Growing Your Business? You’ll Want to “Fix This Next” with Mike Michalowicz

Jake Randall


Jake Randall: Well, welcome everybody to another episode of the Profit Junkie Podcast, where we talk about increasing your sales and making sure you keep as much of your hard earned money in your bank account. Today I’m so excited to have our guest on today, he’s somebody who’s personally influenced my life. His name is Mike Michalowicz. You may know him as the author of Profit First, Clockwork, Surge, The Pumpkin Plan, and he’s coming out with a new book, or he just came out with a new book called Fix This Next.

Mike has been very successful. By his 35th birthday he had founded and sold two companies, one to private equity, another to Fortune 500. He’s now got another multi-million dollar venture, Profit First Professionals. He’s just done a ton of writing. He’s written for the Wall Street Journal, MSNBC and a lot of other places. Man, Mike, thank you for joining the program.

Mike Michalowicz: Oh, it’s great to be here. Thanks for having me, brother.

Jake Randall: Yeah, so I am just a huge fan. I remember it was about, oh, probably a year ago, somebody recommended it to me multiple times and I hadn’t quite got around to it. And they said, “Look, you really got to listen to this Prophet First audio book.” And I’m a big proponent of saving money and making sure there’s a lot of profit, but when I read your book, your system totally opened my mind. And I can tell you, I implemented it probably like 90%, I’m not quite all the way to 100% of implementation yet, but man, it has been such a blessing in my life and there’s been so much more profit available in my businesses.

Mike Michalowicz: I love hearing that. I love hearing that. As we go through this COVID situation, the pandemic and the economic decline, we have to be profitable. If someone asked me, he’s like, “Do you think the small business is the backbone of the economy?” And I thought about and I’m like, “No, I think small business is the economy.” I mean, we need to be profitable. So I’m thrilled you’re doing that. Congratulations.

Jake Randall: Yeah, I loved it, man. It’s a big deal and it was eye opening. So even if you’re super profitable and you haven’t read that book, you need to go read that book. The mindset was fantastic. But you just released another book Fix This Next. Tell me a little bit about the evolution of this book and what you’re going for on that, what you’re teaching.

Mike Michalowicz: Absolutely. So I’m blessed now to have a readership that I can reach out to and just ask what’s the challenges you’re facing? They’re small owners. And it takes me about five years to fully develop a book through research and all this stuff. So five years ago, before I released Fix This Next, I emailed out to my listeners and said, “What’s the biggest challenge you’re facing this year?” And admittedly, I’m not the most technically savvy guy, I triple clicked something, the same email went out multiple times. Well, some people, the same person would email me back with the biggest challenge for their year with different answers on the same day. In the morning a guys, like, “I got a sales issue, we got our fix our sales.” And then the afternoon was like, “We have a system’s problem. We need more systems.” In the evening it was recruiting and talent. I was like, “Oh my gosh.” It became very clear through that and other responses that the biggest challenge business owners face is knowing what their biggest challenge is.

So Fix This Next is a tool I developed to pinpoint what needs our full attention now. I mean the definition of the word most, is at any given time, only one thing can be the most important thing in our business. Yet many entrepreneurs, we go into our business with a plan for the day, but there are days more dictated by the email that comes in and the stream of questions outside our door. And we’re putting out fires. So how do we determine what’s the one thing that needs to be fixed next, address it, and then find the next to fix and the next? And that’s why I wrote the book.

Jake Randall: So can you give us a little bit of an example of maybe something from the book or an example of somebody helping somebody or one of those things that maybe people-

Mike Michalowicz: Of course. I’ll give you the system first and then we can do … So what I’ve found is that in business, there is a common DNA, if you will, for all businesses, basically if you peel back the skin of business, they’re all the same. Same with humanity, right? From the outside if you and I are standing next to each other, people could distinguish us based on our height, our skin color, gender, there’s all these different things we can look at from the outside. But when you peel back the skin of humanity, the essence of our biological makeup is the same. Our hearts in the same spot. If I was having a heart attack and I went into the hospital, the doctor, she wouldn’t say, “Hey, Mike, your heart, is it in your foot?” It’s always in the same spot.

Well I found when you peel back the skin of business, there’s an identical structure. There’s five levels of needs. I call it the business hierarchy of needs. And this is a translation from what’s called Maslow’s hierarchy of needs that is the human structure. But in the business hierarchy of needs, foundationally every business first and foremost must have sales. Sales is the breathing in of oxygen, no oxygen your business is suffocating. Now the interesting thing is at a certain point more sales doesn’t help you you can start hyperventilating. Just like if I’m trying to get cardiovascularly fit or to get stronger in the weight room, simply breathing more won’t make those muscles get stronger, I’ll start hyperventilating. So we need sales, it’s necessary, but it’s not sufficient alone.

The next level above that is profit. Profit is the absorption of that oxygen into the blood stream of the business if you will. It brings about stability for an organization. Warren buffet said “When the tide goes out, you see who’s swimming naked.” As we go through this experience, you see the businesses that did not focus on profit. Some are just focused on sales and sadly, they’re wiped off this planet now as businesses because they weren’t prepared for the trials and tribulations that always happen.

So profit brings about stability. Once that’s achieved the next level of significant need is order, organizational efficiency, where the business does not have dependency in a small business on the owner themselves. Once that is satisfied, the next level of needs is impact, it’s a creation of transformation. It’s where we’re not in the business of transactions with our clients, we’re in the business of transforming people’s lives.

And the highest level is legacy. Legacy is the creation of permanence where a business exists to continue. It’s where business owners realize they were really never business owners in the first place, they’ve always been business stewards, their responsibility is to bring a company about, but their involvement is secondary to the company’s existence.

So these are the five levels. And what we do, is we simply ask ourselves, starting at the base, do we have adequate sales to support the level above it? It’s like building a structure. Is the basement big enough for the first floor? Is the first floor strong enough for the second? You don’t start with legacy, the fifth floor in thin air, because it’ll collapse in the ground. And you don’t build a foundation the size to support a skyscraper and you put a little tool shed above it because it will fall within it. It has to work relationally.

And so that’s the system. To your point, I had all these businesses go through it. And one example I thought was interesting, before the COVID crisis was a coffee shop, I include them in the book called Cottonwood Coffee. They’re in South Dakota, two shops. They also have a roastery facility where they prepare their coffees. They’ve been in business for 13 years and the owner, Jacob Limmer, he said to me, he goes, “I’m at the legacy level, I’ve been around long enough, I got to build a business that can exist without me. That’s where I’m focused.” Well he went through the sequence is hierarchy and they’re simple questions in the book. And it said, “No, you actually have a sales problem. Not only do you have a sales problem, you have the most fundamental sales problem that exists, the most basic level, which is called lifestyle congruence.”

Meaning what is your lifestyle as a business owner and what sales do you need that supports that lifestyle? What’s the congruency between the two? And he’s like, “I never thought about it.” Well, he said, “I’ve been in business for 13 years. I’m beyond this.” So he was emotionally rejecting it. He went through this process of examining his business again, it takes about five minutes. And he did it again and it said, “No, you’ve got a lifestyle recurrence issue.” And he denied it. And the third try, “It keeps pointing to, I’ll just do this stupid exercise.” It took him about 20 minutes and he was hit with this overwhelming clarity. His business, he was aspiring arbitrary sales goals. At first, when we started out it was like the first $250,000 in revenue, that’s a successful business. When he got there, he’s like, “That doesn’t support squat, maybe it’s 500,000. That’s not working. Maybe it’s a million. When I hit a cool mill, I’ll be successful.”

Well, he realized that those numbers were purely arbitrary. When he determined what he needed for his lifestyle he was unable to determine what the sales needs to be. And also the product mix that supported it. He actually didn’t need a million dollar business. He only needed about half of that, but a very profitable half of that. So he realigned his shop as opposed to grow at all costs, now it became grow the right way to support his lifestyle, to give him comfort. Once he achieved that and he had comfort he’s like, “Now I have confidence that my income personally at home is being taken care of. Now I can focus on the growth of the business.”

Ever since his Fix This Next analysis, his business has grown faster and healthier than ever before. Through a COVID crisis, they had to close their locations, but they’ve exploded in growth because he realized what he needed and he started focusing on the stuff that actually sold to it. And with the COVID crisis, he realized it was delivery of coffee, cold brew coffee specifically, where it was the real growth for him. So now they’re distributing cold brew coffee as a result.

Jake Randall: I love that. That’s awesome. And so the other thing that it kind of reminds me of, I remember when you said in Profit First about letting your business find the right size of your business. And I think I fell into that where I was trying to like “Sales, sales, sales.”

Mike Michalowicz: Me too.

Jake Randall: Trying to grow the thing, so it was just this … I thought that I’m a SAS company. One of my companies is a SAS company. And so I thought, well, SAS companies are based on revenue, so let’s just go for it. And man, after going through some of your frameworks there, I mean, it made me feel like, “Man, maybe sales isn’t the thing I should be mostly focused on right now. Maybe I’m a little bit…” As you’re talking, I’m thinking maybe, without having gone through the assessment, I’m kind of feeling like maybe I’m at the organizational.

Mike Michalowicz: Yeah. That actually you may be, it’s a very common thing. Many businesses have sales. And the simple question we can ask ourselves, I call it the, is it adequate? Are sales adequate to support profit? What that does is forces us to consider what is profitable and what’s not. Then we ask ourselves about profit, is profit adequate to support order the organizational component? And in some small businesses that have been around a while and are sustainable, realize they do in fact have an order issue. The ultimate acid test for this is can we extract the owner from the business for an extended period? Usually four weeks, if I can take a business owner of a business for four consecutive weeks without any physical connection, without any digital connection, they’re totally removed and the business can sustain or grow, they’ve likely achieved the order level.

Another example. I travel, I did travel a lot for speaking. It’s kind of slowed down now, but it’ll probably pick up again. And during my travel times, I would admittedly stop by McDonald’s pretty often, it’s very convenient. But I started this routine when I would order my hamburger or whatever, I’d ask the cashier to speak with the owner. “I’d like to speak with the owner. Not because I had a problem.” I said, “I just want to learn about your store here.” I’m so fascinated about the efficiencies of different businesses. Not in one instance, and I did this over 50 times. Not in one instance, was the owner ever there. Every time I asked the cashier, “Hey, can I talk to the owner?” They’re like, “Oh, the owner’s not here.” I’m like, “What about that glorified closet over there, the manager’s office?” They’re like, “That’s the store manager. That’s not the owner.”

One instance I asked the cashier, I said, “May speak to the owner?” And she looks at me and goes, “I don’t think I’ve ever met the owner.” And she goes, “Oh, I did. The owner came in two months ago to pick up the money.”

And I was like, Aha, that’s the definition of ownership. That we own the business, the business doesn’t own us. That’s when we really achieve that order level.

Jake Randall: So in the book so once you find out where you’re going, do you have a framework for helping people figure out what’s the next piece of that?

Mike Michalowicz: Exactly. So step one is to identify in this framework, the business target needs starting at the foundation like Maslow’s. Do we have the base level of sales? Are we oxygenating our business or not? If we are, we keep going up. And then we identify the level we’re at and say, “Okay, this is where it’s not being satisfied in order.” With an order, at every level, there’s five what’s called core needs in this common DNA. So you may have, what’s called a role alignment issue, or you may have a talent assignment issue. There’s these different issues at each level.

Then once we pinpoint on what needs to be fixed, then of course the question is, how do we fix it? Well, I gave a framework for it because there’s countless ways to fix something. So I can’t give the whole guide on fixing everything that would be volumes and volumes of literature. But what I did give is the framework. I call it the OMEN. It’s an acronym. And whenever we identify something to be fixed, we can use the OMEN to see it through. It stands for four components, O stands for objective. What do we need to be fixed? So say I have a sales issue and it’s converting prospects into clients. So the objective is, we need more clients, very simple.

Then the M stands for measurement. Now we say, “What are the numbers we need to assign to know that we’re achieving this goal?” We’re not, this objective. So I need to convert three clients every week or something. I need them to be $5,000 a client. That’s that specificity. Now most business owners know this, it’s obvious, but most of the business owners also leave it at this point. They set it and forget it. They say, “We need more clients. We need 15,000 a week. Let’s go for it.” And then six months later, or year later, whenever it hits them like, “Oh, how did we do on that goal?” And then they didn’t do the goal at all. So we need the other two components ensure that we do it.

E stands for evaluation. It’s the frequency that we check in on our progress. So maybe every week we need to check in how we’re doing. And this is a calendared event. We need to put this in our calendar and say, “Check in on our goals, our measurements, and see how we’re progressing.” And I call it the Goldilocks process. You want to find the right frequency, checking in once a year is probably too infrequent for that conversion. Checking in every second would be absurd. But if you think about it, the business you’re in every second, see how you’re converting clients may be relevant if you’re Amazon, that’s how quickly they convert. If you’re Boeing checking in every week is way too often because they do one or two major contracts a year. So maybe checking in every six months is probably a better number. So you’ve got to find your own sweet spot for your business.

Then we go to the last component, which is N stands for nurture. And nurture is giving ourselves the flexibility, it’s actually even more than that. It’s a challenge to challenge ourselves. So I try to assemble little task teams, the person closest to the problem, maybe the leader of the business, maybe another person to observe our progress, but also challenge, did we set the right settings in the first place? Because when we set the objective and the measurements and the evaluation frequency, it’s based on the knowledge we have at that moment. But as things progress we may realize, “Oh, we don’t have a conversion issue. We have a prospecting issue. We just don’t have enough people coming into the queue in the first place.”

So we need to be give ourselves the right flexibility as new knowledge presents itself to set new goals. It’s ironic, but most businesses set it and forget it and then they abandon. And that’s a mistake. We want to set it, focus on it and improve it as we move along using OMEN.

Jake Randall: I love that. I love that. Yeah. I definitely, as you’re talking about that, I’m thinking about situations where I’ve done just that and got about halfway through that OMEN process and then didn’t set up the other stuff.

Mike Michalowicz: And me too. And me too. Every book I write, literally, it’s partly because I’ve experienced that struggle in part or full, and I need it for myself. So I’ve been there.

Jake Randall: That’s what I love about your writing is you’re not just like a philosopher, you’re actually problem solving for yourself and for clients. And you’re in this moment of where you’re just … But you take the scientific method into that process to figure out how can I systematize this?

Mike Michalowicz: Yeah. Thank you for recognizing that. Yeah. It’s funny, so someone asks me, why did I start writing books? And it’s like, because I needed these ideas. I mean, there’s phenomenal books out there. I just needed to just write down ideas for myself. And then once I wrote an idea to like Profit First and Fix This Next, I was like, “Oh, I can share this with other people because maybe others want it.” And it became very clear that the problems I face are not unique to me. They’re pretty common for many folks.

Jake Randall: Yeah. That’s awesome. So where’s the best place, on this show we talk a lot about marketing and we get into some of the crazy tactics about where you want to send traffic to. So for you personally if somebody wanted to buy any of your books, where’s the best place to go, do you want to send them to your website? Is that the best place?

Mike Michalowicz: Yeah. For Fix This Next I would and the websites Fix This Next. So And I think what we have unique there is you get the books, there’s literature on the book, but there is a big call to action button. A big red button that says, “Take the free evaluation.” It’s free. There’s no download or any of that stuff. It will walk you through about 25 questions. It’ll take five minutes or less. They’re all, yes, no questions, but what it does, it pinpoints what your business needs from you right now, it will pinpoint that next thing that needs to be fixed. So if someone’s interested, you can go there and within five minutes you can start working on the most vital need of your business. That’s

Jake Randall: Fixthisnext. it’s a little bit easier than spelling your last name, right?

Mike Michalowicz: Right. Listen my last name is so hard. So I have a website No one can spell it. So it’s like, “Oh my God.” So my nickname in high school was Mike Motorbike. Now the great irony is I had never driven a motorcycle. I had no plans to, I just never have, but because it rhymed, that was the G rated nickname. I had other nicknames too. So I bought the domain Mike Motorbikes. So people can go to and it actually goes to my site.

Jake Randall: I’d love to buy your book. Now so Fix This Next, how much did that cost you to buy that domain?

Mike Michalowicz: Oh my God, it’s unbelievable, it was like $11 a year from GoDaddy. Sometimes I’m surprised at domains that aren’t taken. And then conversely, I’m surprised by the ones that are taken, so there you go.

Jake Randall: Yeah, that’s great. That’s great. Yeah I remember finding a domain sometimes can be a pain in the butt, but that’s awesome. When you strike gold and you find one that’s just cheap that’s-

Mike Michalowicz: Oh yeah.

Jake Randall: I would have expected that to be like $10,000.

Mike Michalowicz: Yeah. Right, right. Well, you know the funny thing about GoDaddy, so I buy the domain for whatever, the 11 bucks for the first year. And then I’m sure it jacks up to like $100 or whatever every other year, but the second I bought it, it comes up and says, “Hey, do you want to sell this domain for, the estimated value is $10,000.” I’m like, that’s such a scam. Like “Really, really? It’s worth $10,000 all of a sudden?”

Jake Randall: So strategically, did you come up with the name of the book and buy the domain before you solidified the name of the book or was that just?

Mike Michalowicz: Actually that’s correct. So I’m working on three new books right now. I’ve already secured all the domains for them. Now the book names still may change because that’s not the only parameter, but it definitely helps to have your domain as a dot-com.

Jake Randall: Yeah. Yeah. Most people I don’t think, think through that part and they don’t get the domain.

Mike Michalowicz: Yeah. It’s valuable. It’s like an 800 phone number of olden days. It’s significant. It’s really significant. Yeah. And highly searchable. So when people type in: “fix this next” I own the Google first page, like every hit you get is a reference to the book or the domain, because I actively thought about the SEO component before I got the book title.

Jake Randall: Fascinating. I love it. Well, Mike, so I want to make sure we get that. So go to:, take the assessment, figure out where you’re at and then buy the book and do it. And then also just my personal tips, I’m going to go buy mine and take my assessment right after this podcast interview. But then I highly recommend all of Mike’s books. They’re very practical. A lot of times you get a lot of philosophical business books or things like that. But these are very practical books that personally for me, my profit margins have never been bigger because I started doing it.

Mike Michalowicz: I love it. I love it.

Jake Randall: So I definitely recommend you do that. One last question for you, Mike, what is the best business advice that you’ve ever received?

Mike Michalowicz: Probably, it’s become my go-to, but I think this is the best advice I ever got. My business coach, I’ve always worked with a business coach, Frank is retired, but he came to me right when I start my first business. And he says, “Mike, listen to while it’s not words.” And what I used to do is ask my customers or prospects, “Do you want something?” And they’d say, “Yeah, that sounds great.” And I’d bring it to market and then they wouldn’t buy it. And I’d be screwed. What Frank was explaining is that people will say things, not because they’re lying to you it’s socially appropriate to say, “That’s a great idea.” To support the other guy. “You got this,” but that’s not an affirmation they really want it. The only affirmation is are they willing to depart with money? Because that’s a commitment.

So from that point forward, and took me a while, but when I’d really absorbed that lesson, now, if I have an idea, I asked for a deposit on the spot. So if I have a new idea, I’ll say, “Hey, here’s the concept. And if you’re interested, I’m taking deposits today.” And if I don’t get deposits, that’s the best input I can get that that’s a bad idea. If I do get deposits, I got something that’s tangible.

Jake Randall: I love it. That’s great. Well, everybody go check out, And then also if you already happen to be on our list, then we are going to schedule a presentation with Mike. And you’ll hear about that through our email list. And Mike, thanks so much for making the time today, man.

Mike Michalowicz: Thank you so much for having me. I appreciate you.

Jake Randall: Thanks everybody. And we will see you next week on another episode of the Profit Junkie Podcast.

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