Destroying Your Debt: Hot Seat

 

Manage Your Money for Maximum Profit

 

Lesson Info

Destroying Your Debt: Hot Seat

Kirsten, if you're cool with coming up, I gave you homework and I want to know what you did so here. Come on, join the hot seat. Teo crossed right there. Course I wish one I get stuck. I will not be stuck anymore after this little session. And would you feel less stock? Yeah, way less stuff. All right, I have this right now, then does anyone else feel like last time we make progress? You feel a little less stuck in your business? Got some nods. Okay, so where is that cool? Across that one out, you guys feel it's a simple system we're learning here you can implement. Okay, uh, making money not taking money. Do you see the clarity of the difference between making income and profit? You see that? Okay, good. We'll come back and strike rossmore that stuff out, but I wanted to get into your homework. You coming? If you should be like I was so excited about this, but it was it was worse than I thought. Okay, couple months, especially like there's been expenses. We'll start you had. Okay, rou...

ghly fifteen thousand dollars. I just went from january two now, just this year, okay, so let's, look at this year, so as of today, you're much revenue nine thousand eight hundred will do that and I'll round it for you it's closed okay nine thousand eight hundred and sales so far and did you figure out the difference between cost of goods sold and your other costs like you're okay which your cost to go solo seven thousand a little bit more and so cost a good soul for you is the materials right and did you put the labour to assemble this? Okay awesome. So that puts you at uh too no I'm sorry one thousand two hundred okay, right one thousand two hundred okay and what was your other costs um okay other expenses okay, now I need my mask twelve thousand because it give me it all to your calculator here I know one thousand seven hundred fifty seven hundred was in these costs here um yeah my expenses okay, so so you were running a loss right says my loss currently is twenty eight hundred dollars around there like based on this stuff yeah, I get more and that I get set on six four thousand I don't know. Five thousand I get three thousand five hundred I think right spence is four thousand five hundred because yu yu have twelve hundred dollars left twenty eight who wrote this up here? Okay, yeah, you're right the twenty eight hundred okay, thank you so that's two thousand two hundred right? Ok ok nice told my steak isn't authority does right someone don't hear the marker is like well they must be right I already knew anyone named I don't know ok good. So now this is like this is so hard to read now so your sales or ninety hundred you're crossing sold seven hundred that left twenty hundred for radical gross profit which is gross then you beast attracted five thousand five hundred other costs you have a loss of two thousand two hundred so far what my gold with you was to cut this and at least half and also the reese deuce this what did you discover so a lot of my cost this past year I was paying for taxes to be done not like paying taxes because we didn't know taxes so some of this is tax paying taxes, office supplies, interest on credit cards a lot of it was interest thirteen hundred dollars, thirteen hundred bucks and interests. Okay, um I just last month got this um so we talked about like I did get this ad it was two hundred dollars for three months ad in a trade magazine. Okay, that was two hundred another nine hundred. I got this, um it's kind of like a social media email all together kind of aa program okay helps you like things were written kind of already for you like facebook post and like, you can look more like what goes where but it's like more at I put it under my advertising okay, so you're nine hundred plus two hundred for average so I'm eleven hundred for advertising um what are my orders and then tack postage to our things do's and subscriptions so you pay in taxes that you put into these cost last year for the people to do our taxes was a nine hundred dollar oh, this is the service right service that's what's your count, right? Okay. So as one thousand two thousand three thousand three thousand like car insurance fees bank field that's good. I want to go into all the details. What did you decide you could do to dramatically reduce these costs? Um not pay for advertising and promotion what's the consequence of that. Um I'll have to do more pr like sending stuff out immediate to media um, getting placements that way rather than trying todo do pr for free you're the pr person, right? Okay, so you get this down from stuff fifty seven hundred two forty, six hundred. So now your loss is now minus one thousand one hundred. What else can we do to reduce costs determined? Um, hey, doubting credit card, you have all that interests which card you have, like twenty thousand twenty thousand ok, so and so this is it okay, so you could do kind of stuff that phil suggested and get thes interest rates were do strike, but you could also pay down the debt your taxes but there's also, there must be other stuff tucked in these costs. Your cost of goods sold seems awfully high to me. They are. Well, like we talked about yesterday, I can reduce my options. Um, from how having so many reducing those so then I'll be able to get more of that, um and, well, it's, not about the options. So right now you have how many variations of materials stuff do you have, like twelve, twelve, twelve options that customers can buy from you, right? But every time you have to order one there set up fees always so basically, I have to order the fabric. The fabric comes on fifteen yard bolts because we don't that's how they do it and okay for you to buy fabric with twelve different fabrics, right? And so each fabric like they there's a lot of fabric wasted basically because of how they have to cut it. Okay, so that's a lot of the cost is the fabric that's wasted. So if you cut this fabric in half the variability your price, will you still have the buy more of one type of fabric? Because more but it's less per unit, right? Because it will waste less. And what happened with type savings that you think that would represent thie place cost three dollars, two dollars maybe yards per her item because he'll be able to make more money throughout these cost get sold if we cut this down from twelve excuse items and we make it six with seven thousand. Do you think we dropped realistically do your best guest rescue you save a thousand dollars? Probably probably two thousand dollars maybe could happen. Could happen. Yeah, three thousand problem. Okay, right. Not so good. So? So it's definitely one thousand fifteen. Fifteen hundred fifteen hundred okay, so this costs a good soul if you do fifteen hundred this would drop to five thousand five hundred that go right. The bomb line you be positive for hundred bucks now I'm just saying by dropping ads and cutting your line in half of the variability you could become proper I'm suggesting if you spend another day on this, we can find a way to make this another thousand dollars easily or you could find more money in here. This is a simple thing now people were saying to me, but like if I do less things my customers won't want this stuff is but I mean this is what they want never forget this the riches are in the niches people challenge with this all the time prophet first if we make our business more profitable we have to do fewer things and if I do fewer things isn't that it's not put me in trouble? I'm not going to get much business and that's a fallacy the fewer things you do ultimately the more successful business has become think about the general practitioner versus the heart surgeon if you had chest pain you may go first the general practitioner because maybe says the cold maybe it's acid reflux maybe the heart attack the gym practitioner was to diagnosis and then say ok, this is a serious issue and turn you over to a specialist so first of all, general practitioner can't do the most serious things they have to turn you to a specialist but you is a consumer it is this a little chest thing going on? I'll go to a generalist you know how bad could it be once you identify a serious issue, you become a very serious customer customers people with serious issues become serious customers and serious customers bye fromthe specialists and I suspect if you were having potentially heart problems or heart attack you will find how to get one hundred thousand dollars of money or whatever it takes because your survival depends on it. Well, when we are general practitioners of business, we do twelve things people with the general cough will come to you the best customers go to the specialists the people have sex because when you only do six items you become very efficient at it you can deliver on all the demands you can turn around on certain delivery dates no problem because there's less variability you become much more efficient. So for most business owners we believe we've gotto come generalists we use cheesy terms like we have a captive audience you know the customers elmore to our existing customers they love me already when I also screwed just accounting I can rake leaves or their long to they love me and we start becoming more and more of this general that's the thing that people tell me a lot too is because we on ly sell the car seat cover right? We don't sell like we've had in the past we've had these blankets, I love them they're like the perfect size to, you know, sit on their lap and it's the lovey and it's awesome, but then we didn't have enough money to, like keep making them on right, but you couldn't afford to do it right because their customs where I assume getting upset because you couldn't deliver what they want well, they just kind of like left and so then it was fine, but everybody keeps telling me you need to sell you need to come up with you need to do the blankets again or you need this is everybody people friend front bullit business right they're your enemies eyes the biggest lie out there if anyone if anyone tells you do more things just broaden what you're doing you can sell more they are lying to you it's total b s I feel like phil now meaning should tackle with more things people tell you to do the more of a general become the less efficient you become your general practitioner all you can do it basically diagnosed the problem your customer and when they have a real need in our race spend real money you got to say I can't fulfill that I can't make five hundred car seat or car covers sea covers or whatever and you have sent us more else thie on li wei you can deliver on that order is when you become an exceptional at that one I think that whatever comes up exceptional at that then I could be like and look you can get this kilt imagine blink it for your baby too one day when we our super awesome about teo cannot know e can on lee ever sell guarded covers anything else yes yeah okay yes oh no I think about once you do one hundred million dollars in revenue you can do other things here are examples microsoft's a big company right master do tons of things so well that people come to me saying like microsoft they make video games hardware they they have stores now they do tons of things clearly the more you do the more successful you are but your rewind in the history of microsoft for example they started out with bill gates on an airplane typing as he's flying to meet with ibm a dos program a program make ibm computers run it's the only thing he sold that was it he perfected that one thing and kept tryinto one customers one certain demand one certain need until achieve about fifty million in revenue and then made windows and then expanded from there one thing um proctor and gamble tons of things right there there are the equivalent to what you're doing they got soap, they got shampoos you've got car seat you got blankets tons of things but if you rewind in their history when they started their business stated to things like you they they didn't do car seats or car comes but they did candles and soap and then one day proctor goes down we're doing too much bitch the candles were just going to do soap and they started focusing on soap and they figured out something that no one has figured out yet how to make soap float in water military becomes the best customer of theirs because the military says wow when our guys there fighting wars and bathing in rivers in the soap goes down under we're losing so it floats will buy from you they focus on one type of customer need the folks that need floating soap and just it's soap so they got about fifty or hundred million and then started expanding out it is the propensity for us when we're struggling desperate people do desperate things the survival trap you were in the survival trap we're sitting here saying oh not make enough money I'm gonna bring blankets back oh my my customers want more colors oh, I could just do this and we get we start doing more and more and more we become less efficient and it becomes a trap right to question or what? I just said one comment I would go to my supplier who's wasting the material and say I'll tell you what if you want to keep making my car seats cut the material twelve inch squares so nine together give me that fabric back at no additional charge will find another vendor now you get blankets. Yeah, you definitely we negotiate toe I was just challenge on what I would suggest not doing more. I'd become the world's best at one thing um but I do agree with john is everything's negotiable so well so I say okay, I will only on ly I don't know how I'm gonna kick this over if you don't I don't wanna kick something over we had a question on like kristen from victor who want to know are you measuring your r o I on any had any advertising that you're doing? Are you seeing how it's working uh not is well not like I should no, that might be another step a swell and trish is just curious do you do by all your fabric wholesale or retail? I mean, you saving way by a whole cell? Yeah. Expression yeah, yeah, but still it's expensive. Yeah, so it it sounds counterintuitive, but so is the entire profit for system telling like we've all been told, sales minus expenses equals profit and you know that's how the system works and I'm saying is total b s we've all been told captive audience the more you do for them the more success will be and I'm saying that it's a freaking lie the riches or the niches becoming specialists at one thing you will turn away some customers but those customers, they're seeking generalists you're going to turn on customers that have serious demands they want serious providers do it right. Okay, okay. Are you feeling it? Yes, it's just the hard thing when you look at the other people that sort of do kind of like the stuff in your space, right and then you likes see what they're doing and they're like what they have that no one then they have that they have that matt in that too and we're going back up to you know I think when films on here he's like it's a big lie if people are looking successful needing to show success usually they're not if businesses are like oh we're cruising things are fantastic chances are they're struggling don't don't copy them okay my niche it's the best cover for car seats ever and you have six variables maybe nine three for girls no three girls three boys three neutral okay I'm gonna go home and I'm going to cut out our wants you cut it out I'm gonna cut it out remember twenty eighty rule twenty percent your revenue is probably in generated by eighty percent I want to look at these twelve items you have I want to know these twelve items what generates a percent your revenue if if if italians are generally favors annual revenue then god bless you were going to ten but I'll be shocked if he six or generate a present and revenue I think it's three lines I'll be like that's pretty typical so we gotta figure out which ones are doing it and then um we'll have to do an extra episode like a comeback or and after checking with you like three months from now see how we fix that what I did I'll tell you what we can get us the profitable and that's step one but but the propensity also to stop here that's what most was too hey we're bad we're just making it again our business or just making we're living checked by check so I'm not done here I want to get this to two thousand three thousand even four thousand dollars before the day's over today somebody I want to do during breaks and then we're gonna do okay awesome do I complete you e o do you believe it? I d'oh d'oh it's the thing that's like with head right like you're headed just wants toe arguing to be like now but I'm doing like you know that it's true it's just you were here when debby horowitz was up here and she said for ten was that a saying here's ten years and she starts saying I'm an idiot I'm an idiot and I'm saying I told her you're not an idiot or not a fool on ly fools fools are people that want to have a realization they ignore the realization and continue the path right and I know you're not full this I hope this is the biggest ah ha moment now and too much yeah it can be pretty overwhelming but just because you thought someone's right doesn't mean you have to continue that path just explores something getting off it's that's the thing to like right like you know, it's bad, but it keeping it that way is easier than that. Yeah, so they season relationships toe hopefully you've ever experienced this. But when someone's in a bad relationship, that the comfort of returning to a bad relationship is there's more comfort returning that because this is a known quantity, then going to something is potentially better and our relationship with people in our relationship of the businesses are very similar. It may not be the best relationship the world may be sucking the life out of me, but at least I know what the relationships like it's comfortable returned tio so I'm just telling you, you should expect and demand something else from your business, and it is here this this's we're only halfway through the year right now, he would twenty thousand dollar business if this trend continues, especially going into the holidays winter, which is weird people covering twenty thousand bucks. So if we can do ten thousand dollars and bring in two or three thousand twenty thousand, we should bring five to six thousand that's a vacation for your family. Finally, for six years later, you're going to get some money out of this way.

Class Description

Ready to take full control of your business’s financial health? Join Mike Michalowicz, author of The Pumpkin Plan, The Toilet Paper Entrepreneur and his newest book Profit First, for an immersion into understanding the shockingly simple principles behind financial management and leveraging it to grow your business.

In this course, you’ll learn the core four principles of financial health and how to use them to create a profitable "rhythm" for your company. You’ll also learn about the psychology of managing your debt, whether you’re struggling with credit card debt, loans, or personal guarantees. Mike will also cover ways to bring new money into your business through cost-cutting, renegotiating, finding lost revenue opportunities, and much more.

By the end of this course, you will have escaped the panic-driven cycle of operating check-to-check and you’ll have a foolproof way of ensuring that your business becomes permanently profitable... from the very first day that you watch this course.

Reviews

Ella Heath Photography
 

Wonderful class!! Not only is the content very impactful and life-changing but Mike's funny character made the class very entertaining - the marker on the forehead story made my husband and me laugh to tears!! We are implementing Profit First right away. Thank you CL for hosting such an amazing class.