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BigDeal by Codie Sanchez

Business Expert: The BEST Way To Make Millions In Profit | Mike Michalowicz

My new book Own Or Be Owned is out now! I wrote Own or Be Owned to answer one question: How do you make more money, less miserably?

Mike MichalowiczguestCodie Sanchezhost

Oct 7, 202555mWatch on YouTube

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CHAPTERS

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Chapter summaries

Turning Around a Struggling Business: Reclamation Services
Codie opens with rapid-fire owner challenges, starting with a business weeks from running out of money. Mike says most businesses are on the brink of success, and describes how his reclamation services use the 80/20 rule to serve the best customers and cut the bottom 20%.
- •Most businesses survive the cash crunch, so Mike calls them on the brink of success
- •Apply the Pareto principle to find the best customers
- •Tell best customers you value them and ask how else to serve them, so reciprocity kicks in
- •Cut the lowest 20% of customers, who cost money unseen
Why More Revenue Isn't the Cure: The Walmart Story
Asked about higher revenue with lower profit, Mike calls the belief that sales cures everything nonsense. He tells of a client whose biggest customer, Walmart, penalized them heavily while Dollar General was easy to serve, and how prioritizing quality revenue took the business from 4 million to 27 million.
- •Sales brings more cash but also more organizational stress
- •Diversifying offerings dilutes a business and makes it less efficient
- •Big-name customers can assert their strength through penalties
- •Prioritizing the better customer's calls transformed the family business
Trust Wallets, Not Words: Finding and Cloning Best Customers
Codie stresses analyzing cash flow and customer avatars. Mike says to rank clients by revenue, since people won't be candid out of social grace, and to look for those who both pay well and are enjoyable to work with. He then explains finding congregation points to clone them.
- •Customers rarely say your business is bad; they slam it online instead
- •Sort clients by last year's revenue and trust wallets over words
- •Best customers are those who spend and whom you enjoy working with
- •Find where they congregate, such as associations or podcasts
- •A niche without a congregation point must be assembled yourself, which is exhausting
It Ain't About the Money: Mike's Exit and Spending Spree
Codie asks what people get wrong about making money. Mike says it isn't about the money, recounting his exit to Robert Half and the Enron-related work behind it. He describes how he spent to show he'd arrived, and says a business should be an expression of our purpose.
- •Mike sold his company to Robert Half International in his early 30s
- •He bought cars and a Hawaii place to show the effect, and no one cared
- •A good business is an expression of our purpose
- •Codie says people lack knowledge rather than money, since there are many ways to get cash
Has Anyone Arrived Financially?
Mike flips the interview and asks whether Codie has arrived financially. Both say no: people tend to feel their freedom needs double what they have, and Codie says she loves the game and wants to see what she's capable of.
- •People feel financial freedom is about double their current worth
- •Neither Mike nor Codie feels they've arrived
- •Codie's mom keeps asking who is in charge of the money
- •Codie wants to see what she's capable of rather than hit a number
- •People fear others seeing a flame-out more than lacking cash
Losing Everything: Bankruptcy and Rock Bottom
Codie asks about a dark moment, and Mike recounts buying three cars in four hours, losing his wealth within two years, and being told to declare bankruptcy on Valentine's Day 2008. He tells of telling his family, his daughter offering her piggy bank, and the depression that followed, which he now sees as his greatest moment.
- •Arrogance and bad private investments wiped out his wealth in two years
- •He hid the situation from his wife by omission
- •His nine-year-old daughter offered her piggy bank to pay the bills
- •Rock bottom meant two years of depression, not just a way up
- •He is committed to eradicating entrepreneurial poverty
Pulling Out the Nail: Moving Fast on a Cash Crisis
Codie shares her own near-collapse from trusting the wrong person and hiding it, and the advice to pull out the nail rather than dwell on how it got there. She argues most problems are fixable if you move fast, have experienced people around you, and focus on profit, and notes the need for control systems when emotions run high.
- •Codie's company nearly ran out of cash after she over-trusted someone
- •Pull out the nail first and fix safety issues later
- •Money likes speed
- •Most struggling businesses are fixable with speed, experienced people, and a profit focus
- •Self-aware owners use systems as bumper lanes
The Pumpkin Plan: Seed Selection and the Savannah Bananas
Mike explains the Pumpkin Plan, drawn from studying colossal pumpkin farming. He says a successful business needs three elements: being truly distinct, having customer demand for that distinction, and systemization. He illustrates with the Savannah Bananas.
- •Biomimicry: copy strategies Mother Nature has already figured out
- •Be distinct enough to be noticed, like grandma cheerleaders in baseball
- •Distinct is not enough; the customer must want it
- •Systemization means the business attracts, converts, collects and delights without the owner
- •The seed must match the environment
Jedi Mind Trick Questions to Find Your Differentiator
Codie asks what to do without a differentiator. Mike offers two questions: ask best customers what you're doing right, since they reveal how they judge you, and ask what's wrong with the industry instead of what you're doing wrong. His examples are a hedge fund client and fixed billing.
- •Asking what you're doing right reveals the one or two things the customer observes
- •Responding within a half hour made his best hedge fund client rave
- •People won't say what you're doing wrong to your face, so ask about the industry
- •Industry complaints, like unpredictable repair bills, show where to differentiate
Selling, Sell to Tell, and Pricing for Customer Quality
Codie says surveys are worse than selling, and Mike says entrepreneurs don't sell enough or in the right way. He describes sell to tell with deposits, caring for customers at a high ratio before selling, and why customers want their provider to be profitable. They end on how price dictates customer quality.
- •Sell to tell: ask for a deposit rather than building an MVP
- •A conference idea got over 1,000 'yes' replies but only 75 deposits
- •Care for customers at 5:1 or 10:1 before selling, so reciprocity makes the sell obvious
- •Customers want you profitable, like choosing the specialist doctor
- •Low prices attract low-quality customers, and quality means distinct to the customer
Avoiding Distraction and Rethinking the Entrepreneur's Job
Asked when to double down versus cut a distraction, Mike says you haven't arrived until you generate $10 million on one thing, and that diversification dilutes. He argues an entrepreneur's job is to create jobs, not do the work, and calls himself a shareholder of small business.
- •Diversifying too early stalls growth
- •Use diagnostics on customers and per-product profitability
- •About 6% of people run a business, and half of those make it work after five years
- •The entrepreneur's number one job is creating jobs for others
- •Mike runs his businesses through presidents and C-suites rather than doing the work
Beacons and Efficiency: Profitability and Delegation
Mike uses the Amanda Eller story and a German blindfold study to show that entrepreneurs without a beacon walk in circles. His first beacon is sustainable daily profitability, and the second is efficiency. He recommends hiring a personal assistant to learn delegation and delegating what you love most.
- •Without a beacon, people walk in circles
- •Beacon one is being profitable every day
- •Beacon two is efficiency, which requires learning to delegate
- •Hire a personal assistant, even for an hour a month, to practice delegating
- •Delegate what you love so much you'd never give it up
44:22 – 48:40
The Profit First Framework
Mike explains that revenue minus expenses equals profit makes logical but not behavioral sense, since what comes last gets ignored. Profit First takes profit off each deposit first, using Parkinson's Law, so the business shows what needs fixing. Codie and Mike add tips on finding hidden cash, including a dedicated subscriptions card.
- •The standard formula puts profit last, so it gets ignored
- •Take a set percentage of every sale and hide it from the business
- •Parkinson's Law: expenses expand as revenue grows
- •Profit First tells you what needs fixing rather than fixing it
- •Put all subscriptions on one card with paper statements to see spending
Investing in Yourself and Building a Business That Runs Without You
Codie raises investing in yourself, and Mike explains how he removed himself from speaking and then reinserted himself by training in improv, comedy and coaching. Codie argues you can't attract what you aren't. Mike's first system for a business that runs without you is scheduling a four-week vacation, which he says works even at $100,000 in revenue.
- •Mike trained about 50 speakers so he's not the linchpin, then invested in becoming the best spokesperson
- •He studies improv and theatrics and uses a speaking coach
- •Codie says you cannot attract what you are not
- •Schedule a four-week vacation with email fully off within a year
- •Even a small business can have customers do work for it

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