BiggerPockets Business Podcast 53: Fixing All Your Business Problems, One at a Time with Mike Michalowicz

BiggerPockets Business Podcast 53: Fixing All Your Business Problems, One at a Time with Mike Michalowicz

40 min read
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Are you overwhelmed with all the things you’re falling behind on in your business? Not sure what to do next? Have you been taught to believe that as business owners, we need to tackle all of our business issues at once?

Well, it doesn’t have to be that way!

Michael Michalowicz—author six books, including the newly released Fix This Next—knows firsthand what it’s like to struggle with too much to do and not enough time to do it. And on this episode, he teaches how we can evaluate and prioritize the issues in our business—and also how to FIX THEM!

Mike starts with an overview of why identifying the biggest obstacles in your business is important and why so many entrepreneurs make the mistake of trying to solve too many issues at once. From there, he reveals the business hierarchy of needs—the five parts of our business that we must in order to truly put our business on autopilot and create a legacy that can be handed down. Then, he tells us how to identify the biggest obstacle in our business, and the methodology of how we can solve that problem before moving on to the next.

The formula is simple, even if it’s not obvious. But Mike breaks it down step by step so that even the most frantic among us will be able to use it to get our business under control and relieve our daily headaches. He helps us realize that the biggest challenge that most of us face as entrepreneurs is figuring out what our biggest challenge is—and then helps us do that!

And make sure you listen for Mike’s explanation of “the double helix” while helping business owner Carol solve the biggest business challenge she’s facing today.

Check him out, and subscribe to the BiggerPockets Business Podcast so you won’t miss our next show!

Click here to listen on Apple Podcast.

Listen to the Podcast Here

Read the Transcript Here

J:
Welcome to the BiggerPockets Business podcast, show number 53. Impact is the creation of transformation. This is where a business realizes it is not about the transaction, it’s about the transformation it’s having on his clientele. Your product, how’s it changing people’s lives? Do they go out there and say, “This company is saving lives or serving me in such an amazing way.” Welcome to a real world MBA from the school of hard knocks where entrepreneurs reveal what it really takes to make it. Whether you’re already in business or you’re on your way there, this show is for you. This is BiggerPockets Business.

J:
How’s it going, everybody? I am J Scott. I’m your cohost for the BiggerPockets Business podcast here again this week with my amazing, lovely wife and cohost, Carol Scott. How’s it going today, Carol?

Carol:
Doing well. Happy anniversary, J.

J:
Oh, happy anniversary, podcastaversary.

Carol:
That’s right. Happy one year podcastaversary, listeners. Oh my goodness. Thank you so much for all your overwhelming support for your feedback, for your reviews, for sharing. We have reached our one year anniversary of the BiggerPockets Business podcast and we certainly could not have done it without all of you, without all of our amazing guests who have shared so much knowledge, so much expertise. It’s become such a great community together and we could not be more thrilled. Thank you. Thank you. Thank you. Also during this crazy time, of course we are all just working through this together to try and stay positive and stay strong. Everybody, just know that we will come out of the other end of this one way or another so we hope you’re all hanging in there. In the meantime we have somebody really awesome for you to listen to today.

J:
Yeah. We have a great episode today. First, let me point out that this episode was recorded about six weeks ago pre-pandemic. That said, we’re playing it today because it is probably more relevant now than it was at the time we recorded it. I do want to point out if there’s anything discussed in this episode that sounds like it’s pre-pandemic, or if you’re watching this on video and you notice that my hair has gotten a good bit longer since the episode was recorded or I put on a few pounds, that’s because this was recorded a few weeks ago, but we have an amazing guest. Actually on our podcastaversary, we have our first repeat guest.

J:
We’re bringing back our guest from episode 30. His name is Mike Michalowicz. He’s one of my favorite business authors. On episode 30, we talked about his book, Profit First, which was all about how to ensure that your business is making a profit from day one. If you haven’t listened to that episode, by the way, episode 30 is absolutely fantastic. Mike is the … He’s the author of Profit First. He’s also the author of four other books, Clockwork, the Toilet Paper Entrepreneur, the Pumpkin Plan and Surge. Today we are going to be talking about his sixth book, which literally just got released this morning. I hope you’ll check it out. But his sixth book is a book called Fix This Now. In this book, this is basically the culmination of everything Mike has written. Basically, if you haven’t read any of his books, this is the first one you should read.

J:
It encapsulates everything in all the other books, but it’s all about figuring out what that biggest roadblock or that biggest constraint in your business is right now and fixing that issue. Then moving on to the second biggest constraint in your business and fixing that issue and basically step-by-step fixing every issue in your business. Mike lays out an amazing methodology for both figuring out what the issues in your business are, solving those issues and really putting your business on track to being hugely successful. Again, an amazing episode, it was recorded a few weeks ago, but probably more relevant now because a lot of us are facing new issues in our business. More relevant now than it was when we recorded it.

J:
So, please listen to it, enjoy it, and hopefully it will help you with your business. If you’d like to learn more about Mike, more about the new book, more about his other books or anything we talk about in this episode, please check out our show notes at biggerpockets.com/bizshow53. Again, that’s biggerpockets.com/bizshow53. Now, before we jump into this awesome episode, let’s hear a quick word from our sponsor. Now, this is the point in the show where I typically read an ad from the sponsor, but today’s sponsor is ZipRecruiter, a company that Carol and I have been using a whole lot recently, so forgive me for being a little bit less formal on this one. Even though a lot of businesses have had to slow down recently, something that we’ve covered a lot on the show, thankfully, my business has been growing and growing quickly.

J:
In fact, right now I’m looking for a full-time office manager and several marketing people for my company. Now, in the past we’ve tried pretty much every method imaginable to hire great employees, but these days we simply focus on what works best and that’s ZipRecruiter. Ziprecruiter is an online marketplace that posts our jobs to over 100 different job boards. The best part, ZipRecruiter doesn’t depend on candidates finding us. It finds them for us. In fact, the last time we used ZipRecruiter was to hire our executive assistant and we found the perfect candidate in just one weekend. Four to five employers who post on ZipRecruiter get a quality candidate within the first day and given our results, I’m not a bit surprised.

J:
ZipRecruiter, it’s the smartest way to hire. Do you want to try ZipRecruiter? You can, for free at ziprecruiter.com/bpb, like BiggerPockets Business. That’s ziprecruiter.com/bpb. I want to take a minute to tell you about our sponsor PATLive. Did you know that 76% of customers hang up if they don’t reach a live person and 85% of customers won’t call back after an unanswered call? If you’re a real estate investor or if you’re in any kind of service business, your livelihood depends on being able to answer every call that comes in. PATLive offers 24/7 live answering services, so you can spend less time following up and more time growing your business. Unlike many other live answering services, they’re open 365 days per year.

J:
They’re friendly and professional agents are all located in the US and provide all the benefits of a personal receptionist, at a fraction of the cost. They offer fully customizable scripts and they can collect leads, schedule appointments, and process orders. With PATLive virtual receptionists, you can turn more callers into customers. Now, for a limited time only, PATLive is offering BiggerPockets Business listeners 15% off the regular rates. This offer is only available over the phone, so give them a call now at 866-712–1879 and mention this podcast or visit patlive.com. Make every call count with PATLive.

J:
Thanks to our awesome sponsor. Okay. Now, without any further ado, let’s jump into our discussion with Mike Michalowicz. Mike, welcome back to the show.

Mike:
J, I’m a two-timer. I’m back.

J:
You are. You are actually the first repeat guest on the show. We originally had you, I think it was on show number 30, I believe and-

Mike:
It was the most amazing show you ever had. That’s understand-

Carol:
Best ever hands down.

J:
[crosstalk 00:07:21]. So, honestly-

Mike:
Thanks Carol.

J:
… it got tremendous feedback. It was one of the most popular episodes. For anybody that hasn’t listened to episode number 30 with Mike Michalowicz. You were on the show, you were talking to us about a number of different topics, but one of our focuses was on your book, Profit First where you helped us to understand the importance of ensuring that our businesses were profitable, not just in general but from day one, literally from day one. I know that that book and that episode resonated with so many people in our audience. When I found out you had another book coming out, I was really excited about getting you back on the show to talk about that book and just helping us with just your tremendous experience and expertise in helping us grow and scale and build our businesses. Thank you so much for being back.

Mike:
Oh, thanks. It’s a joy being with you all and discussing these topics is my passion, so thank you.

J:
Awesome.

Carol:
It’s great stuff.

J:
Your latest book is called Fix This Next, and can you give us a little overview of what the book is and what we can expect to learn from it?

Mike:
Yeah. The thesis for this book, and how I derive this is as I write my books, I’m actively involved with my readers. I actually host event. I’ll send out an email at some awkward time, like two o’clock in the morning saying, “First 50 people to sign up it’s totally free. Come to my office and I want to study your business, but also share my research.” One of those events is coming up. The most recent one, and talking with other people, I found that the biggest challenge entrepreneurs have is knowing what their biggest challenge is. That’s the thesis for the book, was how do we know what really we need to work on? What’s the one thing that our business most needs from us right now?

Mike:
Fix This Next Is a way to very simply identify the impactful issue your business needs served as opposed to the urgent and all the apparent issues. Because most entrepreneurs, it’s just like putting out fires. You come in with a plan for your day and that first email comes in, you’re like, “Ah, day’s over.” And respond to emails. There’s a queue of questions outside your door and our agenda is more dictated by others than it is on what would specifically serve the business. This helps us pinpoint exactly what to work on.

J:
That’s great. Just for those that aren’t familiar with Mike Michalowicz, you have five other books before this book. Again, I mentioned Profit First. There’s also the Pumpkin Plan. There’s Clockwork. You’ve got just some amazingly successful and books that have just literally-

Mike:
Thank you.

J:
… changed the lives of so many entrepreneurs. I’m a huge fan of your books. The funny thing is when I talk to people either about your episode or I recommend your books in general, one of the first questions I get is, “Okay, he’s got a bunch of books. Which one should I start with?” I never quite know which one to tell them to start with because each of your books basically stands alone. Now, I know in this book you address that early on. You talk about the fact that you have the same issue. People ask you which book to start with and it’s a kind of you have to ask questions of them, but it sounds like you think people should now start with this particular book. Why is this book-

Mike:
I do.

J:
Why is this book the Seminole place to start for any entrepreneur that’s looking to take control of their business?

Mike:
Well, [inaudible 00:10:31] I used to blurt out whatever I was enthusiastic about. My own books are in other books. I’m an avid reader of business books and there’s so many great books out there, so I’d say I’m reading Extreme Ownership. Last week, I just finished Malcolm Gladwell’s Talking to Strangers. If someone asks me, “What should I read,” last week, I’m like, “Talking to Strangers. It’s unbelievable.” Then you ask me today, I’m like, “Extreme ownership. You need Extreme Ownership.” What I’ve discovered is we don’t necessarily need those books. What we need is the solution to our most impactful solution to our biggest challenge we’re facing now, the thing that will move our business forward. The better question, when someone says, “What book should I read?” Their question is, “Well, what’s your biggest challenge?”

Mike:
Pointing back to the thesis of this book, what I discovered is most people don’t know their biggest challenges. We identify the apparent issues. “Oh, we don’t have enough sales. Oh, we need more sales.” And it doesn’t fix the business. These businesses stay stuck, taking two steps forward and three steps back. The starting point is to have absolute clarity on what’s the single most important issue at hand right now within your business that you need to focus your resources on. That’s why I wrote Fix This Next. Now, the answer is pretty easy for me. When someone says, “What book should I read?” I’m like, “Well, do you really know what the biggest impactful issue at hand right now is? And if you don’t, I think Fix This Next could be a good tool for that.” That’s why I’m encouraging people to start there, with my books.

J:
That’s great.

Carol:
That’s excellent.

J:
Yeah. This book came at the perfect time, by the way, for me. I launched a new service business back at the beginning of this year and through some alignment of the stars we found that we hit 200K in revenue by the end of the first month. This far exceeded our expectations or our business plan, which is obviously a good thing, but it also brought challenges as well. We were getting more client calls than we can handle and we still didn’t have a working website and my operations manager was complaining that our trucks weren’t wrapped and our technicians didn’t have their uniforms, our marketing people needed stuff. We didn’t have business cards for half of our team. I was basically pulling my hair out, trying to figure out how do I do this? I can’t do everything at once. It’s so funny, I got a copy of your book and I started reading and really it provided some tremendous clarity for me. Thank you for that, from a personal level.

Mike:
You’re welcome. It reminds me that there’s a UPS commercial, I don’t know if you remember this, this goes back five or 10 years ago. It was hysterical, about new business that’s starting up and they’re selling some kind of widget and UPS is pitching their services for logistics. The commercial opens up and you see them, they have the invention, they’re all excited and they click go on the website and activate the website and the background’s one guy breathing deeply into a brown bag is hyperventilating. They are like [inaudible 00:13:06] sale. Then the first sale comes through, bling. They all like, “Oh my God.”

Mike:
They start high fiving. Then a second later it’s a bling, bling and they’re two, they start going crazy. Then there’s 50 and then there’s like aar, it starts pouring in and the guy starts hyperventilating again. He’s like, oh. Then UPS says, “Don’t worry, we have you handled.” Right? That’s their commercial. But it’s funny about the arc of entrepreneurship is, what’s a win today can become overwhelming tomorrow. There is a structure our business has, I call it the DNA of all business. Every business, actually like humanity shares a common DNA. Yet we judge ourselves and this is not a negative thing. We just actually automatically judge ourselves by what we see on someone. So, skin color, sex, height, weight, those are the things we can see instantly and we put a value on it.

Mike:
That’s a form of prejudice, but internally, 99% of all humanity is identical. We’re the same. Well, businesses is very similar. 99% of business is the same, but we judge it on the skin and we say, “Look how different we are. Our businesses are so different.” But understanding that the vast majority of business is actually identical, I was able to extract that DNA, if you will, build a structure and now we can pinpoint what needs to be worked on and what sequence. You got great sales out of the gate, that’s fantastic, but very quickly that’s going to indicate potentially an issue with profit and an issue with efficiencies and we need to resolve that. Once we resolve that, we may actually have to cycle back to amplifying those sales because of the new efficiencies we’ve brought about. That’s the DNA of business and we need to respond in order of where the bottleneck is within this hierarchy to keep the business going forward fluidly.

Carol:
Got it. That’s really cool. Talk to us even more, Mike, about the DNA within the company and how at the core, so many businesses are similar, but they all have this DNA that you have to identify. In really in the book, you really do dig deep into defining the equivalent of Maslow’s hierarchy of needs to business. That is huge. It really, really resonated with me. Can you talk more about that, about how it applies in business?

Mike:
Absolutely. There is a need structure for all of humanity. Maslow articulated it through what subsequently became Maslow’s hierarchy of needs and basically pointed out there’s five levels of needs. I’ve taken and translated into a business hierarchy of needs. Let’s explore Maslow real quick. Maslow explained that there’s five needs starting with the most foundational need of all humanity, which he defined as physiological needs. Meaning, we all need to breathe air, every human does. Every human needs water, food. Those are the base needs of survival. If they are not being addressed, our bodies will naturally revert to getting that.

Mike:
If we are starving to death, we will seek out food. If we can’t breathe, we will gasp for air. Once those needs are satisfied, then we elevate, according to Maslow to the next hierarchy next in the level which has safety needs. Safety needs are shelter over us, even financial protection, some kind of stability. We want to protect ourselves from harm and then we can continue up. He then talks about the concept of belongingness, meaning to be community, to experience care and love. Then he talks about steam in the highest levels called self-actualization, which is living life’s purpose. Well, this translates to business. Business has a hierarchy of needs too. I want to explain one challenge of why the hierarchy of needs for humanity works very efficiently and effectively and then where we stumble in the business hierarchy.

Mike:
We are all neurologically wired into ourselves. Our neural network internally is wired in so that our senses are collecting information, smell, touch, hearing, so forth, sight. All this stuff collects information and then gives us an instinctual feeling. If you ever walked down a dark alley, all of a sudden you start getting the spooks, like something’s going to happen to you. You should turn around and leave that dark alley very quickly. There’s a likelihood there’ll be harm in front of you. The reason this is likely true is because our senses are triggering off all these different things, giving us direction and saying, “Oops, there’s a safety level concern, exit, exit.” There’s an alarm going off there and we should take action on that.

Mike:
Now, with the business hierarchy of needs, we are not neurological wired into our business. Our business has five levels of needs, just like Maslow’s hierarchy. But since we’re not neurologically wired into our business, this is where our gut instinct starts to fail us. Many times people say, “Ah, well we’re struggling a little bit. My gut says we need more sales.” Well, that’s just a guess because we’re not neurologically wired in, the inputs aren’t there as the collection of data information, as the inputs that gives us clarity on that. Unfortunately most entrepreneurs skip the data and the analysis. The business hierarchy of needs I structured, so the analysis is very simple, but it’s factual based as opposed to just gut alone.

Mike:
Here’s the five levels of the business hierarchy of needs. The foundational level in the DNA of all business is we need sales, so what J experienced. Every business, if you have zero sales, you have nothing because sales is the creation of cash. It is the lifeblood of the business. No cash, no business. Sales is the fundamental level. Sales is a open term. It includes marketing, the generation prospects, the conversion of the clients, but it must result in inbound cashflow. Sales is the creation of cash. The next level of this hierarchy is profit. Profit is the creation of stability in an organization. If there is no profitability, the business is extremely unstable. A business can have millions and millions of dollars of sales and no profit, and it will tumble. It will destroy the business because it’s not able to retain cash.

Mike:
The next level up, which is equivalent to Maslow’s safety level, is profit. Profit is the shelter for an organization where sales is the equivalent for physiological needs. Sales is the oxygen for business. Interestingly, so many of the businesses I studied for this book and subsequently have met with now, are stuck at these first two levels because we’re not instinctually wired into our business. Many business owners are running a business. They don’t have any profit. They can’t pay their own salary. There’s no earnings being retained. There’s this overwhelming stress and the business owner says instinctually, “Ah, we need more sales out of this.” It’s absurd when you look at it from Maslow’s hierarchy, that’s someone saying, “We’ve no shelter. There’s this blizzard coming through. We have no clothing. We’re freezing to death. Instead of seeking shelter, we’re going to breathe more air in because we’re reverting to a base level need.”

Mike:
So, they pursue more sales and the sales does not protect the business. It actually puts more stress on it because we’re still exposed to the elements, so sales then profit. The next level up in the business hierarchy of needs is order. Order is equivalent to the belongingness stage in Maslow, but order is efficiency in organization. It’s where there’s no dependency on an individual, dependency on the community. The community is the employees, the clients, the vendors. There’s an equal responsibility spread out. In fact, the ultimate test is actually extracting the owner themselves from the operations of the business and the business should be able to sustain and grow in their absence. The owner is just a cog, not the controller.

Mike:
Then the next level up is impact. Impact is the creation of transformation. This is where a business realizes it is not about the transaction, it’s about the transformation is having on his clientele. Your product, how’s it changing people’s lives? Does it invoke a sense of a community for them? Do they go out there and say, “This company is saving lives or serving me in such an amazing way. It’s made my day, my week, my life.” Harley-Davidson is a classic case study in this. You can buy a motorcycle anywhere, but when you buy a Harley-Davidson, you’re part of the Harley-Davidson community. You may even throw a tattoo on yourself. You’re now a weekend warrior. The impact level is the creation of transformation, we’re no longer a transaction. The highest level’s legacy.

Mike:
This is the creation of permanence. This is where we design and create a business to live on into perpetuity in absence of the owner. This is the day that we realize the business was never about ownership in the first place, it’s about stewardship. That we were simply a component in bringing life to this business, but it’s not our business. The business is of greater service to the community and we start extracting ourselves out from even a ownership of the business and see it as a stewardship. That way the business can live into perpetuity in absence of the owner and it can continue to do great deeds and great service in absence of that control of the owner.

J:
Wow. Love that.

Carol:
That’s really powerful. I think so many of us, especially so many people in our audience who are small business owners because of what you mentioned earlier, we get into the office, you’ve got all these grand plans for the day, and then the inbox happens and the fire happens. We don’t really even have an opportunity, we don’t feel like to make it through those first two basic needs and to even get further beyond that throughout the day. So, to keep all of those needs at a hierarchal level in front of us is very inspiring. It also just helps us realize that if we do take steps to do what these most important things are, then we can’t achieve the more holistic picture, so that we are achieving stewardship, permanence, all of those things that are really kind of why we get into these businesses in the first place.

Carol:
Can you help us in actionably like you talk about in the book, this main theme of focusing on those most important tasks, and just not trying to do everything at once, all of those things. So, help people like J, help other people who are small business owners figure out what it is that is that single most important task.

Mike:
Yeah. [inaudible 00:22:34] is this thing called the survival trap and this is where we are in the moment and why it’s not working. Then the pathway to move forward to your point is this process. The survival trap is, if you had a piece of paper in front of you can draw the letter A and put a circle around it. That’s where you are in this moment, right in the center of the paper. The interesting thing is most businesses since it’s in fire extinguishing mode says, “Okay, I have a problem.” That’s where point A is. Any action I take that moves me away from point A, so you can go in any direction, hire a rainmaker salesperson because I have a sales issue. Run a discount, cut prices in half, double prices so you make more margin.

Mike:
Any action we take that takes that point A, gives us this immediate sense of relief, “Hey, I’m resolving that issue.” But then since there’s no clear direction on the impactful issue at hand in the business, it just moves us to a new point A. Most businesses are in this arbitrary pattern, a web like structure of client going in this crazy circle. Well, what we do with this business hierarchy of need is we put a beacon out there and say, “The most important issue the business has right now is say it’s an efficiency issue.” We need to remove bottlenecks in our process because we’re running slowly and go through this analysis. You’ll identify what it is, but say it’s that issue. Now, you’re putting a very clear point B on the map.

Mike:
Now, when you’re looking at point A or wherever the problems are today, we simply give ourselves pause and say, “This issue in tackling, is this moving me toward releasing the bottleneck we have.” If so, it’s a prioritized task. If it’s something else, it’s not the priority, so we can start now channeling ourselves in a consistent direction and moving forward. Most businesses don’t have that beacon to move to. Most business owners are in action, something happens, reaction mode. Action, reaction, action, reaction. What we need is action, consideration, reaction. The business hierarchy of needs sits right here in the middle. There’s an action that happens. We then consider where’s it sitting on this hierarchy and is it addressing our vital need, the most important impactful issue. If not, it’s something that can go back into the cannon way a little bit later. If so, we move forward with it. It gives a little bit of a pregnant and important pause between action and reaction.

J:
One of the things I love about this book is basically what you just said. There’s another book and actually I’m looking behind you, anybody that’s watching us on video can see behind you. On your bookshelf there’s a book called The Goal by a guy named Eliyahu Goldratt.

Mike:
So good.

J:
It’s funny because as soon as I started reading Fix This Next, that’s the book that came to mind. Then I think it was chapter two, you actually mentioned that book. Again, The Goal. This is one of my favorite books of all time. It’s a book that I recommend-

Mike:
Me too.

J:
… to everybody. One of the problems I have with this book is it’s somewhat academic. It’s more kind of a business school-ish. It’s less relatable to the masses. When I started reading Fix This Next, the first thing I thought was, “This is kind of The Goal, but rewritten for us, for the typical entrepreneur, not the business school entrepreneur, not the big company entrepreneur, not the guy that’s running in that book, a factory with 700 employees. This is kind of for the small business owner.” I love the fact that you took a topic that has been so near and dear to my heart forever and you made it relatable to everybody.

Mike:
Yeah, I too love The Goal. It’s based on the theory of constraints. It is an academic read because it’s theoretically based. It’s told in a parable though, so it was very digestible. That’s what I like about the book. What I do is I struggle to consume academic knowledge. Actually, The Goal was unique that I could actually understand that one, but there’s some books that are so heavy in theory. The content is so relevant and important, but I can’t consume it. How my mind works is how do I make this easier? I have to keep whittling it down until all of a sudden it clicks. That’s my challenge, but also my ability because I need to simplify it to make it super digestible, I take this knowledge from other extraordinary authors. Like [All Wrapping 00:26:25] one of the best of all time for the business space in my opinion. Taking that kind of knowledge and other people’s knowledge and then condensing it down to very actionable.

Mike:
I have, I’m not in my office, my other office, I have it right above my desk is the business hierarchy of needs. The tools I develop are not alone just to edify readers. It’s because I struggle with these things, even for my businesses. I make the tool, develop it and writing a book for me is a labor of love. It takes me about five years. I’m not an efficient writer. I don’t just write magically. I go through a lot of testing. That process, the business hierarchy of needs have been around for about five years, now about six where I test out my own business. I’m blessed to have a couple companies I can guinea pig it on. I bring in these readers in these crazy events I do to go through the process and I use them as case studies to make sure they work out. My consistent goal is make it simple. Now, don’t make it, I think it was Einstein who said, “Don’t make it simpler, but make it simple.” The effectiveness must remain, but the process must be simplified. That’s what I tried to achieve.

J:
Yeah. Make it as simple as possible, but no simpler.

Mike:
Yeah, that was it.

Carol:
Excellent. Mike, I would really love to bring a real life example to the table that I would love to apply this whole strategy to with the point A in the middle, in the beacon and getting into that specific space and realizing that all the other activities should maybe be on the back burner until that happens to make sure that I’m grasping this properly because I think it will help our audience relate it to their businesses as well. I recently started with an associate, a real estate staging company where we put-

Mike:
Oh, cool.

Carol:
… all the furniture into the houses to get them ready for sale.

Mike:
Yeah, I totally know it. That’s a great business, it amplifies-

Carol:
It’s very fun.

Mike:
It amplifies the value of homes. There’s no question about it.

Carol:
It absolutely does. It’s really fun. We were very fortunate to learn that there’s not a whole lot of competition where we are here in Sarasota, Florida. Great problem to have. Right?

Mike:
Yeah.

Carol:
So, right off the bat, we have our website almost done. We’ve got a strategy for our furniture. We have all kinds of people ready to target and so on and so forth. We start making phone calls right off the bat. “Yes, please. Yes, please. Yes, please. Yes, please.”

Mike:
Excellent.

Carol:
My business partner and I are like, “Oh minor detail. We have no furniture yet.” We haven’t made it that far. Right?

Mike:
Right.

Carol:
So, our thought process was, and again this is really good timing, so I want to see if this is the right thought process with your book. The thought process is the biggest need right now is to make sure that we have the inventory so that we can successfully execute all of these sales, but what needs to be sacrificed is making more sales calls right now, because I think in a new business the typical thing to do, be just get as much business as you can. Just keep going, keep going with that sales funnel. However we suspect we need to move to that beacon of being able to truly serve those customers in back-burner making more calls right now. Does that sound about right with the strategy that you’re describing?

Mike:
It sounds right and I want to give a couple insights or tweaks.

Carol:
Great.

Mike:
What you’re experiencing is called the double helix trap. The double helix trap is where there’s an amplification in sales in a small business, but the sales has certain peak that the people who are selling actually have to convert over to doing. Then we revert our attention to the deliverables and then the sales drop because we’re not selling, so now there’s a drop. Then when we’re delivering the services, and that’s starting to wane out because we’re delivering on our promises, now we got to start selling against, so we revert our attention there and it starts going up. It causes this wave pattern of doing versus sales, it causes a double helix. So, it’s a very common trap. Your instinctual response is right. You don’t have inventory. You need to provide.

Mike:
In the sales level of the business hierarchy of needs, there’s this thing called delivering on commitments. A sale is not complete when many traditional sales people think it is, the handshake, “We got a deal, made a sale.” Didn’t make a sale. The sales were incomplete when the agreement is fulfilled, which means the customer fills their obligation, which is usually a payment and the vendor, we provide our obligation, which is the delivery of the service experience. Only when that’s complete is the money actually legally transferred and the product’s done and the sale is done. This sounds like a delivery of commitment, meaning the prospect of saying, “Yeah, I’ll do it, let’s do it.” You need to now deliver in order for them to pay. The opportunity here may be not buying inventory though. The instinctual response is we need to pick your inventory, but the BHN says is, simply are able to deliver on commitments.

Mike:
Which opens us up to say, “Maybe we don’t need to buy inventory. Maybe there’s rental, maybe there’s a swap we can do or consignment. Maybe what we can do is when someone’s moving out of house and they need a storage facility for two months, we can rent that furniture and actually have it stored at a house that’s being displayed.” So, it changed our perspective. The fact is, I don’t know if you need inventory, you need stuff in those houses to make an exceptional display so that house’s value goes up. Just buying inventory may not be the only solution. You’re definitely on it. You were at a sales level right now, it’s very common for a starter business and we just want to start playing within that category of delivery beyond just buying inventory, would be the only major consideration.

Carol:
That makes it so absolutely relatable and really brings this whole situation to life with the things you’re describing in the book. Thank you for really clarifying that because I do think, like you said, this is something many new entrepreneurs, many new small business owners fall into, this double helix type of situation. By exploring other options and figuring out that process and repeating it, then they can be successful. So, thank you for clarifying.

Mike:
No, you’re very welcome. It’s a great topic. You know what I think is interesting too, in the book I talk about a guy named Jacob Limmer. He owns a coffee shop, actually multiple locations in South Dakota, been in business for 13 years. It was interesting his responses. We went through this experience. He saw the business hierarchy needs as an aspirational hierarchy that you want to climb to the top. The reality is, the business will cycle through all levels at all times for the entirety of the business. We don’t just climb to the top, we’ll experience that, but we will have to cycle back down because if we want to have higher degrees of legacy and higher degrees of impact, we actually need to amplify our sales at the base. The foundation always needs to be strong enough to support the level above it.

Mike:
Well, he’s going through this and he went through the analysis of the business hierarchy and it kept on pinpointing he has sales issue. Actually the most fundamental sales issue of all, which is called lifestyle congruent. Lifestyle congruence is, is the business designed to support the lifestyle you’ve anticipated and what’s the lifestyle requirements you have and how’s it linked? Any business owner can say, “We need to sell more, but don’t really consider the impact on themselves personally.” He said, “I didn’t want to ask that question. I’ve been in business for 13 years, I’m beyond this.” He kept on going through the analysis, they kept on pinpointing, we have a lifestyle congruence issue. After his third or fourth iteration, he says, “I give in. I got to go back to the foundation.” And he did and now his business is healthier than ever before.

Mike:
The lesson is this, building our business on the business hierarchy of needs is like building any kind of structure. It’s a five-level structure in this case. If we start focusing on building a massive third floor, but we don’t have a second or first or basement, the third floor is in thin air, it just collapses below it. We need to have a strong foundation. If the foundation is cracked, don’t keep building up. You got to have foundation. We have to re-stabilize it. Conversely, and this is a weird phenomenon scene too, some businesses only save the foundation, sell more, sell more, sell more, and they’re focused on this massive basement. They put a tool shed of profitability above it and it falls into the basement and gets crushed. It is all related and it has to be structurally sound throughout. You will cycle down, even if you’re in business for 13 years, 13 centuries, we will cycle through this.

J:
Yeah, that’s a really good point. I think a lot of us tend to think of businesses being very linear. We do one thing, then we do the next and we grow, we grow, regrow, and in your words, it’s very iterative. Just to use the example you gave. Yeah, you don’t build the second level until after you build the first level, but you don’t paint the first level until you’ve got the entire structure built. You’re going to work all the way up to the fifth level before you go and start painting and putting in flooring and cabinets. It’s an iterative process.

Mike:
And sure you’re not going to move in Carol’s furniture while you’re still trying to build above it.

J:
Exactly. It is a very iterative process. In the book you talk about this idea of the OMEN and it’s kind of once you pinpoint where you are, how you take action to kind of get to the resolution. Can you talk a little bit more about that because it’s such an important theme throughout the book?

Mike:
Yeah. There’s a lot of other books out there that are phenomenal on setting measurements. I think there’s one called Measure What Matters that talks about what’s called OKRs, which was great for large companies. What I needed to do is distill that knowledge and other stuff into what really works for setting goals for small business. Another method called smart, it’s good for personal goals, but really translate. The OMEN is [inaudible 00:35:14] testing is the most effective way to facilitate a result that we want. Once you pinpoint your need in the business hierarchy, the question is how do you resolve it? And we do through it OMEN, it’s an acronym. It stands for the four stages. First you set a clear objective. Carol is a good example.

Mike:
She has sales demeanor’s demand. We just now need to deliver, so we have a delivery issue. The first objective we set is we must deliver for the 10 homes that we are expected to supply furniture for, right? So, we set an objective. Then the M stands for measurements. How do you know you’re delivering or meeting or making progress toward that objective? It could be the procurement of inventory, it could be the consignment of inventory, it could be a swap plan of some sort with people that are in transition. There’s many ways to structure it, but we need to set the measurements of how do we know that we’re moving toward the objective of supplying furniture for these 10 houses, how do we know we are making progress. That’s the measurement stage. You want to keep the measurements as simple as possible, two or three measurements.

Mike:
Do we have couches in our warehouse? That’s one option or do we have commitments from other people to provide these couches on a consignment basis or whatever the measurements are? What are the most impactful measurements that prove we’re moving toward or not the objective? Next is E. E is the evaluation frequency and what we need to do is set up on a periodic basis to measure our progress. It’s the milestones and do we want to check every day? Are we making progress towards this? In Carol’s case, that may be too frequently. You have say, “Do we get a couch, do we get a couch, do we get a couch, do we get a couch,” every day. May be every three or four weeks we want to see our progress there. There may be this massive demand right now. We got check this on an hourly basis. We got to move, move, move.

Mike:
You set the evaluation frequency to make sure you’re making progress. You don’t want to set so frequently that it becomes a nuisance where there’s no metro progress. Theoretically you could check every 10 seconds if you have a couch and that would be an overwhelm and distracting. You could check once a month and all these clients may go away. We have to figure out the frequency. The N stands for nurture. Nurture is a very critical component of goal setting that is what in my research often ignored. Nurture simply means to allow yourself the flexibility to adjust the objectives, to adjust the measurements and come up with new strategies when we’re failing to make progress in the way we anticipated. Many people will set a goal from a business, “I want to do a million dollars this year.”

Mike:
When they’re not achieving, they’re like, “Well, I guess I’m not going to hit my goal.” Then it becomes acceptable not to hit the goal. Other people say, “You got to hit that goal at all costs.” And they start doing things that are actually contrary to serving the business. They start selling the stuff that’s outside the scope of what they do, just to hit the goal. Well, neither of those are a good approach. Nurturing is allowing ourselves an objective view of our progress and then give yourselves a flexibility to make adjustments. We usually do this by involving other team members, not just ourself because we can be full of our bias. We have other people in our organization, a partner, other people that can give outside perspectives. We bring in an outside coach or something to help us nurture along the process. The OMEN method I found to be the most efficient way toward achieving the goals we set for our organizations and resolving these vital needs we have in our business.

J:
I love that. So, to summarize the book, not that you can summarize a book in four points, but to summarize the book, the whole idea behind solving your roadblock, getting past the next roadblock is first discovering what that roadblock is, pinpointing the specific issue, fixing the issue, and then repeating. That’s the four-step process that you talk about in the book. Discover, pinpoint, fix, repeat.

Mike:
That’s exactly it. Yeah, it’s truly that simple. Sadly, most entrepreneurs miss even the first step, we only go into the finding. We just go into whatever is presenting itself. We tackle it. Step one, we already are off the tracks. This is a simple way to get back on the tracks and move through the impactful thing.

J:
I love this, and here’s the thing that I really like about this book is, it’s your sixth book, but in a lot of ways it should have been your first.

Mike:
First, exactly. That’s funny.

J:
Now, let’s talk about the Maslow’s hierarchy of needs. You talked about sales first. You had a book or you have a book called the Pumpkin Plan that talks all about sales. It’s kind of like, if you want to drill down on that hierarchy of need for your business, there’s an entire book that you’ve written about that. Then you have profit. Second, you have a book called Profit First, which drills down on that in gory detail. You have a book called Clockwork, which kind of deals with that third thing in the hierarchy of needs order. It’s kind of funny that you’ve written these books in the past and it’s like in your brain, you knew here are the key components, but it took you to your sixth book to kind of lay out, here’s the table of contents to your business.

Mike:
Right. Isn’t that funny? The books that I’ve been writing up to this point has always been, what does my reader need next? What’s the next challenge that they’re facing? We always have all been going through the hierarchy of needs. It’s always existed. It’s not like it’s really been invented. I just simply enunciated wherever it existed. We were already going through this and I was trying to address it and then this has become what we call the hub book. My publisher same to you said, “Why didn’t you write this book first?” I said, “Well because I didn’t know I needed to write this.” Has become the hub book and now I’m already working on two future books. They are plugging into the hierarchy and you’ll see every book I write by default has to fit into this hierarchy.

J:
Awesome.

Carol:
That’s perfect.

J:
Can you give us any examples of people that have used, I know you have tons of case studies in the book just to kind of, and we thank you for your help with Carol and we’ll be expecting your invoice in the mail for helping her, but can you talk about the-

Mike:
Who are you really?

J:
Can you talk about any other case studies either from the book or from real life of businesses that have gone through this process, this fix this next process?

Mike:
Yeah, so there’s quite a few. In the book I talk about a guy named [Tursh Beset 00:41:13], owns a clinical icebound in Savannah. They’re a HVAC company. Fascinating case study with him because he was working on impact. They want to be social contributors to their community. They wanted to be of service. They were actively contributing to the community. Performing or focusing on a very high level, but they had a need back at the sales level. Classic example, not-for-profits do this all the time, by the way, where we have to be contributors to our society. We got to do great things and they only focus on the donations, the things that keep, which is sales which keep them afloat. They want to do great things, but they’ve crippled themselves by not being able to give them some stuff that empowers that.

Mike:
Well, that’s actually what Tursh and his team were experiencing. They’re focusing on giving to the community, but they weren’t focusing on sales. He went through the BHN, business hierarchy of needs, pinpointed we have an avatar issue, meaning we don’t know who our ideal client is. They clarified that and then they made the courageous decision of catering to the avatar and differing out when opportunity to come in that were non-avatar clientele. The business started to grow. Sales on a volume basis went up, but also profitability started to really enhance itself. They went back to the foundation, short it up, they got profit in place. Now, he’s focusing on efficiency, order delivery with the aspiration to get back to the impact level, to go back and serve the community.

Mike:
Which we didn’t talk about yet, but the five levels are broken into two stages. Stage one is what I call the get stage. Stage two is the give stage. The get stage is sales, profit, order. Our business needs to get more sales, get more profit, get more efficiency within the organization. That’s the get stage. And only once we get that, can we give impact and legacy? Can we be contributors? There’s a famous saying, “You got to give to get.” The business hierarchy of needs actually showed that’s wrong. It’s, you have to get to give. You can’t give until you get. He’s a great example. There’s another case, Cindy Thomason, bookkeeper, all about organizational efficiency. The question that we pinpointed really was, how do we get employees to act like owners?

Mike:
I’m actually maybe dedicating a book to this. I’m doing extensive research on this solution, but effectively it’s alignment of intentions. Here in short, what we’re doing with Cindy’s organization is most businesses say, “Here’s the corporate goal.” The employer’s like, “Okay, whatever.” There’s no visceral commitment to it because the organizational goal is really the goal of the owner. So, the visceral commitment from the owner, “This is what I want. I want the million dollar business. I want the new house, the new car.” The employee’s like, “I want a job.” When we understand individual intentions of employees, “I want to buy a house for myself one day. I want to learn Spanish.” Or all these different things. That was actually in our own business when we ran this analysis, we found out that three of our employees want to learn Spanish. We had no idea.

Mike:
Someone wants to buy a house, another person wants actually to spend more time with their elderly parents. Once you understand everyone’s intentions, then what we do is we align the path to the corporate goal, the owner’s goal with serving the intentions of all the employees. Now, everyone’s goal is being satisfied and ownership amplifies because it’s all about us as individuals. That was identified in Cindy’s business in the hierarchy of needs at the order level. Those are a couple more examples.

J:
Love that.

Carol:
Mike, this has all been so great. I love all these processes that you were laying out for our listeners, so they can really apply it in real life to their business. It gives everybody some really actionable items and tips to think about is they approach the right way to move forward. So, thank you. Now, typically, as you know we wrap up this episode with our four more, which is four questions, but you did that like way back when, when we had you as an amazing guest the first time.

Mike:
Right, on episode 30.

Carol:
There you go. Let’s just skip right to the more. Mike, will you please let our listeners know where they can find out more about you, where they can get your book and how they can connect.

Mike:
Yeah, I’ll give one site to go to that I think will help specifically with the fix this next process. It’s fixthisnext.com. The reason I think it will be so helpful is on that site we’ve developed an online evaluation where you can actually analyze your business five minutes or less and pinpoint where you are. You don’t even need the book. Now, the book is great education around how to leverage a system. There’s a lot of knowledge there, but if you want the instant five-minute result, where’s my vital need today right now, you can go to fixthisnext.com. It’s a free evaluation and you can do it repeatedly too. Every time you resolve an issue, you can go back to fixthisnexttime.com, reevaluate your business, identify your next vital need and move forward again.

J:
Awesome. We’ll make sure that is in our show notes.

Mike:
Of course, thank you.

J:
Mike, one more quick plug for the book. So, Fix This Next is now available, I assume anywhere that books are sold and is a great accompaniment to your awesome other books; The Toilet Paper Entrepreneur, the Pumpkin Plan, a Clockwork, Profit First. Am I missing any? There’s one more, Surge.

Mike:
Surge, yeah. Thank you. Yeah. Fix This Next is available everywhere. Amazon, you like them or hate them, they usually have the best price. Check it out. If you’re watching this on April 28th, today is the day is coming out. But if you’re watching it after it’s out it’s available. It is, I think is the most important work I’ve ever done. I hope it’s of great service to people, but you can pick it up at Amazon. Barnes & Noble too or your local bookstore, but I encourage Amazon.

J:
Awesome. Thank you so much. You mentioned you’re working-

Mike:
Thank you.

J:
… on two others, so that gives me an opening to invite you back at least two more times.

Mike:
I’m in. I’m in 2021. I’ll be working aggressively on those to come out.

Carol:
Wonderful.

J:
Awesome. Congratulations on the release and we look forward to talk to you soon.

Carol:
Thanks. Bye.

Mike:
Thanks, J. Thanks, Carol.

J:
Thanks. Bye. Okay. I know we recorded that interview about six weeks ago, but the crazy thing is, that is more relevant, at least in our businesses and I imagine in many of our listeners businesses. That interview is probably more relevant today than it was even at the time we’ve recorded it. I know we’re all facing new challenges. We’re all facing new issues. A lot of businesses these days are figuring out how to reinvent themselves, rebrand themselves, to just survive in this whole new world. I highly recommend anybody out there go pick up this book. I hope you enjoyed this interview because I got so much out of it and I’m so glad we did it. I don’t know how. What’d you think, Carol?

Carol:
That’s amazing. Mike is just so solid. He has so much great knowledge and he’s just so real and he’s experienced it all. Of course love everything about him, love his books and I really hope you listeners go get his book and I hope that you can implement some of his great ideas into your business.

J:
Absolutely. Everybody, please stay safe. Stay healthy. Hope you’re staying sane as well. Have a wonderful week. Thank you again for an amazing first year and we look forward to seeing you and talking to you again next week.

Carol:
You know what, time to wrap it up, baby.

J:
It is time to-

Carol:
Can’t believe it’s been a whole year.

J:
Crazy.

Carol:
So cool.

J:
Everybody, I’m Carol. She’s J. Wait a second.

Carol:
Now go. What did you say? What did you just say?

J:
I don’t think I am Carol. I think you’re Carol. I’m going to actually have to start. This really shouldn’t be the hardest part of the show. Let me try-

Carol:
All right, come on.

J:
Let me try that again. She’s Carol. You’re Carol. I’m pointing to you. You’re Carol.

Carol:
Uh-huh (affirmative).

J:
I, I believe I’m J.

Carol:
Nice work. Now, go fix the biggest issue in your business today. Ha, we did it. Everybody, have a great day. Stay strong, stay tough, and just survive. Get through, thrive and survive and have a great day.

J:
Thanks, everybody.

Carol:
Thanks for listening. Bye.

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In This Episode We Cover:

  • The biggest challenge entrepreneurs have
  • Maslow’s Hierarchy of Needs for business
  • What Survival Trap is
  • OMEN (Objective, Measurement, Evaluation Frequency and Nurture)
  • Why sale is not complete until delivery of the service.
  • Actual Case Studies
  • Two stages of Business: Get Stage and Give Stage
  • How to make employees act like owners
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Tweetable Topics:

  • “Thinking about ‘what book should I read?’ The most important question is ‘what’s your greatest challenge?'” (Tweet This!)
  • “Profit is the creation of stability in an organization.” (Tweet This!)
  • “Sales is the oxygen for business.” (Tweet This!)
  • “It’s not about the transaction. It’s the transformation, it’s having the clientele.” (Tweet This!)
  • “Impact is the creation of transformation.” (Tweet This!)

Connect with Mike

Business expert and author Michael Michalowicz knows firsthand what it’s like to struggle with too much to do and not enough time to do it. On this episode, he teaches how we can evaluate and prioritize the issues in our business—and also how to FIX THEM!