The 5-5-5 Profit Formula: Another Strategy your competition isn’t doing

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 explicit or implies shall be extended to W four CY 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. Resident of NeXTSTEP CFO Michael Barbarita and joining Michael for today's show as an executive moderator is chooky obio.

1:00 Yes, yes, yes, this is chokey, 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, Choky? How you doing? I felt a little funny we didn't have a show last week with the holiday. I actually I actually got my microphone ready. But we'll wait a minute, Michael. I love the fact that you stay ready. How about that? Here you go. But as Chuki said, my name is Michael bab Rita. I'm President of Next Step CFO. At Next Step CFO, we are a fractional CFO and strategic implementation firm, and our vision is to ensure overwhelmed business owners achieve the time, freedom, and consistent profits to build a legacy and live the likely desire. Our mission is dedicated to guiding small business owners to leveraging their time, exploding their profits, and build a meaningful legacy. And this show, Powerful Business Strategies and our book of the same name, is a step toward accomplishing that vision and mission. So with that, I'd like to hand it back to my co author and moderator for the show, Chooky Obio.

2:11 Thank you so much, Michael, And today's episode is impeccably well timed. So the title of today's episode is the five five to five profit formula. Another strategy that your competition isn't doing. And Michael, I've got to let you know, we've got quite a bit of an audience coast to coast of business owners and leaders for today's episodes, so. I believe we may get quite a few comments and questions. A point of disclaimer, Michael, look, as you know, you and I are both affiliated with a number of different organizations, and I currently serve as the managing director for business Development at Vetter Price, a global business focused law firm.

2:54 But in addition to that, it is truly an honor to collaborate with you, Michael on our business roundtables initiatives really coast to coast right meeting with small business owners. The lifeblood of our economy. Now. The opinions and insights that we will share as part of today's episode are based on our personal experience and personal views. But my mission is to be the fearless moderator, Michael, and to ask the right questions and help you, me the listener, really drive towards those best business strategies that our competitions are not doing. So with that, Michael, allow toss it back over to you.

3:39 Excellent, Thank you, Chokey. So our show today is about our five to five to five profit formula. And when you utilize this simple and easy to understand formulas successfully, you'll see a dramatic compound effect in your profit and cash flow. And the five to five to five formula is simply this. If you increase sales five percent, decrease cost of good sold five percent, and decrease overhead five percent, this will have a dramatic compound effect on your profit and cash flow. Sound difficult, Well, let me give you some real life situations where I say thousands of dollars and let me tell you the key to getting cost reductions. Here, it is the very key to getting any cost reduction, whether it's a cost reduction and cost of good sold or a cost reduction and overhead is four words you need to ask. Something business owners don't do is ask. Yes, there's three times where they shut the door on you, but you've got to ask. Now. Let me give you an example. When I was in the ski business, I used to get one hundred thousand dollars per year in co op advertising money from my suppliers. Oh. Now, in order I understand how I got this money, you need to understand the mind of the vendor and what's going on over on the vendor side, because the vendor wants to do one thing, and that is sell as much

5:11 product as they possibly can. And the other thing you have to understand is that in addition to the co op advertising that vendors offer in their vendor agreements, which by the way, is another thing business owners don't take full advantage of. But there and in that situation, they're offering one to three percent of your annual purchases and advertising money and business owners aren't taking it. You got to think about that. Now, there's the vendors, in addition to co op advertising budgets per their vendor agreements, also have a national advertising budget. And first of all, they always have money left from co op advertising because no one takes it. And then they have money in their national advertising budget for special circumstances, but no one asks for it. Interesting, every year, I put together a I put together a fifteen to twenty minute presentation to my biggest vendors showing them an advertising campaign that shows them how we will sell more of their product. And by the way, we use the conversion formula, of course, but how we will sell more of their product. And we do that in a very convincing way. And what they will do if they will go into their national advertising budget and pay for or partially pay for that advertising.

6:39 They pay for the advertising by the way one of two ways. Either a deduction off of an invoice so there's no cash being lost other than the taking a deduction. Okay, that's insightful, and the other way, which is cheaper for them and it's better for us if we believe in the product we're selling. Remember I went to the vendors that we sell the most product of but we used to The second way is that we used to get ten thousand dollars of free product at wholesale from a vendor and then sell it to twenty the retail value. So in effect, we really got twenty thousand dollars of advertising from that vendor. But I never counted that because the vendor only spent ten thousand, And when the vendor spends ten thousand of product, they're probably only actually out of pocket five thousand dollars because the cost to produce that product is not less than the ten thousand that they charged me at wholesale. So then once we had by the way, once we had a successful campaign, a couple successful campaigns in a row, there was really no need for the presentation anymore, and it would just be an automatic thing that they would do once we ask.

7:52 But you have to ask. Yeah, you have to ask. That's what's missing out there. And people don't think the situations are available, but they certainly are. But you have to ask. You know what it reminds me of, Michael, we miss one hundred percent of the shots that we don't take. Right, that's right, you have to ask this right. Incredible. Look, Michael, you've struck a chord here. I mean, we're actually getting a stream of comments and questions. Do you have a minute to just take on one of these quick questions? Michael? Wait? So the question is relative to vendors. Can you use this as a way to get a strategic vendor so they're not actually a vendor yet, but you present this as a way to maybe entice the vendor to deepen the relationship.

8:38 Yeah, probably not, And I'll tell you why, because this is, you know, this is out of their pocket and they want to prove they want they only do it with people who have proven to sell. Okay, and if somebody you know, if you don't have a relationship with them, like, you know, just to give you an idea, this was the ski business. So I got money from Rosignol, I got money from Alone, I got money from K two. So all the big players that we knew we were going to sell, you know, like the previous year we probably sold you know, one hundred and fifty thousand dollars worth of their product. So given that they would you know that they have a track record with us. They know we're going to sell product, and you know we can sell product. They know what we know how to market to sell product, and so they they're more inclined to go with us. Then.

9:33 Very helpful, Thank you, Michael. And so here's another area where you have to ask. You know, business owners think it's impossible to renegotiate the rent because you have a lease. But the landlord doesn't want to lose a tenant, and especially a commercial tenant where they would have to do another build out or deal with the cost of vacancy. And most landlords, what's interesting is most landlords understand cash flow problems because many of them have experienced cash flow problems themselves through real estate downturns. That's a good point But. What I found to be the best way to negotiate with the landlord is just, once again, just be totally transparent. Show them your financial statements, show them what concessions you need, and whether it's short term or long term, based on the financial position of your business. You know, when I was in the outpatient rehabilitation business, I needed a rent concession from the landlord. I had at least I think I was entering. I think I was in the first year of a five year lease. This is six months in.

10:39 But once again, like I did with co Op advertising, I put together a presentation with my financial statements and a business and cash flow forecast showing the landlord where my business was and the strategies I was going to implement to improve the financial position to be able to afford the current rent. And he agreed. He agreed to the red reduction because I went through and showed him. I didn't just say I need a rent concession. I showed him how what strategies we need, we were going to implement, and how long it would take, and show him the results through a forecast. That's it. That's all.

11:19 That's all. Plus show him the current financial statements, show him the current cash flow, and uh, he agreed. He agreed to the red reduction, and as a give back, I added another year to the lease. So it's not impossible to discount or defer rent just because you have a lease. So before I give you an example of the effectiveness of the five to five to five profit formula, let me make sure you understand the definition of the terms that I'm using. So I think I think we all know what sales are, so I won't bore you with that one. But let me define cost of good sold, because this is an area that business owners, when I say, you got when I say the five to five to five profit formula is increasing sales five percent, decreasing cost of goods sold five percent, decreasing overhead five percent. I think a lot of business owners are confused as to what cost of good sold is. So let me, to the best of my ability on the radio here define what cost a good sold is. So, generally speaking, cost a good sold are the direct material costs, so any direct materials, direct labor, subcontracted costs, which are costs associated with the production or delivery of the product, and any other direct cost freight as well. Specifically, associated with the production and delivery of the product or service that you provide. So, if you're a retailer, your cost of good sold is

12:49 primarily made up of the product you buy from manufacturers and distributors, plus freight costs the cost of the freight to get it there. Okay, so that probably the most simple in the area of retail. If you're a manufacturer, your cost of good sold is primarily made up of direct materials, which are the materials that go into the production, direct labor which is the production labor, subcontractor costs, which is the outside labor to help produce the product or deliver the product, and then freight costs. And if you're a distributor, your cost of good sold is primarily made up of the product purchased from manufacturers and direct labor associated with moving that product, subcontracted costs, which once again is outside labor to help move the product, and then freight costs. And if you're a service company, your cost of good sold is primarily made up of direct materials, which are the materials that go into the service delivery, direct labor which is the labor that delivers the product, service contracting costs, which is the outside labor, you know, to help deliver the service again, and then freight costs.

14:08 Now they might in some cases they might not be direct labor in providing the service, but in most cases this still is because that's how you provide the service. Now, overhead, it's primarily your fixed costs like rent and insurance and all the costs that support that that kind of support the delivery or production of the of the product of service. So rent supports it because you need someplace to do it. Insurance supports it because you need to have insurance in case there's some loss associated with the production or delivery of the service product. So now just a couple of more definitions. Let me define gross profit. So gross profit is simply sales, which I think we all know what those are, less cost of good sold, which I just defined.

14:58 And this number needs to be high enough to cover your overhead and a desired profit. Now, your gross profit percent is your growth profit divided by sales, and your net profit percent is your bottom line net profit divided by sales. Now, if I went too fast, we have recordings of all of our shows. Forty eight seventy two hours after our show airs at Powerful Business strategies dot com. Absolutely. Now, Mike, guess there's a Yeah, it's funny. Look you're as I said, I mean, you've really hit a nerve here.

15:39 There's some folks that are just aching to ask some questions. Let's pick up on just one of these questions, Michael, So, and you may get to this later on in your insights session. So, sales, costs of goods sold, and overhead. Would you prioritize one of those for the five five five? Right? How should a business owner approach that? Well? I think I think I think they should start with sales, and I'm going to go over strategies to increase sales, but I think they should start with sales and then go to cost of good sold and then go to overhead. Very helpful, thank you. I think yeah, I think it should go in that order in terms of addressing it. Because the top without a top line, there is no business. So we need to address that first. And then the cost of good soul, the costs that make up those sales, That has to be addressed second. And then third, let's let's cut the overhead.

16:36 Let's find ways to cut overhead. Very helpful. Yeah, And Michael, and you would submit that a business owner can sequence this in a way that makes sense where it's not as disruptive to their regular business operations, right, because we're getting some questions around, Look, you know, I've got to run a business, like how do I fit the strategy in there and make you know, making sure it's not disruptive any. Yeah, so overhead is not disruptive per se, but you do need employee buy in reductions and overhead on some in some of the areas. Okay, certainly not rent and insurance, but in some of the areas it might cause a different operating basis and therefore might require employee buy in.

17:23 But other than that, there should be no and you know, sometimes caused a good sold will also require that's right, reductions in labor or labor costs. I don't I don't want to say labor. That's this isn't to try to reduce staff. This formulo doesn't work to reduce staff. If that's what has to happen, that's what has to happen. But the strategies that we use to reduce costs of good sold does not include reducing staff. But you might have to get buy in from them as well. Very illuminating, Michael, Thank you. Okay, and so now let me give you a simple example of the five to five to five profit formula. Let's take a company that does one million dollars in sales, has a gross profit percentage of forty percent and a net profit percentage of twenty percent. If that company increases sales just five percent, then decreases their cause to good sole five percent, then decreases their overhead five percent, they will increase their net profit dollars by forty five percent. Wow. Yeah, So if that's a significant increase to a bottom line.

18:35 And. Some businesses actually bonus their employees because the bottom line is so impactful, they're able to share some of that profit with their employees as a bonus, and having a manager, for example, bonusing a manager to increase sales five percent, reduce cost a good sold five percent, and decrease overhead five percent would give them a pretty nice bonus at the end of the year. Well, Michael, I've got to chime in with a comments last question on this. This is really important. So are you saying it may make some sense for some business owners to have strategic metrics that impact manager compensation based on this five five five profit formula.

19:29 That's right, that's right. And if they if they if they don't want to do it with one manager, they can do it with the managers that I had, the sales manager, the production manager, interesting and uh an administrative manager, and they ca and you could bonus them that each hit that goal. And if each of them hits the goal five five and five. If if one manager hits the goals, they get one level of bonus. But if they but if all three in concert increase sales five percent, decrease cost good sold five percent, decrease overhead five percent, they get even a bigger bonus. And so they'll be going to work together that way if necessary.

20:10 Yeah, Michael, that is remarkable. Really get insight. So so let me make this point though, those who are achieving inordinately high gross profit margins, for example, eighty to ninety percent, which are very few companies, by the way, but those companies will not see as dramatic a change. I'll see a change that's significant, but not as dramatic as I described. But the lower your gross profit margin seventy percent or less, which is the vast majority of companies, that's where the dramatic compound effect takes place. So now the trick is, how do you increase sales five percent, decrease cost a good sold five percent, and increase overhead five percent? So let's start with sales. We talked to out the conversion formula many times, which is by far the most powerful way to convert prospects to sales. And that formula is captivate, fascinate, educate, and close. And I urge you to view episode two of Powerful Business Strategies called the Conversion Formula and Compelling Offers. So the name of that episode, it's called Conversion Formula and Compelling Offers and it's located at Powerful Business Strategies dot com. Yes, and that show we review the conversion formula in more detail. Now, another way to increase sales is by following the five components of a compelling offer, which a scarcity and urgency,

21:44 risk reversal, adding more value to your product or service, packaging and bundling, and being indifferent to the outcome. And once again I urge you to view episode two called Conversion Formula and Compelling Offers at Powerful Business Strategies dot com, where we review compelling offers in more detail. So by utilizing the conversion formula and compelling offers, there are definitely ways that you can that you will increase sales by a minimum of five percent. You actually should do a lot better than that. But another way to increase sales are strategies called up selling and cross selling. For example, up selling up selling means offering a higher grade or quality or size of the item that the customer may may be interested in at the point when the customer is ready to buy. And let me explain upselling. So, there are many people in the world that feel compelled to upgrade. These people always buy the highest grade of gasoline.

22:53 These people always fly first class. These people always buy the best industry has to offer. And these people necessarily millionaires or very well to do. They just feel they have a fomo fear of missing out. They just feel the missing out if they don't buy the best. And by the way, these people strongly believe that if you buy cheap, you buy twice okay, And so it's those people that are perfect candidates for upselling. And because you don't know who you always don't know who you're dealing with, you should always up sell customers to the next level up.

23:33 You know, when I was in the ski business, many times a customer would come in for a beginner pair of skis. They never skied before, but once they saw the benefits of the more expensive upgrade, they bought the upgrade. And even though the ski was built for let's say an intermediate skier, they saw the benefits of jumping up and getting that better ski. Cross selling cross selling means offering other 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 an example of cross selling is when I was in the frozen cookie dough business. We had multiple varieties of cookies of cookie dough and if a customer didn't want a particular flavor, hey, there was always different flavors to offer them and to cross sell. Then there's a strategy. This is something extra called down selling, and down selling should occur when someone declines your product the service offering, so you offer them an alternative at a lower price. So, for example, an example of a down cell would be take a health club that sells a one year gold membership program. The prospect declines that membership, then the sales associate offers the prospect two low risk, low barrier to purchase options. One would be a ninety day called the nine they helped makeover a membership or a one week trial membership. Both

25:06 of these are of a lower value to the Gold membership, but the sales were made. And this is tremendous value that just making any kind of sale at all, because thirty four percent of the time that a customer buys something from you, they'll buy something else at the point of sale if it's presented. Once again, you have to ask many business owners are missing out on that opportunity, so that you've got to well, no matter how small. You know, we even had advanced skiers by we downsold them to the intermediate ski just so we can make the sale, because once we made the sale, we knew that there was a good chance that we could retain them for future purchases. Nice and obviously at the point of sale we'd be selling them parts that Parker package of the clothing package I talked about, as well as accessories like gloves and mittens and goggles and those types of things. So now that we've covered how to increase sales five percent, let's work on probably what it is likely perceived as the most challenging cost reductions in the five to five to five profit formula, and that is reducing cost of good sold. Yes, so the number one way to reduce cost of good sold five percent is to improve your process of how you deliver the product or service to a customer. And that's where I talked

26:38 earlier about employee buy in when I was answering that question, because if you improve your process, make it more efficient, you're going to cut cost. Speed of delivery, just speed of delivery from the point in time when our customer, oh, I'm sorry, when you buy let's say the raw materials or the direct materials to the end when you ship or deliver the product. If you can increase your speed of delivery, you'll make more money, you'll be more efficient, you'll reduce your cost of good solt. Also, many times you find inefficiencies because employees on following the system properly, not following the system properly. That leads it lends itself to a lot of inefficiency and wasted cost. So the key is to identify where the wasted motions are, where the where the wasted cost is. And I can't tell you how many times I looked at a process. I don't care if I looked at it a year ago or maybe even I don't know, six months ago, I look at it again. I still see employees on following the process. I still see things that inefficiencies in the system, people not following the system. But that's that's something that you can find most of the time. And speed of

28:08 delivery is really, really, really important. If you can increase the speed of delivery, you can time it from the from the way from the point of when the sale starts to the point where the product or service is delivered. If that speed is increased, you're going to reduce your cost to good soul. This next area is very neglected and UH. That's negotiation with vendors. As I talked about in the opening about UH advertising, but business owners are afraid to ask. You just need to ask for these things. There are multiple areas to negotiate with vendors, and let me give you all the all the areas. Number one, negotiate free freight. Okay, I can't tell you how many times I could deny. I've been denied, but I can't tell times I asked for fright and they gave it to me, and you know it. It adds up. Now.

29:10 Some vendors, as an enticement, their irresistible offer, if you will, is to offer free freight. Ones they offer free freight just as a matter of their program. But the ones who don't, why not ask for free freight, especially if you're getting it from someone else, You can always say, hey, I'm getting it from this vendor. Why why aren't you negotiate better payment terms? You know, there's a huge difference between paying something in thirty days and paying something in forty five or sixty days, huge difference. It gives you more time to collect your receivables if you have slow paying customers. It just it just allows you to get the money before you have to pay for these things.

29:58 So always negotiate. I don't care how great you think your terms are. Negotiate better terms payment terms, and then co op advertising is explained earlier, utilizing the vendors national advertising budget and preparing a presentation to show them how you'll sell more of their product. Free point appurchase displays, for the most part, they should be free. Some people charge them charge for them, so that should be something though that you get free. But like I said, some people charge for them, and these are just displays and they help sell the product obviously, but you should be getting those for nothing.

30:45 Yeah, Michael, we got a really interesting question here, so let's brainstorm this. And this strategy. By the way, this assumes that you have existing relationships with all of these vendors. Correct. I think you made that clear. Yeah, yeah, yes, that would be except one little point though, if it's a new vendor in terms of reducing costs, yes, uh, not asking for money like in the case of the co op advertising, but reducing costs, you could still ask ah. Interesting, Okay, that's a very powerful exception to that. Now let's take the question from this angle and I'll paraphrase a little bit here, Michael, can you use this as part of a vendor rationalization strategy. So it seems like what this business owner is after is they've got maybe eight vendors that they believe they could get down to like five vendors, and their.

31:44 Approach would be to visit all eight of. These vendors with this recommendation or proposal, and then based on the response to that, Michael, they rationalized down the number of vendors. So will be your reaction to that. Yeah, that's out standing. We'llver ask that question. Gets an A plus for the show and I only get a B minus, so that's pretty good. So yeah, that's a perfect way. You know, one of the compelling offers is scarcity at urgency. And I know we're not offering a product here, but when you negotiate and you say, look, i'm working with eight vendors right now, and I'm going to just select my top five, that's compelling.

32:29 Exactly. That's compelling, and people definitely will react to that. Now, some will tell you to take a hike, which allows you to eliminate somebody quickly. Just make sure it's not your most important supplier. And when I say most important, I mean the best selling or the best or the most needed. But if you have other vendors, you could definitely negotiate that way. That would be an excellent way to do a bunch of these things, because things like better pricing. Everybody thinks you can't reduce prices from the price list. I can't tell you how many backroom deals are made all the time, and I used to make them.

33:11 But you have to ask, yeah, and you have to keep your mouth shut. You can't tell anybody else that you've got a better deal, obviously, that would kill it. That's a good point. Yeah, And then but you have to ask that always backroom deals made, whether whether it is free freight, whether it is lower prices, whether whether it is a shipping delivery, whatever it is, there's always backroom deals made. And so the other thing you can negotiate is faster product turnaround time. Remember we talked about speed of delivery. This is how that that you're going to decrease costs by getting product faster from the manufacturer or distributor. If you, once again, if you increase your speed of deliver where you reduce your costs. Speed of delivery is often neglected and improving process.

34:04 It's speed of delivery. Negotiate minimum quantities. Sometimes vendors have these certain high quantities and you end up over buying as a result of these minimum quantities because you only need five and the vendor requires ten. Well, you've got to negotiate that minimum because you know if you're going to have carry over, it's going to impact your cash flow. Next is negotiate the elimination of restocking charges. I never used to do a business with a vendor if he charged me for restocking. Restocking is when you take a you buy a product from a vendor and you have to return it. You have to return it, maybe because it's defective, or you have to return it because you don't need it anymore. Now the customer might have canceled.

35:04 Some vendors charge a restocking charge, meaning you send the product back and you charge They charge you significantly too, by the way, for the costs associated with bringing it back into their warehouse. And so that I don't do business with vendors who don't who have restocking charges. But if you do have restocking charges and you're with the vendor, you need to negotiate that. That's another area. Look at all the areas we're coming up with to negotiate. Then you can negotiate better packaging and more efficient ways the product can be handled. You know, if you think that that something needs to be done to the packaging for your product, maybe not somebody else's, but for your product, ask negotiate orders being able to be canceled without penalty. Uh.

35:56 You know this is the restock This is another version of the restocking charges. You know, you should be able to cancel orders without any penalty or cost, negotiate exclusivity in a region. That's something, believe it or not. I can't tell you how many times that I asked for exclusivity and got it because I was doing enough volume. But I asked for it, and you know, there were others where I got burnt on it at the beginning, when I was new to the business. I got burnt on that where where a competitor would say, don't sell this person that product, and they would win and we couldn't buy it, and it was a great selling product.

36:49 You know, there was a time where we could not sell CB sportswear, and CB Sportswear was like the most popular. My competitor shut us off. Now that's illegal. But because of the twists and turns that you can't prove it that my vendor did that. Because you can't prove it, it goes, it goes by the wayside. Now some people have gone all the way, some people have lost cases, some people have won cases. But it's a risk, big risk, if you're going to try to sue a vendor for trying to negotiate with a vendor exclusivity. So it happens out there. Believe me, I've been I've been in the I've been right in the thick of it. And of course, negotiate competitive prices. Also make suggestions if the suggested retail is too low or too high. So we covet about I don't know, twelve or thirteen areas that you can negotiate better pricing. Yep. And so now let's go into overhead, so that those are all those areas reduce your cost of good sold. And those can be done over and over and over again. So let's find the five percent or more that you could decrease overhead. So we talked about renegotiating your lease, but you could also relocate your

38:22 place of business. If you're not under a lease or the lease expires, there're somewhere less expensive. You can audit your overhead vendors and obtain new quotes. For example, audit your insurance policies. Obtain new quotes. You should always get multiple insurance quotes for all commercial insurance policies. You should audit your internet and phone services selling landline mention a competitor and most companies will give you a discount very quickly. I can't tell you how many different companies out there. As soon as you say you're leaving or threatening to threatening, all of a sudden, the price drops. It's like magic, it's amazing. It's amazing how that works. Work with your CPA to understand all the tax write offs that are available to you. You negotiate blanket purchase orders for discounts.

39:16 A blanket purchase order allows an organization to bump together purchases that would otherwise happen over an extended period of time and receive quantity discounts. Now, make sure that discounts are significant enough and the quantity purchase will be used over a reasonable period of time, because if not, you have a lot of carryover and cash flow loss. You can also audit your in house services and see what can be outsourced like accounting, it, bookkeeping, CFO services. Look for reductions in waste, you know, materials and supplies, utilities. Ask employees for suggestions on how they can reduce material supply and utility waste. That's a great way to get employees involved. And when somebody, if you implement an idea somebody has for cost reduction, go ahead and bonus them.

40:09 That's a great way to get that's a great way to get ideas. You cancel dudes and subscriptions. If you review your credit card statement right now, many people have forgotten about certain reoccurring costs that they have, certain subscriptions that they have, and they forgot about them. Maybe you can replace more expensive outside services within house. So sort of the reverse. If your outside service expenses are more expensive in the areas of let's say janitorial or landscaping, maybe you can convert that to in house and then solicit employee input as I already mentioned for efficiency improvements.

40:55 Organized stockroom and storage areas for access inventory and supply, or inventory and supplies you didn't realize you had. That's another thing. So let's say you have inventory, you go into your stock room and say, I didn't know we had this, or how did this get here? Or yeah, that's what happens. And you know, to me, I used to if I used to ask the vendors to take it back, even if I had it for a year. Oh wow, yeah, yeah, absolutely, because once again you might they might say no, and what's the worst that can happen? Nothing, nothing changes, But sometimes they do it because you're a good customer. They want to retain customers, especially in an economic downturn. They don't want to lose customers or or or make customers feel uncomfortable or angry. Negotiate lower rates with credit card companies. You know, many times credit card companies will lower rates if you if you pay on time, but you have to call them. Yeah, I can't tell you how many times I was able to reduce a credit card interest rate just by making a phone call.

42:11 You know, if you have allows the credit score, that's going to be difficult to do. But if you have a decent credit score, you'd be surprised how many times they'll reduce the rate. Be creative to reduce the financial impact of benefits or reduce over time. Reduce your hours of operation. That's another way. By the way, reducing the hours of operation allows for a more you know, it's like once again scarcity and urgency. You only have eight hours for production. They have to get more done versus the ten hours they were working. You also, like, if you're a retailer, you can make your hours be the equivalent of one working shift, then you can, you know, focusing on the productivity of employees, inspecting their work with obviously that is amazing how many times if you inspect their work and will normally raise productivity twenty percent because they'll especially if there's surprise inspections because I never know, they never know when you're going to show up. What marketing is not working and burning cash? A review of that.

43:28 It's an important one. Yes, that's right, and then review transportation vehicle costs. Now. Cost cutting normally impacts your employees. For us is what we talked about a little earlier. Sometimes they need to be sold on the idea. So you have to explain to your staff what they will need to that they'll need to make some changes, and that because the company needs to make some cuts to maintain profitability. Outline the cost to be cut, Outline the timeline for implementation, and outline the reason is why, and as appropriate, as I mentioned earlier, offer a reward or incentive to staff or fulfill on their duties to help cut these costs. I mean, that's a great way to bonus people. The more that you can be specific with implementation details, the more likely you are to succeed. So chookey, if I answered all the questions that are in the chat, I think it is time for compliments absolutely.

44:28 And not only did you answer all the questions, Michael, but you're handing out A plus grades, right. I mean, I think the students, the custum are really excited. So look very excited about our business compliments segments. We have five notable business owners that Michael and I want to recognize. So let's start with the first. And by the way, this. This segment is a national representation of business owners coast to coast, so west coast, east coast, Midwest. Even the South. So just very very excited. Beth leipolled Warkhorse Integrations, Michael. They do something really interesting. So they are software integration specialists and for two decades they've used a customized application programming interface or an API to really connect strategies to help companies connect their software applications.

45:21 To each other. So really good work by Beth and team. The second business complement Dan Romano with Adventures in Learning. Very creative business name, by the way, So they combine adventure with education, so ed Ventures in Learning. And what then and team do is they specialize in aligning employees with their companies' specific strategic initiatives. And they do this through kind of a unique and interactive process. They've got this thing called a process venture map, so just really really intriguing. The third Tim Wilson Facts and Feelings is the name of the business. It's a data driven business consultancy, obsessed constructively, obsessed with less and better. So Michael, they figured out how to do more with less, so we should.

46:20 The savings right there exactly. And then the fourth business compliment is doctor William D. Clark. He's a PhD and an MSc as well, so this is interesting with not pro Logics LLC, and they are experienced with dietary supplements and natural and nutritional products. The last, but not least Mark Stendel with Hawthorne Payments, and Michael, look, I I'm fascinated by what market team do. The more I sort of learn and the more we learn about what they do, just the more I'm fascinated. So they've figured out a way to provide a fair and transparent credit card processing service that's available to small business owners twenty four to seven. They've got the sort of dedication and commitments standard of excellence and it's just embedded into their culture. So hats off to Mark and team with that. Michael, I'll toss it back over to you.

47:22 Yeah, thank you, Chokey. So, yes, you know I interviewed. One of the things that we do is we interview business owners to the next edition of our book. Now why we why do we have additional additions to our book? Well, business is always changing, that's why. And because business is always changing, and because we want to make sure that our strategies work in a wide variety of industries, we interview business owners. And several of the people that Chucky complimented today, our business owners that I had viewed and that Chookey interviewed, we that we collectively interviewed. Yes, and so I really I want to fin it's our token of appreciation for interviewing for the next edition of our book.

48:15 But in addition to that, these business owners were able to learn strategies that their competition isn't doing, and so, you know, strategies like the conversion formula, strategies like compelling offer. So and look, Michael, I'm quite energized by this initiative and collaborative with you, right, I mean this in some ways it's our contribution to the business community. So hots often gratitude for sure to you on this Michael and your leadership, and. Yeah, thank you, Chicky. And if you want to be interviewed, go to NeXTSTEP CFO dot net, click the contact button and put your information in and just say you'd like to be interviewed for the next edition of our book, and we'll be happy to do that and you'll learn a lot. You'll learn a lot I had. We had as a matter of fact, Chukey interviewed a business owner uh in the rug cleaning business the other day and he was over overwhelmed by how much he learned and how much his business needs to be worked on. So that's just, uh, it's just one of the benefits of doing a book interview absolutely well, Chokey. To get a copy of the book Powerful Business Strategy, simply go to our website which is www dot NeXTSTEP CFO dot net.

49:35 It's totally complimentary, it's it's chokey and I's uh contribution to the business world. And until next Monday at New Eastern Time for Chucky Obio. My name is Michael Baberina. And remember, don't keep doing what your competition is doing. Thank you. You have been listening to Powerful Business Strategies finding out that everything you ever learned about growing your business. Is is Wrong? Tune in next week and every week at noon Eastern time on W four CY Radio with your host Michael Barbarita of NeXTSTEP CFO and moderator chugy Ovio