Mike Michalowicz advises Dan Ferguson, a waffle-business owner with $4,000 in debt, to calculate his profit percentage by taking his historical margin and adding 1-2 points. Use 95% of quarterly profit to pay down debt and 5% to celebrate, repeating each quarter until debt is gone.
Welcome to Ask Mike. I'm Mike Michalowicz and I got a question from Dan Ferguson about how he's using profit. First, he's got a brand new business and he's in the waffle business and they have $4,000 of debt. He doesn't know what amount of money to allocate to a profit. Here's what you do. Allocate the optimal profit percentage that you determine based upon your historical profits plus 1 or 2%. Build the profits and every quarter keep ramping it up even if you have debt. Dan and here's what happens when you do your profit allocations at the end of each quarter, use the vast majority of it, 95% or more to eradicate your debts, 5% to celebrate. Repeat that process until all your debts eradicated and then the next profit distribution. In that case, Dan, you're going to eat a lot of waffles because it's all going to you. And if you have a question, make sure you send a question to ask mikemcalos.com and I'll answer your question on the next video.
