Why You Should Pay Yourself First in Business (And How To Do It) with Mike Michalowicz6 comments
If you’ve been in business long, you no doubt know the old profits adage: Sales – Expenses = Profits.
Today’s guest on The School of Greatness turns this formula on its head in his new book, Profit First, by proposing a different formula (hint: the profits come before the expenses.)
Before you call him crazy, let me introduce Mike Michalowicz as the former small business columnist for The Wall Street Journal, as well as a frequent guest lecturer at major universities. He hosted the reality television program Bailout!, where he would turn around failing businesses in 24 hours, and he is the “Business Rescue” segment host for MSNBC’s Your Business.
He is also known for his entrepreneurial strategy (and title of his previous book) The Toilet Paper Entrepreneur. Let’s dive in to learn how to pay yourself profits first in Episode 93 with Mike Michalowicz. Subscribe on iTunes, Stitcher Radio or TuneIn
The School of Greatness Podcast
“Instead of asking ‘How big is your business?’ ask ‘How healthy is your business?'” Click to Tweet
In This Episode, You Will Discover:
- About the “Recency Effect”
- The old formula for profits versus the new formula Mike proposes
“Our behavior is dictated upon what we perceive in the moment.” Click to Tweet
- How to avoid the temptation to borrow from yourself
- Why you need to pay yourself first (and well)
“If we don’t pay ourselves first, we start resenting our business. It starts owning us.” Click to Tweet
- TAPS (target allocation percentages) and how to use them
- The importance of matching up with another entrepreneur for accountability
- Why you should hire a book keeper or accountant who understands how to drive profits in your business
- Why spending less in your business actually fuels the economy
“The less money we spend, it forces us to become efficient.” Click to Tweet
- The importance of being efficient with your business budget (I’m definitely shifting some things in my business based on this idea)
- How to pay down debt Dave Ramsey’s Debt Snowball method
- Why efficiency is the magic sauce of profitability
- Where most business owners fall apart in making profits
- Plus much more…
“If you own a business, you have to pay yourself as the best employee.” Click to Tweet
Continue Seeking Greatness:
- Be sure to pick up Mike’s new book Profit First: A Simple System to Transform Any Business from a Cash-Eating Monster to a Money-Making Machine.
- Do this profit assessment worksheet from the book
- Also check out Dave Ramsey and his resources on how to get out of debt
- Buy his book that Mike recommends The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
- To find profit-minded accountants and financial experts, check out Profit First Professionals
- Connect with Mike Michalowicz
- Get your design project underway with a $99 Power Pack Upgrade
- Music Credit: Kruewl by Pandora’s Box
Did you enjoy the podcast?
Have you struggled with paying yourself first or what you are worth? Most entrepreneurs have. Let us know in the comments what shifted your mindset (or if you are still paying yourself last) and how it affected your business. Also, if you are looking for ways to grow your business online, make sure to dive in and apply to the School of Greatness Academy. Sessions start soon and we are almost full for enrollments!
“Money is an efficiency.” Click to Tweet