[00:00:00] Marcia: Why would you be an angel investor? It’s a risky asset class so you do have to think about that, but at the same time, I’m like, hey, This is something that you can do, that you can really feel good about the work that some of these companies are doing. And it’s like an impact driven thing, but it is also, that you’re helping people to really make change in the world.

[00:00:29] Linzy: Welcome to the Money Skills for Therapist podcast, where we answer this question: how can therapists and health practitioners go from money shame and confusion to feeling calm and confident about their finances and get money really working for them in both their private practice and their lives? I’m your host, Linzy Bonham, therapist turned money coach, and creator of the course Money Skills for Therapists.

[00:00:51] Linzy: Hello and welcome back to the podcast. Today’s episode is with Marcia Dawood. Marcia is an angel investor. She is the author of Do Good While Doing Well, where she talks all about angel investing, what it is, how to do it, and today in our conversation we talk about. What is angel investing since it’s a new idea? 

[00:01:12] Certainly for me, I knew like, nah, this much about it. For folks who are listening and can’t see me, I’ve got an inch of knowledge and I certainly have learned a lot just with this conversation with Marcia today. So what is Angel investing? What it’s been like to navigate the financial world as a woman and what Marcia has noted are kind of some trends, when it comes to women and money and finance, 

[00:01:33] and the importance of putting your money where your mouth is. Angel investing as we talk about today, is a way to put your money that you have towards companies that are making great things happening in the world. You know, really to make your money represent your values. It is not the way, to be clear, to just save for your retirement. Angel investing is much riskier than, you know, your typical kind of stock market investing that you might do through your retirement investments, but it is a way to make really cool things happen in your community. It is a way to make cool things happen in the mental health space, and to support people who are visionaries and who are going to change things in a really powerful way. It’s a way for us to make our money make good happen in the world, which is something that I certainly think about a lot, and something that I see as folks work through, you know, money skills for therapists, my signature course with me, or my, you know, other courses, money skills for group practice owners or mastermind work together.

 [00:02:28] Once therapists tend to get our financial house in order and money is no longer a stressor, then we start to think about how can my money actually make my life better, make my family’s life better, make the world better? And angel investing is an interesting way to do that. So here is my conversation with Marcia Dawood.

 [00:03:00] So Marcia, welcome to the podcast.

 [00:03:03] Marcia: Well, thank you so much for having me.

 [00:03:04] Linzy: Yes, I am excited to have you. We were just chatting a little bit off mic, about the folks who listen to this podcast, the folks that I serve, and the world that you’re coming from and I’m going to say that you are bringing things to the podcast today that we haven’t had yet in terms of your expertise and your experience.

 [00:03:21] So I’m excited for what you are bringing today. Could you give folks just a bit of an introduction so they know where you’re coming from as we move into this conversation?

 [00:03:29] Marcia: Yeah, so I was in education, worked for Kaplan for a very long time, and one day I was invited to an angel investing meeting because my husband worked in finance. Now, just as a side note, when I realized the potential that he had, and then where I got in my career, I was like, you know, I am just as good with finance as he could be, but I wasn’t really conditioned that way.

 [00:03:58] So even when I was invited to this angel investing meeting and I was like, oh, cool and then I was like, what’s that? Like, I have no idea what you’re even talking about, like investing that isn’t something that I’ve really been taught to do. I don’t really know that much about it. And so I went to the first meeting and I was just so incredibly fascinated because there were these entrepreneurs that were in my neighborhood, my backyard, because I was living in Pittsburgh, Pennsylvania at the time. I wasn’t even in like New York or San Francisco or some big, fancy place and I thought, oh my gosh, have I been living under a rock? I had no idea that there were, things happening all over.

 [00:04:35] And I realized just how little funding went to female founders and I thought, wait a minute, wait a minute, wait, wait. So we, women are like 50% of the population. You can’t tell me they only have like two or 3% of the good ideas, right?

 [00:04:51] Linzy: That’s bad math!

 [00:04:52] Marcia: Yeah, that’s bad, bad math, right? So, so then I started to piece some of it together. And I was like, you know, I think this is a problem, like a systemic problem because we as women are just not, we’re not taught, it’s not socialized for us to be, you know, the finance people. It’s like, that’s the guy’s job and I would talk to people over and over again about that.

 [00:05:13] And I finally got to a point where I was like, this is really frustrating. So this was maybe like 10, 12 years ago and then over the next, 10, 12 years, I’ve really been trying to focus my efforts not only on, hey, can I learn this? Which I was able to pretty quickly, but how can I get other people to feel comfortable with this?

 [00:05:31] Linzy: Yeah, and the angel investing world that you’re talking about, that you discovered 10 to 12 years ago, and we’re like, what is this? I can guarantee most people listening don’t know about it, either. So can you tell us about angel investing?

[00:05:43] Marcia: Yeah, so it’s basically simply put, it’s, you’re using your own money after tax dollars to invest in a private company. So we hear a lot about the public markets, we hear about Apple stock and Meta and all the things, right? But we don’t hear as much about the private markets because

[00:06:01] back in the day and when I say that, I mean like at least 10, 15, 20 years ago, you did have to have quite a bit of money. You had to be invited into the room, but that has changed so dramatically and now people can invest for as little as like 50, a hundred dollars. Where before you’d have to have thousands and hundreds of thousands.

[00:06:21] Right? And so this whole democratization that’s happening, and it’s still in the process of happening. We’re not, it’s not like tomorrow where you’re going to be able to buy stock in a private company like you can today on E-Trade and Robinhood, where you can do it in seconds, you know? And you couldn’t do that in public markets 30 years ago.

[00:06:39] So it is starting to change, but simply put, it’s like when you’re helping an entrepreneur to grow a company and you’re at that, like earliest of stages when they’re figuring it out, they might have an idea, you know, the angels come in before like the big VC people and the bigger dollars that are going to help the company to really scale

[00:07:02] but I look at it like, and I, have a podcast actually called the Angel Next Door because I was so fascinated as to why do people do that? why would you do this? Why would you be an angel investor? It’s a risky asset class so you do have to think about that but at the same time, I’m like, hey, this is something that you can do, that you can really feel good about the work that some of these companies are doing.

[00:07:26] and it’s like an impact driven thing, but it is also, that you’re helping people to really make change in the world. So I always say, like, I would hear the saying be the change you want to see in the world. And I’d think, yes, I want to be the You know, like, and then I’d be like, what do I

[00:07:44] Linzy: do?

[00:07:44] Right,

[00:07:44] Marcia: Like. I don’t know what I’m supposed to do and then I would see some of these companies and I’d think, oh, that’s really cool. They’re working on like a treatment or a cure for a disease, or maybe they’re working on something that could help the climate and I was like, I could be a part of that.

[00:08:00] Because I always thought, I’d have to be, you know, somebody big

[00:08:03] Linzy: yeah, yeah, yeah. Like have a

[00:08:05] Marcia: rich or Right.

[00:08:06] I didn’t think that me, I could do it. and it isn’t even just with money. What I love about this is there are people who have, and like considering your audience even, who have very specific skills and they can use the skills that they have, whatever they are, because all

[00:08:21] companies need all kinds of help. They could actually do that as something that is a give back so we think about giving back a lot of times as to charities, which is lovely. Everybody should be giving to charities and helping them and everything but if you think about the amount of money that goes to annual charitable giving, it’s a lot, but it’s really only equivalent to about 1% of the value of our US stock market.

[00:08:47] So if we’re thinking to ourselves, Hey, be the change, you know, and then, oh yeah, the charities are going to do that. That’s really not going to happen, right? We’re putting a burden on them that is way out of, what they have the means to be able to do so, like what can we do?

[00:09:00] Well, we could start to help some of these entrepreneurial companies and like, people are like, oh, okay, great. Well, where do I find them? Well, in a lot of cases there are entrepreneurs working on really cool stuff in every city, in every town. So I always tell people, just go to Google or search engine and just type in

[00:09:19] startup events or entrepreneurship or whatever in my town, and then just fill in your city or town because you’d be surprised how much really cool stuff is happening in your own backyard that you can go and find out about and meet new people. I met so many people that I never would’ve met because they were just weren in my industry.

[00:09:38] Linzy: Yeah, ’cause I’m hearing there’s kind of two cool opportunities here. One is you have the opportunity as somebody who has a few hundred bucks that you know, you wouldn’t be ruined if that money didn’t come back to you, right. Because like, first of all, just to be clear, we wouldn’t want somebody putting all their retirement savings into an

[00:09:54] Marcia: angel investment.

[00:09:54] Exactly. Don’t use your kids finance. You know your college

[00:09:58] Linzy: No college funds.

[00:09:59] Marcia: and they’re 15 years old.

[00:10:00] Linzy: So, you know, they are riskier investments, but as you say, it’s more of a values driven investment where you get to actually practically support making something that you want to see happen in maybe even your own neighborhood, your own community happen by funding somebody who is already doing this thing.

[00:10:14] So I’m hearing there’s the opportunity to put your dollars to work, you know, in terms of your values, but I’m also hearing for folks who might have a cool idea that they’re thinking about getting off the ground. This is another way to get funding to get started on some sort of neat vision that you have, is looking to angel investors, people who are happy

[00:10:31] to put money behind your vision and your project.

[00:10:34] Marcia: Right, and nowadays there are a lot of different ways to be able to invest. So I ended up writing a book called Do Good While Doing Well because I would try to explain as much as I could on my podcast, but it then there started to be so many episodes, people are like, okay, wait a minute. We need like a way to kind of navigate through all of this,

[00:10:53] andI just thought it was so interesting that you can invest, you know, like I said, for, you know, a little bit of money through what’s called equity crowdfunding and I explain all that in the book and also my podcast, but you can also use philanthropic dollars, you know, dollars that you would donate to charity that could potentially grow while you are kind of waiting to donate it to a charity.

[00:11:15] So in a lot of cases, it’s through a donor-advised fund and I won’t get into all the gory details, but basically if anybody has a donor-advised fund, and there are literally hundreds of billions of dollars sitting in donor-advised funds right now, and in a lot of cases, the managers of those funds will put them into a mutual fund or something like that, Apple stock, whatever,

[00:11:33] before it’s actually given to a charity and in a lot of those cases that can be used for private investments and it’s a way that, people can get money into these for-profit companies. Let’s say that that for-profit company does do well, it’s a way that you could potentially really expand on the money that you have for

[00:11:54] Linzy: charity.

[00:11:54] Right, right. You’re kind of investing the money first so it can grow and then you have so much more to give and for some language, for folks who are listening, I’m hearing you’re talking about, you know, private and public. So can you delineate just the difference between, you know, those public investments you’re referring to and private just for folks who are not familiar with that language?

[00:12:10] Marcia: Sure, so the public markets are what you hear about when people talk about some of these very big companies like Apple and things like that. They are publicly traded, meaning that you could go onto their website and they’re regulated by the Securities and Exchange Commission, they have to have all their disclosures.

[00:12:28] They have to do quarterly reporting. Annual reporting, and pretty much there is nothing that goes on at a public company that all shareholders know about at any given

[00:12:38] time.

[00:12:39] Mm-hmm private companies are not regulated by the SEC to the level that, a public company is and some, you know, it depends on if they’re fundraising, kind of the offerings that they’re doing.

[00:12:50] But at the end of the day, the private market is, there’s a lot more companies, you’d be surprised how few companies are actually publicly traded. I think it’s like around 4, 700 companies right now in the United States, which isn’t a lot. And there are just millions of small businesses and other private companies, so think about a private company, could be anything from your dry cleaner down the street to, it could be a startup, which is what angels are mostly wanting to invest in.

[00:13:17] But there are, a lot of ways that people can even raise money if they have, a small business in their

[00:13:22] Linzy: neighborhood.

[00:13:23] Okay, okay, and then, you know, you were talking about going back to the beginning of your story, you know, realizing, seeing your husband’s kind of trajectory in finance and realizing like, I, I could do that too. I’m curious, like, what has been your experience like of stepping into this like very,

[00:13:38] I was going to say specifically financial. I’m not sure how to describe it, but you’re kind of, you’re getting deep into the finance world, I think, when you’re getting into these angel investor spaces ish. Yeah. Tell

[00:13:46] Marcia: In? Yeah, in some cases, yes. I mean, the first, angel investing conference that I went to, there was a line at the men’s room,

[00:13:53] Linzy: yeah,

[00:13:54] Marcia: tells you anything. So I mean, I, I did feel, especially from 2012 when I first got started until a couple years ago, like it was pretty male dominated.

[00:14:04] But I feel like that’s the way finance has been.

[00:14:06] You know, guys when they want to make a deal or talk to their friends about it. It’s no big deal. They talk about their salaries, their jobs, their careers. They help each other. They’re on the golf course, they’re texting each other, blah, blah, blah.

[00:14:17] Right? As women, we don’t do that, and I really would love to find the golf course for women, like my husband is a huge golfer, and we would have these discussions about golf and I’d be like, why can’t I take the same amount of time as a yoga class? I mean, come on and then I would realize, you know, it’s not that you’re playing golf, it’s that you have access to people that I don’t have access to.

[00:14:41] And I felt like angel investing was something that I got involved with that opened up my eyes to a lot of things that, hey, I can do that too and it doesn’t have to stop and start at angel investing. It was like all of the things, the people I could get involved with, the different types of, groups I could be around.

[00:14:57] That became my golf course.

[00:15:00] Marcia: Because then I kind of felt like, well, I’m included and I feel like I can have more to give to other people because I’m now getting fulfilled by the people that are around me.

[00:15:13] Linzy: Yeah, I mean golf is an interesting example you bring up, and I’m thinking about a joke from a comedian that I’m probably not going to tell well, but something that’s basically the effect of like, golf is what men do because they can’t admit that they just want to go for walks together. because it’s like you get to spend, you know, a couple hours together and you’re going to talk about everything and you’re going to talk business, and then you’re going to go off and do some other things.

[00:15:31] So there is this, long space there where people can talk things through, you know, maybe do some business like on the golf course itself. And you’re right, we don’t have really, there’s not an equivalent space that women tend to do a parallel thing. So I’m hearing for you, it’s like getting into these rooms has been the parallel for that.

[00:15:48] And what type of rooms are those? What is the financial world that you’re navigating with the angel investors? Is it groups? Is it people that you’ve formed friendships with? What are these relationships looking like?

[00:15:59] Marcia: So in some cases, well, in a lot of cases, angels invest in a group because no one angel investor has enough money to back, you know, some of these companies. So we kind of pool our resources together. Plus, I am huge fan of anybody who’s doing anything in the healthcare space, but I am not a scientist, so you do not want me analyzing the company.

[00:16:18] Okay. I’d be like, I love what they’re doing. Oh my God. I’m such a bleeding heart about it. So that would be bad. So I need to surround myself with the people that do know, you know, the scientists, the doctors, and all that kind of thing so that we can, have better conversations and look these

[00:16:33] Linzy: companies.

[00:16:33] Yes.

[00:16:34] Marcia: As far as the finance side, most of the deal structure is relatively similar and in a lot of cases nowadays, you can invest through funds and a fund would mean that, I could make one investment into a fund manager who would then invest in multiple startups. And it’s their fiduciary responsibility to us as the investors to actually go out and find the companies that fit into, what they said they were going to invest in.

[00:16:58] And that’s great because now if you’re somebody who’s like, hey, I like this idea, I don’t have the time. Okay, and I, I could see myself doing something like this, but I just would want somebody else to kind of manage it. That is a much, different option in some cases better.

[00:17:12] Linzy: That makes sense to me. I mean, it makes me think about a couple things. One, it makes you think about that expression, like you should never be the smartest person in the room, right? So like, especially if you’re starting to want to support something that is not your area of expertise, pooling together with a bunch of people who are all smart in different ways, right?

[00:17:27] Helps you make these strategic decisions But then I’m also thinking too about, you know, for folks who are listening, the importance of being around people who inspire you and challenge you and just how like that kind of raises your confidence and your energy.

[00:17:41] Like if I think about the equivalent in my world, which has been finding people who are as ambitious and confident and kind of unapologetic about wanting to make an impact as I am, how much that’s increased my confidence and my ambition. And so, getting with other people who share similar values, and share a similar desire to make an impact can allow you to make such a bigger impact, as a group and also individually.

[00:18:05] ‘Cause I think, you know, something that I see a lot with us in the kind of like caring, helping space is sometimes we tend to have relationships that are more people who maybe are doubting us. You know, like, oh, are you sure you should be doing that?

[00:18:17] Do you really know what you’re doing? Shouldn’t you just like work for an agency? because we tend to be people who take care of other people, we’re not always encouraged to like, take risks and like, go for what we really want and maybe it won’t work out. there can be this kind of like safeness.

[00:18:29] That, you know, were encouraged to, and I think as women too, we’re also encouraged to like, be safe. Like, are you sure you want to take that risk? Like, I know for me, when I started my private practice, my dad was like, Ooh, this could fail. I’m like, yeah, it could. That’s okay right, but just, surrounding yourself, those people, and I’m wondering for you, what has it been like to build this community?

[00:18:46] Like, what has it done for you personally to be involved with these groups of people?

[00:18:51] Marcia: Yeah, it’s interesting you bring up failure because in a lot of cases it is okay to fail. That’s what we kind of encourage with entrepreneurship, you want them to realize what doesn’t work so that they can figure out. What does, and that’s not going to be a straight line. It never is in anything in life,

[00:19:08] right. So, you know, just being able to see that, you know, one thing that I talk to entrepreneurs about a lot is if they can’t explain the problem that they’re solving in such a way that is so simple and so easy that, anybody could understand it, they’re really not going to do well in their role.

[00:19:26] Right, and so as they’re trying to explain it to me, I. I just started to be the person who just said, I don’t understand. Sometimes that’s hard for us, especially as women to say, oh, I don’t know. A lot of times we’ll just say, oh, okay, uh, I get it, but do you get it?

[00:19:39] And so I just finally started being the person who said, I absolutely do not get it. I don’t understand what you’re doing because a lot of times these entrepreneurs, they’re super good at whatever they

[00:19:49] Linzy: are doing.

[00:19:50] Yes.

[00:19:51] Marcia: and, but, and when they try to explain it, it’s so technical that you’re just like, ah, I have no idea what you’re even

[00:19:56] Linzy: totally.

[00:19:56] Marcia: And so I think that in a lot of cases, the more you can be, and I think maybe that comes with age too. The more you can be humble about it and just say, hey, I just need you to explain this a little bit differently. And it really has helped them also to be like, okay, I’m getting more traction with other people

[00:20:13] because you were willing to say, I don’t understand.

[00:20:16] Linzy: Yeah, and I see that actually as a gift that you’re giving that other person, because that is a very important form of feedback for them. That if, they’re not able to explain it clearly as you say, they’re not going to be able to get traction. Nobody’s going to get what they’re doing. So, you know, as women sometimes we can smile and be like, yeah, yeah, yeah, yeah.

[00:20:30] This is happens a lot, with the folks that we support in our community around finances, right? It’s like your accountant is talking at you, you have no idea what they’re saying, but you don’t want to say that you don’t know because then you might look dumb. So then you’re just like, nodding ha, you know, like pained grin.

[00:20:44] but it doesn’t do anybody a favor at the end of the day, right? Because in that case, you don’t understand what you’re saying. Your accountant has basically just wasted their breath and in the case of what you’re talking about, if you don’t let them know that you don’t understand what they’re talking about, you’re actually not helping them succeed as a business,

[00:20:58] right? So it’s like a favor that you’re doing them there, I hear. it’s a favor to be humble, in the world when everybody wants to pretend they know everything. So for folks who are listening, who are realizing for the first time that there’s these pools of investors out there who do invest in startups and like small companies.

[00:21:18] I heard you mention at the beginning that most people who get funded are not women. Most companies that get invested in and most of the folks who are listening today are women. so what would you say to women who have a really good idea about the possibility of getting angel investors?

[00:21:33] Marcia: Well, first of all, I would say read my book because it’ll tell you a lot of ways that you can get investment without necessarily having to go to investors, right away. And a lot of times, bootstrapping and hitting those milestones. You know, angel investors are really only going to invest in companies that are very scalable, meaning that they can become very big.

[00:21:55] Angels want to see at least a 10 to 20 times return on their investment before they’ll make an investment.

[00:22:00] Right. It’s crazy,

[00:22:01] but there are a lot of other ways that you can, get funding. The other thing I’ll say is you know that number about how little money goes to women. The only way we’re going to change that number is to get more women investing.

[00:22:13] Linzy: Mm-hmm. Mm.

[00:22:13] Marcia: because it’s.

[00:22:14] It’s the people that look like us is who we help. How can we help those women? We can get more women writing checks and making the decisions, even if it starts small. My goal or vision in life, if I could wave a magic wand, would be to have so many more women investing so that it makes it easier for the female founders to be able to fundraise and build their companies because the women are scrappier.

[00:22:41] They’re taking money and they’re making a lot more with it, and they can get more revenue with less expenses. It’s just a proven fact. there’s been studies done.

[00:22:51] Linzy: Yes, yeah, I’ve, joked about this with folks before about, most men that I know, who have started companies think it’s really important to wrap their truck. That seems like a really important investment to them, whereas like, so few women that I know make those kinds of choices, like where, you know, as you say, much more like thoughtful about what will give you return.

[00:23:06] and so I do think that, a lot of the, whether it’s it’s nature or nurture, a lot of the ways that women tend to manage money are more thoughtful and strategic and considerate and therefore we are in a position to build very successful businesses.

[00:23:20] So for people who are listening who are possibly hearing about this for the first time, how can they get further into your world?

[00:23:27] How can they learn more about angel investing?

[00:23:30] Marcia: On my website, which is just simply my name, marciadawood. com, we can put it in the show notes, the exact spelling. I have a podcast tab, and on there I have playlists. So if you’re interested in a certain type of investing, if you want to hear from a certain type of investor, you can go there.

[00:23:48] The very first episode I ever did is me explaining what angel investing is in about seven minutes and it’s been the most popular of all, even though it’s very short, and it’s the first episode that ever came out. In a lot of cases, I’m just trying to educate. I have no real dog in the fight.

[00:24:05] I have a book, but I’m not trying to get people to invest in a fund or get people to invest in a certain company. I’m not a broker, anything like that. I make no suggestions, talk to your financial advisor, everything. I’m not making any recommendations.

[00:24:18] I just think people should know about it because we’re not talking about it enough. We’re seeing a lot of innovation that could be happening in our world, not happen, and it’s basically left metaphorically on the cutting room floor and I just I don’t want to keep seeing that happen. I want to keep getting more and more people to even know that this is something that exists.

[00:24:38] Linzy: Yeah, absolutely and you know, what I’m hearing is it really is an opportunity to kind of put your money where your mouth is you know, being an angel investor, which I know is something that resonates with the folks who listen. ’cause we’re always thinking about how to try to make the world better than it is right now.

[00:24:52] So this is a, a cool new avenue, that we can explore to make this happen. So thank you so much, Marcia, for joining me today. This has been, really illuminating.

[00:24:59] Marcia: Well thank you and if people want to get a free copy of chapter one of my book, they can just go to my website and it’s for free.

[00:25:06] Linzy: Awesome, great, thank you so much.

[00:25:07] Marcia: Thank you.

[00:25:19] Linzy: This conversation with Marcia has taught me a lot about, angel investing and some of the kind of structures around angel investing that I didn’t really know existed. I think I always thought that Angel investing was more of like an individually giving to a company. You know, like your friend’s cousin is starting a cool company, so you give them $20, 000 and you hope that it comes back to you,

[00:25:37] but it was interesting to learn today that there are, you know, a lot of structures around angel investing. You can go in with a group of people who have different expertise than you do to make good decisions as a group. You can entrust your money to somebody who will invest your money. For you, aligned with the values that your group has identified.

[00:25:56] So, you know, there it’s quite a developed world, is what I’m hearing today and something that stuck out to me as I was talking with Marcia, is the power and the importance of stepping up and owning your expertise, your competence, your skills, as a woman or a marginalized person in the world, and what that also does for the world, just representation of us stepping up and saying like,

[00:26:19] I know how to do things. I understand business. I can learn these things. Stretching ourselves. Not only does that expand us as people and make us more confident and grounded and more impactful as people, but as Marcia mentioned, people tend to support other businesses that look like them, It’s not great.

[00:26:39] It’s not a very pretty part of human nature, but the more that we have women and marginalized folks using our money to support businesses from women and marginalized folks, the more of those ventures are going to be successful, right? Like, we need to be in these spaces using our power to make great things happen in the world.

[00:26:59] And if we’re not in these spaces, then, you know, the folks who tend to be there are not going to support the things that we want to see. So really stepping up and using our power through money to make cool things happen is a very exciting prospect for me and something that, as Marcia mentioned, you don’t need to have a lot of money to do.

[00:27:15] If you go in with a group of people, that can be something that you pull your money together to make a really neat company happen which I can’t even think of what they would be ’cause it’s kind of innovation that’s not really what I do but, uh, very, very illuminating today, this conversation with Marcia.

[00:27:30] You can follow me on Instagram at Money Nuts and Bolts and if you are enjoying the podcast, I will ask you if you’ll leave me a review, you can relieve a review on Apple Podcast, but you can also leave reviews on Spotify. We have a link in the show notes that if you click on it, it will take you to the review platform that’s actually compatible with you.

[00:27:48] So for so long I have tried and wanted to review podcasts on Apple Podcasts, and I simply cannot ’cause I’m not an Apple user, but yeah, our link in the show notes now, if you are not an Apple user and you’ve been like, Linzy, I cannot review your podcast. I’m not an Apple user. The link in our show notes is now this cool link that will lead you to be able to leave a review on whatever platform is actually compatible with your device.

[00:28:11] So if you’ve tried to leave a review before, and you are not an Apple Podcast user, click on the link in the show notes. It will give you the options where you can leave us a review, Leave us, you know, a starred review, and that is a great way for other people to find us hear about the podcast. I recently looked at our

[00:28:26] reviews and we have 90 5 star reviews, which makes my inner achiever very happy. Obviously, at some point I will not get a five star review, but I was also reading the reviews recently, and it actually was tearful. It’s really moving, hearing the impact that this podcast has so if you have a story to share about the impact of the podcast, please leave me a review.

[00:28:46] I want to hear about it and it helps other folks to hear about it too. Thank you so much for joining me today.

 [00:00:00] Mike: The job of an entrepreneur is not to do the job, it’s to create the job. That’s our job. So if you’re a therapist and you love doing therapy, by all means sustain that. If you want to build something of perhaps even greater impact, meaning you can serve even more people, then we have to employ people, but then your job has transitioned to building jobs for them, and the reward when you build jobs for people, AKA grow our economy, is profit.

[00:00:35] Linzy: Welcome to the Money Skills for Therapist podcast, where we answer this question: how can therapists and health practitioners go from money, shame and confusion to feeling calm and confident about their finances and get money really working for them in both their private practice and their lives? I’m your host, Linzy Bonham, therapist turned money coach, and creator of the course, Money Skills for Therapists.

 [00:00:51] Linzy: Hello and welcome back to the podcast. Today’s guest is the one and only Mike Michalowicz, creator of Profit First. I try to keep my geeking out, to a minimum, and my fangirling to a minimum.I feel like I succeeded. You can let me know. Today Mike and I talk about some of the biggest conceptions around Profit First that he still sees, coming up, 11 years after he wrote the book. We talk about what profit actually means, like what is profit? and we talk about some of the black and white dichotomous thinking that can come up around profit and people, and moving out of that simplistic thinking around profit and what it is. We talk about the importance of profit specifically for folks who are doing therapy work, healing work, helping work, why we especially need profit, and the cost that happens when our businesses are not profitable. When we’re under financial stress. and we talk about some of the changes that he’s seen in the small business landscape since he wrote the book, and what we need to be more thoughtful about now when it comes to Profit First. Here is my conversation with Mike Michalowicz.. 

So Mike, welcome to the podcast.

 [00:02:10] Mike: It’s a joy to be with you, Linzy. Thanks for having me.

 [00:02:12] Linzy: It is a straight up honor to have you here. I’m going to try not to geek out too, too hard but it is wonderful to have you here to be able to talk to you about Profit First. ‘Cause as we are chatting about a little bit off mic, before we just started recording the work that you have done with creating Profit First and popularizing it has had a huge impact on the small business world. You have made waves.

 [00:02:36] Mike: Yeah. It’s such a blessing. I am so fortunate. It’s been a lifelong dream. I’ve wanted to serve entrepreneurs because of the struggles I’ve experienced. I think the journey can be simplified, maybe not easier, but at least simplified. And it was funny, there was a,a meme. My wife came to me, she’s like, oh, this video got like 5 million views, whatever. So yeah, look at this. I’m watching and it’s this video they’re talking about, American business and stuff. Right in the middle of the guy is reading Profit First. She’s like, look, you’re in pop culture Now, it was not a complimentary video. 

[00:03:10] Mike: It was all about kind of like the American Hustle mentality and how we sacrifice everything in life. So he uses this book, says, look, it’s all about profit, which is not what the book really means.

 [00:03:17] Linzy:  That’s inaccurate. Yeah.

 [00:03:19] Mike: It’s kind of cool to be in that pop culture scene.

 [00:03:21] Linzy: There you go.

 [00:03:22] Mike: It was on Sister Wives. I’m like, that’s kind of fun.

 [00:03:24] Linzy: you go. Yeah,,, yeah, Okay. So you’ve made it onto tv. you’ve got Yeah. Yeah, it has. It has and I’ve heard sometimes the phrase like, if you have haters, then you know, you’ve made it so people, it’s popular enough that people misunderstand it, right? Which says a lot. So I wanted to start with this actually: What do you find are the biggest misconceptions that folks have about Profit First? 

[00:03:47] Mike: I think that meme videos, it was kind of a good indicator. We think that profit first means profit over everything else in a business, that it’s Profit First and people last. That’s often the thing I hear. People are like, oh, I’m people first, not profit first.

[00:04:02] Linzy:  Yes.

[00:04:03] Mike: But what Profit First means is that you need to care for your profitability. It must be the priority otherwise, you can’t care for your people; you can’t care for your organization. It’s not viable. The example I used with therapists is imagine,I’m a patient or you’re the patient and I’m the therapist, and you walk in, in scenario one. I’m like, I’m not profitable. In fact, I’m barely making it. and I’m really desperate to cover my mortgage this month. Let’s do this session or you come in to a therapist who is like, I’m very profitable. The business is extraordinarily healthy. I’ve paid for my mortgage and I have a reserve for the next three months. Are you ready for your session? Who do you want? We all know that the lack of money and the panic to bring it about brings about this ongoing stress and the lack of attention, but when you are profitable and sustainable, you can be all in on your patients. So this is the greatest irony when people don’t know about Profit First is your clients are starving for you to be profitable. They want it for you in the worst way. They may not say those words, but their behavior is totally in alignment with that.

 [00:05:00] Linzy: Absolutely, yeah, sometimes I say that we should be living the lives that our clients think that we’re living or want us to live, right? Because we do, and we see this all the time, especially in the therapy health practitioner, helper, healer space where we’re putting so much, we’re trying to pour so much into making other people well, but you know, we’re pouring from an empty cup, right? And we’re doing all sorts of things that we would not encourage them to do. We wouldn’t be like, you know, what you should do is like work until you’re exhausted for so little money. Go home, cry into a bag of Cheetos, go to bed, start over, right? Like we would never want that life for them and yet sometimes when we are so afraid of being taken care of and being, well that is the life we end up building for ourselves. Right. The financial stretch. and it’s, it’s classic wounded, healer kind of behavior. Like it’s right on target for us, in a lot of ways for the types of folks who, you know, tend to be drawn to these kinds of fields, but yeah, our clients want us to be happy. They want us to be stable. They want us to be able to go on vacation, right? Nobody wants you to be struggling, and as you say, there’s such a cost to that stress, right?

 [00:06:00] Mike: So, and it’s not just with the therapy space. I was reading a study that average retail store owners earn less than if they worked a job at McDonald’s, and the work hours are ridiculous. You know, I have got to stock inventory, I have got to be there all the time. I have got to sacrifice weekends, et cetera, et cetera. And we’re not getting by. Yet the consumer does think, wow, you have got a store that’s been around for five years, you must be wildly successful.We’re the cause of that because we’re the ones that we have to look successful. This gap of perception and reality is what I call the gap of entrepreneurial poverty. We’ve become entrepreneurs ,and we have this impoverished life. It’s not just financial by the way. It’s in so many ways, soulfully, timefully, all these things, but we put this air out there, success, and we believe everyone else has it, but not us. So if there’s one thing I can convey: if you’re a living check by check, you ain’t alone. It’s okay for this moment, but it’s not okay going forward. We have got to fix it because if we fix it, we serve your clients better, you’re fully attentive to them, your life becomes better so you can do more of your craft. Everyone wins if you’re profitable, and admittedly, everyone loses, or at least is compromised if you’re not.

 [00:07:08] Linzy: Yes, yeah, and you know, when you were mentioning that piece of people saying, you know, it’s not Profit First, it’s people first. Something that I think of there is, I think that there’s an old labor slogan, right? Which is like people over profits and so I almost wonder if like, somehow that phrase has gotten plugged in, right? Like people are like, well, if I have to choose, people are profits. I’m choosing people, but you’re like, well, that wasn’t the conversation we were having. People can be very, black and white in their thinking around these things.

 [00:07:31] Mike: Yeah, and it’s not this dichotomy. It’s not either or; they’re complimentary. It should be people and profits, or profits, helps me support my people. I’m very proud that my business has been profitable for 15 consecutive years, every single quarter, and a profit distribution comes out every single quarter, and I’m privileged, I can even share with my team members here.

 [00:07:51] Linzy: Yes.

 [00:07:52] Mike: And I’m proud that it supports an environment we want. There’s not this panic. You see when you’re not profitable. There’s this desperation to get through just tomorrow because we have bills and responsibilities, and that desperation comes into the office. We’re a small shop here in this office, in particular there’s about eight of us. And if I come in stressed, my colleagues will feel it. If they come in stressed, I feel it. So, profit alleviates that, brings about a runway, it brings around, a lack of stress, whatever the alternative is to that and it brings about happier clients, you know?

 [00:08:24] Linzy: Yeah, sustainability has been one of the words I found myself starting to use more like I’ve been working with therapists around finances for six years now, and more and more I find the term sustainable just hits a chord for me. That’s what I want; that’s what most of my clients want. Like most of my clients, they aren’t looking for grandiose lifestyles. They’re not looking for yachts. They’re not even looking for necessarily, you know, impressing the neighbors, but they do know that they need to be okay, right? Like, we all need to be okay, and we all need to be actually enjoying life and so that’s a phrase that really sticks out for me. But profit itself, like, can we dig into your definition of profit or how you talk about profit? ‘Cause I think, too, profit can be this very loaded word, right? Again, this very like, ugh, it’s like an evil word. How do you define profit?

 [00:09:07] Mike: It’s a reward for societal contribution. So I’ll give some context and some stats ’cause they’re pretty shocking. If you look back to kindergarten, when you went, Linzy and I went… Not that we went to the same class necessarily, maybe we did, but there was what, 25 kids or something in our classes, and this data shows that about 17% of those kids, of 17% of the population, will ever start a business. Now you multiply, say 25 by 17 quick math, where three, maybe four kids, very few will ever start a business. So let’s say it’s four. Of that 17%, only 20% do it sustainably, meaning that they’re beyond, you know, your exact word, beyond check to check survival,for five years or longer. And that they’re contributing by offering employment, part-time contractors, hiring vendors. That’s all employment. Well, 20% times 17% is 3%. So if you look at kindergarten, out of 25 kids, 3%. That’s one. One kid pulled it off. Which Linzy, in your case, it’s you. In my class, it’s me. It’s very few. Our job is to be a provider of jobs for the other 24 kids in the class because my friends, your friends, they’re looking for good jobs with good companies to do good things, have a good impact in life, and have a good life themselves, so I have a little kind of quippy saying that. The job of an entrepreneur is not to do the job, it’s to create the job. That’s our job. So if you’re a therapist and you love doing therapy, by all means sustain that, but we do have to make a choice. Are we building a business or building a vocation, or a job? If you’re building a job for yourself, continue the path. If you want to build something of perhaps even greater impact, meaning you can serve even more people, then we have to employ people but then your job has transitioned to building jobs for them. And the reward when you build jobs for people, AKA grow, our economy, is profit. It’s the thank you pass for what you’re doing for our society. So yeah, some of these CEOs make way too much money or these business owners. I understand. I get it. But also look at all the jobs I’ve cascaded out of the work she or he has done. It’s pretty extraordinary. So maybe some people have deference to how much they make, but I would argue they, and you, and we, deserve something for contribution, and that’s what profit is.

 [00:11:24] Linzy: Yeah, and that’s a great definition and that’s a great point about the rarity of entrepreneurship and the rarity of successful entrepreneurship, too. I think, too, for some folks who are achievers, they’re used to getting stuff done. Like, I think about my group practice owners that I work with. They sometimes might take for granted the fact that they’ve been able to build this… Like anybody could build this! Of course, anybody could just hire 20 other therapists, and fill them up, and create a great reputation and have a really strong, you know, quality of clinical care that’s being given to everybody…, like of course anybody can do that. Like they don’t really recognize the rarity and the specialness of what they’ve built, and the person next to them wouldn’t actually be able to build that, but I do think with therapists, especially we do tend to underplay our gifts or our accomplishments and forget that like, no, actually your neighbor down the street couldn’t have started this private practice. The neighbor across the way would not be able to actually help people cure their complex trauma. What you’re doing is special, and you should be rewarded for that.

 [00:12:19] Mike: Totally. I do a little mind game when I walk down the street and I observe other people, I ask myself what’s likely their vocation? And just the way that people carry themselves or dress or something, it’s like, oh, they’re probably doing this and that. It’s rare that I say, oh, that they’re clearly an entrepreneur. And then when I do a more formal survey and ask people, oh, what do you do? Just at a cocktail party that I’ve never been to before meeting new people? It’s the rarity. Someone’s like, I own a business. It’s typically a vocation of some sort and so it really is rare what we do. I think we also undermine our talents. So the fact that you can help someone navigate such a difficult, perhaps, experience and help ’em see to the other side, which is extraordinary. That’s a gift. But because we can do it, it’s like, well, everyone can do it because I can do it, and if I can do it, the world can do it. And that’s not true. That is your God-given talent. That’s extraordinary.

 [00:13:10] Linzy: Yeah. And what I try to remind our students of as well, and everybody listening is that, first of all, you had a natural tendency towards this kind of gift ’cause generally like folks who are really empathetic and able to do that was like a natural gift you got. Then you got a bunch of education, right? And depending on what that education was, you might be a couple hundred thousand dollars in debt for that education. Then often, in the United States… I’m in Canada, so our process here is a little different, but in the United States, often folks end up working for very little money or for free. To get their licensure, and then you start practicing and then at that point you think that you should be giving things away for free and there shouldn’t be any more money. You know, like, and then we move into a self-sacrificing place. It’s like, no, you have just invested so much into yourself. You have so much to offer.  You know, there’s

 [00:13:50] Mike: a saying,when you have a family, you always want to have a doctor, a lawyer in your family, and a therapist. One of my colleagues here is studying to be a therapist. Her name is Jenna. She’s been working on it for about two years now and she goes, as I’m pursuing this, she goes, you wouldn’t believe how many people in my family, like, oh, I have got to tell you something, talk, you know? Right, and she gets this. So as a therapist, you are really in a privileged position, like you’re something that every family wants and if it’s not my family, I’m going to seek it out. So I also understand the cost of that. Because that means even though it’s a business, it is a 24 hour job. You never know when that call is coming from a patient or not.

 [00:14:28] Linzy: Yes, And I think too, something that I’ve reflected on over the years is also because often people were being therapists before they were a therapist, then it’s weird to think that you should get paid well for being a therapist, and maybe even have profit ’cause you’re like, but I’ve been doing this since I was eight. Now, like, I’m supposed to want you to pay me $200 an hour for it. Like I’ve always given this away for free. So there’s a lot of specific barriers, I think, that in the helping professions, you know, that we have to overcome to get to that point of realizing I need profit in my business.

 [00:14:55] Mike:Yes, and I’ll give you a little tip. You know, when it comes to paying people are only as vested in the outcome as they are invested in the service. So if you provide services for free, I’ll see it as valueless. Maybe I appreciate what we’re doing, but if I don’t show up or I miss an appointment, ah, what do I care? It doesn’t cost anything anyway, but if I put $200 into a session. That’s real money. Now I’m acutely listening to what feedback you give me. The conversation matters deeply to me, and the output matters. It’s ironic. The more your customer, client, or patient pays, the more they’ll participate. So we actually have a duty, a responsibility to charge a premium. Fair. I’m not saying gouge by any stretch, but charge a premium to ensure the engagement of the patient in the first place.

 [00:15:43] Linzy: Right, they have to buy in, literally.

 [00:15:44] Mike: Literally.

[00:15:45] Linzy: You need skin in the game. And for folks listening, you know who I know their minds might be going to like, but what about people who don’t have a lot of money? It can be proportional, right, to what somebody’s earning. Like somebody doesn’t need to pay you $500 an hour to be invested in therapy, but there is a literal investment that happens when folks pay you a meaningful amount of money for your services. It’s not trivial at that point.

 [00:16:06] Mike: No, yeah, it can’t be trivial. It cannot be trivial. My mother-in-law is a therapist in Hawaii and she works with some individuals that are in a, we’ll say, impoverished position, and what she does is say, listen, I’m not going to charge you a fee, but you must contribute back societally. So they volunteer time at a local food shelter. That’s the contribution and it’s measured and tracked, and it says, okay, you’ve made that effort. It’s helping society, secondly, they still made an investment, and they link it to her because they have to do that work in order to get the therapy, and it’s been a huge win-win.

 [00:16:37] Linzy: I have never heard of that.

 [00:16:39] Mike: Oh, really?

 [00:16:40] Linzy: For such a creative way of compensation. Yeah, I mean I’ve heard all sorts of creative ways ’cause therapists are endlessly creative. I’ve heard of all sorts of ways that folks come up with different sliding scale points and like you…

 [00:16:50] Mike: You can do that, too. All that.

 [00:16:51] Linzy: You pay me per hour, what you get paid per hour, whatever you make in thousands a year, that’s your hourly fee. I’ve heard all sorts of things. 

 [00:16:56] Mike: Oh yeah. Interesting.

 [00:16:57] Linzy: But yeah, that’s interesting to actually ask somebody to exchange their time and like, contribute to the community. It’s like you are investing and contributing to them, and then they’re turning around and contributing to the community. That’s an interesting model. So I am curious, you know, having done this work now… You first published Profit First in 2014, so it’s been a minute at this point, 11 years. What have you noticed has changed in the small business landscape over the time that you’ve been doing this work? 

[00:17:22] Mike: Well, you know, inflation is one, so the numbers always go up, but it seems to all go up unevenly. It kind of evens out the next plateau, and it’ll be there for a period of time. So Profit First seems to be even more imperative to get done right because all the costs of doing it wrong are just bigger. So that’s one. The second thing is with automation, you know, the rise of AI and so forth, there’s a lot of tools to help see you along. But what’s interesting, we have about 1 million, maybe a little bit over, it’s like 1.1 million businesses globally have deployed Profit First. The ones who deviate from the core system struggle the most. So even though there’s these AI tools, these amazing spreadsheets you can create or download, they’re not intercepting your natural behavior. So this is not a therapy term. I made it up. I call it behavioral intercept, so I don’t even know if that’s a clinical term, I don’t think so.

 [00:18:13] Linzy: It’s good.

 [00:18:13] Mike: Alright, so here’s what a behavioral intercept is. I look at a pattern I have and I insert something in that pattern to either disrupt it or channel to an outcome I want. So the example is for exercise. I want to exercise regularly. This is about. 10, 15 years ago now, I said, I have got to commit to this. I tried to use willpower. No shocker, it didn’t work. I started putting my gym shoes on top of the toilet seat. So when I woke up in the morning, I couldn’t use the bathroom without grabbing my sneakers. That’s what I call behavioral intercept. Well, for our finances, the vast majority of therapists I’ve met managed their numbers at their bank, and the accountant or bookkeeper is saying, don’t do that. You know, you’re not. You have got to balance your books. Your bank is not the place to go. And I’m telling you, if that’s you are walking to the bathroom in the morning, that’s what you have to do, but we have to intercept it there. So we set up the accounts at the bank. So it’s ironic. As things have changed and there’s more of this technology, people are abandoning the sneakers on the toilet seat and saying, I’ll leave ’em in the closet ’cause that’s where I should store them. But if you don’t go in the closet naturally and deliberately, you’re not going to have access to that tool. So, that’s the iron. The basics still work. Set this up at your bank. Have multiple accounts as money flows in, carve it up. Pre-allocate to as intended use before you spend it, and you’ll have clarity. Don’t rely on something that you don’t likely use. It may be more sophisticated and interesting and really razzle dazzle, but if you’re not seeing it every day, by default, you’re just not going to see it.

 [00:19:36] Linzy: Yeah, yeah, and something that I always describe to students when they’re contemplating, should I play with Profit First? Do I do another budgeting method? Profit First is so tangible. You know, the system that you have developed is so tangible. There’s a physicality to it. Like often when I’m talking about managing money in general, but also about Profit First, I do this by moving your body motion, like you have to do it. ‘Cause sometimes like therapists too, because of it not necessarily being what we love, most therapists don’t also love math. The Venn diagram overlap is small. It exists. I’m in there. I’ve met other people who are in there, but mostly this is not where our happy place is. So that physicality of it. Sometimes I find that therapists have a hard time understanding Profit First like they’re like, but I don’t really get it and I’m like, just do it. Like you have to do it. You have to set up your numbers, figure out what makes sense for you, do your distribution, actually feel the money moving. See like, okay, my income account now has zero. My OPEX has 500. That’s a real number. That’s real, right? Like you’re setting up actual boundaries. That’s one of the clinical terms that comes to mind for me is boundaries, like good boundaries, and you can steal from yourself. Like you could just move the sneakers off the toilet and be like, meh, get out of my way, and ignore them, but you’re making a choice to do that at that point.

 [00:20:45] Mike: Correct, there’s consequences.

 [00:20:45] Linzy: Yeah. Yeah. You’re actually having to physically override it, and it’s the same. If I want to steal from my staff account to pay for something in opex, I can do that. Nobody’s stopping me. It’s mine, but I have to clock the fact that I’m doing that, right? I have to be honest with myself that I am out of my plan right now, and maybe I’m out of integrity, or maybe I’m doing it on purpose, but there’s no deluding myself.

 [00:21:07] Mike: The most addictive drug in the world is playing out here, too. It’s called dopamine, serotonin. And so it’s a little squirt that comes from our brain when we do these motions. So dopamine’s the anticipatory drug every time you log into your bank account. Once you do this transfer to profit. Perhaps for the first time you see a cash profit accumulating, next time you log in your bank account, dopamine, it’s like you’re about to do the transfer. It’s like, yes! And so it starts building that muscle. So Profit First is by design, I made it to be a repeated process, most businesses do it once a week. You can do it semi-monthly too, but once a week does actually seem to be the optimal rhythm and admittedly, most people ogle every day. So we log in and say, how does that profit account look? And then maybe once a week we do the transfers. All of that’s amazing because it’s all dopamine, serotonin, all the neural pathways start building, and so repeat this process. The other thing that’s beautiful is it doesn’t matter if you’re doing with dollars or tens of dollars or hundreds or thousands as long as you get started. So when you do that first transfer, and you see perhaps it’s a small amount, a dollar in your profit account, it’s like, oh, I never had profit allocated before. That’s pretty cool. The next day it’s three or $4, and it goes to 15, and that building momentum is amazing. I also designed the system that when you withdraw the profit to reward yourself, that never, ever will deplete the entirety of the account. There’s always something there. So the day you have your first dollar profit, there’ll always be a portion left because you’re always halving what’s remaining in that account, and you’re always contributing to it, too. But you’re always halving it, which means you’ll always have a profit distribution every quarter, hopefully always going up, sometimes going down, but never depleted.

 [00:22:41] Linzy: Yeah, It’s a brilliant design. And I do remember in the book you talking about your mom having those cash envelopes, you know, as being the basis for it. I am curious, how did you actually come up with this system? Like was it something organically that you started to build in your own business? How did you develop this? Because this is something that you actually like built and lived.

 [00:23:00] Mike: I’m ground zero for Profit First. I started it 16, 17 years ago, and part of it was that my mom used the envelope system. Part of it was, I remember, we used to go to our church locally and this concept of tithing and contributing, you know, pay first, I remember,the hiding money away, the old cookies in the jar syndrome, if you keep ’em on the counter, it gets consumed. If you hide it, you don’t and so what happened is, at my own desperation, honestly, I was trying to run it the way you’re supposed to run it through an accounting system and all these different things and it wasn’t working. And I said, I’m just going to go back to what I know. And my gosh, all of a sudden, profit was accumulating. My business didn’t change. It almost felt magical, like how could I make more profit? Well, I was just running the business more appropriately. I started understanding where the money was flowing and not spending money superfluously, And that’s how I developed a system. It was through trials and tribulations for about three years before I started documenting the story for the Wall Street Journal. I wrote the article. It took off. And I said, I have got to write a book about this and that’s how the book came about.

 [00:23:58] Linzy: Clarity is immensely powerful. You know, like just seeing it and I think that in so many ways too, it can feel like magic ’cause you’re making better decisions without having to use all of the cognitive willpower that it would’ve taken before to look at a bank account full of money and be like, okay, there’s 20,000 there. But I think 12 is for taxes, and I think like rent is coming out next week, so I need to think about that. Like there’s so much fuzziness. And I find too, especially for the types of folks who listen to this podcast and like the therapists and health practitioners that I work with who are so used to being so competent, that having fuzziness around money can really undermine your confidence. And, you know, you just end up feeling totally clueless and overwhelmed. And so you could still have $20,000 but feel like you have nothing ’cause you don’t know if it’s yours.

 [00:24:41] Mike: That’s right.

 [00:24:42] Linzy: Whereas just allocating it so you’re like, this much is taxes, this much is operating expenses. I’m covered for all of next month. I don’t have to worry about that. This much is my paycheck. It is so powerful, even though it’s the exact same amount of money.

 [00:24:54] Mike: Totally there, there’s a thing called the primacy effect, where we put great significance in the first thought and lessen the subsequent thoughts. I’m just finishing up a personal finance book, and so here I talk about an experiment. A thousand dollars is deposited into your account. You need to buy a new television. It’s $500. Can you afford it? Well, the answer is. I got a thousand dollars, it’s 500 and I say, the next thing is rent is due at seven 50. Can you afford it? And they’re like, I can’t but I say, scenario two, a thousand dollars comes in. Seven 50 is allocated toward your rent automatically. Two 50 is available for spending on whatever you want. A TV for 500 is what you need. Can you buy it? And it’s like, obviously no. So to your point, it removes that cognitive load. But without that, whatever our next urgent feeling is, we think all the money’s available for that purpose and blow it, and then rent comes due, and we’re in real trouble.

 [00:25:43] Linzy: Yeah, I mean, behavioral economics is a big part of all of this, right? Like once you start to understand those kinds of behaviors, these things that can feel so personal, and also for so many of us can be kind of shameful. Like, oh my god, I’m so bad at money. I’m a mess. Once we start to understand those kinds of mechanisms, we can work with them, right? Like then we have somewhere to go. I’m very excited to hear you’re writing a personal finance book, by the way and Mike, thank you so much for joining me today. I really appreciate it. For folks who want to get further into Profit First want to learn more about you and the, basically, can I call it the Prophet First Universe? Is that fair at this point?

 [00:26:17] Mike: Yeah

 [00:26:18] Mike: Sure. I love that. They can go to my website. So my name’s Mike Michalowicz, mikemichalowicz.com, but the shortcut is Mike Motorbike. So anyone listening, you know, in their car or whatever right now, go to mike motorbike.com. It’s easy to remember and you’ll find all my resources there plus the books.

 [00:26:31] Linzy: That’s a good shortcut. Easier than Michalowicz.

 [00:26:33] Mike: Yeah, by far.

 [00:26:34] Linzy: Still alliterative, so we like Mike Motorbike.

 [00:26:38] Linzy: Wonderful. Thank you so much, Mike, for joining me today.

 [00:26:40] Mike: It is a pleasure.

 [00:26:53] Linzy: It was such a treat to get to chat with Mike today on the podcast, and something that stuck out to me that I don’t remember him talking about in the book, Profit First, is about that emotional load that comes when money’s not working for us in our small businesses. And in the therapy and health practitioner space how we’re going to end up inevitably bringing that into a relationship with our clients. You know, that stress, maybe a little bit of desperation, is going to be there in the relationship ’cause that’s what we’re carrying with us. and so the cost of not having money, not having a business that is working for you isn’t just a financial cost, right? And we know this, it’s an emotional cost. There’s so much that is painful about our businesses not working. So fun to talk with Mike today. So interesting to see my own language, and thinking about Profit First, which I’ve been having this conversation with students for the last six years to be able to have, conversation using some of that language with the person whose brain it actually came from. I feel like Mike also has a great illustration here of what can happen when you’ve just figured something out for yourself, and you turn around and teach it. I know therapists and health practitioners, as he said, we tend to undervalue what we know, but this is a system that he developed organically through his work. And in the work that we do, we’ve often solved certain problems for ourselves or we do have specific expertise on things, and we’re often scared to teach and speak up but when we do, like Mike Michalowicz, we can have a big impact, and change the way that people think about a certain thing. And Mike has certainly had a huge impact in how small business owners think about their business finances and I know it’s been a tremendous positive impact in my own business and in the businesses of so many folks that I teach. 

We do teach Profit First in Money Skills for Therapists, in my signature course. Not till later. We don’t start with budgeting. We get into budgeting later, but Profit First is something that I suggest most therapists at least try, just try Profit First. ‘Cause those pieces that Mike and I were talking about today about the tangibility and the clarity that you get, it’s really hard to get from any other budgeting method truly. And I find most people benefit for at least spending some time using Profit First and feeling what it feels like to physically move their money around and have that clarity.So I so appreciate Mike joining me today for this conversation. 

If you are enjoying the podcast, it’s so nice when you can leave a review for us. We have this beautiful magic link now in the show notes that will take you to a page that will direct you to wherever you can leave a review. So if you’re not an Apple Podcast listener, like I am not, it will direct you to other places that you can leave a review for us, like Spotify. If you have three minutes to do that, I really appreciate it. It’s a great way for other folks to hear about the podcast, and if you would be interested in getting my support in implementing Profit First and getting clarity in your business around your finances, as well as working on your overall relationship with money and understanding money, I do all of that with you in Money Skills for Therapist. So if you want to learn more about Money Skills for therapists, you can click on the link in the show notes. You just need to check out my masterclass, which is like my intake process. That’s where you’ll learn about the course, what I teach, my approach, see if it’s a fit for you, and that will get you an invite to Money Skills for Therapists. Thank you so much for joining me today.