Episode 224: Building Value with John Warrilow

In today's episode, we're going to talk about building value in your business so it's positioned to sell it. Yeah, I know you have that dream. You're going to learn how to do it. In today's episode, we invite in John Warrilow, who's going to explain exactly how today is the day that you make profit a permanent fixture in your business. Welcome to the Profit first podcast. That's right, Kelsey. All right. I'm Mike McCalowitz, the author of Profit first and Clockwork The Demand. Did you see the demand for it already? Yeah, yeah, we're recording this pre release. Yeah.

Exciting.

Yeah, it's awesome. I'm pumped. And the pumpkin plan and other books. And you, my friends, are listening to the Profit first podcast. This is where we explore every element of profitability. And I'm joined in studio by none other than Kelsey Ayers.

Hello, everybody. And you can find us on itunes. Stitcher, Tunein Radio, Google Play, any podcast or anywhere, but please Visit us@profitfirstpodcast.com.

Yeah, and we're on Spotify.

Yeah, we're on Spotify, finally.

And where else did we get iTunes?

IHeartRadio radio.

Okay. IHeartRadio iTunes radio.

Yeah, let us know if you find that.

That's not a thing. Hey, I got a special offer for you too. If you go to mikemicalicz.com I have my book Surge, which you can buy on Amazon if you prefer to spend coin, but you can get for free right now@mikemcalowitz.com just go to the homepage, go to the top right and you'll see. Get my book for free. And by the way, I know you can't spell Michalowitz because I can't spell it.

It's true.

It's true. I messed up regularly.

Yes.

Go to mikemotorbike.com that was my n. High school, Mike. Motorbike.com Go.

There was Mike Malishitz.

You are a toughy. You are a toughie on me. So go to mikemotorbike.com and top right and you can. You can get it right there. All right, Kelsey, we. I gotta ask you this. Did you pick on people when you were in high school?

No. Only you.

Really?

No, that's not true. I am.

You seem more emboldened to pick on people like you nail everyone out the office. I don't. You know what I'm saying?

Oh, yeah, yeah, yeah. No, I. Once I build a comfortability. I am very unreserved about calling people out, especially when they mess up words or trip or fall.

I think it's the coolest thing. I think it's the coolest thing in the world. So yesterday we went go kart racing. There was eight of seven or eight of us. They tell Aaron not to race because she's pregnant. And she's wearing this big shirt that says, don't eat watermelon seeds.

Yeah.

Which is hysterical with her big belly showing. We have a race. We go 47 laps.

On that note, did you love it when our attendee was like, which one of you is not supposed to be racing?

Oh, Eric.

No, his name is Eddie.

Oh, Eddie.

Is that who you were talking about?

The host guy?

Yeah.

Yeah.

Which one was I supposed to be racing?

The one who was super pregnant.

So diplomatic, though, because, like, he didn't know. You don't call her pregnant. I don't care if she's. If she's past nine months, you don't call her pregnant.

True.

How did you enjoy the racing?

I loved it. I'm actually a little bit surprised at how much I liked it, because previously, when I was younger, yeah, it scared me a little bit. But now I just really liked it. I didn't. I don't like hitting people. I'll say that. Really like crashing into people.

Okay. Yeah. I did not like the crash at the end where I got a car on top of me.

Yeah. That was actually horrifying.

That was horrifying.

Yeah.

So just a quick note about that. We're going to 48 laps is the race, and everyone's competitive in their own rights. And everyone improved as we're racing. 47th lap. The Hawaiian lumberjack here at the office tries to pass me on the last turn, and what happens is I start skidding out because I hit the brakes inadvertently early. So I start skiing out. He hits me. I go into a full spin. He accelerates somehow, not intentionally, into me. The car jumps up over me and lands on my leg. And I swear to God, I thought I broke my leg. I know, because the car weighs, what, 230, 300 pounds easily? It's a cart. And then squeeze. Another 50 pounds.

Yeah. Plus, it was like, the, like, rigid metal outside of it.

Oh, my God.

That's what landed on you.

It hurt so scary. Yeah. All right.

On that note.

On that note, Kelsey, we have any community shout outs?

We do. This one comes from Joe Santa, an avid listener from trophy center. Plus, he heard the episode where you talked about your favorite AC DC song. And he said his favorite is It's a long way to the Top if you want to rock and roll. He says you can't beat the bag.

Oh, at the end. Yeah. That is a great song. All right.

And you sounded just like a bagpipe.

You are a jerk. So, Joe, awesome. Thank you for listening to our show. And yeah, ACDC rules. All right, today we're going to talk with John Warrilow and we're going to dig into selling that business that you've always wanted to sell. He also argues it's not profit that drives value in the business. And then we're going to share what we learned about. I do want to thank nextiva at Receipt Bank. There are our sponsors for today's episode. We'll share more details about them in just a minute. But let's get to our guest. Okay, Kels?

Yeah. Okay.

Okay. John Warrilow is an entrepreneur and author with over 20 years of research experience into the small and medium business market. Also known as the SMB, he founded the Value Builder System. John is the author of the bestselling book, which is awesome. You must read this book. Built to Sell. Creating a business that can thrive without you. With no further ado, John, welcome to our show.

Welcome, John.

Hey. Hey, thanks for having me, guys.

So that's the crowd going wild, in case you didn't figure that out. That sounds.

Love it.

So you said, John, right when we were getting ready for the show, you're like, hey, Mike, I hate to drop this bomb on you, but profit isn't necessarily the driver for value.

I didn't say it was not important, but it's not the only thing. I mean, a lot of. Look, a lot of entrepreneurs, I mean, we grow up thinking that profit is our report card, right? So we get our P and L at the end of the year and the accountant says, yeah, look, you made money, you didn't, whatever. And that's sort of how we know we're doing well. And to some extent, I think profit is certainly a great metric to measure. But there are things that actually make, in some cases, more important for an acquirer. So for example, if you wanted to just grow your business, your profitability, you probably do all the selling yourself as an entrepreneur, right? Because you know your product the best, you know your company the best, you're the most passionate advocate for what it is. But if you're the one out there doing all the selling, your business is virtually worthless because an acquirer is going to look at it and say, well, it's. Unless the owner is sticking around, there are no sales. So that's where Profitability. If you want to have a really profitable company, then, yeah, by all means, go be the rainmaker for your company. But if you want to actually sell it one day, you've got to become less profitable in the short term by hiring salespeople. And that's the difference.

Well, so people struggle with that, John. I'm barely making enough scratch now to survive. I do everything right. I do all the selling. I run the business. And now you're telling me to hire someone that I can't really afford to do, and I'm gonna have a. Take a step back in my life. How do you navigate that challenge?

Yeah, this is a biggie. So the reason I think a lot of people are stuck in their business is they get to the point where they're basically a mile wide in terms of products and services that they offer, and they've gotta start reducing the number of things they do. It's. It's pretty natural for entrepreneurs, I think, to start off, and we want to serve customers and make everybody happy. And so we start selling products and services. And when customers ask us for things that aren't necessarily our expertise, we agree, right? We're like, yeah, you want widgets? No problem. You want grommets too? Okay, I'll figure out how to get you grommets. The problem with doing that, though, is that employees can't follow you. You can't train employees to, To. To continue to. To re. Innovate in a company and to learn different products, how to sell them, how to make them, et cetera. And so as a result, if you're selling too many things, you, the owner is the person delivering them. When you're the person delivering them, you're basically suffocating your company. And so, as ironic as it is, I think that the way forward is actually to sell less things to more people. So taking all of the products and services that you sell and figuring out, like, we use this thing called tbr. Teachable, Valuable, repeatable, meaning which of these products and services that we sell today score the highest on these three metrics. Teachable means I can teach employees to do it. Valuable means that customers care about it. It's something that they want. And repeatable means it's something that customers purchase on a regular cadence. And when you identify something that meets those three criteria, that's when you can start specializing.

Okay. Wow. I'm so excited to explore that. I do want to ask a preceding question, though. Why do businesses buy business in the first place? Why do those acquirers not Just do it on their own.

Yeah. So in fact a lot of them do, you know, when they meet with you, they're making a do we want to compete with this guy or do we want to just buy him or her? And so they may not be that forthright in communicating with you, but they're looking at you saying, can we just kind of rip this company off? And if you're selling a commodity, if you're responding to RFPs, if you're selling by the inch, by the pound, guess what? When an acquirer looks at your business, they're not going to buy it. They're going to just say, look, why don't we just drop our price by 10 points and basically pick up their entire business? They will only buy your business if you've created something different. You've created a differentiated value proposition which for them would take a long time to replicate. So a big company, Microsoft, looks at LinkedIn and says, do you think Microsoft could create what LinkedIn has done? Sure they could. I mean they've got billions and billions and billions of dollars. So if they wanted to create what LinkedIn created, they could certainly do that. But they looked at it and said, man, that would take a long time, man, that would be a lot of money. And you know what, these guys have already done it. So why don't we just get out our checkbook and buy LinkedIn? And so they would look at it and make that decision based on the strategic value of the company to them. So from a business owner's perspective, our business is valuable to us because it pays us a dividend at the end of the year, pays our salary and hopefully it's worth something down the road. But when Microsoft bought LinkedIn, they're looking at it and saying, not only do we like the profitability of this company, but we, we also like what it can do for us at Microsoft. So when Microsoft, for example, embeds LinkedIn data into Microsoft products, like when you go to Outlook and you say, ah, Mike, I'm going to have a meeting with Mike. And all of a sudden I get Mike's LinkedIn profile directly in my Outlook calendar invite. That's really valuable. It makes Outlook and by definition Microsoft products more valuable. Makes me more likely to re up on my Microsoft subscription, my 365 subscription. So that's why Microsoft bought LinkedIn, because of the strategic value of the company to Microsoft, not just the profitability that LinkedIn was generating.

Gotcha. I hear that term strategic thrown around a lot. It's a strategic Acquisition. But doesn't every business have acquisition, have strategery?

Love it.

Doesn't they all have strategery behind them?

Not necessarily. Like when a financial buyer. So there are two types of acquisitions, right? You've got a financial buyer and a strategic buyer. So financial buyer is buying one thing. And a lot of times business owners get this wrong. They think that the financial buyer is buying their customer list or buying their location or buying their brand or. No, the only thing a financial buyer is buying is your future stream of profit. They are buying the rights to your future stream of profit. That's all they're buying. And the extent to which you have a good brand or you have a good location that will ensure that there is a future stream of profit. But don't confuse what they're buying. They're buying your future stream of profit, and they're willing to pay more for that, the safer that that future stream of profit looks to them, and so the more protected it is, et cetera. But they're not. A financial buyer doesn't have strategic assets to bring to bear. It's Not Microsoft buying LinkedIn or Microsoft buying Skype. That's not what a strategic or financial acquisition is. It's usually a private equity company or a wealthy individual just saying, hey, I want to buy this business and basically have the rights to their future stream of profit. I know a guy, a friend of mine actually bought a crappy little limousine company, and it's probably got three cars on the road. It's generating three or four hundred thousand dollars in profit. And I'm like, why on earth did you buy this company? You're not a limousine driver. You know nothing about driving limousines. He's like, yeah, but I mean, look, I can pick the business up for 6 or $700,000, most of which I can borrow from the bank. And I can virtually guarantee that they're going to continue to churn out 2, 3, $400,000 every year for a long time into the future. And whether that's three years in the future or 10 years in the future, I win. And that's why he bought the company. And that's a financial acquisition. It's very different than a strategic acquisition.

So this financial buyer that's buying for the future profit stream, I assume, and also the strategic buyer. This ties back to that TVR concept you were just pitching or proposing.

It does. Again, for a business to be valuable, it's got to succeed. Whether in the eyes of a financial buyer or a strategic buyer. It's got to be able to succeed without the owner. And nobody's going to be interested in your company if the, if you are the linchpin, if the business is dependent solely on you to operate, if you can't take a vacation, for example, without your business collapsing or basically stalling, it's not valuable in the eyes of either a financial buyer or a strategic buyer, most likely. So whether you want to be acquired by financial buyer or strategic buyer, one of the prerequisites for that is to figure out your tbr get yourself personally out of doing everything. And in my view, the first step to that is focusing on your tbr, your teachable, valuable, repeatable products and services.

So one more thing about mindset is most owners I meet with John, like, they feel they have to be the linchpin. And subconsciously I think they want that. I think, I know for me, it feeds my ego to be the big man on campus. Kelsey, I'm staring you down as I say be the big man. I come in, I go into the big office, and look how important I am. I want to be needed by the company. How do I get past my big.

Fat ego that I can't help with? There's no way. No, I think you're absolutely right. And it comes down to, what do you want? And I think for a lot of entrepreneurs, they do get their ego satisfied, but by their company. But at the same time, they crave freedom, right? They crave the, the, the ability to not show up for work one day and have things run without them. The ability to, to take a vacation and not have things collapse. The ability to have another, an extra couple of zeros in their bank account and, and really have what is genuine financial freedom. That idea that I, I, I don't have to answer to anybody. So, yeah, I think it does fulfill their ego. But I think for most of us, we reach a point where we don't necessarily feel quite as freed by our business. The business is sort of ensnarling us, if you will, and trapping us a bit. We're having to work a lot of hours, et cetera. And that's when I think that desire to build a business that's not dependent on you. And the key here is, and this is a key distinction, you don't have to want to sell it. We went back and forth this book I wrote a while ago, which you were kind enough to say nice things about. The book's called Built to Sell, which a lot of people kind of roll their eyes at, right? They're like, oh my God, this sounds like a terrible book. It sounds like Built to Flip. It sounds like a bunch of Silicon Valley assholes doing the absolute worst thing for capitalism. And that's not really what it's about. It's about the subtitle of the book is Creating a business that can thr without you. And that's really about having control over your company and being able to sell it. Not that you want to sell it, but being able to sell it. And that's a key distinction.

You know, it's funny, I think there's, there's ego that comes into play that slows down our growth and progress in business, but also outside social influencers. Kelsey, like, I've seen people like, you know, oh, profit first. What are you all about? Profit, man, you're a dick. Right. And John experiences the same thing. Were you all about selling a business? What about caring for your customer? Yeah, so I just wanted to. I don't know where I'm going with that.

I just wanted to share that it's snap judgment.

It's snap judgment. So, John, let's shift over to this TVR model because I think it's remarkable. Could you tell us more about the teachable, valuable and repeatable elements and how this plays into making a business that can thrive without you? Sure.

Okay, so let's imagine you own a swimming pool company, all right? And you install swimming pools in guys backyards. You also go in and open up the swimming pool in the spring, you close it down in the fall, you sell chemicals, et cetera. The jobs that most entrepreneurs want, the sexy job, the one that they can tell their friends and neighbors about, is the installing of the swimming pool. Right. The problem with installing swimming pools is it may be high revenue. It's probably not high margin because it's something the homeowner probably gets quoted. So your margin on it's probably pretty low. It probably requires you personally to go oversee the job because it's relatively technically complex and there's no tail to it because people only ever install a swimming pool once. And so although it feeds your ego and it feels good, wow. I'm doing this $10,000 job for the house down the street. It doesn't actually add value to your company. What adds value to your company is a tail to your revenue, recurring revenue. And so the same guy who owns a swimming pool company, I would say, what is your pool maintenance program? Because what you want is 10,000 customers, homeowners paying you 100 bucks a month to manage their swimming pool. For you, the worry free swimming pool program. You know, send a technician to your swimming pool in May to open it up. Every two weeks the technician comes back to balance the chemicals. And in October we come and close down the pool for you and make sure it's all safe and done properly. And for that Mike, we're going to charge you 99 bucks a month for the year. That's a valuable company because it doesn't require you, the pool company owner to do the chemicals. You can hire some college student, pay them 20 bucks an hour to go do the chemical balancing. But it's a valuable company because it's not dependent on you, the owner and there's a tail to the revenue. And that's where we get it wrong. We think, oh well, we got, you know, we got to do the big installation because that's the big revenue number. It's actually not what makes your company valuable, it's the tail and the ability for your company to run without you.

So John, you were saying like that with that pool, you sell a pool and there's your 10,000 bucks. But that's really not the revenue. You're talking about this tail of revenue over here in our office. I don't know if you know this, almost everyone here is an entrepreneur, part time business and so forth. Kelsey has a jewelry business. It sounds like this applies to many businesses. But I can't see how a jewelry business can have a tale of revenue. Does this apply just to the pool guy or other guys and if so, how?

Yeah, no, for sure. Every business should be able to create some form of recurring revenue. It's going to make the business much more valuable. There are nine different forms of recurring revenue. So you know, I don't know the jewelry business terribly well, but you know, one automatically that comes to mind is you could sell, if the jewelry is expensive, some sort of recurring insurance for that jewelry. So you can say look, it's a $500 piece of jewelry, but for five bucks a month I will insure it for you so that it if ever breaks or whatever. You could have a jewelry maintenance program where you could have a jewelry cleaning once a year, you could have it come in for cleaning, etceter. You could do with jewelry as an example, you could do what they do at Rent the Runway where you can rent new outfits. You know, jewelry kind of get bored of it, especially if it's cosmetic or you know, it's you know, fun jewelry. You could say look for, for 10 bucks a month, subscribe to our jewelry club and you can get a new piece of jewelry every month. You just return the one that we've given you and we'll continue to replenish your jewelry. So jewelry is a really tough one, but there's a lot easier ones. I mean, if you like, let's imag own a carpet cleaning business, right? And you go into offices and homes and clean carpets. I mean, if you're just doing it on a job by job basis, your company's limited in value. But if you create monthly service contracts where you say, look, once a month we'll come in and clean your office's carpets, that's where you're building a valuable company. So in virtually any industry, jewelry is a bit of a stretch. But in virtually any industry, you can create at least some form of recurring revenue.

So you hit, I jotted down five or six there, and you mentioned nine. So I heard insurance, maintenance, contracts of some sort, rental club or membership. There's some other ideas you have for recurring revenue.

Yeah, I mean, there are nine. I wrote a whole book on this, so I feel very passionate about the topic. Yeah. So there are nine models. Another one is the consumables model. Right. So we've all, you know, seen Dollar Shave Club where you run out of razor blades every three or four weeks. If you're a guy and a woman for that matter, you probably, probably run out of razor blades. They'll ship them to your door. Company was just valued and sold at a billion dollars, $200 million in revenue. So they sold for five times revenue, which is an astronomical multiple. But it goes to show you the power of recurring revenue. Membership models is another one. So you know, any, any membership website where you're getting a regular fee and people say, like, are people willing to pay for content these days? And in actual fact, the answer is yes. There was a time when, you know, everybody believed information should be free, right? Like, that was the ethos of the Internet. And then all the media companies started going bankrupt, right? And they started to shake their head and say, okay, wait a minute, we gotta start charging for our content. And so people like Financial Times, New York Times, Wall Street Journal start selling access behind the paywall. And all of a sudden we realized that it's actually worth spending a little bit of money for good content. And that change really created a huge wave of membership websites where you, a contractor selling, Joe Casseri as an example, runs a paid membership website for contractors. If you own a construction or engineering company, et cetera, and you can get special content for running that company. And you pay for access to that content. Dancestudio owner.com, guess what? It's a company for dance studio owners. It's a site for dance studio owners where you can download checklists and worksheets and templates for how to run a successful dance studio again. Ten years ago, even 20 years ago, people would never have paid for this stuff. They would have thought it was free and should be free. But we started to get kind of comfortable with this notion of paying for content, especially unique, highly specialized content. People will pay for it. So that's another one of the models.

So why don't you go back to our original start about profitability and your suggestion that profit is an important factor, but not the only factor with all these things. And when it comes to profit, must it be profitable or is it a good idea at times to build a membership even at a loss because of the potential sell value of your company?

Look, I personally think that the value of your company should be your number one report card. @ the end of the year, it will be your biggest paycheck, it will be. The biggest impact on your net worth is not how much money you draw out of the company in a salary each year, it is when you go to sell it, what do you get for it. And to that end, if that is, if you agree that that is the most sort of, that is your report card as an entrepreneur, then yeah, there should be decisions that you make that give up short term profitability in favor of long term value. I mean if you think about valuation for a second, generally you could distill it down to your company is worth a multiple of your profit. Now you have to make profit in order to have it multiply something. Generally, unless it's a strategic acquisition, which is a different case, but for the most part for most small business owners, it is a multiple of your pre tax profit. And so you have to make profit. And the more profit you make, the bigger the value your company is. But the other side of the equation is what is the multiplier? Are you getting two times profit because you have lots of customer concentration issues and your business is not very valuable, or are you getting nine times profit? Profit. And so it's not as, it's not as easy just to say profit is the most important or is the least important. Both are important. Profit's important because that's the, that's, that's one number that's being multiplied. But I think a lot of us as entrepreneurs forget about the multiplier because you know Is it times two or times nine? And that, that can have a huge impact, obviously.

Yeah. So it sounds like you're moving kind of multiple dials because. Because the buyer, at least in the financial position, is buying a profit stream. So profit is important. The strategic buyer is buying potentially a plug in where they can generate profit even from an unprofitable business. But plugs in. But John, I don't know if every business owner actually wants to sell. I don't know, Kelsey, if you're sitting going, I want to sell my jewelry business one day. It's a hobby that's turned into a true ongoing entity. What about the person, John, who doesn't want to sell their company? Is this still a good model to follow, what you're suggesting?

Absolutely. Because the essence of building a sellable company is that it can survive without you. It can thrive, in fact, without you. That's the common denominator of the acid test. And when you have a business that can thrive without you, you've got all the cards at the poker table, you've got the royal flush, so to speak. You can work in the company and continue to make profit if you really enjoy it. You could bring in a second in command to run the day to day and just do the strategic stuff. You could bring in a shareholder and say, do what's called a minority recapitalization or minority recap, where you sell, let's say 40% of the company and put a bunch of money in your jeans and continue to hold 60% of the company. You could sell it outright, you could transition it to family, you could transition to the next generation of managers. All of these options are only available to you if it can thrive without you, if it's a sellable company. I think the next closest thing to child abuse, frankly, is when one generation owner passes an albatross down to the next generation owner.

So true.

I think that is brutal. When you take a business that is not sellable, it is deeply dependent on some patriarch and give it to your kid and say, now you go run it. And you basically indentured them to servitude for life. And so even if your exit strategy is, hey, I want to pass down to my kids, you've got to pass down a business that is not going to become an albatross for the child. Right.

What's the first step people can take? I mean, I know John, people are listening to the show and they're like, holy cow, I got to do this. But then the overwhelm kicks in. The Day to day, how do they get to building a business that can sell, be sold? What's the first step?

You know, the first step is tvr. So teachable, valuable, repeatable. Grab a white paper or grab a whiteboard or a piece of paper and write down all of the things that you sell today, the services that you provide and the products that you sell, and rank them on a scale of 0 to 10 on how teachable they are to employees. Give them a scale of 0 to 10, how valuable they are to customers. In other words, the opposite of value is commodity. Give it a 0 if it's commodity. Give it a 10 if you're highly differentiated, offering it. And then repeatable. Something that they buy on a regular cadence, like chlorine for a swimming pool, as an example, would have a high score on repeatable because it's something I have to buy regularly. A swimming pool or a wedding ring would score very low because they only have to buy them once. And then basically you're going to add up the score for each product or service that you sell and you're looking for the things that sell that score the Highest, closest to 30. Focus on those, you'll get immediate uptick in the quality of your life if you also do the opposite, which is to eliminate one or two of the products and services that you sell today that score the lowest. Ultimately, I would love everybody to get to a handful of products and services that score high on teachable, valuable, repeatable. But that's like ripping off the band aid for a lot of people. It's too hard. And so you'll get again, a material impact on the quality of your life as an entrepreneur. If you just eliminate the one or two things that are scoring the lowest, that's going to help you redouble your efforts, deploy your capital, your limited amount of money to the very best opportunities, the ones that have the best opportunity to scale.

When I speak of the new entrepreneur or an established entrepreneur who's looking to build a business to sell, they say, what? What should I do? I give them two steps. Now think about giving a third. I say step one is read E Myth. Step two is read Built to Sell by John Warlow. And E Myth is kind of the theory. Built to Sell is much more practical. I love the book. And then I try to hock my own wares on people too, truth be told. But those are two books I recommend. And now I'm saying you gotta hire John's company, Value Builder System. So, John, why don't you share a little Bit about your business and also how they can get your book.

Oh, you're very generous. So yeah, we work with entrepreneurs to help you improve the value of your company. Whether you want to sell or not, just improve the value of your company. The first step is you complete the Value Builder score questionnaire. Takes about 15 minutes. It's free. And we'll give you your score of 100. The average scoring business achieves a score of 59 and goes on to trade at 3.5 times pre tax profit. Those that go through our system and achieve a score of 90 or greater. So these would be our best in class. They trading at 7.1 times pre tax profit. So more than double. So it all starts by getting your Value Builder score for free. And you just go to valuebuilder.com okay.

Everyone do it right now. You got two tasks. Get his book. John Warlow's book. Built to sell. Creating a business that can thrive without you is amazing. I personally endorse that. And check out the company. And we'll have the link down there for the free exam that you can take. Can, you know, gauge yourself. So, John, thank you so much for being on today's episode.

So much.

Hey guys, this was really fun.

So. All right guys, here's what we're going to do. Kels punched me first. Oh, I love the little sound effect with it. We're going to tell you what we learned from John and we're going to summarize it in our own words, which won't be nearly as fluent or as effective as what you shared. And we got a special giveaway that's available for you. But first I do want to thank our corporate partners. So. Oh, and I got listener mail today too. Right. That we're gonna answer. So here's the dealio. I Want to thank Nextiva VoiceOver IP phone system and Next OS. They actually email me to get feedback on the next OS system. And we've been dependent on another CRM for the longest time. We were talking yesterday, Kelsey, about making the move over to a new system. And I want to give them RF feedback, which means I want you to give them your feedback. But they, they are a communication suite now. No longer is it just a voice system. It is an all inclusive communication system. You gotta check them out. Nextiva.com and of course receipt bank, all those receipts are piling up. You can scan them in with your phone. Don't have them wedged in your pocket, jammed in your purse or wherever you shoebox or where you keep just Scan them in. It links with your quickbook books. So that's what it does.

Yeah.

All right, Kels, what'd you learn today? Oh, I gotta push the button.

Yes. What'd you learn today? Oh, I really love this. So I think.

You'Re stymied.

Well, yeah, I don't really know where to begin. I guess I just super love the conciseness of thinking about it as teachable, valuable, repeatable. I think that makes it very clear.

Yeah.

And then. And when you evaluate that in your own business, think about the things that are the opposite of that. Eliminate that right off the bat, and that automatically is going to give you, your business more value, but your life more value. And I love. I feel like this, in general, he says, improve the value of your company, but I feel like it's. Improve the value of your company and your life because ultimately you're getting control back. Right?

Yes. Yeah. Tvr, that is the winner for today. Wow. Wow. I also like the question I said about my big fat ego walking into my big fat office with my big fat demands on everyone. And he goes, mike, do you crave freedom more than you crave your ego? I'm like, oh, that's a wake up call, right?

Yeah, exactly. And that's a great way to pose it. Great perspective to have.

Yeah. That was powerful stuff. We want to know what you learned, too, so make sure you share that. We'll tell you how to share that in a second. But before we do that, that now we can do the listener mail, which I got to find the. Oh, the funny gag line. Here it is. You've got mail pattern baldness.

Okay, so this one comes.

Oh, oh, I'm sorry. Oh, yeah. That's been a long time since that one has ruby tan.

It's totally appropriate in that moment.

It really was.

So this comes from Cassandra Bell Ball.

Bill Bell Ball. That's a weird last name.

It's just Ball. Okay.

Yeah, that. Oh, it is just. I thought it was Bell Ball. I wasn't looking at the notes.

So she asks, or she says she's decided to try laddering CDs with the vault funds. So use a CD at the same bank the vault account is in. What do you think? Has anybody tried this? Are there any pitfalls to this system that we haven't identified?

This is the first time my collegiate education is going to come into play. This is unbelievable. I never knew this would happen. So I went to Virginia Tech. Go, Hokies. And I took a finance class. I was studying finance, which, by the way is a C student. So maybe this is totally irrelevant stuff, but this does apply. A technique called laddering is say you have $1,000 that you want to invest and make money on, but you don't know if an emergency may happen. Maybe the boiler at your house breaks and you need to replace it. So you need access to the money. So if you just put in a savings account, you'll get the bearing, the interest that's bared at the, the savings account, which is less than the interest of inflation or the cost of inflation. So you're actually losing money. It's just fading over time. But on a cd, sometimes you can start approaching the interest rate, you can make a little more money. CDs might not be the best, but what you can do, the CD is ladder it, where you take a percentage of it, let's say one third. So you take $333 and put it into a CD and you have it vest within three months. So very short term CD, so you get a higher interest rate rate and that money will be available in three months. Then one month later you invest in another three month CD for 333 and the next month, 333. By the time you invest in that third one, at the end of that next month, the first one comes relevant again, meaning you can pull that money out and you can flip it back into another CD and get interest. So you've laddered, meaning you've put these in stages. So at any given month you'll have $333 available to you, plus interest. So higher interest and access to a portion of your month if an emergency strikes, it takes them three months to clear out all that money and it comes back to you, but you've gained interest. That's called laddering. Now a vault account is an account in Profit first where you save up for a business disaster. So even at Profit First Professionals, the company we both work for, we have a vault account where we're constantly putting money away so that if disaster strikes, this building collapses, something happens. You know, sales just dry up overnight that we can sustain as a business for an extended period of time. Time, we are now starting to ladder that money because it just sits there, right? So we're gaining interest, but we want it accessible. And in a, in a business, if there's a collapse, it's not like you have to take all that money out one shot. It's usually over time, you have to pay wages for people and so forth. So a laddered strategy is very appropriate. So yes, Cassandra, Bell ball.

No pitfalls.

Yeah. Ladder your money. Okay. That was great. Was that good one?

Yeah, Love that.

All right, cows. Hey, what do I have here? An old script? No, I got it. I got a new one. We answered the question. What do you do? Oh, my gosh, I forgot. The last thing is. I want you to share where people can.

Yes. So please leave us your ratings and your comments on itunes, Stitcher, Tunein Radio, and especially Profit First Podcast, because we get those right away. So please tell us what you think.

Yeah, tell us what you think about this episode. We're changing the format around a little bit because I said podcast movement and there were some suggestions. So hopefully you like this format a little better and learn a little faster. Oh, and there's one last thing you need to do, perhaps the most important thing right now. Go to mikemicalitz.com now you know the shortcut. It's mikemotorbike.com, not McAllister.

It's cute.

I should. I should get that.

Get that URL.

Yeah, I'm gonna get that URL today. But you can go to mikemotorbike.com or by times broadcast, Mike Michalowshitz. If you can spell that dot com, go to mikemotorbike.com it'll forward you to my website, Mike Michalowitz. Go to the home page in the top right. My book Surge, is available for free. It's on Amazon for purchase. You can go to your local bookstore and purchase, or you can get the entire book on the PDF for free instantly, and surge your business forward. All right, Kels, let's get out of here.

Thanks, everybody.

See y' all.

Bye.