PROFIT FIRST - Why Most Shopify Stores Fail. (It's Not Bad SEO, Bad Products, or Even Bad Marketing)

31:59The vast majority, we turn to permanent profitability within 30 days. And so the question, of course, is how can a business that's been in business for four years or 10 years, we went to one business 10 years and they never were profitable and we can make them profitable in 30 days. The reason it's behavioral, the word event, a derivative of that is eventuality. So the belief is that profit is an eventuality, that one day I'll get there. And there's this belief that I need to grow my way to it. I need to grow my way to profit, which profit we define as a healthy business. So I have to get big enough to be healthy.

32:34And that's a perverted belief. Growth of an organization is an amplification of what you're doing. So what most businesses do, they say, well, I'm selling this item. I need to sell more of it to be profit. Now, I'm not selling 10 of them and being profitable, but if I sell 20, maybe I'll be profitable. But the thing is, if you can't be profitable at 10, growing into 20 actually in most cases will amplify the costs. So you'll actually be less profitable. Then they fall into a cashflow game. They say, well, if I collect the money sooner and spend it later, then I'll be profitable. No, you're playing with cashflow.

33:10So you'll see more cash in your bank for a period of time, but those bills are coming and they're going to wipe you out. So here's what we do. We take the profit first. So we go into a business like that and we can do with any Shopify business. And we actually have invested in e-commerce businesses, one that sold specifically candy. We went into it and we said, we're going to start, we want a 20 % bottom line. And they're like, well, it'll take me a long time to get there. I'm like, no, no, we're going to start there. So every time money comes in, there's a transaction. We're going to take 20%, put in a profit account, hide it away.

33:42Now, if you took, if the average cart is$30 for them, you don't have$30. you now have$26 or$24 because we took$6 off the table. How are you going to do$24? What happens is we say that profit first won't fix your business. Profit first will tell you what needs to be fixed within your business. When you take your profit first and you only have$25, you realize this is what I actually need to operate off of. Where am I incurring unnecessary their expenses. And the areas are common, usually underpriced, which means the value propositions off, the overstaffed, unnecessary storage. In businesses that sell inventory, my God, are they having way too much inventory that doesn't move?

34:27We look at the turn ratio and it's like, why are you sitting on these Zots candies that sit for six months because one customer wants every six months? Why are we even selling Zots? We recategorize the profitable items. it triggers a cascade of consideration. But since most businesses don't take their profit first, they say,$30 came in, I have$30. How am I going to get by$30? And they find a way to get there. The greatest irony, Jay, is this. If you can find a way to survive, tread water for four years, what we're told is your business is on the verge of collapse. The reality is it's not. Your business is on the verge of success because you've proven no matter the circumstances, you keep treading water.

35:09So we're going to change the circumstances to put you in a profit trajectory. And since you've proven you can tread water, you're now going to tread water at the appropriate size as we take your profit first. So any of these businesses, anyone listening in right now, start taking your profit immediately. My one tip is if you're doing this alone without a profit first professional, you're just doing it solo, just start really low. Just start with one or 2 % toward profit just to prove to yourself that you can take a little skim off the top and store it away. then as you get results amplify that three or four percent or i would definitely suggest you get an expert in to really do it right it's like a trainer at a gym do it right but start slow and let it grow if you're doing it alone so this is completely backwards to the normal way we think about accounting where 100 it's it's what's left over is the profit it's there was a report that came out from the sba it's a small business administration in the u.s they studied north america all three of the major countries here well i guess all three of the countries, period.

36:09No, there's not a fourth country, at least. Well, not yet. I'm sure something wacky. But of our three countries, 83 % of businesses are not profitable. 83 % of businesses that exist today, and between our three countries here, it's somewhere around 50 million businesses. 83 % are just getting by. And that's true with the Shopify network, too. If you're an e-commerce business, you hear these success stories, but the majority of people, even though it's an amazing platform are dying and struggling. And so people say, our profit first is backwards to accounting. No, accounting is backwards to profitability.

36:46It's a very logical system. You have sales, you subtract expenses, and you see what your profit is. That makes mathematical sense. But behaviorally, when something comes first, like profit, you actually do it. If I want to exercise, you have to exercise first. If I love my family, I don't say, I put my family last. I say, I put them first. What first gets done. So I, this is my big opinion. I think accounting is backwards, traditional accounting. And I think the right way is to take your profit and then see what you have available to operate a healthy business. I love, there's an analogy in your book.

37:19Actually just reminded me of it. Losing weight. There's the four principles of small plates, the plate size, the order you eat. Vegetables first. Explain that. Cause I thought that was a great framework work of thinking about how that applies. Yeah. So I'll do the small plates one first, because it's fascinating. So just a quick background is plates in North America, all three countries, plates have doubled in size over the last 300 years. So 300 years ago in the 1700s, plates were what we consider a coffee saucer, was a dining plate or a dessert plate. But now our plates are double size. What's so interesting is humans haven't changed.

37:56Back then, they filled up their plates and their mom said, clean up your plate. And they did. Today, we fill up our plates and our moms say, clean up the plates, and we do. But since the plate has doubled in size, the servings doubled in size, and now societally, our waistline is doubled in size. This fitness instructor said the biggest, the simplest and most effective way to reduce and control your weight is actually to change the plates of your house to those little dining, those dessert plates. And that's your entree plate because it's portion control. And I found in our business the exact same thing.

38:27We have one plate, which is our checking account. all the deposits go in there and the more that's served the more magically we consume so what i teach in profit first is at your bank level set up little plates one for profitability so that's a short but one for your tax liabilities one for your inventory purchases one for your payroll and so forth and now when money comes in instead of having one checking account we divide the money up on a percentage basis these little plates and you see what's available for what purpose it's effectively the envelope system but at the bank level yeah i love it because it one thing that struck me when you talked about that was i often think like to for someone to innovate or to be innovative you you have to restrict time restrict resources restrict money yeah you know the more what's it um it's parkinson's law exactly but yeah the a task will expand to the available resource, the available resources.

39:28Right. And so, so will our spend essentially, is that part of Parkinson's law? Yeah. Yeah. And, and, and the flip side of Parkinson's law is when you constrain resources, it's forced frugality. You have to work with what you got, but you become innovative. We simply out all the time. And so in your personal life, I call the toothpaste situation. When you have a full tube of toothpaste, look how much you use. When you have an empty tube of toothpaste, look how little you use, but how you stretch it for day after day after day until you get a new tube it happens and on grand geopolitics politics the u.s says we're going to stop shipping to china chips uh the high-end chips to do their ai so what does china do they find a way to do deep seek or whatever it is on on these on the micro economy on cheapo chips and they kick our butt so when you constrain innovation kicks in so with business owners the default is like i need all my money to get by that's the bad side of Parkinson's law.

40:25When you take your profit first and hide it, you constrain the amount of cash available. The magic that happens is innovation. Our own office, so of course, every business I own does this, but my own office, we did this and we set aside very little for technology. And we're a very technology-oriented business. So it came about that we needed to get new computers for our staff because our computers are getting old. And I met with our president, Kelsey, who you spoke with. And I said, Kelsey, we don't have enough to get computers. She's like, well, how about we start making some phone calls? So one of the ideas that comes about is how do you get computers for nothing?

41:00We called a local pharma company, a large one called LaRoche, and said, hey, we're looking to get computers. They said, oh, thanks for calling. Every three years, we rotate our computers and sell them to our employees for$50 a computer. If they don't take them all, then we junk them. We'll tell you when we have a junk set and you can take them. They gave us 10 computers. They had actually about 50 left over. So we took 20 of them. These computers, we still run on them today. This is 10 years ago. They are so high end. We could have never afforded them, but it was junk to this big company. But the funny thing is we never even thought of that.

41:34If we had the cash, we'd say, let's hop on Amazon or, you know, let's hop on some computer site on Shopify and buy them up. We didn't. And so when you constrain cash, you start to think out of the box. If you don't constrain cash, you dumbify yourself. I wonder what the, I mean, I don't know if you could calculate this, but the percent, percentage of waste that is caused by not having constraints. Like it's, it's, it's, that number in America would be huge. Like astronomical. Unbelievable. Yeah. There's so many resources that are underutilized and just sit there. I, you know, I think I heard once a study of vehicles.

42:17I think it was like 96 % of vehicles right now are sitting static and won't move for at least another 24 hours. That's crazy. Yes. One car could serve 20 people in a neighborhood, for example. And the funny thing is it may be coming about. As autonomous technology comes about, that might actually happen. So what can we do? What's the resources that we're buying that we don't use? and how the way to get that resource only for when we need it so we get the same service out of it, but cut our costs by one-tenth or one-one-hundredth. We've got to think that way. It's not natural to think that way unless you don't have the money.

42:55That's why we've got to take it away first. Okay, I want to, well, for those listening, I highly recommend reading Profit First. We're skimming the surface here, but I want to touch on a couple things from some other books too, because I've had a number of people on the show that have written a book and we spend the whole time talking about the book, but you've got, you've got 10. So we got, we got, we got to, we got to jump around a little bit. So you said something at the beginning that I really, really liked it. You said it's the, you know, hustle is not the measure of, of success. It's, can you remove yourself?

43:28You know, sometimes that, so your book clockwork, I want to dive into, because I, I think that is very relevant. A lot of entrepreneurs running their, their business are working 12, 14, hour days. It's completely dependent on them. They can't, they can't remove themselves. Some might say they just have a job with a really bad boss. Yeah. So tell me, tell me about the thesis behind clockwork. Yeah. So the thesis is, it's around the, I call the superhero syndrome. And that when you start a business and it's only you, it mandates because you don't have any resources that you insert yourself. But then there's this perverted belief that, oh, I'm necessary and I can do this.

44:13I call it the I can do syndrome. I can do the accounting. I can do the order of fulfillment. I can, yeah, you can because you had to, but you sucked at it. And there's other individuals, other resources, other technology that's better at it. There's also this belief that I have a performance level of a certain standard and absent me, my team, my resources are a lower level. Therefore, it's necessary for me to keep on pulling the organization up. But that's a perverted belief. What we need to do is actually extract ourselves from the business, find the homeostasis. What's the natural level of performance in my business?

44:45And if I, the owner, are not satisfied to build infrastructure below it. Could you imagine Jeff Bezos of Amazon says, you know what? I got to ship the packages. I don't like how to wrap in those up. Like how absurd that would be. But there was a time he actually shipped the packages when he had it out of his garage. But as fast as he could, he said, I will never do it again. We got to build a list of all the things we do and start delegating those out absolutely fast. But I'll tell you the thing that most people delegate. It's the thing I don't like doing. I don't like taking customer service calls.

45:17I'll delegate that. That's actually the wrong thing to delegate. Delegate the thing you love most because the love becomes the addiction. I love doing the customer interface. I love talking with customers and just chit-chatting it up. Do you know, as you get rid of the things you don't like, you'll do more and more of what you love. And you start building this, this kind of callous around you. And that becomes your lifedom. And that's a real problem. You have to have the wherewithal to remove the thing you love doing, delegate that out. And now over time, the things that remain for you are the things you like least, which will expedite your extraction from the company.

45:54Now the catalyst kind of like a private first, I always look for a catalyst. The catalyst is ultimately the fork vacation. we just invested in a company that septic installs and the owner is the whole knowledge base he is so technically oriented and we said alan we're getting you out of the business we're taking out for four weeks and he almost had a heart attack hearing that and you don't do the next morning but if you're gonna have a heart attack that also means we don't have the systems in place well as we removed him sure enough the business sunk down but now we know the performance of the business and all the problems that he was always rushing around trying to fix they started popping up like, oh, we need to systematize that.

46:30Oh, we need a resource here or a person there. At the top of the show, I mentioned OmniSend can now talk to ChatGPT and Claude. And I want to tell you why that's even bigger than it sounds. So if you missed it, quick catch up. OmniSend is what I use for email and SMS on every Shopify store I work with, plus for this show as well. And you can now connect your AI, Claude ChatGPT, straight to your OmniSend account. Your data, your campaigns, your flows, everything. You open a chat and you ask, what should I focus on this week to make more money? And it will come back with real answers about your store, which flow is underperforming, which automation needs improvement, which customers are going quiet, what's missing, everything.

47:14My favorite part though, is AI segments. I used to build these by hand, clicking through filters forever. Now I just type something like customers who bought twice but ignored my last campaign and it just builds it. And anything it writes already sounds exactly like your brand because it pulls from all your previous emails, from your website, your logo, your color, your voice, everything. I've been doing this for 15 years and this is the closest I've ever felt to having a full-time marketer sitting right beside me. I have a link for you in the show notes that will give you 30 % off for your first three months or you can just use code J30 when you sign up.

47:48J-A-Y-3-0. If you're ready to migrate from Klaviyo to Omnisend like thousands of others, they will do everything for you. You just show up and all your campaigns and automations from Klaviyo will be set up and running in OmniSend, ready to go. And usually at 35 % less what you were paying Klaviyo. We need a resource here or a person there. So I invite your listeners right now, go to your calendar, put a four week vacation. Now this is a full physical and digital disconnect. No working remotely. That's not that stuff. You're out and And you can schedule it for up to a year out, but no longer than that.

48:24If you feel terrified about doing that, that is your business screaming at you, we are too dependent on you. Now, the other thing that'll happen, I do this for myself. This is my seventh or eighth year consecutively of taking four-year vacations. The very first time I did it, I left and I was terrified. I'm like, first, my business is going to collapse. Secondly, my ego is like, well, what do I do with my life if I'm not working inside my business? is. And finally, my mind went on vacation. When I came back, we had some problems, but my team navigated best they could. And the problems we identified, then that was my job to help build systems to fix it.

49:02And then I left again and again. The lesson here is the business doesn't, I mean, you don't need a vacation nearly as much as the business needs a vacation from you. But the final part of this story, Kelsey, our president, after two years of me taking four vacations, she said, Mike, I think we all need to take a four-week vacation. I'm like, what do you mean? She goes, as you leave, the work gets delegated to other people and they can do it now. But what if Andrea, who leads our marketing, she had that, or Jake or Jeremy, what if they aren't available? They need redundancy too. So she incidentally, against my better wishes, and she's right, she instituted a fortification for everybody.

49:40And not like we take all the same time, it's all over the place. And now there's this redundancy. The thing is, your employees, you yourself, things are going to happen. You will take a four-week vacation. Usually it's unplanned. We plan for it and it's built redundancy. It's like a fire drill in school. You do it enough times when the fire actually happens, you know where to march. And that's what's happening with our company. Andrea was telling me you even go so far as to change passwords on emails. So people can't, you physically can't check your email while you're away. Yeah, exactly. It was funny today, we have a sponsor, a major sponsor, and they wanted me to do a presentation this morning.

50:19And they needed to do a prep call half hour before. And Andrea leads that. So I hop on. Well, Andrea's on vacation. And in comes another person, Amy. And she's like, okay, we're doing this, this, this. I'm like, oh, hey, Amy. Haven't seen you in a while. How you doing? Good. She was totally fluid. Well, we've rehearsed this so many times. It wasn't like Andrea left, here's your script. Andrea doesn't kind of cram things together. Amy is always exposed to about 10 % of what Andrea's doing. so when Andrea steps aside, Amy can step up. But also Andrea covers Amy and so does Aaron. And it's all kind of this web effect.

50:52So when anyone steps out, we naturally are ready for the next person to step up. I would say it's the strongest type of organization is not the traditional pyramid structure. It's this web-like structure. Agree 100 % because you inherently think there's a ceiling of what you can't do and what's below you. and yeah that's right that's right none of that and we actually we even stripped away titles i don't you know people like what's your title like author guy thingy i think but i don't know the only person the title is kelsey because a company needs a president so like okay you're president and and she she is such a extraordinary human that she doesn't feel entitled by that she feels that's a responsibility but whatever the company needs she'll fulfill that so people have roles, but minus the titles.

51:41So on a real practical level here, if someone is running a store by themselves, I imagine you could automate a number of things through like VAs and AI tool. Like you could, I mean, this is something that when you have a few employees, like most of our listeners are in that bucket, but there are some solopreneurs. Yeah. So, so what does that look like as you at maybe like the different stages? So, yeah, the obvious and appropriate things are the VA, the contractor, vendors you have, technology. I'll tell you the un-office, really powerful, best ally for you in getting work done is actually your own customers.

52:22And no one thinks about that. It used to be, you know, I grew up in the day where if you wanted to order something, you couldn't go online. The internet didn't exist back in the 80s. So what we would do is you would get a catalog and you'd call. And then this operator would say, well, what's the mailing address? What's the credit card information? and you repeat it like 10 times over. Well, then someone said, oh, let's do order taking over the internet. We're going to have the customer enter the data. So we don't have an operator do it. We're going to tell the customer, you now have a job. Enter your address, enter your credit card information.

52:52And sure enough, I'm click clacking away going, oh, this is amazing. I can do the work for this and it's accurate now. Send it to me. And I'm paying them to do it. The customer in the right positioning will gleefully do the work for you. They can help in areas that you never thought of. So ask, what is the challenge I have? And before you say, how do I outsource it? How do I find a resource? Saying, how can I have the customer gleefully do this work on their behalf through my company? And you may surprise yourself. That's so true. I'm thinking of multiple ways that this could implement. Like we, we do so many things like from, from returns to support, to self-help, to tracking there, so much can be automated that you, yeah, that's, that's a fascinating one is I, I, I think you don't have, if, if you can't leave your business, I would argue whether it is a business.

53:55I agree. or whether it's just a job and you are your own boss, which is, which is okay, but it isn't a business. Like a business should be able to run. If you're, if you're sick, it goes on. If it, if it dies, you had a job, right? I 100 % agree. One of my favorite experiences I went to, I often go to a McDonald's when I'm traveling and Mr. Health nut here. Shame on you. Don't you exercise five days a week or something? Give me the largest Coke. so i'll go to mcdonald's because it's so convenient but i started a tradition for myself now about 10 years ago when i go to a mcdonald's i'll say hey may i speak to the owner real quick i can't actually think of a single instance and over 50 times where the cashier's like oh yeah the owner's in the back right let me grab her yeah i had one instance this is my favorite i go to cashier i said uh i like to talk to the owner and it's not like i have a complaint i just would like to learn about this business the cashier goes i don't think i've ever met the owner oh no no No, I'm going to pick up the money to pick up the money.

54:58I was like, that's, that's ownership. What, what owner is doing is creating opportunities for others to live, you know, the job of an entrepreneur, good lives, to do good things, to, to, to achieve good outcomes. And our responsibility is to enable that as much as possible. And at a McDonald's, maybe it's a transitional position. Maybe someone's not going to work there their entire life. It's unlikely, but maybe they can stage it as a transition for that person. But if that owner is cooking the fries or flipping the hamburgers, they are blocking people for having that life experience to move to where they want to go.

55:31So the owners got to get the F out of the way. And I'll tell you that McDonald's owners, they've nailed it. We've got to have that mentality in our own business is that franchise mentality is can we build it that can operate in our absence? And then we can do the greatest gift of all, which is do more of it to employ more people and make an environment that serves people the greatest way. And if I see a business where the employees are taking advantage of, they're the ones who are forced to grind it out. They're the ones who are taking on the burden. Then I have a responsibility as an owner to create a competing company that does a better job to serve people way better than that.

56:07And those people then will flock to me. And that's the job of the owner, to create great environments, not to work within one. do you think there's a, a lot of people don't leave because it's, they see themselves as they need to be there. They need to inspire the team or if they leave, I need to be the hardest one working the first one in the last one out. The like, there's this sense of like, I personally have that for me. Like I, I feel, I feel that I do take time off. I'm not, I'm, I would say I'm somewhat balanced, but I do also feel that I need to be present. I need to be, you know, like that's probably a struggle for a lot of people.

56:48Yeah. So that's a huge struggle. And they say, I have to demonstrate my expectation through my effort. And I think that's a very perverted belief because what we're saying to people is, my presence is what I also expect of you. If I'm here 20 hours a day or whatever it is, you better be here 19 hours a day. Is that what we want? or is it the output? If we can demonstrate the success of our business without our input, maybe we can encourage our colleagues to be highly productive, not sacrificing their time. If I say I prioritize my family and I want to be there for my family, and I also expect the same of you, that changes it.

57:26I'll tell you one thing that really changed things for me, my computer crime investigation business. I remember coming out of the office, we achieved$5 million. We were actually approaching 7 million at that time on a run for it. And I'm like, oh my gosh, next year we hit 10 million. Up to that point, I never had a business achieve 10 million in revenue. So I come out and I call, I had 30 colleagues at the time. I call everyone together in this room we had. And I said, I got a big reveal. And I had Patty, my assistant, queue up Survivor. Whatever that song. I have the tire. I have the tire. Oh, yes.

57:58Dude, total cheese. Total cheese. If I had a smoke machine, I would roll that out too. And I had this big flip chart and I wrote 10 million behind it by have a piece of paper covered. I'm like, this is the year we achieve. I rip it off,$10 million in revenue. And there's this resounding sound of silence. Like people are like, okay. And people kind of slump away. I'm like, what the hell has happened? Like, this is a big vision. We have the goal. And Patty says, Mike, you get the new house. You get the new car. Why should we care? What about our visions? I was like, holy crap. And that's where I started to understand the corporate vision is nonsense.

58:37That is the dream of the owner. They don't care about where the corporation's going. Everyone cares about where they're going. When I get to a certain goal in my corporation, that's my big fat ego being stroked. That's meaningful to me to spit in someone's face that said, you will never make it. I can prove I did. I have one colleague who wanted to move internationally. I had another person who's trying to buy their first home. I have another person who's coming over a life-threatening disease. That's their vision is to achieve that. The job of a leader is to say, how do we achieve your goals through your job?

59:10I can't grant your wishes, and that's not my mission, but my mission is to know what your vision is and to somehow align your role to help you accomplish that because that's why you're actually here. And when you care for your colleagues' visions with your absolute core, reciprocity is they will care for your vision, the corporate vision. I love that I want to get to your new book that's coming out soon is it out yet? no it comes out in January but you can order it right now at your favorite retailer The Money Habit right? The Money Habit yeah I don't know much about it I heard you talk about it on a podcast and I tell me about it I'll give you a big reveal my first book that's not only for entrepreneurs so uh it's profit first but it's translated to personal finance so it's a personal finance book but here's how it came about i got a call from this guy tommy and he's like he's a uh garage door they installed garage doors and he read profit first he's like dude i am permanently profitable because of you and he goes i have one problem left though and i i said okay he goes my employees are struggling financially because they asked me to pay him more and i try to and i can only pay so much, but even when I pay them more, they struggle financially.

1:00:30They need a profit first for their lives. He goes, can you teach them profit first? I said, yeah, yeah, yeah. I said, how many is it? Like a handful of employees, like six or seven? He's like, no, no, no, it's 900. 900. I'm like, 900? He goes, yeah, yeah, we're in it. We're national. We have 20 or 30 locations. We have 900 employees and they need to know this. I'm like, okay. So we did a beta with, I think 30 people to start. And then they expanded it and they're teaching everyone. and we transform these folks. What was so interesting is financial independence doesn't come from earning more. It comes from being able to control your money more.

1:01:05Yes, earning more helps, but only once you've control. And there's these distinct stages. First, we need to bring clarity to how you're managing your finances now. Then we bring control. And once you've control, you've confidence. Once you have confidence, now you can roll forward. We gotta get rid of that financial worry. And the vast majority of the human population has financial stress. I myself I have what's called tinnitus which is ringing in the ears and I was born with it it's it's constant and uh it's this constant ringing in the background and and it can be very stressful and what I realized is oh my gosh we all have financial tinnitus like if you're struggling financially you wake up in the morning and you just feel that pain it just drains you I live that when you're at work and someone's like hey can you go out to lunch you're just like yeah but I can't afford like there's always that ringing and like if we if we can put authority and control around that the ringing might be able to go away so i create a system that works with our natural habits you don't have to change a thing about who you are it's profit first principles plus a few that do it the last thing i discovered as i was teaching this to to the garage company someone said i you know what if i just won the lottery if i just had you know a couple million dollars everything would be fixed and i'm like i think you already have a couple million or like, what are you talking about?

1:02:22The average North American, three countries, makes$50 ,000 a year on average. And so if you're listening right now and you make more than 50 ,000, you're actually outperforming folks. But the average person makes 50 ,000 a year. The average person works for 40 years. 40 years times 50 ,000 is$2 million. Most people are going to make millions of dollars in their lifetime on the aggregate. We have to know how to manage millions is the lesson here because you're already going to make millions. So millions isn't going to serve you. It's knowing how to manage it. And that's what the money habit does.

1:02:54You know, we talked earlier about the global percentage of waste of spend. The global percentage of inefficiency, like at work or in life because of that, sorry, what was it with your ear it was called a tinnitus there's that low grade anxiety that it's devastating business carry around and you know you're in a meeting you're talking to you're on a sales call but in the back of your head like i gotta i don't know how i'm gonna pay rent on friday or shoot i need this and and you can't perform your best when you're worried about paying rent on friday or making paying your mortgage or if your kids what they're gonna you know like that's that's I said, I have a massive effect.

1:03:41I did a webinar, uh, yesterday with entrepreneurs, all different sizes. And it was anonymous on the chat. And I said, what is your biggest financial worry? Like every day, what was that? What's the ringing in your ears? The number one response was mortgage or rent. And these are entrepreneurs. It's funny, the outside world, most people are not entrepreneurs. Like, wow, you're rich, you're nailing it. No, we are just as worried, if not more so than everyone else about paying them. And the consequence is how you perform at work. The consequence is at home. Are you really present when you can't or you're concerned if you're not gonna be able to pay for the food on the table or for the rent?

1:04:18Of course not. I've been very lucky to experience both sides. And I really do consider it luck. I've lived way too long knowing what's not being able or being fearful that I'm not gonna be able to make something like rent and how devastating that is just to my attention. I've been on the flip side where, and I live that now and I hope to, but we'll see forever, where I have financial confidence, absolute assurity of what I can do and what I can't do. And I can't do it. I'm not buying that luxury boat or whatever. I'm not buying that jet. And I have assurity I'm not doing that because my financials tell me no.

1:04:57But my financials also say yes to what I can do. And living within those confines, Oh my God, is it freeing? I don't worry. I sleep so well. I'm so present because I live within my means. And this attraction, you know, there's always like dudes, these freaking bro-y dudes. I almost said the F word. These freaking bro-y dudes who are like, look at my jet and my, you know, the Lambo or the Bentley. This is success. No, that's douchery, man. That's not quick. You know, if you're going to show your success, first of all, that's not success in my opinion. but but secondly that's a perversion trying to perpetuate out there that you have to make more to get there you realize is is you're already there it's just managing with what you have right now is that is the success yeah well and there's always there's always going to be guy has lambo someone's got a garage of them or there's always going to be something else like you can never you can never and the funny thing is like it's i i know men and women who who have that and it's really cool but there's i did find a subtle difference i i play poker with my buddies every so often the person with the weakest hand is the biggest bluffer like every time it's like oh man pushing all the chips and you know try to sit at the table and like okay you got the weakest hand the the the guy with it's this happens to be all guys in this case but the guy with the with the strongest hand he's like i don't know if i should stay in you know i don't know because he knows he's going to take the table.

1:06:27I find this in life too, is the people that got to say they're successful, there's something missing there. There's something really missing. It's the people who don't care about the comparison, who whatever their situation is, and some people financially could be, you know, perceivably off the charts, don't really care about what other people think about. To me, that's success. And living within comfort of wherever you are, I think is the the biggest necessity for all of us. That is so, so true for, if I look back on my life, the percentage where I feel similar to you. Like I've been in such, I've been in, I've been in those times where how am I paying rent next month?

1:07:08And I've been in those times where I feel very blessed that it's not even a thought and, and being able to be in both, you have perspective and it's, I'm excited for that book to come out. we're getting close on time here and I want to be courteous. You've been so gracious with your time. What would you like to leave our listeners who are, who are entrepreneurs? They are, they are fighting the fight every day there. It's e-commerce is such a competitive space. There's a dozen other people selling the exact same products that are a click away on Google or Amazon or anywhere else. Like it's there, they're, they're fighting hard.

1:07:45Anything that you can leave them with some wisdom, inspiration, anything you'd like to say? And maybe not in a way you expect it. So there was a phrase that circulates around a lot saying, small business is the backbone of the economy. So I ran the analysis, the data behind it, and concluded small business is actually not the backbone of the economy. Small business is the entire economy. It's not just the backbone. It's the arms. It's the muscle. It's the brains. It's everything. In fact, every business I looked at, including these mega businesses, started in the garage. Like Amazon started literally in a garage.

1:08:22Some of them get investors, but it's a seedling of an idea. It's a small concept that maybe comes quickly, but the vast majority of them are slow moving. So here it is. Holy crap, do we need your success? Like Manitoba's counting on it. New Jersey's counting on it. The three great nations in North America, the whole globe is counting on your success. like this for our listener this is bigger than you you gotta be successful for you you gotta be successful for your family you gotta be successful for your community you gotta be successful for our globe we are thirsting for it and yes it's going to be very competitive yes someone else is a click away from the same thing but you can be different you can find something that no one else can do because it's your story your packaging your innovation you can use parkinson's law to your benefit.

1:09:12The reduction of resources can amplify intelligence and thought and innovation. So please, please buck up. Like I know it's hard, but gosh, we need you so badly. If, if, if small business goes away, stick a fork in all of us, we are done to just put everything you got into it. And I've got your back. Like if I can be a resource for anyone, email me, call me. My team is there. I might not be able to get back to you personally, but some way somehow we'll try to support you. I love it. Where, where, where would you like to send them? Where can they go to learn more about you? Um, all those. Yeah.

1:09:47So my name is Mike Michalowicz. So of course I have Mike Michalowicz.com. No one can spell it, but my nickname in grade school was Mike motorbike. And the only reason was Mike motorbike is because it rhymed. I do have other nicknames and they are so foul and, and X rated. I can't share them. So Mike motorbike.com. I bought the domain, I think when I was a kid, so go to Mike motorbike.com. And at that website, um, I have all my books, uh, chapter downloads. So you don't have to buy them. You can, you can go into it. Amazing. I just found out today you can listen to profit first on audio for free by going to YouTube and say profit first audio book for free.

1:10:27Someone ripped it off and put it up there. I don't care that how you get it as much as that you get it. Wow. But MikeMotorBike.com. And I do have an email list. I send out a weekly tip that's really concise that hopefully will move your business forward. I used to write for the Wall Street Journal. I provide that content. I will do everything to give you the resources to give you to level you up. MikeMotorBike.com. Wow. Thank you for all you're doing, Mike. It's incredible. and the fact that you would mention that your book is on YouTube illegally, but you care about the message, not the money and the fame.

1:11:06It's helping entrepreneurs, which is incredibly, incredibly, so much respect. Thanks, bro. Thank you so much. This has been great. I wish you all the best and I'm excited for your book to come out and I will make sure to all the listeners that all those links, well, the main MikeMotorBike.com is in there and everything else we talked about. And just thank you so much, Mike. Jay, this has been a joy. Thanks. What an absolutely amazing podcast. I am just so thankful that I've gotten to know Mike. He is such an amazing person that genuinely cares about changing people's lives and helping entrepreneurs.

1:11:43He's making such a big impact. I can't encourage you enough to go out and read his books, learn more about him, listen to his podcasts. If you're going to start with one book, start with profit first. He's, he's, he's got 10 of them. He's got another one coming out this fall. So I don't know exactly when this episode is coming out, but maybe it's, maybe it's even out already. He's, he's just an amazing person that truly cares about helping people. Now, as you know, at the end of every episode, I like to give a 1 % tip or 1 % win. I thought, what could I pull from this episode? There's so many, uh, there's literally a dozen tips, but the 1 % wins, I do like to keep very Shopify focused as much as I did say in the, in the episode, like the, your entrepreneurial journey and how you handle your business might even be more important to then how your menu is structured on your website, for example.

1:12:35But for these tips, I do keep them all very Shopify focused. And the one thing that he did say that stood out that I want to, I want to make the 1 % tip today is, is all about letting your customers do the work for you. So here's an interesting stat. Did you know this was in 2023? A Zendesk report showed that 81 % of customers actually prefer to solve their own problems before reaching out to support. I often find myself thinking like putting FAQs and chatbots and different things in front of creating a ticket is doing a disservice and customers might get upset. there's maybe a small percentage, actually only 19 % that would get upset.

1:13:17The rest actually don't want to talk to someone. They want to just find the answer. So this means they actually want to do some of the work for you. And when you make it easy for them, you don't just make their life better. You save time, you cut costs and you have happier customers. So your 1 % win for today is tap your customers for free labor. Now, of course, I'm not talking about them to pack boxes for you, but it's about designing your Shopify store so customers gladly handle certain tasks themselves. Like actually enjoy it. Like you make it fun. When e-commerce started, we used to always call in and give our address and our credit card number over the phone.

1:13:57Now we entered in a checkout. Now, if you're younger, you probably don't remember those days, but that was one of the first early things that was fast self-service that customers now actually prefer. They don't want to pick up a phone and call in. So here's three things that I think most stores can easily implement to give some of the work to the customer. So the first thing is it's all about adding self-service options. And one of the easiest ones to add is self-service returns or exchanges, whatever you do for returns and exchanges in your Shopify store. Don't make it a process that they need to call in.

1:14:32There are such good apps out there that make this easy, fun, a breeze. They can log in and track where the return is. They can, you can prompt them to swap for other items instead of returning. You can actually upsell them if they're swapping on other items. Like you can actually turn your returns into a profit center. And most importantly, you don't have to do the work of talking to them when they want to do the return. Three good tools that I would recommend for this, for each of these options, I'm going to recommend a tool. Loop Returns is probably my top, is my number one pick by far, actually.

1:15:03It is, I would say the leader for returns and actually turning it into a profit center. Returnly is also a pretty good one. And I'll also give a nod to happy returns as well, too. So those three would be picks. Loop is number one for me. That's number one. Second, make sure you have FAQs and some type of an answer hub on your store. So, you know, this is an area where people can search and find answers to all common questions about your products. Now, I know sometimes people put some common questions on their product pages. That's totally good for sure. But I would actually encourage you to build out a proper help center.

1:15:42And, you know, as a software company, we do this. We use Zendesk. We have a help center. If you use any of any bold apps, you can go to it. You can type in anything and it pulls up articles with answers and screencasts and walkthrough. For example, one of the articles in your help center might be, how do I exchange a product? How do I return a product? And then you can create a little screencast showing it with your returns app that you're using, how to do it, the steps to take so they don't have to call. But every single question that a customer emails you about, put it in a spreadsheet and once a month, take a day.

1:16:14I would do it more frequently, but take some time and create a little article on the answer to that question and put it in there. It's also super good for SEO, by the way. These get indexed really well. A couple of tools that I would recommend for this. Zendesk is great. That's what we use. It is a bit of an enterprise solution. So like if you're a smaller store, I would probably look at Gorgias. And I mean, Gorgias is for sure work like tons of Shopify plus merchants use Gorgias as well. It's more maybe focused for e-commerce. And I would also highly recommend you check out Sienna.cx. It is a AI agent tool.

1:16:48And I think if you're not using AI for some form of support, you're missing out. It has gotten incredibly good. You train it on all your support talks. So once you have all these articles, you train the AI agent and it talks to your customers for you, like in a kind of a chat like experience. And it gets smarter over time. It can even handle returns. It can handle things like subscription pauses or skipping months. It can actually do stuff too. It's not just like, here's an article on that. So that's Sienna. Then the website is S-I-E-N-A dot C-X. That's number two. And then the third thing I would do is if you find customers asking you questions about what product to buy, maybe you sell skincare or beauty or cosmetics or some type of food or natural, maybe it's natural pet food or I don't know if anything that there's a bit of a decision, use an interactive quiz.

1:17:41I'm a huge fan of interactive quizzes. They actually have been shown to increase conversion too. So each, you know, sometimes people will say when you have an extra click that might reduce conversion because you want to reduce the as many clicks as possible. But when a click is in a quiz style experience, the customer feels that you're getting to know them better. It actually builds connection and they're called micro commitments. And by the time they answer a couple of questions in a quiz, they're three to four times more likely to convert on the product that's shown after that quiz saying based on everything we know about this quiz, This is the product we recommend for your skin versus if they just searched in your store, read a few things, went and looked through all the products and tried to figure out each one themselves.

1:18:28Customers love quizzes. It actually makes them feel more connected to you. They feel like they have some emotional buy in because they chose the product. And studies have actually shown they're much less likely to return the product as well, too. So they're fun. Experiment with it. The two tools that I'll recommend for this one, my number one pick is Octane AI. Octane AI, and they've got a fantastic tool. You can drag and drop questions and then you pick which products should be recommended based on some conditional logic of what they choose. That one is fantastic. And just to make sure I recommend two, the other one I would recommend is Jebit, J-E-B-B-I-T.

1:19:06That one is maybe a little bit more of an enterprise solution. It's, I would say Octane AI is definitely easier to use, but they're both fantastic. Both are great. Jebit and Octane AI. Okay, so I went a little bit longer on this one, but I want to make sure I really fleshed this out. So the whole concept that we talked about with Mike was letting your customers do the work for you. And this is directly how it can apply to your Shopify store. And this is your 1 % tip for today, because every single minute your team spends answering the same, where's my order or manually processing returns is time you're not spending on growth, what you should be spending your time on.

1:19:45So let your customers happily do the work for you, not begrudgingly, they'll happily do it. They'll get a smoother experience. They can do it at any time of the day. But most importantly, you free up your resources to focus on big wins. Now remember, your job isn't to do everything in your store. It's to design the store that can do everything for your customers. That's your 1 % win for today. Thank you so much for listening. And if you're getting anything out of this show at all, please can I ask you a favor? Would you go to the Apple podcast app right now or Spotify and leave a five-star review?

1:20:21It's the way this show gets recognized and exposure. It helps us in our rankings. And if you leave a comment, email me, jay at shopify1percent.com. I have a special gift for you. I'm so thankful when people write something in the reviews, it really means a lot. We actually put them up on our website and I do have a special gift for you. If you shoot me an email if you have a well written out review. So thank you so much, everyone. We'll see you on the next episode.