Reducing Your Overhead
this part is very important because I know that a lot of small business owners out there really just want ignore the whole number thing and even mawr, they want to ignore their account like Oh my God, the account is coming Just like a lot of business professionals. You should make sure that you see them as an asset for your firm for your company. There's some way that can really add value to your company. So I want to review some of the key parts of the entire financial section, and I want to go through our workbook again. And Chris, how can you get a copy of this workbook so you can apply these concepts to your business? A copy of the workbook by purchasing anytime access to Barry's course, you'll see the buy button just below the video window, and right now it's $49 while we're live on the air. But that's gonna change soon. We've only got a little bit time left before the price goes up to $79 I've already bought a four times. I never have too many, exactly so a couple of concepts I w...
ant to go through. I wanted to think about all of body in our studio audience and the folks out there on the Internet. I want you to think of two ways that you think that you can reduce the overhead in your business two ways you do silver. Because remember when I drew this chart that you have to make sure that the overhead is as low as possible. So when your business goes like this, you make sure that you're still making money and that your collecting your profit first. So think about two ways you produce your overhead. The reason that I focus on this is because I sit down a lot of small business owners and they say, you know, that's it. These expenses I gotta have I just can't do anything. I need this. I need this. I need this. Then we actually break it apart. We Sorry. Let's start over. Let's start your starting from the beginning. What do you absolutely have tohave forget about all this legacy stuff and lo and behold, I want to use that at least one Sally. Lo and behold, you can actually reduce a lot of your overhead expenses. So in the music store, right? What do you think you could do is what's one or two things you could reduce? Jana? See, I'm taking risk today. I know there's $100 every single time put out there, but I'm testing myself. I'm not just pointing to you. I'm taking the risk. I'm being honest, Jana, Better inventory management so that we can reduce shipping costs as well as be more profitable because we'll have on hand the things the customer wants when they walk in, and we don't have to order it. So talk about how you reduce your shipping costs. Is that mean either taking, doing better planning and taking longer to get it? So it's less costly or combining more things together in order, ordering at a given point in time a little bit of both. So make sure plan ahead so that we get in what we need. But also a lot of companies have free discounts. So if you order over a certain dollar amount for accessory companies, a lot of time that's between two and $ they'll ship it free freight, which is great, especially if you're hoarding things like music stands and microphone sands of their heavy that could be very costly to ship. So if we don't order had an order in a boat quantity, then we may end up having to buy five or six stands, which then we have to pay the shipping wait, which could be costly. And this is very interesting, cause if you think about a shipping stand, what is a shipping stand? Cost shipping us stand by itself or well, cost was caused by by ship a music stand when you buy a music stand between 22 $80 spending on the stand still to be $20 it could cost me five bucks to actually ship it to me to be able to sell it. That could be what that could be 25% or 10% of my cost. If I could eliminate that or combine that together, I can improve my gross margin. That's a great way. So that's the 1st 1 that shipping what was the other one? Um, the other would just be overall costs of supplies paper, you know, office office management supply. So even being kind of more ego conscious of what we're using in our in our office of paper wise and trying to be more technology friendly and the way that we handle the teacher schedules and things like that. So we'll reduce printing costs, reduced paper costs, um, things of that nature. We're not quite in the paperless world yet, are we? In fact, these days we actually is more paper because of printers than we ever did before. You will find out if you don't keep those supplies on hand, you'll actually go through less of them. Yeah, if there are less pens and pencils, people don't lose them so frequently. Yes, that's really important. Those air to excellent ones. So arena and your business where two ways. You think you could reduce your overhead? You know, I'm actually pretty savvy when it comes Teoh, um you know, keeping my overhead really low. Um, because my my footprint is meant to be low in in all aspects of my business. I feel like I'm pretty, um, stable in that way. Um, I know that there are some places in my business where I could maybe look at some Softwares that are maybe a little bit on the less expensive side and other companies that provide things that, you know, I just would have to take a look at that and see, really. But right now I'm actually looking to add in, you know, accounting software and things like that. So shopping around and seeing where I can, you know, be the most cost effective. This is what I'm gonna be looking at As I stepped forward into this one. The traps that many of us fall into is we get all these monthly subscriptions that thing like $5 here. $50 here, $20 here, $50 here and just automatically build your credit card. Now, here's a way to get out of that during a single month, cancel your credit card or put on hold. All these things will start bouncing, and then you can actually see Do you really need it or don't you need it right? And if you don't need it, don't reopen and l just cancel whatever you're really gonna got. And that's a really good way to figure out if some of us and I know that all of us do check our credit card statements and balance those out to whatever we have for her business. But if you don't, that's a good way to do it. Now you're just starting out. I think Mike did a really good job. Is there anything that you've done so far? We said, you know, we could have spent less on that, Not necessarily less. But I think we're in a place where we can stop. I think that we can use the equipment that we have now and just improved by learning more on how to use what we have. I think that that's a very valuable way. I think that social networking is a really wonderful place for us to do some of our marketing. I think we have the opportunity to do press releases and see if we can get some interest in the press and do some of those things that keep expenses low to none and then not adding on to equipment costs at this time. And that's a really good thought. And, you know, I know that you have your little more limited in what you can do. Is there any thought You said we were like, really reduce the cost here, um, one things that it comes up is I do a little driving, driving from home office, still crying side. So, um, now there's I am in keeping to his technology that I can work from home and perhaps doing a better job scheduling all the meeting in one alia so that I'm not driving back in force again. And not just gas, about opportunity costs. It's really interesting, cause you would be surprised what you really can do without. Yeah. So let's go to our hosts here. Kristen. Sally, is there anything in your business? You think God, I don't really don't need that. I could reduce that. Sally, let's really start with you. Because I know you're running three businesses there, right? Yeah. And entrepreneur Olic, just like miss, There's gotta be something you're saying. I don't need to spend money on that. Well, there was actually it came to me in that last section has been compiling. It's been compiling. One of my things has been that the costs of ship might hog tank is huge. It's a huge cost spot. There's one little thing Aiken tweak on the dimension that will bring it in an innate the FedEx dimension to actually take it down by about 30 backs. That's cool. But mainly, as you say, three businesses and it's just May And what I What I've been thinking about is I can refocus them. So instead of me trying to take sections of all of those and justify my import old make them all. What do you call it? A me centric South centric. I'm gonna make themselves centric. And it's gonna make my day a lot more structure because I'm actually just gonna allocate my time to them rather than dividing up their income and giving it back to make it. Is it? I think that makes La Salle centric self take away. Yeah, I really like that. I think the important thing is, you know, you want to kind of take a little bit off of what you really don't need. But then you also don't want to dig into what really makes people happy. What really makes you know you grow really get the satisfaction of your business. So that's the first thing. The second thing is, how do we actually get paid quicker? Right? Is there something that we can do? We talked a little about that. I know Karen. You were talking about creating different kinds of packages for people. Pay you what's available right now for Yogi Stream. The packages that were getting ready to launch are going to be a 24 hour package, a seven day package and an unlimited monthly package. So that's what's available right now straight out of a hopper, right? And so you could get depending what people want. You could create some additional yes packages to really increase your your cash flow, right? So, you know, if you think about your business, is there some way that you can create packages for people to sign up mawr and to pay up front? And that's really what many of us do. If we're consultants or freelancers or creative, we want to try to get once we've done business, somebody we want trying to get to buy off and doom or over a longer period of time. So what can you possibly do in your area? Well, it's funny that you say that because I had originally started with a very large course called Um uh, it was called media marketing that matters, and it was extreme amount of content in a very short amount of time. And the students that I had on my first course were just overwhelmed while the content that I had So I actually had to break it up from that big bundle into smaller, digestible chunks. And so I have, ah, live course coming up called mass media marketing basics, and it's you can find it on eventbrite. And then I have several other classes that I teach for that and then is well, you know, I can do packages for those of you that are interested in being on the Rian Nicole chauffeur sponsorships, advertising features, all that fun stuff so excellent. This brings up a really important point cause you have to understand the way that people buy. Ah, lot of times people want to buy something small, then they want to buy a second thing that a little bit larger. Then they wanted by big packages. Other people want to sign up for everything, right? So you really have to get a sense of really what, your market, what they really want in this whole thing, cause there's gonna be something for everyone. So she and I want to go to you do you actually package things together. I know we're talking about bundles yesterday, but you actually package together lessons and sales of instruments or rentals or things like that. Absolutely. Yeah, we package sales of instruments with lessons that come along with it. We do a lot of times. What we would started doing over the last about about the last year is people who were signing up for group lessons versus individual one on one lessons, the group lessons or less expensive. But we asked for a commitment for a longer period of time, and then we give them an incentive to purchase the instrument and allow them to also pay that off over a shorter a short amount of time. But give them some time to pay it off. So it's not this huge, you know, hit to the checkbook for mom and Dad for those people who are signing up their little their kids for the lessons. But it also guarantees a certain amount of revenue for us over time, and then we also get additional revenue with the books, and then we get the lifelong learners who decide I really, really love playing guitar, and I'm gonna Now, instead of doing the group lessons now, I'm gonna come into more expensive private lessons. They're going to get more out of that. And so you have different things like that. Rentals. We also do. So depending on the rental package, if they rent the p A system, we might offer the wireless microphones for a less expensive price. Eso again? It just depends on what I'm looking for. Yeah, all right. I'm gonna ask you one question, which I'll ask you for your answer. That question down experience. What's the one financial change you're gonna make as a result of this particular section? And as you writing that down as you're thinking there, I didn't want to give you one additional tip, which I didn't yet disclose. And this works out really well, and it's kind of like a secret way to pay your bills later, all right? And I feel like I really have to whisper it at this point. So what you try to do is you get 30 day terms for paying someone, someone sells you something you you secure. I'm gonna pay them in 30 days. And then at the end of 30 days, What you do is you don't pay them with a check. What you do is you pay them with a credit card, and when you pay them with a credit card, depending what your credit card cycle is, he gives you 2 to 4 more weeks to actually pay that. That's a way to hold on to your money longer and to make sure that your payables go up and so your cash flow goes up. All right, so conclude this section. I want it. Let's start with Yoko here. What's the one change from a financial standpoint that you're really gonna make? Even though I know you already a c p a. And you're very financially savvy, Miyoko. Um you know, not that you mentioned about the credit card. I will double check to see if I'm getting the most point taking my time because you actually can can do that. Karen. What about you? What? Mike shared sales minus profit equals expenses, right? Arena? You know, I have learned so much in this segment. You know, Justus faras how Teoh allocate my paying myself and and where expenses are going. So being able to pay myself first is is more important than I originally anticipated. Absolutely So it's really important cause if you pay yourself first and you will support yourself is something you can do, then you're really, truly a Cecil small business owner and Shana. Yes, um, using the profit loss in the financial statements more regularly and getting used to doing that because I've sort of done it. But not as much as I should. Sort of sounds like we don't do it. That much sort of very often regularly would be monthly, right? Yes, exactly. So that I can see a more balanced view of the business and then also be able to integrate those ideas of pay yourself first and putting the profit out first and then and then doing like what he had suggested. Any of these are all excellent solutions. And Sally and Chris, I know that during this section some people have really been lost. But the reason I talk about is when I lost the $1,000,000 I didn't really like that very much. And so my mission has really been financial literacy because I want to make sure that small business owners that works so hard they really do get the maximum return and it is a way having your own business to really be able to support yourself at something that you love doing, and I want to make sure that happens.