Cindy went away for four weeks, came back, business was bigger. She has some employees there. Employees decided to raise the rates on a customer to right size. The revenue coming in from that customer, customer was glad to pay it because they were getting such good service. And when she debriefed with her team and said what worked, what didn't work, they went through a few things that needed to be fixed and, and she said, what's the biggest challenge we have going forward? And they said, Cindy, our fear is that you're going to reinsert yourself in the business. We've got this now. We need you being our visionary. And it gave, it gave her goosebumps. She got excited about that and she now, one week a month, she's digitally disconnecting. So this is her second month into it from the office and she's just sitting there thinking to the point. There's a statue dedicated to this most important process. It's called the Thinker. You know, there's this naked guy with his chin on his fist sitting there contemplating. And that's what Cindy's doing. And we're only two months into this, but she, she's coming up with these concepts that will radically improve her business and stuff that she would never done before if she was stuck in the weeds.

I love it now, now is, is the vision for us, Mike, to all become a naked person that just stands and thinks for a while with their leg up.

And that's the ultimate goal in life, not the vision.

I, I, I'm not trying to start a world of naked people.

But the vision is for you to be a thinker. It is to think more that is so important. I get frustrated about how much talk is about hustle and grind and pushing yourself. I understand the sentiment, but I think it's being misconsumed. I think people are thinking we got to work harder and harder. And that is a fallacy. We need to think smarter and smarter. That's the goal.

I love it. And that's where, well, a couple things I know we've all shared the, I know I've been there before. Not on the beach, per se. Like, the stock photos have corrupted all of our minds. Where you bring a laptop to the Caribbean beach and like, no, why would you ever want to do that? It's horrible. But, yeah, we've all been there. I'm sure.

I've done it myself. I've done it countless times. It's only in recent years. You know, the nice thing about being an author and writing these books is it's the ultimate accountability mechanism. Like, if I don't live a clockwork life, if I don't live by profit first, I'm a charlatan, so I have to do this stuff. So as I was writing Clockwork, I guinea pig on myself, and other clients are willing to try things out. But then once I release the book, it's like, I have to live by this. So I used to be that guy, and I was actually proud of it. Like, oh, my God, I'm a workaholic. I can get so much done. I've gone 180% about face. I don't pride myself in working more. I pride myself in having a business that's growing as efficiently as possible with the least active input from me.

Yeah, no, that's interesting. I love the example you gave of the people coming back, the lady coming back and then her team members saying, we're afraid you're going to get more involved in your business again.

For me, when I go on vacation, I have this sense of guilt around the business, around not being in the business. This sort of sense of guilt of knowing that I have other team members back there getting stuff done while I'm sitting here on a beach sipping a margarita. I should probably check in on them. And there's this. This, like, guilt element of it.

Yes, yes. So that is one of the major roadblocks. There's actually two. There's ego and guilt. And I'll explain how both play out. Guilt is. Yeah, is the feeling like, oh, my God, I'm giving other people my burden. This is my business. I'm the big benefactor. Right. So I gain the most financially, but now I'm basically working on other people's sweat. But another way to see this is empowerment. What we're doing is we are giving people an opportunity to step into a role that only we were filling before, which means they are up leveling their ability. And if they can up level, that means they can receive more compensation through our organization, as our organization grows. So instead of seeing guilt, we see empowerment. Now the other side is ego. Ego's like. And this Happened to me. My business didn't need me. I took a two week vacation. I went to Australia. I still checking emails, which I shouldn't have been, but I was. And I noticed that no one was emailing me about the business. Well, after four or five days of this, I wanted to pull my hair out. I thought my business was going under and no one was calling me. So I reinserted myself in the business and the response was no, we've got this, Mike. And that bruised my ego. I said, I'm not needed in my own company anymore. Oh my God. So I started to reinsert myself and ask questions and require reports and do all these things that people didn't or couldn't do.

And I started to unwind the progress we made in our company.

Ego is a real issue and so I don't believe we can just squash our ego. I think we need to re channel it. So what I, I told myself, I said, listen, Mike, talking to myself, I need to up level my game here and I need to be a designer. I need to choreograph our resources, organize our team here so we can start getting the results that we want as an organization. I need to play at a higher level and if I reinsert myself in the business, I'm actually pulling us down. So my, I just took that ego and redirected it and that, that seemed to work pretty well.

I love it. Yeah. I think for me, I think my biggest aha moment reading your book came during the section where you were Talking about the four Ds, I believe, doing, deciding, delegating, designing.

So I wrote up on our whiteboard four Ds. I should have in retrospect written out.

What they all were.

So I wasn't so uncertain of myself.

It was a good test anyway.

The biggest sort of aha that I had was the, basically the difference between deciding and delegating. You know, Joe and I, we're constantly talking about, yeah, we're, you know, we've got stuff really well delegated in our team. We've got great team members. We love the people that work for us. They do a really good job. But in retrospect, we're looking back on it and we're essentially just kind of passing tasks over to them and then they're coming to us with all of their questions. And so our day to day went from us doing these tasks to us giving these tasks to other people, but still working just as much, responding to questions and working with them. Yes, that was the big aha. Was the sort of the differentiation between being a decider in your business and being a delegator in your business. So do you want to speak into that for a minute?

Yeah. And that can. Oh, my gosh, can that. That become frustrating? So the doing stages is where we do work. The deciding phase is where we really become task rabbiters. And we hire a couple people, we give them an assignment to do something, and then you notice, like a minute later, they come back with a question. Like I say, hey, you know, Joe, please do some invoicing. And you're like, ah, okay. And you come back a second later and say, you know, should I be billing in 15 minute increments or like an hour? And I make a decision around that. And then you come back in a minute later and say, you know, how do I sort these people out by last name? Is that how we bill? You know, and it's this constant stream of questions. What happens? Is I the owner of the business? Am I able to do the other work that I wanted to do? Because I'm constantly distracted by the influx of constant questions. Now, the reason this happens is for the employee, the best thing to do is ask the owner questions, because then you can do no wrong whatever I say, if you do it, if it's a mistake, well, I'm the idiot, the owner. And if it's right, well, you just did what you were told, so it's a win for you. And most owners continue to do it because it's fast, it's easy. It's easier just to give the quick answer than spending the time to really think about the process and then transfer it over to the people. So it serves both of us. It also serves our ego too, because we know all the answers. We're a superhero. We swing in and solve another problem and then fly back out.

We need to move to a higher level, which is called delegation. And most people don't understand delegating. They say they're delegating when they're actually task rabbiting. Delegation is not the assignment of tasks. Delegation is the assignment of outcomes. And what I mean here is we have a clear.

Goal that we're looking to achieve. As the example with invoicing, instead of saying, do this process of invoicing, I may say to an employee, it's important that we bill accurately and timely. We have a best practice invoicing process that I'll share with you as you go through it. If you have any questions or problems that you face, I've hired you for what's on your shoulders. It's called your brain, your head. And I want you to make decisions. I want you to make decisions that you feel are in the best interest of moving our company forward and improve on our processes. Now, that's how you assign outcomes. You empower them to make decisions. Here's the reality and the challenge we're going to face. If we tell them to make decisions, they will first come to us without making decisions because that's so atypical. They'll ask questions. They come with a question, we have to say, I'm not going to answer that for you. I've hired you because of your smarts. I want you to come back in with your decision. Now, when they come back with an answer and say, this is the way I think we should proceed, your answer can only be to support it even. And this is the hardest part. Even if it's a bad decision. Because if they make a bad decision and we say, oh, sorry, you're an idiot, don't do that. We've unwound the delegation. We're not empowering decision making and we're taking it back. We're going right back to that deciding phase. So you must reward all decision making, even bad decisions. Then when they make a bad decision, you say, listen, we're not getting the outcome we want. And you know why? Again, I want. I'm proud of you because you made a decision that you felt is in the best interest of the company. It didn't work out the way we hoped. Go back in there, tiger. Figure it out. Find some way to navigate through this. By doing that now, you're empowering employees to take ownership over decisions and really get independence from, you know, the day to day tasks in your business.

I love it. That was such a big aha for us and definitely something we're working on now. And it partially goes into, hey, don't give them all the answers either. Have them put a little skin in the game to kind of think it through. And this is where your capture method of your systemization is really cool. And we were doing, I'd say half of it of capture with video screen share, pass it over to the team system, actually write it out in a document, but you almost take it. Well, you do take it a next step where you give it to those folks and then they essentially follow poke holes and then rerecord the capture on their end. So they're kind of creating the answers, getting a little bit of input from you. But that ownership, it's a total delegation model there.

That was A huge concept for us for sure, because like Joe said, we actually, our business is actually fairly simple to systematize because we're online based. Almost everything we do is at a computer. So, yeah, install screen capture software, hit record every time we do something. And you know, we've got all of our systems documented after a certain amount of time. The big thing for us was this, this concept of giving this educational content to our team members, Let them go through it, try to do it, ask their questions as they go through it, and then re record it themselves to a. You know, now they become the teacher of it. So by becoming the teacher, you obviously it sinks into your brain a little bit better when you start teaching it. But also, you know, now they kind of have ownership of this process because they're the one who's, who's teaching it now. That concept just kind of blew us away and added this whole new level of this. This is how we got to start systematizing. And we mentioned before the show that we actually bought a copy of this book for our operations manager because we basically want her to read through the book and say, all right, this is how we're going to start systematizing.

Yeah.

I was once doing a presentation at a university and as I was walking down with the host, we're walking by this room as there are some students as we're getting to the auditorium and the host points in there and says, oh, there's the smartest student. And I kind of looked in and I saw someone, one of the kids there taking notes and stuff. I was like, oh, okay. And we walked by another room and then she said, kind of under her breath, oh, there's a smart student. She repeated a few times. And I said, what are you doing? How are you picking out the smartest person? And she looked at me and said, oh, the smartest student is always the teacher. She was pointing to the professors. And that's kind of the golden lesson here is once we create a system and I encourage everyone to do it through, you know, technology nowadays, screen capture or use your smartphone, but capture the process as you do it, you then give it to someone so they can copy the process that's right in front of them, they can watch the video over and over again. So they can through the process verbatim. But the key to learning is then teaching, right? That's when you become the best student. So we mandate that everyone that now takes on a task, does a subsequent video also. We encourage them, we want them to include any improvements they have which means they take ownership over it. And by creating the next video now they have to really master the process beyond just copying tasks. You know, kind of like Simon says, now they are actually teaching it so they understand at a much more intellectual and visceral level and are likely to execute on it much more consistently. Plus you set yourself up for them to transfer to someone else in the near future, if that's, if that's appropriate.

Yeah, and it's great for any businesses. We've had this in previous podcasts. But it doesn't matter if you know, you're a one person show. It's probably easier if that's the case. Just it at least capture the stuff or it's great for folks wanting to sell their company scale, whatever the intention is, it's important for everyone. There's benefits for all.

Oh yeah, yeah, yeah. So yeah, the idea, you know, as business owners, as the business grows, we have to realize kind of how the math works and how work gets transferred throughout the company. You know, when you're a solopreneur and you hire that first employee, that's 100% growth in our business. That's like Google saying, you know, with their hundred thousand employees, hey, we just hired another hundred thousand employees today. Like that's the significance of that first hire. You're doubling your capabilities. And therefore they need to take on a lot of responsibility, even if they're an entry level person, for taking on tasks, ideally half or more of your workload. Right. As you hire more people, you hire the second or third employee. Well now you've improved, you've grown your company by another 50% or 25%. So as we get bigger and add individuals, the impact on the company as a whole reduces percentage wise. So it's in the beginning we have to get these habits in place because those people that we hire then are going to transfer out to the next set of people coming in and so forth. And the truth is for most companies, most small businesses will never have more than five or 10 employees. That's the reality. Most companies actually will never surpass a million dollars in revenue. For anyone listening in has, congratulations, you're part of an elite few. But it's unlikely you'll pass 10 million, statistically speaking. Therefore every individual hire that we bring on has actually a big impact on our business. Google hires one person, it's a drop in the bucket. We hire one person, that's another bucket. Like that's a big deal. So we just have to see it from our perspective and the impact of the numbers even on small businesses is super big when you hire an individual and start the delegation of tasks and so forth.

Yeah, I have one last question and we'll kind of start to wrap up because I want to be respectful of your time when it comes to hiring people. What advice do you have for that solopreneur that's just running their own business and is just really scared to make that financial leap of taking on, you know, additional, additional spend in their business?

Yeah. So it's the ultimate trap that every solo entrepreneur faces. Right? We, we sit here and we're working hard, working hard, we're generating revenue and we look and say, I need to make a hire because I can't work anymore, but I can't afford to make that higher, therefore I need to work harder and push further, but I'm exhausted and so I need to make the hire. And now we're stuck between a rock and a hard place. Here's the key, and this is a trick from profit. First, set up another account, a bank account, and call it future employee. Start paying their salary as best as you can. Even before you hire the person into this account, you start reserving money. What this will do is prove if you can or cannot afford the cash flow hit to pay them. If you can't now, some money's reserved and you got to maybe reduce the amount you're contributing. If you can over a period of time, you say, okay, we can afford this, then you can go make the hire. Now the beautiful thing is if you've been reserving money for three months or maybe six months, you now have a six month reserve for this employee that you can pull from that account and have no financial impact on you. So you know you're prepared and you have a buffer. That's kind of the coolest little hack to get through that sticky spot.

I love that. I remember reading that in the book and I was like, that is so cool and so damn simple. Yeah, it's just like. And thank you for finally bringing it up. But I mean, same with profit. First, it's such a simple concept and yeah, it could involve multiple accounts and all that stuff, but at the same time, it's very simple the way you laid it out.

Not to mention it's one of the most fun reads on the topic of personal finance and business finance.

Thank you.

Thank you. I agree with that one for sure. Well, we can keep going all day, but yeah, let's wrap it up here. And what's the actually, do you have an audiobook For Clockwork.

Oh, yeah, yeah. It came out the same day, so it's on Audible and itunes and all that stuff.

All right, awesome. We're gonna get that because that's actually how we read, quote, unquote, read profit first. And we thought it was super cool because not only do you keep the books fresh and entertaining, the audiobooks, you kind of interject random stories that are just.

Yeah, there were some stories that I added back. They were in the original manuscript and due to the nature of publishing, I had to cut it down. But I put them back in the Audible, so they're there.

Cool. Yeah, well, we'll definitely be picking that up. What are some books, other resources and things that you personally go to? You, you mentioned start with why is one of them Sinnicks? Any others that you kind of refer to?

Yeah, so Simon Sinek stuff I love. I'm an avid reader. You know, one thing I did, I don't think. Well, actually, I don't even know if it's appropriate for listeners, but it's appropriate for me. I go on Amazon periodically and see what the number one book is meaning. The number number one, like the true top selling book in the world and not, not a flash in the pan for the day. I mean, something that's consistently there. And whatever book that is, I'm like, I got to read that. There's a reason the world is compelled to read this. I recently, there's a book for women. It's called girl, wash your face by Rachel Hollis, I think is her name. And so I'm listening to this book for chicks, and I gotta be honest, it's pretty amazing. It opened my eyes to something I wasn't aware of. So I think that's one kind of cool resource. And I don't know if that applies to everyone listening, but for me, it's been a cool way of breaking out of my comfort zone of reading the same type of book over and over and discovering something new.

I love that. Joe and I were actually just having this conversation a little earlier today about, you know, for the most part, we don't go straight to like the typical business books. In fact, we actually find like a ton of wisdom and just random, completely unrelated books like Neil Degrassi Tyson, who's one of the guys we were talking about, where when you start reading some of these other books outside of business, you start finding things, you start finding connections that you don't really notice by just staying in that bubble of reading business books all the time.

So lateral with it.

I Love that concept of let's, you know, let's get outside of our own book bubble.

Yeah, yeah. So, yeah, you gotta get out of the bubble. Right. Because otherwise it's that rusty lawn chair potentially.

You don't want that thing slipping out. Yeah, no, no, no.

No one wants it.

On that note, where should people go find.

Yeah, where's obviously Amazon. You're there. But where's a. Where do you want people to go? Really check you out.

Yeah. So the hub for me is my website, which is mikemicalitz.com I. I do have a shortcut to get there because Mallowitz is basically impossible to spell. It's mikemotorbike.com that was my nickname in high school. And you can go there.

Nice. And we'll definitely link that up in the show notes, too.

So that's another thing with you. I noticed you have all these sub little notes and stuff in the book and you have so many domain names that are just out there and funny and have their own little story or something happening. So it's super cool. I just like how you're doing. Keeping it fresh.

Mike, thank you so much.

It's fun. All right, man. Well, it's been a pleasure. Definitely go check out everything of Mike's 100% recommended. So have a good one, Mike. Thanks for coming on the show.

You too, guys. Thank you so much.

See it. All right. Thank you. And I hope you just enjoyed this episode you just listened to. Now, right now, before we sign off, I have a few things I would love for you to do. So the very first thing is to go find our guest on Facebook and tell them that you loved their episode with us. That's gonna help them just feel good about themselves, but also it's gonna spread the word a little bit more for us. So go find them on Facebook. Everybody's on Facebook. And go say that you love their episode and maybe one cool thing that you learn there. The second thing is to go to itunes and subscribe to our podcast. Just look up Hustle and flowchart and hit the subscribe button. And the very last thing, the third thing is to leave us a review on itunes or wherever you're listening to this podcast and help us spread the word more. That's how more people are gonna get this awesome knowledge, this. This cool podcast training, and a whole bunch of other cool, free training that we give out@evergreenprofits.com so that's about it. Go find them on Facebook, go subscribe on itunes and leave us a review. You would be amazing if you did that, but you're always amazing. So thanks for listening, and we'll catch you in the next episode.

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