Finding Brave Ep #40: Key Steps to Make Your Business Run Itself, with Mike Michalowicz

Hello, everybody. Welcome to Finding Brave. This is Kathy Caprino. How's the week going? I hope you're finding it especially brave. Or if it's not, you know why. And maybe there's something you can do to tweak that. And I am so excited to share with you my inspiring guest, Mike Michalowicz. Did I get that right, Mike?

Nailed it. Nailed it.

Oh, good. All right, off to a good start. Mike, I think I've interviewed you. This is the third time. Maybe once.

I was gonna say second, but you think. You're right. I think it is the third.

And we had you on Best Work, Best Life podcast a few years ago, and I. You know how I learned of you? I think you were talking to Marie Forleo years ago.

Right? I actually did a pilot TV show with her about six, seven years ago.

Yeah, a pilot TV show.

Pilot TV show. Never. Never aired, but it was at least a pilot. And then she's in my newest book, too. She's awesome.

She is inspiring. And I'm seeing your book right there. Clockwork. Well, before we launch in here, folks, let me tell you all about Mike, because, boy, he inspires for anyone who's in the entrepreneurial world or even wants a more entrepreneurial mindset, I think that's you. So let me tell you about him. Mike Michalowicz is the author of Profit First Surge, the Pumpkin Plan. That's what I interviewed you on. Loved it. Still use a lot of those tips. And his newest release Cloud, which came out August 21st. Congrats. That's like birthing baby number four, right? It's a baby by your. By his 35th birthday, Mike had founded and sold two companies, one to private equity and another to Fortune 500. To a Fortune 500. Today, he's running his third multimillion dollar venture. Wow. Profit First Professionals. Holy cow. That's amazing. Mike is the former. I didn't know this. Small business columnist for the Wall Street Journal and the former business makeover specialist on msnbc. Gosh, you've got a lot of experience in this world. I'm sure you can. You know everything there is to know about triumphs and the tragedies of entrepreneurs, right?

Yeah. I've experienced a lot. I've seen a lot. I don't think I know it all. I'm hoping to learn more.

I'm glad you're saying you don't know it all, but I think you probably do. Over the years, Mike has traveled the globe, speaking with thousands of entrepreneurs, and is here today to show the best and most brave of what he's learned. So let's just cut to the baby Clockwork. What's the key overarching theme of this?

Yeah, so the subtitles. Design your business to run itself. And I found that there is a hierarchy of needs that entrepreneurs have. And it's kind of like Maslow's hierarchy of needs, but it's the entrepreneurial definition. I think at the base level, if you own a business or aspire to own a business, sales is the oxygen for a business. If you don't have sales stick a fork in you, you're done, you it and you're gasping for air. But then the next level up is profitability. That's the nutrition for a business. We need that to sustain, to be healthy. The next level up, what I call the shelter, is actually sheltering time, protecting ourselves. Too many entrepreneurs, Kathy, are so embedded in their business that every waking hour is devoted to working in the business or their mind chugging away at it. And the only resource that is not replenishable in any form is time. So this book is designed to help entrepreneurs at that level to recapture time so they can do what they want, when they want, both in their lives and in their business.

Oh, gosh, I can learn so much from this. So do you have a kind of niche sweet spot about who you talk to? Is it a certain revenue level? Is it a certain number of employees, just so people know what is?

Yeah, definitely sub million dollar companies, usually solopreneurs, I mean, they call micro enterprise. That's my peeps.

I love that.

Oh, I love that.

Didn't you once say, can you tell me about this? I think a lot of women listen and that's my peeps, typically. Didn't you say that something about how women kind of work differently from men and.

Wow. Yeah, yeah. So I had the privilege when I first became an author 10 years ago to really be embraced by the female entrepreneur community and relish.

Why do you think that is?

You know, I think I did. I don't pander. And I mean, I'm not trying to, I'm not trying to hurt the feelings of any guys out there, but I think a lot of us pander to the female entrepreneurial community.

Like talk down to like, talk down.

To like, like, you know, good luck.

Nice, nice little side thing.

Yeah, yeah, it's side. Right. And not taken seriously. And I think that's nonsense. I think any entrepreneur's got a shot at this and I think women actually have an advantage. What I found is women are naturally more collaborative than men and men are more competitive. Like this is my stuff. That's your stuff. Where women are more collaborative. That's a generalization. I think this economy we're in is a collaborative community, meaning I can grow faster if I'm willing to reach out. And I'm not saying olive branches, but really seek ways to reach out to others, even competitors, and join forces. I think that's a natural tendency of women. So I mentioned that a while ago. And there's the fastest growing segment in entrepreneurship is women. There's more women millionaires now from entrepreneurship as a ratio or as a percentage than men on any given month.

So much since I won my. I won an award make mine a million dollar business years ago.

Yeah, it's changed dramatically. But the other point I wanted to make too is a million dollars is an arbitrary number. And I am adamant now that we can have the right size business find us. I think it's true for all of us. Like we don't need to have a million dollar business. Just if that's what happens, great. I think what we do need is something that gives us a degree of comfort in our lives. However we define that financially, a degree of comfort in our lives. Time wise, I think there's these elements. A business is meant to serve us, not the other way around. That's. That's what I'm trying to help you with.

That's going to be the lead quote, I think. And I just want to hit home there so many times you'll read somehow the implicit message is if you're not making over a million dollars, you're not having a business. And I don't make over a million dollars in my business, but my God, it's a business. So I love that you're saying that because I feel like. And again, not to paint all men with the same brush or all women with another brush, but I feel like that's a male construct that it has to.

It could be, it could be because it's very measurable. It is like a trophy. And male. I aspired to that for the longest time. Like I have to have the million dollar business. And if another counterpart of mine, man or woman, was doing more than I was, that became the new setting. I had to beat them. And I think, no, I don't think that way anymore. I think what I need to do is serve a purpose. I have a very clear life's purpose. And I think my business is an amplification of that. And I think whatever money Flows through the business. I need to use to the best of my ability to further amplify what I'm doing. At the same time, live a comfortable lifestyle. I'm not looking to live the life of pauper. I don't think contribution translates to sacrifice and I think a lot of people see that too, saying if I'm going to be of service to others, I need to destroy myself. Put your oxygen mask on, people. Put your oxygen mask on.

I love it.

Yeah, so I don't really care about the million. I actually don't even measure so much. Why I do care about is the sustainability. And to me that's profit and time. If I have enough revenue to support a comfortable lifestyle for myself and my family, so I feel comfort, I can use that then to contribute. That makes me feel good. And if I have time now, that's balance. And I don't care what the top line number is.

I totally love that we're going to hit on your 4D mix. I can't wait to hear. But I do want to say this. Having been a corporate person, then a therapist, then a coach, would you say yes to this? And if not, say no. I think that so many people that feel like contribution means I'm flattening myself is because there's a bit of a rough conflict in people's mind about what doing good is and when to put myself first. You know your book Profit First? When, when is that going and when is it not good? Do you feel that you hear?

I totally feel that. And I think there's a little bit of martyrship in there because I have a tendency to lean toward that. If I'm failing at something, I use that to say that I'm a martyr. And I don't say that as a compliment. I mean, I speak negatively about that reaction. And I think a lot of people behave that way saying, you know, look at all the sacrifice I've made of myself to give to others and think that the reward is in the recognition of sacrifice. I don't think that's true. I think people don't understand too. We see Gandhi or Mother Teresa and we're like, look, such sacrifice. They gave it all away. They were billion dollar muggles. They managed over their lifetimes billions of dollars and directed it. They defined what a comfortable lifestyle for them was. I think that we define our own comfortable lifestyle. I don't think we look at someone else and say, well, that's their definition, therefore it's mine. No, define what it is. And if you feel you the most comfort in living in a mansion. And it brings you joy. That's what I define as comfort. It has to bring a joyous state to you. If it brings joy to you and it's living in a mansion, awesome. Go do it. The thing is, that is not necessarily the definition of joy for everyone. Some people have mansions and they hate.

That they're an albatross.

It's too much albatross. So the goal is give yourself comfort and joy. And if you're having that, then all that energy now is freed up to do what you want to do, to serve others. So that's, that's what I'm seeking to do.

Beautiful messages. Love every word. All right, the 4D mix. What are we talking about there? Tell us.

So in my new book, Clockwork, I'm trying to help people find time. I evaluate businesses and I see that there's four stages in businesses. I now call it the 4D mix. Every business goes through all these elements and it always has to do some of it. But we as entrepreneurs need to navigate. Here's what the four Ds are. The first level of every business is doing is the foundational level. We must be doing things for our clients or whoever our benefactors are of our services or products. And we must be doing activities that support the delivery of those, the beneficial things that we deliver. Those are all called doing. So we do invoicing, we do marketing, we do the service, we do the product. Every business needs to do that. But as an entrepreneur, we need to start going up this chain. The next level is called deciding. Deciding is where you hire that first couple employees and you start giving them tasks to do. But you notice they come back a second later with like a million questions. And at first it's like, oh, that's good. They're, they're inquiring, they're learners. It feels good. Within a few weeks it comes very frustrating. It's like, are they idiots? They can't figure this out now? Well, they're not idiots. The system we're using, called the deciding system is the idiocy. When someone comes to me and asks for a decision and I give it to them, they go off on their merry way and do what I've told them to do. It's painless for them and they can make no mistakes. I mean, whatever decision I make, it's now my fault if it's wrong. So therefore it's the easiest path and also satisfies the entrepreneurs ego. So many entrepreneurs love to make decisions because they Feel empowered, like a superhero swooping in, fixing things again. But it's very limiting. There's a Hindu goddess named Kali. Kali has a single head with those eight arms.

I've seen Kali.

We become Kali, which is ironically, is the Hindu goddess of death and time, or death by time, I call it. We put so much time in decision making, we get no work done. We get frustrated. Many of us revert back to the first D of just I'll do everything myself. The doing phase. So to get through designing, we need to go to what's called the delegation phase. True delegating is the assignment not of tasks which most people think it is. It's the assignment of outcomes. It's like, here's what we want to achieve, here's the best practice we followed. Now you get us to this outcome that we've agreed to. And when you hit roadblocks, problems, our system isn't working. Use your head. That's why I've hired you in the first place. Use your head to make decisions. And whatever you decide, as long as you feel it's in the best interest of the company, that's the way we're going to proceed. The key to this is the entrepreneur needs to watch their own ego. I have to watch my own fatigue for my colleague. I have 10 colleagues here. When they make a decision, I got to stop listening and stop inserting myself. And if they make a wrong decision, and this is key, I need to still acknowledge they made a decision that they felt is in the best interest of the company and reward it, saying, good job, even maybe the outcomes that we wanted. The fact you made decisions good, which empowers decision making. Now go fix it.

I wait, don't go. I got a question for you. Yeah, I have some time. I hate micromanaging in the corporate world. I want my head would explode. I don't want to be a micromanager. But what I have found in I have contractors and teammates. And sometimes I have felt that where they're going or the decision processes hasn't been what it needs to be. And so I'm guessing that you would say, well, then instruct on the decision making process. Not that particular thing. But do you ever. Do you have a nice little tip for us about when, when is it that you can see, okay, they can't make these decisions.

Yeah. So, so basically it becomes we keep asking questions. So when they come in for a decision, say, what do I do now? We say, well, what do you think we should do? And they'll say, well, I don't know. And then we'd say, well, if you did know, what would you decide to do? Just give me a hypothesis. We keep pushing it back. At a certain point they say, listen, I'm exhausted of all resources. I've come to you because you're the only resource. Then I say, okay, I'll give you my input and direction. But before I do this, will you be able to capture this knowledge you're about to glean from me and use it going forward independently of me? So I want to make sure that they're not.

You ask that out, right?

Yeah. And they say, yeah, of course. It's like, great, I still want to become a crutch for you. And then I tell them, here, from my experience, this is what we did and what served us best.

And they replicate it, you know, quickly. I just did a Forbes post on the five things I wish I knew before I left corporate life and started my business. One of them is how to start thinking like a leader. Yes, you are leading your business.

Yes.

And you. We don't. I, even in the corporate world, I was a vice president managing $30 million budgets. I didn't lead like that. I didn't. Wasn't encouraged to do that.

Which points us actually to the last D. So we Talked about the three Ds. The highest level is designing. And this is what leadership is. And I believe entrepreneurs need to navigate to the design phase, though. The design phase is where you've clarity on the outcome you want to achieve for business. A small business is usually called a vision. If you're a corporate leader, it's the project outcome or whatever, but you have clarity on what the outcomes like. Then we have to go back and look at a very tactical and strategic basis on, you know, monthly, weekly, daily basis on coordinating and choreographing the resources we have in our organization, the people, the software tools, we have vendors, and organize them so they as efficiently as possible can achieve the common outcome. Designing means communication and lots and lots of thinking. So much thinking that there's actually a statue now dedicated to this key entrepreneurial process, a very famous statue called the Thinker. There's a naked guy out there thinking, and that's what we need to do more of. A lot of time thinking, a lot of time strategizing. Abraham Lincoln said, if I had eight hours to cut down a cherry tree or something, I would use seven hours to sharpen the axe. That's what I'm talking about.

Sharpen the axe. Good grief. Within that nice little framework There's a lot of work we all have to do that. That's internal, external mindset. Right. Wow.

It's.

I mean, you make it sound easy and, and it sounds like it is easy for you, but for some of us, there's work. That's why we need your book.

Right? Yeah. Yeah. It's not, it's. It's simple but not easy for me. It's not easy too. I struggle with this, but I have implemented this process like I do with all my books in my own business.

God, I'd want to work with you. I'd want to work for you.

Awesome. I'd like to be on a job interview in a second, Kathy.

All right, now talk about qbr.

Qbr. Yeah, qbr. Qbr. So QBR is the queen bee role.

I thought it was a quarterback role.

Oh, no, no. Well, qb, that's true. It could be, but no, it's the queen bee role. I derive this from studying what I believe is now the most efficient organization in the world, which are beehives. Beehives, extraordinarily efficient. Their use of energy are able to scale build their hives very quickly. And they've done this by identifying the most important function that the entire hives survivability and therefore thrive ability depends on. And what it is is the laying of eggs. The queen bee happens to be the bee serving this function. The lesson here though is the role of laying eggs is the most critical to a beehive. The queen bee. And this is where entrepreneurs get confused aren't necessarily the most important part of the hive. They're absolutely critical, but so is every other bee. And the queen bee is failing to produce. They will remove her and they'll spawn another queen bee. So everything's about language.

Who decides that?

Yeah, I mean literally the hives. The hives, predefined rules. It's not like one bee sits there and says, get rid of the queen. Off with her head. No, the bees is. No, she's failing to produce, spawn a new bee and then she's expunged. So what happens with with organizations is every organization has a queen bee role function. There's a critical function that your business's success, your survivability and thrive really depends on. Sadly, 99.9% of businesses don't have any clue what the queen bee role is that critical function. So here's how to find it. Here's how you address it.

Yeah.

I'll give you by example. FedEx. I use that name because everyone recognizes the brand Their brand promise, their commitment to their customers. The number one commitment is delivering packages on time.

Right? Right on time.

When you peel the onion back from that promise, that's our promise to us as a customer. You peel back the onion. One layer. What is the activity that supports it? Logistics. It's the movement of packages. Well, for us as business owners, we have to define what is the one big promise we make. As an author, I make complex business concepts simple. Peel that back. What's the one function that supports it? Well, writing books that are super simple to read and engaging. That's it. So the production of books is the laying of eggs for my organization. That's the role that needs to be protected. And as the books go, so does my entire organization. So instead of me saying, oh, am I getting that speaking engagement? Do I have that podcast done? All these different things and jumping around. The one thing that can never be compromised is my books. If anything I'm doing is compromising the production of books, game over. The entire organization is being compromised. If I put every effort into elevating the production of excellent books, the entire organization goes up. So we need to identify that one thing. The last thing, though, is the queen bee is expendable, and it doesn't even need to be served by one person. And yet, even for creative work like writing books or painting paintings, I can be replaced. There's a reason there's ghostwriters and all these different people. I am choosing right now not to remove myself. I write my own books at the risk, knowing that if one day I'm unable to write books, I become injured, sick, or die. Game over. My organization is done. But I'm making an election to remain in that role. And we all have that right. First, identify with that critical role in your business, the queen bee role, and then you decide, do you want to serve as the entrepreneur? If you do, the business is contingent upon your sweat and effort. If you don't now, the business can grow without you.

My head is spinning. I need to understand this better. Hang on here. Now, the queen bee role is the single most pivotal function. Function.

Yeah.

That you're. Now, can I ask you this?

Yeah.

Wherever our time. We got 10 minutes, right? Five minutes. How do you determine that? Is it finance? Is it boy? What is it?

Not necessarily. I asked, well, what's the. In your business? Like, what's the most important thing?

So why I'm all tangled up here is. And I read your pumpkin plan and watch your stuff. I want to get out of being so necessary within the Functions and the services that I provide. But first it was a coach, then it's teaching. But I have a curriculum that I'm licensing, so I'm getting out of the queen bee function.

Right. So the most important thing your organization does is what I'm hearing is the delivery of excellent content.

Transformational content, let's say that.

Transformational content. Okay, there it is. That's your brand promise. So yes, we always start off with that. Like, what is the customer gaining from you? That they. That is extraordinary transformational content. Then we peel back the onion and say, of all the functions, and I know you do speaking, you do amazing podcasts, you do tons of stuff. Of all those things, if you could only do one, what one is elevated the most. Which one is the most important function.

And important in terms of financial.

No, important as in it delivers on that promise. If all the.

What most would probably be one on one coaching and. Or my courses. Okay, so that's why I don't want it to be coaching, because I need to back off.

Okay, so let's say it is coaching right now.

Yes.

So we have to refine down to that one thing. Once you know it, then we say, okay, that's the queen B role. Your organization is known to deliver transformational content and you're known to deliver it through extraordinary coaching. That's what we're known for. If the coaching gets elevated and does even better, your entire organization reputation will climb. But you are the one serving the coaching, which means ridiculous hours, constant. It's very draining work because you have to insert yourself in someone else's business. Big energy drain. So now we know the queen bee role. That can't stop. We need to now put other people in and extract you out. The thing is extracting out podcasts, all the other work you're doing is not necessary until we take care of the queen bee role. That's the first thing we want to protect and make sure it continues on.

Tell us the one thing. So you've worked with how many thousands of entrepreneurs in all these years? Hundreds.

Well, we're. Yeah, I don't know. Speaking. Who knows?

Yeah, Thousands and thousands and hundreds of thousands.

Maybe a hundred thousand. I don't know.

So if you had a magic wand and could wave it for all of us about what we should be doing differently, the one thing besides your cute queen bee, besides everything you've just shared, is there something that pops into your mind?

Yeah, instantly. And I haven't written the book yet.

You got another thing.

You're sorry, I'm pitching this to my publisher next month.

And before you answer, Mike, let me ask you this. You say your books are the queen bee function. Why is that? Is that because everybody wants to work with you after reading that book?

No. No. I don't even care about it. It'd be nice, but. But I don't really like to do that. I realize that the biggest impact, my promise to my customers is that I'm going to make very complex things very simple. When I look at all the ways to make complex business topics simple, the best way I can do it is through books. That's why it's a queen B roll. And I know if I did nothing else but write books and they're extraordinary, that's the key, that it will support the lifestyle I want and serve the community in the greatest way. That's why I say, is there residual income that comes out of and other things? Absolutely. Absolutely. But it's not my core intent. And I'll never do those things and compromise the quality of my books. That makes sense.

But they must be making you some money to have the joy that you have.

The books make me a tremendous amount of money. My primary source of revenue. Right. Which most authors would say, you can't make money writing books. But I'm like, yes, you can. If that's what you devote yourself to. Elevating the game on. I also make income through other things, as was saying. But those other things are secondary to writing extraordinary books.

My head hurts, which is a good thing. It means I have a lot to think about. So I cut you off. The one magic wand thing that we need. What? What is it?

Seek out your purpose and have your business be an amplification, a platform for your purpose. I believe I exist on this planet through this experience we're having to eradicate entrepreneurial poverty. I believe the outside world, the day you declare you're an entrepreneur, thinks you're a millionaire and have all the time in the world. Reality is we're impoverished, typically, we're broke and we're strapped for time. We're desperate to get out of the business. I call it entrepreneurial poverty. There's this fake aura around us which is not real. I want to fix that, and I want to fix it through my books. We all have a purpose on this planet, and the words eradicate entrepreneurial poverty, that took me 10 years to find. I just came up with that. It's almost a tagline. It doesn't matter how consolidated is or how you say it. All that matters is what you're doing inspires you that you feel inspired of being of service in some way. Once you find your purpose, or at least once you start seeking out your purpose. And by the way, if you don't know your purpose, seek out your purpose. If you don't know your purpose is, or when. I'm sorry, once you know what your purpose is, have your business be a platform for it. And as you're seeking your purpose, whatever business you do have, have that be a platform for exploration to find your purpose. But I will tell you, once you find brings so much energy, people ask me, Mike, where do you all this energy? You speak so quickly, you move so fast. You're always working. I'm like, I just love. I mean, I love being of service. Like I found what I need to do. I feel so compelled to write. Like I know there's not enough time left in my lifetime to achieve what I need to do. And that kind of excites me because it motivates me to get more done.

You know what I so love about this? I feel the same way, but that's not what I'm so effing sick of people debunking purpose. You don't need a purpose. You're going to go broke following your purpose. Purpose is crap. Passion is crap. What? I mean, anyone who writes that has never felt it.

Exactly. Don't you think I agree 100%? And I think there's a lot of terminology being thrown around right now about grind, hustle, pivot, change, pursue the customer's needs. It's all about the short term focus on money. And I think it's put blinders on many entrepreneur who would've been successful, who's just trying to work their butts off and they loathe their business. Getting rich, hating what you do is no way to live. No way to live. It's about getting rich inside, right? And that richness then comes out. And maybe it returns in richness and cash, but it's being internally, soulfully rich. That's what it's about. I'm adamant about that.

I so love it. I'm gonna let you go in a minute, but you gotta tell me this. Were you always a writer? Did you always know you had more ideas than you could do with do? Yeah, that's the one.

Yeah. Yeah. I was always a writer. I was never and still not a natural writer. Meaning this is a labor of love. It takes. It took me six years to write Clockwork. I think professional authors can get stuff like that done in six Months.

So what kind of authors? Professional.

Professional authors? Yeah.

I think you're a professional author. No.

Well, me, I'm professional but with amateur skills. So to write a page, it literally takes me like a day to write half a page. Like I have to labor over and back and forth. But. But I love it and I feel it's. It's critical. So.

What a blessing.

No, I wasn't always an author, I guess, but I am now.

For anyone who doesn't know to come up with a methodology, a framework like you have that's incredibly rich but succinct is so difficult. So you're. You're so in the right profession. Of course, you know, but you are. I deeply appreciate that. So what, what, where do people learn from you? Where can they come to your courses? What do they do?

Yeah. So if you want. Since we talked about Clockwork, I have a site specifically for Clockwork. Tons of free resources, everything go to Clockwork Life. That's L, I, F, E. Beautiful. Tons of free downloadable stuff that complement the book. And we'll get your business hopefully, you know, running on automatic.

Wonderful. We'll link to that. Anything else? You said you're starting a course. Did you?

Yeah.

Mastermind.

What is it? Oh, yeah, I am sitting in Mastermind. Yeah. So I have another website. Mike Michalowicz.com or you can go to Mike. Motorbike. That was my nickname in high school. Mcallowicz is too hard to spell. So. Mikemotorbike.com the irony, Kathy, is I never drove a motorcycle.

But. But there you are. Are you gonna go to mikemotobike.com oh, I love it. And that teaches what? What are we gonna learn there?

Well, I have all my books up. My books are foundationally for everything, so anything. If you are looking to explore rapid growth, that's the pumpkin plan. If you're looking to become profitable, that's profit first and so forth. Under each one. I actually have businesses that do personal consulting. Not it's not online courses, we have that too, but it's person on person consulting around all these books. And that's all available through mikemotorbike.com I love it.

I just want to hug you up. You're breath of fresh air. And we so these messages because we're beleaguered, we the entrepreneurial world. And you're right about. I just want to say this veneer, it's so damaging because people are buying into that veneer and thinking, if I'm not making a million in that mansion, you know, in Miami, I'm failing and you're not failing.

Yeah, exactly. Far from it.

Thank you for joining me. I feel great already. Thank you so much. And good luck with your book and we will everyone link to all of these resources. So you're going to have a field day becoming a braver and happier and more joyful entrepreneur. Thanks everybody and we'll see you next time.