1 00:00:00,000 --> 00:00:03,119 Do you keep seeing dwindling profits in your business, even though you're 2 00:00:03,119 --> 00:00:04,869 growing in revenue every single year? 3 00:00:05,419 --> 00:00:07,939 Maybe it's because you have too much team in your business to handle. 4 00:00:08,209 --> 00:00:11,410 You're tempted to go back to being a solopreneur because a team that 5 00:00:11,410 --> 00:00:14,819 you've hired is both not cutting it and depleting your profit margins. 6 00:00:15,590 --> 00:00:18,594 Or maybe it's because you simply over investing. 7 00:00:18,955 --> 00:00:22,784 You purchased yet another new course or program that you've invested 8 00:00:22,784 --> 00:00:26,341 in that you haven't had the time to even log in or implement. 9 00:00:26,861 --> 00:00:30,261 Another reason is because of a life changing event that happened in your life. 10 00:00:30,491 --> 00:00:34,931 You were forced to change your offers and no longer feel confident, hence less 11 00:00:34,981 --> 00:00:37,221 sales and less profit in your business. 12 00:00:37,901 --> 00:00:40,401 Maintaining a healthy profit seems unattainable in this 13 00:00:40,401 --> 00:00:41,281 season of your business. 14 00:00:41,991 --> 00:00:46,051 It would be great to have more profit, but you don't know. 15 00:00:46,496 --> 00:00:47,896 How you can make this happen. 16 00:00:48,236 --> 00:00:51,056 If this is you stick around in this episode, you'll learn how to 17 00:00:51,066 --> 00:00:55,376 effectively increase your profit margins as a coach or service provider. 18 00:00:56,256 --> 00:00:59,986 This is the Harmonious Wealth Podcast, where we're breaking online business 19 00:00:59,986 --> 00:01:05,056 owners free from chasing every next revenue milestone and instead prioritizing 20 00:01:05,126 --> 00:01:09,236 lifestyle and legacy goals so you can finally have the personal wealth 21 00:01:09,256 --> 00:01:10,896 to show for your business success. 22 00:01:11,226 --> 00:01:15,366 I'm your host, Iyanna Vaughn, fractional CFO and bookkeeper here to guide you. 23 00:01:15,826 --> 00:01:18,426 Now let's start building your financial legacy. 24 00:01:19,704 --> 00:01:24,099 Hello and welcome to episode four of Harmonious Wealth. 25 00:01:24,109 --> 00:01:25,679 I am so excited. 26 00:01:26,039 --> 00:01:27,819 I got my little floral shirt on. 27 00:01:27,819 --> 00:01:31,639 I haven't, I bought this from Express like over a years, a year ago. 28 00:01:31,639 --> 00:01:36,489 If you're watching this on YouTube, you could see it and I wasn't able to wear it. 29 00:01:36,489 --> 00:01:39,599 I still probably can't because I'm, I put a scrunchie on the back 30 00:01:39,599 --> 00:01:45,359 of it so it could look good, but I feel like spring is springing. 31 00:01:45,369 --> 00:01:46,219 It's sprung. 32 00:01:46,299 --> 00:01:50,219 Pam the Palm is making her debut for a second time. 33 00:01:50,219 --> 00:01:51,739 She is my co host today. 34 00:01:51,739 --> 00:01:52,329 I love her. 35 00:01:53,329 --> 00:01:56,649 But anyway, welcome to another episode of Harmonious Wealth. 36 00:01:56,899 --> 00:02:01,229 Uh, first, before we get into the episode, I want you to join us on 37 00:02:01,229 --> 00:02:06,859 our open house, April 26th, which is a Friday at 12 PM Eastern. 38 00:02:06,859 --> 00:02:10,429 I am going over why revenue does not matter if you do not have 39 00:02:10,429 --> 00:02:15,384 the legacy and lifestyle goals to show for it and your business. 40 00:02:15,957 --> 00:02:20,627 Today I want to talk about how to actually increase your profit margin. 41 00:02:20,627 --> 00:02:24,547 We was talking about in previous episodes, we talked about the why 42 00:02:24,577 --> 00:02:30,347 behind it, the energetic reasons, the spiritual reasons, the root causes, 43 00:02:30,467 --> 00:02:35,807 and just things that we know are there and kind of like putting light to it. 44 00:02:36,277 --> 00:02:41,627 Now I want to show you how I help clients effectively increase profit margins. 45 00:02:41,627 --> 00:02:45,497 Once you're able to fix the profit problems in your business, just 46 00:02:45,497 --> 00:02:46,907 about everything else improves. 47 00:02:47,287 --> 00:02:50,947 You're able to pay yourself well and consistently from your business. 48 00:02:51,267 --> 00:02:53,897 You're able to accomplish those immediate lifestyle goals 49 00:02:53,917 --> 00:02:56,577 that you have been working on. 50 00:02:56,967 --> 00:03:00,737 So say for instance, it could be like two vacations a year. 51 00:03:00,947 --> 00:03:05,567 Getting more massages, obliterating your personal debt once and for 52 00:03:05,567 --> 00:03:10,327 all, and saving months of expenses so that you can get out of debt. 53 00:03:10,927 --> 00:03:15,207 And in the future, you're using debt to leverage versus living, right? 54 00:03:15,817 --> 00:03:21,257 And you're able to move forward in your life, raise your credit score, buy a home, 55 00:03:21,637 --> 00:03:27,367 all of those different things with having your business be the number one or top 56 00:03:27,707 --> 00:03:30,927 vehicle for personal wealth in your life. 57 00:03:31,167 --> 00:03:33,837 You're able to accomplish these things in your personal life. 58 00:03:33,977 --> 00:03:39,234 In episode three, I talked a little bit about my profit focus philosophy. 59 00:03:39,604 --> 00:03:42,934 When I think of like profit, right, you're increasing your 60 00:03:42,934 --> 00:03:45,464 profit to do a specific thing. 61 00:03:45,524 --> 00:03:49,944 It is to retain equity in your business, which means what's left over and you're 62 00:03:49,954 --> 00:03:55,264 able to pay yourself more in distributions or keep cash on hand so that you can 63 00:03:55,544 --> 00:03:57,994 reinvest in the business to scale. 64 00:03:58,714 --> 00:04:04,849 However, I like to think of what do you do with that profit by having a profit focus. 65 00:04:05,359 --> 00:04:09,799 So the first focus of your profit should be fixing your cash on hand. 66 00:04:10,139 --> 00:04:13,399 So the elephant in the room is we don't have money in our bank account. 67 00:04:13,519 --> 00:04:14,349 We know it. 68 00:04:14,499 --> 00:04:15,319 It is what it is. 69 00:04:15,769 --> 00:04:16,849 How do we fix it? 70 00:04:17,159 --> 00:04:19,779 The first step is improving your profit. 71 00:04:20,429 --> 00:04:26,684 The next profit focus is tackling your business debt, because your business 72 00:04:26,684 --> 00:04:31,424 debt becomes an expense if you're holding debt in your business over time. 73 00:04:31,784 --> 00:04:36,894 So we don't take into account a lot of times, like, all the cash that we need 74 00:04:36,904 --> 00:04:42,379 in our business, because we're only looking at one viewpoint, one report in 75 00:04:42,379 --> 00:04:47,674 our business, and that is usually the income statement or the income statement. 76 00:04:48,324 --> 00:04:49,884 Did I say the income statement or the income statement? 77 00:04:51,174 --> 00:04:54,254 The income statement or the profit and loss statement. 78 00:04:54,564 --> 00:04:59,334 This, that only shows one viewpoint and that is all the revenue, all the 79 00:04:59,334 --> 00:05:01,724 expenses, profit, which is left over. 80 00:05:01,724 --> 00:05:05,694 It does not take into account if you have credit cards or 81 00:05:05,694 --> 00:05:08,804 loans or stripe advances, right? 82 00:05:09,339 --> 00:05:11,519 That you come across in your business. 83 00:05:12,129 --> 00:05:16,789 And I have a thing, I have a hate, hate relationship with Stripe advances, 84 00:05:16,829 --> 00:05:20,649 any payment processor advances, they're cool until they're not, 85 00:05:20,659 --> 00:05:22,489 which is never, they're never cool. 86 00:05:22,899 --> 00:05:23,419 So. 87 00:05:23,839 --> 00:05:27,879 You get into a trap of paying off your advance and then because they 88 00:05:27,879 --> 00:05:32,239 know your sales cycle and your sales history, they're going to 89 00:05:32,239 --> 00:05:35,309 slide it right on in so that you're tempted to do it all over again. 90 00:05:35,699 --> 00:05:39,359 So when I work with my clients on a profit planning intensive and CFO 91 00:05:39,369 --> 00:05:46,319 clients, we plan to avoid those payment processor payouts like the plague. 92 00:05:46,855 --> 00:05:51,535 The third focus of profit is paying yourself more in business. 93 00:05:52,065 --> 00:05:57,085 When you pay yourself well and consistently, you're able to accomplish 94 00:05:57,085 --> 00:06:01,105 those lifestyle goals that you have, as well as create legacy goals 95 00:06:01,105 --> 00:06:03,335 and implement those in your life. 96 00:06:04,215 --> 00:06:09,835 The fourth profit focus is getting serious about retirement. 97 00:06:10,325 --> 00:06:14,115 When you don't plan for retirement, you're avoiding planning for your future. 98 00:06:14,515 --> 00:06:17,665 It's different from worrying because worrying about the future 99 00:06:17,675 --> 00:06:20,855 is different than like, planning or having provision for your future. 100 00:06:20,855 --> 00:06:21,175 Right? 101 00:06:21,835 --> 00:06:23,405 So, and entrepreneurship. 102 00:06:23,875 --> 00:06:27,885 It's pretty rare, unfortunately, to see someone like, having a 103 00:06:27,885 --> 00:06:32,815 retirement account and contributing it maxing out every single year. 104 00:06:33,110 --> 00:06:39,510 Even if we're focusing on like this aspect of your profit or like increasing 105 00:06:39,510 --> 00:06:42,560 your profit so that you can invest in your retirement, even if it's 106 00:06:42,560 --> 00:06:45,990 just getting started, at least we're starting somewhere so that you can 107 00:06:45,990 --> 00:06:49,850 start investing in growing your money. 108 00:06:50,120 --> 00:06:53,460 Or having your money grow so that you can have a nest egg in the future. 109 00:06:54,340 --> 00:06:57,920 The fifth profit focus is becoming an investor. 110 00:06:58,440 --> 00:07:02,840 And now that you've hit all these different areas, now you can use excess 111 00:07:02,880 --> 00:07:07,730 cash to do things like buying a real estate, commercial real estate, investing 112 00:07:07,730 --> 00:07:11,750 in a new company, being an angel investor in companies, acquiring different 113 00:07:11,750 --> 00:07:13,140 companies, things of that nature. 114 00:07:13,730 --> 00:07:21,150 So these five profit focuses happen either together, one at a time, but it is an art. 115 00:07:22,100 --> 00:07:23,770 Cashflow management is an art. 116 00:07:23,810 --> 00:07:26,800 Increasing your profit and knowing what to do with your profit, 117 00:07:27,250 --> 00:07:29,775 with your cash on hand is an art. 118 00:07:30,145 --> 00:07:33,805 So when you work with me as a client, you're able to say, okay, what's the 119 00:07:33,805 --> 00:07:38,325 first thing that comes to mind for me immediately having at least a month's 120 00:07:38,325 --> 00:07:40,015 worth of cash on hand in your business. 121 00:07:40,795 --> 00:07:43,805 Then we'll work on getting your debt taken care of. 122 00:07:44,175 --> 00:07:47,885 And then when we look at your, your personal finances, what do 123 00:07:47,885 --> 00:07:52,455 you absolutely need so that you can start thriving versus just surviving? 124 00:07:52,455 --> 00:07:54,015 We'll kind of work on those three things. 125 00:07:54,465 --> 00:07:58,700 And then as we obliterate one of your debt is like, okay, what's the next thing? 126 00:07:58,700 --> 00:08:00,370 What's the next thing that we need? 127 00:08:00,380 --> 00:08:00,790 Right? 128 00:08:01,320 --> 00:08:03,840 One of my clients, she had a payment processor loan. 129 00:08:04,200 --> 00:08:08,460 And with our weekly cashflow forecast, I was able to accurately predict 130 00:08:09,170 --> 00:08:11,670 the exact week that we paid it off. 131 00:08:11,670 --> 00:08:12,640 We had a celebration. 132 00:08:12,640 --> 00:08:14,525 It was like, wait, Let's go and check. 133 00:08:14,575 --> 00:08:15,815 And it was zero. 134 00:08:15,845 --> 00:08:21,585 I was down to the day that, that I predicted when it 135 00:08:21,585 --> 00:08:22,685 was going to be paid off. 136 00:08:22,705 --> 00:08:25,685 We celebrated because it was like, now we can move on. 137 00:08:25,788 --> 00:08:31,028 First up are coaches and service providers with retainer services. 138 00:08:31,508 --> 00:08:35,728 Usually when it comes to increasing profit, we're only talking about revenue, 139 00:08:35,998 --> 00:08:40,468 raising your rates, making more sales, but there's no guidelines on what you 140 00:08:40,468 --> 00:08:43,898 should be spending so that you can have optimal profit in your business. 141 00:08:44,638 --> 00:08:49,448 My approach is first, as usual, we're uncovering what you must pay yourself. 142 00:08:49,998 --> 00:08:54,828 Then we are going to look at what do you have going on currently. 143 00:08:55,468 --> 00:08:58,168 Before we get into planning to increase your profit. 144 00:08:58,478 --> 00:09:01,648 So, 1st is what is your current monthly recurring revenue? 145 00:09:03,458 --> 00:09:07,798 If you have a coaching program, what are your open payment plans for the 146 00:09:07,798 --> 00:09:11,588 next few months so that you can see exactly what you should be expecting 147 00:09:11,598 --> 00:09:14,798 in your business coming in and cash. 148 00:09:15,218 --> 00:09:17,258 If you're a service provider, same deal. 149 00:09:17,298 --> 00:09:21,418 If you have projects that are six months for recurring revenue or three months, 150 00:09:21,458 --> 00:09:24,838 nine months, 12 months, figure that out so that you know exactly what to 151 00:09:24,838 --> 00:09:28,438 expect these next three months or more. 152 00:09:29,648 --> 00:09:33,553 Then I want you to review all of your expenses as they are right 153 00:09:33,553 --> 00:09:36,313 now before you pay yourself. 154 00:09:36,923 --> 00:09:41,543 Then you get to see exactly what your profit margins are before 155 00:09:41,543 --> 00:09:42,723 you've even paid yourself. 156 00:09:43,393 --> 00:09:44,903 Ask yourself these questions. 157 00:09:44,973 --> 00:09:47,968 Is, Your current profit optimal for you right now. 158 00:09:48,938 --> 00:09:51,408 Are you able to pay yourself your desired salary? 159 00:09:51,808 --> 00:09:55,418 Are you able to have cash left over after you pay yourself to 160 00:09:55,418 --> 00:09:57,608 pay any debt to save for taxes? 161 00:09:57,868 --> 00:10:00,598 If you don't, let's highlight those gaps exactly. 162 00:10:01,908 --> 00:10:06,348 What do you need additional so that you can pay yourself, your expenses, 163 00:10:06,928 --> 00:10:08,708 and your debt and your taxes. 164 00:10:09,448 --> 00:10:13,268 So, when we look at the gap in your recurring revenue, right? 165 00:10:13,818 --> 00:10:17,478 Let's say you're currently at 20, 000 and now you need an additional 166 00:10:17,478 --> 00:10:18,828 10K so that you can pay yourself. 167 00:10:19,048 --> 00:10:23,968 Be able to pay yourself your salary as well as paying off your debt., 168 00:10:24,678 --> 00:10:26,418 You know, the gap is 10, 000. 169 00:10:26,788 --> 00:10:30,808 Now you can go out and make 10, 000 additional and recurring 170 00:10:30,808 --> 00:10:33,058 revenue so that you're not starting from scratch all over again. 171 00:10:33,108 --> 00:10:38,048 Maybe it's getting a new retainer client, maybe a new coaching client and that 10, 172 00:10:38,048 --> 00:10:44,288 000, maybe it's 3 of those clients, maybe 1, 1 off service, whatever your rates are. 173 00:10:44,698 --> 00:10:48,008 What can you do to close that gap of monthly recurring revenue 174 00:10:48,008 --> 00:10:51,238 so that you're not starting from zero to 10 every single month? 175 00:10:52,283 --> 00:10:56,553 Now, I want you to be on the journey to make 50 percent profit 176 00:10:56,563 --> 00:10:58,223 margin before paying yourself. 177 00:10:58,493 --> 00:11:02,333 So that means if you're making 30, 000 or your goal is 30, 000, 178 00:11:02,343 --> 00:11:06,963 that means your profit should be no less than 15, 000 a month. 179 00:11:07,473 --> 00:11:11,023 And that leaves you the ability to pay yourself what you desire. 180 00:11:11,063 --> 00:11:15,733 Maybe that's eight to 10, 000 having money left over for maybe the minimal 181 00:11:15,733 --> 00:11:20,123 debt and putting cash on hand or saving for cash in your business. 182 00:11:20,376 --> 00:11:23,286 You want to rinse and repeat this so that you can incrementally increase 183 00:11:23,286 --> 00:11:27,586 your, your profit or go straight to see like, here's where I am now. 184 00:11:27,926 --> 00:11:34,251 Here is where I will be if I were to make 50 percent profit margin in my business. 185 00:11:34,539 --> 00:11:37,159 We do this with our clients during our profit plan. 186 00:11:37,739 --> 00:11:41,039 After we set the goals, uncover what you need to pay yourself, 187 00:11:41,279 --> 00:11:44,949 we'll go into planning for profit along with a tax strategy. 188 00:11:44,979 --> 00:11:49,329 Usually with coaches, they don't have as much of a problem with, with 189 00:11:49,839 --> 00:11:55,719 profit as a service provider, because they're typically the main talent and 190 00:11:55,719 --> 00:12:00,379 they're able to serve one to many, or one to few versus one on one services. 191 00:12:01,299 --> 00:12:06,109 So the biggest thing is your tax strategy, because when you have high 192 00:12:06,109 --> 00:12:11,114 profit, chances are you, you're might potentially have high tax liability. 193 00:12:11,594 --> 00:12:18,304 So what we do is when we look at our clients plan for profit, we're then 194 00:12:18,324 --> 00:12:23,544 creating a tax strategy by looking at your past tax return, putting that data 195 00:12:23,554 --> 00:12:28,334 in for your personal and then implementing what we mapped out for your profit for 196 00:12:28,334 --> 00:12:33,614 that current year and then having an estimate and suggesting strategies. 197 00:12:33,999 --> 00:12:36,029 So that you can reduce your tax liability. 198 00:12:36,379 --> 00:12:40,559 Those tax strategies can be anywhere from changing your tax structure to an 199 00:12:40,589 --> 00:12:46,349 S corp, hiring your children buying a vehicle, buying a fixed asset so that you 200 00:12:46,349 --> 00:12:51,619 can 179 deducted, which means that you expense it throughout the year and putting 201 00:12:51,619 --> 00:12:55,919 money into retirement different things, depending on where your life is right now. 202 00:12:57,539 --> 00:13:02,229 If you're a coach or you have high profit margins already, you might be 203 00:13:02,269 --> 00:13:05,329 thinking why would you need someone else to help you with your money? 204 00:13:06,049 --> 00:13:08,709 And chances are they're not helping you with a profit plan to have 205 00:13:08,719 --> 00:13:13,349 guidelines for how you're managing your money or a cashflow strategy. 206 00:13:13,909 --> 00:13:17,099 Chances are they're not helping you understand your tax strategy. 207 00:13:17,099 --> 00:13:22,009 Because, as we know, more profit can potentially mean more, more taxes if you 208 00:13:22,009 --> 00:13:24,449 don't have the strategy to rectify that. 209 00:13:24,449 --> 00:13:28,019 When I created a three year profit plan for one of my clients 210 00:13:28,019 --> 00:13:35,189 in 2021, we mapped out what her 2022 through 2024 looked like. 211 00:13:35,569 --> 00:13:41,259 We were able to accurately predict what her 2023 looked like with multi 7 figures 212 00:13:41,259 --> 00:13:45,899 and revenue as well as very healthy profit margins by the end of 2023. 213 00:13:46,289 --> 00:13:50,039 We were able to say, okay, you're, you're right on target with your revenue. 214 00:13:50,409 --> 00:13:55,359 You might even surpass it and you have really, really healthy profit margins. 215 00:13:55,419 --> 00:13:56,279 Every single month. 216 00:13:56,279 --> 00:13:57,149 We were giving her. 217 00:13:57,884 --> 00:14:02,544 Tax estimates so that she can put money over to save for taxes as well 218 00:14:02,544 --> 00:14:07,104 as pay some some quarterly taxes So that it's not an overwhelming 219 00:14:07,304 --> 00:14:08,894 amount that's being taken out. 220 00:14:09,334 --> 00:14:13,864 So by the end of the year, I was like, okay, how could we save you as much? 221 00:14:14,054 --> 00:14:14,924 Towards the end of the year. 222 00:14:14,924 --> 00:14:16,344 How can we save you as much? 223 00:14:17,084 --> 00:14:23,779 taxes and then also Help you Accomplish some of those immediate lifestyle goals. 224 00:14:24,219 --> 00:14:27,439 So we were able to save for about a $100K in taxes because 225 00:14:27,439 --> 00:14:29,739 we implemented tax strategies. 226 00:14:30,312 --> 00:14:36,012 Next up is for service providers or influencers who work on projects. 227 00:14:36,832 --> 00:14:41,332 So they have projects, so say for instance, that is like an event planner, 228 00:14:41,682 --> 00:14:45,822 video production agency, or you're an influencer who works with brands. 229 00:14:45,862 --> 00:14:48,032 You are a project based business. 230 00:14:48,522 --> 00:14:50,622 You have project based services. 231 00:14:51,072 --> 00:14:54,622 Usually when it comes to creating revenue or more profit in your business, 232 00:14:54,622 --> 00:14:59,192 you're thinking again, let me raise my rates so that I can have more profit. 233 00:14:59,612 --> 00:15:03,822 Let me do it myself so that I don't have to pay a team and I can keep 234 00:15:03,822 --> 00:15:07,227 profit because I don't know when the money's going to actually come in. 235 00:15:07,637 --> 00:15:12,477 Another thing that I've seen is not keeping up with your invoices when you 236 00:15:12,477 --> 00:15:17,747 have a project based business or not having automated payments or not having 237 00:15:17,757 --> 00:15:23,952 any deposits, and you're waiting on your money to come in net 30, 60, 90, 238 00:15:23,952 --> 00:15:28,632 depending on if you work with small businesses or bigger corporations. 239 00:15:29,252 --> 00:15:34,332 My approach when helping clients such as this with projects or influencers who work 240 00:15:34,332 --> 00:15:43,152 with brands is we need to keep a pulse, a heavy pulse on your current invoices. 241 00:15:43,182 --> 00:15:43,442 Is. 242 00:15:44,247 --> 00:15:48,157 Tighten up your invoicing system is going to be the most important thing 243 00:15:48,517 --> 00:15:50,237 and automate as much as possible. 244 00:15:50,647 --> 00:15:55,627 And then what you could do as well is have an incentive or just have 245 00:15:55,627 --> 00:15:59,167 a process where you're getting deposits from these companies. 246 00:15:59,787 --> 00:16:04,412 Another thing is when you are working with brands, especially, because they 247 00:16:04,412 --> 00:16:08,702 pay whenever they want, unfortunately, it's having another source of revenue. 248 00:16:08,982 --> 00:16:12,412 So that working with brands is not your only source of revenue. 249 00:16:12,792 --> 00:16:14,142 You're able to mix things up. 250 00:16:14,142 --> 00:16:15,562 Maybe you have a digital product. 251 00:16:15,902 --> 00:16:19,672 Maybe you have a service that you offer on top of working with brands. 252 00:16:19,962 --> 00:16:24,202 Those things can help you maintain healthy cash flow throughout the year versus 253 00:16:24,262 --> 00:16:28,932 struggling with that cash flow, because you're waiting on a company to pay you. 254 00:16:29,632 --> 00:16:33,952 We want to look at tactively, what do you have going on right now 255 00:16:33,952 --> 00:16:35,912 before we increase your profit? 256 00:16:35,982 --> 00:16:39,572 So look at your expected revenue for the next 6 months. 257 00:16:39,712 --> 00:16:41,582 That's supposed to come in based on your projects. 258 00:16:42,592 --> 00:16:44,362 Look at all of your expenses. 259 00:16:44,952 --> 00:16:49,652 And then get your before paying yourself and then you can get a 260 00:16:49,652 --> 00:16:53,502 review of what your profit should look like before paying yourself. 261 00:16:53,902 --> 00:16:55,322 Then we want to highlight our gaps. 262 00:16:55,562 --> 00:16:59,122 Are you able to pay yourself what you want based on your current profit margin? 263 00:16:59,512 --> 00:17:02,502 Are you able to even afford paying your current expenses? 264 00:17:02,842 --> 00:17:04,052 Are you able to pay off debt? 265 00:17:04,182 --> 00:17:05,672 Are you able to save for taxes? 266 00:17:06,282 --> 00:17:09,602 If not, We need to figure out how to increase your revenue 267 00:17:09,932 --> 00:17:11,732 and manage your expenses. 268 00:17:12,512 --> 00:17:17,092 So first thing when it comes to like project base is we want to 269 00:17:17,122 --> 00:17:20,832 plan for profit from the very beginning with your with your rates. 270 00:17:21,432 --> 00:17:23,912 So I like to look at your pricing. 271 00:17:24,577 --> 00:17:28,087 And see what is it costing you for your team, your software, 272 00:17:28,087 --> 00:17:29,247 with every single project. 273 00:17:29,577 --> 00:17:32,637 What is the profitability of each and every project that you have? 274 00:17:32,927 --> 00:17:37,777 So that as you work with more clients on projects, you're able to scale 275 00:17:37,777 --> 00:17:43,877 at the same level of profit versus Depleting your profits entirely 276 00:17:43,987 --> 00:17:47,187 because one, one service is one price. 277 00:17:47,657 --> 00:17:48,657 Another is another price. 278 00:17:48,737 --> 00:17:52,247 And this client wanted more things and this involved your team having 279 00:17:52,247 --> 00:17:57,307 to get paid more and just having your gross profit margins depleted. 280 00:17:57,697 --> 00:18:01,577 So gross profit is when you have your revenue. 281 00:18:02,132 --> 00:18:06,292 Minus your direct costs, so direct costs directly relate to your sales. 282 00:18:06,632 --> 00:18:11,342 So that can be like a subcontractor, or if you're a video production 283 00:18:11,382 --> 00:18:14,402 agency, that can be like your editor working on client projects. 284 00:18:14,872 --> 00:18:19,732 If you are an event planner, that is like your, your event planning team 285 00:18:20,212 --> 00:18:22,262 who helps you retain that revenue. 286 00:18:22,552 --> 00:18:25,922 If it's someone like me say I'm doing a project or either 287 00:18:26,182 --> 00:18:27,912 retainer, it's my accountants. 288 00:18:27,912 --> 00:18:28,552 That's on my team. 289 00:18:28,552 --> 00:18:30,672 That is a direct cost to my business. 290 00:18:31,181 --> 00:18:35,551 So as we're going to use the same deal right now, the recurring revenue 291 00:18:35,551 --> 00:18:38,171 for projects can be very sporadic. 292 00:18:38,201 --> 00:18:41,581 Maybe it's 20, 000 one month, 10, 000 another. 293 00:18:42,101 --> 00:18:45,961 If you map out for the next six months, what is stopping you from hitting that 294 00:18:45,961 --> 00:18:51,611 30, 000 and monthly recurring revenue, you know what your project should look like. 295 00:18:51,971 --> 00:18:56,701 Once you know the gap, you will know what your goal should be. 296 00:18:57,221 --> 00:19:06,896 So that means getting another Project and mapping out your monthly payment plans 297 00:19:07,236 --> 00:19:10,196 so that you can close that gap entirely. 298 00:19:11,866 --> 00:19:17,146 You can also do some cash injection where you offer paying full bonuses for projects 299 00:19:17,156 --> 00:19:19,076 so that you can get some cash in advance. 300 00:19:19,606 --> 00:19:20,816 But then also your. 301 00:19:21,261 --> 00:19:23,191 You have visibility for the next few months. 302 00:19:23,891 --> 00:19:29,361 If you feel that your cash on hand is too sporadic because you have projects 303 00:19:29,851 --> 00:19:33,041 again, consider having another stream of income so that you can increase 304 00:19:33,041 --> 00:19:37,671 your monthly recurring revenue that can be having a digital product that 305 00:19:37,671 --> 00:19:42,171 can be having a membership community specific to like, what you're offering 306 00:19:42,171 --> 00:19:43,391 to the community to your audience now. 307 00:19:43,391 --> 00:19:48,641 So say, for example, you're an influencer and you've built a, an 308 00:19:48,651 --> 00:19:50,701 audience that really trusts you, right? 309 00:19:51,001 --> 00:19:56,311 And they, you can have an, a membership community where you talk to them more 310 00:19:56,321 --> 00:20:02,861 intimately, or you have a, an offering that you can have like some camaraderie 311 00:20:03,031 --> 00:20:07,881 in a community for them, or you can launch a service or a coaching program. 312 00:20:08,521 --> 00:20:11,941 So you might have a business where you're a project based business 313 00:20:11,941 --> 00:20:14,581 owner, or you work with brands and you don't feel like you're ready for 314 00:20:14,591 --> 00:20:19,351 a fractional CFO or that you even are ready for a profit planning intensive. 315 00:20:19,751 --> 00:20:23,831 So when you're making about at least 500, 000 in your business and scaling 316 00:20:23,831 --> 00:20:28,621 path to about 1 million in your business within the next year, it is time for a 317 00:20:28,711 --> 00:20:31,751 discussion about fractional CFO services. 318 00:20:32,351 --> 00:20:36,071 Or if you're a business owner and you're making 100, 000 or you're trying to make 319 00:20:36,071 --> 00:20:39,931 multi six figures in your business, this is a great option for the profit planning 320 00:20:39,931 --> 00:20:46,426 intensive as it will give you about three months Having a CFO on your team, no 321 00:20:46,426 --> 00:20:47,816 matter where you are in your business. 322 00:20:47,826 --> 00:20:54,386 So you don't have to be at that level of 500 K to get cFO level services for 323 00:20:54,386 --> 00:20:58,236 your business because it can be in an intensive style for the next 12 weeks. 324 00:20:58,796 --> 00:21:00,426 Next up is beauty businesses. 325 00:21:00,466 --> 00:21:05,416 So of course this is a service provider, but the business model is different. 326 00:21:06,036 --> 00:21:11,686 When it comes to making more profit in beauty businesses usually there, I 327 00:21:11,686 --> 00:21:19,216 haven't seen a lot of specific tactics on how to grow profit besides increasing 328 00:21:19,216 --> 00:21:24,576 rates, of course, making sure that you have the right team in place making sure 329 00:21:24,576 --> 00:21:28,556 that your team does well with services so that they have returning customers. 330 00:21:28,556 --> 00:21:30,386 My approach is working backwards. 331 00:21:30,996 --> 00:21:34,426 I like to review all of the expenses again, right? 332 00:21:34,736 --> 00:21:40,076 Highlight the gaps of average weekly revenue that comes into the business 333 00:21:40,586 --> 00:21:45,276 is going to be the pulse of how to maintain the company financials. 334 00:21:45,686 --> 00:21:50,166 When it comes to increasing profits for a beauty business owner, it is going to 335 00:21:50,166 --> 00:21:57,836 be essential Essential to track weekly, track your finances weekly, because 336 00:21:58,086 --> 00:22:00,006 you're going off of weekly sales. 337 00:22:00,252 --> 00:22:03,172 So getting your average weekly sales is going to be where 338 00:22:03,172 --> 00:22:04,522 you're going to start, right? 339 00:22:04,882 --> 00:22:07,712 Then you're going to map out all of your expenses and then you're 340 00:22:07,712 --> 00:22:09,002 going to get to the profit. 341 00:22:09,172 --> 00:22:12,252 Is the profit going to be able to help you pay yourself? 342 00:22:12,627 --> 00:22:16,297 Well, is the profit that you have so far going to help you pay debt? 343 00:22:16,697 --> 00:22:18,687 And is it going to help you pay taxes? 344 00:22:19,017 --> 00:22:21,147 If not, we're going to have to fill in that gap. 345 00:22:21,456 --> 00:22:24,906 So once we map this out, we'll see, okay, what is the gap? 346 00:22:24,906 --> 00:22:30,136 What must you make every month so that you can pay your expenses yourself, 347 00:22:30,286 --> 00:22:32,206 paying off debt, having healthy cashflow. 348 00:22:32,726 --> 00:22:36,256 You want to divide that by the week and then you have your weekly sale. 349 00:22:36,956 --> 00:22:38,046 weekly sales goal. 350 00:22:38,056 --> 00:22:45,576 So say, for instance, you must make 40, 000 a month so that you can support having 351 00:22:45,576 --> 00:22:50,456 cash on hand, paying yourself, paying debt, of course, having your expenses. 352 00:22:51,136 --> 00:22:57,741 So that means every single week you need 10, 000 and In sales, and this means 353 00:22:58,021 --> 00:23:04,211 that you're able to see what your weekly sales goals is for your entire team. 354 00:23:04,851 --> 00:23:09,301 They're able to see the average, so you're able to say, okay, the average ticket is 355 00:23:09,371 --> 00:23:15,161 125 and then you're able to say, okay, this is how many clients need to be seen. 356 00:23:15,441 --> 00:23:18,981 For every single stylist that you have on your team or every single technician that 357 00:23:18,981 --> 00:23:23,691 you have on your team, and you're able to then give them goals so that they're 358 00:23:23,691 --> 00:23:26,335 able to reach their revenue goal too. 359 00:23:26,335 --> 00:23:31,065 So if they're making commission of 40%, then you know 60% is gonna 360 00:23:31,070 --> 00:23:33,255 be left for you to pay yourself. 361 00:23:33,585 --> 00:23:36,645 Now it's gonna be hard to get to 50% profit margin. 362 00:23:37,425 --> 00:23:41,655 Promising that, but we do want it to be healthier than it is right now so that 363 00:23:41,655 --> 00:23:43,365 you can be able to support yourself. 364 00:23:43,745 --> 00:23:46,935 And what that means is you might have to start implementing different 365 00:23:46,935 --> 00:23:52,325 strategies outside of your services and offering product so that you can 366 00:23:52,325 --> 00:23:57,855 have higher profit margin, or if you are an established beauty business 367 00:23:57,895 --> 00:24:04,815 owner, you can also start offering maybe courses or different classes, or 368 00:24:04,835 --> 00:24:06,775 maybe even classes for consumers, right? 369 00:24:06,785 --> 00:24:12,385 So saying you're a hairstylist, maybe you can have a course on how to maintain 370 00:24:12,385 --> 00:24:17,115 your hair after they leave or something like that, or having a membership, you 371 00:24:17,115 --> 00:24:21,045 know, something that would be like a given you have some membership sales 372 00:24:21,045 --> 00:24:25,785 that come in every single month, maybe half of them take up on the services 373 00:24:25,805 --> 00:24:30,185 that They are invested in for their membership that can help you increase 374 00:24:30,185 --> 00:24:35,855 your revenue without decreasing your profit and that'll help the business grow. 375 00:24:36,351 --> 00:24:41,731 So again, when it comes to beauty businesses, your cash on hand, managing 376 00:24:41,731 --> 00:24:45,721 that, and as well as your profit is going to be an art because you're going 377 00:24:45,721 --> 00:24:50,881 to have to, because most of the time with beauty businesses, especially if 378 00:24:50,881 --> 00:24:54,241 you have a storefront, you're going to have some debt because you're 379 00:24:54,756 --> 00:24:58,266 Getting the business started and you're probably, and you're getting the 380 00:24:58,266 --> 00:25:02,746 business started so that you're not using your own money to fund the business. 381 00:25:03,046 --> 00:25:07,796 So it's going to be imperative to have enough profit so that you're able to 382 00:25:07,796 --> 00:25:10,646 pay yourself and pay the debt off. 383 00:25:10,646 --> 00:25:14,576 Having a weekly cashflow forecast will help you tremendously. 384 00:25:15,796 --> 00:25:19,536 So one of the things that might come up for you is How do I 385 00:25:19,536 --> 00:25:21,536 actually track my finances? 386 00:25:21,976 --> 00:25:25,236 It will be essential for you to have a bookkeeping system. 387 00:25:26,066 --> 00:25:30,706 So usually with our clients, if you're coming in and you need to be 388 00:25:30,706 --> 00:25:34,766 caught up with your bookkeeping, we will get your bookkeeping caught up 389 00:25:34,766 --> 00:25:38,126 so that we can look at your trends, which is the second part of our 390 00:25:38,126 --> 00:25:40,036 framework called assessing your trends. 391 00:25:40,613 --> 00:25:45,133 When it comes to having bookkeeping cleanup in your business, we go up to 392 00:25:45,133 --> 00:25:49,763 one year so that you can know exactly what you're inspired up to a year. 393 00:25:50,093 --> 00:25:54,503 And you can assess those trends and make assumptions for the new year when 394 00:25:54,503 --> 00:25:56,313 it comes to creating a profit plan. 395 00:25:57,648 --> 00:26:01,618 Let me recap on how to actively increase your profit in your business. 396 00:26:02,208 --> 00:26:06,218 First, you're going to see exactly what you must pay yourself. 397 00:26:06,673 --> 00:26:07,683 from your business. 398 00:26:07,929 --> 00:26:11,539 Then you want to map out where you are currently in revenue. 399 00:26:11,819 --> 00:26:15,579 Ideally, if you have a service business or a coaching business 400 00:26:15,579 --> 00:26:19,129 with payment plans, look at your monthly recurring revenue currently. 401 00:26:19,719 --> 00:26:25,719 Then look at all of your expenses before you pay yourself, assess where that profit 402 00:26:25,719 --> 00:26:31,689 is before you pay yourself, ask yourself, is this enough to pay me, pay off debt, 403 00:26:32,029 --> 00:26:34,409 and retain cash on hand in the business. 404 00:26:34,789 --> 00:26:39,769 If not, increase that number so that you can get your profit margin 405 00:26:39,769 --> 00:26:43,589 before you pay yourself at 50%. 406 00:26:44,669 --> 00:26:45,759 Highlight that gap. 407 00:26:46,539 --> 00:26:50,119 Is the gap 10,000 Is it $15,000 Figure that out. 408 00:26:50,739 --> 00:26:57,189 If it is $10,000 and your service is 50, 000, 2000 per person for four or six 409 00:26:57,189 --> 00:26:59,319 months, then you know you need five sales. 410 00:27:00,159 --> 00:27:02,339 What is how you, how would you get five sales? 411 00:27:02,819 --> 00:27:07,149 Would you have to show up on five sales calls? 412 00:27:07,159 --> 00:27:09,669 Seven sales calls because of your conversion rates. 413 00:27:10,049 --> 00:27:13,139 Then you look back and say, okay, how do you get people on these sales calls? 414 00:27:13,159 --> 00:27:17,469 Is it, is it by adding people to your email list and inviting them on a call 415 00:27:17,469 --> 00:27:19,139 with you while they're on your email list? 416 00:27:19,639 --> 00:27:22,349 That way you can actively increase your sales. 417 00:27:23,329 --> 00:27:24,319 Then look at. 418 00:27:24,574 --> 00:27:28,734 Your expenses, what are some of the guidelines if you're if your team 419 00:27:28,734 --> 00:27:31,014 is over 30 percent that is too much. 420 00:27:31,434 --> 00:27:37,364 How can you effectively either increase your rate or figure out how to pay 421 00:27:37,364 --> 00:27:39,384 your team in a way that is affordable. 422 00:27:39,384 --> 00:27:44,024 So after the 30% of what you pay your team, you then should 423 00:27:44,029 --> 00:27:49,009 have guidelines for the rest of your expenses in your business. 424 00:27:49,569 --> 00:27:53,009 So typically I like software to be no more than 5 percent of 425 00:27:53,009 --> 00:27:56,849 your revenue for investing in your professional development. 426 00:27:56,889 --> 00:28:02,069 I like that to be no more than 10 to 15 percent of your revenue in your business. 427 00:28:02,459 --> 00:28:08,159 For marketing, maybe you have a digital product based business and. 428 00:28:08,904 --> 00:28:14,274 Instead of having a team be at 30%, your advertising should be no more than 30%. 429 00:28:14,944 --> 00:28:19,744 And if your advertising is higher than 30%, there might be an issue 430 00:28:19,754 --> 00:28:21,704 with not having repeated customers. 431 00:28:22,004 --> 00:28:26,814 How can you decrease your ad spend by looking for ways 432 00:28:26,874 --> 00:28:28,474 to have repeated customers. 433 00:28:28,474 --> 00:28:32,954 Once you figure out what your profit margin is and those guidelines, you're 434 00:28:33,014 --> 00:28:35,274 able to then increase your profit margins. 435 00:28:35,644 --> 00:28:38,704 Based on what I shared today, which one of these tools will you use to 436 00:28:38,714 --> 00:28:41,744 create more profit in your business based on your business model? 437 00:28:42,214 --> 00:28:45,674 Let me know in the comments, what type of business that you have, and I'll talk 438 00:28:45,674 --> 00:28:50,084 more about increasing your profit margins there in the comment section of YouTube. 439 00:28:50,532 --> 00:28:53,542 So today we talked about how to effectively increase your profit 440 00:28:53,542 --> 00:28:55,322 margin as a coach or service provider. 441 00:28:55,642 --> 00:28:58,972 If you're ready to expedite, increasing your profit and take control of 442 00:28:58,972 --> 00:29:03,732 your cash, Flow, book a call with me and my profit planning intensive. 443 00:29:03,792 --> 00:29:07,112 I'll help you create predictable and healthy cashflow in 30 days. 444 00:29:07,112 --> 00:29:09,922 Understanding and growing profits in your business will help you create 445 00:29:09,942 --> 00:29:11,662 a legacy for three generations. 446 00:29:12,212 --> 00:29:16,512 You as a first generation entrepreneur, like me, will, you'll be able to also 447 00:29:16,552 --> 00:29:20,142 honor your parents in the previous generation, as well as create a legacy 448 00:29:20,142 --> 00:29:24,372 for your children in the third, in the future for your children's children. 449 00:29:24,872 --> 00:29:27,277 Head over to lovelyfinancials. 450 00:29:27,277 --> 00:29:29,517 com slash intensive to book a call with me. 451 00:29:29,517 --> 00:29:33,077 I'm on a mission to help 100 women reach at least 1 million in net 452 00:29:33,077 --> 00:29:36,627 revenue to create generational wealth and break generational curses. 453 00:29:37,227 --> 00:29:41,207 If this aligns with you, I'd love to have you as part of the community and tune 454 00:29:41,237 --> 00:29:43,307 into more episodes on Harmony as well. 455 00:29:44,297 --> 00:29:47,447 Hey there girlfriend, if you're ready to finally have the lifestyle 456 00:29:47,447 --> 00:29:50,947 and legacy to show for your business success, I would love for you to 457 00:29:50,947 --> 00:29:54,737 click that subscribe button on your favorite podcast app or YouTube.