093: Fix This Next
Michele 00:00
Hello, my name is Michele, and you're listening to Profit Is a Choice. It's my pleasure to have Mike Michalowicz with us again on the podcast. Mike was one of my first guests when I launched my podcast back in 2018. He is a fantastic author for entrepreneurs with books such as Toilet Paper Entrepreneur, Pumpkin Plan, Profit First, Surge, Clockwork, and now his latest - Fix This Next. I've been working with Mike since 2015 when I became a certified Profit First professional, and I also am working with him and his team now, as the Fixed This Next advisor. Listen in as Mike and I discuss business DNA, what all businesses need, and even more importantly, how to get from where you are to where you want to go. I really hope you enjoyed the podcast.
Michele 00:51
Everyday empowered entrepreneurs are taking ownership of their company's financial health and enjoying the rewards of reduced stress and more creativity. With my background as a financial software developer, owner of multiple businesses in the interior design industry, educator and Speaker, I coach women in the interior design industry to increase their profits, regain ownership of their bottom line and have fun again in their business. Welcome to Profit as a Choice. Hey, Mike, welcome back to the podcast.
Mike Michalowicz 01:24
Michele, I love being back. Thanks for having me.
Michele 01:27
You're welcome. I reached out to you a couple of months ago, even way prior to the pandemic that we are in the middle of now, with the idea that we were going to be talking about your new book and the new methodologies, and we're going to talk about that. But I think it's even more important and relative to where we are today.
Mike Michalowicz 01:45
Yeah, it's funny. So I wrote Fix This Next while considering the crisis and challenge businesses have. Many businesses don't know what to do. And now we're in micro crisis, mean there's economic shifts, there's a big disruption, and that triggers tons of micro crisis. So the book is more relevant, I think now than ever before. I wish it wasn't necessary, but it is. So, yeah, I'm happy. It's coming out now.
Michele 02:10
Yeah. And you know what I'm like you, I wish we didn't need it at the level that we need it. And I'm super thankful to have the resource at the time that we need it. I mean, that's what's most important, is that we have a resource.
Mike Michalowicz 02:19
Well, yeah, and it's funny, so what we're experiencing now is an exasperated problem of what we've always faced as business owners. So it takes me about five years to write a book. It's very research laden and a lot of writing. And I'm not an efficient writer. It just takes me time to get there. I love it. So five years ago or so, I emailed my readership and said, "please tell me what the biggest challenges that you're facing right now because I want to write a book around that and study it." Some people answer that same question multiple times in the same day with different answers. And that was the "duh" moment that the biggest challenge business owners have is knowing what their biggest challenge is. We're in this struggle, and right now, when it comes to the disruption we're experiencing, people go into hyper-speed. And we overreact. I mean, the 'toilet paper runs' are somewhat comical. But there's a person here in this area that has a garage full of toilet paper. He's got a 50-year supply, and we see extreme responses. And that's just an illustration of what's happening in business. There's these extreme responses that start to defy logic, and actually now put a burden on these businesses, because they don't know what to do. They're just reacting. So I want to get people out of that reactionary mode and move them toward deliberate action that moves the business forward.
Michele 03:36
So, I don't know if everybody and all of my listeners know, but I am a pre-reader for many of your books.
Mike Michalowicz 03:42
Yeah, yeah. I appreciate it so much.
Michele 03:44
So, I have been a Profit First Certified Coach since 2005. I'm in my sixth year now. I love every minute of it; everybody knows that. I mean, that's what my whole podcast is streaming about Profit First in our time, not just Profit First in our money. And Profit First is the most important thing that we're stewarding because that's a mentality and a movement. It's not just about money. As a pre-reader, I had the ability to pre-read Surge, Clockwork, and then also Fix This Next. And I love that. I think I shared this with you when I wrote some information to you on the pre-read of Fix This Next, but April of last year. So, April of '19, I was working with some other peers and pulling together. We were doing a panel conversation, and it's so interesting being in the podcast business, as well as coaching business, we all have information coming at us. You should do this, and you should do this, and then you need to look at this, and you need to look at that. And they're not even telling us the same strategies, which is fine, different strategies, but they're telling us all these things we should be looking at. So it becomes this hodgepodge of ideas and suggestions. We're looking at it, and we're either feel overwhelmed, we don't know what to do, we block it out. It's too much. We put our head in the sand, or we do the wrong thing next. And so, it was funny because these other two people that I was working with, we started talking about Maslow's Hierarchy of Needs last April, as we were trying to figure out. You don't really need to be working on 'that' if you don't have 'this' done, like, why would we do 'that'? And so then when I got your book and what it was based on, I was like, "No way," because that's about the same way I felt about Profit First. I was like, "No way!". I'm struggling and figuring these things out and teaching them, not certainly at the same level that you present them. Yours is so much more thought-out. But I'm already working through those things like every single time and the clockwork I shared with you. I've had a year where I had to stop and educate my son and had to work on the efficiencies in my business. And so it's like my small little micro-business. If I'm struggling in these things, and I know everybody else is struggling with them too.
Mike Michalowicz 05:56
Well, you know, I love what you did where you were talking about your son is that you adjusted 'the service' if you will, to meet the specific need and your prior point, most people provide the service regardless of the need. I have expertise in sales - I'm a sales coach - therefore, you need sales. I'll tell you how to sell better than ever before., or I'm an HR coach, you need to hire better. So, we go in with this preconceived notion and a bias for the solution, but it may not be what the business needs. In fact, sometimes, we make decisions and take actions that are contrary to our benefit and puts us in a worse position. So, in the book, I talked about this concept called The Survival Trap. And actually, you give me feedback on this too, because I've been in multiple books. The way to illustrate this is, you can do it in a piece of paper, or you can do in your mind, but you draw the letter A and put a circle around it on a big piece of paper, right in the center. That A represents where our businesses now, where our situation is, and for many of us right now, it's crisis or challenge. What's the challenge we're facing right now? Step two, is you can draw an arrow out in any direction that you choose, away from A. So, you started an A, you draw an arrow out for a short distance and what that arrow represents is a specific action we can take that will get us out of the challenge part. The next part, step two, is to draw another arrow out from A in a different direction, and then do it again, and do it four or five times. What this illustrates that any action we take, that gets us out of crisis, will give us relief only momentarily, because the third and final step is you draw the letter B in the bottom left corner, that piece of paper. And chances are you didn't draw any arrows or very few arrows in direction of B. Yet B represents the specific vital need, the business has, the one thing it needs from you. And when we're only considering where we are now, escaping the day to day challenge and crisis, and putting out fires, we do feel relief in the immediate moment, but it simply puts us in a new 'A'. So, we get an immediate relief with the trade-off of long-term agony. The goal of Fix This Next is to identify what is needed first, and then start to provide a solution. So, when we were talking, applying, and what somebody sounds like, "oh my god is so smart! You figured out his style of learning and his capabilities and where his super strengths are." And then you started providing solutions, their constituents need and now, you know, he's excelling. He got three job offers in this market, like that's unheard of! So, you did something to address a specific need. And that's what we have to do in our business. First, identify what truly is a business need, and then make decisions that are consistent with it, not just escaping crisis.
Michele 08:32
So, I call that being graspy, right? Here are the terms that I hear a lot, "well, I'm just throwing jello at the wall or spaghetti at the wall and seeing what will stick." That's all those lines coming out from 'A'. It's away from where we are. I call it being grasping, I'm just grasping at ideas without really thinking, where do I want to be? To your point, one of the things that we did for our children, which is the same thing that I do as a business coach is, "okay, here's where you are in 'A'," and then I said to both my boys - this was like a ninth-grade where everything they do matters, right? Because it's all on this trajectory to get to college. "Tell me all of your goals in school," and then we took their goal schools and we put the mascot up, we looked at what they needed for the ACT and SAT, what course load they had to have. And we wrote it down. Then we backward engineered it and said, "if you do this path, you have the ability to go to any school you want to go to that's on the list," and we made a great big poster, we put it on their wall, and every day they would come home and, "I hate Spanish and I hate history." I'm like, "well, you're not taking Spanish for Spanish. You're taking Spanish because it gets you what's on that wall. You're not taking history for history. You're taking because it is what's on the wall." And with that, the thought is when you have us put that 'A' and then that 'B’, right? The 'B' indicative of where we really want to go. There's more than one way to get to 'B' or more than one decision that could get us to 'B', right? For example, there's more than one way to market but we still need to market
Mike Michalowicz 10:02
Right! There's a lot of ways to do it.
Michele 10:04
Multiple ways to do it, but I think what happens is sometimes we get caught up in the multiple ways of doing it, instead of that vital need, and really identifying the vital need. Then we can find the best approach that fits us to get to the vital need. That was what I did with my son, "your vital need is to be a productive person, right? You got to find the best way to get you to that."
Mike Michalowicz 10:26
Right. Yeah, it's funny, so is marketing is a great example. So, there's many ways to market. The question is, why does the business need marketing? Well, we may identify, we need to generate better quality prospects, or maybe it's more educated prospects. Or maybe it's community specific, you know, people in a specific community. Once you understand what the definition is, what would that be is, then the market becomes apparent. "Oh, you know, I can market on Facebook, through Facebook ads in this community," or to those people hanging out the pool club, "the marketing is, I actually should just be attending the pool club," or it's a networking type thing. But without that knowing, many of us just say, "I got a market, I need some clients." And we do this the spaghetti and it's very arbitrary. We get frustrated, it's not working. Sadly, sometimes we touch on things that are working, but because we're so distracted by all the things, we then abandon it. And that becomes a trap. Because we say, "oh, yeah, I tried the Facebook ads, or I tried to go into the club one time, and it didn't work. So clearly, that's off my list." And yet, that may be something we've had to concentrate our efforts in over time. So, by getting this clarity, we simply narrow the path. And we can walk it a slightly different way, but it's a much clearer direction. And the goal of course then, for some aspects like marketing, isn't having persistence behind it. Just like your children. "You're in Spanish, and you do over and over again," and in the moment, it may be painful, but the long-term objective is being satisfied, so we need to stick with this. Same with the marketing, maybe didn't work the first go around, but we noticed the right community. Let's try it again and let's try to improve on it so we can get to that goal of ours.
Michele 11:58
And what I found so interesting about the Business Hierarchy of Needs that you have developed in Fix This Next, that pretty much follows in alignment with thinking through, the way that Maslow thought about his Hierarchy of Needs. You know, it starts with sales. You have said, well, of course you know you wrote it, but there's a triangle, and then sales, then profit, order, impact, and then legacy as we work our way up. And what I have been doing with my clients, because I've been teaching it for the last two months in my Designers Inner Circle, is I've been drawing an arrow on the outside with the arrow up and arrow down, to show that we over time move up and down that hierarchy. It's not just we're moving up, it isn't up and down at any given time. And I want to make that point simply because many of us were up potentially, because 2019 and early 2020 had been kind of a boom for many of us. So, we were up at that order, impact, legacy, and all of a sudden, we get dropped back down to sales, like that. And so, if we don't know that we are going up and down, and that our vital needs changes. Just because we've solved the vital need today, doesn't mean in six weeks that vital need won't show back up. Because many of us had vital needs me included, that showed up all of a sudden down on the sales level that we didn't have a month or two ago.
Mike Michalowicz 13:28
I love that you're advising people on this, your F 10 advisor because that's the clarity people need. The confusion is they think it's a ladder, right, as I climb to the top and I waved my friends from up there. But this is like building any other structure; the foundation must be adequate to support the layers above it. And as you build bigger layers above it, you have to go back into the foundation. And if the foundation cracks, sales slow down, you got to get down there. And this is true for all business. It's not just small business. You know, the mega businesses like General Electric and Procter and Gamble, those businesses have to go around the cycle also. So, we had to build a structure and relation. What's interesting is like Mazda has five layers and when you understand these, you can start navigating them, and pinpointing where 'B' is. So, it identifies 'B', the foundations, and your point is sales. Sales is the creation of cash. If we equate this to Maslow's hierarchy, it is like oxygen. Now, the most basic physiological need is to breathe. And if we're suffocating, we can't breathe, we will die. So in our business, the business has no sales, it is suffocating. It's not breathing. But if it has some sales, we asked another qualifying question saying, "do we have enough sales to support a reasonable degree of the next level above it, which is profit?" So, if the answer is no sales, you must focus on sales. If you have reduced sales, "are the sales at least adequate to support profit?" If no, you still have a sales issue? If yes, we go to profit and say, "do we have any profit?" If no, then we actually have a profit issue. So for some businesses in this market, sales have dropped, they actually have to first address profit issues. Even if less sales revenue. It's not just about increasing sales. It's actually reassessing their profitability. They may have to cut costs. There's a lot of restaurants in this area, your area too, and I've heard, but the restaurants are all shut down. And some of them are, "my gosh, we've lost our sales, we just need to sell our way out of it." And the first solution is, "Well, you can't." Second solution is "you better cut costs quickly for sustainability." And then we got to assess sales, because if you have no sales coming in, you're suffocating. We gotta get back down to that level. And so, what's interesting is there's this one technique we've been using, we call One Step Back.
Michele 15:42
Yeah. And I added something in our conversation online about it with regards to it. Yeah, go ahead.
Mike Michalowicz 15:48
No, yeah. Here's the basic structure. I love to see how you can take this further, we use this as our final deliverable. And so, restaurants are a great example. The final deliverable traditionally for restaurants placing food on the table for your consumers to eat. We asked ourselves, what happens one step back from that? Because what you realize is ultimately your final deliverable is a accumulation of multiple small deliverables. So, before that is, we carry the food to the table, the waiter does that. Well, you can then have to carry out or take out. One business right in this neighborhood, they teamed up with a food truck. So, the food truck is doing delivery runs to neighborhoods. And this former restaurant is now a cooking kitchen. They are producing for the neighborhood. That's a great collaboration around carry out. But you can keep on going, one step back is the idea. So, one step back prior to carrying food to table, what do you do? Well, we prep the food. So why not sell the recipes for your 10 most popular dishes? Why not make a cooking training program where people can learn how to cook your meals? Why not actually do cooking classes where you can do live stuff. You have your chef come in teaching people, so they still experience your restaurant and the fun they used to have there, but they're also cooking the meals. Now that can be a significant premium because it's a cooking class from home. And what happens was prior to that, well you procure meats and vegetables. You can now carve that up a portion and sell those as the raw ingredients, kind of a Blue Apron for your community. So, by rewinding one step at a time, you may discover additional offerings that you have that now can become your primary offering.
Michele 17:17
Yeah, and I had coming into you when we were talking about that in our private group that was the same thing I saw. You know, all of a sudden there's like this
Blue Apron fresh foods that was delivered in a box. There were all these step backs. There was, you know, bakeries who are now giving you an iced cookie with the icing and then a video on how to ice in the home. I mean, just all types of things. So, in the interior design industry, our biggest issue during this really is being in the house to either take measurements, do delivery, or installations. Many of us still design, we don't design sitting in that homeowner’s home. I mean, we come up with ideas for sure, but we're not doing the basic design in their space. So our one step back is, what can we do now? That means you can take a picture; we can walk you through how to measure things. Now we can create from home or from our design space and give you a layout. We can do everything except literally show up in your house, deliver and install. We just are not able to do that.
Mike Michalowicz 18:26
Yeah, and you did. So, you just facilitate procurement of the furniture and stuff. Yeah. See, it's interesting. For a designer, it's the only thing you're removing is your physical presence. But all those other elements.
Michele 18:37
We were doing it in the office anyway
Mike Michalowicz 18:39
Yes, it's still needed. And what's interesting is, it actually may become a more intimate experience now because now you work more collaboratively, potentially, with the homeowner. They have their phone or walking around and say, "hey, let's really explore this." So now they are there, instead of being a passive involvement, where they say, "hey, just make this room look good." Now they're actively involved. So in any challenge, there are new opportunities as the needs shift because of this disruption. This is the ultimate entrepreneur’s petri dish, we simply have to respond in a new format. I strongly suspect new designers will come out of this meaning they're going to be some authorities who figured out a new solution for the new needs. So, this is this can be a great opportunity.
Michele 19:24
Right. The other thing that has been really interesting is when we were talking a minute ago, all those steps back. What I've also seen and talked about on a couple of other podcasts is I'm seeing these areas that are really starting to be heightened for us where design is really needed. For example, we just took all of the US and practically shoved them in their living space and said, "don't come out for two or three months." Okay. I mean, that's kind of what we did. And now we're all sitting here going, "well, that's irritating. Well, that's not functioning well. It's not pretty and if I've got to work and sit at this thing, one more time, I'm going to scream, right?" Then my husband came home, and the first thing he did was, "I needed this. I need a standing desk. Oh, my gosh, I need to get this monitor arm and I need this new thing." I mean, he had to outfit a complete home office through Amazon, because we were shut down. We couldn't go out again. So, every couple of days for a week, Amazon was delivering. What a lot of the designers that I'm working with is focusing on a couple of areas that are really showing up right now. And Mike, I totally believe your point, they're going to show up later. This is the home office. This is an area for homeschool, because that's where they're all, the kids at. This is an area for home gyms, which are huge because people can't go to the gym, and they're probably going to be a little bit more wary of just jumping back to the gym. And so, they're creating these spaces in their garages, or in their basements, or in this extra place. How do I set this up and they (the clients) want it to look good and be functional. And then the other space that I'm seeing is this family collaborative space because families are now going back to how when I was a little girl. They're all very home base. They're doing puzzles, they're doing games, they're doing other things that are not so electronics, trying to spend their day doing other things. And so, we are creating these spaces. Now I'm not saying designers didn't focus on those things before but, I can tell you most were not going, "let me help create a yoga room or let me help create a space for you to do this." And now those opportunities are there looking for them and you don't have to be in their home to do it.
Mike Michalowicz 21:31
No. Also, I think a massive opportunity right now is zoom rooms. Everyone has gone virtual. Some people the setups are crazy, there's a blank wall or it's like this bright light behind them. There's even design opportunities in the way we present ourselves on video now, and that's an immediate need. To your point, the gyms and stuff are also gonna be needed because once this situation goes away the mindset won't. Even though this will be resolved, and things will go back to normal, it is going to be a new normal. And that new normal is going to have us thinking differently about how we are managing our space.
Michele 22:13
So, in your Fix This Next, which is out at the end of April, and super excited about that, in this hierarchy of needs, you have also developed a hierarchy assessment. And I offer that, so we'll have that in the show notes. Everybody can get one. But it's a list of five questions for each level of the business hierarchy of needs, that helps you really think about it. And as we're going through that, one thing I really want to point out, and I would say and I would hope you would agree now more than ever, we have got to look at data and not just go off our emotion and a gut. I'm seeing that graspiness again, that over emotion, and that 'sales is the issue'. Like you said, it really could be profit. One of the things I did, I was on a webinar last week and for the last two weeks, is I created a document probably about a month and a half ago when I saw some of this coming called the Cash Position. And all it is is a one-pager that helps you figure out your cash position at that moment, using Profit First to give you ideas. We're not just looking at the p&l. We're going to the bank statement and to the bank account. We're literally going to look and remove our cost of goods, who have we already promised money, is it to a vendor, to satisfy for our clients? And then where do we have cash? Then we start going through the idea of what can I reduce? What can I remove? What can I delay? We're doing it very thoughtfully. So, talk to us a little bit about your five questions for each area. How you develop that, how we can think that, and how we really need to look, because you say in the book to look, at the data. And I think a lot of times we don't look at the data, we just have this gut feel and that's not always lead us where we need to go.
Mike Michalowicz 24:01
Yeah, so that that was that was the interesting differentiator between Maslow's Hierarchy and the Hierarchy of Needs. We are biologically wired into ourselves. If someone puts a plastic bag over my head, I'm suffocating. I'm biologically responding to it by tearing away the bag, because I know. The thing is we're not biologically wired into our business. So therefore, if a business has a sales problem, we don't know it's having one necessarily, but our gut will say, "I think it's this," and we put too much value in it because we know it works in our personal lives. Therefore, you need empirical data, indisputable evidence that this is the problem. And what I found interesting is in every business, there's a common what I call DNA. So, your business and my business, while they're different on the outside, when we look at the essence of our businesses, they are probably the same. Attracting prospects, converting those to customers, delivering on promises, collecting on the revenue, those elements stay the same. And it's actually true in our biology, too. If you take any person on this planet and take off their skin so to speak, not trying to be grotesque here, but if you do that, our hearts are in the same spot. If I was having cardiac arrest, I don't go to the hospital and the doctor shouldn't say, "Oh, your heart is in your foot." No, it's always the same spot. So, we know exactly where to pinpoint the triage, where to go. In our business at every level, in sales, profit, and so forth, there are five core needs I found to be common in all businesses. To just to give you a sense for the makeup of the sales level, there's a need for lifestyle congruence, meaning the sales actually support the objectives of the business owner themselves. This is supporting their lifestyle, as what they defined as comfortable. Shockingly, many business owners don't correlate the two. They say, "I make more money to be comfortable." And that's not true. You need the data to design what you need. And what does that translate back to is appropriate sales.
Michele 25:48
I want to make one comment on that. So, a couple of years ago, my son asked me, this is the same son who is getting ready to graduate. "Mom when do you know how big is big enough?" For your company, how do you know? What is enough? When do you know you've met that threshold? And this one question that you asked about lifestyle congruence is an indicator, right? Because at some point, I am amazed at the people that I coach sometimes and I asked them, "what salary do you want? How much money do you personally need to make?" And they go, "I don't know." But we would never go into a corporate setting and not having an idea of what our value and worth was. We need to be able to compare the salary offering against a prospective employer. And so, I just wanted to stop and put an exclamation on this one. I would say it was almost like a 'don't pass, go don't collect $200 on the Monopoly board', because everything else kind of stems from this question, in my opinion. So I'm so glad that you brought it up first. And I just don't want us to miss its importance because it's easy to kind of, from my experience, for people to gloss over that almost the way we used to look at in Profit First that, "this as I'll take, what's left over whatever I can get", as opposed to going into it with the plan and knowing that their lifestyle is tied to the sales of the company. I just needed to stop and just hammer that.
Mike Michalowicz 27:18
I appreciate you emphasizing that. It's absolutely true. And to your point, the right size business will find us. It's interesting as I was studying many businesses, I found that they don't need to be nearly as big as they thought they needed to be and the numbers they were picking were totally arbitrary. "Oh, we need a 1 million or 5 million or $10 million business." I also found that businesses once they supplied or supported the lifestyle needs of the owner or owners, then they started to move toward impact and legacy. And some of these businesses found out, "oh my gosh, we have an opportunity to change the world here." We need to be bigger not because of what that means to me, but what it means to be of service. So, it was fascinating, as I was researching that. The other elements, currently are common for all businesses is prospect attraction. It's converting those prospects into clients and look upon the appeal and think about for sales is delivering on our promises. You know, a sale is an agreement and unless is fulfilled on both sides, the agreements are not done. If you gave me money, Michele, and then I don't deliver, that's rightfully your money and you have the right to take it back. But also, the client has an obligation, I can deliver the promises, but the client doesn't pay, well, then that agreements not fulfilled. So, all that stuff constitutes the sales level. What we do in this analysis is, we simply look at the empirical data. Do we know what our lifestyle standard is? If you don't, to your point, don't pass go, stop here. We need to evaluate that first. That is a vital need for the business because that sets up the entire trajectory for the business. But once that satisfied, then we ask, "are we generating prospects?" And if you don't know what prospects are, you don't have them qualified, that is a vital need of your business. If you do know who they are, but they're inadequate. It's a vital need. You keep going through this. And there's coordinates, those are coordinates, they become vital when you don't check it. There's coordinates throughout the Business Hierarchy of Needs. And what we do is we look at every single level, but we always revert to the foundation. If at any time a foundational need is not being satisfied, it means sales is not satisfied, we then actually revert to that, to measure it up, and to give it a stronger foundation to then support the level above it and so forth.
Michele 29:25
A lot of the clients that I am currently working with, I would say prior to this business disruption, many of them were in that order. They had enough sales. I usually draw the triangle with all the errors coming in at the bottom. So, they had enough and feeding it.
Mike Michalowicz 29:43
Yeah, yeah, I love it.
Michele 29:44
They were sustainable, which is what profit creates. Most of the clients we had. I just got to stop and segue to tell you how many thank you notes I've gotten from my clients, because they've been working with me and that they.
Mike Michalowicz 29:56
I love hearing that.
Michele 29:58
They were in a different situation walking into this and some of their counterparts. And, again, this is a hard time simply because we don't know how long this disruption is gonna last. This isn't like a quick disruption, so if they had that fall or that three months savings in their business, there's nothing that says say they're not going to need six or maybe they won't be prepared for six, but they were prepared for three and they have the mindset to go through it, just gotta say that. So, thank you for all of that. You give it to us so that I can also give it to others, because it has been a lifeline for me and for them. And they can see that they have the skillset to think through what they need to do now, right? To take that step back. Okay, so you work through the sales, they'd work through the profitability. And so what we were doing was going back and taking the order, and we were looking at it and going, "here's my new clients, here's how my business has grown. There are some of my processes that now need to be more efficient," or that we need to change. To your point, that foundational level we need to go back and tweak some things. All the way through for where we were actually growing. And it comes out of nowhere. Some of the projects that are just started but stopped. Out of fear, out of broken supply chains, because a lot of our stuff comes from China. We started having a fear of people coming into their homes, so then installation stopped. They literally went from focusing on the order, kind of a clockwork of their business, all the way back down at the bottom. And that shift has been emotional for some. I know that you have shared in some of our private trainings as well, about kind of that shift of emotion, and for some, I don't know if you've experienced this, and if you did a training on it, I might have missed it. But for many, it's almost like going through a death. So, we've been looking at it. In my private group as that we're going through the process this morning, where we were and where we were going. I said the other day, "I almost feel like you're about my age." And I can remember riding in the car and my mom or dad slamming on the brakes. We didn't have seatbelts on, you fly forward, you throw your hands up, and then you sit back. Kind of what it felt like if you're just zoom in, and then all of a sudden, somebody slammed on the brakes. You're like, "wait a minute, I'm in a different direction than I thought that I was in." I would love to hear your opinion on how we handle that because we're talking about this empirical data and look at this next. But there's emotion tied into this. Mostly when the brakes just got slammed on. What have you seen? And can you give us some suggestions on how to feel that. We don't want to be Pollyanna and "it's all great!" We need to be really intelligent. How do we work through that?
Mike Michalowicz 32:55
I'll share the five stages of business crisis which are like the five stages of grieving. Then there's technical block control. I don't know if I shared that in our group yet, but that will help. So, here are the five stages of a business crisis. The first stage is the shock stage, kind of getting that accident. He's there, hands up and saying, "that didn't just happen, did it?" Then we go into the desperation stage and shock stage, by the way, is where many businesses freeze up. And if you freeze up for too long as a business, you'll go out of business and sadly, will collapse. That desperation stage is where we take big actions, but sometimes they are not beneficial to the business, sometimes, actually become detrimental. So one common trend we see right now is so many businesses trying to get loans without really understanding the consequence of a loan. When you borrow money, there's a reason you're borrowing money. So what's the essence of that problem that needs to be resolved? We're just building a bridge for a short period of time, and some loans may need to be paid back. Many loans likely actually. Well, some of them may be forgiven, but even for a loan that's forgiven, we're still borrowing money. We're ignoring the wound of the business. That's called desperate action. Loan for some people is appropriate. I'm not trying to judge you. I'm just saying that could be one desperate action people are taking.
Michele 34:05
But there's a reason that we need that loan. And if we don't want to need to loan in the future, we have to go back and solve the problem that put us in a position to meet the loan.
Mike Michalowicz 34:12
That's exactly right. Then the next stage of the business crisis is evaluation. And this is where things start to turn. If you do it right, we can evaluate what causes stagnation, analysis paralysis, or we can find what's the one deliberate action. And what I hope Fix This Next does is it slows you down just momentarily to pinpoint something. Then taking a deliberate action which is the specific action to move you forward. And I'll share a technique called Block Control in a second that will help people do that. Then the final stage is it's called the Surge. And what's so interesting about the final stage is that as your competition will go away, but of course, the demand won't go away. It's simply being deferred. So we've deferred demand and deplete the competition, which means at one point, I don't know if it's a few more weeks, a few more months, or a year or two. But at certain point, as customers re-enter the market, there's gonna be less supply. So, they have heightened demand with lower supply. That is a huge opportunity. And that's what we see after recessions, businesses that sustained through recession or start during recession, inevitably get this big boost after the recession and become the dominant players in their community or field. The technique of Block Control is derived from Dale Carnegie's book How to Stop Worrying and Start Living. Start your smart living. Block control is the realization that if we look at the big picture, we start getting overwhelmed. It causes paralysis and we start thinking of the long consequences like, "I don't know how long it's gonna last. I'm gonna be out of business. I can't afford to be in the business," and it starts winds up, causing us to freeze up. So, we need to say, "well, what's the outcome that we want? I want a stable business," but then we start saying, "I can't do that." That's sort of the outcome. So, we need to rewind and start doing it in blocks. What can you do in the next month to make your business stable? I could consider a few things. But still, one month is now overwhelming, maybe too much. Then we ask ourselves, "what can we do in the next week?" And we try to think of the strategies. If that's too overwhelming, we are trying with one day. "What can I do in one day to move the business forward? It's small stuff, but what can I do?" And we keep rewinding. For some people, they either go down into the one hour or one minute, that's when we start moving into smaller blocks. Let's just focus on just surviving the next minute or our next day. It starts to become manageable. So if you're feeling overwhelmed or paralyzed, start breaking down what you need to do to survive or move forward in the next smallest block. And that will start giving us forward momentum.
Michele 36:40
I love that approach. Many of us have said, I've even said at different times, "I can't even imagine how I'm going to get through the week ahead. I'm just going to take it a day at a time, right?" Get through a day at a time. It's the same kind of thing. That is the way that you have described Block Control, I've absolutely done that through all of these. As a business coach, I'm here just like you are, supporting other businesses and encouraging them. But I would be an absolute liar if I come on here and said, "this didn't shake me." And if I said, "I didn't stop and admit that I feel inadequate in some ways," oh my gosh, now what do I do? I mean, I had to stop and get myself together to be able to move forward. And I think anybody with the magnitude and the complexity who realize how quick this has come upon us and didn't tell you that they stopped. My point is, we got to be afraid, at least we have to take the inventory. because at the very, very beginning of all of this, I would say about mid-March, I said, "okay, let's keep going." But by week two, I felt the overwhelm, I felt that weight, and there were a couple of times that I was in my kitchen crying at the devastation. Then having to come into my office, wipe my face, go in and bring it back to focus. There were days where I didn't feel I could go do all the Fix This Next. I can't even look at it; I can't think about it. And what I realized was I had to, because of that feeling, that depression and desperation, I had to take care of myself and grieve. I went outside, I went for a run, we've got a puzzle set up. I set up stations around my house so that I could focus on something other than the complexity of all of this and I think because this particular COVID disruption, it came with an emotional toll of death. It devastates not just my money in the stock market, not just what's happening to my clients, that's all horrible by itself, but also this deep loss. You have to all suffer silently, or not totally independently, but this lack of being able to be together, which is a support in and of itself. So I think those things definitely made an impact and I had to stop and work through it. Then I got to where I could look at a week out, a month out. Then I might have one good day. I'm just saying I vacillate between taking a minute or a day at a time. Then I can look a month out. I go back and forth and we also need to get worked up the freedom. We Block Control to go back and forth.
Mike Michalowicz 39:20
I think fearlessness equals foolishness. "I physically don't have any fear" and that actually is concerning because that means they're not considering the impact. I think confidence and fearlessness are two different things. Confidence is the acknowledgment of fear, "I'm scared. I feel really bad, of how businesses are affected. I feel really frightened that my business in my livelihood might be affected selfishly. And there's no question I've got that fear." While confidence is the knowledge that taking action will provide salvation and inaction will cause entrapment. "I need to take action." The other thing that's interesting in this market is with so many people affected simultaneously; there is a herd mentality. And what happens in a herd is when the group starts moving almost in synchronicity, they look for a leader who knows the way out of here, or who will start marching forward so we all can start moving collectively. So, I would say you and myself, many of us, this is the greatest opportunity to show our leadership. And I love how candid you were. It shows that we're human. We're scared and crying in the kitchen too. And that's who we are. We are committed to moving out of this and we start hitting the drums. "Just follow my drum pattern and follow me out of this." That's what we have to do. It's a very candid, empathetic leadership that's needed now. That's what you just shared and demonstrating, and that's what we all have an opportunity to do.
Michele 40:48
Thank you for saying that. And I agree that one of the things I've even told my group is, "you are a combination of yes. Most time, it's also about who you are and who you surround yourself with. We have to be careful if the drummer who we follow really knows the way out. We need to be looking at their track records. We need to be looking at that honest and empathetic approach. That they're not beating us up, because we all have a moment of indecisiveness. They need to be saying, "I get it. I've been there. Let me show you the way." And that's the whole thing, I've been there, so let me show you the way. And I thank you for your books, because honestly, the work that you're doing in the entrepreneurial space is huge. It really comes all the way back from Toilet Paper Entrepreneur, which believe it or not, we've gone back to some of that in my coaching, because that's where we talk about being very graspy. "Do I need it today? Can I wait one more day?" Then we've moved up in the coaching to the Pumpkin Plan, all the way back to, "is that your right client because if it's not the right prospect and it's not the right client or not the right vendor, then no." I have a methodology called Aim with Intent, and it's the way that I have put together how we work through my clients' businesses. And the 'A' is for aligning your team. I'm talking about People Process Profits and Intention. Align your team, ignite your process, manage your money with intention. So, everything has to have the intention to go to B. From the A to the B. Be very strategic and intentional. But when we're going to think about People Processing Profits, what's going to get us through. Then we've had to go all the way back to, "is this the right vendor? Is this the right client? Is this the right message you get from Pumpkin Plan?" Then you move up; Surge is coming, whoops, we're not there yet. We're moving into Clockwork and, "how can I be efficient?" Because efficiency has shown up now in a good portion of my clients. They're at home, homeschooling their children, and trying to run a full-time business. So, process and efficiencies, it's highlighted right now. And we're taking that step back. The instruction that you've written strategically and tactically in those books apply because we are in a point in time right now where I am pulling every single one of those books off my shelf for the training and relearning what I've gone through for all of them. Then I'm directing my clients, "you go over here to Toilet Paper Entrepreneur. You go do this one in Fix This Next. I mean, that really is. What do we need at this time? Resources. And honestly, for a time such as this, when we have all of them available, versus if this had happened just after Toilet Paper Entrepreneur, we wouldn't have the rest. So, I love the perfectness of all of them being out and available, because they meet a different need that each of us have right now.
Mike Michalowicz 43:48
Yeah, thank you for saying that.
Michele 43:50
You didn't pay me to say that.
Mike Michalowicz 43:51
Oh, I wish I yeah, I was like sorry. Awesome. Thank you for saying that.
Michele 43:57
So, Mike, as we wrap up today, we've been talking Fix This Next. We've been talking all of the other books and talk about the strategies more. The book is where the strategy is. It is the strategies that we need to think about, what would be the next thing that these business owners who are listening need to do? What is next step they can take for their business?
Mike Michalowicz 44:16
Yeah. So simple action that I think will have great impact is we did set up an evaluation site and there's a generic one. But there's also one specific from you, which I'm not sure the name but it's, I think it's gonna be Michele Williams dot Fix This Next dot Com.
Michele 44:31
I'll put it in the show notes.
Mike Michalowicz 44:31
Yes, in the show notes. But go to that evaluation and go to Michelle's specifically because Michele, you have the control over how to provide direction from analyzing the answers, right? What you will do is you take this evaluation, it's free, it's online, it's quick, you don't need to download anything, you just enter your information and complete the examination. What it does is it will pinpoint what you need to work on now. So, it gives you that Block Control and it will say, "here's the one thing to do." It gives you that point B, the direction you need to head on and you can start moving forward. It also has your contact information there, Michelle. And once they understand what to work on and any questions they have, they then have you as the resource. That's where I would get started. And then you can also, at that website, get the book. Fixed This Next is available starting April 28. When this comes out, it'll be up there. And I really want to invite people to get the book, because it's a good field manual. It gives you some more direction as you do this examination and then know what you need to do. It gives you some more direction around that.
Michele 45:28
Yes, we got some really great examples that are easy to relate to. So great book, of course. I love it. Thank you, Mike, thank you so much for all that you do for the entrepreneurs out here, recognizing that I would call us almost micro businesses. I've always said my biggest struggle is when I first started my company back in 2000. I'm in my 21st year of business. My biggest struggle when I started was, I had worked in a large corporation, and I didn't take all of the principles in school. We didn't learn entrepreneurship. Back in the 80s, that's not what we were taught. We were taught how to go work for a large company. And that was even before dot com. It was at the time where you would start working for somebody, you've retired 30 years later, and get your pension, which is not the way that business has turned out to be. So, our training was very different. And I did not know at that moment how to take the same good business principles, that DNA that you talked about, from my large corporate background, and dial it all the way down to a micro business of my own. That's been my journey of dialing it all back and going, I might not be able to do it the way they can do it, but what is the heartbeat of what they're trying to cross? How do I do that in my business? That's what I share and teach, but just from my own journey, of figuring out what worked and what didn't work, which I know you've had a similar one. So your resource has been very helpful over the last five to seven years.
Mike Michalowicz 46:53
Thanks so much, Michele.
Michele 46:54
Well, thanks for being here. You have a great day.
Mike Michalowicz 46:56
You too. Bye
Michele 46:58
Bye. I'm super thankful. Thank you for being with us today, it is so enjoyable for me to find somebody to talk business with. And you know, for the most part, we're on the same pages for everything. We really are all adapting our businesses in a multitude of ways right now due to the economic changes brought on by COVID-19. But I want to just encourage you not to let that stop you from action. Don't let fear shut you down. Use the evaluation in the show notes and let it help you pinpoint what to fix next in your business. And please don't feel like you need to do it alone. Reach out to me at ScarletThreadConsulting.Com and let me assist you. Profit is attainable, but it doesn't happen by accident.