Mastery Through Mentorship – Pricing Your Products (Part 2) – a Look Under the Hood

Audio Transcription

Broadcasting from the thrivetime show studios in beatbox that ross is toast everyone cpa in every way, but he’s a business coach gentleman it’s time to take a look under your financial hood, with paul hornwelcome back to look under the hood, with paul clark in the former united states small business administration entrepreneur of the year since you’re on a mission to get you into an absolutely great, a fantastic, a tremendous financial position, I’m here with paul hood with the hood cpas paul. How are you doing this morning? I am doing amazing clay. You know, god bless me were working hard, beautiful weather, I’m, loving life. How about you I am excited inside the studio, with a tip top k-9, an actual business owner right. How are you my friend, doing good man and we have eric church up here, the business coach and so a lot, a lot of talent in the studio on a great people, lot of good values here and we’re talking about how to price your business coach products or services park to those who listen. Last week we talked about it a little bit we’re getting more into the details today and I want to break I want to be very actionable on today’s show very specific things that you can dostep one for me out there listening i, want you to pull up a google sheet or a excel document in williston right now, and you can’t do that. Just got to ship paper, okay I want you, make three columns, 3 called spring,, that’s a vertical lines:ok 3 columns and the first thing I want you to i. Want you to write down your fixed cost for everything that you have spent money on for the past 90 days. I want you to put the past 90 days and I’ll. Tell you why 90 days, because when you do 90 days this what’s going to happen right, this is a stupid exercise. It’s all in quickbooks, it’s just all right. There and I need to do some stupid, stupid, stupid, stupid, show stupid person, but then how about I don’t know an hour into this?

She, like, oh, my gosh, ancestry.Com i, don’t know that I actually signed up for that, or you might say yes, I do remember, going to the casino i, don’t remember, leaving the casino, but that seems like a lot of people. Don’t look at their people. Do not look after expenses. Why does everybody need to take the time to stop all of your fixed business coach expenses for the past 90 days? Why is that so important player of the expenses you have to cover that you got to pay whether you sell one thing or not, or whether you bring i, don’t care. If you have a job, you still have fixed expenses and such as well or your mortgage or your car payment when I tell people to do is take i, i, say 18 months, go 18-month schedule out your expenses dirty I am i, mean i, always good to draw a line. If there’s not much variation in those expenses month month, that’s a fixed, it got fixed cost if it’s going up and down different things and that that’s a variable cost, but your fixed cost is where you start, because that is that’s the foundation that that determines how hard you have to work or how much half price for carolina. I got the kind of man that would what up another man, but I will tell you this I would recommend everybody out there listening. You would do 19 months10 years. I wanted to I would like you to know. I did to your car.

Are those expenses associated with delivering the product or service center on I want to tap into your brain on this because it tip top k-9 when you train somebody’s dog? The first lesson is a dollar right:it’s okay, but it didn’t cost you a dolly to pay somebody to go. Do those demo business coach lessons? What does it really cost you in terms of time or money to do the first $1 dog training session? It cost about $40, because you’re paying somebody so now this is the thing I was at I was just on a mathematician you’re, so I got together with some close buddies, dfw take $40, that’s out, and you put $1 in that would be $39 negative and that would not be positive. Show me the for theyeah and then, when you actually need someone signs up and says, I want you to train my dog correct what kind of fixed expenses you didn’t counter the trainer paying the trainer to go out to the lessons or boarding dog have to get sasikala pair people that should want to work there for free, no but seriously. I’d say that we have our trainers, trainers and you have dog food. Yet we have dog number, that’s provided by the client, so, okay, so everybody out there. You have fixed expense. That are some things that I am fixing fences does the reoccuring expenses they have variable variable or the ones that change over time. Now. This is what I see paul you tell me if you give somebody would say:i even playing I’m at currently paying of an online order, a cookie to a website, company and i. Don’t know, I need to pay it or they disconnect. My business coach internet I mean so you’re paying for a carchris that you really don’t need to pay for a long time, so they think they need to like they’re paying like six hundred bucks a month. I see a lot of clients paying $6 a month to keep their website on, I mean just like wait. What does that mean? I’m serious I’ve seen this a lot, and you know that’s why I tell him to schedule at forget. Quickbooks forget, you know whatever use, excel use a piece of paper so that you see the numbers in in you have to write them down just like when, when I’m trying to help an individual client, when you know set a budget, I tell him to carry around a little notepad and every penny they spend.

They got to write it down, and so, when you got to write down that that expense, it it acts as a kind of hold you accountable, and so when you look at your numbers, if you write them down, you instead punch them in the computer and then something spits out. You don’t even know what it is you got to do it manually show me you got to enter in all your fixed expenses and call him one. You want to all your variable. This is the only fun one right all of your sources of business coach income downno. For me on my life, I am kind of a squirrel kind of like a squirrels like to me to bring in the nuts and save them for the winter. You know they’re they’re, all about saving that’s kind of one of my squirrel like activities your thing as girls aren’t around I’m, always screwing around you know, and so it’s my life is really funny, because vanessa will I’ll text when I’m like a verify. We got $122.26 and she’s like from what you know if I forget to add that on there and what happened is like cuz, the limo business that I’m involved in with andy elephant the room and it’s like $2,000 or four thousand bucks in one week-and you did it-is every business venture is going to sell that body of yours and no one is ever about my about us. I actually was using sex to sell I’d be homeless. We would be back to that dollar and $39 out I think how to list your fixed expenses in one column, your variable and another, and your income another. Now. This is big because I’m tip top k-9 is example. He has a very thriving business coach business. That’s really growing he’s got a new baby coming to the planets earth, which means his wife was better richard for paul ii didn’t say that paul paul richard gregory gregory richard, look at me like I’m something right. Expenses are growing correct. How do you stay on top of a weekly time? Or do you just throw all your receipts in back of your car and hope it works out? Thursday’s, my wife and I meet and go over the numbers. Is it like a thirsty thursdays? We got to get together and have a glass of wine, and you say:okay, we can wait. Go another. What would you do if your house is it’s like? Is it going at the office at the office?

Yet how long does it take 45 minutes to an hour, give or get into a big debate about this expensive, but not really debate see with my wife and I the relationship. We have weed every single friday. We look at expenses and anything, that’s a variable expense. She tries to reduce our expenses by 3% every single week. This is the process of what you made your three columns of your of your fixed expenses. You were. Ball in your income. My wife sat down every single week and asks:how can we decrease expenses by 3% every week and paul? There are some pretty incredible solutions if she comes up with every time you have to have the time in your schedule scheduled to look at your finances. Why do you have to do that? My man will success in life and I’ve said this. Multiple times, successful in life comes from being deliberate and you’re, deliberately controlling where your money is going, because you know that the drifting and and little bit of money here and there you would be totally surprised i-have yet to meet somebody that even people that think they have control over their finances that when we go through this exercise, if they’re not blown away that there’s business coach money going out that they didn’t even know I was going out and having people write. That down. That is such a huge thing, because clay and I would actually work with a client last week, and we discovered that haste. Somebody on the team wasn’t going back and checking making sure cards were going through ride and and whatever is going on, and so what happens with people when they keep everything in their quickbooks or everything in their bank account, and they just checking on their phone. Is that is considered the junk drawer of your financial life made it there.

It’s automatic record billing right, which is like throwing a drunk driver, has a junk drawer. We, like i, just put it there, so you knew you’ll go back there and so it’s in the junk drawer. If you’re my new place, you never go back to exactly and we found out home. Boy hasn’t been charging client thousand $2,000 I need to know about it. All of the time the where the, how the what you need. All of those things you have to like paul said be deliberate, write, those down put them on your to-do list and schedule it and actually go over there. So i, like ryan and clay, were saying every week cuz. This is one of the most important aspects of your life and business you’re. My wife just found a $1,300 mistake. Quickbooks said the car got ran, but yeah you got to verify the bank of goat meat. If you have to make sure it goes in the bank, you got to keep things at the front of your mind there for the things that are important and what’s more important financially than your numbers, you have to keep those in front of, and that’s your driving force, you’re looking to those numbers to help steer your car now jim rohn. This is the best selling author I really liked his book his books. He had a big impact on tony robbins there who, like tony, robbins some you say i, can’t stand either way, I’m running a big impact on tony robbins, and he says what you don’t know will hurt you alright.

So you now know you’re very looks. Pence’s, you not know your fixed expenses. Calm when is a fixed expenses, call him to as the variable expenses coming through as the income. Now you have to do whatever you have to do, i, don’t care what you have to do, I’m going to give you tips to what to do. I really don’t care how you do it, but you have to operate at least a 25% profit margin and I’m going to explain to you what happens if you don’t do this you’re not going to be bankable, which means it a bank in the event that you are semi-successful. They won’t lend you money to open another one. If somebody wants to buy a franchise from you, they can’t you’ve got to do this, and so the best way that I know to do this is to 1b really really intentional, with how you schedule your staff paul talk to you about this cuz, a lot of people, they let their own business coach staff choose their own hours, and let me tell you what there’s a huge difference between employee work in 38 hours and 41 cuz. What’s homeboy I get to 41 he’s making time and a half for the more of your employees only need to get to the work shift will take 15 minutes before they’re scheduled, not a half hour, I mean if you let your employees make your own schedule. But what happens every single time? Every single time is as they they do it in their favor and what they do is they end up fitting 6 hours worth of work in the 9 hour work day, and so yes, it looks like two or three hours of overtime, but the not put in the even 8 hours of work. I have a really funny story. There was a guy or can it elephant in the room? This is probably 2 years ago and I noticed every week will work at 44 hours every week, and so we set up now or you can be working 44 hours. Okay, so I’m say what. Are you do I look at he’s getting to his he’s getting to his shift at a barbershop an hour and a half before the shift starts in he’s on cam? Yes, did you guys want some help taking up to take taken down?

Do you want some help kind of cleaning up she’s like helping people do what they can already do on them self and it’s on camera? If you guys want some help taking up that tree, so he’s like walking, a woman could easily carry the trash. Now he’s like caring the trash with her and he’s doing whatever he can, because he wants it that 42 baby, because he’s got some goal he’s trying to hit know he could sell memberships with all the ways you can make money, but instead he just wants to milk that cow. He just wants to get that extra hourly pay. We come back, we’ll talk even more in depth about how to properly price your products or services, because there is somebody out there who is charging too much you’re somebody out there who was absolutely charging too much I’m, not sure who you are as a business coach, but there’s somebody out there and you. You know who you are you’re charging too much or what’s the fair profit that everybody should be making on your products and services, broadcasting from the thrive time show studios in beatbox. That ross is toast everyone cpa in every way, but he’s a gentleman it’s time to take a look under your financial hood with paul. Welcome back to the conversation, it’s look under the hood with paul hood cpa in every way he’s kind of a big deal, but the man is looking like he’s skipping meals certain. How can you possibly be a big deal and weigh so little? How much do you weigh right now because I don’t know if very manly I’m I’m only way in about a hundred fifty seven pounds at the training for a physique, bodybuilding show and I’m 50 years old last week, and it’s an elderly, client, lady and and she’s saying cuz I have I have to eat like seven times a day.

For this the show and she’s asking why I said I can’t believe I was so I’m telling her. Why and I’m doing a physique bodybuilding show. So, you know I’m not going anywhere on those speedos I’m going to be wearing a regular swimming suit and I said it’s kind of like a modeling type still and she said modeling yeah, you better just quit right now, really tender you’re, not a model! You remind me of your brother nathan, that’s exactly i, just I loved it. It was lucia modeling business coach competition. We could go to luby’s. We may have to put ryan’s face on my body but products effectively. How do you do? How do you price your product effectively? Here’s the deal you got to make sure if you have a service out there, europe your operating about 25 to 20% profit margin. You have to do this. You have to do this I hear some motivational tip. You have to do this. Here’s another way to put it yet. You have to do this because that’s what you have to do. Somebody else kind of your kind of looking for maybe a softer approach to do this. I, don’t know what to tell you, but you have to operate a 22.5% profit margin. Cuz! If you don’t do it you’re not going to be bankable. If you want to go, get a small business loan to expand the bank’s going to go out. So how much money do you need to get music? Why I’d like to borrow 50000 to expand in a baker? Look at you and go curly mustache to sprouts up always.

Let me go get my partner going to come in one by one and can you believe this myth this guy wants to borrow the boardroom you’re going to be like a comedian, your lycamobile comedian people are going to go guys like dane cook sign again. This guy is great and I’ve worked at banks I’m telling you they honestly laughed it’s like that they feel like. Let me let me see what you think sorry. Would you get your profits up to 25% more than this looks interesting. I mean why do you? Why are people so resistant to raising their prices? Why are frayed to lose business, but the reality is is? Is they won’t and you know them even if they lose that say somebody doubles their their their prices and they lose a third of their business. There’s they’re, making more money working less and you know the reality is-is clay as most people don’t even know what that profit margin. Is they don’t they don’t know their numbers? They don’t sit down and and back into it, but and often times when you know we show people we go through this exercise and-and they say well, I need to raise our prices. You need to get a different line of work and you need to figure out a different product line to make it happen to have some of those numbers paul that you’re talking about so they didn’t know their profit margin, maybe they’re break. Even when you know you can talk about all kinds of ratios with the bottom business coach line is as you’ve got to to determine how much money you want to make and then back into your fixed cost or variable cost to see and then compare that with what your pricing your product, and so if you can’t get your price of your product it up, and you need to reduce your costs to get that bottom line number. So you look at your gross profit, gross profits, going to be your yourselves less your your variable costs and then you fixed costs, and then you come down to your property or your actual net income to see if that’s 25% or more, if you’re struggling to price your product or service that you go to thrive time. Show.Com today, drivetime show.Com today and up paul hood will actually give you free tickets to our next in person.

It’s a two-day 15 hour. Workshop, you get your tickets at what time show. Com to get the free tickets. All you have to do is subscribe. The drive time show on itunes and leave us an objective review subscribe to the front of an itunes, an email us proof that you did it to info at thrive. Time should i, come to email, your contact info and will give you those two free tickets. Now, if you want to get a free copy of warren buffett’s book, snowball, warren, buffett books, no ball, then paul will also give you that book for free all you have to do is go to hood cpas., com and schedule your one-hour consultation with paul hut in when you schedule a consultation. They will give you a copy of the snowball book will schedule the one on one consultation. It’s all right there for you, just go to hood cpas. Com say a concert going to share in just a second real quick I want to irritate, have to listen to get it get. It does not have the ability to control their business coach spending. They then print more money. All the time, gus deflating the value of your daughter, making her money worth less every year, so you’re going to have to raise your prices by at least 3% a year to stay current with the cost of living. I want to make this very real for the great people in oklahoma. So there was a friend of mine, very good friend of mine and my friend of mine he’s at he’s a teacher he’s a teacher-and this is this:is this the real story? I want you guys to understand the story? We’re going to college oral, roberts university university comes out in the back in the day was $30,000 a year, okay, and so what happened? Is he says to me?

He says I want become a teacher and i. Remember saying this and he says cuz I really want to teach and I said then start a business and teacher employees or start a business in teach at church. Her I want to be a teacher, said I want to make sure you get this. You are definitely not going to make more than about 30000 bucks a year and he says to me:that’s cool though cuz I get the summer off and I said:okay. Well now, I’m 37, you know, and so now I find out. He wants to go on a little strikey because he wants to get more because he was shocked that the deal he agreed to was the deal he agreed to. He was shocked, chaka khan, chaka khan. He was shot so now he said, I cannot believe the deal that I agreed to and now I want oklahoma to pay me more now. My friend luke, who owns the business coach gym, called the hub. He owns a gym called the hub and he was paying himself a teacher salary and he came to me and he said you know, I’ll make more money and I said cool and he said hey. Can you show me how to show them? How but I guess luke could have gone on strike. Long story short look did not decide to go on strike, and so he decided to grow his business with these teachers and they said there was a time where I think about it or not. They just got a $6,000 a year raise now what to think about this for a second $6,000 per year.

How many teachers are in oklahoma how many teachers are in oklahoma cioppino? How many teams in oklahoma 2775 can you put on okay and they all just got an extra $6,000, which is great because that’s a pretty cool deal that 41775 people just got a pair of the i? Don’t remember agreeing to raise my taxes, I don’t know, but I thought the whole declaration of independence was the idea that we could not have taxes raised without our consent. I! Don’t remember that but I guess, because somebody decided they wanted to attend. Oral roberts university in the middle that and agree to make $30,000 a year that now they’re, shocked and so now they’ve gone strike. So now I guess I missed that boat. So now, oklahoma has just increased its budget and puts on the show duck, shepherds. 250-650-0000 repeat this to the letter e 1705 teachers increase their pay by a total of $6,000 who got a $6,000 increase. Would in fact get the increase. My missing something. Know it all teachers 6000 going to come from right, santa santa santa $6,000, no know what you’re going to do if you’re going to raise taxes, and so what you’re going to do. Mister business owner is you’re going to say why I just want to be nice and i. Don’t ever want to raise my private man you got to raise your prices and business coach government constantly is raising raising still running around giving free stuff to everybody. All you want to library will give you a little library. You want a little park will give you a part how you want a little i. Tell you what colleges heart, let’s make it free phone bill, I got an obama phone and you go boom a hard time paying your debt forgiveness program, eventually government just going to keep raising taxes, anything playing in all the time. In on that, because I think teachers are won the most important profession, we have our youth, but the reality is in in in in this country. You have supply and demand. So if, if the supply of teachers is above the demand, then prices come down if the demand for teachers is higher than the supply, the the the the price goes up, and when the government intervenes there certain times, I need to it’s. It’s just it’s it’s! You know it always messes up the business coach market system if your small business anyway, if you feel like you, don’t have your pricing figured out, you just don’t know where to start go to hood cbs.Com, that’s hood, cpas. Common schedule a one-on-one consultation with the man, the myth, the legend call hood and he will give you a free copy of warren buffett’s book snowball. Snowball get your coffee today at hood cpas,. What’s going to put cps.Com what was that website? Cpas, will see you next week