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Episode Info: Episode 117: Need tips for managing your business finances and making your business more profitable? Tune in for details. On this episode of 2 Frugal Dudes, we’re talking about tips for managing your business finances with Mike Michalowicz. An entrepreneur behind three multimillion-dollar companies, Mike is the author of Profit First, The Pumpkin Plan, and The Toilet Paper Entrepreneur. About Mike After college, Mike had a hard time getting a job, let alone the job he planned on having for his entire life. At 23, he started his career as an entrepreneur. He grew his first company over eight years and sold it. At that point in his life, business finances weren’t Mike’s forte. His idea of frugality was eating PB&J sandwiches and sleeping under his desk to save on hotels. When Mike became successful, he purchased luxury items until the money was gone. This experience was an eye-opener and led Mike to learn how to manage his finances, respect money, and subsequently become an author. Common Business Problems One of the main issues that Mike sees when working with new businesses is having a grand (read: unrealistic) vision of how things will work. Many entrepreneurs have a misconception of what their experience will be. It takes time to understand that managing businesses finances and operating a business is about more than selling: it’s managing people, it’s battling the economy, it’s the disappointment when they don’t experience overnight success. Another issue Mike sees is the hustle and grind mindset. The idea that one person bears the weight of the business on their back alone is the road to burn-out. Work smarter, not harder. Connect with your employees. Learn what drives them and put together a team. Side Hustle vs. Full-Time Entrepreneurs Side hustles are a great way to increase your income while still holding a stable job. This can work for some people, but sometimes you need to burn your boats to be a success. There’s a theory called “loss aversion.” The idea is that people avoid taking a loss even though it could result in eventual gains. Side hustles can help offset loss aversion, but they can also get you in a negative cycle where you’re never willing to push through and make a change. When you go all-in, you learn through the burn. Having only a plan A and promising yourself to fall forward rather than planning a fall back plan can be the motivation you need to succeed. Profit First for Managing Your Business Finances Profit First is a notion that challenges the common business vernacular that says profit comes last after you calculate your sales and expenses. A small business is defined as a business that does less than $25 million dollars annually, 83% are surviving check to check. That’s over 100 million businesses that are staying afloat without reaping the benefits. In other words, the sales minus expenses equals profit model is flawed. Flip...
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