How To Get Relief From Your Business's Current Challenge - MIKE MICHALOWICZ

I have the man, the myth, the legend, Mike Michalowicz, bestselling author of Profit First, Clockwork, and The Pumpkin Plan, and Fix This Next. I'm assuming you got that status, right, Mike?

Of what, bestselling author guy?

Yeah, for Fix This Next.

Yeah, but no.

I mean, it says number 1 bestseller on Amazon. But to me, and this is like fat author ego, that's not really bestseller status. It's got to be that way for a year. Then if I If you get number 1 for a year, then you're legit. That's my opinion.

That's fine. Like, I had it for a day and a half, so I'm gonna take it.

That's fine. You own that, John. I know, that's, that's Dickie author mentality now. I'm like, oh, I have to be bigger and better. So yeah, it has achieved that. I'm excited about that. But I'm also just this, just has to be bigger and better. It's my ego.

That's fine. Um, those of you who don't know, Mike actually has a life purpose, and that is to eradicate entrepreneurial poverty.

Dude, you gotta see this. I haven't shown you this yet. Look what I just got in. Hold on, from Etsy. I gotta turn my camera so you can see it.

See that right there? Nice.

Yeah, so that's—

I don't know if you can tell, but that's made out of chain.

Bike— I like to go biking, so it's all made out of bicycle chain, and, um, it's just a reminder of my life's purpose.

Do you like to ride bikes? Why the bicycle chain?

Is there any significance? Oh, I just said, yeah, I like to ride bikes. It's not like I like to tie people up with bicycle chain in the basement of my house or anything.

Yeah. As an example.

As an example.

I have a tip. Yeah.

Great.

Hey, this interview is over now. Thank you.

So Mike, start us off. What is the biggest challenge entrepreneurs are dealing with today?

Yeah.

So I'll tell you, and I'll tell you how it came about first, though, just to add a little mystique. So I'm not the most technically savvy guy in the world. I sent out an email to my list about 5 years ago asking, what's the biggest challenge you faced this year? It's something I do regularly because it takes me about 5 years to write a book. I must like triple-clicked. I don't know what I did, but it went ding, ding, ding. It went out 3 times over the day. And in some cases, the same people responded multiple times with different answers. One guy said like, oh, my biggest— in the morning his biggest challenge was sales. By afternoon his biggest challenge for that year was hiring employees. And by the evening it was determining how to get out of the business. And that's when it became very clear he's not an anomaly. That's true for all of us. The biggest challenge business owners have is knowing what their biggest challenge is.

Hmm.

So we randomly pick it, you know?

Yeah. That's very interesting. So, for those of you who don't know, I was introduced to Mike through a variety of ways. I was going through this program called Goldman Sachs. They have this like 10,000 small business mini MBA thing. And as an alumni, they then introduce you to the other alumni of other different locations. And one lady reached out and we got to talking. And she's like, oh my gosh, you have got to read this book called The Pumpkin Plan. I'm like, sweet. So I read The Pumpkin Plan and reading The Pumpkin Plan, then I found the other books that you had written. I read Profit First and I was so naive thinking like, oh my gosh, halfway through the book, I'm thinking I should call this guy. Like, this is resonating with everything that my clients need so much. I should reach out to this guy. Maybe there's something he has that Can I help, like, use his methodology and teach people? And of course, by the end of the book, you introduced the Profit First Professional concept.

Right, right, right, right.

Oh, I guess he thought about that first.

Please send me— I'm like, if you want to talk, please send me a Traeger smoker. And you're like, okay.

Yeah.

I had no idea that's all it took.

Yeah.

For anyone that doesn't know, John, you were so kind to gift me a Traeger smoker because I told you I wanted to learn how to smoke meats and stuff. And you're like, you'll learn. And the next day this beautiful smoker shows up, which we use every day. We are going to be using it this weekend again. And it makes unbelievable food. Did I ever tell you about the Traeger story? Like when I called their support line?

Yeah, you mentioned that they're like the most—

Unbelievable. Yeah, they're the essence of customer service. And it actually, I should have put them in Fix This Next. I'm probably gonna include them in the next book because I was blown away. So I gotta do— I know I told you this one, but I feel compelled to share the story again for anyone that hasn't heard it.

Sure.

I call Traeger. I don't know how to work the smoker. I'm making my first, uh, beer can chicken, I think I was making, where you stick the beer can in the chicken and it's unbelievable. So I call them and like, I don't know how to smoke it, and like, how do you balance the chicken? Like, let me just call this line because they say call us for anything. And it's, it's in the South, so I'm gonna do my worst Southern accent because I have a bad Northern accent. I call, it's like, hey, how you doing? I'm like, good. He's like, you, uh, you cooking something up over your Traeger? I said, yes, I am cooking something on my Traeger. What are we making today? I said, chicken.

He's like, hot dog, we're making a chicken!

And I go, uh— He goes, this is the best part, he goes, have you ever smoked before on a Traeger? I said, no.

He's like, we got a new family member, this is unbelievable! You hear a bell ringing, he's like, he's yelling to the other support guys. Hey, we got a new Traeger smoker guy here.

He's like, and he comes back, he's so excited.

He's like, we're gonna crush this chicken. Your family's gonna love this.

Dude, I was so excited about this chicken. I was ready to eat it raw. I was like, it was the best experience of my life. Traeger won me over as a lifetime fan in that moment. And the funny thing is it points to selling and sales isn't necessarily in calling a person and trying to convince them. It is remarkable service sells. I can't stop talking about them ever since this phone call. I, I hopefully— actually, I know, I know a Traeger I sold because of that phone call. There's an author named Sally Hogshead, and, um, I was always on a trip with her in Puerto Rico, some other authors, and she and I are in this, uh, driving back, and I tell her the Traeger story. She's like, that's amazing. She goes, tell me about this cooking system. Like, it's unbelievable. She bought a custom hog because it's Hogshead. They make one of a pig. She bought that one for like $1,200, and she's calling me saying, this is the best experience of my life. So, Traeger, you won over another customer.

That, uh, my wife and I sometimes joke like we should ask if we can be some sort of spokesperson for them because we loved ours so much. I— we've had like 5 or 6 of our neighbors have since bought one after they come over. We're like, This is the most amazing thing ever. And then they try the food, they're like, this is the most amazing thing ever.

It really is. It really is.

So, um, we can see your books behind you in that corner over there.

Yeah.

The one in yellow is your latest one. I was wondering if you could tell us what's your journey that took you to writing that book?

Well, the journey started with, you know, I asked that question, what's the biggest challenge? And it's very clear we don't know what our biggest challenge is. So then I start the writing process. And for me, it takes about 5 years. Now I produce books every year or 2 because I have many in the queue. I'm working on 4 more concepts right now.

Of course you are.

So I was, I was diagnosed as having hypomania by my in-laws. So my in-laws are both psychologists and like, oh, you're prototypical hypomania. I'm like, what is that? It's a little bit less than hypermania. I'm like, oh, okay. So I can't stop myself. That's a genetic issue. So I, I start researching out this concept. And what I noticed is businesses fall into this concept I call the survival trap. And you can just do it in your mind. What most businesses do is we're escaping the, the now, meaning there's a crisis or there's a challenge. And we're looking for ways out of the immediate challenge. It's the classic example of putting fires out all the time. So if you draw the letter A in a circle in the center of a piece of paper, that's, you know, point A. That's where our business is now. And what you can do, and you can do in your mind, just draw a few arrows out from A in any direction of your choice. Each arrow represents a way out of A, and that's how most businesses operate. But the final step, draw the letter B in the bottom right corner of that piece of paper. And chances are none or very few of the arrows point to B. And if I ask, well, you know, why are no arrows pointing to B, the answer is obvious, because I don't know where the B was.

No one knew.

And that's how businesses operate. We know where we are now and we simply want relief from the immediate crisis and challenge. We don't consider B. Now, B is the vital need of our business. It's the one thing that will most move our business forward. Without knowing what it is, we never move toward it. So most businesses move from A to the next day and yet to another, and they go in this circuitous pattern. There's, there's one circumstance actually that's the most dangerous. Sometimes we unintentionally, accidentally move toward B. Happenstance happens and you move, you draw an arrow toward B. And those are the days like you come in like, I've been putting out fires, I've been putting out fires, and one day all of a sudden, holy smokes, everything's clicking. I finally figured out something's happening today. This was the moment I've been waiting for. And then the next morning, the shitstorm presents itself again. It's— everything's wrong. Those moments are dangerous because we took a right action, but we still didn't know what B was. We just moved toward it and we started feeling relief, but we simply moved to a new A because we didn't identify B. So now we stopped doing the right thing because we didn't know it was the right thing in the first place, and we continue the circuitous pattern. The goal to navigating your business toward your vision for what your intentions are is to do the right thing at the right time. We need to know what to fix next. Hence the title. Hmm.

Very interesting. Hey, if you guys are listening, feel free to start sharing this. Click the share button on Facebook and then start a watch party. All right. Let's get as many people hearing about this concept. I've had the opportunity to get the book a little early and I've read through it. It is phenomenal. And I'm going to start asking a few questions to Mike. About some of the concepts in the book. So let's, let's get as much people sharing this as possible, if you would. So, I mean, you mentioned the survival trap. So to me, that seems like it's almost like without some sort of system or direction or, let's say, a pyramid to guide us. Yeah, it's like typically we're crisis management as owners.

Yeah.

Sometimes we may luck out. But really, we just jump from one crisis to the next. I know I've always felt kind of like a fireman sometimes without proper direction.

Yeah, so you need, you need a pyramid. You really set me up perfectly for that.

That's crazy.

Like, hey Mike, why don't you show the book right now? It says that in the script. So this is the book, um, but the, the pyramid is on the back and it's a, it's a hierarchy of needs. So this, John, is what you're alluding to, and it, um It's based on Maslow's hierarchy of needs. Just a real quick primer on that. Maslow studied human needs and identified that for all of humans, we have a base level need called physiological needs. We need to breathe air, eat food, drink water. Once that's adequately satisfied, then we move to higher level needs like safety, protection from harm, and higher levels are like belonging. The highest level is called self-actualization. Well, Maslow identified if anytime a base level need, a foundational need, is not satisfied, we will biologically revert to it. I guess safety— say you and I were walking around and we decide to take a shortcut down an alley, a dark alley, to go somewhere. And all of a sudden we're like, this does not feel right. Like something doesn't feel good here. That's an instinctual response. That's our sense of sight, hearing, smell that is telling us, get out of here, harm's about to come upon you. We better turn around. It's a good instinct. The difference between Maslow's hierarchy of needs and the business hierarchy of needs is that, well, it's for the business. Business also has 5-level needs, but we're not biologically wired into our business. So at any time we trust our gut or instinct and not back it with empirical data, we often go the wrong path. I can't tell you how many people— actually, I can tell you because you get it— how many people are panicked to get loans right now. I need the PPP, the CARES Act. I need relief. They're not considering the empirical data. Why do you need it? Do we have a cost problem? We actually need to control cost. Do we have a sales issue, margin issue? We need to resolve that, 'cause businesses are putting a bandaid over a gaping wound in some cases. That is all gut instinct and it's very dangerous. So the business hierarchy of needs is here. It's 5 levels of needs like Maslow's, but these are business needs specifically. And we have to evaluate each one with empirical data. Sales is the foundation, it's the creation of cash. No sales, no oxygen for business, you're done. Next level is profit. Profit's the creation of stability. It's the extraction of that cash inflow Reserving it for the preservation of the business and the reward for the shareholders. And some businesses sadly are all sales and they go out of business because they didn't focus on profit. Sadly, there's some, you know, popular people saying sales cures everything. That's bullshit. Sales is a source of income and cash flow, but the entire hierarchy cures everything. You need everything working. So profit is the extraction of cash. Order is the creation of efficiency. The ultimate acid test I write about in Clockwork is if you can remove the business owner for 4 consecutive weeks and the business maintains and grows, that's typically an indicator that there's a higher degree of sophistication and systemization in the business. There's other things too. We have to remove linchpin employees or dependency on them and remove bottlenecks. That's the order level. The next level above order is impact. That's the creation of transformation. What's so fascinating, and things start changing at this level in an interesting way, is this is where businesses are not in the business of transactions. They're in the business of how that transaction will impact people and change their lives. Transformational. One example I use is Harley-Davidson. Like, if you're into bikes, you can buy a bike, I'm pretty sure, anywhere.

I'm not.

But you could buy a bike at Harley-Davidson. And when you buy Harley-Davidson, now something significant happens. You become part of a family.

You're a weekend warrior.

And that means something. So by buying Harley-Davidson, you belong to a family. That's one form of transformation. Any business can do it. But the end effect is people say, you've changed my life in some capacity, you've changed my life. And then the highest level is called legacy. Legacy is the creation of permanence. This is where you realize— this is fascinating, and I interviewed so many business owners around this— when you achieve legacy, it's when you realize you were never a business owner in the first place. Sounds kind of crazy, but you've always been a business steward, meaning you were put on this planet with a responsibility to give life to this organization. It's actually more about the continuity and the ongoing effectiveness of the organization beyond our involvement even in it. That's what legacy is. And the idea here is you must always have a foundation. It's like building a structure. You must have a strong foundation to support the level above it. But we don't want a massive foundation. We don't want to sales foundation the size for a skyscraper and then put a tool shed of profit above it. That's a business that'll collapse. And you don't want to skip to building the 4th level of impact without any floors below it because it'll fall in thin air and crush itself. So this works relationally.

I remember I have had the opportunity to see you teach that a few times. And it's interesting. I've heard about the Maslow hierarchy of needs. I was familiar with it, but it wasn't until you explained, you did like an anecdote. You're like, imagine you're a billionaire and you're sitting in a restaurant. Like theoretically you're in self-actualization stage, but if you start choking on your meat that you're trying to eat, you immediately go back to the most basic foundation first. Now it doesn't matter that you're a billionaire. The thing that's most important is getting that thing out so you can start breathing.

Yes.

And then you talked about how, like, in businesses, we're just constantly— it's okay that we jump from one stage to the next because it's just as your business grows, right? Like, you know, as a half a million dollar business, I think I know what that takes. But as we continue to grow now, it's like, okay, well, we've grown. Our systems that supported us at half a million don't really quite support us now. We're our sales aren't enough to keep up with the payroll needs that I've taken on. So I love that one of the concepts of the book, how you'd go back and forth and it's—

Right. You'll move around and we see it happening right now. Amazon, you know, a billion-dollar corporation is not focused on its continuance as a legacy. They are fixing resolutions. You know, they're trying to resolve sales issues. They've changed what they ship when to amplify and control sales. Right. They've gone to staples and what they call, you know, critical items. So they've adjusted their model. Now here's the thing, when you start resolving some of the base, it's not like you lose the status here. Like that billionaire that starts choking on a piece of meat, they still— when they get that meat dislodged, they probably still have that billion dollars. It doesn't vanish. But the idea is there's a critical need that must be serviced anytime. The other elements simply need to stay in the ballpark. So like, like right now we're talking, we're talking business concepts that can be considered parts of self-actualization, in fact. But we're still breathing. So right now, and we're not thinking about it, it's automatic. So the base level needs are still being served. Our simple ask is, as we go through this, is where's the bottleneck? Where is the current big problem in the business that needs fixing? Everything else must be maintained. But where do we concentrate our energies on the fix? Once it's resolved, we look at the structure again, figure out where the next crack in the foundation is or when the next addition can be made. We focus on that area and we go through it again and again. And this becomes a life kind of cycle. We continue to cycle through this process.

Very good.

So I have 2 more questions before we let you go. This is a selfish one for me because I read this paragraph and I had a question about it. So I might as well ask you about it.

All right.

You say this: you meet with your team and tell them your plan to shift roles to increase their happiness. You ask each employee to list the top 10 tasks they do that make— that take most of their time. While your employees may do dozens and dozens of things, you know that the old 80/20 rule points to the fact that only a few things constitute the majority of their work. Next to each task they do, you ask them to provide a candid evaluation of love it, hate it, or meh. Then you ask them to write down the 5 new tasks and you get to work. So my question is, As a business owner, how do you know when to try to shift your team member to a role that fits them better, or when you just— or when the team member is just not the right fit and you need to let them go?

Yeah, so the trigger for the consideration is inadequate performance in— or to meet your expectations in a certain category. So maybe you have someone that schedules your calendar for you, and if there is errors in your calendaring, you may deem that to be inadequate performance. So then you have a conversation with them. The biggest determinant about their performance is their enjoyment for it. People that like doing what they're doing typically are really good at it because they will continue to seek ways to improve. People are doing it because it's required of them, but they don't like it, will slip. So then, so first we just monitor performance. If it's slipping, then it's a candid conversation. But we have to tell, ask the employee in a way, What do they like to do without cornering them to make them say what they think we want to hear? Like in interviews, you know, what's your biggest weakness? I work too hard. Like they say that because they, we, they think we want to hear that. Well, our employee, if I say, you know, the calendaring, you're messing some stuff up, what do you really want to do? Well, I want to be excellent at calendaring. That's not it. So instead of doing that, I don't even bring the problem up, say, hey, um, you know, Joe, what, what is your passion? If you could do anything here, because you've been exposed to it, What's your interest? And I listen innately for that. And they may not say accounting. They may say, you know what, I really like logistics and shipping. And then my job is to start shifting people around. The thing is, there's some people that just can't perform in any category where you have a need. I believe, and this is maybe a fault of mine, but I believe everyone's exceptional in something, but it doesn't mean that something's in your business. So I think we need to see if we can move people around. But there comes a point where we don't have that role for them. And holding on to someone where we can't satisfy what they want to do in our business is a mistake for both them and for us. For us, because financially we can't sustain it. For them, because we're withholding them from serving that experience they want at another company. So I try to move people with my organization to their passion. If I can't satisfy that, then it's time to part ways. And really, I feel it's a responsibility. I don't feel I'm firing them. I feel like I'm freeing them to find something else. And as best I can, I'll help them find that alternative that satisfies their needs.

Very good. So last question, Mike. Obviously, you even just mentioned you're working on 4 or 5 things right now. What are you working on next?

Yeah. So the book is called Different Is Better. You know, listen, I have 4 or 5 things on the stove, but only one center burner at any given time. So the book is called Different Is Better, and it is a way to differentiate yourself in the market. I believe advertising is the tax for not being different. That if you have to pay for advertising, clearly there's something that doesn't make you remarkable and stand out. So how do we stand out? And, and the measurement is there's no cost for advertising. Traeger, how we started, is a great example. That is something that's so unique they don't need to market. Now they do Then it becomes a way to speed up the gain of or acquisition of customers. But if they stop today, they keep selling. So that's what I'm working on now. Oh, and before I ask, I do wanna say one more thing about Fix This Next, if I may.

Yeah.

Okay, okay. So, 'cause I know we gotta wrap up. First, for anyone watching live or if you're watching in the recorded mode, I do wanna have a— I have an ask, something that I know will be of service to you and I know will be of service to me. So there's 2 reasons. Why I like to ask anyone watching right now, or if you're watching recording, to get a copy of Fix This Next on Amazon. Here's the reason I ask. If you get this, it's the greatest way I can be of service to you. It's the most cost-effective way I can be of service to you. It's $25 or so, probably less now, and it is the most effective way. I spent 5 years and I am extremely proud of this work. I know it will serve you because I wrote it for crisis. I never expected what we're experiencing now, so it will serve you. But I asked for a second reason. This is the launch happening right now. If you buy on Amazon along with other people, the more people that buy, it extends the exposure because Amazon starts marketing it through the algorithm to other entrepreneurs. So if you buy it right now, it also serves me exposing to other entrepreneurs. And I want to say, anyone that buys this, John, I want— I just had an idea. I would like them to email me so I can thank you, but also I have a little bonus. I call it the lost content. I wrote— there's about 25 different sections I wrote for this book that ultimately I excluded because it wasn't succinct, but it's really valuable content. So if everyone emails me— here's my email, it's mike@mikemikalowicz. But when you go on Amazon, you'll see this spelling, Mikalowicz. Go mike@mikemikalowicz.com and put in the subject line, John Briggs hair rocks. So John Briggs hair rocks. Hair rocks! Exclamation, exclamation. And if you write, John Briggs' hair rocks, um, that will just be my confirmation you got the book. And thank you for that. I promise you'll serve you and you're serving me, and I will email you back as quickly as I can with the free bonus content. I know you'll love it. So that's my big ask.

Yeah, that's great. And, uh, I really— this is 2 months now.

Yeah, look, dude, look at me.

Look at—

I just— if I start doing like this, I become homeless. Like, look at this homeless guy.

Oh, and I mean, obviously, Mike, it's your book, so you're asking them, but not that I have this power, man. If I could tell you guys, I command you to buy this book. I've read through it and I had an idea of where we— what we needed to work on in the business. And what the book showed me going through your action tools there is that it's actually showing up in a different way. Like the same problem I thought existed, it is a problem, but it's showing up in a different way. and causing different problems that I didn't realize. And so now we're going to fix that first, which will subsequently also fix a higher need anyway. So, Mike, I certainly appreciate— I know, I certainly appreciate what you're doing for myself personally, but all business owners. Um, I mean, I think about the knowledge of action items people can take just with those books behind you, specifically Fix This Next as well.

Thank you.

Thank you. I appreciate it.

Thank you. And I enjoy our friendship. Tremendously. So thank you.

Okay guys, take care. Have a good day and buy that book and email me.