Stuck making urgent decisions that don’t move your business forward? Learn how to escape the survival trap using Mike Michalowicz’s Fix This Next framework. Watch now to discover the Business Hierarchy of Needs and build your roadmap from survival to success. 

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Topics we cover in this episode:

• 01:08 – Ross Loveland’s Background
• 02:55 – The Survival Trap
• 04:55 – Business Hierarchy Explained
• 08:55 – Sales Level Breakdown
• 12:55 – Profitability vs Growth
• 15:25 – The Order Level
• 17:47 – OMEN Process Overview
• 19:31 – Nurturing Business Growth
• 21:35 – Practical Implementation

LINKS

Find out more about Ross at https://trueprofitsalons.com/

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Find all episodes and related links at ContractorSuccessForum.com.

Join the conversation on our LinkedIn page: https://www.linkedin.com/company/CarpenterCPAs

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Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | SuretyAnswers.com

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TRANSCRIPT

[00:00:00] WADE CARPENTER: Are you stuck making decisions that feel urgent but don’t seem to move your business forward? Many business owners find themselves trapped in a cycle of short term fixes that only adds stress without addressing the real root problem.

Today we’re diving into the concepts of Fix This Next, a book by Mike Michalowicz, to help you identify and solve real issues, holding your business back. We’ll explore how you can escape the survival trap and build a roadmap to long term success using frameworks like the business hierarchy of needs and what Mike refers to as the OMEN process. This is the Contractor Success Forum.

I’m Wade Carpenter with Carpenter Company CPAs. With me as always is my co host, Stephen Brown with McDaniel Whitley, Bonnie Insurance. And we have a special guest today. . A friend of mine from Profit First, Ross Loveland who’s going to be talking with us in a little bit. But Stephen, your thoughts real quick on Fix This Next.

[00:00:49] STEPHEN BROWN: We’ve had Mike Michalowicz as our guest a number of times, and he’s a hoot as you all know, and fantastic. And this book Fix This Next is something that’s new to me, but we’ve been talking about it and I think it’s a great concept, Ross. How did you get involved in it?

And can you tell us a little bit about it?

[00:01:08] ROSS: I’m Ross Loveland. I am the owner and founder of a company called True Profit Salons. So it is a Profit First firm, similar to what Wade runs. And our goal is to help salon owners build businesses that serve them and their lifestyle to really help people have something that’s rewarding them and serving them and they’re intentionally setting aside money in a way that rewards them.

One of the cool things about this book, Fix This Next, the way Mike talks about it himself, he is always asked what should I read first? Which one of your books should I read first? Mike has written many books: Fix This Next, Profit First, Clockwork, Pumpkin Plan, Surge. All in, there’s so many, so he’s asked that question a lot.

And before Fix This Next, he never really knew what to say. But the whole idea behind Fix This Next is that it helps you identify what you need to work on next as a business. And then you can go over and read that book from Mike to get even more help and support on that specific area.

So when this book came out, he shared those concepts. He shared more ideas that we’ll talk about as we go through this podcast. And I was very drawn to it. I think as business owners, we really do fall into that trap of not knowing what we should be focused on, to not knowing what is next, what’s the best thing that’s going to move our business forward. And this book addresses that.

[00:02:21] WADE CARPENTER: Great again, Ross, I appreciate you coming on and in addition to being Mastery Certified in Profit First, he’s Certified in Fix This Next. And that’s something that I didn’t do, but I really appreciated this book when it came out too. And it was disruptive for me.

I think Mike thinks of himself as a disruptor. But, when I read it myself, I looked back at the way I approached building my business. And I realized that I had done some things in the wrong order. So I think maybe we can unpack that a little bit more, Ross, can you tell us a little more about the process and what all this is about?

[00:02:55] ROSS: Yeah, absolutely. And as we get into that, we first need to understand the problem. The entrepreneurial mission, Mike’s overarching mission that he always shares is to eradicate entrepreneurial poverty. So how is he trying to do that with this book? What is he trying to address?

And he talks about this idea that we’ve touched on already, that as business owners, we go with our gut a lot. We think that we need to focus on this, we need to focus on this. And usually it’s driven by urgency, it’s driven by what’s the loudest, what’s calling our attention, what seems to be broken, and it’s putting out fires. So we’re constantly putting out fires.

We’re stuck in this place of urgency and being reactionary. And he calls it the Survival Trap. We get to this place as business owners, where our goal is just to get through that day. What do I need to do to get through this day? Then the next day, what do I need to do to get through this day? It’s about surviving. It becomes about just making it day to day. it becomes the grind.

 And what we want to do is to be able to step away from that for a moment to take these moments of pause. That’s what he’ll call that in the book, having these pause moments, where we can look at the bigger picture. We can analyze for a moment.

And this process is quick. He talks about being able to run through this framework and identify your vital need in five to 10 minutes. Like it’s not meant to be something that takes, oh, I’ve got to analyze this and run this and crunch those numbers. It’s meant to be really quick,

[00:04:07] STEPHEN BROWN: Yeah, you answered the question I bet our listeners were asking next, how involved is this process of deciding what’s the thing you have to fix first? First thing that popped into my head, Ross, was, that expression, you can’t see the forest for the trees. But you can’t see the forest through the trees if your forest is on fire either.

Can you?

[00:04:25] ROSS: that’s

[00:04:26] WADE CARPENTER: Good point.

As you were saying that too, I think our listeners, contractors, they are bouncing from one thing to another. What he was talking about with this survival trap, I think, hits home for so many of our listeners.

[00:04:39] ROSS: Yeah. , I think that is why Mike’s mindful of that. That’s why he built this framework to be what it is, to be as quick as it is. Cause I think that’s so true in construction with contractors, I think it’s also true in the beauty industry, and I think it’s true in legal. I think it’s true in really any business that we get stuck in this trap.

 And that is another foundational principle he teaches in this, that the skin of our businesses are all different, even in what we’re providing and how we’re providing it. But underneath that, businesses are 99. 9 percent the same. They have the same needs. And he compares that to us as humans. We might all look different, talk different. Underneath our biology, our needs at that level are 99. 9 percent the same.

So it’s true with the business. And so this framework is going to serve those that are contractors, those that are running salons, those that are you know, running a gym, whatever it might be.

[00:05:29] WADE CARPENTER: That’s great. And I think going to the business hierarchy of needs, as Mike explains it, I don’t know if we need to explain maybe the Maslow’s hierarchy of needs,

[00:05:38] ROSS: 1943, that was the year that Abraham Maslow released this idea that he’d come up with this hierarchy of needs. that we as humans have. So at this base level, we have our need for things like food, water, and air, those bare necessities.

Then our next level up, we have safety. So we need to feel safe, have some shelter, physical safety from threats. Then we get into self esteem, we get into these higher levels as we go up this human hierarchy of needs.

So businesses have the same thing. They really do have these five needs that fit a pyramid. We’re at our base level. In the case of a business, we’ve got sales. That’s our air. Without sales, we don’t have a business. Maybe we have a hobby, but if we’re not bringing any money, we don’t really have a business.

Then we’ve got profit. We’ve got money coming in, are we managing it well? Are we profitable? Do we have good margins? How are our expenses?

Order is about systems. It’s about processes. It’s about being able to put some structure in place around everything else is happening.

Impact. So this is now we’re getting into maybe some longer term thinking, some longer term ideas. So impact is about the kind of culture that we’re creating, both with our team members, but also with our clients.

And at the very top legacy. Legacy is about creating truly a legacy business, something that will outlive you as the owner, something that has reached that place where it’s more than the business, it’s become a lasting entity that will hopefully span generations.

One of the things that he points out that I think is really interesting is that with our human needs, it’s very instinctual. We understand we feel when we’re hungry. Okay. That’s our base need right now. Like I haven’t eaten in so long. I know that I need that. The air gets sucked out of a room. That’s our top priority is to figure out how we get air. And when we feel longing, like we know that we need to find companionship.

But on the business hierarchy, it means we don’t really have that natural instinct. We have our gut feelings, which we follow a lot and are usually wrong. Or they’re not accurate enough. Maybe we’re along the right track, but we’re not quite there.

It becomes the equivalent of, maybe we are, he uses this example. I think this is one straight from his book, of being held up at gunpoint, like with our physical needs. That’s our top priority. Like we need to find safety. We see someone in front of us, the air gets sucked out of the room. We’re no longer worried about safety. We’re worried about finding air. It changes like that.

But with the business, we don’t understand that. And so we often are gasping for air, and what our business really needs is a sense of belonging. And we’re just trying to breathe in more air to get a sense of belonging. And it doesn’t work.

[00:08:14] WADE CARPENTER: When I read this book, I probably went the wrong way when I was building my business. As well as I think I’d like to try to relate it to our contractors and maybe go from there.

But, I probably went about this incorrectly because when I started my business, I was all about creating systems and stuff like that. I was trying to build all these systems, which is basically the third level, the order level, and then I had a marginal level of sales. But I didn’t really worry about the profitability.

Now, where I think our contractors start out is they understand they need some work to do, but they just chase any and every work and they get in a cycle, that survival trap, and don’t ever get to that second level where they really can start finding the profitability. What’s your thoughts on that?

[00:08:55] ROSS: Oh, that’s a great point. Mike breaks that down. Like the sales level isn’t just about finding work. Like he has these principles, these different things that we can go through.

So as we do this quick analysis, we can ask ourselves these different questions on the sales level, and it can prompt us to think more strategically than maybe we have in the past.

So one of those principles is in the sales level. He’s got five questions in each level. Five principles followed by a question that we can ask ourselves to see if we’re meeting that need. It’s called Prospect Attraction. Do you to attract enough quality prospects to support your needed sales?

He’s got some important words in there. Are they quality prospects? Are we getting enough of them? And are they supporting what our needed sales are?

There’s a principle right before that’s called Lifestyle Congruence, which is have you figured out how much sales you need in order to support your life and what you’re trying to build?

And so this prospect attraction is tagging onto that. Are we getting enough quality ones that will support that? That’s a really important principle. It’s not just about finding any and all work.

[00:09:50] STEPHEN BROWN: Absolutely. It’s so amazing to me, Ross, how so many people have not defined what their ideal prospect looks like. Or maybe they just don’t know yet. As I’ve evolved in my business, I can tell you my ideal prospect is a customer that is looking for a professional for advice, that can handle all their insurance needs, handle their surety bonding program.

And I take it even further, do they take my advice most of the time and do they pay their bills on time? I know that a lot of contractors, they have a niche, they know what they’re doing. And a lot of folks that are starting any kind of business. They have a gift of something that they enjoy, and they think they’re good at doing, and they’re probably a thousand times better at doing that niche than, say, I would be.

 They haven’t really defined exactly what it is they want to accomplish.

[00:10:40] ROSS: I think that’s one of the reasons that we go through this whole process because even the idea of identifying some of those higher levels, and like going through those questions, even if that’s not our need right now, it does help us to keep that in mind of where we want to be. It’s a pyramid for a reason.

We have our bottom layer. It’s not meant to be linear. It’s not meant to be, you start at the bottom, you work to the top and you’re done. But it does have a structure for a reason. And it’s meant to be something that we can cycle through. And I know as we meet needs, we keep coming back through it.

But yeah, I think that’s so important. We need to know where we’re going and that’s a little bit of that’s in that lifestyle congruence where we have to have at least an idea of what this business needs to accomplish, how it should be supporting us in order to then achieve that number of sales.

Then we’ll see it in some of the other levels as well. What’s the profitability? Things like that.

[00:11:26] WADE CARPENTER: That’s exactly where I wanted to go with this because, in our world with these contractors, they believe that poor sales is the, the cure to all evils. Just, if I can just get to half a million or two million or five million, things get better. And they forget about that second level of profitability.

I know we could probably spend the rest of the time just talking about the– there’s more to this book, but can you unpack that a little bit? Again, at some point our contractors need to understand gotta stop looking just for sales.

The movie Jaws is like, we need a bigger boat. You don’t always need a bigger boat.

[00:12:00] ROSS: I love that you brought that up. I actually just recorded a YouTube video yesterday where I talked about some money myths. And one of those is that sales is the most important number.

I think that is a big myth that we have that idea that when things are hard, when money is tight, I just need to sell more.

If I can sell more, it will solve my problems. If I reach half a million or a million and whatever the target is for the individual, then everything is awesome. Like then I’ve made it.

But the reality is when we do that, when we grow our sales, what we’re doing is we’re just scaling what we’ve built now.

So if we have something now that’s not serving us, that’s causing us some problems, and as we grow and scale it, we’re just going to have something that’s bigger, that’s causing us more problems and still not serving us.

So what we need to do we need to understand how we can be profitable at our current level, nail that, and then we can grow and we can scale it.

There’s another similar myth that we often have that in order to grow, in order to expand our business, we have to spend money. I have to lose money today if I want to have a chance of making money later down the road.

I think that’s another myth. I don’t think that’s true. I think actually when we become more profitable, it gives us opportunities and chances to do things that we wouldn’t otherwise be able to do. When we’re profitable, we can take advantage of things that come our way that we wouldn’t otherwise be able to because we’re profitable, because we’re stable.

We can do a heavier lift. We can expand. We can hire another team member. We can buy a piece of equipment because we’ve got that base of profitability and cash should come with that.

[00:13:24] WADE CARPENTER: Absolutely. And getting that cash and that room to grow, gets you to that third level is the order, and building those systems.

[00:13:31] ROSS: And that’s a great level. That’s a fun one. When you get to start to do some work there, it ties in really well with Mike’s book, Clockwork. So building these systems and these processes in place so that you as the owner stop becoming what he calls it in Fix This Next, the linchpin.

You stop becoming the one person that everything has to go through, really the bottleneck. And so you get to put things in place so that not everything’s reliant on you. And then hopefully get to a place where you can take time off. You can take vacations. You can not have your phone or your laptop with you and you can enjoy life a little bit more.

[00:14:01] WADE CARPENTER: Is there anything else you want to say, because I know we’ve got the whole OMEN process and all that stuff we need to unpack too.

How to find your vital need

[00:14:06] ROSS: Let me actually touch on the process of identifying your vital need. And I think you can find some of these resources online at I think it fixthisnext.com If not, you can search Mike Michalowicz, Fix This Next, and you’ll come up with it.

The process is you go through and it basically becomes a questionnaire. Each of these five levels has five principles and questions. So you go through and you identify those things that aren’t met. You’ll do that for all five levels.

And then you’ll look at what’s not met. If, for example, you have some needs that aren’t met on the profit and the impact and legacy level, you would then go to the lowest of the ones that you haven’t checked in this case, profit. You’d look at that need that’s not met and you’d work on that. That’s your vital need.

So then as you work on that, your business will evolve. It will make tremendous progress because now you’re no longer, a millimeter in a thousand directions. You’re very focused moving forward in one direction. You can solve that. You can improve it. Not that it will happen overnight, but you can make great progress.

And once that need is solved, then you can go to the next unmet need. In that sense, you may work up the pyramid, but then things always change with business. And there’ll be times when maybe we’ve met all of our needs at a certain level. And now it’s time to focus more on sales. We need to improve our prospect attraction, or we want to increase the amount of sales that the business is bringing in because we’ve got a different goal.

Now we’ve got a different lifestyle where we’re leveling up. So as we go through these level ups, then we’ll cycle back through.

And the order level, he talks about, so there’s five here, minimized wasted effort. So do we have a model to look at our processes to identify those things that are bottlenecks.

He calls another one role alignment. So this is our people’s roles and responsibilities really match to their talent, people in the right positions.

Outcome delegation. Are the people closest to the problem, empowered to resolve it? Have we given that to our team or are we holding it all ourselves? Which is the fourth one that he talks about, which I already mentioned, linchpin redundancy.

Do we have these linchpins in place? It’s almost always the business owner, but it can be others too. Where things are getting stuck because they always have to go through. It also creates risk. So if you get hurt or you get injured, everything goes through you. You’ve stalled the business. What does it do now? Can I operate without you? You need to have a plan in place to make sure that doesn’t happen.

And then the final piece in order, he’s talks about mastery reputation. So do you have a great reputation in your industry? Do you stand out for something? Maybe one or two things where you really excel at, as opposed to trying to be good at everything.

[00:16:26] WADE CARPENTER: I think a lot of these things align so well with the episode we did recently on that five stages of growth. And the last stage that, the decline stage that we talked about, Stephen. I think, a lot of these contractors and businesses in general never make it all the way up the hierarchy. So a lot of them stay in the bottom level their entire life.

[00:16:46] STEPHEN BROWN: We’ve talked about that before, and it’s so true. Your talk, Ross, about the linchpin, I immediately thought of a customer of mine. And if you’re listening, you know who you are, but there’s a linchpin that’s not you as the owner, but it’s in your organization. And that person’s a perfectionist. And they’re the bottleneck that’s stopping the flow of things.

And they made themselves indispensable to you because you dump a lot of these organizational headaches on that person. Anyway if my customer’s listening, that linchpin will call me and cuss me out. So I’m ready for that too.

[00:17:21] ROSS: I’d be willing to bet it’s not just that customer. I bet others listening are hearing that and be like, oh, I have that in my business too. Maybe I need to hear that too.

[00:17:28] STEPHEN BROWN: Yeah. Maybe you need to move them to another position or change their responsibilities to where they can’t be a linchpin to the rest of the flow coming through your organization.

[00:17:38] WADE CARPENTER: Ross I know you’ve already hit a few of these things, but I think there is a process for applying this. And I didn’t know if you want to spend a little bit of time talking about that.

[00:17:46] ROSS: Mike calls it the OMEN process. So O M E N. So there’s four things, four points of review. These are the steps that you take after you’ve identified that vital need.

So the very first one is the objective. So you’ve identified the vital need. We can even take an example. Let’s go back to the prospect attraction. So on the sales level, that vital need called prospect attraction. So we would look at that and we would say objective. What’s our objective? What’s the result that we want to achieve with prospect attraction?

So maybe the first step is we don’t even know what our ideal customer is. We need to identify our ideal customer. And then we want to target them with some marketing.

And we want to be as specific as possible, of course, follow SMART goal framework or something similar. And so maybe it’s, we want to bring in five leads a month that meet our quality, prospect or ideal customer criteria.

So that would be objective. We’re identifying the objective, the things we want to do that will help us know when the vital need is met. When we’ve done this, we’ll know the vital need is met and we can go back to the hierarchy.

Part of that would be M, measurements. Here’s where he’s adding more detail to Objective. So measurement is what’s the timeframe? And there could be a component of the number too. So we want to have five per month. We want to get this in place by the end of the year. And that’s our measurement.

Evaluation frequency, so how often are we going to review our measurements? How often are we going to to check in on our progress on this need and the work that we’re doing to meet it? So maybe it’s, I’m going to meet weekly with my assistant and we’re going to see what kind of leads are coming in. We’re going to check on our marketing efforts.

 Depending on the goal, it could be monthly, it could be could be every morning. We just want to make sure that it matches the objective that we’re trying to do. That it’s neither too obsessive nor too lenient, and we never know what’s going on.

And then the N, the last part of this OMEN framework is called Nurture. So we want to make sure that we’re building in moments, and this could be similar to when we’re doing that evaluation. We need to build in moments to make tweaks. Because from the beginning, from our outset, we might have one idea. And as we go along, we’re going to get different ideas. We’re going to see things, we’re going to gather more information. As we get that information, what are we needing to change?

For example, with the quality prospect, we might have identified one, maybe it’s married couples in their late forties, early nesters or empty nesters are almost there. But then as you go along, you realize this isn’t actually fitting. It’s not the right avenue.

It’s not the right client for the type of work that we’re trying to do. What we need are retirees, or we need young married couples, or whatever it might be. Like, you might find that it’s a different quality prospect that you really want as you start to see them.

[00:20:15] WADE CARPENTER: Rinse and repeat. I mean, you fix one thing and then you move on, right?

[00:20:18] ROSS: Yeah. Again it’s not about climbing the pyramid. It might be, we solve something on the sales. Maybe next vital need for us is on the order level. And maybe after that it’s profit, then it’s back to order, then it’s back to sales and we might be going all over the place. And that’s perfect. That’s how it’s meant to be.

[00:20:33] WADE CARPENTER: Again, things also happen in a company’s life or the economy, or construction is very cyclical. So you may be going up and down. Some key person leaves while you’re trying to create order and then you’re having to start back over. So it’s a fluid process.

[00:20:49] ROSS: That’s true.

It is meant to be, really with the questions, and as we get into each of these vital needs, we’re solving them on a deeper level. If we come back to the same need later, it should be building on what we did before. We are making progress. We are making growth. .

We’re not creating the same situation that we’re trying to avoid. The whole point of this is to avoid running around like a chicken with its head cut off, you know, putting out fires, always solving the thing that’s right in front of us. And so by doing this process, we are solving these things on a deeper level. So we are making progress.

And so we might come back to them, but again, it’s a level up. Now we’re solving it in an even better way. Even more profitable or our systems are even better. Things like that.

[00:21:26] WADE CARPENTER: Yeah, and if something does happen like that, it is a lot easier to go to that next level. So that’s a great observation.

[00:21:34] ROSS: Absolutely.

I think that it’s such a worthwhile process to try to put into place. He talks about certain folks that he’s worked with have taken that business hierarchy of needs and they’ve put it next to their desk. Or maybe with contractors and maybe it’s, on their dashboard. But the idea is that you can look at it and you can reference it and you can do this so quickly.

And again, to circle back, it’s about creating these pause points. If you’re feeling stressed, if you feel like your business is struggling, you’re not making real progress, that it’s not serving you in the way that you want to, and I’m guessing that most listeners are going to feel that either now or in the near future, because that’s just the reality. Like running a business is hard, being a business owner is a challenging thing.

There’s a reason most of the population doesn’t do it. But they’re also superheroes for doing it because it makes such an impact. I really believe in the value that small business and entrepreneurship brings to our economy, to our communities. So I think this is a great tool to support you as you’re doing that good work. That you can look at it. To give an example, I mean with my own business,

it has changed so much over the years. And being able to reference this hierarchy is incredible. Right now, look at my business, and we recently, I would say six months ago, we were doing a lot of work in the order level. We’ve got some really good things in place now.

Some team members that have grown, they’re doing amazing things and helping with some of the processes. Even just our documentation has gotten so much better.

I’m back, my, I would say my vital need now is in the sales. I’m back on that sales level, leveling up and trying to bring in more.

And so it’s so helpful to know that I know there’s still more to do in order. I know there’s still more I can do in profitability. I want to build a legacy business. I want to make an impact with my clients, with my team members. But I can’t do it all at the same time.

I really want to make progress. I’ve got to focus, keep the other things going. Of course, we don’t abandon sales work on profit. We don’t tell our customers, just wait a couple of months. We’re going to work on profit. I’m not going to do anything for you, but keep sending us money. We have to keep things going, of course, as we work on our buisness.

[00:23:31] STEPHEN BROWN: I think you nailed it, Ross. That’s exactly what we wanted to understand, is how this affects you and how you’ve seen it in action.

My whole thought process as I was going through the hierarchy of needs, personally, were just simply some customers that I needed to fire. And some other ones that I need to spend more time with.

[00:23:50] ROSS: I just love that. That’s so important. And by doing that, I’m sure you feel freed up both with your time, but I’m guessing even emotionally. You know, You’ve let some tough ones go and now you’re in a better place.

[00:24:00] STEPHEN BROWN: The tough ones are stressful, and when you fire them they’ll cling to the back of your neck and I’ll never let you go.

[00:24:07] WADE CARPENTER: This has been some great insights. And again, every time I revisit the book, it reminds me of several things in my own life. Where I am and what I need to do next.

Ross, I really appreciate you spending some time with us today. Any ways that our listeners can contact you or final thoughts?

[00:24:23] ROSS: Sure. Yeah. TrueProfitSalons. com is our website. And you can also find us on Instagram and YouTube. Those are our main platforms. True Profit Salons is our handle on both.

And just my final thought is this, really this idea of trade offs. So in our business we have to make intentional choices.

We can’t do it all, but by making those choices, we can then excel. Instead of doing everything, we can do a couple things really well, and I think that is the key to success and sanity.

[00:24:50] WADE CARPENTER: Well said. Thank you again for being here. For our listeners, have you got any thoughts or questions about today’s episode? We’d love to hear from you. Share your ideas, your feedback, topics you want us to cover on future episodes in the comments below.

I wanted to thank you all for tuning into the Contractor Success Forum. For more information, take a look at the show notes and we’ll have Ross’s contact information there as well.

If you found this episode valuable, make sure to share like, subscribe. We appreciate all that. We post a new episode every single week and we will look forward to seeing you on the next show.