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Pruning Discussion

with the quarterly plan. What? I want you to also dio so once 1/4 you're you're going through the questions you say. How can I get more client activity and then you figure out your goal for that? That's gold One for this quarter. Gold to is how do you get people running more efficiently? I gave you a tool here for this goal. Three is cutting expenses and I have the method. I like you, Teoh. Consider every quarter. It's called one lower class and this is how it works. Whatever you are purchasing today, how do you do it at one lower class? Now, this is from the travel industry. You can be first class rugby, one lower class. Now they have what is the first class business class, economy plus economy. And then you're writing in the restroom. I think right often we start purchasing at the business class and over time we can upgrade ourselves. The first class Many times were over spending on stuff. We're getting too much benefit, more benefit than we need. Look at all of your recurring expens...

es and say, How do I go? Just one lower class. Inevitably, you'll find big cost savings for me. It's with my shopping cart, e commerce. I set my e commerce system, and somehow when I started out, it was $50 a month and it did all I needed to the email so forth. Now I just went through this. I'm actually just about to go through in preparing. I noticed my e commerce bill is $ a month. I don't know how I got there. I've been upgrade like always bells and whistles, and I'm using my shopping cart less. There's an opportunity for me to go one lower class. I could get back to $50 a month or less. Do that across the board with all your activities. You know, finders, huge cost savings. Inevitably, the space we rent, we pay way too much for how we go. One lower class, the phone service we use. How go one lower class? It doesn't mean compromise doesn't mean that you lose the features or it doesn't mean you. You lose your your ability on how you present yourself of the quality of the experience that customers have. It just means most the features you are getting from what you're paying. You're not using anyway. How do you go? One lower class? Yes. Example of that one of our clients discovered when they started looking at their office space on DSA. Started looking around. They actually found new office space that was bigger, newer, nicer, closer to where the business owner lived. And it was saving them money. So sometimes, but they have been in the same office space for like 20 years. So what Mike is saying like, sometimes you don't even realize you have things that you've always done and you don't even think about reevaluating. And also, sometimes costs go up and you don't notice. They kind of creep up and you're not paying attention. Or maybe you assume, like everybody else's cost creep up. But what used to be a good deal may not still be so. Yeah, that's great. Yeah, well, just give a shout out to our online community. What are costs have creeped up on you and in our in studio audience here because it may trigger ideas of where we're running costs rampantly, and I'll give one story that I want to hear you guys. Feedback. There was a company I was working with us. It is a pizza shop, and the pizza shop to get business was using online advertising. They were in an online directory and they were using the Yellow Pages. I think some people still of persons from the old pages, but they were using online directories and so forth, and they found out that was really costly. We went through this one lower class thing. How do we cut costs? Well, as we were talking about, which are brainstorming, and we realized that there was lots of peaches shops in the community that had started their business and then had gone out of business, they were no longer around. But they're advertising was still online. So Joe's Pizza that was right down the street as boarded up. Now they went out of business. Still hasn't ad in the Yellow Pages still had ads online all over with their number everywhere. Advertising was running, and when you call these numbers and that's what we did, we call the numbers. They were disconnected. There's no longer this number is no longer in service. We called the local phone company, said, Hey, can we get that phone number redirected us, right? Yeah, sure. Instantly, the phone started ringing. Free advertising. All these ads were up all over the place for competitors that were out of business. Our phone started ringing because we re redirected us. When we answered, we said, Hey, we know you're calling Joe's Pizza. Unfortunately, they're out of business where the pizza shop next door and will gladly deliver your pizza. And we picked up business like that innovative ways to cut costs. They got a huge amount of advertising for nothing. So I want ideas from you and from my own lining on audience. We've just got tons of people feeding, giving us feedback, online marketing costs, shipping costs we had that was from Bilby online marketing costs. And then we heard inefficient employees. Which takes us back to some stuff we touched on yesterday from VD. Huge, cost efficient poise I love shipping costs are so many ways to cut costs and shipping you clean. I'm not supposed to use Queen Well, as an eBay power seller, you get an automatic 23% up to 23% discount if you keep your top rated seller status on eBay. So it's a very important, uh, area to get. Make sure you get your packages out and so forth. And then I I had a discussion with UPS and they will manage your account. So I have ah rep that I call and he called me back yesterday, see how things were going. And so now I have a relationship with UPS. There is actual person that answers the phone, and so he's gonna call him back on the break and make sure that everything's upto you know, up to par and that I'm getting the pickups that I want, the delivery service that I want. And so it makes me then want to use them over the other ones that I use also. But the discounts air. They're built in number one because eBay is such a powerful group, and that's the largest this. Can I get your leveraging this powerful group that's bigger than you to get costs down? One really innovative way. I heard of people cutting shipping costs, whether the small business that was shipping to communities all over the place and found that shipping to a house that was ah, package cost $15 a ship. What they did was they put for one community, put all the packages into one package, shifted toe one house and said, We're having a pickup party. And so now the one big box and was $50 a ship, as opposed to 10 boxes of 15. So they dropped from $150 down the $50 he called it a pickup party. So became an event, and people were talking about the product in how cool it was in tweeting out pictures of opening their products. There's always ways to go a different way to look at your I guess you would say utilities like cable telephone because they're always changing their packages. But they don't necessarily notify you when they've got a package that maybe is more appropriate and less money for you. So you should always periodically be looking at your phone, your phone package, your cable package, all of those things that you kind of pay monthly a flat feet for Yeah, there's recurring costs. Yeah, you're talking about the employees that their online you have said that in a fish employees the thing club Parkinson's law not ending with Parkinson's disease but have you heard of Parkinson's law? Are you what Moore's law is? Where what will go wrong or can go wrong will go wrong part Parkinson's law is that our time expands to fill the time made available so that the time we spend on a project the more time we give ourselves our time fills that that void we made therefore, using Parkinson's law, the less time we make available, we seem to still get the same amount of work done in compressed time. One simple technique is with your contractors or employees is to reduce the time they have to get stuff done and you'll find gets done more efficiently. It is human nature again. When you had that exam to study for in school, what did you do? You had three or four weeks to prepare. You kind of flea threw it in the There's panic at the very end. Well, if you compressed the time down, the panic happens a lot earlier, and we could do the same thing with with our employees and ourselves. Make less time available and efficiency has to be found and we dio. But if you make more time available, available inefficiency gets found and we get the work done. Taking more time, any other cost cutting tips. I love this stuff. We Yeah, we subscriptions, like on my credit card and on my pay pal. There's $20 a month and $5 a month and $ a month and, ah, $100 a month. And I'm gonna have to go through it all when I go home and just cut. Cut, cut, cut, cut. Most of it I never even look at Yes, yeah, I never use them. That's just that waste of money. Yeah, you know, it's interesting. That's the 10 10 10 perspective. Often, when we buy monthly subscription to something in the moment, it's so appropriate, like, Oh, I totally need this information or totally need that I could see myself using all the time. Then, 10 months later, it's like, What was it like I bought? And I'm not even using it. And it was a cold dollars later. Yeah, exactly. And in 10 years later, it the costs has accumulated significantly. So a lot of these things Ah, lot of places offer trials. Take the trial, try it out. If it's a recurring cost they're gonna occur forever and see if you really are using the product. Many things we pay for we don't even use one of my favorite cost cutting tips is, uh, my friend. He owns a plumbing service, He's a plumber and he used the Yellow pages is one thing that still gets used. He has online advertising. He purchased his trucks and vehicles and stuff like that. The problem is, when it comes to negotiating costs often, if you negotiate down the cost, you still have a deal. That vendor after the fact and agree, could be some bad blood. You know those trucks? I can't pay $30, a truck. I can only pay 25,000 if the guy acquiesces. Okay, over 25,000. He's the same guys delivering the truck to you. I mean, like, it's like your food at the restaurant. We're talking about this last night down. And I, uh you know, my food wasn't prepared properly, in my opinion, And I'm like, I'm sorry. Could you Could you prepare is probably Could you cook it a little more now? I'm afraid of repercussions. Find rational. Expecting to spit in my food exactly what you said. They're spitting in my food. I can't believe I just did this. Of course they're not. But there is potential bad blood when we when we have to. Have you worked in the restaurant free? Of course they are. Of course they are. But what happens here is we negotiate something for our best position. But now with the deal with that person going forward, there could be some bad blood with my friend. This plumber figured out a little trick. Bring your accountant in. The beautiful thing is, you have to pay your accountant. You tell your accountant you're getting my accounting business. Nice. Ask one favor when I have a critical meeting. Either want to join in via phone over is really big. I want you come with my office with space to face meeting and we're going to a little good cop bad cop when the When The vendors there and they're saying, Well, this how much it costs for, say, truck, I'm gonna say, as the owner of business, I want that truck. It sounds like a reasonable deal. The accountant's job ends to make this huge bad cop fanfare going are you kidding me? You're getting ripped off. Truck should be half the price of this is ridiculous. I would never do this. No good account can support this and use the business. Owners say, you know he's my accountant. I can't do the deal now. The negotiations happened between that is thes two. And when the deal is done, you get your truck for 25,000. Whatever the number is in your count leaves that guys, that said God either Riel, you know, real jerk. And while he's my accountant and, you know, sometimes he could be a little rough around the edges. But now you have a friendship going, And I wish when we went to restaurants next time in a restaurant, when the food comes, I wished on it would be my bad cop. They bring the food, and I want that want the waiter to come with the plate like all you know, precarious. And she hits out of handling. This is ridiculous. Plate goes flying, he can eat stuff like this. No one should serve that. Now they know that's what I dio that is with a job, any other cost cutting tips that we have out there using maps for different tasks and stuff. My gran, any recommendations, like you tell, is something that has been popping up in the chat room. I'm actually not sure exactly what it is, but it sounds like it's for accomplishing. That's fantastic. You realize that one of the things with inefficient employees we're gonna talk about one comes the system ization. Sometimes those things already being done through systems out there on the Web you could. Right now, if you want to do old school column or accounting, you can get the old column or book out, and you can fill things out. Or you could just use QuickBooks sometimes their systems out there, that the efficiency it represents. You pay your 30 bucks a month or whatever it is for quick bucks, but it saves you 15 hours. That's a good thing. You know, they want to talk about people is our costs. This is something that June you and I were talking about yesterday. All of us cost the business. Every employee cost the business of salary, including the owners. So what we do and we're talking about your husband cause he's involved your business I'm not gonna specify the numbers, but just say from your business, you take se $30,000 a year. Okay? Now, what you do is you figure out what would a normal employees work in hours per year for you, for that amount that you're taking? Usually most employees may take work about 2000 hours a year. That's pretty much the rule. So I always divide by 2000 and that means that's equivalent to $15 an hour. So someone that makes $30,000 a year, that's you isn't generating about 15 bucks an hour. That's what you're costing the company. Every hour you commit to doing something cost you 15 bucks. Staehli. Think about that accounting that you're trying to save the business money I'm not gonna buy. The accounting software was gonna do it myself. I'm not gonna hire an accountant, and you spend our sweating over this going on like I don't know what's going on. The numbers are wrong, but eight hours if you spend eight hours a month doing accounting, uh, think my maths raised 120 84 kids, I think that costs you $120 a month. You are costing your business $120 a month. So if you buy software that cost $30 a month now, you can get done in an hour. If 30 plus 15 is $45 cost versus evaluate your own cost. You're one of the most significant people here. You want fewer people. I mean, maybe if you could do just you being doing things more efficiently, that's a great way to evaluate your own cost. OK, any questions, tips, advice from the audience stares that we've got some great advice here. A 3 18 media is saying he, he or she apologizes. Looking for a new accountants on their project board on Brute Brute camp has come up with a solution. They married in accountant. It was the ultimate. That's awesome. Very good. I wanted to show you we started off by talking about Paradas rule, that Italian economist. There's a company that don I did some work with called Strategy X, out in Chicago, and they did a study that's fascinating, and I just wanted to reveal it real quick what they did, they broke. They studied clients that that they were servicing and they were clients of all different size. I think it took a sampling of about Was it made clients, and they broke him into was called core tiles. They took the clients short amount by revenue into quartile. Quartile just mean 25% so clients were broken into four groups. This is the top quartile, the top 25%. This is the bottom or low lower, 25%. And this was the upper middle and this was the lower middle 25% of clients. They then just study What was the revenue that these clients were generating? And they found that 87 note is 89% of 89% of revenue is generated by the top 25% of clients, and this points back to paradas rule. Peredo said that 20% of wealth is maintained by 8% a percent of wells maintained by 20%. Well, this is 25% of clients generate 89% of revenue. And as you study your own business, you may find it to be shockingly similar to this. Then he found that the up the next quartile generated 7% of revenue. The lower middle generated 3% in the very bomb quartile generated 1% of revenue, pretty shocking that the top 25% your clients generate so much revenue. Then they measured effort. An effort is really cost the money they spent in the time, so cost plus time is effort. And they found that, UM, 25% of the effort these companies were making the costs of the incurring the people they're devoting was devoted to this top quartile. 25% was here, and it's the same across the board. And if you look at this, it's fascinating, meaning 25% of the company's effort generates 89% of the revenue. If you could just focus up there, that's pretty amazing. The thing that just blew my mind was when they talked about the net profit and the study showed that 150% of the prophet of the net profit was generated by the top clients. This was almost break even, so this was about 0% and this was about break even to, and the bottom quartile actually was a loss of 50% of profit. Therefore, the top clients were bait. Their profit making off the top clients was in part being redirected to the worst clients, the lowest tier clients. Well, this is the ultimate breakdown of of, ah, distribution of revenue and cost. Our job as businesses when we prune our businesses is we want to grow the top quartile because we want to grow. Clients are generating this revenue. We want to reduce the cross costs across the board. And as we get rid of clients that air down here soaking these costs go away, right? And if we get rid of these costs, so does the loss that we're incurring. Fees, lows, clients. Yeah. This is a great example of yesterday when you were working with Kirsten and she was lifting her top clients and then the lower clients. She had three clients that brought in a significant amount of revenue, and then the rest of her clients were teeny tiny compared. I would be willing to bet that it distributes just like that. I think that was a great I think so, Yeah. Maybe I should work harder to like Amazon and make them a better client, you know, figure out how I can even generate more sales with them. Even though versus the little tiny eso was the baby and so was one more. Usually one thing is Amazon. You didn't seem to like so much. Really? You like more, Right, But oh, so last night we were looking my husband and I get more reports in the the profitability by you know how much we sold it for and all that kind of stuff. Kazoo. Really? We have to sell it below wholesale because they discount. And so they weren't is profitable. We didn't make as much, even though it was Maurin revenue. Um, but let Baby our prophet was the highest too. So we could find baby boutiques that by a lot of our products. Then we will be good. Yeah, And now you know where to focus. And now you don't start looking the interesting thing too. Is your bottom clients down here? Or maybe costing you money? I've seen businesses and strategists confirmed this company. We were working with it sometimes just by removing the worst and worse is a bad word. It's just not that they're bad people. Just bad for our business by removing these lowest clients that all the sudden profit just jumps. But the key is when you remove a client that's not fit for your business, that you also remove the costs that are not fit anymore. There was a, ah software company as working with in New York, and, uh, they write in multiple languages, code coding languages. And I'm probably using terms incorrectly assessed Really not my thing. But they wrote in C plus plus job Ruby on rails always terms. I hope I'm using those terms properly. Actually, the online community can say, Mike, you're totally screwing this up there. That's the terms at all. But what was interesting? I said, Well, why do you write in so many different languages and the responsible? Because our customers demand that Well, then we sorted out their customers based upon the revenue in the cringe factor and so forth. And the top clients all wanted one language. Everything was in C plus plus in this thing called sequel SQL. Like this back end database stuff accessible this ruby on rails and other things like who uses that these other small clients were trying to break into that, then we look at the distribution of employees. There was two employees that were doing the C plus plus in the sequel stuff. There was one employee doing ruby on rails, and that's all they did. There was one person doing some other other language in its entirety. Those two employees that were doing these, the sequel sequel software and the C Plus Plus. We're generating, like 95% of revenue. They had to other employees that were just catering to two clients because that was their unique needs. But they were weak clients and they represented a huge cost. Once we've got rid of those clients was really easy. We said, You know what? We're not gonna support Ruby on rails anymore. We have another vendor that will support it. We pointed them there. Now we didn't need this employee cause I was the only thing employees doing. The beautiful thing was where we sent them for that vendor. Other vendor, our competitors. They were ruby plus shop or a ruby on rails shop. The employees went there and excelled there in our revenue or profit skyrocketed after revenue skyrocketed to, because now we knew the area to focus on their equivalent to the baby. Yeah. Can you look at, like, for me at least, like I do wedding clients on one side and the fortress and looking and separately in comparing because the revenues very different, obviously, is that okay to break them up into different categories are well with. The goal here is to identify what you like to service best. So I would start off, put him on one grouping of clients because what you're going to find is that yes, you're serving a mix of clients. Typically, that's not the best way to get started. You want to pick your one niche, and so I would compare face to face the wedding and the preservation of family photo. Another story wanted to share with you guys is about the shoe industry. It's interesting. A lot of pushback I get is, you know, Mike, if I do focus just like June was talking about in the photography industry, I can't. It's established industry. The innovation is gone. And I want to call Bs on that because I found the shoe industry that innovation isn't gone. Um, you would think that you think the shoe industry would be. There's no more innovation because the shoes been around since the invention of the first foot. After all, it's been around forever, right? Like, how can you keep innovating and shoes? But Ugg came out with a shoe that has dominated the world. But what's interesting is how they focused to answer or to address what June just brought up came out with a boot specifically for this surfing market. First, they focused on the Australian serving market than the California market right here, and I talked about this yesterday. They developed a shoe that used shearling. It's the material wool, I think, or something like that comes off sheep. Yeah, feeling comes off of sheep, and what's interesting is it's a natural material, so it doesn't collect bacteria, so it doesn't collect any odor, but very warm. So if you come in off the ocean, you can put these boots on and your feet or insulin warm. No bacteria, no odor. Ugg dominated the surfing market that's actually rub came from, And in the seventies and eighties and nineties, when you didn't even know existed, they were dominating their niche. They picked their category their equivalent to family memories of memory journalist. Once I think there was about $50 million in revenue and that may be inaccurate is once they started to break out. That's when the surfer guys and gals are wearing it. Their boyfriend or girlfriend riesgos or kind of cool boots. And they started wearing it, and they started becoming the second kind of community outside the surfing market that was now wearing the boot and then, ultimately, our teenage daughters, because my teenage daughter caught on to this trend because she's got Ugg boots like, Ah, whole closet of Ugg boots. Focus on a category very focused niche, and what you do is you evaluate your clients using this method and you'll find that maybe it is the families and maybe the weddings, while their fund is not allowing you to dominate the niche now just to continue to shoes story. So you think. OK, well, UBS was the last one innovate. It's done. But then I told you about my five fingers shoe, that crazy shoe that looks like, you know, like I got frog feet walking around that came out for the Natural Runner's Market people that do marathon runs and stuff, and actually, the owner is name, I think is Tony Post or the CEO of Ah, Vibrant is a runner and he would get knee pain and shin pain from running with regular sneakers while he was a proponent. Is a proponent for natural running, where you go barefoot but still too dangerous. That brought about the invention of the vibrant, and they started running with this, And sure enough, it's reducing and removing knee pain. Viber became very successful in the natural Runner's market. They dominated that niche. That niche became so successful it went to the like, just outdoor enthusiasts and gymnasts and stuff like that, and it's getting bigger and bigger and bigger. Then you think, OK, well, can have a more on shoes, but we see constantly redwing. If you know redwing, same thing came out for the boating industry. You want it. That's pretty much it was for I think sailors or boaters And then same kind of things start to catch on and who didn't think that they were the most hideous shoes they'd ever seen. When I first came out, but again, it was the teenage girls who really propelled that. Yeah, I had a pair of crocs. You did? Yeah, Yeah, Yeah. Skechers discussion. Kurt bottom. She Yes, yes. Curve your bottom. Yeah, exactly. So innovation keeps happening. The funny thing is, when we hear about it, we think crack, they were just big. And, um, you know, uh, bugs. They were just big. No, they all started by catering to a niche serving that niche. Bring anyone else in the world. And if you were in the boating community, you knew about crocks 30 years ago. If you're in the greater community like us, you knew it was a fatter five or six years ago. So pick that niche, focus and commit. If there's any questions, we'd love to get feedback from the online community to what? Our natures that you've dominated. Or that you found that you can dominate. I mean, really going to that specific category. And as a result, I've been able to prove the expanses, get rid of associate costs and really become profitable. And also, we may have some people out there who are getting excited about a niche that they plan to. Dominy. Yeah. I love that. I have to hear that from least your T. Just giving some feedback on how she applied to prove your yes, I assume it's a Shia Lisa. The killing Method method works with products to. We applied this method to our products that took a lot of time but has small profit margins. Incidentally, most of us one time customers bought the low profit margin product, and repeat customers buy the more expensive, higher profit margin problem. Yeah, I love that were actually in touch with that in the next module about matching up top clients and top products or top offerings. That's great for you, but I still later sports just just typed in with this one working on the use softball in baseball market sports training glasses to improve hitting and batting averages. Interesting. Yeah, so I hear people don't get the sports. You think you have to offer the entire uniform every there, there just in just the glasses for better batting. Yes, amazing, Amazing. You know, I have another story to share, actually, someone that a colleague who is she has a marketing business and one of her clients wanted to get into the reflective vest industry, which apparently you know, runners use thumb and apparently is they found out after looking into it is a fairly saturated market, and there's a lot of price pressure there. But what they did instead was they realized there was a demand for other reflective products, like half backpacks Jews. So instead of going into that Senate traded market, they still did reflective products. But they saturated that, you know, market for people who are out at night. And I don't want to get in the car safety market. Yeah, yeah, Never forget the riches air in the niches there was in. You'll see, uh, strategy. Constantly. I was just flipping through the newspaper or the magazine on the airline's yesterday or two days ago when we're flying in and there's a bike on the bike. Had the, you know, sometimes bike at night, have a light on the front. The entire front wheel was the bright light, and the entire back wheel was the backlight, the red light, and what this biker noticed was that bikes have had these lights mounted up top. If you're a serious night biker that that's not appropriate lighting, you need lighting that gets right at the pothole. That's right here. Not beyond it. So this guy I need to invent Ah, bike lighting system for people that are nighttime bike riders and change the whole process. And he started pruning stuff. He was heat. This guy. Inventors had all these different lighting systems. He's able to get rid of all of it all the amounts and stuff and just focus on this one. Design efficiency skyrocketed. Profitability skyrocketed and is dominating the market. One last tip is that when you pick a niche, you often if you pick the right niche, will be the number one provider almost overnight. If you're in the general broad market, you competing is everybody. Once you pick your category and you're only category, the world starts to recognize very quickly. You're the only source, and that price is no longer relevant. Did you want to say one more thing? I had one more story. Do you remember I showed you that article? I believe it was an entrepreneur magazine about the dog goggles, the sunglasses. This is a story. They're adorable. This couple invented sunglasses for their dog because they noticed that there dog was squinting and they kind of posted pictures on their Facebook page. And anyway, there started to be demand for these sunglasses. But what happened? Waas The military pick this up because apparently military dogs have a problem. Dogs, I've could be sensitive. And they have these trained dogs. The military became their biggest customers. They're called dog ALS, right? You never. They're called goggles. Really, really great story. I remember sitting that we were flying somewhere and I'm like, You got to read This might be the best story, but it's another example of how even a niche found them. They knew they had a unique niche product, but the actual market found them. And now they're They're almost a fashion statement for your dog, and consumers can buy them as well. So shout out to dog ALS. If anyone's watching