Episode 105: From Corporate to Captain with Chris Murphy

Do it, man. Chris, I am anticipating this one. I'm feeling it. The first time Private First Podcast has ever gone mobile in the history of this show.

That's right. And this is not episode 105. This is trainwreck 105. This is the Profit First Podcast. Let's just get this thing started. We got grunting on the phone, and I'm spitting on the microphone and Christina pouring a drink for herself. Welcome, everyone, to the Profit First Podcast. My name is Chris Kern. I'm the founder of Fractal Recording.

And I'm Mike Michalowicz coming at you from somewhere on the street. I'm like the mobile guy. I'm also the author of the Profit first, the Profit First, Profit first, the book and Search, and a million other books. And I'm not joined in studio with Christina, but she is over the interweb. Somewhere out there.

Hello, world.

And you, listener, are listening to the Profit First Podcast. It's the only show on the entire web that explores profitability from all angles. In today's episode, we're exploring how do you go from a corporate position where money is kind of given to you to starting and building your own business and being profitable in the process.

That's right. Profit is that important. It is the most important thing in your business. And this show is based on. On profit alone, period. We go through all aspects of it. We have a great guest, and we're going to talk to our guest, and Mike's going to work with our guest on finding out how he has been profitable. After that, we're going to actually give our takeaways. Me, Mike, and Christina will give our takeaways. So. And of course, first we have to mention a few little companies who are slightly important to the show. Mike.

They're called our corporate partners. I love him. I mean, I love him so much. It's more than a kiss. It's kind of like a lick up the side of the face kind of love. And I want to thank. Well, Christina, who do I want to thank?

You want to thank Fundera? I do want to thank nextiva, Fundbox.

Yes, yes.

And Receipt Bank.

Yes, I do. I want to lick them all.

Lick them all. Gonna isolate that clip. Jeez.

I want to lick them all. Yeah, put that one with Barry's tips. It was like, you need some horses, some mules. I'll be like, yeah. And I want to link them all.

Yeah.

Here's the deal. Yo. Thanks, Barry. Here's the dealio. At the end of this episode, we'll give you more details on those companies and why we think they truly are extraordinary company. But today's episode, we're going to be talking with Chris Murphy. He's going to share his experience transferring from the corporate world to the entrepreneurial world. First, Chris, I got to know, bro, what have you been up to, man?

You know, I just. It's just this spring has been awesome. I went to Podcast movement, but as we're taping this, I didn't go yet. But when this airs, I'll have gone to podcast movement because I was speaking there. And should I say that it went great or is that jinxing myself?

I would say it went. I would just say one great. I would predict.

Anyhow, it's a big thing for me to be invited to speak at podcast movement, and that's. That's kind of a big deal. So I'm great. That's awesome. So what about you, Mr. Michalowicz? You're headed to a concert?

Yeah, I'm on my way to see Mumford and Sons. We're doing a little dynamic thing. We are walking over to a limo bus that's waiting for us. So a little bit of. I wasn't planning appropriately, I think, on my behalf. So we're doing a podcast this way. And we'll see. We'll see how friendly my friends are. Will they make noises and throw things at me while I'm trying to do a podcast, or will they respect and honor the sanctity of the show and be silent? We'll find out soon.

Barry, do you think they're going to be nice to Mike?

No way. You crazy.

Nope.

Thank you, Barry. Thank you, Barry. You know, Chris Murphy has a highly diverse background, everything from business owner and manager, as we join now, from a financial analyst to a consultant. And he does own his own business in salons down in Austin, Texas. And he moved from the corporate world to being a leading entrepreneur in the space. We're going to learn right now, Chris, from you, how you did it all.

Awesome. Thanks, Mike, for having me on the show. I'm excited to be here.

Oh, it's a pleasure. It's a pleasure. And I should have actually introduced you formally so there wasn't that awkward pause there.

No, no worries.

So I want to know first from you, what was the last corporate job you had and how bad was it for you to want to leave that?

You know, I can't say it was all bad. I was working at Dell Financial Services here in Austin, Texas, and I had a great experience. I can't Say it was all bad. I learned a lot. In fact, I learned how to run a business in many ways at Dell. And so. But, you know, I come from a long line of entrepreneurs in my family, and it's just kind of. I feel like it's in my blood. And so I was struggling, looking at the clock every day, you know, 9 to 5, and just couldn't wait for the day to be over and knew that there was just something else out there for me that I could do that had more purpose and that I could enjoy.

So was there a moment? Was it like, you know, why was there a certain day that you must have. Today's the day I'm done.

Well, you know, actually, the way an opportunity kind of presented itself and just kind of fell in my lap. And so, you know, that's typically, I guess, how it always happens. Huh. But, yeah, I was feeling that way for a while, and I guess I was kind of contemplating what to do next. And I have a good friend of mine that owned a hair salon here in Austin, right across from the University of Texas, and came into some health issues and was really having to make some tough decisions on what she was going to do with the. And she was like, either I'm going to put the key in the door and call it a day, or I'm going to sell the business to someone that I know that will take care of it or grow it, and I can just stand on the sidelines and watch it grow and know that that was my baby. And so I was kind of at a crossroads at the time and just thought to myself, I can do this. If it doesn't work out, I can always go back to the corporate world. Took that leap of faith and haven't looked back. That was 15 years ago.

15 years ago. Okay, so let's rewind to that. You said Dell was preparing you, was giving you business experience. I mean, did you really walk into this business and it was turnkey?

No, I was baptized by fire. Yeah. No, it's a. Not to mention, is it just, you know, obviously a smaller business, but at the same time, you know, it's just our industry in itself is just while it can be a fun business to be in, it's also known for lots of craziness and all kinds of things. So, yeah, I had to learn quickly how to adapt in this completely different industry, for sure.

So what were you not prepared for.

The really. Just systems, just structure, expectations, that sort of thing. In our industry, you're around a bunch of artists. If you Will. And so imagine trying to. Not to mention it's a very labor intensive business, so it takes a lot of hands to produce the work. And so imagine trying to manage a business full of artists. It's like herding cats. So that probably is the biggest challenge, I think, with the salon environment is the human resource and management piece and then finding that balance of implementing structure so that everyone is working from the same place.

Now I want to know about the profitability component. So I assume that corporate job you had, maybe the cushy job. I strongly suspect it was a predictable check. You knew your income's going to be and then you move to this business where you only eat if you're profitable. Was it a smooth transition financially?

Oh man, no. I took a huge pay cut. And you know, but, but again, you know, I think that, you know, high risk, high reward. Right. Is what they say. So, so, you know, I was young enough at the time where I felt like, you know, if I'm going to do this, I'm going to go for it now and I'll have plenty of time to recover if it doesn't work out. So, yeah, I did sacrifice quite a bit, but the business itself was, it wasn't awful. The salon, I mean, it was in a highly. Lots of traffic in front of the space, lots of steady business coming through the door. I think it was just learning how to manage the money coming in and making sure we stayed profitable. And so, you know, we've made lots of mistakes along the way, learned some pretty big lessons. And so, you know, I think that that's just part of the journey. But yeah, so for sure it was a lot of sacrifice in the beginning, but at the same time, you know, I loved what I was doing and I still do. It's just the thrill of being, creating something from nothing, you know.

Yeah, well, give me the sense of the mistakes. This is what I'm trying to learn. There's some folks listening in here that maybe are exploring the entrepreneurial space, maybe want to get into it, maybe that steady paycheck. What are the mistakes you made and perhaps stuff that they can avoid.

Oh, gosh, that's a tough one. I think starting off just learning how to, where to begin and what to tackle first without rocking the boat so much that you have a mass exodus, if you will, establishing order without creating chaos and then at the same time building trust with team members and that sort of thing. And so it's not just one thing, it's kind of a lot of things happening at the Same time. But I think the biggest thing is obviously the first thing you go to is cash flow and looking at the finances and making sure that you have enough. You don't, you know, you have enough month to cover the bills, if you will, that are. So I think that that was the big thing is getting in there and making sure that, you know, we were generating, you know, enough revenue to cover payroll and then overhead. And there were some months where it was pretty, pretty thin. And then from there you just decide, okay, well, what, you know, how do we address this? You know, are we overstaffed? You know, do we need to make cuts there? Or is it, you know, are we signed up for things that we don't need to be signed up for and just really start digging in and finding out how to make the cash flow stay positive.

Okay, so you walked into an established business, right. It's already running along. When do you start making changes? Do you start changing right away or is there a learning period for you first? How's that work?

Yeah, you know, I think it's in my nature to always try to make things better. So I think, you know, yeah, there's certain things, you know, cosmetically I think, you know, we did, you know, to change things and to start improving upon the existing business. Like I said, it was already trucking along, but the opportunity for so much more was there, the potential was there. And so I think the first two or three months you just kind of get in there and assess the situation, kind of just get to. And at the same time, you got to remember, I had no knowledge of the salon industry at all. So I was really having to kind of immerse myself and just learn how the business operated. And so it took a couple of months to really just observe a little bit bit and see how things were being run and then, and then start building upon that.

Yeah. And like, how do you learn the business? You can't sit in the back room. Are you going out there and getting your own hair done by the crew? Like, what are you doing?

You are sitting around in there? Absolutely. No, that's exactly what I did. You know, I went in and, you know, I started establishing relationships with the employees and, you know, just watching what they were doing. You know, I park myself behind the front desk, you know, and watched how appointments were being scheduled and, you know, and started asking a lot of questions. You know, why a 45 minute haircut instead of an hour? What made you decide that be the time standard for a haircut, for example? So just things like that, really observing, just watching how things operated. And then once I got a good idea from the daily day to day how things were being run, then I could then start drawing conclusions on what could be done to improve upon that. Yeah.

What about the employees perspective? They see this new young kid. You know, 15 years ago, you come in, you're like, I'm the new boss. Aren't they thinking, who is this guy? He doesn't even know what a salon is, let alone he's gonna run this place. Aren't they trying to kind of push you out? Aren't they trying to.

Oh, yeah, no, it was. It was very. Yeah, because you got to remember, I had this very structured corporate background. So, you know, you can't walk into a small business, let alone a salon, and try to, you know, implement that overnight, like structure and that sort of thing. So, yeah, absolutely, there was a little bit of tension there. You. I always use the analogy of it was kind of like the business was kind of like a pit bull, and I was kind of the choke hauler to kind of restore some balance and order so that not only for the employees, to help them become better at what they do, but also to make sure the business was healthy as well. And so, yeah, that wasn't favorable for some people. And quite honestly, some folks hopped off the bus. They weren't enrolled in that. And so there were some painful moments along the way where we had to replace stylists, and I think that's obviously where it got a little bit easier, because then you replace them with team members that really don't know how things were before. So sometimes it does take some turnover to really power through a transition like that.

But does the turnover kind of throw you off? You just bought a business and now people are leaving. You don't even know how to run the business yet.

Absolutely. Yeah. So it was a very, like a tightrope walk. We had to really make sure that we weren't too forceful in implementing change. And you just. You kind of learn what you can and can't do based on your experience working in the business with these folks. And so you make some decisions that don't fare well, and then you make some that do. And so it's just kind of a trial and error thing in the beginning, and it is a scary thing. But at the end of the day, you know what you can get away with without, like I said, having a mass exodus. And in some ways, I like to think of it as anytime you have a culture shift, anytime you rock the Boat. Some people are going to fall off, right? I mean, if nothing changes, nothing changes. So you got to make sure that you're focused on the overall 10,000 foot view of the picture here.

I noticed that some businesses have these social networks. You mean they have the org chart, there's someone that manages the salon, there's someone that does the reception, or someone that does the haircutting. But the manager may not be running the business. It could be the receptionist has the social influence. Did you find kind of there was a social network or culture running on of influencers that weren't necessarily there by title?

You know, I think yeah, because it's a labor intensive business. You know, you do have those large personalities inside the business that tend to, you know, have people polarize around them. And you know, I think that just kind of comes with the territory in our industry. But we worked really hard. I mean, it's funny you mentioned that because unlike most salons, you know, about eight years ago, we really took a hard look at our compensation model and we determined that, you know, and it was a commission based model. And so we realized that the commission model really was feeding a lot of the negative behaviors in our business. And unless we did something with that, then we were never going to be able to change that. Our vision was to create a business where everyone was working together, pulling the company in the same direction. What we did was we re engineered our business and went from a commission environment to a more salary environment so that there was no negative competition within the four walls. It was when we did that, that was things really started to kind of gel and come together and make more sense from a business standpoint and an employee standpoint. Now we've got team members, we do more with less team members. And so we've got team members making more money than they ever did on commission. So.

Okay, but I want to understand the commission because I assume some people were making a disproportionate amount of money and maybe it's competitive internally, but now you move to salary. Did some people take a cut and what do they think about that?

No, nobody took a cut. When we made that conversion, we basically converted them at what they were making. We just converted them to an hourly rate. So yeah, in fact, we gave everybody a bump in pay to really emphasize that this wasn't about a pay cut.

And I assume that since everyone has a predictable income coming in, they don't need to compete anymore. It's just about making customers happy.

Yeah, absolutely. And then the, the idea of like you said predictable stable income, really. I've got more team members going on vacations to Europe and they're able to buy homes because they can actually get approved for financing. So the dynamics have completely changed and it was one of the best decisions I've probably made in my business.

What about your compensation? You went from this job at Dell. Did your number stay the same throughout? Did you take a dip? What was your experience? Personally?

Yeah, no, I did. I took a pretty, a pretty big dip. I mean, I pay was cut in half pretty much, you know, from the very get go. But I've always managed to draw a paycheck, you know, from, from the business, you know, and so I've been, I've been blessed with that. And so I think, you know, and that for me, you know, was a motivator, you know, to do more in the business so that, you know, I could restore my salary back to what it was and then some. And so for in a weird sort of way, I gu. You know, that can be a good thing because that really drives your passion to build the business. And I definitely could see the potential when we took over, which is why I chose to move in that direction.

And how long did it take you to get back to the numbers you were at or have you recovered to those numbers?

Oh, yeah, no, and then some. Yeah, because that was 15 years ago. So it was probably like about three years before I really kind of got back into the same salary range and then a good, probably another two years and I started really growing my salary from there. And you got to remember, it was a small studio space right across the street from the University of Texas. And we moved the business within that first year and we've now grown the business to three locations here in Austin. So it's a lot larger business boom.

Looking back, anything you'd do differently.

I probably would have re engineered my business sooner. When I say re engineered, you know, re engineer the comp plan the compensation sooner for sure.

And where can people learn more about you, Chris?

People can learn about me. I've got a blog at Motivepoint Biz that's M o T I V E B P oint biz.

Great. Chris, thanks so much for joining us for this episode.

Sure, sure. My pleasure.

Thanks, Chris.

Christina Buldock. I am standing outside the limo so we gotta do a debrief. As I get on the noise party bus. What I want to do, I want to talk about what we learned. I want to talk about our sponsors. I want to talk in a voice like Tony would talk. First thing first, our sponsors. I want to thank Fundera. Christina, you're going to explain what each one is. So I want to talk about Fundera. I want to thank nextiva, fund the box and receive bank for their support.

Yes.

So, yeah, Christina, you tell. What are they doing?

So Fundera is a loaning source. They will. You need some money for a loan for your business. They let them know, they will go out, they will find the best loan for you, they will come back and say, here, this is what you need. Boom, there you go. Nextiva, voiceover ip. Best phone system in the world. We use them. They have call forwarding. I get calls on my cell phone when I'm not in the office. It's super convenient. Best customer service I've ever experienced, by far. Also, Receipt bank makes it super easy for you to track your receipts. They have a little app you put on your phone. You go out, you get a receipt somewhere. No more storing them in your wallet. You take a picture, you upload it right there. Everything's online and easily accessible. We love them. And Fundbox, of course, Fundbox. If you have a client that isn't paying you and you need that money right away, call up Dave Tolkien, he'll give you the money. Say, you know what, Take your time. As soon as your client pays you back, you pay Fundbox back. Amazing.

Amazing. I love them. All right, so I want to know what we learned just now. Chris, you're up.

Well, I thought it was really interesting. He said when he got into his business, some of the things that, that he wasn't expecting or sort of caught him off guard or that he wasn't exactly prepared for was systems and expectations. And that, you know, if he never owned a business, you know, those are things that you have to learn by doing. And that's exactly what he did. And I, I also assume that this, the systems and expectations, as your business grows and you get to higher levels of business or more profitability and more revenue, there's probably different systems and different expectations. I mean, maybe you're always learning on that level.

Christine, how about you? What'd you learn?

Yeah, well, Chrissy. Silent. He kind of stole my. But no, I never thought that there would be an issue, you know, going into a business if you're the new owner and you're younger than a lot of people that work there. I never really thought of that as an issue. Maybe that's because I'm on the younger side of the scale, but I can kind of see how that can Cause a tiff. And if people. Unfortunately, if some of your employees aren't willing to. To be open to new ideas and to be open under your management, sometimes you have to make the tough decision to replace them personally.

You don't need to rub in that you're on the younger side of the scale. I heard a lot of you knew of the scale. Now I'm on the wrong side.

Yes.

You know, my takeaway was when Chris said, you can't change unless you change. And I don't think, aha. But I like that he spent months first analyzing the business after he bought it, as opposed to changing things right away. And he did it by living inside the business. Right. He's getting his hair cut. He's sitting at reception, and he keeps asking why. I think you can't make any of those strategic moves until you first do a thorough analysis. I love his patience. Also, it's a step back. You know, one step back. It seems to be a theme. With last episode's train wreck episode, it was, you got to take one step back, take two steps forward. It sounds exactly what he did. He throws the income drop. He started understanding the business. He worked inside the business for a period of time and then ramped it, scaled it, and look where he is today.

Boom. Oh, yeah, look who's on the soundboard now, Christina.

Oh, my God. Yeah, we've been shy on soundboards. Now I'm fired up that Christina's taking it over. All right, now, Chris, I got only one more thing to talk about. You do the little rap.

Yeah, yeah. So, by the way, Profit first podcast dot com. That's the website you can. All our episodes are there. You can listen and binge listen. We're also available on any podcast platform. Itunes, Google Play, Stitcher, Tunein Radio. I use Podcast Addict. A lot of people with iOS use overcast. That's a good one, too. But profitfirstpodcast.com, that's where our episodes are. And you can comment on the post if you have ideas about what you learned from Chris Murphy. Comment on these posts or ask your question to Mike or Chris. They're both. They'll both answer you. And of course, the real support the foundation under this whole show is Profit First Professionals, Mike and Obi Wan Kenobi. And, well, Obi Ron has a. Has a lightsaber. Mike doesn't, but I do not.

I actually grabbed it once, and he tried to kill me. You never grabbed a Obi Wan Kenobi lightsaber. It's only for Jedi, not For non Jedi.

Did he cut off your forearm and now you have a metallic robot?

My hand is robotic.

There you go. So Profit first Professionals is literally changing the world. Mike, give it to us.

So listen to this. We exist to eradicate entrepreneurial poverty. Many entrepreneurs don't make the transition that Chris did. Chris did it seamlessly as he did. And that's why we wanted them on the show, to show you the right way to do it. Maybe you're struggling. Maybe your business isn't as properly you want it to be. If that's true, welcome to normality. 83% of entrepreneurs struggle to be profitable. I suspect in the full party man. Many people here struggle to be profitable too, but won't admit it. Here's the deal. If you want to increase your business Profitability, go to profitfirstprofessionals.com, click on the find button. We will hook you up with certified, absolutely certifiable, certified people, certified product first that are accountants, that are bookkeepers, and that are business coaches who have mastered the profit first process, been trained by myself and our team, Obi Ron and the rest of the team at the office, and will drive properly in your business. They will take you to the level of profit that you've never experienced before. And here's the funny thing. You need an accountant anyway. You hire bookkeeper same way you do a business coach anyway. Why not have one that's birthed and has mastered profitability, the most important component of your business? Go to profitfirstprofessionals.com right now. Click on find and we'll help you out.

That's right.

Do it now.

Yes.

Profit First Professionals.com. and by the way, you. You should invite an accountant or bookkeeper into your business to slap you with the profit stick. Really? Seriously. All right, well, thank you to Chris Murphy, our guest. Thank you. Mike Michalowicz. He's on the in the limo party bus over there. Thank you, Christina, for manning the controls. And of course, in the background, Oberon and the Hawaiian lumberjack. Oh, God, she's back.

And Aaron.

That's right. Thanks. Thanks for listening, everybody. We'll see you next time. Peace.

Thanks, guys.

Yeah.