How to Cut Expenses without Killing Your Business!

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The purpose of any business is to develop a profit. There are many factors that will affect your business’s ability to generate a profit. Those include the costs of goods sold on your products, your price point on your product and services, your fixed and variable expenses.

In this economy where the sales funnel is typically wider for most businesses, meaning it will take more calls to make a sale, the knee-jerk reaction is to cut your prices to increases sales revenue to help generate overall more profits. That strategy typically will backfire (unless your up-sell process is strong and you know your numbers like clockwork).

One of the biggest issues is knowing the ratio between cutting your prices a certain percentage (like 10%) and now knowing your corresponding COGS (Cost of Goods Sold) percentage. The key question becomes, how many additional sales will you have to do at full price to make up for the one sale you gave a 10% discount? My good friend Spike Humer, has developed a very good chart that tells you the answer based on the price discount and COGS. For example, if your product or service has a 40%COGS and you cut the price by 10% the company would have to do an additional 15 sales to make up the profit lost on that one sale. This brings in revenue, but unless a strong back end exists this can lead to a fast track to being out of business.

There are a few fundamentals that we recommend you have in place before you start cutting expenses to make the best decisions.

First, you must know your numbers. There are important questions to ask yourself about your numbers. How many leads to you have each day? What is the cost per lead? What is your cost per appointment? Cost per new client? What is lifetime value of each new client?

For example, if you have 10 leads per day and you have to spend a total of $2,000 per month for marketing, and that is divided by 30 sales days (counting weekends ) or 20 sales days if you do not. That comes out to 10 leads per day x 30 sales days= 300 leads. Now take $2,000/300 leads=$6.66 per lead.

If it takes 10 leads to develop 3 appointments, that is $22.00 per appointment. If those three appointments turn into 1 sale that means it is costing you $66.66 per client (which is a low number). For many of you, it may be costing you $25 per lead that you receive. That changes the numbers dramatically.

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Patterns that Create Business Failure and Business Success—An NLP Prospective

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Business and life do have patterns of success and failure. NLP (neuro-linguistic programming) is the study of the connection between the neurological processes (“neuro”), language (“linguistic”) and behaviour patterns that have been learned through experience (“programming”) and can be organized to achieve specific goals in life and business. I like to use this simple definition: it is a study of patterns or recipes. If you have a great recipe for your favorite meatloaf there are certain ingredients that if are added in the correct amounts and sequence will create a specific result. This is similar to an NLP pattern.

For example, good spellers do one thing differently (or have one more ingredient) than bad spellers. Good spellers will first see a word visually in their mind, sound it out, and then spell it. Bad spellers will skip the step of visually seeing the word and jump right to sounding out a word, then attempting to spell it out. Good spellers have a different “recipe” than bad spellers. They have one ingredient different.

In business, there are patterns of success and failure. One core pattern for business success is the Disney pattern. This was molded after the famous Walt Disney. Walt and his team of Imagineers were able to accomplish amazing results with their meetings. Walt did not run a meeting like most business meetings. He would separate meetings into different meetings. In the first meeting, called “the dreaming room,” you are allowed to come up with ideas and that is it. There is no evaluation or organization of ideas. That is a separate meeting! Why? If you start
allowing your staff or yourself to evaluate ideas in the meeting many times that will stifle the new ideas. People will start to think, “Maybe my idea is not such a good idea”. That is NOT how Walt Disney conducted meetings.

I would recommend you adopt this pattern for your business meetings. Here are the four meetings Walt would run: First is the “in the dreaming room” – all brainstorming. Second is organizing the ideas. The third is to evaluate the ideas. Fourth would be to implement the ideas.

This was his brilliant pattern for business success. This is especially important if you are a solo business owner. You may be sabotaging your own success by coming up with great ideas and immediately thinking how can this NOT work. That will stifle even your own ideas.

Another pattern that seems to prevent a lot of success is lack of time management skills. Most people think they are very good at managing their time and they are really not. You can calibrate in a minute to how well you are doing and perhaps consider a different pattern for success.

The poor time management pattern looks like this:

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Where Did My New Years’ Resolution Go? 9 Strategies To Rescue Those Resolutions!

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Resolve comes easily on December 31st.

By March of the new year, the resolutions made are in disarray, compromised, abandoned. And the resolute determination to make this year, finally, the year you stick to ‘em, forgotten altogether.

This is not about guilt over this abandonment. Instead, it is about the real reasons resolutions and the determination to achieve them are lost, year after year after year, and how to change – yet this year – and get on track to systematically set and achieve new goals.

Big Idea #1: you can’t achieve new goals or make desired changes without allocating time to do so. Check out page 63 of my NO B.S. TIME MANAGEMENT FOR ENTREPRENEURS BOOK* for ‘time-blocking’ strategy instructions. A big reason that resolutions never become reality is no room made for them in the daily schedule! If your days are already full, and you resolve to get in a 1/2 hour a day on the treadmill or on your laptop, writing that book, that 1/2 hour has to come from somewhere. Something’s gotta give! You have to find something or things currently consuming time you can cut 5 or 10 or 15 minutes from.

Big Idea #2: priorities should govern schedule, the schedule shouldn’t govern priorities. On pages 69-74 and 103-111 of the same book, I talk about the mistake made by the vast majority of business owners and entrepreneurs – they operate like workers instead of bosses and leaders. They report to a workplace, then they let people and events ad interruptions come at them all day, take control of their day. You have to est control away from others’ priorities and govern by your priorities. President Bush cited Social Security reform and tax reform as top priorities of his second term, presumably accompanied by a resolution of the mess in Iraq. Then along came the tsunami. Still, he organized his tax reform panel. It’s hard to judge from outside looking in, but my belief about W. is that he’s determined to govern by his priorities. Are you?

Big Idea #3: resolutions aren’t resolutions without resolve. Only you can decide what really matters to you. You shouldn’t bother with ‘lip service’ faux resolutions, made to appease or satisfy others. Honesty with self is a pre-requisite for success.

Big Idea #4: resolutions require resources. Almost anything you decide to do, any change you decide to make,
any goal you set out to achieve requires new or different resources. That might be a piece of home exercise equipment or different food in the cupboard, a private work environment outside the office, information, people. You aren’t really serious about a resolution unless you invest in and gather the required resources.

Sometimes investment motivates follow-through, too.

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Extreme Productivity for Your Business and Life

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We are living in a time where our life and business is constantly getting interrupted with thousands of commercial messages every day, from e-mails, texts, instant messages, phone calls, social media, appointments, family, kids, staff….interruptions all over the place!

For many, it is becoming hard to believe what was life like before FaceBook, where so many people are addicted to checking out what all their “friends” are up to, or who liked your post multiple times per day. This was similar to how e-mail was 10 years ago when each new e-mail had a little ding that would tell you that you have mail, and most would stop what they are doing to check that email. That is now happening with texting. With all this happening no wonder it has become more difficult than ever to become productive, much less experience extreme productivity

Let’s go for ideal. I have learned a lot from the marketing guru, Dan Kennedy in this area, who is prolific at cranking out a ton of content, getting a lot of accomplished and still has plenty of time to play (for him it is harness horse racing-he actually rides in the races).

The starting point is to be clear on what your outcome or goal is that you want to achieve. If you are not clear on your outcome for your business and personal life that is the first challenge. That alone would cause you to jump from one thing on your checklist to the next allowing for a lot of interruptions that totally destroy your productivity.

Let’s assume you have your outcome and goals organized. The next step is your belief system as to why you are continuing to allow someone to consistently interrupt your time. Most of you, if you are really honest, may find out that you are your own worst enemy when it comes to interrupting yourself consistently. If, I am being very honest, I will fall into this group from time to time and immediately look to get back on track to being focused and productive.

It is always important to look for a great person to model when it comes to any skill set or goal you want to accomplish. When you do you are in a better position to calibrate what is different from what you are doing vs the person that has what you want. There is where you have to be really honest with yourself.

For example, do you think Donald Trump always answers cell phone calls, IMs, during meetings or other engagements? Do you think you can just call him up and interrupt him and get him on the phone? Or do you think his day is very structured? The reality is that those who are highly productive are extremely structured in their schedule. I know that some of you do not like structure because somehow it means you are giving up flexibility or your creativity. Again, this is a belief system shift. Those who are extremely productive are very structured. If you have a 30-minute consulting call with Dan Kennedy and are 5 minutes late, you will end 5 minutes early. Right at 30 minutes, you will hear the phone hang up. You can be in mid-sentence, but he will not take an extra 2-3 minutes with you. He is very structured and very productive.

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How to Work Backwards to Solve Any Business Problem

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Short and long-term success in your business will be the result of your ability to solve business problems which may include everything from legal, tax, management, marketing, lead and client issues. Successful entrepreneurs make decisions quickly and are slow to change their mind and unsuccessful people are slow to make a decision and change their mind quickly and often.

The first step is to look at any problem as an opportunity. If you have a client who complains about a portion of your website that does not work, instead of getting frustrated at the client, look at that as a real opportunity to improve your website. When you think about it, you are not even paying these people to point out your flaws and areas you need to improve. You are receiving free advice on areas that need fixing! Reframing what the problem means is step 1. You are changing the meaning to be that of an opportunity to improve!

One of the main reasons business owners do not solve many problems and it feels and looks like their business is not moving forward, they immediately conclude that is not working so let’s do something else.

A common example if your business is looking for more lead generation and you put more time and energy into social media this past month and you notice you have very little results and you immediately stop that next month and focus on article writing. After that does not work you invest your time in video marketing. You are consistently jumping around from one lead generation strategy to the next vs. digging deeper into “what part” of the first strategy did not work to the level you were hoping it would.

Here is my formula to solve any business problem

1. Clearly, define the problem and avoid generalization. Example, my lead generation is not working vs. my Facebook ads are not working to the level I had estimated. I am only receiving 100 clicks per week but only 10 opt into my list.
2. State your goal specifically and a time frame. My goal is to receive 100 opt-ins to my list per week starting in three weeks.
3. Focus on what part you can change (or test three parts at one time) to determine if that will help solve your problem. If you do have a team or a group to mastermind, allow others to give input to solve the challenge. I would recommend you use the Disney approach and when you brainstorm solutions allow for those ideas to flow without evaluation in the moment. If you start to evaluate ideas while people are still offering solutions you will find that many will shut down because their idea may be “dumb” or of no value.
4. Implement the new ideas to solve your problem.
5. Measure if you are getting closer to solving your problem. Specific measurement is a must. If you have leads you are looking to manage you may want to measure the ratios between a call to approach, approach to presentation, and presentation to close. Measuring ratios will help you isolate what part of your presentation is not working for you and where you need to focus your improvements.
6. Repeat steps 4 and 5 until you solve at least a PART of the problem or the entire problem. Other tips for success:

  • Model someone else who has solved the problem already. Find out what they are doing differently than you.
  • Find a coach or mentor who has experience in the area where you have problems. For me I did not have any management experience so I hired mentors in the area of management.
  • Focus on making small improvements in your business!
  • Allow yourself to win the game!
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How to Increase Your Odds of Success at Any Business System.

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Have you invested in a business system that was supposed to deliver great results to you and your business but the results were far less than what was promised? I know I have over the years, probably over $100K worth or more. You saw the great testimonials by people that did not look half as intelligent as yourself. You may have been thinking…”If they can do, so can I”! Many times the great system only leads to a great disappointment. Another system that didn’t turn your business around and didn’t bring in all those new customers or clients. Why is that? Was it the system, or was it you (or both)? In some situations, the marketer was just overpromising and the system could no way produce the results promised or the system was just crap, to begin with. I am sure we have all invested in a few of those. I do believe that most systems are really good and will help you produce amazing results. If that is true, then what is the challenge? It is you. Before you get upset, this is a good thing.

Being accountable and learning a new distinction or shifting a belief can make a major difference in your future results. Let me break down the steps why the system is not producing results for you and what you must do differently in the future (even if you go back to your bookshelf and dust off some of those CD, DVDs and other systems you have already invested in and now go back with a new attitude and mindset to get a better ROI.

Three Reasons Why the System Did Not Work for You and How to Turn that Around

  1. You were sold on simple steps to get the results in your business or life. Unfortunately, that is what sells, but it rarely ever works that way. Dan Kennedy has over 100 steps for every live event he conducts. These are complex marketing funnels to get attendees to sign up, to get them to actually come to the event after paying, and the following funnel after the event. He actually tracks revenue PER HOUR at his four-day events. It is a business and he runs it like one. Now if you want to put on events and have 700 people in the audience and have a $4 million event with ticket sales, upsells, speaker splits…it is a massive undertaking. You may go to or invest in training on how to run high ticket events and the headline will not be…”100 Simple Steps to Run a Profitable Event”. It may be 7 steps, 3 steps…That is what people want, the simple solution. Rarely is that the case. Now, the 7 steps might be an overview and very accurate but each step may have 10 other sub-steps to get the result. No one can tell you that up front because you would never invest in the program.The solution is to realize that it isn’t that simple. You invested in an outline, blueprint or pathway to get the result (which was worth the investment). Just realize that each step may be very involved with many other steps and when you have the mindset this is going to be twice as much work, take twice as long to get the results. This is the first step to realize, there is more work involved in this system. No different than the long hours you have put into your business or your skill set. You may have been up late nights, early in the morning and working long hours to find that most still do not appreciate or want to pay top dollar for your trial and error and resulting expertise. Even my title, three reasons… really tells you there may be 40, but I am going to give you the top 3.
  2. Your mindset is not focused on small incremental improvements. I have found when interviewing people over the years, especially in the direct sales industry and I ask them how is business going for them, many times it is not going well and usually their reason is that they are doing everything that the guru or top leader is doing but they are not getting the same results. They incorrectly conclude that the “system” does not work. The harsh reality is that if you were doing EXACTLY as the top leader you would get EXACTLY the same results. It should be quite clear you are NOT taking the EXACT same approach to the system. If you start with that new belief, that is half the battle. The solution is to get really excited about modeling EXACTLY how the top leader or guru is using the system to get results. If it is a direct sale opportunity where everyone has a similar website or opt-in page (and usually on an opt-in page to capture leads there may be 20 different distinctions from headlines, to the color of headlines, the video used, pictures, language to opt in…). Even if you have molded that in the detail usually the process to bring in a new member is to speak to them on the phone. Now, this is where the big differences show up immediately. You have to measure your call, approach, presentation and close ratios to better determine what part of your call process is not working so you can improve it. If you can record the top leader and record yourself and compare, the differences may be subtle or massive. They all will make a huge difference in your results
  3. You did not implement all the steps. Most people I find quit on step 3 of a 10 part system then conclude it did not work. You never even poorly implemented all the steps. At least if you would have done that you would have gotten some results. I have done this over the years and that is a big part of my success. At least I poorly implemented all the steps as a minimum. That is ahead of 90% of the group right there. The solution is to not only implement all the steps but then go back to improve the implemented steps. As you know you will get better with improved repetition. If you are doing all the steps incorrectly and you repeat that process all you end up with is more incorrect repetitions or no results. No wonder you are so frustrated. If you are not frustrated and you are one of the few who is getting results with the system, congrats to you! That is a model of success for you and others you may influence!  It boils down to the psychology, your mindset that will determine your success with the system in most cases. When you realize more work will be involved, and you focus on small incremental improvements, implement all the steps and improve them with repetition you are on your way to getting a much higher ROI on your investment in any system you have invested in the past or future!
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