Making a profit is the goal of any agency owner. But too often, the way we think about profit actually hurts our agency. The standard equation (sales – expenses = profit) can lead to bad decision-making. We are willing to accept the leftovers (profit) rather than running our business to deliver profit as a key outcome. I’d much rather have you determine the amount of profit that is acceptable to you and then you manage your business to that goal.
This is a more effective way to look at the profit equation – one that helps agencies thrive and gives you the ROI you deserve for taking the risk of owning an agency.
Michael Michalowicz founded and sold two multi-million dollar companies. Then in his mid-30’s, he went broke. Starting over again, he was driven to find better ways to grow healthy, strong companies. Among other innovative strategies, Mike created the “Profit First Formula,” a way for small to mid-sized businesses like our agencies to ensure profitability from their very next deposit forward.
Michael is now running his third million dollar venture, is a former small business columnist for The Wall Street Journal, the former MSNBC business make-over expert, a popular keynote speaker on innovative entrepreneurial topics, and is the author of Profit First, Surge, The Pumpkin Plan and The Toilet Paper Entrepreneur.
What you’ll learn about in this episode:
- The two questions Michael asked himself that allowed him to find his calling to become an author
- Why leaving too much money in your agency leads to bad decisions
- What it means to run the Profit First system within your agency
- Basic principles to help your agency get ready to use the Profit First system
- Why you aren’t limited by a lack of resources
- The parallel between Pumpkin farmers and business regarding organic growth
- Key takeaways agency owners can apply to their biz dev strategy using the principle of “growing the strong sprout”
- Why it’s important to serve the verticals your agency knows well, and that will allow three or four of those legs to support your stool
- Consequences you may face when you put too much focus on your weakest clients
- Why entrepreneurs struggle with being profitable
- A better way to calculate profit for your agency so you can stop using the “Frankenstein Formula”
- Principles taken from health and fitness industry you can apply to manage your money better and simplify your agency
The Golden Nuggets:“I have a pretty specific process in my writing. I ask, ‘what did I do wrong in business, and then what did I do right?’ Then I interview as many entrepreneurs as possible who did it right.” – @MikeMichalowicz Click To Tweet “It’s not good enough just to study best practices. I test them out in my own business before I write about them.” – @MikeMichalowicz Click To Tweet “In my mind, the fact that you've built successful businesses and you've made mistakes along the way – which you've been pretty transparent about and learned from – that’s actually what makes your books so pragmatic.” – @DrewMcLellan Click To Tweet “A successful business is actually facilitated through the lack of resources because a lack of resources requires innovation.” – @MikeMichalowicz Click To Tweet “When you borrow from profits, it doesn’t allow you to correct systematic mistakes. You’re just masking mistakes.” – @MikeMichalowicz Click To Tweet “We've all been told this in our personal finances: Set a percentage of income aside – hide it from yourself as money for your future. Live on whatever remains. This principle should apply to your business as well.” - @MikeMichalowicz Click To Tweet “If you have an idea and you want to start something, don’t wait. Time is the only non-renewable resource. And your lack of other resources is actually an advantage.” - @MikeMichalowicz Click To Tweet “Don’t exert yourself on your weakest client. Weed out the weak clients and focus on assisting the strong client. I call this the pumpkin principle.” – @MikeMichalowicz Click To Tweet
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