Muscle for Life with Mike Matthews - My Top 5 Takeaways from Profit First by Mike Michalowicz

Episode Date: May 1, 2020

“Can you recommend a book for…?” “What are you reading right now?” “What are your favorite books?” I get asked those types of questions a lot and, as an avid reader and all-around bibliophile, I’m always happy to oblige. I also like to encourage people to read as much as possible because knowledge benefits you much like compound interest. The more you learn, the more you know; the more you know, the more you can do; the more you can do, the more opportunities you have to succeed. On the flip side, I also believe there’s little hope for people who aren’t perpetual learners. Life is overwhelmingly complex and chaotic, and it slowly suffocates and devours the lazy and ignorant. So, if you’re a bookworm on the lookout for good reads, or if you’d like to get into the habit of reading, this book club for you. The idea here is simple: Every month, I’ll share a book that I’ve particularly liked, why I liked it, and several of my key takeaways from it. I’ll also keep things short and sweet so you can quickly decide whether the book is likely to be up your alley or not. Alright, let’s get to the takeaways. --- Mentioned on The Show: Books by Mike Matthews: https://legionathletics.com/products/books/ --- Want to be notified when my next book recommendation goes live? Hop on my email list and you’ll get each new installment delivered directly to your inbox. Click here: https://www.muscleforlife.com/signup/

Hey, this is Mike from Muscle for Life, and I'm often asked about books. People ask me for book recommendations on various topics. They ask me what book I am currently reading and what books I have recently read and what my favorite books are and so forth. And as an avid reader, I am always happy to oblige and get some book recommendations in return as well. I also just like to encourage people to read as much as possible because I think that knowledge benefits you much like compound interest benefits your bank account in that the more you learn,

the more you know, and the more you know, the more you can do, and the more you can do, the more opportunities you have to succeed. And on the flip side, I also believe that there is little hope for people who aren't perpetual learners. I know that might sound a little bit pessimistic or cynical to you, but let's face it, life is overwhelmingly complex and chaotic. And if we look around, we can find plenty of evidence that it simply suffocates and devours the lazy and ignorant. So if you are a bookworm and you're on the lookout for good reads, or if you'd like to just get into the habit of

reading more, then this book club is for you. The idea is very simple. Every week I'm going to share a book that I've particularly liked, and I'm going to tell you why I liked it and give you several of my key takeaways from it. I'm also going to keep these episodes short and sweet so you can quickly decide whether or not a book is likely to be up your alley or not. Now, before we get to the show, if you like what I'm doing here on the podcast and elsewhere, and if you want to help me help more people get into the best shape of their lives, please consider picking up one of my best-selling health and fitness books. I have Bigger Leaner Stronger for Men,

Thinner Leaner Stronger for Women. I have a flexible dieting cookbook called The Shredded Chef, as well as a 100% practical hands-on blueprint for personal transformation called The Little Black Book of Workout Motivation. practical hands-on blueprint for personal transformation called the little black book of workout motivation. These books have sold well over a million copies and have helped thousands of people build their best body ever. And you can find them on all major online retailers like

Amazon, Audible, iTunes, Kobo, and Google Play, as well as in select Barnes and Noble stores. So again, that's Bigger Leaner Stronger for men, Thinner Leaner Stronger for women, The Shredded Chef, and The Little Black Book of Workout Motivation. Oh, and I should also mention that you can get any of my audio books for free when you sign up for an Audible account, which is the perfect way to make those little pockets of downtime, like commuting, meal prepping, dog walking, and cleaning a bit more interesting, entertaining, and productive. And if you want to take Audible up on that offer and get one of my audio books for free, just go to legionathletics.com slash audible, and it'll forward you over, and then you can sign up for your account. Okay, so let's get to the featured

book. This is Profit First by Mike Michalowicz. I believe Mike maybe should have chosen a pen name, chosen a pen name, Michalowicz, M-I-C-H-A-L-O-W-I-C-Z. And this is a book that I chose because I get asked about business stuff fairly often and often from people who are either thinking about starting a business or have just started a business. And this is one of the books I always recommend that they read among others, but this is one of the books I always recommend that they read among others, but this is one of the first books I recommend they read because it highlights the vital importance of generating a healthy profit, not just revenue as many people think. Now, profit is imperative because if you focus too much on the top line, if you focus too much on revenue and too little on the bottom line, profit, you can find yourself saddled with all the troubles and risk and uncertainty involved

in owning a business for less money than you could make working for someone else. And what's more, a lack of profitability is one of the primary reasons that businesses fail. And this is why I've said many times that I would not want to own a business unless I could make at least three times more money than if I worked for someone else. I've owned a couple of businesses now for eight or nine years and things have gone well. Some things have not gone well. I've learned a lot and I just don't think that it's worth the hassle if you can't make enough money from it. I think there's a lot to be said for just having a great job, for having a stable, high-paying job where you get to do work

that you like and you don't have to worry about all the other stuff that comes with running a business. A lot of stuff that is rightly not your concern, that if you work in a good business, even if you are very enterprising and you want to try to help the business do as well as possible, there are certain areas of the business that a smart CEO or COO or business owner would say, don't worry about that stuff. I want you to focus on what you're best at and let's do that. And I love the initiative and let's pour all that creative energy into what you are very good at and what you enjoy. Don't worry about these other things.

We'll take care of these other things so you don't have to waste your time with them. You get to have that luxury as an employee, not as a business owner. And so anyway, what that means then is if a business can't generate enough money for you, and ultimately that means it needs to generate enough profit, it might be smarter to get into a different line of work, to have a different business or to work for someone else and to work for a business that you believe in and work with a group of people that you like and make good money doing the stuff that you like to do. Because again, owning a business means that you're going to have to do a lot of things that you don't necessarily like doing. You just do them because you need to,

but there needs to be a reward for that, right? And so then an unprofitable business, which is to quantify that, I would say a business that's generating less than 5% in net income. So if less than 5% of revenue is there at the bottom line, net income, which is the money that's left over after you take out expenses, interest, and taxes. That's really what's left over for the owners. That business is in dire need of an overhaul. 10% net income by business standards is good. Not great, it's good. 15% is great. Anything higher than 15% is better than great. If a business is generating only 1%, 2%, 3% in net income, you really need to find out why and address it.

And this is something I've learned firsthand in my businesses, which have ranged from super profitable in the case of my book publishing to super unprofitable in the case of my sports nutrition company, Legion. And it has taken a concerted effort to keep the publishing highly profitable over the years and then to raise Legion's net income to a normal level, to get it to around 10% of revenue, which again is good by business standards, not great. And the first step to achieve those things was to embrace the message of this book and to focus on growing the bottom line as aggressively as the top line, to focus on improving how much money we retain just as much as we focus

on generating sales, right? And the second step then was to put systems and controls in place to maintain those desired levels of profitability. So let's get to my five key takeaways from the book and I'll share some of my thoughts on each. So let's get to my five key takeaways from the book and I'll share some of my thoughts on each. So the first one here, quote, the new definition of success is not about the most revenue employees and office space, but the most profit generated through the fewest employees and with the least expensive office space. Make the game of winning based upon efficiency, frugality, and innovation, not on size, flair, and looks. And my note here is, I completely agree with this. I agree with this now more than ever,

given what's going on globally. Revenue is a flashy metric. Millions of dollars in sales sounds impressive. It catches people's ears, but it doesn't tell you how well a business is actually doing. It doesn't tell you how likely a business is actually doing. It doesn't tell you how likely that business is to make it, is to endure. Revenue is biceps and abs, right? And profit is hormones and cholesterol levels. Now consider this. So my publishing company, which has only published my stuff, I haven't published anybody else's stuff yet. I may do that in the future, but I haven't yet. That has generated a total of about $8 million in revenue since its inception. Total sales by $8 million. My sports nutrition company, Legion, has generated about $63 million in sales

since its inception. And the publishing company, let's see, it was 2012 is when that began. So from 2012 until now, $8 million in sales from the publishing company. And Legion see, it was 2012 is when that began. So from 2012 until now, 8 million in sales from the publishing company and Legion's first year was 2014. So 2014 until now, 63 million in sales in Legion. Now, which do you think, or which would you assume has made me the most money personally? Obviously you would think Legion, right? You go 63 million in sales. Wow, that's a lot of money. 8 million is great too, but 63 million. And you'd be wrong. I have received quite a bit more personally money from selling books than supplements. And that's partly because the publishing company was generating far more profit than Legion was until just a year or so ago.

There were some years where the publishing company was like 80% net. 80% of the revenue being received was net income, which means that's the money that's left over for me to do whatever I want with. And Legion had had years of 3% net. I don't know if we went lower than that. We've had months that are lower, of course, but there were a few years where it was probably three or 4% net. And so that was partly by design. I was making enough money from books to not need much money from Legion, which allowed me to reinvest large sums of money into Legion to continue growing the business. But that wasn't the right strategy.

And that wasn't entirely by design either. wasn't the right strategy and that wasn't entirely by design either. For example, I was allowing Legion's money to be spent too freely because I didn't need it per se. So mostly on inflated salaries of underperforming personnel, I'd thrown away quite a bit of money paying certain people too much who are not with me anymore, who didn't deserve it and should have just been fired actually. And then I also spent too much money on questionable marketing initiatives that didn't pan out. Not enough due diligence was put in before making the decision to spend 150 grand on something that didn't produce much of an ROI. And there were a number of those blunders over the years. And now fast forward to today and things are very different. Legion is

much more profitable and the publishing is still profitable. It's not at 80% net anymore. And I'll talk a bit about why and that there is a little lesson from the book that that ties into. But one of the reasons why Legion's finances in particular are a lot better now is my team and I just run them more stringently and we insist on maintaining a respectable level of profitability. And that has forced us to figure out how to get more from less. And the result of that has been much higher returns on advertising and marketing spend and on capital and equity. And really this is just Parkinson's law applied to business. And if you haven't heard of that, it's just a simple principle that states that something expands to match its supply, right? So in our personal lives, some people, some of us, we've experienced that as lifestyle

creep, right? The more money we make, the more we spend and we expand our lifestyle. We've experienced that in our work. The more time we have to get something done, the more likely it is to take longer for us to get it done, right? Whereas if we're on a tight deadline, we really buckle down and get it done a lot faster. In business though, you have expense creep where if the more money you have to spend, so the more money you have after you take out the cost of goods, the cost of creating the product and getting it to the customer, and you're left with then your gross profit, right? And you have to take your gross profit, pay all your employees, run your marketing campaigns, all your expenses. And then once that comes out of the gross profit, you're left with net profit. So the more you have in gross profit, the more likely you are,

if you don't, and I've made the same mistake, if you don't really pay attention, the more likely you are to just spend the money not very well, to spend it inefficiently. And so what I've learned is that you really want to manage both your personal and your business finances in similar ways, not in the same ways, like you deal with debt differently, for example, in business versus personal. So sometimes it makes sense to take on debt as a business. It's actually a smart decision to fuel growth. And it's basically never a smart decision though, to take on on consumer debt to buy knickknacks, for example. But you really want to manage your business finances meticulously and your personal finances meticulously to ensure, for example, that personally you can save and invest, let's say,

anywhere from 10% to 20% of your personal income, 10 being good, 20 being great. And on the business side of things, you want to make sure that you generate somewhere between 10 and 20% net income, 10 being good, 20 being great. Okay. So I have a bit more to say on that, but we'll go to the next takeaway because it's all on the same topic, obviously. And my additional thoughts will flow from these other takeaways. So the second takeaway is quote, the profit distribution is an award to the equity owners, you and anyone who invested in the business with money or sweat for having the courage and risk tolerance to start the business. Don't confuse the profit distribution with owner's comp, which is pay for working in the business. Profit is a reward for owning the business. And my note here is this is an important point because if you own a business, you should be

getting paid twice. You should be getting paid once for the work that you're doing in the business, basically as an employee. And it probably shouldn't be lower than a market rate for that job unless it is for tax purposes. And then you should be getting paid again for the burden of owning a business and the skill that's required to maintain it. So what you don't want is where the default situation is where profits are remaining in the business. By default, profit should not remain in the business. Net income should not remain in the business as reinvestment or plowback or profit retention to fuel growth. And it also should not remain in the business to make ends meet. That's even worse. If it's remaining in the business to keep the business growing, that's actually not ideal. If it's remaining in the

business just to keep the doors open, that is very, very much undesirable. So what should be happening is by default, the profit, the net income, it should be going to the owner because a business should be able to remain solvent while also producing a substantial net income. And it should be able to keep growing too. It shouldn't have to cannibalize its net income to grow. Again, when you look at the gross profit that it's generating, that should be enough to continue growing the business and to pay all the bills and to produce a substantial amount of net income. And if a business can't do that, it has major problems. That said, something not addressed in this book is that business owners don't necessarily have to take all net income out of the business as distributions. That, if I remember correctly,

is kind of the message in the book. And that's not always the case. I don't agree with that as a blanket statement, because you'll have businesses that are generating far more profit than the owners need to make their personal finances work, right? To meet their personal financial obligations. So then what should the owners do? Should they be taking all the profit out of the business? Okay. And then what? So for example, let's say a business produces $500,000 in profit per year, and the owner requires 200,000 of that to cover their financial needs. What should they do with that remaining 300,000? Well, what they should do is they should look at how they can put that money to work, right?

How they can make that money, make them more money. And often you'll find that if you are in that position, you're going to get the highest returns by just investing your money back into your profitable business, which you can then use to grow it even faster. So again, if you have a strong business, let's say it's growing 20, 30% year over year, and it has a healthy gross profit of 30 to 40%. It has a healthy net profit of 10 to 15%. And you are left over with an excess amount of money every month, far above and beyond what you need personally, should you just take it and buy things, stimulate the economy? I would

suggest not. I think that it'd be smarter to take the opportunity to use that additional income to grow your wealth, to grow your net worth, to grow your passive income so you can diversify your sources of income and set yourself up for a future where you don't have to work for money. That's true financial independence, right? If you're like me, you're probably always going to work. Some of us are just wired that way. I have no dreams of retirement, of just disappearing into the hills somewhere and raising chickens or something. But I certainly have interests that I'm not sure how much money they will make me. For example, I will write fiction stories at some point in my life, probably sooner rather than later. I'll probably start in the next three to five years.

And that was actually my original interest in writing was fiction. I even started to work on projects over the years, but it was very slow going because, okay, I was like carving out these little windows of time. I was waking up at 5 a.m. and I'd put in an hour on my fiction story and then start my day. And that was okay, but I figured that it made more sense for me to just shelve that interest for now, focus all of my time on my fitness stuff, make the most of that opportunity, and then revisit the fiction a little bit later when it makes sense for me to give it the time that it would require to really do what I want to do. And so that's something that I will do. How well it's going to do, who knows? I mean,

you can make a lot of money with fiction if you do very well, but of course it is very hard to do very well. Most fiction authors don't make very much money and I am confident in my ability to make it work to some degree, but I'm not sure, for example, if I'm going to make millions of dollars from fiction. And so coming back to the discussion at hand, we have this business owner and they have $300,000 left over. Well, what they could do is let's say, okay, I can take that money and I could put it in the stock market or I could put it in real estate or some other vehicle. And let's say that those options, they might return five to 10% over the following year,

and they have varying levels of risk, 5% lower, 10% higher. And if they put the money though, back into their business, if they say, I'm going to not loan per se, but I'm going to essentially kind of give my business and infuse it with this extra $300,000, I'm going to spend it intelligently. I'm going to spend it on things that are likely to grow the business, likely to produce a strong return on investment. And if I do that, looking at the history of the business and the performance, what these business owners often find is they can get a much better return by just putting it back in their business. I mean, in some cases, your business might return 10 times what the market would return over the short term, over the next, let's say, one, two, three years.

Now, of course, there's a downside to that. If that's all you do is just reinvest all excess money, all excess profit into your business, you're placing all your eggs in one basket. And that's great if it works out, right? If you're able to turn, let's say, again, the business is growing at 20% to 30% year over year, and it is generating a healthy profit. And let's say you could stimulate that by 50%. You could bump it up by 10% or 15% by reinvesting a large amount of your profit, which would produce a great return. But if all you ever do is take the money, you're not really taking it out of the business, right? You're leaving in the business. But if you're like, okay, I'm just going to keep that money in there, keep reinvesting. Oh, look at it grow, look at it grow. If something wild happens, if you have a black swan event, like, I don't know,

a global pandemic, for example, that might come and wipe the business out or wipe all of your cash out, put your business in debt, really set you behind, that can have major ramifications personally. And so I think it's smart again to diversify your sources of income, diversify your wealth. And so what I do is I take 25 to 50% of the net income of my businesses out of the businesses. And I invest that money into other things, stocks, real estate, life insurance, other investment vehicles. And then I leave though the remaining net income in the business. I invest that remaining money in projects that will further boost the growth

of those businesses. But if I didn't do that, those businesses would still grow substantially. Legion is going to grow. I mean, I guess there's a little bit up in the air right now, right, with the coronavirus. But if the economy comes back online, which of course, states are opening back up and other countries are opening back up, or at least certain areas and countries are opening back up. If everything opens back up and we don't have another major shutdown or other wild catastrophe, I think Legion will grow 30% to 40% this year. And that's following the strategy I just outlined. And so if I took all the net income out of the business, I'd probably lose out maybe on 10% growth in an absolute sense, not relative.

And I don't like that because I also have a bigger strategy that I'm working toward in terms of growing Legion and the value of the business and so forth. So I think it makes sense again, to leave a fair amount of the money in the business, to reinvest a fair amount of money. And that would run afoul of the advice in this book. But I understand that this book is not written for me per se. The author, I'm sure would agree if we were having a conversation that it wouldn't make sense for me to just take all the net income out of the business. But if you had a business that was generating, let's say it's a smaller business and it's generating $100,000 a year in profit, then that's an example where it's almost certainly appropriate for the business owner to take all of the net income out. That should be distributed 100%

to them because $100,000 is you're making a good living and that plus whatever salary. So let's say he's getting 30, 40, $50,000 a year in salary, and that's great or she, he or she, but depending on where you're living, if you're living in Manhattan, $150,000 a year is not very much money. You are going to feel a squeeze. Now, if you're living in the middle of Missouri, you might feel rich. So it really depends on circumstances. But again, the point is that when a business is not generating that much profit, then it makes more sense for it to be almost wholly distributed to the owner. You do not want to be in a position where you have a business that requires that 75% of that $100,000 to keep growing at, let's say just 10% a year or worse just to maintain its

size and market share. And then even worse to even just stay in business. Hey, before we continue, if you like what I'm doing here on the podcast and elsewhere, and if you want to help me help more people get into the best shape of their lives, please do consider picking up one of my best-selling health and fitness books. My most popular ones are Bigger, Leaner, Stronger for Men, Thinner, Leaner, Stronger for Women, leaner, stronger for men, thinner, leaner, stronger for women, my flexible dieting cookbook, The Shredded Chef, and my 100% practical hands-on blueprint for personal transformation, The Little Black Book of Workout Motivation. Now, these books have sold well over 1 million copies and have helped thousands of people build their best body ever. And you can find them anywhere online where you

can buy books like Amazon, Audible, iTunes, Kobo, and Google Play, as well as in select Barnes and Noble stores. So again, that is Bigger, Leaner, Stronger for Men, Thinner, Leaner, Stronger for Women, The Shredded Chef, and The Little Black Book of Workout Motivation. Oh, and one other thing is you can get any one of those audio books 100% free when you sign up for an Audible account. And that's a great way to make those pockets of downtime, like commuting, meal prepping, and cleaning more interesting, entertaining, and productive. Now, if you want to take Audible up on that offer and get one of my audio books for free. Just go to legionathletics.com slash Audible and sign up for your account. Okay. Takeaway number three, quote,

absolutely do not ask people to take a pay cut. I did this with dire consequences, asking all your people to continue to work just as hard or harder than ever for less money is worse for the emotional welfare of your company than letting just one more person go. And my note here is when times are tough and cash is tight, which is the case right now for many businesses, the business owners must bear the brunt of the downturn, not the employees. It should not be equitably distributed, everyone bearing their own fair share. No. To do that the business can be improved and really caring, but not when it comes to the finances. Because one reason owners should earn more when the business is flush is the willingness to earn less when it's strapped. And so that means that if the

owners have to cut their pay to zero, even if that's what it takes, and even more reduction is needed, you're better off removing non-essential staff and asking your core team to temporarily work harder for the same pay than trying to keep everyone and asking them all to work just as hard for less money. And this is mostly probably just psychological. And a small reduction in pay can have a disproportionately negative effect psychologically. And one of the reasons for that is research shows that people are more averse to losing something they have than to missing out on the opportunity to gain something they don't have. And so people will respond much worse to a cut in their pay than to an increase in their hours. Now, if you're wondering, wait a minute, but they're losing time if you're asking them to

work more. And that's true, but losing money is a lot more tangible, right? It's a lot more visceral than losing time. And really what you're losing with time is you're losing the opportunity to do something else with your time, which again is kind of like an unrealized gain. It's just not the same. People do not respond the same to losing money that they're used to getting versus losing some time or being willing to sacrifice some of their time to keep the show on the road. Okay, next takeaway, number four, quote, when profit margins are big, usually in excess of 20%, people sniff out and almost immediately start to duplicate what you're doing, and they look for ways to do it better, faster, and above all,

cheaper than your company. So my note here is if you play the game of business for long enough, you are going to strike very profitable veins that you can tap into, right? It is going to happen from time to time. Sometimes it's going to be a new offering, a new product or service that just does exceptionally well. And sometimes it's an advertising campaign that produces outsized returns, huge ROIs, right? Sometimes it's a distribution win. Sometimes it's a combination of all of those things. Sometimes it's something else altogether. And when this happens, you have to do three things. One, you have to move quickly and you have to exploit it as fully as

possible because your competitors are going to catch on. They will find out what you're doing and they will start doing it too. And it will drive profitability down. Then you need to consider ways to consolidate your gains and to forestall number one from happening, or at least diminish its effects. And strategically, this is talked about in terms of building a moat, right? So you're building moats around your operations. You're making them less penetrable to outsiders. And there are many ways to do that, but that would be another discussion. Could be a whole podcast unto itself. And the third thing you got to do is you have to keep prospecting for new opportunities, including what your competitors are doing. What are they harvesting right now and what's working

well for them and what can you do in those spaces? Because number one will happen when you are doing something that's very profitable, people will move into the space and it will become harder to generate a profit. I mentioned earlier in the podcast that my publishing company had years of upward of 80% net income. That's not impossible now, but it's a lot harder now because word has gotten around that you can make some money selling books. And so a lot of people have published books. Now, a lot of them are not very good and they haven't done very well, but it has glutted the space. And so ultimately fewer people are finding my books and book sales have gone up year over year, but the rate of growth has gone down. And partially that's because there are a lot more options and a lot more choices. Now I was aware of this years

ago. And so I did take actions along the lines of the three steps that I outlined. Like for example, I moved quickly by publishing more books. I was publishing a new book every six months or so. And then I consolidated my position by updating existing top selling titles, new additions to improve them, relaunch them, get more people interested in them. I started writing articles and recording podcasts to lead people to my books. I started investing large sums of money into book advertising and did other things. Those are moats, right? Or expanding the moat, if you want to look at it just in terms of one little fortress. And I also continue to build new avenues of customer acquisition for Legion because the books have not only been very

profitable unto themselves, they've also been a very profitable top of funnel for Legion. They've brought in a lot of not just people, but very high caliber people. Most people don't read books. The average is one per year in America. Average. And remember, averages are driven up by the extreme highs and down by the extreme lows. So what that really looks like is you have a small number of people who read a lot of books. When you break down the details of the data, you have a small number of people who read a lot of books, and then you have a lot of people who basically don't read at all. And so the people who take the time to read and especially read a book like Bigger, Stronger or Thinner, Stronger, which they're about 150,000 words, maybe 130,000 words. And then that's already rare, right? So if someone's going to read the book, they're rare. And then if they're going to use the book, they're actually going to

apply what they've learned and get results. That's rarer still. And those are higher caliber people. And I don't mean that as a slight on people who are not reading or not applying things they read. I'm just stating an objective fact, an observation. And so what we found with Legion is the books have gotten us a lot of great people and great customers. And so coming back to this three-step process, this final step of looking for new opportunities, I've continued to build these new avenues of customer acquisition for Legion as opposed to just relying mostly on the books and on book publishing because I wanted our customer acquisition system to be as resilient as possible, or even you could say anti-fragile as possible

if you want to go beyond resilience. Okay, let's get to the fifth and final takeaway here. Quote, to grow the biggest and the fastest, you need to be the best at one thing you do. And to become the best at something, you need to first determine what you are best at and do it a whole lot better. Now, my note here is this is the central tenet of the book Good to Great, which is a must read if you want to own a business or if you own a business and you want it to be highly rewarding, or even if you just want to have a highly rewarding job, I highly recommend Good to Great. And in this book, the author explains that to be great, you must find what you can be the best in the world at and then

do as much of that and as little as everything else as you possibly can. And that's a vital component of what the author calls the hedgehog concept. That's a phrase he termed. And that describes an essential strategic framework that's present in all the top performing companies that he and his team analyzed. And in short, what it is, is the hedgehog concept. Your hedgehog concept would be something that you or your company can be the best in the world at. And it also needs to be something that drives your economic engine. It's very commercially viable. And it's something that you are deeply passionate about. Now, most of us are not trying to build the most successful companies in the world, which is what the book is based on. Those are the companies that were analyzed for the book. And that's okay. I'm not

trying to build the most successful company in the world. I'm definitely not. I'm just trying to build a very successful company or very successful companies. And so my point was, I think it's reasonable then to say that for us, A, can be downgraded to extraordinary, right? Or to borrow from Steve Martin, so good they can't ignore you. That is, most of us don't need to be the best in the world at anything. And our companies don't necessarily need to be the best in the world to achieve our goals, to become very successful financially and otherwise. We just need to be far better than most. We need to be so good that they

can't ignore us. We need to be extraordinary, right? Top five percentile, right? And so in the beginning of a business or career, what that means then is you say yes to a lot of things, right? Because the opportunity cost of most of the work at that point is negligible. It just costs a bit of your time and you're looking for what that can be. Where can you be outstanding? Where can you be extraordinary? Where can you start to gain momentum? And then though, as things improve and you start to hone in on that, and it takes time to find your hedgehog concept. Colin talks about that in the book. You're not just going to sit in an ivory tower and figure it out. You can have a plan. You can

have some intuitions, but ultimately you're going to have to get into action. You're going to have to do things and experience feedback from prospective customers and people and start really again, honing in on what are you good at? What do you like doing and what is resonating with people? And that is probably also something you can get really, really good at, right? That's what you're looking for. So as time goes on, you start to find that thing. Well, then you need to start getting better and better at saying no to opportunities and to work that will just pull you away from your hedgehog concept. And that's something that I've had to learn in my journey. In the beginning, I would spend a lot of time writing about a lot of different things and recording content about a lot of different things and chasing different marketing opportunities and

advertising opportunities. And I've gotten much more focused in the work that I do and the stuff that I write about, the projects that I work on. I turn away a lot more marketing and advertising opportunities than I pursue. And I am personally involved as little as possible in as many things as possible that are not related to the highest and best use of my time, which is creating content, writing articles, recording podcasts, writing books, recording videos, doing interviews on other podcasts and other maybe publicity related things. Like that is my hedgehog concept. And the more I focus on those things, the more successful I become and the better my

businesses do. All right. Well, that's it for today's episode. I hope you found it interesting and helpful. And if you did and you don't mind doing me a favor, could you please leave a quick review for the podcast on iTunes or wherever you are listening from? Because those reviews not only convince people that they should check out the show, they also increase the search visibility and help more people find their way to me and to the podcast and learn how to build their best body

ever as well. And of course, if you want to be notified when the next episode goes live, then simply subscribe to the podcast and whatever app you're using to listen, and you will not miss out on any of the new stuff that I have coming. And last, if you didn't like something about the show, then definitely shoot me an email at mike at muscleforlife.com and share your thoughts. Let me know how you think I could do this better. I read every email myself and I'm always looking for constructive feedback. All right. Thanks again for listening to this episode and I hope to hear from you soon.