MIKE MICHALOWICZ - How Do You Know What To Focus On In Your Business | Incite Tax

We have the one and only Mike Michalowicz. I'm excited for you guys today because this book, I just finished it last night, Fix This Next, freaking phenomenal. I can tell you as a Profit First professional, it's kind of weird to think about that I'm suggesting, and even Mike suggests, that you actually don't start with Profit First first. You start with fix this next first, because you may have other problems within your business. So, we're super excited. Mike is giving us his time to talk us through some of the concepts that are going on. And Mike, we'll turn the time over to you, man. All right.

Thanks, John. Thanks for doing this. And thanks for everyone that's joining. I just want to make sure you can hear us adequately in the chat. Do you mind? We'll use the chat for any conversation.

Just Where are you from?

And I'm curious, uh, what kind of business you have too. I think everyone here owns gyms, but I think there's some other people outside that space. Um, so just put it in the chat and, uh, confirm that you can hear us loud and clear.

Okay.

And while you all are doing that, um, good. I got Dayton, Ohio.

Great.

Thanks, Mike Lyons. Okay, good. I see, uh, uh, another gym. Excellent. Training facility. Audio Works in Baltimore. Tolls.

Okay, great.

Thank you.

Well, welcome.

What we're gonna explore is a strategy to navigate coincidentally through what we're experiencing right now. I wrote Fix This Next specifically for crisis. I never— no one anticipated what's going on now. I wrote the book for business crisis. Like when we face a challenge, how do we navigate it? And specifically microcrises where like a a competitor appears and takes your clients, an employee leaves and puts you in a trap. How do you navigate that? Well, we have what's going on right now. It's called macroeconomic crisis. Macro crisis triggers micro crisis, meaning there's a big economic shift, everything is changing, there's a new normal, and that triggers businesses to have to adjust very quickly. And those who adjust and, and provide in the new normal will be the ones that sustain and grow and, and be the next generation of successful businesses. Just as a little more detail on who I am, John and I work together with Profit First. John is the author of Profit First for Microgyms. I'm the author of Profit First, the original book. And I've been a business owner myself now for 25 years. I've been through 2, this now being the 3rd recession. So in 2001, 2008, and, uh, 2020. And I found there's a common trend. I actually have a graphic I'm going to show you in just a second around this, but found that when recessions happen, there's an underpinning of economic instability, and then there's a trigger event. So 2001 was a dot-com bubble and, uh, the terrorist attacks caused the economic rapid economic decline, but it was a very fine economy. And then it took about a year, year and a half, we started to go on the rise again. 2008, which, you know, everyone remembers so vividly, was the Great Recession triggered by the housing collapse. And now in 2020, we're entering a clear recession and the trigger event is COVID. So I found that there's 5 distinct phases businesses go through And wanted to start by sharing this because it correlates into what you need to fix next in your business so effectively. Now, I don't use PowerPoints, I use a handheld. So if you want, you can do a screenshot. I'll hold it there for a second. And if you want a shortcut, at the very top under the title right here, it says Recession Response. You can just go to that page, recessionresponse.com. You don't need to download anything. It's— you can just click on these different PDFs right there prepared for you for automatic, you know, You know, download. And let's go through the elements that are in here. So the first phase that businesses go through in the business crisis trend is called the shock stage. That's stage 1. And there's a trigger event, COVID. And what happens is many businesses freeze up because the unexpected is now upon us. Or maybe it was the expected at an unexpected time, like something was gonna happen. Who knew it'd be this? And we freeze up. If hopefully you've never been in an automobile accident, but if you've ever been in a car accident, that concept of shock is where our brain becomes overstimulated. There's so many inputs, there's so much to calculate that it actually disconnects our thought around certain things like pain. So some people in shock feel no pain, sometimes for a few moments, sometimes for a few hours, sometimes even for a few days, because our mind is trying to digest it.

Yeah.

Well, in business, we have this kind of mass effect going on right now of mass shock where people are like, what just happened? And many businesses freeze up. They simply say, I don't know what to do, and they proverbially stick their head in the sand. Businesses that freeze and don't take any action— it's no surprise here. You can see on this graphic again, someone just shared it. John shared it. You can download it there. Go into a slide of inaction and they fall into business collapse. So a percentage of the market— and you've seen this in gyms, you've seen all businesses— have already gone under. You perhaps even know someone that says, I don't know what to do. They freeze up. The second stage we go into is the desperation stage. That's stage 2 of the business crisis trend. Right now, I'd argue where we're trending, we're out of the shock stage for most of us. Most are in desperation, some moving to evaluation. My goal for our call today is to get you to actually deliberate action. What to do next, what to do right now. The desperation stage is typified by an overreaction and a stampede effect when it comes to macro crisis. So the one thing we all saw was, you know, the run on toilet paper. That's an overreaction. At first you see one person go for toilet paper, like, what's that weirdo doing? Then a few people replicate. It's like, oh, that's kind of funny. It's kind of crazy. And then it becomes a stampede. where so many people are doing it actually affects the supply, in this case of toilet paper. And now there's a dearth, there's not much available. So it becomes a real problem. But some people have so overreacted that they're in a position— suppose there's a story down the street, there's a guy who has a garage full of toilet paper. He has a supply for 50 years. His challenge isn't getting toilet paper. His challenge is like in guarding that. Like, does he have to hire a security guard? To walk around and like dehumidification systems. So we do this exasperated response that offers no significant benefit. Well, in the business space, you may have seen it happening too, particularly with loans. That's been the most recent stampede. And let me just put a disclaimer here. I'm not saying a loan is not a right fit, but it may not be a right fit. And I want to talk a little bit about that. But we see businesses jumping to get loans. Now here's why— what we need to consider besides taking that immediate action is why do we need a loan in the first place? If we need a loan, there must be a reason behind it. Is it because we can't maintain our costs? Is it because our margins aren't appropriate? What's the trigger? As sales have stopped 100%? If so, sales have stopped or we can't maintain our costs, we really need to concentrate on resolving that because a loan will afford us a period of time. Maybe you can continue business as normal for the next month or 2 on a loan, but you need to make an adjustment to the business. So that is just my big disclaimer around loans. You see business after business owner just jumping on loans and they don't know the parameters around it, but they haven't investigated why they need it in the first place. They're doing what's called a loan bridge or a debt bridge, and a bridge can only go so far before it has to get to the other side. And these businesses aren't gonna make it. And therefore, when that loan is exhausted, now they're in the position to say, what do I do? I've incurred all these expenses, plus I have debt on top of it, the loan itself, unless it's forgiven, which actually is questionable for many businesses right now. I have this loan on top of it and it's gonna devastate some businesses. 3 types of loans, or 3 types of debt I just want you to be aware of. There's what's called debt leveraging, there's also debt bridging, and there's debt anchoring. Debt leveraging is not what's happening right now, but it's important we have the same basis for that term. Debt leveraging is where we use money to make a guaranteed or high probability return on that money. For example, if John, John Briggs, you give me $100, uh, I see that $100 and I know that if I invest this in a specific action that in 2 months from today I'll double my returns nearly guaranteed because I've been researching and, you know, studying my ROI. That is a debt leverage. I take $100 from John, I spend the $100, I get $200 in 2 months, I give John the $100 back plus the interest due to him. and I make a profit or a gain on that. That's a debt leveraging technique. And rarely are businesses debt leveraging properly. They don't know the predictable return. They're making gambles. And in this environment right now, many businesses— excuse me— are not doing debt leveraging. Then we have what's called debt anchoring.

Hmm.

Actually, before I get to that, I always say debt bridging. Debt bridging is where we take a loan. So I borrow $100 from John to cover a valley of debt, of cash flow debt for a short period of time. For example, John gives me $100. I have a valley of cash flow, meaning I don't have adequate cash flow to support my ongoing entity. But I do know within 3 weeks or 4 weeks that big invoice is due or the membership renewals are coming and it will pay for all that debt I just took on to cover that bridge. That's what a debt bridge is, is borrowing money to cover a known quantity of time with a promised out at the end of it so I can return John his money plus interest and my business can sustain. So a debt bridge carries over a gap in income. A debt leverage is an opportunity to gain more. The anchoring is the third scenario, and this is where we, we take on debt almost, almost without a known ROI, and it becomes a weight on the business. So we take debt to get immediate relief. It's like, okay, I feel good again. But the consequence is long-term agony because we stay stuck. And I'm afraid a lot of businesses right now are doing debt anchoring. So just first kind of big tip here is be very, very cautious in regards to how you manage debt. Okay, back to this chart. So again, you can download it at the link John shared, but the 3rd stage is evaluation. That's what I'm trying to get you to. Evaluation is where there's consideration Of what to do. And some businesses actually can get stuck here and go into what's called stagnation. And that's where you see them going on this down curve back down our business. Evaluation, real simply, here's tip number 2. Real simple evaluation is ask yourself, what is working right now for my business in regards to the main categories: marketing, sales, your offering itself, operations? What is working? And then ask the second question, what is not working? Write these down in 2 columns, and then your job is to amplify what's working, do more of what's working. Whatever's not working, either to diminish it or to spin it, meaning change what it is. So I've been working with restaurants a lot recently, DJs, a lot of businesses affected. Gyms are being affected in such a big way. What's not working is the traditional— for some of the gyms I've worked with, the traditional, you know, bring people in because you just can't. So we We have to evaluate what's working right now, if anything is, and amplify that. What's not working is jettison it and make a rapid change. One technique— so here's tip 3 or 4 now— is to use a technique called one step back. And what you do, it's a method I talk about in Fix This Next of reverse engineering your offering. Every business, its final offering is an accumulation of multiple steps prior to it. So the example I'll use is a restaurant. A restaurant's final delivering deliverable traditionally is putting food on the table, right? So there's guests there, you put food on the table. Well, we now ask ourselves in this new environment, what happens one step back from that? Well, one step prior is we carry food to the table. Okay, that could be the new offering. So the new offering could be carryout or takeout, and a lot of restaurants are obviously doing that. The really smart businesses are doing collaborative opportunities in You have this chance too, is this one restaurant teamed up with a food truck. So the food truck is doing deliveries into neighborhoods of dinners, and this restaurant now has become a cooking center. They're cooking and churning out meals, and they're delivering it in the late afternoon, early evening to all the different homes for dinners. Really smart technique. Well, we can ask ourselves what happens one step back. We're gonna keep doing is reverse engineering the sequence of things you do to deliver your final deliverable. One step back in the restaurant's case, before carrying food to the table, they get it in the kitchen so the food is prepared. Well, to prepare it, you have to have a recipe and all those different things. Why not sell the recipes? Why not pick your 10 most popular food dishes, for example, and sell the 10 most popular dishes to your clientele?

That's an option.

Well, why not have a cooking training where you sell the dish but also you have your chef show the preparation of how she does it. Or why don't you go one step further and have a cooking class where you go to your former patrons and say, hey, you have— we have our 10 most popular dishes. We're now gonna do a cooking class over 10 weeks, every Tuesday night or something. Gather the family, and for 2 hours we're gonna have a fun cooking class together, and you're gonna be enjoying an amazing meal at the end. That's another, you know, what happens one step back and keep on rewinding. And just one more example with the restaurant. One step before that is the procurement of inventory, the raw meats, the vegetables, the condiments. Well, why not become the Blue Apron for your town and carve that up? Now you can mail these out. All of these are multiple opportunities. But what a lot of businesses do in the phase of evaluation is they get stuck in stagnation by saying, this is the way we always did it. It's not working. How do we make what's not working work? And I think that's the mistake. What we need to do in the evaluation phase, and hopefully now you got, you know, one of those tips you can use, is simply to really consider what's working, what's not working, and then look historically of your offering set, what's worked, and extract elements out, reverse engineer it, pull out pieces and try that. One other thing I want to encourage you to do is actively communicate with your client base. So all those people that have a membership at your gym, and there's some other businesses here, This is an opportunity to reach out to them. And quite frankly, the most golden question to ask is, how can we serve you in this new normal? And that's maybe not the exact question, but how can we serve you now? You see, your customers still want the core benefit of physical fitness or whatever they derive from it— energy, confidence, whatever they derive from it. They still want that core benefit, but they're going to need it delivered in a new way. You can ideate by doing this one step back, but you can also ask them. And here's what not to do. I got an email. I own a Chevy and I got an email from Chevy and Chevy said, in response to COVID— I'm sorry, their opening line was, we're all in it together. And I'm like, oh, here we go. We're all in this together. And as a response from Chevy, we are proud to say that we've maintained the facilities, we're open and ready for you. This email went on to be this 15-paragraph diatribe. It's like, you know, halfway through, it's like, and you're gonna need your oil changed. Who knows if you need to escape town and go what, to another infected town? Like what? And like, we're ready to change your oil. They said at the end, they said, and by the way, if you're ready to buy a new car, we can deliver right to your driveway now. You don't even have to see a single human being. It's like, you're being opportunistic here. You're trying to sell me Chevy because of COVID United, who I historically haven't liked, really impressed me over this last month. I'm a United traveler historically because their hub is right here where I live. And they sent an email out about 3 weeks ago. It says, Dear Mike, thanks for your loyalty with United. Clearly no one's traveling right now. We just want you to know that we've extended your loyalty benefits Another year and a half. That was it, one paragraph. And I was like, wow, they did something proactively to be of service to me. A week later, they emailed me again, said, hey Mike, uh, we want you to know, uh, that you have some travel coming up. You may not be traveling now. You have the ability to cancel it and get a full refund. We invite you to cancel if you wish. Wow, they proactively gave me some support and service. Again, short email. That's the next lesson. tip, whatever, is communicate with your client base in short, tangible sound bites. Be of service to them, but also invite them to educate you on how you can serve them in a new way. Giving stuff away free can become painful and dangerous. In fact, I see so many businesses right now saying, I've got to give it away, give it away, give it away. People are giving till it hurts, and the problem is it's hurting the business. There's a certain point where you're going to exhaust your funds and your sustainability. So I want you to remember that you have an absolute obligation to sell in this market. An obligation. Not to take advantage of people, not to be opportunistic. Opportunistic is where someone's at a disadvantage and you take advantage of their disadvantage. This is an opportunity where you can serve clients in a new way, but you have an obligation to sell because that's fair to the customer. It's also fair to you. If you don't sell in this market, uh, you won't be sustainable, and the good services you offer won't be around. So sell, baby, sell. It's important. It's your obligation and it's fair. All right. Next step is called deliberate action right here. Deliberate action is where we want to move to. And I just gave you some tips. Deliberate action is where we start specifically determining what we need to do right now in this moment and do the one thing. Many businesses, maybe you're feeling too, is we're pulled everywhere. There's 1,000 fires we got to put out. I have to do everything, and that causes us to spin wheels. If you've been putting out fires in the past and now you're putting out more fires than ever, is not the way to move our business forward. We have to move directly down a single path, and I'm going to show you an example of that, of why businesses get stuck. I want to show you one final thing, is, uh, the surge phase. It's coming. I can't tell you the day it's going to happen. I don't know if it's a few weeks or a few months or maybe a year or two, but the moment will come when we hit the surge, and the surge is where The businesses that have sustained and maintained through the recession or even grown are going to get massive velocity. The reason is, is there's going to be excess demand with decreased supply. Gold's Gym just shut down, what, 5 or 15, 20 locations, right? I mean, there's big gyms. I saw in the news recently, so that's why it came to mind, but there's gyms of all types that are going under in this market. And it's a shame, but it's also an opportunity. A few things are going to happen. First of all, when a business goes out of business, those are new patrons, clients that are freed up that are now looking for a new solution. They may not be in the position to buy immediately, but they are in the position right now today to start doing the know, like, and trust. Who is the new provider? And if you're actively out there communicating with your client base and maybe communicating with the prospect base through YouTube and stuff like that, And just putting yourself out there, you'll become the authority they know, like, and trust. So there is an educational marketing opportunity there. The second thing is many clients use a situation like this to free themselves up from a vendor that they actually didn't really like in the first place. It's an excuse. And I don't know what the percentage is. I'm gonna say it's 10 or 15%, but 10 or 15% of customers say, you know, I never really liked dealing with Mike so much. He's a fine guy, but it's just Didn't feel right. Maybe this is a subconscious thought, and then COVID hits. They're like, you know what? This is my excuse, and they say, Mike, I'm done doing business with you. Well, if I have say 100 clients and I lose 10%, that means I've lost 10 of my clients. 10 of my members are gone, and the mistake that many businesses are making now is we look downstream and say, how do I get those 10 back? What do I have to do? Do I discount? How do I persuade them? The greater opportunity is that all of our competition is losing 10%. So maybe in your area that you service, maybe there's 10,000 potential customers and they're working with different gyms. Well, if they lose their 10%, that's 1,000 customers. So there's 1,000 customers who are saying, you know what, I don't know if I wanna be at this gym anymore. You've lost 10 that don't wanna be with you. But instead of looking downstream, we simply can turn and look upstream and say, who's coming down the pike? Now, here's one interesting thing. I was talking with a real estate agent. Maybe this translates into your business. If you're in a regional business, if you service customers in your area, Here's a simple technique. I spoke to a real estate agent, said we're done, and I'm like, no one's ever done. Let's figure out what we got to do. And we decided this is an opportunity for her to become an authority in the neighborhood. I'm in a town called Boonton, and what she did is she called the police chief, the fire chief, the mayor, some other representatives from town, and started interviewing them via Zoom. And she's doing interviews around the real estate market in Boonton. and how the town is servicing and addressing COVID, how things are coming back online. She's become the authority for the town. You know the notoriety and exposure she's getting? You have the exact same opportunity. You could be showing for your town, like, areas to work out and boot, and like, you know, areas you can still hike in, areas you can do different exercises. Maybe you can be talking about future community events that might be coming up, or the community coordinator and what they're doing virtually. Maybe there's virtual exercises going on, but you can become the authority by simply reporting on it. And just by putting this in YouTube, even if you don't have your own YouTube channel and you're brand new to this, you can start getting some significant exposure with the right titles. If you put like, you know, fitness strategies for the town of Boonton, you'll be the only person having that, yet you have a town now of like 7,000 people They'll become aware of it because if they type in physical fitness Bootcamp, they find you. And YouTube, how it works is it syncs with Google, it'll get exposure. So look at doing that. I decided to start doing that. I didn't— wasn't big on YouTube before. But in regards to recession, I want to help people with a recession response. So when you go on Google and type in recession response, you'll start seeing me on the front page of Google, not because I have this great SEO, because I've leveraged the tools they have like YouTube. Um, so let's talk about this deliberate action stage. I want to show you a strategy specifically from Fix This Next that you can use. It's called the business hierarchy of needs. I'm going to hold up this screen. If you want to do a screenshot, you can. And, uh, John, you're up if you want to share the link too. It's, it's on the recession response page if you want to share this direct link. Um, but what happened was I conducted an analysis of businesses And found, um, why businesses get stuck and, and that solution which I showed you there, which is the business hierarchy of needs. So I'm going to show you first why businesses get stuck. If you have a piece of paper in front of you, we can do it on this piece of paper. But what I want you to do is simply draw the letter A in the center of a piece of paper. And what we're going to be drawing here is called the survival trap. And you can do this in your mind too if you don't want to do a piece of paper. But what A represents is where your gym is, your business is right now in this moment. Its crisis or challenge. Step 2 is I want you to draw an arrow out in any direction you choose, a short distance away from A. So I drew one going out to— in this direction to the right. And what this arrow represents is a way out of A. Now just draw 2 or 3 more arrows in any direction you choose. Whatever you want. I just drew mine like that. And what these arrows represent are different choices you can make. So you can make a choice right now to take your business in any direction to get out of crisis. And what happens is this will give you immediate relief. The problem is there's many choices. Now I want you to draw the letter B in the bottom left corner of that piece of paper. And what B represents is what your business actually needs from you now. It needs this in order for it to be served and sustained. But sadly, most of us don't think about this. And in my example I drew here, is none of the arrows moved me toward B. In fact, in one of these decisions I made took me directly in the opposite direction from B. And what happens is if you experience this, we simply move to a new A. We get out of the current crisis and then we move to a new crisis on the next day and we make decisions in some direction and it moves us yet to another A. And many businesses start going in circles because they simply Live crisis to crisis, and maybe even before now. Maybe you experienced this. If you come into work and say, "I got a plan for the day," and then you're overwhelmed by fires you got to put out, you're living in the survival trap. We're not deliberately deliberately moving our business forward. So the solution we need is a simple hierarchy. It's called the business hierarchy of needs. I translate from Maslow's hierarchy of needs, and if you're familiar with Maslow's hierarchy of needs, Maslow said that. Humankind has 5 levels of needs, the most base being physiological. It's drinking water, eating food, breathing air. And if we're— if any of those things are absent, we'll quickly perish. Therefore, we're biologically wired to very quickly revert to the base. So if I, if all of a sudden, you know, I'm sitting here and someone puts a plastic bag over my head, I'm done presenting. I'm gonna tear away that bag because I'm suffocating. So we always revert to the base. Well, the 5 levels of the business hierarchy of needs are very similar to Maslow's hierarchy of needs with one substantial differentiator. Every business at the base needs sales. That's the creation of cash. That's the oxygen for your business. If your business is experiencing no sales right now, it is suffocating and we need to address it. But I'll tell you how to in a sec. The next level is profit. Profit is the creation of stability for an organization. This is runway. If you have no profit, you have no control of your future. You are living day to day, and the second the oxygen is depleted, your business dies right away. So the profit is the storage tank. It's the shelter for the business and will carry you forward. Um, but even at these 2 levels, many businesses get confused. Maslow's hierarchy, we are biologically wired in, but the business hierarchy of needs, we're not biologically wired into our business. So we get confused here right now. If your business, um, has slowed down in sales, I see some business owners doing is saying, oh my God, I need to sell my way out of this. I'm going to cut prices. And they're actually further harming their business. The opportunity may be to improve profitability. Sales— I want to be very clear on this tip— is that sales is the creation of stress on an organization. The more you sell, the more membership you have, the more responsibility you have. And if you're a small business owner-operator, that's usually more stress for you. So the more responsibility your organization has, the more you got to do, the more you're carrying on your back. The, the balance that stresses profitability. But sadly, many businesses, because we're not biologically wired into our business, say we're going to sell our way out of this. There's like sayings like sales cures everything, which is total bullshit, by the way. Sales doesn't cure everything. Sales is necessary for the creation of oxygen, but only in relation to profit. So here's the questions you got to ask yourself to navigate this. First, ask yourself, do I have any sales? If yes, then ask yourself, do I have enough sales, adequate sales, to drive some degree of profit? If the answer is yes, and if you have any sales, you should be able to, then we look at the profit level, and then we simply ask that same question over and over again. Do we have any profit in this case? And do we have an adequate degree of profit to support the next level, which we'll explore in just a minute? Many businesses right now, if you have some sales, we actually need to look at the profit side. What do we need to do to cut and control costs? What do we need to do to actually amplify margins? And maybe you can use that one step back technique. The obvious stuff is virtual trainings and elements like that, but maybe you can start a community. Maybe you can start some kind of encouragement program. Maybe you can start some kind of check-in like my local gym did, where I get a text every morning. I have to subscribe for it, and they simply say, how you doing? And, and everyone in the gym is reporting back and doing quick videos that they got their workout in. We've become to champion each other, and the gym is charging for us because they're facilitating it. What can you do like that to drive sales that bring adequate profit and bring new margin? The next level above that is called order. Order is the creation of efficiency. This is where your business is not dependent upon you. Now, depending upon your circumstances, this may not be the moment for your business right now to focus on efficiency. The ultimate acid test is getting the business owner out altogether. If you can take typically a 4-week vacation where you're away from the business, a full digital and physical disconnect, that is positioning the business to operate itself. The level above order is called impact. Impact is the creation of transformation. This is where you're transforming people's lives. It's beyond the transaction, it's the impact you have. And many gyms do this inherently. The highest level is called legacy. Legacy is the creation of permanence, meaning the business can live into perpetuity. Now, this is not a ladder. You don't climb to the top and wave to your friends. It's something that we cycle around, and at all times, all elements are happening. It's just where we concentrate our efforts. And sadly, there's 2 major mistakes that are happening right now. I touched on one already with sales. Some businesses right now are just trying to amplify sales, amplify sales, and are not considering profit. They're putting this massive foundation designed to support a skyscraper, and on top of it, they're putting a tool shed of profit, and the profit collapses within it, and the business will be done if there's one misstep. Other businesses are focusing on the highest level, which is called impact. Impact is where we're trying to transform people's lives, but people are doing that without considering sales, profit, and order. In other words, they're trying to be of service until it hurts, and the businesses are going under. In fact, many not-for-profits often start off this way. We want to change the world. We're going to be of such great service, and then they elect not to focus on contributions and efficiency, and the business collapses on itself. So for our business, we simply have to ask our questions. Do we have any? Do we have adequate? We have any sales? We have adequate sales? We have any profit? Do we have adequate? And we keep on asking any, adequate as we go up this chart and focus on that area right now. Um, a couple other things I just want to share with you that are pretty actionable. This is also at recessionresponse.com, which may help you with some cash flow right now around the profit center. Is, uh, Is there's right now there's what's called first asker advantage. It's fading out quickly. So you've probably heard of first mover advantage. First asker advantage is the first people going to any of their established vendors, anyone, any of their borrowers asking for some form of reprieve. So right now, if you have credit cards, call your credit card company if you maintain any debt and simply say, I'm being affected by COVID. Would you be willing to reduce interest rates? Credit card companies are actively doing it. I don't know how long. It's a first-asker advantage. If you lease space, we went to our landlord 6 weeks ago and simply said, change is afoot. It's likely going to negatively affect our business. We need to renegotiate terms. Now, I'm lucky we haven't had any revenue impact yet, but we positioned ourselves to protect ourselves. We didn't tell the landlord to take a cut. I don't think that's ethical. Ethically fair. We're doing okay. We did agree to it. But we did ask for new terms. We said, listen, instead of having a 5-year lease, can you cut us to a 6-month lease with a 2-month out? Meaning, after 6 months, whenever we ask for an out, we want to pay 2 more months and we're out because we don't know what's coming. And the landlord said, thank you. I understand your circumstance and thanks for not cutting the rent. You got a deal. The other people in our building are coming to the table late. I don't know what they're getting. But I think we got a very good deal because we asked first. Be the first to ask her. Another technique you can use around your finances: call your credit card company, tell them to reissue your credit cards. Right now, with so many moving parts, a lot of our credit cards and debit cards have recurring charges on there that we're not even aware of. We're getting dinged every month. So you can call your credit card company, say reissue the credit cards, don't transfer the subscriptions. It's basically like a stolen credit card. You get the new cards, you keep your credit, and then, um, All those vendors that were automatically dinging you now will line up and say, hey, I can't process your credit card. Anything that you must ethically pay, of course you pay, but you'll find that you may have some subscriptions that you're not using, like my Netflix account that I hadn't used in over a year, and I was able to cancel that. What are other things that you can catch that you can cancel? And if you're overwhelmed, a real simple strategy is just put a stop on those cards and get them reissued. Another strategy I want to share with you is, um, the, uh, introduce new financing options. As you start, uh, adjusting your business, as things, uh, maybe you start bringing people back to your gym, look into new financing programs. If you don't accept credit cards, accept credit cards, but look into PayPal options. Uh, look into ACH transfers where you automatically pull from someone's bank account. You can pull small amounts. There'll be no fee associated with it. You actually net a little bit more by doing that, and it may be more efficient. Set up a GL account. Maybe John already advised you on something like this, but for your, your banking, for your accounting, set up a general ledger account that says the word COVID. Any expenses you incur during the circumstance that, that is directly related to COVID, you track in that account. Here's the power of this. If when this is over, if there's any kind of reimbursement by the government for expenses incurred due to COVID. If, if there's insurance claims, you can now extract it out because you're tracking the cleaning supplies you had to get, the virtual meetings you set up, the new equipment, the technology, whatever you got to do to respond to COVID, you can now pinpoint it. If you ever look to sell your business, you're gonna have to do what's called a recast. If you can't recast the COVID out, it's going to show a blip in your income. You got to be able to say, no, this is the COVID occurrence and pull it out. If you ever want to get financing or loans for your business, You gotta be able to speak to that. So that's the reason behind it. Next thing is, if you have to choose, and this is a little bit draconian, but if you have to choose between the fiscal health of your business and your personal fiscal health, take care of yourself. The reason is your credit score matters more than the business credit score. So future loans, if you wanna, you know, anything you wanna do personally in the future, buy a car, get a mortgage, if want to refinance the business, you have to do a personal guarantee, your personal credit is going to matter the most. See a lot of business owners right now reacting to this situation by saying, I'm going to do whatever it takes to take care of the business. I'll cut myself. I won't take pay. I'll skip on my mortgage. I won't pay my expenses. And they're crushing their credit score. Your credit score is critical right now. So if you have to choose, I hope you don't have to with these techniques we've been talking about. But if you have to choose, Choose yourself in circumstance. If you have to let go of your coaches or employees, the approach here is— now I know a lot of contractors, so you're fine. But if you have full-time or part-time employees and have to let people go, right now is the best time to let people go. The government set up the most soft landing I've ever experienced in my lifetime, and we think we'll ever experience. So they're protected. Some businesses are saying, I'm going to try to hold people on at least one more month or 2 more months. it may be to their detriment because the landing may not be so soft in a couple months. Things may get worse. And now you've extended your company for 2 more months, but for what cost? You maintain these employees. If you cut now on those unnecessary expenses or expenses you can't support, you may have a longer runway. So think about that. I wanna encourage you to consider bold moves. You know, there's massive acquisition opportunities right now. As these businesses are about to go out of business, why not reach out to other gyms or your competitors and say, listen, clearly things are changing, I know you're going out of business, I'd love to talk about an acquisition. Now, the beautiful thing is you can do zero money down acquisitions. You can do owner-financed acquisitions, particularly in this environment, and say, listen, you're gonna be shutting, cutting your gym, I would love to have your members now come over to us, we'll invite them over, any member we convert over, we'll give you the first 6 months of their membership, or we'll will pay you 50% of their membership over the first year, and then you're motivated to bring them on. But they get a jest in their costs. They can shut their facility, they can shut things down, but they're gonna get a recurring revenue stream. These opportunities exist. We're actually looking for an acquisition ourselves right now. These acquisitions exist for the first askers. So go back to that, move quickly on that if that's something you want to explore. And okay. I got a couple more tips. If anyone has questions, by the way, you can post it right now in the chat. I do want to ask you something. It's a bold ask, but I asked this because I know it'll be of service to you and selfishly be of service to me. So if you're willing, I've been talking with, with a lot of groups about supporting their business. My brand new book, which I have strategically positioned right there, called Fix This Next, is available for preorder now. I'd like to ask you to get a copy. And the reason I ask you to get a copy right now is twofold. One is it is the most affordable and impactful thing I can do. I've spent 5 years developing this strategy. We just scratched on a couple of the tips from there. If they were of value to you, that is just the beginning. It will service you. That's just, that's my promise. It is the most affordable thing I can offer you right now for this crisis. The second reason I'm asking, and it's my selfish reason, is that if you do buy, if we get 15 or so people buying the book on Amazon right now, It triggers the Amazon system. Amazon has an algorithm. When they see a surge of purchases, they start marketing the book. And selfishly, it's the best way for fellow entrepreneurs to discover the book. So I just wanted to ask that if you're willing to do it, if you just post in the chat, because I want to personally thank you for pre-ordering a copy of Fix This Next. And I also want to send you something too. So just, just make a note of that. Katie, thank you. You rock. I appreciate that. All right, while you guys do that, I just want to share another tip. There's a very simple strategy called the 10-10-10 rule. Ryan, thank you, brother. Maria, thank you. Amelia, thank you. That's awesome. It really does mean the world to me, and I promise you it will serve you. The 10-10-10 rule is a real simple strategy for navigating things when you're in rapid fire like we are now. It's not developed by me, developed by a woman named Susie Welsh. She was actually married to Jack Welsh, who passed away sadly this year. Mary, what Susie Welsh developed was, or understood, is that most of us make decisions right in the moment. We consider what's it going to feel like in the next few minutes when I make this decision. So if I'm gonna lay that employee off, the next 10 minutes off. Well, the 10-10-10 method is a way to look at how we feel in the moment, how we feel in 10 months and 10 years. It's the immediate-term, midterm, and long-term reflection. So what happens now is consider laying off that employee. They've been loyal. They're wonderful. The next 10 minutes, I'm going to feel like crap. In the next 10 months, how will I feel? Well, you know what? I feel actually probably confident, confident I made the right decision, the best decision in the interest of my business, but also the best decision in the interest of that employee because they have a softer landing now. In fact, in 10 months when we're through this, because my company sustained, I may be able to hire them back. How I feel now in 10 years. Well, 10 years, my company's gonna be around. This could be the big exit for me. There may be a selling opportunity here because I sustained and made the tough decision in the moment. So by doing the 10-10-10 rule, you're able to reflect at the immediate moment, but also look at the mid and long term, and it gives you a much stronger perspective. The beautiful thing about the 10-10-10 rule is you don't need any paper. You can simply do it in your mind as you're facing different considerations. And Josh, thank you so much. Brian, Iconic rock and roll. Northcrest, thank you. Petworth Fitness, thank you. Amanda, thank you. Keith, thank you. I promise you that book will serve you in a tremendous way. Hold on to receipt because there's something special coming on April 28th. Just make sure you check out for emails I send out or John sends out. So anyone has a receipt, just got a little something coming your way. Jennifer, thank you. It will serve you. So those are the strategies around the recession. I just want to show you this one more time. Just as a reminder, the early stages of a crisis, we go into shock and desperation. Many businesses are here right now. Our goal on this call, call was to get you into evaluation. We talked about the what to do, what not to do strategy. And you simply say what's working, what's not working, amplify what's working, discard what's not working, and regenerate a new format. We talked about the one step back, a strategy where you can rapidly go back, or the best strategy of all is simply reach out to your customers in small bite-sized pieces and say, how can we serve you now? Tell them you're still open for business, that you care for them. Is there anything I can do to serve you in a new way? They often will have the answer of your new offering. Then there's what's called deliberate action. Deliberate action is the one steps you need to take. Now, we talked about it in the business hierarchy of needs. Most businesses are trying to do all this or they're reverting to sales. All you have to do is look at this hierarchy and say, Do I have any— do I have adequate— do I have any sales? Do I have adequate sales to support profit? Do I have any profit? Do I have adequate profit to support order? We start moving our way up. Most businesses I'm evaluating right now are in a profit problem more than a sales problem. So don't just jump to the base. Consider all the things. Other businesses have an impact problem. They're trying to serve impact when they should be focused on profit or sales. So don't jump that too. Then once you start taking that deliberate action, then we move toward the surge phase. The surge phase is there is big opportunity coming our way. There's a lot of clients being freed up right now. We must sustain and start actively marketing to them. Gave you tips. Do those YouTube videos, do educational marketing, be of service, connect with your community, collaborate with the mayor or the town event coordinator and see what kind of videos you can be doing with them through interviews to position yourself for the surge. And when that surge comes, whenever it comes, it's going to be a powerful time because the businesses that sustain will grow. That's what I want to share with you. Uh, Jennifer, thank you. Craig, thank you so much for getting a copy. You will love it, I promise you. Uh, and John, thank you so much for letting me share all this stuff. That was a pretty rapid fire.

Yeah, Mike, uh, thanks for giving us your time. Um, you guys, I can't tell you enough, like, I've read the book. Um, this is what it looks like without the dust jacket on. He has 5 questions in each of the layers. Like, it's very thorough to identify very specific areas of each row in the hierarchy. And it's super cool because I was thinking about this before I read the book. I have a Google spreadsheet that I've called— it's called my priorities spreadsheet. So anytime I get an idea, I plug it into the Excel file, and then every so often I'll go back through and reorder it and like figure out what are my priorities and whatever. Like this book And the tool that you give, more importantly, that hierarchy of need and the 25 questions, basically, it's going to make it so much easier to identify what I should be prioritizing instead of what do I— like, what does my gut say I should do?

Yeah.

Let's look at empirical evidence. And then, like you said, let's work on getting to point B first instead of getting in the survival trap. Like, I can't tell you guys enough how awesome that book is. So For everyone who did buy it, you're gonna love it. It's gonna serve you well. And those who haven't, I encourage you to. Like, it, it's awesome.

John, my, uh, my final thought is this. I just want to share with everyone before we wrap up is, uh, it's kind of effing crazy. Uh, the world just cold-cocked us all in the face, right? We're just standing there and the world is like— and, uh, we got a black eye, a bloody nose, and we're stunned. And in that same moment, the world's like, and please save me. Like the world just punched us and says, I need to save— I need to be saved by small business. The backbone of our economy is right here, right now. Small business drives our economy. And we, the world, needs your success. If small business fails, we're all done. You know, over 50% of the world population is employed by small business. Over 90% of the businesses globally are small business. So it's crazy, but we need you more than ever. So my final decree is this. Just, uh, stand up, step forward, and let's kick some ass. Uh, John, thank you for having me. Thanks, guys.

Thanks, Mike. Thanks, guys, for being on.

I appreciate you all. See ya.