In this CNBC interview, entrepreneur Mike Michalowicz discusses how small‑business owners should pace growth, emphasizing the need to say no and focus on the 20% of activities that generate 80% of results. He likens business growth to adolescence, with spurts and painful learning moments, and warns against staying disciplined in a way that stifles flexibility. Michalowicz explains the shift from a "can‑do" mindset—where founders try to do everything—to delegating the 80% of lower‑impact tasks and bringing in experts as revenue scales. He outlines how management style evolves: early‑stage founders must micromanage, but once a business reaches the next million, they should hire specialists and focus on vision. He suggests taking a month‑long vacation to surface hidden weaknesses. Finally, he introduces his "Profit First" approach, treating profit like a 401(k) for the business by setting aside a small percentage (e.g., 5%) of revenue in a separate account, which forces the company to operate on the remaining funds and accelerates profit growth.
Mike, is there any way people should pace their growth? You grow by saying no. Businesses grow like adolescence. You go through growth spurts. Right. And there's painful experiences. So you don't want to be so disciplined that I only do this. But you do have to have the discipline that you can feed yourself. And that comes back again to money. But businesses will grow as long as you have a consistent vision, will grow fast and slow. Fast and slow. But I'm a small business guy. I can't get to the big picture because I'm just going from 9 o' clock to 10 o' clock to 11 o' clock. Use the 2080 rule. 20% of things you're doing are resulting 80% of your benefit. Focus on that 20%. The other 80% of stuff you're doing is only benefiting you. 20% start delegating that. And the first one is called the can do problem. Yeah. Entrepreneurs think they can do everything. And their irony is to start a business, you have to do everything. But what you did for the first million will not work for the second million. That's the dichotomy of entrepreneurialism. You've got to change gears. Give me an example of what a management style or a work style that works in the first million. But if you're doing it one to five, you're going to get into trouble. Well, you do have to micromanage in the beginning. You got to be checking out the website. You got to be doing this, got to be doing that. When you get to the next million, you can afford it. You got to bring the experts that are great at those components. A great website designer, you're probably not it. A great accountant, you're probably not it. You're the visionary and you got to keep that vision pumping. But I know better. I'll tell you the trick to do it. Go on vacation for a month. Then you'll see the weaknesses in your business. They'll expose themselves. The problem of I'm better is because you're at the office all day checking, looking, checking, looking. Get away from there. When do I know when I can start taking some shekels off the table? I have a very unorthodox approach. I say profit first. It's like a 401k for the business. If we put money aside and we don't lose. Look at. It's amazing how fast it grows. And I think businesses can do the same thing. You don't do a huge amount, but maybe 5% of your revenue coming in. Put in an escrow account. It's amazing how we subconsciously adjust and are able to run the business off 95%. And that 5% grows awfully fast. Dr. Doug, we'll see you next time on the Big Idea.
