Latest / Second Act Business Owner / Maximizing Margins | Smarter Approaches for Business Finances
Transcript
- Ep10 === The Money Lie --- [00:00:00] Lee Gray: Do you want to know the lie that business owners tell themselves about money? I'm Coach Lee, and this is episode 10 of your second act business owner. I'm gonna answer that question today. I'm going to tell you the lie that business owners tell themselves about money, and this is the lie they tell themselves. If I could just get [00:01:00] more customers, everything would be better. That sounds like a good thing to say to yourself, doesn't it? I hear that all the time. It sounds right. But I'm going to tell you something that might surprise you. Why More Customers Fails --- Lee Gray: More customers is not always the answer for most businesses, and it's not because we don't need or want more customers. We're not ready for new customers. We must be ready for new customers. So let's say you're working hard, You've got customers coming in, money's moving in. Money is moving out, out, out. And at the end of the month, it's not what you thought it would be. You're still wondering where all the money went. You're tired and you may even be a little bit frustrated. Why isn't it getting better? I've actually worked with business owners who doubled their revenue and still struggled with money. Fix Pricing and Retention --- Lee Gray: What's happening with the customers I already [00:02:00] have, that's the first question I ask. Are we charging what we're worth? Are we charging what we're worth? Do all of our customers come back that could possibly come back? Do we have a good customer return strategy? Are we increasing our customer spend over time? Are we offering more value, more reasons for them to want to add money to us add, are we giving them a reason to buy more from us? And of course, I've gotta ask you this question as your coach, do you know your numbers? Because all of these areas have room for improvement and improvements can change everything, and that's what we want for the second act. We want your second act not only to be fun and liberating and legacy building and all of those things. We do want it to make money. If you want it to make money. More customers is not a bad goal. It's absolutely not a bad goal. Keep Customers Profitably --- Lee Gray: [00:03:00] However, we do have to have a system for attracting, retaining, you know, adding real opportunity to bring in the customers again and again, taking care of the customer. That's already, already right in front of us. You just have to look at it a little bit differently. I'm not sure exactly what the statistics are. I do know that there's like 75 to 25. Percent difference in how much money companies spend to get a new customer compared to how much they spend to keep an already happy paying customer. The real opportunity in your business might very well be the customer that's sitting in front of you. Your greatest opportunity may very well be the customer that's sending right. In front of you. Have you ever thought about that? You just have to look at it differently. Costly 1099 Vendor Trap --- Lee Gray: I had a therapy business that I worked with. [00:04:00] They had 10 99 vendors that provided their services, and sometimes that can get kind of wonky if you've got 10 99. Employees in under the same roof. What happens sometimes is the 10 99 vendor, because they're not an employee, the 10 99 person gets treated just like an employee, which costs you more money, and in this case it did cost them more money. They were providing coffee and sodas and cleaning the offices and doing all the things that they would do for employees. They ended up eroding away their margins when that happened. And then the. 10 99 person became so profitable they went out and started a business on their own. We have to be really careful about those kinds of things and that there are little things sometimes we're doing. It seems like in the beginning you might be better off working with a [00:05:00] 10 99 relationship, but if you're treating them like an employee, they end up costing you more oftentimes than if you actually hire them as an employee and pay that percentage of taxes for them. But the thing we wanna look at in the business is how much money do we keep? That's what we wanna look at. And it does cost more money to go out and get new customers. It costs more money to get new employees. That's another story. But think about this. Revenue Vanity Profit Sanity --- Lee Gray: If you're bringing in a lot of customers and your prices are too low. Or your costs are too high on the other end, you're not selling it for enough. You're, you're not going to make money and you're gonna be busier than you were maybe before when you were selling it for a higher price. You're just working harder for the same result, or sometimes even a less result. That's not where we want you to be. A second actor. You're in your second act. You deserve more. You deserve twice as much, in my opinion, as any other business owner. [00:06:00] I've seen businesses do everything right on the outside. They're busy, they're booked, the phones are ringing, they're getting all kinds of social media likes, dings, beings, and all of that. Profit Systems and Accounts --- Lee Gray: But behind the scenes, there's not, clarity around the numbers. They don't have a plan, and there's no. Control over the profit, the money that comes into the business that's earmarked profit needs to have its own special, lovely landing place because if it gets mixed up in the day-to-day business operations, you go to the bank and you look at your statement, look at your accounting software and say, oh my gosh, there's no money left. Take that profit, move it into a safe place, IE another account that you don't have easy access to. Some people even say that two people have to sign in order to get money out of that profit account, which isn't a bad idea. And if you have a way to start that in your second act, I would recommend it. It's a good strategy. You know, it's like kind of like going [00:07:00] to the store and, and having it in your mind that you're gonna go and buy something. You get there and you find out, well, maybe I really didn't need it. After all. Not only did it save you that money, you didn't have to create new sales to replace the money that you spent because you didn't spend it. So instead of asking yourself, especially in your second act, especially early on. How do I get more customers? Ask yourself, how do I take care of the customers that I have and how do I make them be the most profitable they can be and the happiest they can be because of the value that I'm adding? Don't get hung up on revenue and sales and sales and revenue and revenue's. This and revenue's that. 'cause at the end of the day, revenue is vanity and profit is sanity. We've talked about. Some interesting things today, haven't we? Well, until today, you may not have known the lie that most business owners tell themselves. Remember what it was. It [00:08:00] was, I just need more customers. And maybe that's not the truth. Not today. Second Act Focus and Wrap --- Lee Gray: I have had such a good time today in episode 10 with you, and I know that sometimes what we talk about in the second act business owner is hard to hear. You know what? You got what it takes. You're in your second act. You're not just a starter over person. You are someone who has a mission. You've got vision. You are a second actor. What I feel like expressing today is the second actors that pause for even a moment to say, am I focusing on customers or am I focusing on profit? Yes, there's a balance, but I don't wanna compensate. I don't wanna focus too much on getting customers at the expense of my business. That's what I feel like expressing. What do you feel like expressing, if you found today's podcast helpful, would you do us a favor? Help [00:09:00] others by leaving a review either on Apple, Spotify, or any platform that you find us on. And if you watch us, see us on YouTube, give us a thumbs up and a review or a comment that really helps us and that helps us get elevated in the algorithms. And then this gets shared with more people who wanna be in a second act just like you. Thank you for joining us on the second Act business owner.