Episode 23: Pricing and Profitability with Matthew Perosi

From the.

There we go.

Welcome from the studios of fractal recording. This is the profit first podcast, episode 23.

Oh. Oh.

I love it.

Is our show too masculine? We're like grunting at the beginning.

It's like a workout session like you would think. You'd think we'd be talking about. Dude, now it's time to get pumped up. Do the military press above your head. Push yourself.

Wow. Welcome, everyone, to the profit first podcast. My name is Chris Kern. I'm the founder of fractal recording.

And I'm Mike Michalowicz. And you're listening to profit first podcast, what you just said, where we talk about the alpha and omega of business. We look at all facets of business, all different types of businesses, but we figure out what's the essence to being profitable. Because that's where your money's at.

That's right. That's kind of important. Hey, say your name again. Mike.

Mike Michalowicz. That's a tongue twister right there.

New clip. We had to use it, of course. So our podcast is available on itunes and Stitcher and also the website profit first podcast dot com.

Dude, what have you been up to, bro?

Yeah, so my bathroom and tub backed up with sewage from the apartments above us this past weekend.

That's why you're fired up. You said you weren't fired up, you're fired up.

Well, I was really fired up. Now I'm okay.

So you are looking forward to moving to Colorado now I understand.

Yes.

And that triggers that. That's a big send off.

Oh, yeah.

Well, stool dripping down the steps, dude.

Scary.

Oh, really?

Well, not that scary, but just anyway you get, you know, and it's weird if it's. There's a weird little mental difference between if it's your stuff, you know what I mean by stuff, or if it's someone else's stuff. Why is. I don't know what the difference is mentally. Nice face, Christina.

Yeah. Our special guest in the office today is Christ. And actually, you can attest to what happened in our office with this toilet.

Oh, my good. Well, hello, everyone. That's the hell of an intro.

Nice intro. Yeah.

Yeah.

All right. So what have you been up to, Mike?

Well, did you all notice the new T shirt I'm wearing?

Oh, yeah.

Thundera, one of our sponsors. I went out to dinner with them and not only did they pick up the bill, they gave me a T shirt. So I've been getting out networking more with some folks that are helping us out. Fundera Nextiva, T Sheets and some other folks. That was fun.

That's cool. So yeah, those are our three sponsors. We're going to talk a little bit more about them later.

But what are we talking about today? Right?

Yeah. What are we going to talk about today?

Jewelry. Jewelry, but actually how to crush it. In the jewelry business we have a profit first professional who's going to be joining us just in a few seconds named Matthew Perosi and he's going to give us some amazing insights on what it takes to grow a profitable business. Now his specialty is marketing to these businesses. So if you want to have a fancy schmancy website and so forth, this is the guy you bring on. Matthew's business is called Sapphire Collaborative and he is calling in from France with no further ado. Matthew, are you there, sir?

Hello gang. I'm glad to be here today. And yes, I'm calling from Bordeaux, France, the wine capital of the world essentially.

Yeah. And considering that right now as we're recording this, it's about two o' clock, that means it's about six o' clock where you are.

No six hour difference. So it's just coming on 8:00pm here.

Uh oh, that means it's drinking time. Are you throwing back some wine already?

Not yet. Not yet. That will be a little later. Right now I have a nice tall glass of water in front of me. Don't want to be dry.

Now when I called you, Matthew, you said that you were covering the phones. Are you? I know you service a lot of businesses out here in the us why are you working this late at night in France? Is that because you work in the US too?

Well, I have employees that are scattered all over the United States, but only three of us have telephones. Now it's myself that have a telephone. I'm sorry, four of us have telephones. My bookkeeper has one too, my main customer service agent has one and my business partner has one. But it just turns out that my partner took Friday off today and Kathy, who normally is answering the phones is on lunch right now. So it's like, okay, I have to answer the phone. That's, that's fine.

Hold on. Lunch at 8 o' clock at night?

Well, no, she's in, she's in Buffalo, New York.

Oh, she's. Oh, okay. I didn't get. Okay.

We are a completely diversified business. Several years ago I used to have nine employees working out of my one office in New Jersey. Right. Which is our main headquarters. So. But then I was traveling back and forth to France for some educational stuff and I had to figure out how to rebuild the business so that I could travel. And once I did that, as we've been turning over employees, we don't just hire people in New Jersey anymore. It's like, all right, where do you live in the country and do you want to work for us? We'll ship you a computer, we'll ship you a phone, and it's good to go.

So one of the biggest questions I have around an international business, particularly like yours, talking about virtual, I mean, you're wrapped around the globe, is there's a lot of efficiency, AKA profitability, out of being able to accomplish things as a team. How do you coordinate this? When it's 8 o' clock there, it's 2 o' clock here. Buffalo's in some kind of weird time meld void, like who knows what time it is there. How do you. Yeah, that was a good one. I know. Thank you. So how do you manage the efficiencies?

Well, it turns out to be pretty good because my other main employee is in Las Vegas so many times she'll cover the west coast time. We have the east coast time pretty well covered. And it's kind of interesting, all of my clocks in front of me here are set to New Jersey time. So I look at my computer and it says, it's just coming up upon 2pm and I have to think to myself, oh, well, where am I really? Oh, it's 8 o' clock here and I got to look at my cell phone to see. But we share files. I've got a server room in both Arizona and in New Jersey where we share files through. We use many different file sharing services and believe it or not, our biggest and best form of communication is Yahoo Messenger. Even though it's an oldie, it's been rock solid for us for quite a long time.

Is Yahoo Messenger. That's instant messaging, right?

Yeah, yeah. So we all have instant messaging open up on our computers and we think nothing about just picking up a conversation from tomorrow, I'm sorry, from yesterday, or just casually saying, okay, I need help with this, and we're sharing files back and forth from one another. It has become seamless using multiple services rather than just having one paid service that we all rely upon.

Now, one thing you mentioned, a little bit off the cuff there. You said you have a clock, it's on New Jersey time. Do you have all your employees and colleagues using one specific time zone and that's the time you reference?

No, since my partner, my business partner and my main employee, they Both live in the East Coast. Most of the stuff we do is based off the east coast time. But we have customers in the 48 contiguous states. So we always have to figure out what time zone they're in. You know, what, what time zone are we in? Do the math or use Google and say, what time is it in Oregon?

Yeah, yeah, yeah, no, I totally gotcha. So now tell us a little bit about the service you provide. I think it's fascinating your niche in the jewelry industry, but can you tell us specifically what you're doing for them?

Yeah, well, we started, I got into the jewelry industry by accident back in 2003. And initially I was just programming websites for, for some jewelers. I landed, lucky for me, I landed a half million dollar web programming contract for one of the companies that runs jewelry trade shows. Because of the exposure I got just from that contract, from 2004 through 2007, every single week, without fail, I had a jeweler calling up saying, well, if you're good enough for them, you're good enough for me. Where do I sign? And I didn't have any need for marketing because people were calling in just from that exposure. So really after a few months back in 2004, we realized that something was happening with what we were doing. And we were a web programming company for basically anybody who wanted a website in North Jersey. That's where we were focused at the time. But with this ramp up in jewelry, we stopped advertising. Over time, we eventually phased out and pretty much fired all of our other customers that were non jewelry. And we started to build this niche industry, learned everything we could about the jewelry industry. We went to trade shows, we got subscriptions to magazines, we really, really became specialists for the needs of the jeweler. And then what really became unique was that I had always been a computer consultant. I had always been a computer consultant or business consultant of some type. And websites was an easy way for us to make money through the 2001 recession. So once we got into the jewelry industry, I started to realize that all my consulting techniques, they still applied. And then we eventually started to just build up the consulting end of the business again, but this time just focusing on jewelry businesses.

So you were never a jeweler yourself.

You know, that's kind of funny that you say that, because my grandparents on my father's side, they had a jewelry store in Little Falls, New Jersey. And they had that jewelry store from, you know, when I was born, until I was, until I was, after I graduated college. But after they closed the jewelry store, a Strange way that the human brain works. I had completely blocked out that they owned the jewelry store. And just like the entire section of my childhood had been blocked out. It wasn't until I went to my first jewelry trade show and I was standing there talking to one of the vendors and he starts describing something to me. And I said, oh yeah, well, my grandparents had a jewelry store that I worked in when I was young. And suddenly I nearly got a headache because all these memories came from.

So you work there?

Yeah.

Okay, so you know, as folks are listening in right now, we all want to master our category. The riches are in the niches, they say. What were the keys for you to really get or at least position yourself as proficient and a niche leader for jewelry providers?

Oh, well, I guess because I've been programming websites for so long. I mean I started in 1994, so I'm kind of an old timer when it comes to website programming.

Was there even was the Internet. That's right when it came out, like 1994.

Yeah. Well, 1993 was when I was still in college at NJIT. We had a computer lab there and they had this fantastic thing where we could look at a web browser and we could remote control a robotic arm from a different university that was online in Australia. It was just wild. It was like, wow, this is amazing. We had this video. It was pretty high tech stuff that we then didn't see for many years later, but that's what they were doing in the university anyway. I got started programming in 94, so a year later and have worked through a lot of different evolutions of technology.

So let me ask you, as you become efficient developing websites for jewelers, there was other web developers out there. Were you able to price yourself higher because of your expertise specific to this niche?

No. You know what, we made a complete mistake in 2003 when or 2004 when we first got hired into the industry. We made a mistake when we started to price ourselves out for jewelers because we just assumed that, well, let's just do all the same similar pricing we had in the, in the cutthroat industry that was known for North Jersey.

So yeah, so everyone was competing aggressively to. You can get a website anywhere from anybody, Is that what you're saying?

Yep.

And you were in the same box as everyone else?

Well, we didn't realize that we were not in the same box because then back back then there were only, I don't know, maybe five or six other companies that were. That were programming websites specifically for jewelry. So we just presented ourselves using all the same low pricing. And then it turned out that we made a complete mistake because we didn't realize that the jewelry industry, they need a lot more hand holding on the coaching side of things. So we were offering these inexpensive websites and including consulting, but we weren't getting paid or compensated for any of the consulting work. So it took us several years to realize our mistake and we got ourselves into financial trouble.

It was gig. Okay, so financial trouble, tell me, what was the financial consequence of competing on price and having to do extra work because of their special needs?

What ended up happening? By 2007, we were, as our employees started a turnover and also we had a change in ownership because I had several different partners through the years. So I had an. I had my most recent ex partner. She. She left the business in 2008. And what we didn't realize was that she had been providing a lot of free services to some customers. But by 2007, we had tried to clamp down and said, all right, you know, people got to get charged for things. But she was still going along with doing a lot of work for clients for free, which was putting us in a financial hole. But I didn't know where the financial leak was because she wasn't documenting any of her time or her work.

So how bad financially was it?

Well, when she left the company, we ended up losing a couple of dozen customers because they all said, well, I'm not going to pay for this service anymore. She's been providing it for free.

Gotcha, gotcha. Did your company go into debt at that point?

Oh, God, yeah. We went. We went 60,000. We had a line of credit in 2008, time frame, and we maxed out that line of credit. And I mean.

Yeah, exactly. Yeah, whenever someone says maxed out line of credit, that triggers off automatically. So.

And we maxed it out because I refused. I was one of those business owners that refused to realize the truth of the recession. And we also, the way we had built ourselves incorrectly because we were providing a lot of services that we didn't have systems in place to do them. So it took a lot of human labor. So we were doing a lot of labor, spending a lot of payroll to get work done. And we were like, well, how can we continue providing the same level of service if we don't have the people on staff to do it? So as the recession began, we dipped into the line of credit to pay the regular bills and only use the money that customers are paying to pay our payroll. But you know, we got zapped by. By mid-2008, we were. We were in a lot of trouble and we just had to lay off everyone other than myself and my dude, my new business partner, who's now still my current business partner.

Yeah, so that sounds like the. I mean, a turning moment. You're. You're in debt. Even though you have a niche business, you don't realize that you could dictate more. You have to cater to them. You have to do additional service. How did you turn around? How did you turn debt into profit? How did you become profitable?

Well, we did it because. Well, we did it first of all because suddenly we were missing five employees. How were two of us going to manage several hundred customers and only be able to provide the same level of service? Now, since I'm a web programmer, I had to put my programmer's hat back on and I had to look at what we were doing, and I had to go through every service that we were doing. And I, from the summer of 2008, I completely re engineered from scratch all the software we were using. And I created a lot of new software that could run the business and do things a lot more efficiently. Also that was easy for people to learn. So that, you know, thinking in the future, would customers support themselves or would we hire people? And that software itself, which took me about six months to develop, was what helped turn the company around.

Are you saying you spent six months developing software? It effectively replaces five employees that left.

It allows now, yeah, because at the time, each employee was handling about 60. No, about 30 clients. And now the software easily allows one employee to handle between 60 to 70 clients.

Dude, nice. That's the turnaround moment from wah wah wah to cha chinga. So, Matthew, that's a massive turnaround. Did the numbers turn around right away? What was the experience financially for you after releasing the software?

The numbers didn't turn around because even though I was rapidly developing the software, it took us a couple of years to fully deploy the software. And also during that time, all of my customers in the jewelry industry, they were experiencing the recession as well. And one of the sad things is that I had. Oh, God. From August of 2008, I guess through the end of that year or maybe, maybe early 2009, I lost 60 clients because about 30 of them just went out of business. They just had to fold themselves because they were mismanaging money. They didn't see the recession coming. In another 30 or approximately 30, they decided that they were going to hire either their niece or their nephew. Or somebody local to work on their website because they couldn't afford to. They couldn't afford to, you know, pay us for the services that we were providing.

If we fast forward to today, is your business profitable now?

Oh God, yes.

All right, well, give me the oh God, yes. This is a lesson I want to learn. How do you go from to oh God, yes.

I guess it's interesting what we had to, what we finally did. I mean, through all this learning process, the most difficult thing was realizing how to correctly price ourselves. By the time 2012 came around, we were already realizing that consulting was a big part of the business and that we needed to get paid for that consulting. Now the consulting took the form of we were providing a lot of data from the websites and then giving a lot of reports, but not just like giving reports. And hey, here's the activity of your website. We were giving reports and then calling up the jewelers and we were saying, hey, did you notice this blip? Did you do any advertising that day? Tell us about the advertising. How can we create that positive blip for the future? And then we would. We started to coordinate their offline ads with online stuff and we were being more of a website consultant. And then eventually I was able to dovetail that into then getting into their finances and management, employee management. So it has grown a lot now where we now officially say, you know, we collaborate with so many different areas of the, of the business that we, that we had to go and change our name because we used to be called jeweler websites.

I remember actually that's when you and I first met. That was back maybe six, seven years ago now, if you remember. Yep. So, but Matthew, let me ask you this. You went from break even to God awful profitable. God awful actually godly great profitable. It sounds like by going from a transactional, we design your websites to a consultative. We are your marketing force. And doing the statistical analysis and then tying in trends and data that you're collecting. It sounds like from transactional to consultative. Is that accurate?

Yeah, we work very closely with the business owners now and we provide them with the coaching and intelligence to increase their profitability. But we have to use the numbers that we gather from the website. And because I engineered the software, I engineered it in such a way so that I can do, I can do God awful amazing type of tracking. Like for example, I can tell you when somebody is on a social network and then visits your website. And then I can tell you what town they were in when they did it, even if they don't give you permission to know what town they were in because that information is publicly available on the Internet, but very few programmers know about it.

Oh, that's cool. So you could tell me the last site Chris was on and your answer would be a porn site. It was a porn site.

Are you watching us on video right now, Matthew?

No, but, no, I only have that control when somebody is on one of the sites that we've created. So I can see what social network they came from, I can see what they look at on the website, and I can develop customized experiences for those clients of the jewelry store. And those customized experiences will appear on their mobile phone and on their desktop. And then if the jeweler is really, really forward thinking, I can present and surface that information right on their own smartphones in the store. So that if a customer comes in and says, hey, I saw this on your website, and if the customer shows the smartphone to the salesperson, then the salesperson can kind of pull out their own smartphone and like figure out who this person is and what their tracking history has been and have this, and have this conversation where the customer has no idea that the sales agent is so well informed with their activity.

That is bad arse. That is really cool. Matthew, before we wrap things up, I know you're a Profit first professional. You're a Profit first guy. You're implementing Profit first in your business. Well, let me take that back. Are you implementing profit first in your business?

Well, it's interesting that you ask that because in order for us to get out of the financial hole, we created a system which very much parallels the Profit first system. What's amazing about our system is that because our customers pay us on a monthly basis, basically monthly retainers, we have fixed bills that we have and we know what our contracts are. So I can do budget projections out for almost 24 months. And they are. Or financial projections out almost 24 months. I can see the numbers on a daily basis. And we know what our profitability is going to be at any point in time. So whereas the Profit first system, and we do have multiple bank accounts, by the way, just like Profit first does does say. But we use our main Excel spreadsheet in our main equation that I engineered that tells us, all right, well, hey, you know what, this is the month of April. So in the month of April, which we've been planning for quite a while, what do we have due this month? We've got business insurance, which is due this month. Myself and George had to be given extra money to pay for Our taxes. And we got a couple of bazinga.

I'm sorry, I heard taxes.

And I mean, all that was planned for, properly planned for, without any hiccup, but using kind of a combination of the PfP system as well as our own system that we used to initially get ourselves out of the hole.

I love it. Last question I have for you. As you have an opportunity now to speak to thousands of people that will listen to this episode, hopefully tens of thousands soon. What would be your best tip to profitability? I mean, you've taken your business from oh my God, I'm about to die to God awful success. What do you suggest our listeners do to increase their profitability?

You know, one of the things I didn't mention was that I've been writing a blog post every day, every weekday, for four and a half years now. And just ironically, on Wednesday this week, I wrote a blog post saying, planning your jewelry store's profitable future. Because so many jewelers are wondering, well, what are they going to do? Where are they going to end up in just a few years? And one of the things that the jewelry industry is known for is passing their business from one generation to the next. And usually the next upcoming generation, they become apprentices with the business first. But nowadays you got to. As an entrepreneur, jewelry stores need to understand that the next generation needs to know more than just being a bench jeweler and how to repair a ring or set a diamond. But you have to understand a lot more things about business, about financing, about, about marketing and the. Just admit to yourself that you don't know everything.

Yeah, I think that's the key.

And you have to trust other people who you ask for their advice and not just say, okay, well, what do you think of this? And then not act on it. If they're giving you good advice.

I love that. I love that.

And you have to also plan for, you know, are you going to be selling the business or you. Or do you want to retire and sell all your assets off? So if you want to sell the business, well, then you've got to figure out how to tap into the new generation of customers and how to turn your own pricing around. Just like we had to turn our pricing around, the jewelers also need to learn how to turn their own pricing around to make themselves profitable for the long run.

I love it, Matthew. I love it.

He makes it sound so simple.

I know. Just do this, this, this, and you're set. Yeah. All right, you jewelers out there, listen, if you want to learn more about Matthew Perosi, go to Sapphire collaborative dot com. If you can't spell that, just go to pro dot com. I think it's pros dot com, right, Matthew?

Yep. Pro dot com or S A, P P H R dot com, which is like the abbreviation for Sapphire.

Oh, yeah, exactly. Check it out. Check out what Matthew's got going on there. If you own a jewelry business and actually starting to get into some other stuff. So if you have any kind of business that wants this dynamic data feedback and connected to your website, Matthew's the guy. Hey, thanks for joining us today. I really appreciate Matthew.

Oh, thank you so much for having me.

We'll catch you later.

Thanks, man. Great job.

Thanks.

See you.

Take care, guys.

So, Chris, man, see, I didn't say wow this time.

I said man.

Oh, yeah. You've been listening. Yeah. Wow, that was flip. Oh, there's. There it is. You know, I want to. We're going to do a couple things. I want to take our. Do our top takeaways for the three of us. I want. Christine has a cool tip for us. I got some cool stuff. But first I want to thank our corporate sponsors.

Yes.

I got to start with Fundera because they gave me this cool T shirt.

I know I'm going to have to Instagram that picture. Yeah, I'm gonna take a picture of you.

We should start Instagramming. That's what we should start doing from the studio.

I took some pictures. We can send them out.

Yeah. Can you start doing something with that?

Yeah.

Is it profitable?

Is it profitable? Oh, hell no. That's a good point. So Fundera funding source, One Stop Shop. You need money. You want to grow your business. My one tip is don't grow a business without knowing if it's profitable or not in the first place. So if something's working, that's what you want to grow. You need funding for it. Reach out to Fundera. They seek out the money for you. They're awesome. Plus, their T shirts are pretty cool. Talking about T shirts, T sheets gives away T shirts too, which I think Fundera cloned because they're very similar feeling T sheets. Christina, we're starting to use it in the office now, right?

Yeah. Yes. We actually. We just started using it as of this morning. Yeah.

Christina walked in. Christina walked in and I said, hey, can I get your time? She's like, sure. She's like. I'm like, but can you fill out this T sheet thing?

He's like, can you send everyone else up as well? I was like, okay.

Did you already get Set up?

Yeah, we pretty much ready to go. We're gonna test run it for everyone on Monday.

Isn't that amazing? Like, listen to Chris. I gave her, like, three seconds notice and I said, you gotta get down. We gotta get to the studio for the podcast, but get our time tracking system set up for the entire office. Yeah. And she's like, okay, three seconds.

With T sheets.

Yeah, with T sheets. Oh, yeah. We're tsheets users and now we're starting on Monday. We're full bore.

That's it.

Yeah. And they make it very easy to use.

Yeah. Time tracking is a big deal, Chris. And then. Nextiva.

Nextiva.

Nextiva.

Hello. Yes, nextiva. Thank you.

If you say this when you look at your current phone system and you say this, oh, hell no. Then it's time to go to nextiva. Nextiva is Voiceover ip. We've been using it for years. We need a feature to record phone calls. We do a lot of support calls with our membership for Profit First Professionals. We want to broadcast out some of the stuff. We got to record it. We've been using Skype and this and that. Christina, also, one phone call to nextiva. It's complicated stuff. They have a technician that sits there for 10 minutes or 10 hours, whatever it takes to get all the settings you want done. And now we're recording all of our calls and goes right up to our website when we want to. It's amazing.

It's amazing.

That's it. Nextiva.

Thanks.

Nextiva.

Nextiva. Thank you. We love you.

From the beginning. From the beginning. They've been with us from day one.

They stepped up. I'm like, do you want in? And they're like, we want in, babies. They joined us. I know you got a question waiting for me, but I first want to talk about our top tips or our top takeaways.

Top takeaways, yeah.

And if you don't mind, Chris, I want you to lead us off here. Yeah.

So after, as you know, every episode, we have a great guest and we have a topic, and then Mike and I and Christina, if she's here or whoever else is here, I think Barack Obama is going to be here next week or. Or Christina again.

We'll see.

Back up, bro. So my. My top takeaway was when he realized that he wasn't getting paid for all the consulting services he was giving. And I think probably in every company, there's things that you're doing that are valuable, but you're not charging for. And I think it's sort of a Big mental block, too. Like, oh, how could I charge for that? I'm already doing it for free. That's just a great point because look, when he fixed that, boom.

Yeah. If I gotta bring out Bobby Knight one more time, nothing gets me more fired up than when you listener. Hey, you look at your business. You're like, I can't raise my price. No one will like it. The only person talking is Joe. It's only you talking. Your customers are willing to do it. I'm sorry. Bobby Knight comes every so often.

He ends on a nice, calm note.

He calm said, I didn't come here to f around. Go play entrepreneurship. Christine, what's the number one tip you took away?

Oh, God, he had so many good things going on. But I think what I find most fascinating was that he just kind of jewelry just kind of fell into his lap. He didn't even start with that because of one account that he took on. That business just took off, and then that just became his niche. And he's like, a genius at it.

Yeah.

God, I love that.

It's true. Like, opportunity presents itself. And I hate it when people say, I don't know anything about jewelry. I didn't go to school for it. I could never do it. No, it's right in front of you. And then inevitably, our life stories. You know, he used to be worked for his grandparents in the jewelry store. Inevitably, stuff winds in, and he forgot that too. I know, I know.

He's at a conference. Oh, yeah. I spent years working at a jewelry store.

I had no idea. Why don't you tell me that? My number one takeaway is kill the ego. He was saying, you know, my ego was saying this. My ego was saying that his little tip at the end was, if you want to be profitable, be willing to say, you don't know everything. And that's where you start learning.

But I have a question. Trusting others advice. He mentioned on the same lines of that. I don't think that's a blanket thing. I mean, I don't think you should trust every single person. I don't know. Anyway, I have more questions about that. Maybe that's a different episode.

Well, I like that. Yeah, that would be a long conversation.

Because I get burned myself. I trust people too much.

Or don't go to too many people for advice.

Right, but how do you know who to go to? That's the rub.

All right, so can I answer this from my experience, please?

Oh, yes, yes.

We want to hear from you. Here's the person not to go to Because I did this when I was writing books. I'm writing books. Person to person says, you'll never be successful. You can't sell books. Here's the question to ask any person that gives you advice. Say, oh, tell me about your experiencing, your experience doing it. And then they can say, people say, I've never written a book. That's why I was heard. Don't listen to them. Other person said, people said, well, my book kind of failed. And I tried and I gave up. Don't listen to them. I then met Tim Ferriss. We did an episode on the Big Idea, used to be a TV show. I meet him on the set, I go, hey, Tim, I'm thinking about writing books. What's your advice? He's like, you can make millions of dollars doing it. And I'm like, tim, oh, I missed the but. I'm like, tim, I love it when you seek the advice of someone, ask them in return what has been their experience doing it. Right. If they tell you they failed or they haven't done it yet, it's probably bad advice.

Don't listen.

If they've been successful and they say, don't do it, then you listen to that person.

See? Again, so simple. See the benefit you get from listening to this podcast. Christina.

Yeah, there's lots of money being made here.

So I have a question for you. Mike Michalowski, is it, by the way, Michalowicz?

That's a tongue twister right there. Thank you, Barry.

Why in profit first, do you want people to set up a separate tax account?

Great question, great question. Because it is tax season right now. We are days away from sending in the big checks. Why you want to set up a separate tax account is called loss aversion. So listen, listeners, when you set bank accounts for your profit first, as you bring in money, immediately allocate a percentage of your money. I usually recommend 15% of your top line of your business goes into a tax account. The reason you do this is you're effectively, Chris, an agent for the government. As you sell stuff, you are required by law, it's called income tax, to pay them a tax. So you're acting as an agent for the government. Reserve this money aside. Now, here's the benefit. When tax time comes due, the money's been piled up and you hand it over to them. But you don't experience loss aversion. Loss aversion is where you, like Christina or I or Kris, we get paid, and then the government says, oh, and you owe us money and we take out of our paycheck. We in turn owe more money. We give them money out of our paycheck. We're like, God, the government sucks. And then we do stupid things to avoid the taxes. We spend money to as expenses just to reduce taxes. If you reserve the taxes in advance and it never touches your personal pocket and the company pays those taxes on your behalf, you don't have loss aversion. And kind of the logic is there. You don't go into this emotional downward spiral.

Right. And then at the end of the year, I guess it's like a no, it's just a non issue. There's the tax money right there.

Yeah. Another tip. Call your tax account, your bank account, call it the government's money. That's what my tax account says in my office. And when he comes in there, says, the government's money, I see it, I'm like, oh, the government's getting some money. But it never feels like it's mine. So there's no aversion or pain when I pay it. And it's been reserved in advance. I live off the remainder.

Everything's good and you're not relying on it.

Exactly.

Anything.

Exactly, exactly. Christine's got one tip for us. I want to go before we wrap up. We want to start introducing some apps and tips and stuff. What do you got for us today?

Oh, yeah, so there's this new tool called Google Flights, and I found it's really helpful, especially I coordinate all of Mike's travel and if he calls me, if there's a cancellation last minute, you type in where you're coming from, where you're going to, and it pulls up not only the flight line, that or the airline that you're using, but all competitive ones. Which flights the cheapest, how many stops it has, and it's just quick and easy right there all laid out for you.

I love it.

What's it called?

Google Flights.

Google flights.

Yeah. Google that. Isn't that funny? It's kind of ironic.

Google, Google, Google, Google flights.

I wonder if anyone's ever Googled Google.

Is that a fractal?

Imagine someone's on Google, like, I want to go to Google. And you're like, google, Google. Does Google come up to itself?

Yes.

Oh, I've never done that first page. Chris, where can people find out more about you?

Fractalrecording.com. that's right. I'm having fun producing podcast shows for businesses. It's a great way to complement your whole online marketing. And it's like the blog of today.

This has become the most powerful marketing presence for what I do professionally and for profit first Professionals. And I think you've had people sign up or at least reach out to you because of this podcast to have their own podcast with you.

Yeah, it's great. It's not as hard as you think. Creates a ton of content. What about you, Mike Michalowicz?

If you want to learn more about what I'm doing, Christina's doing, we've got a little growing headquarters now. Got a brand new website that's coming up. It won't be up for this podcast, but by the week after, it's profitfirstprofessionals.com. there's some cool kind of hidden away funny stuff on there. So navigate the entire website. Next episode. Dude, you gotta be listening. We are having Benita Konigbau. She's from Germany.

Bless you.

We're covering you. Excuse me, excuse me. Let me try one more time. We're having Benita Konnebach from German tongue twister right there. Tell me about it. Barry, Benita is calling in from Germany. So we did France today, Germany tomorrow. And we have a fun, fun bit we're doing. Chris, you better be ready. You're gonna be talking German.

Sweet. Thanks, everybody for listening again. Check us out on itunes. And stitcher and the Prof. Sorry, Profit first podcast dot com. That's our website.

And gosh, man, put profit first in your business. It's time for you to be profitable. I want you taking a distribution this quarter.

That's right. Enjoy all our previous episodes too.

See you on episode 24.

Until next time.

Bye, y' all.

Bye, bruh.

Bruh.

It's coming, bruh.

Yeah.