7-Step Pathway to Profit Formula Using the 80-20 Rule to Get Your Time Back

0:00 The topics and opinions expressed in the following show are solely those of the hosts and their guests and not those of W FOURCY Radio. It's employees are affiliates. We make no recommendations or endorsements for radio show programs, services, or products mentioned on air or on our web. No liability explicitor implied shall be extended to W FOURCY Radio or it's employees are affiliates. Any questions or comments should be directed to those show hosts. Thank you for choosing W FOURCY Radio. Welcome to Powerful Business Strategies, where you will find out that everything you have ever learned about growing your business is wrong. Finally, a show where you'll learn the right way to grow your business by learning business and financial strategies that your competition isn't doing and now here is your host. President of Next Step CFO Michael Barbarita and joining Michael for today's show as an executive moderator is chooky, obio.

1:00 Yes, this is chooky, and I believe that gratitude is undefeated and growth is about the next step. It is an honor for me to moderate today's discussion with my good friend Michael. Michael, how are you great, Chokey, how are you? I'm doing well, doing well. So, as Chokey said, my name is Michael Barberida. I'm president of Next Step CFO. And next Step CFO is a fractional CFO and strategic implementation firm and our vision is to ensure overwhelm business owners achieved the time, freedom and consistent profits to build a legacy and the life they desire. And our mission is dedicated to guiding small business owners to leveraging their time, exploding their profits and build a meaningful legacy. You know, this show Powerful Business Strategies and our book of the same name as a step towards accomplishing that vision and mission. And so with that, I want to hand it back to our to my co author and moderator for the show, Chooky Obio.

1:56 Michael, thank you. So I am energized by today episode seven step Pathway to Profit formula using the eighty twenty rule to get your time back. This goes right to the heart of the mission and vision statement Michael that you called out this idea of legacy and leadership for business owners. So before we really jump in a quick disclaimer. So Michael and I are both affiliated with a number of different organizations. I currently serve as the managing director of business Development for Vetter Price, a global business focused law firm. But in addition to that, it is truly inspiring to collaborate with Michael on a business roundtable that we do coast to coast for business owners and we document best practices from business owners across industries, and then we document that in our book called Powerful Business Strategy. Is also the name of the show. But please note that the views expressed on this show are our personal views. But my mission as the Fearless moderator is to ask the right questions to help you and to help me learn the best business strategies that the competition isn't doing. So Michael look really energized for today's episode.

3:17 Likewise, Cherokee, and so our show today is about working your way toward getting your time back by utilizing what we call the seventh step Pathway to Profit formula, using the eighty twenty rule to finally get your time back. Nice. And you know, in the mid eighties, I bought a ski specialty retail business. And when I bought the business, I never skied before. And when I bought the business. I was twenty seven years old and didn't have any experience running a business, and I needed something or to do something to be able to accelerate my learning curve and really understand what was going on in the business, to be able to talk intelligently to my employees, who quite frankly, knew way more about the business that I did.

4:02 And I was way behind the eight ball, having a lot of sleepless nights wondering what I got myself into. And I was making a lot of mistakes. It's unbelievable, feeling like totally out of control and losing the respect of the employees. I mean, I was struggling with not knowing anything about the business and certainly not knowing anything about the ski business, and the employees needed direction and leadership and I wasn't giving it to them. And I was getting more and more frustrated with my lack of knowledge about the business, and it was affecting employees who were leaving and were equally frustrated, and it was affecting the business that was now struggling. And you see, at the time, I was trying to make sure that the business would survive, but I was overwhelmed exhausted, overworked, frustrated.

4:55 And then something really bad happened. While all this distress and my mismanner it was going on the top it all off, I caught an employee stealing right out of the cash register. Oh wow, and yeah, this is I'll tell you. That's when it really hit bottom, which told me I really couldn't manage the business correctly. I really had to do something to right the ship. And as you could imagine, I was really in bad shape and desperate, but I wasn't going to give up on my dream of finally giving finally being in control of my business and my destiny. And this is when I started to look at things that I should focus on in order to leverage more revenue. And that's what I learned about the eighty twenty rule and how to use it to leverage more revenue. And so business owners overall, from the ones we've interviewed Chooky, it just so overwhelmed because there's just so many things they have to know and understand about running a business. It's endless, and just as an exact in our book called Powerful Business Strategies, we have this little pie chart that has layers of things that we business owners should be at least familiar with, if not actually understand and know. And this pie shot has subcategories of subcategories, and if we took out just one sliver of the pie shot, it's a real, real, tiny sliver called digital marketing. Then business owners have to know

6:28 about social media, email marketing, blogging, copywriting, e commerce, paid ads, search engine optimization, data analytics, conversion and optimization, videos, squeeze pages. I could go on and on, but days and days, it's just so overwhelming. And this is the overwhelm that I was looking at when I was in the skate first, you know, my first days in the ski business. And so the question becomes, with all these things, we business owners have to know what should we focus on to get the biggest the buck and to get the most leverage. So I turned to the eighty twenty rule commonly referred to as the Pareto principle, that says that eighty percent of the consequences comes from twenty percent of the causes.

7:18 And to put that in business vernacular, most business owners think that the eighty twenty rule as it relates to business is that eighty percent of the revenue comes from twenty percent of the customers, which by the way, is true. But the way I looked at the eighty twenty rule and the way I broke it down is that eighty percent of the revenue comes from twenty percent of the effort. So the trick is to identify what tasks make up that twenty percent that drive eighty percent of the revenue. And Chokey and I, when we wrote our book, broke this down to what we call the seven step Pathway to Profit formula. I didn't have that terminology back in the eighties. Yeah, right, So Chifty and I put a name on it when we wrote the book, and once again we talked about that that twenty percent being the seventh step Pathway to profit formula. And so what we did it is identified the tasks that make up that twenty percent that drives eighty percent of the business that you do drives eighty percent of the revenue. And I'm going to explain each step one in a time.

8:33 Great, Michael, Yeah, Yeah, I was just gonna say, I'm so fascinated by this because, as you know, I mean, this is personal for us, and not just for us, this is personal for a lot of business owners and leaders. I go back to the twenty seven year old Michael writing mean Michael by which is really impressive that at such a tender age, right, I mean, you had this great drive and initiative to venture out on your own. Can we just let's stick a minute there, Michael, because I think that's really important because the why sometimes can be very informative to get to the how. So why at that tender age, Michael, did you embrace this path of entrepreneurship?

9:14 Well, first of all, I wish I was at that tender age again, because the age now it's not so tender. So, but the main reason was chooky. I didn't like the politics that went on in corporate America. That was the main drive driver. And I was getting promoted in my jobs that I held at a reasonable rate. Don't get me wrong. I just had a little I just looked. I had a little forward looking view, okay, and of what I thought or I anticipated what was to come, and it just didn't look fruitful enough for me. And like I said in my opening, you know that to reach, you know, to want to reach that destiny, to want to want to go above and beyond, to want to accomplish and and really build something. It takes business ownership, and it's a great and it's a great path, but there's some things like we're going to go over with in this show, not to this show, but in all of our shows that hopefully will help guide people and not to go through the agony that I went through.

10:33 Yeah, I mean that's just so inspirational, Michael. And so the point about the effort piece of this, right, I mean, effort is everything, right, It's funny. Effort is a great equalizer. So when you look at this seventh step profit formula, I would be very interested. And I know you're going to go through this methodically, and Michael, I think we'll have some questions from the audience, but I would be very interested at how that twenty seven year old entrepreneur would have implemented on these seven steps. You think it would have accelerated the business growth? Would it have gotten you closer to the destiny? I would so love your perspectives on that. But yeah, feel pretty h well. One of the things, you know, one of the things is is I really sat down and really tried to find where.

11:19 The drivers were interesting. And that's what these seven steps are. They are the drivers that drive the revenue, and they drive it in a very leveraged way if one focuses on them. If one doesn't, then you know, the basically go back to what you're doing now, uh, for the most part, because we've interviewed a lot of business owners and we've seen a lot of overwhelmed absolutely, and we see them working on things that aren't moving the needle. But if you focus on these seven steps, I don't think you can help but move the needle. So so let me go through those. So step one is you need to work on it and focus on generating more leads, now preferably through the conversion formula. Now, we've talked about the conversion formula before and I'm going to go through it again because it is absolutely critical to the first couple of steps of this seven step Pathway to Profit formula. The conversion formula plays a key role in the first two steps.

12:22 So let me explain the conversion formula again. And so, as we've been saying in several a few of our shows, the key to successful marketing is that you have to enter the conversation taking place in the head of the prospect. Well, how do you do that? So what we observed Chucky and I when we were writing our book, is that you can enter the conversation taking place in the buyer's mind because it's centered around two things, the problem the prospect has and doesn't want and the solution that they want that they can't find. And we simply enter the conversation in the biased mind strategically by using what we call the conversion formula. Now here's the thing about the conversion formula, so four pot formula that allows you to address the prospect's problem and solution and do it at just the right time, just like if you were in the prospect's mind. And it has to be followed just like any other formula or a mathematical formula, if you will, with all four parts executing in the right order, otherwise it falls apot. Doesn't worry. So here's that formula very quickly again, and review what we've talked about in other shows.

13:39 The conversion formula stocks with what we call the captibate. That's the headline which happens to be the problem that the customer has and doesn't want, and it's designed to stop the prospect in their tracks because it is addressing the problem and it interrupts them, if you will. And this headline or problem is the first thing that you say out of your mouth or that a person sees or hears from you or your business, and it really it must really identify the problem they have. And because you basically only have a few seconds to keep their attention, so it's really going to focus in on that problem and then fascinate. Is that's the second step of the conversion formula. Now that you've interrupted the prospect with the problem, we have to keep their attention and we have to engage them with the sub headline or the second thing that they see, which happens to be a quick solution to that problem that they can't find. And this is how you enter the conversation. The prospects are having in their minds to captivate and fascinate the problem and the solution.

14:48 And so the third now that you have their attention, and by the way, we call these first two steps of the conversion formula the position of market dominance. So you need to get that position of market dominance right that captivate and fascinate that problem and solution. You have to get that right now. Then once you get that right, you now have the time to educate the prospect, and then and then we have based on that, we have more time to give that prospect more information, more information about how we go about solving that problem. And then finally the clothes. That's the fourth component of the conversion formula, and that has to be very compelling and so irresistible that the prospect would be foolish not to take it.

15:40 And we'll go over that in a minute, the irresistible offers. But so let me show you how the conversion formula does the heavy lifting by following the way people buy, and people buy based on emotion, and then back up that emotion logically. You see, if we break down the conversion formula the first two components, which is the problem the customer has and doesn't want and the solution they want that they can't find that touches the prospect's emotion, and then the educate, which goes into a little bit more detail on how that problem is solved. That's the logic behind making the purchase. And then of course then there's the close. So you see how the conversion formula actually follows the path to which a buyer buys. They buy emotionally and then back that up. Logically, the emotional triggers is to captivate and fascinate the problem. The solution, the logical trigger is the educate and then you hit them with the clothes. So step two of the seven step Pathway to Profit formula is focusing on conversions. Now that I have my lead, how do I convert that lead into my sales process? Whatever that process is?

17:00 Absolutely, And Michael, before we really open step two, so a couple of really quick questions. So step one applicability across industries. So it seems like what they're saying that I'm consolidating a couple of different questions here, So it seems like they're saying, wull this apply across industries? And the answer to that would probably be what Michael. Yes, absolutely, that you have to these seven areas that you must focus on that leverages eighty percent of the revenue. They cover every industry. I don't know have an industry that they don't cover. Great, And you know, as far as step two goes, where you're focusing on conversions, this is how you get convert that lead, which is step one, generating more leads, converting that lead into your sales process and whatever that sales process is. And so the conversion formula helps you get through step one and step two because if you identify the problem, solution and solution, the prospect wants to know more. And that's where the educate comes in. And that's the conversion. And so you're you're getting them into your sales process and and and that's converting them from a lead into the sales process. Now keep in mind that the conversion formula doesn't have to be just through digital marketing. It could be a networking scenario.

18:31 It could be a radio ad, it could be a newspaper ad, a billboard and of course all forms of digital marketing. And you know, we've actually had a couple of clients to get who even put their position of market dominance to captivate and fascinate in their incoming voicemail message or or a live operator even taking an incoming call. So that's really uh, it can be. It could be in any form of communication with the customer. Step three of the seven step Pathway to Profit formula is focusing on closing rates. Now, once again the conversion formula comes into play by utilizing the fourth component of the conversion formula which is the close, and the close needs to be compelling. And I don't like to talk about that.

19:23 I don't like to talk about the clothes needing to be compelling without reviewing the four components of a compelling offer. Sorry, the five components. Five components of a compelling offer. So in order to close, which is the third step, and you need to focus on these things. Now, remember we have leads, conversions, and closing rates that need to be focused on. To help you with your clothes, your offer needs to be compelling. And so the five components of the compelling offer is number one. Scarcity in urgency. Now, scarcity is when you proclaim that there's a limited availability of your product. For example, there are only three hair brushes left. That's that's scarcity. There's only a few left, so they better hurry and get and buy whatever's remaining.

20:16 Urgency is when you put a time limit on the offer. You know, when I was in the ski business, our most successful sales were four days that would start on Thursday in and on Sunday in one of those sales, we consistently did a million dollars in business in four days because the deals that were not only great. But but there was urgency, uh in getting there in those four days, and there was the intensity of scarcity because when that when those when those key products, those focused products run out, that you know, that's it, it's over. You can't get them anymore. So when I should say those promotional product, when those promotional products run out, it's over.

21:02 So urgency and scarcity was really something that we paid attention to in retail because that's really that attracted a lot of attention. And then there's the risk reversal where the seller takes all or most of the risk. And I usually give my SKI guarantee example here, but I have construction clients that give five year warranties on their work. And these guarantees are real differentiators because most people in the construction business, they don't even guarantee their work for a year hmm. Yeah. And these guarantees, like a five year warranty on construction work that closes a lot of sales.

21:47 And the other day I actually heard an ad for a psychic service. This is a service that predicts the future, and they said if the prediction that they make does not come true true, you get your money back. Wow. That yeah, talking about a risk reversal. I couldn't believe my is. I had to hear it a couple of times, but yeah, that was what they said. So that if they they said, if the prediction that they give to the customer doesn't come true, you get your money back. It's just unbelievable. But that's what that's a risk reversal, and that's pretty compelling. So the third component of a compelling offer is adding low cost but high value to a product or service. You know, like for example, is an example, a toothpaste company would put a QR code on their tube of toothpaste. That leads to a video that shows people four areas inside their mouths that are most neglected while brushing their teeth and the best way to brush those areas. So information is a wonderful way add more value. And that's a perfect example of that.

23:04 And then the fourth component of a compelling offer is packaging and bundling multiple products and services together. Okay, a package provides a strong perception of value. And then finally, the fifth is in difference to the outcome. You know, the prospect can tell when you're pressing to make a sale, and as a result, they surmise that you don't have their best interest in mind, and that's a problem, that's a real problem. So by being indifferent to the outcome, it puts you and your prospect on the same side of the table. Yeah, and getting to know the person in terms of their inspirations, goals and objectives helps with this process. And then step four of the seven step Pathway to Profit formula is to focus on client retention and customer retention. And by the way, Choky, what I found in our interviews is this is one of the most neglected steps by business owners because when they get a customer, and I do the same thing when we get customers. We take it for granted that once they're a customer, that will have them by default and keep them.

24:18 But nothing could be further from the truth. You know, we have a saying it next step CFO, you're only as good as the value you brought in your last meeting. While Michael break that down further. I think that's a really insightful point. Yeah, Well, what that means is is you're not adding value or working towards adding value with every delivery or product or service. Yeah, then you run the risk of losing the customer. That's a good point. You got to continuously add value and work towards adding value. You know, when you think about it, no matter how established a brand is, they always strive for product improvement or whether it's product or service improvement. I mean you take I mean if you look at the Fortune five hundred companies, they all have huge research and development departments and millions of dollars good O, R and D, R and D. Right, that's all adding more value, that's all. Yeah, that's not standing still and just expecting the customers going to keep buying from you.

25:25 Absolutely, it's interesting. There's a comment here with quasi question Michael, just this idea of the rejection that comes with trial and error. Right, So you might try something that doesn't work in the marketplace, and as a very busy business owner, how do you how. Do you contend with that? Right? And you know, if we sort of contrast that with like a large Fortune five hundred operation where they've got a whole, like you said, R and D department where they're just turning things out. Some things work, some things don't work. A business, a small business owner may not have that luxury. So any reactions to that right. You know, the big cubpanies have all these I don't know firms that they that they hire to get all kinds of market research, and we small business owners don't have that luxury. But what we do have the luxury of doing is testing and when you and the beautiful thing about testing is you don't have to test your entire market mm. You just have to test a few customers use market. Yeah, that's all. It's not. It's not like you when you're testing. You have to well. In order for us to really find out if this is really adding more value, we have to try it with everyone and commit to everyone. You don't, you don't. That's the beautiful thing. You could test it, whether it's an AD, whether it's a messaging, whether it's the conversion for you, whether it's a market position of market dominance, you got it.

26:49 You can test it, but you don't have to test it full scale. Just test it with a few customers, see what the reaction is and so you know, that's I think that's something that we small business owners can certainly do. You know, and other ways to retain clients and customers has given them calls to see if you can provide any assistance, you know, showing your gratitude, even in one form of another. It's just another way to keep that customer. We just can't take customer retention for granted. And as you probably have heard from many, many, many in the past, it's much more cost effective to keep an existing customer than to find a new one. Absolutely, Step five of the seven step Pathway to Profit formula is focused on increasing the average dollars per sale. Okay, some of the key strategies for increasing average dollar per sale is a strategy called bundling and packaging. Now, we talked about bundling and packaging packaging as one of the components of a compelling offer, and it is, but it also can be applied to increasing the average dollars per sale.

28:06 And here's how I increased the average dollar per sale. When I was in the ski business. Every ski retailer in America bundles skis, bindings, and polls to create what is called a ski package. And it's definitely effective, but everybody does it. Well. What we did when I was in the ski business is we took the colors of the most popular ski packages and created color coordinated clothing packages of a Parker bib, sweater and hat. So once the customer bought the escape package, which is usually the first thing they went and bought, we then showed them the color coordinated clothing package, to which now the skis, bindings, polls, and outfit are all color coordinated. But then, of course we sold them color coordinated ski boots and the color coordinated gloves and even if you can believe it, color coordinated socks, despite the fact that the socks were hidden from sight, covered by the ski boots, but they still wanted to make sure because when they took their boots off in the lodge, they wanted to make sure that their socks was still color coordinated.

29:24 I love that. So you can imagine by doing this, by adding this package of clothing that was color coordinated, we dramatically increased our average dollar per sale. Now another yeah, and so another strategy is up selling and cross selling. Up selling and when I say another strategy, another strategy to increase the average dollar per sale, okay, upsale. Up Selling means offering up like a higher grade or quality or size of an item that the customer may be interested in at the point when the customer is ready to buy so let me explain upselling a little bit. There are many people, There are many people, many customers in the world that feel compelled to upgrade there. These are people who always buy the highest grade of gasoline, okay they These are people who always fly first class.

30:21 Okay you know. These are people who are always buy the best an industry has to offer. And they're not necessarily millionaires. They just feel like they're missing out if they don't buy the best. And because you don't have you don't always know if you're dealing with such a person. Should always upsell a customer to the next level, up. Right, give them a chance to say yeah, your nay, right. Right to that next level, because they might be that customer who needs to buy the best, who wants to buy the best, who feels compelled to buy the best, who feels a fear of missing out if they don't buy the best. Yeah. As always, do not negotiate for your customer or your client before.

31:04 Sh right, yeah exactly. And then cross selling, which simply means offering products or services which complement the item the customer is interested in. Once again, at the point when the customer is ready to buy and the clothing package strategy that I just gave you also is an example of cross selling. Yeah, you know, we're just selling across to another department. So if you notice, when we're describing up selling cross selling, I always make the point that these up selling and cross selling opportunities should be presented when the customer is ready, ready to buy, right at the point of sale. Because the reason for that is is that thirty four percent of prospects will buy additional products or services at the time of their original purchase if they're asked to do so.

32:01 Michael, I mean that is so insightful. I think it's worthy of emphasis. Right, you said thirty four percent. Right, wow, And I'm saying if you don't remember a single thing that I said today, please remember that one statistic because it provides a tremendous opportunity to increase the average dollar per sale that you make with each customer. It's a really good point. Yeah, you got you. And this is this is this thirty four percent has been tested over and over again and to be true. It is it is true. And step six of the of the seven step Pathway to Profit formula is focusing on increasing the frequency of sale. Okay, how often can you get a customer to buy, and this could be accomplished by creating loyalty programs with rewards, sending personalized marketing campaigns based on purchase history, offering limited time deals, and proactively reminding customers when they might need to repurchase based on their usage patterns. And rejuvenating former customers is another one of those strategies that's neglected by business owners. Through our interview process, we found this to be true. These are people who have previously bought from you.

33:27 Why not provide special offers and additional products and services to these customers who already know and trust you, they've already purchased from you. It's a strategy that is really effective and many times neglected. So rejuvenating former customers. You know I talked about don't forget what I said about the thirty four percent. Yeah, don't forget about rejuvenating your former customers. It's a tremendous opportunity for people who already know you, they already trust you, they've used your service. You know, for one reason or another, they've drifted, but you can bring them back. Yeah, Michael, it's a really important point and it's also practical right. So I recall from a number of our business roundtables, Michael, we had some business owners that were just literally noting like they were not in their heads, right, I mean, they were just like vigorous in vigorous agreements on that. Now, one of the challenges with rejuvenating former customers is having a good customer database or some kind of a list where you keep in touch with customers.

34:32 Did you want to maybe react to that, Michael. And yeah, yes, you know, when I was in the ski business, we had eighty thousand customers, we had eighty thousand name customer lists. And while the reason is is that every time they bought, and at the time it was the email, but every time they bought, we got their name and address and we put it on the sales slip, and then we took the sales slip and we added it to the database. And so every time you make a sale, you must get the customer information, including their email addressed now and by doing that, you now have an opportunity to market to them again and again and again and again. And it's it's really important that you rejuvenate those former customers and that you maintain that database because without the database, it's hard to rejuvenate. Hmmm.

35:30 So the final step, step seven of the Pathway to Profit formula is focusing on how you control your costs. Those variable costs, which are the costs directly incurred through the production or delivery of the product or service and what's commonly found in the cost a good soul section of your P and L. And fixed costs, which are also operating expenses like rent and insurance that are for the most part, the same amount every month or every year, and in most businesses, the largest part of their operating expense base. This is the for the most part fixed costs is rent, payroll, advertising, and insurance. If you focus on managing just these four expenses, it will provide you the biggest bang for the buck when managing your cash flow and when managing your costs. So once again, that's rent, payroll, advertising, and insurance. Okay, now I'm going to talk about each one and how and how we could go about saving money in each of these areas or what you should look at. First of all, rent, You know, business owners think it's literally impossible to renegotiate rent because they have a lease, but the landlord doesn't want to lose a tenant, especially a commercial tenant, where they would would rather you know that have to do another build out for another tenant and deal with all the costs associated with vacancy.

37:02 And most landlords understand cash flow problems because many of them experience catch flow problems themselves through real estate downturns. But what I found to be the best way to negotiate with the landlord is to show them your financial statements and show them what concessions you need in the short term based on the financial position of your business. And in that situation, you do have to put your hat in your hand, Okay, And I've done this successfully myself, and I show the landlord how we're going to get, how we're going to pull through the difficult time, and how the rent concessions are necessary in order to pull through. Now, if you're not having a difficult time, then you know you don't go about doing this. You do have a lease that you must honor. But if you are going through a difficult time and you need to cut the then by showing by showing all your cards to the landlord, put your hat in your hand, uh and and really showing them how you're showing the situation you're in now and how you're going to pull through. Most landlords will uh play ball. Uh. And that's and that's the thing.

38:23 And by the way, a business and cash flow forecast is invaluable in that scenario because that shows the future you know of how you're going to pull through exactly. And if you have to, you can add the concession money that the landlord gives you up front to the back end of the lease, or you can add another year to the lease as a way to give the landlord something in exchange for the concession. Okay, but whatever you do, don't think it's impossible to discount or defer rent just because you have a lease. Michael, Is there a right time to have that conversation with the Yeah. I think if first of all, if you have a business and cash flow forecast, you'll know in advance, okay, Okay, that you know that that's there's trouble ahead, trouble brewing. Uh.

39:11 Some some business owners will can right now expect trouble brewing, you know, if there's to see some softness in their business. Uh. But otherwise, you know when you're experiencing the pain of a cash flow problem, or you really believe that in order to continue in your business you need some rent concessions, that's when you go, that's when you go do it. But it's great to have your financials and a cash business and cash flow forecast to be able to show the business owner high the I'm sorry, the laydload. How are you going to get out of it? Nice? Yeah, kind of the two step process. Right right, yep. And then there's there's always there's usually always ways to cut payroll, whether it's laying off employees or reducing employee hours. I mean, certainly you work to keep your a players and let go of inferior players.

40:05 And in retail, another strategy to cut payroll hours is to change the stores operating hours and closing times, tighten them up that way. You know, if you could tighten them up to eight hours, eight to nine hours like we did at times, that's just like one shift and it's easier to deal with and it's easier to manage the schedule, and it cuts payroll. And then advertising. I just don't like cutting advertising, but there are ways to cut advertising without making a dramatic impact on sales. And if you have you know, if you've been tracking what works for you. That are course, you'll know what to cut by eliminating the advertising that's not working. But other ways to cut is reducing sizes of ads, changing four color to two color, maybe running radio spots, condensing it from sixty seconds to ten second ads, maybe even changing the radio's time spots where you might do a couple more overnights to try to reduce the cost. But if you haven't been tracking your advertising, and shame on you because you now it's a difficult. It's difficult to make un educated choices on way to cut advertising and it poses a great risk. And then insurance, Ah, yeah, start with health insurance. Get quotes from for health insurance providers.

41:36 What I found is that although rates are basically the same, you'll find one creative provider out of the four. We will figure out a way to cut your medical insurance costs to the lowest possible amount, and you may have to reduce the employer paid portion and put more of the cost burden on the employees. But one thing that works very well for my clients, especially as they they have younger employees, and you can increase your deductibles and you can increase the deductibles, and then if the employee reaches that old deductible amount, you can reimburst them for the the overage because for the most part, young people don't hit their deductible. And then, you know, from commercial insurance you get four commercial insurance providers. Commercial insurance carriers get very competitive and usually shopping their pencils on general liability policies, you know, and if you have an umbrella policy, you can reassess the need to continue that as well as get competitive quotes on those. And let me give you an example of a client I helped. I had a client in the construction business that had an umbrella policy that was costed of seventeen thousand dollars per year. However, the reason they were having the umbrella policy was on huge commercial jobs. Now, in the previous year, they didn't win one, not one of any of those large commercial jobs.

43:09 They weren't even close. And to be honest with your, large commercial jobs was really not part of their market that they would compete in. It wasn't their sweet spot. And we fought was mid range jobs that you know, didn't require to carry an umbrella. So we dropped the umbrella and say seventeen grand. Yeah, and you know, most business owners wait until there's a downturn in their business before they assessed the size of their overhead. Yeah, it's it's so funny that you mentioned that, Michael. That's the stream of questions that we've been getting on this is I would say I would classify a number of these questions under the category of timing. The timing to have these kinds of conversations, right right, So absolutely, Yeah, So you take on that Michael's a be proactive as a business owner, right, don't wait till the you know, roof is sort of caving in.

44:05 Yeah. Well, with with respect to insurance and advertising, that should always be looked at always, always, so you can you can. You don't have to wait till you're in trouble for that one. Uh, Insurance and advertising really really needs to be looked at constantly, you know. And let me end with this chokey because I know we have to leave time for compliments. That's the seven steps that leverage a company revenue that you know, I know what you're saying out there, you know what, what about all the other things that I have to do? I can't just focus on these seven things exactly. Well, what I have to say for that is something we called we called choky and I call aid CO. A, I, D, D O is the pneumonic And when you need something thing done, look to A automate it. Automate the task, look for I innovate, find a creative way to complete the task, A D Delegate the task to an employee or C cancel or eliminate the task if it's unimportant.

45:19 And finally, oh, outsource the task to a subcontractor. Focusing on that seven step pathway to profit formula in conjunction with a CO will finally finally get your time back and CHOOKI just before I hand it off to you, I do want to review those seven steps again. So it's step one. This is the seven step pathway to profit formula that will leverage eighty percent of your revenue. This is that twenty percent that focuses. That leverages eighty percent of your revenue, leads conversions, closing rates, client retention, average dollar per sale, frequency of sale, and costs, time for compliments.

46:02 Seven steps. Great segue into compliments, Michael, and look, this week's business complements Segment five business owners that we want to highlight and these business owners. By the way, they're coast to coast, so national representation here. So Trevor Lawton, co founder of Abyssinia and Michael will probably help me with some of these pronunciations. But look, they are a biotech company working on groundbreaking technology to cure Alzheimer's. Trevor Lawton and team hats off. Drew McGhee based on in the Midwest, So Trevor's out in the East coast, Drew McGee and team are out in the Midwest. They are with IVM Group.

46:46 We have a strategic and thoughtful approach. They have marketing expertise and solutions just for insurance vendors. So they've taken an industry specificity approach to really contextualizing how they support insurance operators and vendors. So really intriguing there. The third Tom Saddob Midwest based. He is and like I just I marvel at this title that he has and his scope of responsibilities. He's a director at the Center for Entrepreneurial Studies. And Michael, I've got to share their mission statement. This just blew me away.

47:34 So they've got this mission statement to ignite the. Entrepreneurial spirit for the students, faculty, university staff, alumni, and the greater university community. So they're igniting and activating the entrepreneurial spirit across their different stakeholders. Chad, Yeah, really really cool. So Chad beareguard out on the East Coast with arbor Way tree Care. They are a full service. Locally owned and operated tree care company and they've been doing this work for over four decades. But even better than that, Michael, they've got to your point about guarantee earlier. They've got this sort of guarantee where projects always.

48:15 End on time. Right. Remarkable. Jeff Silver, Last but not least, the Silver Group. These are real estate sales professionals out of the East Coast, New Jersey, PA. Really incredible professionalism that they bring to every single engagement. I love what Jeff and teams say. So they create a personalized plan for clients using a proven system. So great compliments around these five business owners. Hats off, Michael. Back to you. Thank you Tookey real quickly too. You know, last week we talked about solving cash flow problems. One thing that I just wanted to quickly touch on was customer deposits if you're having a cash flow problem and your customers, you can ask your customers to pay a deposit up front or prepay the whole price for a discount. I have a client who is taking one third deposit for services.

49:12 He increased it to fifty percent and he dramatically improved his cash flow. And another client who gave a client a two percent discount if they pay if they paid for the entire order upfront, that also worked as well. So Chicky to get a copy of the book Powerful Business Strategies, simply go to our website www dot NEXTSTEPCFO dot net. It's totally complementary. And until next Monday at noon Eastern time for Chicky Obio, I'm Michael babar Rita, and remember, don't keep doing what your competition is doing. Great job, thank you. You have been listening to Powerful Business Strategies finding out that everything you ever learned about growing your business is wrong.

49:54 Tune in next week and every week at noon Eastern time on W four CY Radio with your host Michael Barbarita of Next Step CFO and moderator Chugiobio. M