Mike Michalowicz's Blog, page 43

Building Your Legacy – Yes, Even Now

When it comes to your business, what does creating a legacy mean to you?

When I was interviewing business leaders and owners for Fix This Next, I made a profound discovery. The ones who had already achieved the first four levels in The Business Hierarchy of Needs and were in the Legacy level, said they are not business owners.

Huh? I needed clarity. How do you leave a legacy for your business and not own it? You know what they told me? They are business stewards. They never really “owned” their businesses. Their job was to raise their business to be independent of them. Eureka! What a profound realization.

As a steward of your business, it is your responsibility to bring life to the business. More importantly, it is about that business continuing into perpetuity without you! To create a legacy, you must create permanence in your business. And, it must be designed to run on its own.

Boom. When that mindset shift occurs, a business is positioned for legacy. It will live on and continue to impact the world – permanently.

You see, legacy is not about money, power, or how much fame you have. Wait what? As a young entrepreneur, that’s sure what I thought it was about. Ends up, legacy for your business is all about it continuing to have an impact on your community, your customers, culture, and the world. And without your active participation.

Apple runs without Steve Jobs. Mary Kay runs without Mary Kay. Countless companies are living long after the involvement of the business owners ended. And that is exactly what the founders wanted.

We’ve been looking at The Business Hierarchy of Needs, and Legacy is way up at the top. To achieve the Legacy level the owner must care more about the corporate legacy vs his personal legacy. This should be the objective of your business.

In the current environment, your ideas about your legacy may have been changing. But be sure you always have an idea of what you want your legacy to look like.

So what is the recipe to leave your legacy (and your ego at the door?) Let’s get into the 5 Vital Needs of The Legacy Level:

Community Continuance

Do your clients support your business? Do they support it in a way that is authentic to your intentions?
Intentional Leadership Turn

Is there a plan for leadership to transition and stay fresh? Do you have a plan for people to take over leadership of your business when you are ready to move on?
Heart-Based Promoters

Is the organization promoted by individuals inside and outside of it, without the need for direction? Do they see the greater mission and become curators themselves?
Quarterly Dynamics

Does your business have a clear vision for the future? Does it dynamically adjust quarterly to make that vision a reality?
Ongoing Adaptation

Is your business designed to constantly adapt and improve? Does it find ways to get better and beat itself?

This is just a summary of the 5 Vital Needs of the Legacy level, but you can see why, right? Review these 5 Vital Needs within your business and assess where you are in leaving your own, or your company’s, rather, legacy.

Remember – Legacy isn’t about going public, or making billions of dollars. Legacy is about making your mark on the world. The way you intended.

-Mike

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Make an Impact

Why did you decide to start your own company?

When I ask business owners and entrepreneurs this question, it is most often answered, “I wanted to make a positive impact in the world.”

The same is true for me. Yes sure, I wanted to be my own boss, do work that brings me joy, create my own systems, have financial freedom…but the end game is that I wanted to make things better through my business. I wanted (and still want) to eradicate entrepreneurial poverty. To make the world a better place for me, my family, and my community.

I know – with the current state of things you may be feeling as though your dreams are a lofty goal, and need to take a back seat. Your business has a crisis to survive, after all. But you can accomplish both survival (heck, thriving) and impact – even during a pandemic.

You are closer to your dreams than you may feel right now. They don’t have to fall by the wayside.

The biggest impact you can make right now is through HOW you serve your clients and community in the face of one of the biggest challenges in our lifetime.

But you can’t do that if you don’t have a solid foundation in your business.

So let’s recap what I have been posting about: Using The Business Hierarchy of Needs (The BHN) is the key to the success of your business right now. Let’s take a look again at the model:

You have to “get” in order to “give. To reach the IMPACT level, you must assess the vital needs of your business in the three first levels (the “get” levels) of the Business Hierarchy of Needs. You must GET enough cash (SALES), stability (PROFIT), and efficiency (ORDER) to maintain a strong foundation. It’s easy to lose sight of your dream and get wrapped up in the day to day operations of your business. But if you have these three levels working consistently, you can, and will, see your impact. And be able to give.

Great Mike, thanks for the pep talk, but things are a little different than when I first started out…I hear you loud and clear. The needs of your customers and clients have likely changed over the last weeks and you may feel stuck in, say, the sales level of The BHN. This is why I created the Recession Response which addresses the HOW. How to take steps to ensure your first three levels of The Business Hierarchy of Needs are in place, so you can go ahead and make your impact in the world. I invite you to visit the Recession Response for tips and tangible, actionable resources to help you maintain your SALES, PROFIT, and ORDER levels of The BHN, because you can still achieve your dream and impact your community in a positive way.

You were put on this earth to have an impact. And that impact is not achieved by sacrificing yourself, or your business. Nail the first three levels of sales, profit and order. Then you can give back to the world and make your impact.

You’ve got this!

-Mike

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The Business Hierarchy of Needs – How Order Manages a Crisis and Beyond

The Business Hierarchy of Needs (The BHN) is the DNA, or make up of your business. Because of the crisis we are facing, we have never needed this model more than right now. It will guide us through the new challenges that we are facing.

Of the five levels of The Business Hierarchy of Needs, the Order level may be the most crucial during times of crisis. Order is the creation of efficiency throughout the organization. If that is solidly in place, the other levels will run more smoothly.

There are days that everything feels emergent. When there is triage needed it’s crucial to know exactly where to start. For instance, if you need heart surgery, the surgeon won’t start with your feet. Along those lines, some business owners are feeling panicked and not knowing where to begin. This can result in potentially focusing on the wrong area to find what vital need requires fixing first.

For most businesses right now, the vital need is most likely within the Order level – in the stability of the organization. As a reaction to the present crisis, a lot of businesses are putting band aids on issues and creating short term results. Some are attempting to amplify sales, opposed to managing profitability through modifying their offer. Others are offering deep discounts because they are trying to get more sales to sustain their business. But remember, that’s not considered profit, and can compromise your business. There is an uptick in those seeking loans and debt, which is another short term solution to an inevitably larger issue.

It’s important to note that all levels of The Business Hierarchy of Needs work in synchronicity. So while we can focus our efforts on bringing more to the Order level, it’s always an element that is at play. The goal for small businesses is to achieve organizational efficiency and autonomy. There should be no dependency on the owner themselves. Real organizational efficiency extracts the owner from the business process so it has no dependency, and can run on autopilot.

Even though you may be scrambling to pivot your offerings right now, you can still work within the Order level to create long term organization. Each level of The Business Hierarchy of Needs has five needs within them. Within the Order level, I feel linchpin redundancy is one of the most important. Ask yourself, is your company designed to operate unabated if a key employee is out? One way to find out is to have an employee go on an extended vacation or break. Not only is it preferable for that employee to recharge, but it forces the redundancy in your business. This way there is no dependency on one single employee and their IP. The employee creates systems in which strategies are shared and retained, therefore empowering the rest of the company to fill in.

We did this here in our offices. I told Kelsey, now our company president, to go on a four week sabbatical. For months prior, she created and shared systems to cross train our employees. And now, we are doing it again with the rest of the team. We are each sharing our systems with video training and all the resources you can ask for. We are able to work independently, and virtually, though our recent virtual experience has made us all realize we much rather be together in the office.

Another pro tip for times like these within the Order level is to ensure there is protected capacity. Most businesses need about 20% idle time, or protected capacity. This allows your company to handle any surge that requires attention. That idle time doesn’t mean the employee isn’t at full capacity. Rather, 20% can be made of something that can be put on hold when needed. Now – You don’t want to go so lean, that the business is able to just squeak by to get things done. While that may be cost effective, if there is ever a surge or a modification demand, like a slow down or spike, if you don’t have a little extra capacity you can’t take on the surges and shifts.

Those are just a couple of tips that I know will serve you in your business both now, and when this crisis is over. My purpose for sharing The Business Hierarchy of Needs with you is that you become the very best in your industry.

I am wishing you tremendous success. The world needs you more than ever right now.

Be well.

-Mike

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A Look at Fix This Next

I know my next book, Fix This Next, will help you navigate your business in these uncertain times.

As business owners and entrepreneurs we often spend our days trying to figure out what needs to serve first. Check out this video to learn more about The Business Hierarchy of Needs, the tool I created to diagnose what you need to focus on in your business – to fix next..

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Profit and The Business Hierarchy of Needs – How Your Profit Works in a Crisis

Let’s talk about profit. 

Really Mike, now? Is this the time to discuss profit?

Definitely. 

Why should we talk about profit? Because in light of the coronavirus pandemic, some business owners are burning through cash to run “business as usual”. As Covid-19 cases increase, you worry whether or not your business can sustain a recession that will be triggered by this pandemic. You want to have profit during the coronavirus crisis because you want to have a solid foundation in your business now. It’s also necessary to have a solid foundation when the pandemic is over so your business will be better positioned for success. 

First to note, we are all in this together. Second, I am working tirelessly to provide as many resources and guidance as possible in order to extend a hand to you in service. One of these resources, unbeknownst to me while writing it, is my next book. Fix This Next will be released on April 28th (what timing, right?). I wrote the book over the course of five years, during which I never could have imagined we would be facing the challenges we are today. I am, however, grateful that I did write it and within it created The Business Hierarchy of Needs (The BHN). The BHN is the compass to help you determine the vital needs of your business, and the diagnostic tool for fixing which need you should focus on first. Knowing where to start can be pretty daunting these days.

Enter profit, the second of the base levels in The BHN. Profit is the creation of sustainability. Now, it is commonly misunderstood that profit means making money, when in reality, it means taking money. Profit is the reserve you can use in any way you require, and it won’t hurt your business. 

Without profit, your company will constantly be teetering on the edge of going under. When you master the profit level, you bring fiscal health to your company. 

There are a lot of ways we can discuss profit, but let’s apply it to the current situation. For your business to survive a crisis it must be able to retain cash. In times of crisis, many businesses revert to sales when in reality they should focus on creating profit, because profit is what insulates your business during these times of a crisis. That retention of cash gives you a runway. Depleting the funds from your profit account is not running business as usual, it simply gives you time to look at the data significance. Ask yourself, do you have enough data to point out that you are having an actual problem and you need to take action? Or, is your business running as it normally would? 

The thing is, if you don’t see money coming in, you react without having data significance, and it’s not a good move. It is best to use your cash reserve to get through the crisis you are facing – usually a period of two to four weeks is enough for most businesses. In that time you can determine from your data if there are trends, if your business is a risk, and if you need to take action and revisit your costs. 

In Fix This Next I explain that a common occurrence is that business owners often have a profit problem but are focused on sales. Remember, it’s more important to bake profit into every transaction you have. Sales does not translate into profit because we, as humans, spend what we make. If you are smirking that you already know this because you read and implemented Profit First, then you know what I’m talking about. You need an efficient system in place to bring profitability around.

To determine whether or not profit is one of the problems you should be focused on,  I’m going to give you another sneak peek at the 5 CoreNeeds – this time, at the profit level within The Business Hierarchy of Needs:

Need 1 – Debt eradication – Do you consistently remove debt or do you accumulate it?

Need 2 – Margin health – Do you have healthy profit margins within your offerings and do you 

seek ways to improve upon them?

Need 3 – Transaction frequency – Do your clients buy from you instead of the other guy?

Need 4 – Profitable leverage – When debt is used, is it used to generate predictable and increased profitability?

Need 5 – Cash reserves – Does your business have enough cash reserves to cover all expenses for three months or longer?

Once you’ve fixed the right problem you start reviewing The Business Hierarchy of Needs again from the bottom up. Using the BHN will ensure you are creating a solid foundation for your business, you simply have to focus on the fundamentals. 

I hope that some of this has helped you get some clarity on exactly what profit is and the role it should have in your business. I am sending you well wishes not only for excellent physical  health, but entrepreneurial health as well.

Keep going, my friends. The world needs you to succeed!

 – Mike

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Marketing During a Crisis

No one wants to be sold to right now. The pandemic and ensuing recession has created concerns regarding our health and livelihoods, and it’s the last time to ask something of your clients.

Unless you can help them.

Most of us became entrepreneurs and business owners to serve a community. So serve! Here’s the thing – If you have a product that can help your clients during this crisis and beyond it is your responsibility to market it. Again – it is your responsibility! At the same time, you have to do it in an integral way, so approach your marketing mindfully and remember you are one of the good ones. Marketing during a recession is the only way we can get out there and care for our community who needs us. If you can help people improve their situation and you have something that is of better service than your competitors, it is your responsibility to make it known.

Market sincerely 

Many of my colleagues and I have been brainstorming and exchanging ideas in the hope that we can cast a larger net to help others during this dilemma. In chatting with Darren Virassammy, of 34 Strong, he reminded me of the importance of being of service while keeping a human face. It’s important to let your clients know you are in the same boat, but can provide a service them at the same time. Less sales, more empathy. Because no one wants to be sold to, instead, make an offer to help. Know that some of the clients may not be able to use your offering now, but when this crisis is over they will remember that you were the business that reached out to them during a global crisis.

Survey your clients to determine new needs

The service you normally provide may not be what your clients need now that businesses have been thrown a major curve ball. Marketing the same product during a recession may not be relevant, and you will have to change your marketing strategy, and offering, to fit the current times. Tracy Jepson, of TLJ Bookkeeping and Consulting, agrees. Tracy says it’s more imperative now than ever to market what products you have to help others in their time of extreme need. At the same time, you may have to pivot your services to fit your clients’ changing dynamics, and help them pivot their services as well.

Market your knowledge

While not everyone is buying, everyone is listening. Pitch your knowledge! Market your services to get exposure and serve your community online. There is an influx of online training from accountants, fitness instructors, mechanics, cooks – you name it. Providing these services are a wonderful way to get out there and gain exposure for future business.

The marketing decisions you make now determine the health of your business later. It’s imperative to keep our businesses intact, and one way to do that is to serve your community and help them succeed during this uncertain time. Your business will be better positioned for when this crisis is over.

You may be afraid of marketing right now, but this is not the time to step down. It is your time to step up and serve your community!

-Mike

Join me on the journey: Instagram

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Marketing During the Coronavirus

Yes I’m passionate in the video – and for good reason!

Marketing during the coronavirus is being viewed as unethical. No one wants to be sold to right now. The coronavirus has created fear and panic regarding our health and livelihoods, and it’s the last time to ask something of your clients.

Unless you can help them.

Most of us became entrepreneurs and business owners to serve a community. So serve! Here’s the thing – If you have a product that can help your clients during the coronavirus and beyond it is your responsibility to market it. Again – it is your responsibility! At the same time, you have to do it in an integral way, so approach your marketing mindfully and remember you are one of the good ones. Marketing during the coronavirus is the only way we can get out there and care for our community who needs us. If you can help people improve their situation and you have something that is of better service than your competitors, it is your responsibility to make it known.

Market sincerely 

Many of my colleagues and I have been brainstorming and exchanging ideas in the hope that we can cast a larger net to help others during this dilemma. In chatting with Darren Virassammy, of 34 Strong, he reminded me of the importance of being of service while keeping a human face. It’s important to let your clients know you are in the same boat, but can provide a service them at the same time. Less sales, more empathy. Because no one wants to be sold to, instead, make an offer to help. Know that some of the clients may not be able to use your offering now, but when this crisis is over they will remember that you were the business that reached out to them during a global crisis.

Survey your clients to determine new needs

The service you normally provide may not be what your clients need now that businesses have been thrown a major curve ball. Marketing the same product during coronavirus may not be relevant, and you will have to change your marketing strategy, and offering, to fit the current times. Tracy Jepson, of TLJ Bookkeeping and Consulting, agrees. Tracy says it’s more imperative now than ever to market what products you have to help others in their time of extreme need. At the same time, you may have to pivot your services to fit your clients’ changing dynamics, and help them pivot their services as well.

Market your knowledge

While not everyone is buying, everyone is listening. Pitch your knowledge! Market your services to get exposure and serve your community online. Over the last weeks we have seen an influx of online training from accountants, fitness instructors, mechanics, cooks – you name it. Providing these services are a wonderful way to get out there and gain exposure for future business.

The marketing decisions you make now determine the health of your business later. It’s imperative to keep our businesses intact, and one way to do that is to serve your community and help them succeed during this uncertain time. Your business will be better positioned for when this crisis is over.

You may be afraid of marketing during the coronavirus, but this is not the time to step down. It is your time to step up and serve your community!

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Recession Response

We are in this together! I have created a Recession Response 1 Sheet for you to use. I hope it serves you. Stand up, step forward, and kick some ass, my entrepreneurial friends!

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Accounting for Covid-19

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A Tip for Adjusting Your Business During Covid-19 – Course vs. Concern

Presently, we are dealing with a health scare as well as the fear that we may go into a recession. You, like many of us, are trying to figure out the best course of action to navigate through this uncharted territory.

Before you make your next move, ask yourself – Are you complying with the course, or are you complying with the concern?

To comply with the course is to be proactive – practicing social distancing, washing your hands and avoiding large gatherings. The concern is our reaction – when you overexert yourself in a behavior that is of no benefit (e.g. all the toilet paper), while simultaneously ignoring the course. There is no benefit to purely reacting, because then you are disregarding the course that will inevitably help you.

This scenario translates into your business as well. You’re likely attempting to go about business as usual in unusual circumstances. However, you must adjust your business and deliver your services or products in a way that addresses the circumstances around you during the Covid-19 pandemic.

If you think you should take on debt, take out loans, get more credit cards so you have more money to keep your business afloat, please reconsider. More money may (and I mean may) help in the short term. But remember, money will only carry your business as it is today, without making the real adjustments you need for the long term. Besides, you don’t want to take on the burden of added debt.

Instead, analyze your business and define what the core competency is that you deliver. How will you adjust your existing offering to the current environment? Maybe this means moving to online services and training, virtual conferences replacing in person ones, or consultations for future endeavors with clients. Invest in a new method to serve your clients by asking them how you can serve them in a way that will help them right now.

Ask yourself one more time. Are you responding to the concern to barely survive, which will have long term detrimental consequences, or, are you responding to the course which is the best interest of your business and will help sustain it?

You are the backbone of our economy. If the business world needs anything right now, it needs you to be successful.

Stand up, step forward!

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