The Power of Profit First with Mike Michalowicz
In this powerful episode, we’re joined by none other than Mike Michalowicz, the bestselling author of Profit First and the driving force behind one of the most transformative financial systems for business owners today.
Alongside hosts Tim and Duncan, Mike unpacks why the traditional formula of Sales - Expenses = Profit is fundamentally flawed, and how reversing it to Sales - Profit = Expenses can shift not just your numbers, but your mindset.
Tim opens the episode with a heartfelt account of his own journey as an accountant, sharing the emotional strain he witnessed (and felt) from business owners stuck in the cycle of feast and famine. This sets the stage perfectly for Mike’s insights on how prioritizing profit creates stability, confidence, and long-term success.
Key Highlights:
- Why most entrepreneurs never feel “profitable” (even when they are)
- The psychological shift required to break free from financial stress
- How Profit First empowers business owners to build healthier, more resilient companies
- Real-life stories of transformation from Profit First adopters
- The role of certified Profit First Professionals in providing accountability and guidance
This episode is more than just a conversation, it’s a call to action for anyone who’s tired of working hard with little to show for it. Whether you're an accountant, bookkeeper, coach, or entrepreneur, this is your invitation to rethink what profit means - and how you can claim it.
Listen now and start putting profit first - in your business and in your life.
Transcript
Foreign.
Speaker A:Welcome to Profit first beyond the Book, a podcast that takes you beyond the book with Profit first, brought to you by Tim Duncan and the rest of the Profit First Professionals, UK and Ireland.
Speaker A:Well, who better to have on our podcast, Profit first beyond the Book than the man himself who created Profit First, Mike Michalovich.
Speaker A:Mike, welcome very, very much, Tim.
Speaker B:It's so nice to see both you and Duncan today.
Speaker A:And, Duncan, you're with us again.
Speaker C:Yep.
Speaker A:So, Mike.
Speaker A:So, Mike, we're excited that you.
Speaker A:You've joined us on our podcast.
Speaker A:Of course.
Speaker A:And just before we go into talking about how Profit first came about, I just want to share something with you that I was.
Speaker A:I was an accountant, sat in my office and I can reflect back on this.
Speaker A:I was sharing this with some accountants and bookkeepers the other day and I had my head in my hands, you know, my or face planted on the desk, as I think my phrase was.
Speaker A:And the light was.
Speaker A:Was dropping.
Speaker A:You know, it was getting late in the evening.
Speaker A:All the other cars in the estate that I worked on had gone home.
Speaker A:I was left in my office still crunching out tax returns.
Speaker A:And then when I came to the point where I got the book Profit first, as you can see, just over, just over my shoulder there, who knew when I opened that first page what was going to happen?
Speaker A:A series of events that happened after that, from becoming a Profit First Professional, implementing Profit first in my business, working with my clients with Profit First Advisory, to selling my accountancy practice, to transitioning into a coach, to then me and Duncan having that conversation that led us to talk to you, to you, about us having the license for the UK and Ireland and becoming your business partner.
Speaker A:Profit First Professionals.
Speaker A:How is that for a transformation?
Speaker A:And that's what Profit first is doing for people.
Speaker B:It's so remarkable to me what you've done, both you and Tim and Duncan, what you've both done, the impact you're having is what's to me, gets me emotional.
Speaker B:There's so many entrepreneurs that have the exact same scenario as you did, Tim, where they're heads down and the only solution feels like I have to just do this again tomorrow and I have to keep exerting myself.
Speaker B:And there's this false hope that if I just work hard enough, if I sacrifice enough of my life for this business, I'll have some money at the end.
Speaker B:And it's sadly rarely the case that there's any money left over at the end and there's no money in between.
Speaker B:So the fact you're doing this, it gets me Emotional because it serves so many entrepreneurs.
Speaker B:Last time I was out in London, a Duncan Toby, for a.
Speaker B:For an American, a crazy bike ride through London, since it's the other side of the road, is confusing as all heck.
Speaker B:He just kept on yelling, keep the American in the middle.
Speaker B:There was British bikers in front of me, British bikers behind me, British bikers on the side, and the one American who had no idea what's going on in the middle.
Speaker B:And you guys kept me alive.
Speaker B:But then we went to a pub afterwards, and I was talking to the folks there of how profit first transformed their life, that they too were in that scenario of I was just putting my head down.
Speaker B:It was exhausting.
Speaker B:And it almost feels, I don't know, foolish that once we implement profit first, that it could really be that easy, that the business was that close to being permanently profitable.
Speaker B:And that's the reality.
Speaker B:Most businesses are very close to being profitable.
Speaker B:We do know how to sell.
Speaker B:We do know how to service clients.
Speaker B:We just need to know how to extract profit.
Speaker A:I love that.
Speaker A:I love that.
Speaker A:And that's a fantastic story.
Speaker A:And I know Duncan does love a crazy bike ride.
Speaker A:We know that for a fact.
Speaker A:And there's been a couple of accidents because of these crazy bikes.
Speaker A:But you've.
Speaker A:You find, obviously your story is very similar to mine, but would you say yours is a story of transformation the same as mine, or would you like a little twist on yours?
Speaker B:For sure.
Speaker B:There's an exercise that we could do, actually.
Speaker B:Maybe we want to do it at profitcon.
Speaker B:I call it the life pulse.
Speaker B:And basically, when you and I reflect on our lives, we can put points in it.
Speaker B:Actually, Duncan and I were talking about this.
Speaker B:Duncan was kind enough to drive my wife, who came with me for one trip.
Speaker B:We're driving up the highway, and we were just reflecting on points of life, these transformational moments.
Speaker B:And sometimes there's these wonderful moments that we have that we say, I want to keep doing that, or I want to serve people in that way.
Speaker B:More often it seems that there's these moments that are traumatic in some capacity that we say, I will never experience that again.
Speaker B:I'm devoted to eradicating that and.
Speaker B:And not allowing others to experience that.
Speaker B:And so for me, similar hands on my face.
Speaker B:But it wasn't in a business moment.
Speaker B:It was coming home to my family to say, we lost everything.
Speaker B:I had lost everything just due to poor business decisions.
Speaker B:There's a certain point where an inoperating business falters and fails.
Speaker B:There's that day, and we try to Extend it months or years.
Speaker B:And sometimes we can.
Speaker B:But the moment came and it came for me.
Speaker B:And I couldn't pay my bills.
Speaker B:And my daughter, who was there, she was nine years old, ran to her bedroom to grab a piggy bank.
Speaker B:She'd been saving one day to buy a horse.
Speaker B:And she said, dad, please use my money.
Speaker B:I'll pay our bills.
Speaker B:And it was the most humbling chills.
Speaker B:Every time I think about it, it was the most humbling experience, embarrassing for me, pride in my daughter.
Speaker B:There's Duncan, you've done this, Tim, you've done this.
Speaker B:I've done this.
Speaker B:The folks listening have done this.
Speaker B:We have labeled ourselves as providers.
Speaker B:We provide for ourselves, for our family, for our communities, our country, our globe.
Speaker B:And I couldn't do that one job.
Speaker B:And that became a moment of transformation.
Speaker B:The last thing I want to share is it wasn't like the next morning, woke up and said, now I'm on the path to eradicate entrepreneurial poverty.
Speaker B:Next morning I woke up and I said, where is the Jim Beam?
Speaker B:Where is the whiskey?
Speaker B:And started to drown myself in disappointment and depression.
Speaker B:And I think that's also a necessary phase.
Speaker B:The drinking part can be excluded, but I went through a period of reflection and frustration.
Speaker B:But over that, reflection of that moment with my daughter and my reflection of how poorly I've been running my businesses, even though I thought I was running them well, I devoted myself to fix that for myself permanently and for anyone to come in touch with.
Speaker B:And that's how Profit first ultimately came about.
Speaker A:That's amazing.
Speaker A:And it's such an emotional story when you share it with us, the thought of your daughter running to get her piggy bank.
Speaker A:And it's interesting talking to daughters because it's reminded me, Duncan, your daughter came to one of our events in Newcastle and she shared with us what.
Speaker A:How she looks after her money.
Speaker A:And I'm wondering whether Mike would love to hear that from you.
Speaker B:I'm sure I would love to hear that.
Speaker C:Yeah.
Speaker C:So my, my daughters are in their early 20s now, so this is going back a couple of years.
Speaker C:They'll be 18 and 20.
Speaker C:And when I.
Speaker C:When I first came across Profit first, for me, it was a bit of a face palm moment.
Speaker C:Why don't I write the book?
Speaker C:Yeah.
Speaker C:What's.
Speaker C:What an effective idea it was and how it would serve my customers really effectively.
Speaker C:And again, that was a humbling moment for me because I thought I was doing a good job and actually I was missing.
Speaker C:I was missing a trick.
Speaker C:So I had to pivot the business to serve customers much more effectively.
Speaker C:But I could see how the methodology applies to your personal finances.
Speaker C:And so that's how I run my personal finance.
Speaker C:I taught my children to do the same thing.
Speaker C:So when they went to university, they would make sure they got pots for their money, for their, for their rent and for going out and so on.
Speaker C:And by putting up those guard rails, I'm convinced that they will avoid the typical, you know, young person financial mistakes where it's easy to get a credit card, it's easy to, it's easy to fall behind, and then you've got this, this burden of debt.
Speaker C:And we, we all know young people who've done it.
Speaker C:You know, maybe that was you.
Speaker C:Yeah, happens to lots of us.
Speaker C:So the fact that Hannah was, was able to.
Speaker C:Is already familiar with the principles, I think shows how well the system serves both, both companies and individuals and reflects my own passion for how this system, embedded in the right way, can deliver fantastic benefits.
Speaker B:It's interesting.
Speaker B:That's a great story.
Speaker B:It is so interesting how our children learn from us.
Speaker B:And I emphatically believe it's not through our words, but through our actions.
Speaker B:I bet you Hannah is observing what dad, you are doing and replicates that.
Speaker B:Could you imagine?
Speaker B:I mean, this is a crazy scenario, but if a father is a drunk and he says, whatever you do, don't drink, it's killing you, there's such a disingenuous there because the father's not taking his own medicine, his own advice.
Speaker B:So what he's saying is, I'm saying this, but I don't believe it to be true, at least not for me.
Speaker B:And I think that's what we do with financials.
Speaker B:So many entrepreneurs run businesses that are barely getting by.
Speaker B:And we say proudly to our children, you know, entrepreneurship is the pathway to freedom.
Speaker B:But we're not free.
Speaker B:So we're lying to them through our actions.
Speaker B:Or at least if nothing else, there's a mismatch.
Speaker A:Yeah, I think, I think we, we set up a business ourselves, don't we?
Speaker A:And our intention is that it's going to be much better than when we were employed.
Speaker A:We're good, we're going to be freer, we're going to have more money, everything's going to come easy.
Speaker A:And actually there's a reality that, you know, accountants and bookkeepers were, we're trained to do accountancy and bookkeeping.
Speaker A:We're not trained or we have no clue sometimes how to run a business and what that means.
Speaker A:And so there's a real reality that hits us Sometimes and it comes via our bank account.
Speaker A:So, Mike, for anyone who's been living under a rock for the last few years, can you explain to everyone what profit first is?
Speaker A:So there's an understanding for anyone listening to this in case they're not aware?
Speaker B:Of course, of course.
Speaker B:And a lot of people don't know what it is, so I don't want anyone to feel bad if they don't Profit first.
Speaker B:What I did was I looked out of my frustrations of struggling financially.
Speaker B:I was building businesses and while the turnover revenue was increasing, I was never taking money in.
Speaker B:And so my thought was, oh, I just don't have enough turnover, I need to make more.
Speaker B:And ironically, as the business grew on the top line, the stress grew exponentially and the profitability never showed.
Speaker B:It was actually the reverse building more debt.
Speaker B:I I've surveyed now, informally or formally, tens of thousands, probably hundreds of thousands of entrepreneurs of why they started their business.
Speaker B:I have a speaking engagement next week and I am going to ask entrepreneurs the same question.
Speaker B:I'll say, why did you start your business?
Speaker B:What was the desires you had for yourself?
Speaker B:And it's always the same.
Speaker B:3 Responses.
Speaker B:Financial freedom, meaning I don't want to worry about bills.
Speaker B:I want to have all the money I need to do what I want.
Speaker B:When I want personal freedom.
Speaker B:I don't want to be restricted by time.
Speaker B:I want to have the availability to live life on my terms and impact.
Speaker B:I want to be of service to others, my customers, my community.
Speaker B:I want to be known for something that's of greatness.
Speaker B:And I said, okay, great.
Speaker B:We all envisioned that.
Speaker B:Who honestly is living that I ask and no hands go up.
Speaker B:That is stunning.
Speaker B:Very few entrepreneurs achieve the biggest number one thing is financial freedom.
Speaker B:Very few entrepreneurs achieve it.
Speaker B:And there's been studies around this that identify is somewhere between 83 to 85% of businesses that are operating today, including the individuals listening right now, are not sustainably profitable.
Speaker B:In fact, they're surviving check by check.
Speaker B:They need more money in, in this moment in order to cover their bills.
Speaker B:Otherwise they're done.
Speaker B:It's this constant just keeping our neck above the water, paddling.
Speaker B:So what profit first is?
Speaker B:I said, well, how come so many smart people, you have to be smart to operate and run a business?
Speaker B:It is not easy and we can do most of it sales, serving customers.
Speaker B:How come we're not profitable?
Speaker B:And one day I was looking at the foundational formula, global formula for profitability, which is your turnover minus your expenses results in profit.
Speaker B:And I was looking at that and I said, oh, my gosh, this formula is wrong.
Speaker B:Now, mathematically, logically, it makes sense.
Speaker B:The money that comes in minus the money goes out is the money that's left over, that's your profit.
Speaker B:Makes logical sense, but it doesn't make behavioral sense.
Speaker B:Behaviorally, it's very human that when something comes later or last, we ignore it.
Speaker B:But when something comes first, it gets prioritized.
Speaker B:That's why we say things like, this is my top priority, it's first.
Speaker B:My health matters so much, I'm going to take care of that first.
Speaker B:I love my family, that's why I always put them first.
Speaker B:But last means insignificant.
Speaker B:If I say I love my family, I never say I love my family so much.
Speaker B:That's why I've decided to always put them last.
Speaker B:It makes no sense.
Speaker B:Or I've decided to take care of my health, therefore it's the last consideration.
Speaker B:No, but we say we want financial freedom and profit, and it's coming last.
Speaker B:And the terminology is it's the bottom line or the year end or the final take.
Speaker B:Those are terms for profit which all say last.
Speaker B:So what we did with Prop 1st is we flipped the formula.
Speaker B:It's our turnover minus our profit equals expenses.
Speaker B:And mathematically it's called a variable swap.
Speaker B:It's identical on the logic, but it's radically different on the behavior.
Speaker B:Because what we're going to do in practice is every time money flows into your business, we're going to take a predetermined percentage, whatever you want your profit to be.
Speaker B:That bottom line, 5, 10, 17, 18%, we're going to take that money, remove it from the business, and now the business tells you what's left over.
Speaker B:And while this doesn't guarantee you have a healthy business, it guarantees the profit.
Speaker B:And then it reveals within your business if you can sustain that, if you can't, there's something fundamentally flawed with your business.
Speaker B:I have a little saying now, profit first doesn't fix your business.
Speaker B:It tells you what needs to be fixed within your business.
Speaker A:Absolutely.
Speaker A:And Duncan did.
Speaker A:Can you remember?
Speaker A:I can certainly remember.
Speaker A:Before profit first entered our lives, did you have clients that would have made a profit, but they didn't understand where the money was?
Speaker C:Yeah, 100, you know, here's your accounts.
Speaker C:You made £200,000.
Speaker C:Great.
Speaker C:Where is it?
Speaker C:You know, not an unreasonable question.
Speaker C:And just go, go back to what you were saying earlier, Mike, about.
Speaker C:Now people listen to this.
Speaker C:Companies that not making, not making any money.
Speaker C:That's true of a lot of bookkeepers and accountants as well.
Speaker C:And I think that, you know, we as a profession just need to just, just get, get real about that.
Speaker C:You know, if that is, if that is you, then then this is an opportunity for you to reverse engineer profitability so you can really, you can serve your customers with authenticity.
Speaker C:Because we accountants and bookkeepers are really kind, giving people as a community.
Speaker C:They're really giving people.
Speaker B:Oh yeah.
Speaker C:So they end up not charging what they should, they end up giving, giving away value.
Speaker C:And actually we teach up our members to package property, to market property, to look after themselves first because only then are they really able to serve people.
Speaker B:There is a absurd number of accountants and bookkeepers who are not profitable.
Speaker B:And when I say absurd, I'm not being accusatory here, but for the consumer, someone who hires an accountant, bookkeeper, we would think they are the masters of numbers and will never struggle with profitability.
Speaker B:And the reality is they are the masters of numbers.
Speaker B:But the component to profit is not a numbers game, it's a behavioral game.
Speaker B:It's a prioritization game.
Speaker B:So it's, it's literally this simple trick, if you want to call it a trick of taking your profit first that then facilitates permanent profitability and you align everything behind it.
Speaker B:There was a, in the states here, a pretty significant accountant who declared bankruptcy.
Speaker B:And they were associated with a lot of other people in the industry, so they were a well known name and they declared bankruptcy.
Speaker B:There was this uproar.
Speaker B:How, how dare you almost, how could you.
Speaker B:They didn't understand the profit first principle.
Speaker B:They were doing what most of us do.
Speaker B:So here's the great irony.
Speaker B:As an accountant or bookkeeper, if you've struggled to profit, you have a leg up because you understand what the emotional experience that your clients are going through.
Speaker B:Once you resolve your own profitability, and I assure you, profit first will fix that immediately.
Speaker B:We have these overnight turnarounds.
Speaker B:It can be shocking.
Speaker B:There's a cartoon that I see as popular where it's a miner who's in a cave chipping away at stone and he's looking for the diamonds.
Speaker B:And in the cartoon you see the diamonds one chip away and he says, ah, not here, I'm going to give up and start somewhere else.
Speaker B:We in our business are that close to the diamond mine and having this cache of wealth.
Speaker B:If we just deploy profit first.
Speaker B:The beautiful thing is when you do and you see how this serves you, and you see how that worry of, of worrying about money starts to fade away.
Speaker B:You have such an advantage of serving clients now because you can tell them with 100% surety.
Speaker B:We're going to get your numbers right for compliance, but we're going to get your profitability to be permanent.
Speaker B:And that's what clients ultimately want.
Speaker A:Yeah.
Speaker A:And, Mike, you wrote, created, wrote Profit first, and it's helped millions of entrepreneurs, business owners around the world.
Speaker A:But I want to ask you why you created profit or you.
Speaker A:You bought together Profit First Professionals to serve people with Profit First.
Speaker B:That's a great question.
Speaker B:It came about Profit First Professionals, the organization which is accountants, bookkeepers, and business coaches who are now certified.
Speaker B:This methodology, it came about the day after I finished what's called the substantive edit, meaning I wrote the book.
Speaker B:It went to the editor to review, and they come back with some suggestions.
Speaker B:The editor said, hey, this system is really cool.
Speaker B:I could use it.
Speaker B:I want to make sure I'm doing it right.
Speaker B:Who's the bookkeeper that supports this?
Speaker B:I'm like, what do you mean?
Speaker B:They said, I got to make sure I'm doing it right, and I need to be held accountable to it.
Speaker B:Who's the bookkeeper?
Speaker B:I'm like, I will find you one.
Speaker B:And I made the first call to someone I knew as a bookkeeper and said, hey, do you want to practice this and get certified in this?
Speaker B:And they said, yeah, that's literally how it started.
Speaker B:When people consume the book, they're open to the ideology, the.
Speaker B:The concept, but the fear and it's appropriate that people have is.
Speaker B:Am I doing it right?
Speaker B:The analogy I used him is the three of us say, let's.
Speaker B:Let's start exercising together.
Speaker B:Let's go to the gym.
Speaker B:But none of us are trainers.
Speaker B:We're not experts in this.
Speaker B:We'll give advice like, oh, you know, you should.
Speaker B:You should put on a lot more weight there.
Speaker B:You know, back like the.
Speaker B:When you were a teenager.
Speaker B:Let's.
Speaker B:Let's start with that.
Speaker B:Push yourself.
Speaker B:We can actually cause severe injury.
Speaker B:We don't know the mechanics of the body.
Speaker B:But if we hired a trainer, someone who knows how it works, they will write a prescript that's specific to us to ensure we maximize our benefit but minimize our risks of injury.
Speaker B:The other component is they hold you accountable.
Speaker B:I used to exercise with a buddy of mine, and I found a partner was extraordinary.
Speaker B:Until it wasn't.
Speaker B:I would call him on a rainy day.
Speaker B:He's like, I don't want to go.
Speaker B:I'm like, I'm going.
Speaker B:You're going?
Speaker B:And he's like, okay.
Speaker B:And then the next day, I'm like, I don't want to go.
Speaker B:He's Like, I'm going, you're going.
Speaker B:And that worked beautifully until as we were driving, his name was Mark.
Speaker B:We were driving to the gym, I said, hey, you want to stop by Dunkin Donuts?
Speaker B:He's like, yeah.
Speaker B:And became collusion against the activity and the guilt was gone.
Speaker B:Like, well, if Mark's going to have a donut, so am I.
Speaker B:And we became the Donut guys.
Speaker B:Actually, we started to look like donuts ourselves.
Speaker B:So a train, someone that is an external party who does not have an emotional attachment to your business and can't be persuaded to start eating donuts, it's going to hold you accountable, make sure you do the process properly, ensure you're profitable, but make sure you don't do with injury, meaning hurting your business.
Speaker A:Yeah.
Speaker A:And what I love as well about the Profit First Professionals environment is the fact that our members have to implement in their own business first and foremost.
Speaker A:Foremost.
Speaker A:So we're helping them solve problems in their business and, and we'll be real.
Speaker A:There are a lot of us.
Speaker A:When I joined, I had a massive problem in my business.
Speaker A:My final finances were all over the place.
Speaker A:And profit for implementing Profit first when I first went through the process was quite overwhelming until I had the call with my guide, which was Liz.
Speaker A:She just made me realize that I had a plan to move forward and it was something that I hadn't thought of up until that point.
Speaker A:But then understanding that Profit first gives you a way forward and it helps you look into the future, it kind of opened my eyes even more to the whole concept of how it can work and how I can drive my business into a different direction.
Speaker A:And we see it with our members when they come on and we do the one to one with them with their profit assessment and then they start to have this realization that this is great.
Speaker A:I didn't get this from the book.
Speaker A:There's no way I could have got this from just reading the book.
Speaker A:But going through this with you guys and now I can build a plan.
Speaker A:I'm starting to see how I can help this client and that client and that client.
Speaker A:And for me that's the benefit of being a Profit first professional and being able to help clients in that way.
Speaker B:Absolutely.
Speaker B:But also for the client, there's one other benefit that I think is one of the greatest and it's the surety that you have the right person showing you that you're doing it right.
Speaker B:And they have to prove recurringly recertify re exam every six months or a year to prove their competency.
Speaker B:The economy shifts and so is Profit First.
Speaker B:It's a dynamic system, it can adjust with things.
Speaker B:And there's some people admittedly who've read the book probably first and say, oh, I can just tell you what the book does, do what the book does.
Speaker B:That's like a trainer saying, you know, I'm going to skip the certification process, I'm not going to study how the human body works.
Speaker B:But I did see there was this exercise regimen, you should do it and, and I'm never going to study it again and, and you should do what I'm doing.
Speaker B:Well, we have that in the States here with doctors and it's illegal.
Speaker B:There's doctors who perform procedures without getting recertified and they put their patients at massive risk.
Speaker B:So one of the, my favorite components of Profit first professionals is the users who work with the PFP have absolute confidence that this person, not only have they implemented it in their business, not only do they have experience doing with others, they have to prove that they're still competent at it and that they're learning the adjusting and new processes as they come about.
Speaker B:As you know, and this is early notice, but we have a personal component.
Speaker B:What we found is that many entrepreneurs, once they're nailing it right in their business, but they're not nailing the numbers at home.
Speaker B:The home leeches off the business and it collapses the system.
Speaker B:So we have introduced a component of how to bring that balance.
Speaker B:So there's a personal finance component for the entrepreneur too.
Speaker B:That's just one example of what's coming about right now.
Speaker B:And there's this constant improvements and adjustments of the system.
Speaker B:And that's why I love that PFPs are on top of that.
Speaker C:Can I just build on what you were saying there, Mike?
Speaker C:Because one of, one of the, I mean the book is it gives, it gives principles and it gives some hacks and some how to's.
Speaker C:But I think one of the great strengths of the system is that every PFP does it in their own way.
Speaker C:And so they bring their own intellectual property to it.
Speaker C:They're bringing authenticity to it, enables them to really serve their customers.
Speaker C:When someone joins PFP uk, we don't give them a big money, say that's how you do it.
Speaker C:They give principles and they fill in the gaps, they do the hard work.
Speaker C:They then have something really valuable that only, only they have a customer, can't compare them to anyone else.
Speaker C:And so they're able to charge higher prices because they're able to deliver better results that drive transformation in their customers.
Speaker C:Businesses and therefore in their own business and in an age where software is getting more and more effective, AI is doing more and more the.
Speaker C:The human element, that ability to tell a story, to connect with people, to relationships.
Speaker C:That is where I think the profession is going.
Speaker C:That the successful accountants, bookkeepers and coaches will be the ones who understand human relationships.
Speaker C:And that you can't have AI do that.
Speaker C:AI will help you, but AI won't do it for you.
Speaker C:Software can't do it for you.
Speaker C:That's all, that's all up here.
Speaker C:And profit first is a great way of unpacking that and serving a customer.
Speaker B:It's funny, I was on AI yesterday and I was getting so frustrated while the answers I was asking for were being answered.
Speaker B:It had this rah rah mentality.
Speaker B:Every time I was like, great question, Mike.
Speaker B:And at a certain point I'm like, shut the stinking F up.
Speaker B:Just give me an answer.
Speaker B:Or actually be critical of what I'm saying.
Speaker B:So that we have.
Speaker B:I don't want this constant accolades.
Speaker B:It's kind of funny.
Speaker B:And a proffers professional.
Speaker B:One thing we're developing more and more of is the behavioral side.
Speaker B:We are becoming psychologists.
Speaker B:And you're right, crunching numbers, that's easy.
Speaker B:Anyone and anything now can do it with AI.
Speaker B:But that's not the solution to profitability.
Speaker B:It's understanding our behavior.
Speaker B:There's a new study I've been doing around what's called optimal foraging theory.
Speaker B:It actually reverts back to the cave people days and how our minds were and are still wired to collect resources like food, but how we go through preservation and consumption of it and how modern society has actually perverted the preservation component and therefore the consumption is sporadic.
Speaker B:So how do we leverage how we're naturally wired optimal foraging theory to our advantage and there's ways to do it.
Speaker B:And that's the type of stuff that our PFPs are learning is the psychology component.
Speaker B:And if you're going to be successful with something, we all got to master our mind.
Speaker B:And you want a guide that's going to do that for you or with you.
Speaker A:I couldn't agree more.
Speaker A:It's.
Speaker A:It's a minefield in effect.
Speaker A:It goes on and on.
Speaker A:The learning just continues and continues and continues.
Speaker A:We have the advantage, myself and Duncan, that we get to get a monthly call with you and our fellow international licensees, which is like our own mastermind group where we go around a room and we all, we all bring, bring ideas and topics up so we're really lucky.
Speaker A:And then we're able to filter that down to our members as well.
Speaker A:The things that we learn.
Speaker A:And it's an ongoing process of learning.
Speaker A:What I'd like to know, Mike, that so many people have had success with Profit First.
Speaker A:What's one of your most favorite success stories that you can think of?
Speaker B:Well, you guys.
Speaker A:I wasn't leading you.
Speaker B:Into that, but I mean it is extraordinary.
Speaker B:There's something special where we, the three of us never had an opportunity to connect until you're already doing it.
Speaker B:To me, that's extraordinary success.
Speaker B:I think for our PFPs.
Speaker B:Some of my favorite stories that come about is the cascade of effects they have.
Speaker B:So they work directly with the entrepreneur.
Speaker B:They don't necessarily have the opportunity to speak with the family.
Speaker B:And so they have a Hannah or equivalent in their family who now is living this principle and it causes this cascade of financial improvement.
Speaker B:It's funny, as I'm sitting here, two emails have come in in the last, since we started, the last 30 minutes of people that have implemented Private First.
Speaker B:I'll read them in a little bit.
Speaker B:One of my greatest joys is maybe not all the individual stories that I hear, which I love.
Speaker B:It's the quantity of stories.
Speaker B:And I invite people who read the book to contact me directly to share their commitment to Profit first and, and what they plan to do.
Speaker B:And some people dig in deep and share their stories and it is, it's mind blowing.
Speaker B:Profit first and the PFPs have backed it, have saved marriages because there was financial strife at home.
Speaker B:They've saved businesses.
Speaker B:They've turned something that was 30 years of just getting by into the next six months of achieving permanent profitability.
Speaker B:And now this person has a retirement plan or they're going to sell their business.
Speaker B:I can't tell you how many businesses have been sold because of Profit First.
Speaker B:There's a fella, he's a billionaire who was on the radio recently saying he uses profit.
Speaker B:He's a billionaire.
Speaker B:He's using Profit first in every company he invests in businesses he mandates that they, they use this system.
Speaker B:So I love that it's transcending everything from micro enterprises startup businesses to these largely successful venture funds are now using the system.
Speaker B:So yeah, I can't pinpoint a story besides you guys.
Speaker B:I just love all of them.
Speaker A:There's so many, isn't there?
Speaker B:So many.
Speaker A:Yeah, I mean, we know off the top of my head, you know, Stephen Edwards added 100k sales revenue in his first year of being a profit for First Professional and he's still smashing it upwards by the way, ongoing from there, Deb Halliday added 65% to a gross profit.
Speaker B:You know what's funny?
Speaker B:You're talking about how he increased revenue by a hundred thousand pounds.
Speaker B:What's so interesting is one resistance point that here, perhaps the most frequently of why I don't want to do private first.
Speaker B:The person says, because I want to grow.
Speaker B:And I first asked him, I said, well, why do you intend to grow?
Speaker B:And what's so funny is I want to become profitable.
Speaker B:So they're saying I'm not going to be profitable now in hopes that I'll be profitable in the future, which makes no sense to me.
Speaker B:We need to master the profit system now.
Speaker B:So as you grow, you sustain profitability.
Speaker B:But ignoring even that, I tell people, what if you took your profit first and you grew even faster than you are right now?
Speaker B:And they go, well, that's impossible because we all know it takes money to make money.
Speaker B:And that is like the biggest lie among some others out there.
Speaker B:But that was one of the biggest lies on this planet.
Speaker B:It does not take money to make money.
Speaker B:In fact, most entrepreneurs are proving it every day.
Speaker B:They are taking all their money to make more money, and they're not.
Speaker B:So we've already proven it's not working for us.
Speaker B:What it takes to make money is innovation, out of the box thinking, challenging industry norms, focusing on efficiencies.
Speaker B:There's these business fundamentals.
Speaker B:When you take your profit first, it triggers a cascade of fixes in your business.
Speaker B:Because if I want, say I want to have a 20% profit, which is seems extraordinary, and say I'm doing £100,000, I'm taking £20,000 out of the business.
Speaker B:My business is telling me, you got to make this work with £80,000.
Speaker B:And if I see that there's bills I can't pay, well, that means maybe I have too many expenses, maybe I don't have the right pricing and I need to increase the pricing.
Speaker B:Maybe there's not enough efficiency.
Speaker B:So I'm doing a lot of rework, which the customer doesn't see, but it's costing me dearly.
Speaker B:I need to build efficiency.
Speaker B:Maybe I should do fewer things better and make a lot more.
Speaker B:In.
Speaker B:In the US and they've become an international brand.
Speaker B:And I know I've mentioned before, but there's such a good story because they've become such a large brand is this crazy baseball team called the Savannah Bananas.
Speaker B:They're, they've exploded in the U.S. if you rewind, seven or eight years ago, no one heard of them.
Speaker B:They were just getting started and they started Profit first when they were a brand new business.
Speaker B:What happened was as they were building their business, they were taking their profit.
Speaker B:They didn't have enough money to do certain things that you are supposed to do in baseball, like have a scoreboard so people can track the score.
Speaker B:And they said, we don't have enough money to support it.
Speaker B:What most businesses do without the guidance of a PfP, say, well, I guess I can't, can't be profitable.
Speaker B:But what they said is, if I, if I must be profitable and I must be, how do I still report the score without a scoreboard?
Speaker B:And that's when they recruited the audience to hold the score up, like between boxing rounds.
Speaker B:And then they said, well, how do we entertain the audience?
Speaker B:And they had the audience.
Speaker B:You had to be 80 or older.
Speaker B:They call them banana bananas.
Speaker B:You had to be over 80 and you are now the dance squad.
Speaker B:And the audience lost its mind.
Speaker B:What's so interesting about Profit first is it gives you perhaps one of the greatest opportunities in regards to business is it forces you to innovate.
Speaker B:And it's the people who challenge the industry standards because they're not throwing money at just doing the same thing, are the ones who redefine the industry and win and grow faster.
Speaker A:Absolutely, yeah.
Speaker A:I love the Savannah Bananas, by the way.
Speaker A:I follow them on Facebook and watch some of the videos because I came across them from Profit first in the book, obviously, and Jesse Cole with his the Yellow Tux man.
Speaker A:So I remember that, see.
Speaker A:And I've not looked at anything for a while, but it just comes back to me because the branding and everything is just there, isn't it?
Speaker A:And it's so simple when you break it down.
Speaker A:It's simple what, what they've done, but it's only simple because they thought of it and they actually acted on it.
Speaker A:And they did it without breaking the bank to do these things, didn't they?
Speaker A:So it's very clever.
Speaker B:It would be such a shit.
Speaker B:And sadly, hundreds of other baseball teams came out of this.
Speaker B:It's a minor leagues, effectively, it's called All Star, but it's my least.
Speaker B:Hundreds of other teams have this opportunity.
Speaker B:But what the owners did is they said, this is how baseball operates.
Speaker B:Let's put more money into it and more money into it.
Speaker B:And they're all losing money and getting frustrated and they're trying to put more of their own savings into it.
Speaker B:The burnout rate of these baseball team owners is.
Speaker B:Is overnight they.
Speaker B:They wipe out their wealth doing this and Jesse from day one said, no, we will be profitable and use the system and look what happened.
Speaker B:Now Jesse is a unique person but I would argue if you're an entrepreneur, you are a unique person.
Speaker B:You've done what very few people do.
Speaker B:Don't use money to dumify you down to replicate other people, extract money to give you sustainability and the confidence to express yourself the way you need to express yourself and want to through your business.
Speaker A:Amazing advice.
Speaker A:And Duncan, we've got the opportunity for people to come and get this amazing advice from Mike in person, haven't we?
Speaker C:Absolutely, yeah.
Speaker C:Monday, 22nd September, Central London.
Speaker C:Mr. McCallow himself will be on stage so you can get tickets on Eventbrite and we're delighted to be joined by Ron Baker and Carl Reader.
Speaker C:And it's going to be absolutely incredible day, full of productive conversations and challenges and people will be on their feet and on the, they'll, they'll.
Speaker C:You're not going to be lectured for the day.
Speaker C:It's going to be, it's going to be hard work and you'll, you'll leave with a head full of ideas and things you can implement in your business the next day that will make you more money.
Speaker A:Yeah, and, and it's good that it's in London again because I remember two, two, three years ago, the first time Mike came over to London to join us for ProfitCon and we took him to Milton Keynes.
Speaker A:So we decided since then perhaps we better stick to London.
Speaker B:You know, it's funny, I loved Milton Keynes and I did.
Speaker B:You know, it's funny, as the outsider, I didn't get it.
Speaker B:I'm like, it's beautiful out here.
Speaker B:And I, my, that's when my wife came and she was touring around some of the space.
Speaker B:But I get it now, it's, it's not the big city, big city, but.
Speaker C:You know, we, we were there at Zero's office.
Speaker C:Zero are sponsoring us again this year.
Speaker C:So thank you to Zero.
Speaker C:We're really grateful and we are.
Speaker C:I mean, the hotel in Milton Keynes was very nice place to be.
Speaker C:Yeah, not looking.
Speaker C:It was, it was a great, it was a great event and we were very well looked after by the good people of Milton Keynes.
Speaker B:You know what we should do is when I see you gentlemen in London, I, I'll see if I can find a mug here that says I love Boonton.
Speaker B:Because where I live in Boonton, New Jersey is the equivalent to Milton Keynes to London.
Speaker B:You know, the Milton Keynes relationship to London is the Boonton relationship to New York City.
Speaker B:I would love for you to get me a mug that says, I love Milton Keynes because it is my favorite city.
Speaker B:Now London is my second favorite city.
Speaker C:You're on.
Speaker C:You're on.
Speaker C:Challenge accepted.
Speaker B:Okay.
Speaker A:Sounds great.
Speaker A:It's a great photo opportunity.
Speaker A:So.
Speaker A:So, Mike, are you looking forward to coming to London?
Speaker A:Are you worried that Duncan's gonna take you on a dodgy bike ride again?
Speaker B:I can't wait.
Speaker B:I. I have so much fun.
Speaker B:I do have a love for.
Speaker B:For England, you know, my trip to Milton Keynes, if I recall, I think was my first trip to England, which is shocking.
Speaker B:I've.
Speaker B:I've traveled all over the world, but I see how London is the hub of our entire globe.
Speaker B:It brings Europe and the.
Speaker B:The Western countries all together.
Speaker B:And.
Speaker B:And I know from the event, the energy is extraordinary.
Speaker B:The intelligence in the room is top shelf.
Speaker B:And it's.
Speaker B:The speakers are great.
Speaker B:The speakers are great, great.
Speaker B:But it's the participants supporting each other.
Speaker B:It's such a powerful act of dialogue.
Speaker B:It's not just someone droning on from stage.
Speaker B:It's dialogue and concepts and ideas and thought.
Speaker B:If someone comes out of that event without having millions of dollars or millions of pounds of ideas when they leave the event, I would be shocked.
Speaker A:Yeah.
Speaker C:We didn't even put people flying over from America to see Mike.
Speaker C:That's the irony.
Speaker B:Yeah.
Speaker A:Right.
Speaker B:And there's some Americans coming.
Speaker B:Yeah.
Speaker B:Yeah.
Speaker B:We definitely should not go on a bike ride as a group.
Speaker B:That would be a disaster.
Speaker C:We've got a different social plan for this year.
Speaker B:Oh, good, Good, good, good, good, good.
Speaker A:It's going to be great fun.
Speaker A:Mike, just before you go, you said that you'd had a couple of emails in while you've been on the call and you're going to share a success story that you had.
Speaker B:Oh, yeah.
Speaker B:You want me to read the emails?
Speaker A:Yeah.
Speaker A:Is that okay?
Speaker A:Yeah, I don't want to let everybody down.
Speaker B:Yeah.
Speaker A:Okay.
Speaker B:So these were just coming in as I was speaking.
Speaker B:This one came in from, let's see, Mary Ellen Strand.
Speaker B:And she says, you know, I expected nothing else better than the toilet paper entrepreneur, but profit first was it, because it's no nonsense, direct style of.
Speaker B:Of writing, happily, that it resonates with my style.
Speaker B:Would look forward to.
Speaker B:I look forward to seeing you keynote one day.
Speaker B:Well, Mary Ellen, who also goes by Ellie, why don't you come to London with me?
Speaker B:This came in from Vito.
Speaker B:Let's see.
Speaker B:Vito simply says, I committed to profitability in my coaching and future business.
Speaker B:He's an online transformation Coach says, I will complete Profit first and apply the strategies right away and master them.
Speaker B:I'm committed to create my business.
Speaker B:Coach cow don't care how long it takes or how hard it will be, I won't stop until it happens.
Speaker B:I'm all in.
Speaker B:Let's do this.
Speaker B:That's what I love, and that's the enthusiasm when someone reads one of the books.
Speaker B:Now, Vito sent this, you know, six minutes ago.
Speaker B:Here's the challenge that Vito may experience right now.
Speaker B:He's hyped up.
Speaker B:It's just like when you see that commercial about you can have that perfect body or something, then you gotta get to the gym.
Speaker B:And the risk that veto and all of us have is, how's it gonna be six days from now?
Speaker B:Not six minutes from now, and how about six months from now?
Speaker B:That is often where they say, hey, I need someone to call me accountable.
Speaker B:There's this slip back period.
Speaker B:So a lot of people have great enthusiasm and I invite them.
Speaker B:I say, hey, why don't you start a dialogue with a Profit first professional now so that you have someone available should you slip back some.
Speaker B:Listen, some people can do it alone and go it alone, but most people need a PfP first professional coach, including myself.
Speaker B:I have been working with a PfP, the same one now for seven years.
Speaker B:I was doing Profit first on my own.
Speaker B:I slipped back and I. I'm the guy who created the system and said, okay, I got to stick with this.
Speaker B:Karen Dellarepa, who's a Profit first professional in the United States, took me on and she's my coach.
Speaker B:I actually have a call with her at, in about an hour and a half from now to talk about my Profit first deployment.
Speaker A:That's.
Speaker A:That's absolutely amazing.
Speaker A:So.
Speaker A:So Mike Bakalovich himself uses a Profit first professional.
Speaker A:That is.
Speaker A:That is fantastic.
Speaker A:And it also demonstrates the value of working with a Profit first professional.
Speaker B:Yeah, they're amazing.
Speaker A:Mike, thank you so much for joining us.
Speaker A:We're really looking forward to seeing you in person again in London.
Speaker A:We can't wait to have a good pint of British beer with you.
Speaker A:I can't wait on everything.
Speaker B:I can't wait.
Speaker B:Tim Duncan, it's been a joy.
Speaker C:Thanks, Mike.
Speaker B:Thank you.
Speaker A:Thank you for joining us on our podcast today.
Speaker A:Profit First Beyond.
Speaker A:The book was brought to you by the Profit First Professionals UK and Ireland team.
Speaker A:If you'd like to find out more about Profit first or becoming a Profit first professional, head to our website profitfirstuk.co.uk.
