Overcoming Bankruptcy and Finding Business Success - Success Inspired

Episode 62

Overcoming Bankruptcy and Finding Business Success

Ean Price Murphy helps successful entrepreneurs set up an easy spreadsheet-free cash-management system that works with your existing habits to get you at a glance clarity … so you don’t have to learn accounting to be permanently profitable.

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Highlights:

  • (00:00:13) - Introduction of today's guest - Ean Price Murphy
  • (00:17:43) - Give every dollar a job and give every dollar a home.
  • (00:19:39) - Juggling money around, luck of integrity and responsibility
  • (00:22:19) - Don't treat your finances like a yo-yo
  • (00:23:36) - How to figure out your business maths and what really matters in the end
  • (00:26:59) - Ideal place to start with when trying to figure out the purpose of your business.
  • (00:35:10) - Pricing & Value, 2 ways to decide how much to charge
  • (00:36:46) - Simple maths formula to figure out how much your business needs to make per year
  • (00:40:32) - How to figure out your initial investment to start a business
  • (00:45:33) - Ean's story about overcoming bankruptcy in her early 20s
  • (00:53:21) - What happens when you declare bankruptcy

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Transcript
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Welcome to the Success Inspired Podcast, a business and personal development

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podcast to help you accomplish more in life and realize your true potential.

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And now here is your host Vit Muller

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Hello.

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Welcome to another episode on the success inspired podcast.

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I'm your host.

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And my guest today is a survival for personal bankruptcy in her early twenties.

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That started her on the path of financial literacy.

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She was not born an accountant yet.

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She managed to turn that experience around, into launching

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a successful bookkeeping business.

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Fast forward to now she helps accomplish intrepreneurs to set up an easy

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spreadsheet, free cash management system that works with their existing

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habits to get them at a glance clarity.

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So they don't have to learn accounting in order to be permanently profitable.

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And who wouldn't want that.

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Right.

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So please welcome to the show Ean Price Murphy.

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Thank you,

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creativity in the show in

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great to be here.

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So I've already introduced you a little bit, but what's something

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that not many people know about you.

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Oh, I'm kind of an open book.

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I think most people know quite a lot about me.

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You know, all of the things that people don't know sound a

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little, a little stereotypical.

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I love to travel, but, for me that means that I had the opportunity

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to, study salsa dance in Havana.

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So there we go.

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Nice.

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And what's been happening in the wall of academy.

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Thankfully very little numbers are very reliable and they're very

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calm and, and, they either, they either make sense or they don't.

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And if they don't, it's one of the only places in the world I've found

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achievable perfection, you just got to keep looking, you'll find the

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problem and you can always solve it.

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I spoke to someone the other day about that.

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Say, you know what?

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Like you could work with people.

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You can, you can work with designers or, you know, you can do all these

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other things, but there's one area of business that you can always rely on.

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You don't have, there's no pitching.

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It's, it's always going to be true.

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It's no lying and it's numbers and it's counting always rely on that.

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And there's a, and there's piece of that as well.

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Right?

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I think so

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what do you like most about your, your, your line of work other than this?

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Well, I mean, I, I, what I, this is, I don't know that I

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love this about my industry.

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But what I love about my job specifically, or the company

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that I run is that it really is bringing those two things together.

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It's allowing me to have that ability to achieve perfection, which I definitely

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like, but because I, myself, I'm a small business owner rather than

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working in a corporate accounting firm.

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I still have the ability to interact, with really interesting,

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fun people on a day-to-day basis.

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And, you know, we, we work with people that are doing really

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amazing and cool things out there.

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And so being able to sort of, you know, support that and be a part

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of that is really satisfying to me.

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And, and I love working with business owners who are ready to make that

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transformation because watching that.

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Cloud lift, you know, the CS part, the numbers suddenly makes sense

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to them and their shoulders drop and they breathe a sigh of relief.

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you know, to me, that's, that's, that's my food.

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I live for that.

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And, and it's so nice to be able to have both of those together in the same place.

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I love it.

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And you're totally right.

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It seems to, to lose passion for, for what you initially may have left when you, when

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you not always, but not, not always the case, but, you know, in some cases in a,

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and I have noticed with some people that are, that I know, in, in, in an example

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of accountancy, initially they love it, but then they go into the corporate gig

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and, and it just, you know, it's all structured and, and, and you're just.

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You know, not being an employee it's, it's bad.

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I mean, it's nothing about that.

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About, you know, in some cases it just becomes like tutored

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or teen you're too constrained.

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It's too many roadblocks and you have to report and, and it just becomes, it

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becomes too much of a job and less of a, something that you initially like

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it because you really like loved it.

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You kind of lose the passion out of it.

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And I know a few people that, that have been too, and yeah, it's kind of sexy.

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It does suck in a lot of times it's just being, separated from the, the,

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the results that you're producing.

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You know, if all you're doing is producing the reports and not being able to see

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how that affects the decisions and being able to help people make smarter choices.

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You better hope that you've got great coworkers that you really

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like.

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Some decisions that numbers can help business owners make.

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I mean, what, what can it help them with?

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That's why I love them as I, you know, for me, I think that, especially in

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sort of small business or, or lean and mean organizations where it's

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one to three partners, you know, less than 20 employees or sometimes down

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to just one person themselves, it's so easy to get caught up in what you

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think you're hearing the trends are.

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Or you've had a brilliant idea in the middle of the night, or, you know, you

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just sort of have this gut instinct that this, this is really where we should go.

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And all of that is great and really important.

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We need that spark of creativity and it needs to be balanced

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against the reality of the numbers.

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So, you know, when.

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Because this is at least in the U S you know, 50% of small businesses go

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out of business in the first year.

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And 70% are out of business.

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After five years of the businesses that fail almost all of them, 82% say

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that it was cashflow was the reason that they went out of business.

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So not that people weren't super excited about buying their products or that they

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couldn't find the right path to market, but that they didn't know how to manage

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the cash so that they had the money that they needed when they needed it.

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And to me, that is a giant tragedy, right?

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And so either that's because you get this middle of the night, brilliant

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idea, but you haven't tested it enough.

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And so you waste a bunch of time and money trying to sell something that

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people aren't interested in buying, or they are really interested in buying it,

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but you haven't really thought through.

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The, the cycle of how we're going to get this product out.

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How much time do we need?

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How much is it going to cost us?

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Where are we going to get that money from?

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You know, and so explosive growth can take a company down.

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And we saw that however many years ago, it was 10, 15 years ago.

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Anytime a small company would end up on Oprah's list.

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They would like be blown out of the water.

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And, and a lot of them had to fail because they couldn't keep up with

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this insane demand that they had no structure or systems to handle.

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Okay.

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So chaos.

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So we like to go from chaos, chaos to clarity so that you can see

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what's happening and then make really wise decisions around it.

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You can temper your feelings about something by saying, well,

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but this is what the numbers say.

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Now when we can talk about the Kaos example, why do you think it is it, is

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it because they suddenly get so many new customers, they can't handle it.

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And the reason why they fail while it puts them down is because of the

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overwhelm, the quality then goes down, which then affects the reputation.

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And then it goes like demand goes quickly up and then quickly

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down, is that what is your right?

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or it just goes, it never goes down because they can't fulfill

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the obligation that was created and they have to refund the money.

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So they, you know, there are businesses that go out of business with people,

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clamoring for their product, but if their supplier shut down, if they had

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a single source and their supplier shuts down, or if they, you know,

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live in an area where they can't get the right kinds of employees in.

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You know, if you're, even if you're just selling pizza, if you don't have somebody

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to make the pizza, you got no shop.

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And, and so often in small business, what happens is the owner

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ends up trying to do everything.

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And sometimes it ends with right with them having a heart attack, you know,

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like it ends one way or the other

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quite literally, you're not joking here.

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That's actually what happens here

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quite literally.

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Right.

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And that happens in corporate as well.

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Just people don't see the, the fallout the same cause usually they have a really

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strong health insurance and pension plan.

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So there's, there are risks to being a small business that that

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really aren't anywhere else.

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But the rewards also, you just don't find the rewards anywhere else.

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You know, it's really interesting how you unpack that.

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What is, and this is what helps me plan understand what helps people

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buy into the idea of the number's been really important and planning.

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Cause like when you unpack it like this, what are all the different consequences

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from your business can crash down to your health, to your relationships.

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I mean, if your business going down and you're taking it on yourself, you're

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the business owner that in Australia fix everything and you're just flipping the

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heads, changing the heads in one day.

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Like it's not human possible at all to be productive.

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You're going to go nuts.

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That's going to affect your, you know, what happens at home,

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your relationship, your health.

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And then, I mean, I would, I would bet there is even cases that, that

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led into homelessness or whatever, you know, like it's it's yeah.

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It's consequences.

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So where's the fight balance though.

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Like how do you, how do you balance it out between, you know, there's,

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there's a level of in business, there's a level of embracing bit of chaos.

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to perfection because perfection kills progress.

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Right?

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We know that.

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So you can't always like have it all laid out.

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Perfect.

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And then go because then, you know, moving and you need to move and move.

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What I mean by move, you need to start making some profit.

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Sometimes that requires a bit of, a bit of chaos and bracing level of

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chaos, fixing things, improving things, tweaking things, optimizing it as you go.

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So where's what would be the right balance?

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What would you, your vice sort of be on, on that?

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A lot of that has to do with the personality of the business owner

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and what their resources are.

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So if you're, you know, a single mom who has a job and you're starting a

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side hustle on the side, you know, making candles, whatever, and.

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You want to know, like when can I leave my full-time job and really do this?

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There's going to be a period in there that's tight.

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And, so the numbers will help, you know, what's the income I need to

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replace in order for me to do this.

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you know, I th I think it's, it's like jazz, right?

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It has to be half structure and half chaos.

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Otherwise, if it's only chaos, there's no music.

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And if it's all structure, it's boring.

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Right.

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So being able to find, and so I, you know, I really think of the reason I say jazz,

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partly because my father's a jazz musician is because it is the structure that allows

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the improvisation to be music instead of.

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I love it.

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Yeah.

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Because you need to be able to pivot in business as well.

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There's trends there's yeah.

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You need technology that you might want to use.

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There's new ideas, new, new ways to do things.

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So yeah.

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That's definitely, you need that room for creativity to be

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able to leverage off, off that.

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Yep.

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So in the idea of, you know, our mom, who's making candles, that's

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her middle of the night idea, right?

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Oh, I'm an, I know how to make candles.

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My friends say they want them, I'm going to try it.

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Great.

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Well, before you go out and spend your entire life savings on

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wax, how do you do a small bat?

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And, or even before you make a batch, how do you say I, you know, everyone's

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telling me that this is a good idea, which is not the right question to ask

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the question is, would you buy from me?

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Would you buy this?

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Because everyone's going to tell you, it's a good idea.

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They love you.

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They want to support you.

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But if you ask them, would you buy one, you might get a very different answer.

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And so that's what matters, right?

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Is not.

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Do you have a likable product?

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Do you have a, a sellable product?

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And then is that a profitable product?

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People liking your product?

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Doesn't turn into doesn't turn into profit.

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No people buy it.

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Can can, unless you mismanaged the money.

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Right?

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And so same thing, if you, if you fail to factor in the labor time, right?

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If, if she's just thinking about the cost of the wax and the Wix and the

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jars and forgets to say it takes me, you know, six hours, it takes all

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day Saturday for me to make this.

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So now I have to hire some help to make sure that, you know, the house is

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cleaned to the kids are fed or whatever.

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Cause who knows, like there's other labor factors that need to be taken in.

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And so even cause that's where most people go, right?

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Well, I'll just sell more, but if you don't have a healthy profit

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margin, if you're not pricing correctly, You're you're just

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burning your way down to bankruptcy.

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it's actually a really good point.

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You're right, because you got a, you got a cost per product per

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each unit and it's, you know, it's not too difficult to work it out.

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Right.

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You've got the material used, you've got the cost of the production,

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if it's possible to calculate specifically their product.

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so that's, that's that, and then you've got, obviously your, your

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fixed costs, your company costs your everything else that you need to

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pay to keep your company running.

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so that's an important, yeah, that's an important distinction to

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make now how what's the best way to go about it because like, okay.

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The cost of the production associated today, you know, that's, that's

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an easy one, but how do you try to see how it can best say this?

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how do you best work out a financial plan?

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How do you best, how can business owners out there best.

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Structure it, the financials around it.

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Let's say if you have, yeah, because like, because ultimately you're gonna,

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you're gonna put that price in there as well, because you want to make a profit.

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Like if you sell like an example of that lady, right.

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You're selling one candle and you know, okay, this is how much it costs

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me for the box for the, for the notes.

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And then many decoration, maybe I'm putting on a little pieces of

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decoration and how many pieces.

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And I know the exact cost of that.

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And then on top of that, I've got, these other costs.

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So how do you, how do you calculate these other costs?

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on top of that?

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Yeah.

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So the idea is to keep those other costs as low as reasonable.

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And what I mean by that is you have to know the difference between what is an

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expense and what is an investment because marketing, if you're doing it right.

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And if you're measuring it, isn't.

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It's money that you spend that will bring you back more than you laid out

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at some point might not be right away versus an expense of paying rent.

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Once it's gone, it's gone, right?

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There's no, there's not going to bring you money back in,

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unless it's a storefront rent.

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so, you know, if we just continue with this exam or let's switch

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it up, let's find a new example.

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What about a photographer?

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Right.

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A photographer has to have a location to shoot.

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So, so the photographer would, you know, digital.

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So there's their sort of equipment cost, which is a one-time cost and

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some things that need to be replaced.

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mostly

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the microphones, the lights, all that.

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there's their time and labor.

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maybe they need a photo assistant.

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Maybe they don't, but they, but they'll need somewhere to shoot.

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And again, some photographers get very creative and do

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outside portraits to avoid that.

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So, you know, if, if the decision is I need to pay rent

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because that's an investment because I need to have a studio.

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Great.

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So then you have to think about, well, what's the rent on your studio and if you

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charge $250 for a portrait session, how many portrait sessions do you need to do

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in a month in order to be able to pay?

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Right.

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And is that a reasonable amount because people also forget when you're

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a business owner doing everything yourself, you really can only be

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producing about 40% of the time.

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You really need 60% to do the admin and the marketing and the sales and

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the contracts and the follow-up and the, you know, all of that other thing.

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And so people think they can work 40 hours and that gets them 120 hour

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work week and it's not sustainable.

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So being very clear about, you know, when I sell a portrait package,

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there's not just those direct costs that you were talking about and the

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indirect cost of overhead, but also all of the ancillary costs around it.

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How, how long does it take me to get a new client?

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How much does it cost me to obtain that client?

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And those are all things that are a little bit harder to pinpoint.

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And that's why, you know, the I'm deeply in love with the system that I

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teach, which is not my own it's based on the book profit first by a guy named

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Mike because yeah, he's a good guy,

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a really good book.

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I've got to get him a bookshelf.

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It's called life in half a second.

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Anyway, anyways.

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So that his system essentially comes down to give every dollar a job and

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give every dollar a home meaning put money that has a different purpose

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in an actual different bank account.

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So you have a bank account for your direct costs for the production costs.

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Really good point.

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That's a really good point.

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You know, I actually, this is funny that you say, cause I've, when I was,

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I was running a gym a couple of years back and I was about to have some

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employees for the first time and I kinda just did it like intuitively.

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I just, I just knew that, you know, like you've got to pay super and

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superannuation here in Australia.

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you guys don't have superannuation in the U S do.

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Nope.

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some other crazy.

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Oh, it's not a tax.

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Oh, it's kind of a, it's not a tax.

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It's like a, for your retirement.

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Oh, yeah, right.

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Yeah,

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no, we gotta do that over here.

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Like our social security, we have to pay into social security,

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but yeah, so we got a superannuation, work, the, the insurance, the word cover.

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anyway, so you've got these, and then you, obviously, you got your taxes

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associated with everyone's, everyone's wages that you need to deduct.

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So obviously pay them their weekly or fortnightly, whatever their paychecks,

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but, you know, there's as that mom.

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And so what I did is I had, I had an account for the superannuation, what I

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would accumulate the 99.5% from every time I did a pay rent, I had another

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account for, for the taxes and then the third account for, there was a third

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account for something else, but yeah.

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Continue because that's actually, that works as long as it goes

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to that moving things around.

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Right.

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And, and, and that's, I mean, that is the system, right?

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It's it's there, the book has an outline of a more sort of intensive

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and structured approach to it.

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But the reason that it's so great is because it does, it works right.

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Then you can look at your bank balance and say, I've got

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enough, or I don't have enough.

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And so that's where you begin to borrow from other places.

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But at least if you're borrowing from other places, you know, that

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something is going wrong, right.

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I should be able to cover my overhead out of my overhead expense.

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I've over committed to something in some way, or I have failed

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to meet my sales target.

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And so now I have to go steal from the government essentially by borrowing

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from the funds that I owe them.

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Hopefully I'll put it back before I have to pay it.

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And so it's an, it's an early warning system to say I'm running out of money.

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I can't make, I can't meet my obligations because that's what

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business owners want to know.

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They don't care much about any of the stuff that accounting cares about right.

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While they want to know is like, am I good with the government?

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Have I paid what I needed to pay?

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And have I paid the least amount that I can legally get away with?

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Is anyone coming after me?

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I don't even know.

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Nevermind the government by your employees, like you have an

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obligation to pay your employees.

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Like I've been, I've experienced so many times, like I've did

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something for somebody and, you know, I wasn't even an employee.

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I was just like doing some, you know, invoicing them for some

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services that are provided.

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They didn't pay me, you know, like they did not account, they didn't

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manage their business properly.

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I don't know what they did with their money, but like I had to

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harass them for a month, four months, four months, four months.

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It took a year.

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Yeah.

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Yeah.

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Like 15 months to get paid.

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So to anybody out there, you guys listening and you feeling like

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I've got a business and it takes hustle and you know, sometimes you

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need to like kind of, take risks.

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Yeah.

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You have to take risk, but you also have to be responsible to the

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people that are working for you that are providing you service.

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That helps you grow.

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Like if somebody did service for you that let's say, if somebody build you a website

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that has help you acquire new customers, you got to pay that guy or that lady,

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whoever did it, you got to pay them.

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If you have an employee and they're working their butts off

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for you, you have to pay them.

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That's an obligation.

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So, I'm, I'm ruthless on that.

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Cause I, I hate when people do think that, because it's, because it's, it's

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because the money is in the account.

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But they feel like it's, it's their money.

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It's not their money.

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It's someone, someone else's money that they need to pay out.

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And so the idea of having that structure and that discipline and having it in

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individual accounts and being honest and being ruthless to realize that that is it.

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Now I've put those money in there.

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That's no longer my money and I'll have to work with what I've got left

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and that's how it keeps you honest.

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And so we actually recommend that there be a specific account for the

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owners pay, because again, you know, a lot of times owners are treating

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their finances, like a yo-yo.

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And so they, they go without a paycheck for six months so

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they can pay everybody else.

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And then they get a big payment and they take it all and then it

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starts the whole cycle over again.

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And so being able to have a, an amount set aside so that again, you can see

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am I being paid a reasonable salary based on what my business can actually

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afford, rather than just what I need to take home or what I feel like taking

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today more often than not businesses can actually afford to pay their owners

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more than the owners are taking, because they're paying too much for overhead.

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And so again, once that becomes clear, I should be able to pay myself

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X percentage out of my business.

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And the reason that I can't is because I'm spending too much on rent.

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Now I have a reason to go look for a cheaper rent right now.

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I have a reason to negotiate with the phone company, or now I have a reason to

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come to the employees and say, we need to be more efficient with what we're

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doing, because if I can't get these costs down in a nice way, I'm going to

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have to start cutting and burning and, and finding the way to sustainability.

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Just while we're talking about the, the calculations, right?

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The examples of, you've got your fixed cost and then you get your, you get

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your cost per product sold or cost per particular service provided.

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Let's say if it's a day of photo shoot.

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So therefore the blueprint or like a simple formula for anybody out there,

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be, workout what's your minimum.

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What's your minimum amount that you need to spend in order to be operational.

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So what's the minimum amount that you need to put into your

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marketing, to acquire customer.

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What's the minimum amount to, you need to put into the systems.

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Let's say, if you buying a software to manage your, your workflow and manage

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your team, what's the minimum amount of things that you know, that you need to

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pay for so that you know, what that fixed costs total fixed customer needs per, and

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let's say generally we like per month.

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but it doesn't have to be whatever works for you.

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Right.

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and then work out, obviously what's the service or product that you want to offer.

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Who's the ideal audience?

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Who is your market?

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Are they, you know, low income, middle income, high income earner.

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He's your, you know, and then is your service tailor to those and

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then that will then govern, okay.

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How are you going to price it from, from a marketing perspective?

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But sometimes if you price it too low, might not be appealing.

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You might have to price it higher, whatever you do there, but work out how

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much you want to charge for what you sell.

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And then quite easily you'll then work out how many of those units you need to

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sell in order to cover your fixed costs.

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But the way I do it is you need to, I was kind of ask you about, I'm

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going to give you the answer, but let me just finish this and then

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you can expand on that because I'm sure there's more that goes into it,

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but then you need to also work out.

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Okay.

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So out of those units that you sell, out of what you sell the product or service

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out of what you sell their work out, what's the, net net, the gross profit.

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That's a gross profit.

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So the profit would be debt.

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What's the fixed cost.

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That way you've got the cream on top.

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That's like your gross profit.

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And I've worked out.

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How many of those.

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you need to sell or basically divide your fixed costs by the gross

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profit tells you how many units you need to sell and that's your yeah.

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And that helps, you know, how many need to sell.

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And then obviously on top, it you've got taxes.

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So you need to take those into account too, but they're just get the

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director to have your gross profit, which then turns into net profit.

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Would that be like a simple formula for somebody out there thinking,

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Hey, I've got this great idea.

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I want to sell this widget.

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How do I get to start it?

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How many of these would I need?

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So the short answer is yes, no.

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And the reason I say no is not because that isn't exactly the formula because

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it is it's that simple and formula don't co-exist for most business owners,

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most business owners would rather pull their teeth out than do that.

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Okay.

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And

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would that be an ideal, like if people did that,

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it would be a great place to start, but again, back to this idea of

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half structure, half chaos, it doesn't matter what you plan.

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And this gets back to what you were saying, right?

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You can plan all you want, but you're not taking motion.

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And so you're not seeing what really works.

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So I always like to start with, what problem am I solving for my ideal client?

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Is it the problem that I really want to be solving?

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Like, do I enjoy this work?

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Is this the work that makes me happy and let that kind of carry

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through some of those other answers?

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So again, I could be doing the same work that I do now in a corporate

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environment, and I would be much less.

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So it's, it's, it's crucial to know, not just that you like to do the work that

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you do, but who do you like to do it with?

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In what circumstances?

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Over what time, you know, how do you create your ideal environment and

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then who does that most appeal to?

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And that's your ideal client?

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Not a 30 year old man who lives in a suburb and has three kids.

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Like, unless you're a 30 year old man that lives in suburban has three kids.

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I don't know if that's really your ideal, like why, so, so you know,

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and I know I'm saying that this is a numbers person and then suddenly

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getting all the way from the numbers, but that's because again, I, I see so

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many business owners get held up by the, how do I even begin to think about it?

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Figuring out what it costs me to to get a client, if I've never had one, right.

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That, that thought alone is enough to stop anybody in their tracks.

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And so I go forget it.

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If you don't, if you don't know it yet, don't worry about it.

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Worry about what is it you want to do?

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Who do you want to do it for?

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And how are you going to explain how you are solving this problem

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better than anyone else for them?

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Not in general for them again, bookkeeping, right?

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It's not rocket science.

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If someone asked me what makes me better than another

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bookkeeper, I can't answer that.

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I hope that all bookkeepers.

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I know that they aren't, but I hope that all bookkeepers are.

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Honest, careful, you know, ethical detail oriented.

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I'm not different.

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That's the baseline.

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The only thing that makes me different is me.

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So if you like my personality and if you like the way that I work,

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great, we'll do fine together.

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If you are someone who wants to be able to call me and get me on the phone anytime,

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day or night, that's not how I work.

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That's not going to work for me.

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You're not my ideal client, you know?

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So you need to find someone that's a good match businesses, shockingly, like dating.

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So, so then from there you can begin to say, what is the value that I'm providing

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to this person back to our photographer?

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The value that I'm providing is not a picture.

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It is capturing a moment in time so that you can share it with others.

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Right.

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This is what my kids looked like at age, whatever, you know, this

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is what my grandparents looked like before they passed away.

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It's it's documenting the moment, the important moments in our life.

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I did not thought, are we going to talk about like, you know, like I thought

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we're going to talk about lots of numbers.

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We are, we are, but we are, and this is so important for people to

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understand this is just, you start unraveling it, it goes much more.

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It goes much more in depth.

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And there's so many like lateral consideration.

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This is actually a really good one that you just said, this is,

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this is marketing one-on-one.

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And like, I don't know if it's going to be part of the recording, but at the

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beginning we were just speaking something and I was talking to you antibody.

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You know, one of the most, one of the most powerful skills that any business owners

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need to learn and should learn when they start is the power of copywriting, because

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everything is marketing any business.

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And I don't care what business you're in.

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You need to be able to market.

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That means you need to be able to Conway your message to your target audience.

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And literally the way you write things is what's going to either make

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your advertisement convert or not.

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And in that example, you just said, well, what is the photography?

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It's not, you're not selling a picture.

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You're not selling a, you know, a snapshot.

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Here's a, a digital file of an image.

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It's the capture that experience to capture that moment, right?

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So it's understanding how to play on the wards and get to the root of what you're

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truly what the, what the true value.

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Right.

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Yep.

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And so it's just a picture.

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You can do that on your iPhone.

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Why would I pay for that?

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yeah.

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So, so, you know, so back to the planning phase, if you're trying to

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work out okay, how many things I need to sell to cover my , my fixed costs.

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Obviously, once you work out, who's your ideal market and what, what you

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truly love to do in consideration also your lifestyle as well, right?

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Like it's got to work for your lifestyle, not just what you want to do, but

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it's got to work with your lifestyle.

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like in your case, like you said, you're not just going to be picking up

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phone for, for anybody just like on the fly, because that wouldn't suit your

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lifestyle and that's, and that's great.

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so, so that's all day and then you need to work out.

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Okay, well, what's going to, how am I going to optimize it?

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Like, if I know I need to sell this man, It's the ancillary costs,

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like you said, how long is it going to take me to sell those?

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So one of those things that's going to influence that is how

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well, how quickly can you sell it?

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How quickly can you market something?

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And how can you shorten the path from somebody's eyeballs landing on your

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ad for the first time to them opening up a wallet and signing up, and that's

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marketing and sales, conversion, and copywriting, and many, many

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other things that are going there.

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Right?

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And so the reason that, that I think that that piece is important

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and framing it is important.

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And knowing what the problem you solve is which is marketing is

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because that affects your pricing.

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Because if you're saying this is me capturing, you know, a moment that

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you wouldn't have access to with your iPhone, no one else is going

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to be able to make it in this way.

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Then.

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You can charge, essentially whatever you want, the more you charge the

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different that your ideal client changes.

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Right?

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So if you wanted to do that for high school seniors, you wouldn't be able to

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charge necessarily $5,000 for a portrait because that's not in their budget.

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So that's a disconnect, but if you're talking about a

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high-end wedding photographer, go for it, that's probably low.

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So again, that's how, what you want and your pricing interfaces

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with your ideal client.

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So how that gets back to what you take home, et cetera, et cetera, the price of

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it is you, you then, I mean, what often happens is someone says, oh, I'm going

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to be a high end wedding photographer.

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I'm going to charge $10,000 a day.

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So now I have to justify that by rolling up in a really nice car and

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having the nicest camera and the best lighting and three assistants

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and a hair and makeup team and no.

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You've just, you've just taken a $10,000 income and dropped it down

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after you pay out all of those people.

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Maybe you're keeping a thousand, what a terrible business model.

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So every time you invest a dollar in any expense, anytime

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a dollar leaves your doors.

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No.

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What is it that this is going to bring back to me?

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How is this going to allow me to charge more?

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Because if spending all of that money allows you to go

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from charging 10,000 to 20,000.

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Great.

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But if it doesn't, if, if your, if your ideal client feels like the market value

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of what you're presenting is 10,000, then you want to keep your costs as

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low, as reasonable so long as it doesn't affect the quality of the product.

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Right.

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And then you've got two choices to make as well on that front.

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We thought when you talk about pricing, right, you can either try and.

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Trying to set your price based on a market pricing, based on a perception

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of what, like the market would be willing to pay, but then you're kind

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of playing the same game, like everybody else, and you're competing on price.

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And then the moment you start to do that, it might make you want to even

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start doing discounts and special deals.

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And it's just like a way down the rabbit hole option two is

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you can say you can sell based on a value, leveraged the value.

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So raise the value of what you're offering.

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Therefore you can raise the price.

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And so you no longer, you no longer competing on the price point with

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everybody else, you enter your own vacuum, you enter your own space

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and that's where you want to.

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Because that's where you're going to like, raise your prices, double your

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prices, even then you're competitive, but you will still sell as long as the

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value that you provide is much greater.

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And if you can convey what's the return on the investment for the customer

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in a clear way and predictable way and way that you've got, tried and

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proven with bunch of other customers strengthened wave some social proof.

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And then, then you're winning.

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Yep.

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And so the, the way that I approached the money numbers after knowing all of that is

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to say, how much do I want to bring home?

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How much do I want to pay myself?

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And, and then watching the profit margin, how,

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yeah.

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It's even right.

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It's even more than that because the idea is if I know that I want to pay

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myself, I don't know, $75,000 a year, then I would say, okay, so that.

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That's how much I want to take home and I can use the profit first

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framework to say, what percentage of my overall income should my wages be?

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Well, let's call it 40%.

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All right.

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So 40% goes to me, 5% needs to go, or 10% needs to go to just pure profit.

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That's my cushion.

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That's my emergency fund.

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That's my, what happens if things are suddenly the global

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pandemic happens, right?

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Where's, where's my business emergency fund for growth, for

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emergencies for all of that.

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So I want to set that aside.

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I want to set aside the money for taxes, and then I want to set

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aside the money for my operating expenses and for my direct costs.

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So that means whatever I need to do to cover all of that production cost,

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because those are the costs I know, right.

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I know how much it costs me to make a candle.

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I know how much it costs me to pay the taxes on that.

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Then whatever that number is, that has to be 60% of something.

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So if I want to pay, if I'm saying that a healthy business would pay

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its, its sole owner, 40% of the income, then, then everything else

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has to fit into the other 60%, right?

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The taxes, the profit, the owners pay, et cetera.

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And so that's what I say was okay, so, so what is that number?

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I have to actually pull my calculator out cause I can't do math in my head.

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So if I were to say, and this is so much easier than all of

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those other calculations to say, what is, what did I say?

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75,000 divided by 40%.

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A hundred and eighty seven, five hundred.

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That would be my sales target to know that I'm, that I'm able to cover all of my

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expenses, my production costs everything.

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And that's how I know that I can take home what I want to take home.

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That's awesome.

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Right?

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So

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much simpler, so much simpler.

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And then you break it down on divided by 12.

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So, you know, what's your monthly, and then you break it down to how many

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things you need to sell per month, week, day, and then off that you're all off.

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Okay.

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What's your conversion?

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How many sales calls do you need to make?

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If you know that if you do 10 sales calls and you sign up five customers,

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that's 50%, you can then play on there.

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You can unpack the rest of the numbers, and then that forms your KPIs

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or your KPIs, your key performance activities that drive your KPIs.

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Right?

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And so now you only have to look at two numbers every month.

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Did I hit my sales goal and is my business banking.

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Staying the same or getting better.

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If it's getting worse, I have to make an adjustment because

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something has been happening.

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One of my costs has been creeping somewhere doesn't matter which one, right.

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We all get obsessive about line items and budgets.

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And, oh, I spent over $10 in this category, but I spent

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under 70 in that category.

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So now what do I do?

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And it's so complicated and it doesn't need to be, all you need to know

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is what is my sales target for the month and is my bank balance holding

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strong or getting better the end?

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That's it.

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That's it

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simple, simple.

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I think we've unpacked the whole thing.

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I love it.

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I love it.

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You know, this is, this is so much value.

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I mean, I'm sure there's somebody out there right now, listening that was

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considering maybe starting a business and it was all, you know, a bit bit unclear.

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so I really hope that we've kind of helped somebody, clear that up now.

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I have one more thing to add on that, which is when you're starting a business,

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you know, you're not going to start with whatever, 187,000 in sales a year.

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Right?

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So whatever the divided by 12 is, let's just round numbers.

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Let's call it 10,000 while you're starting out.

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If you know that you need to be bringing in 10,000 in order to be

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able to pay yourself what you want.

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And, you know, you know that that's not going to happen through sales.

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The question is where is that money going to come from then?

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And so now, you know, I have to be able to invest $10,000 of my own

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money into this company a month to be able to pay all of the things.

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And so that's how I can see when my earned income starts coming up.

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Then my investment starts going down.

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But if I know that I only have $50,000 to start a business with, I now know I

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have about a five or six months, runway..

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Yeah, that's, that's actually really good.

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So bring it full circle all the way to the beginning, because we kind of

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covered only the, under the assumption that you already kind of operational.

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So this is actually really important.

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Like how much money you actually need to get started because bootstrapping

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it with nothing is super scary.

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And the likelihood that it's not going to work out is much, much higher because when

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you are not winning, you're not funded.

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Then you're more stressed when you're more stressed, your IQ goes down, it

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means you're more stupid and you make more, you know, you get worse decisions.

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So it actually is so important.

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So on that example of somebody transitioning from, let's say, they've

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got a job and they want to start, you know, their candle business.

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It is scary.

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And the best thing you want to do actually is because you've

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got a bridge already built.

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You've got one bridge there.

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You've got your income from your job.

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This other thing is not making any money.

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You got two options.

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I mean, you could go all in, which means you're going to have all the time on

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to learn that, which is, which is good.

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That's your leverage more time, but no income until they do.

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Or you could work extra at night building this thing, building that

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little bridge by bit by bit, but having that security of income, therefore

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less stress, also more workload.

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So it kind of, yeah, you kind of have to make it, make it, make a choice on that.

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but I think that's a better option.

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I think that's a better option slowly, at least at least to get to

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50% or at least establish systems establish your, operational workflow.

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So you have a clarity because if you do the first option and you

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got nothing, then you got chaos.

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But if you start with an established way of.

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establish, like if at least you got a plan, like established marketing plan

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and you've got a clarity and you've got your collateral ready for marketing, and

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you've got your production processes.

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Well, that's much easier to then go all in

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and I would say eat right even so, so I think a lot of people

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start with collateral before they have proof of concept.

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So I see a lot of people say, oh, I haven't started selling yet

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because I've been spending all my time building, building my website.

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Well, unless you plan to sell online, even if you do plan to sell online, like, are

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you sure somebody wants to buy this yet?

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Don't don't print a business card.

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You know, if someone wants your info say, oh, I'll just send you an email right now.

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I'll text you right now.

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Give you the info right now.

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Yeah, right?

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Yeah.

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That's the whole, like, don't, don't aim for perfection.

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Like don't worry about business cards.

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Don't worry about that.

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You can do it through an email.

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You can do it.

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You don't even have to have a few.

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You can just go with your own Gmail, prep, Gmail.

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Don't worry about domain go from there.

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Right?

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Because essentially it doesn't really matter that much.

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Like at the end of the day, like if there is a value behind what

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you offer, people don't care.

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Whether it's the MDM or it's a fancy website, like that stuff matters

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later when there's you want to scale.

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But if it's just like, we're looking for one or two or three customers

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who want to buy a couple of candles, literally just check it on Facebook,

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show them a picture of the candles, tell them about, you know, how they smell.

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And then literally I was like, who would want to, like, we wouldn't

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want to buy I'm building fi you know, I've got 10 next week.

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I'll have 21st people then put the hand up, I'll be me and I'll send you them.

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And then that's your proof of concept.

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And then exactly.

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And then the best, next thing you want to do is get them to get

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them to, you know, record a video or write it's just a Memorial.

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So you've got some sort of.

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Then build your website, put it on there as an example.

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Yeah.

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I mean, exactly.

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Right, right.

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Otherwise you're building a website that nobody cares about, and then

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you're going to have to try and go and get that social proof when

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you could have had that all along.

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Right.

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I mean, it's one of the things I really love Kickstarter about where you can

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create a project and see who funds it.

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Right.

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Sometimes it will be funded by people who just like doing that stuff, but it's

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a great way to see, you know, what, now that I'm ready to move beyond friends

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and family and my local influence will strangers buy this from me and

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without risking a dime of your own.

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And, and I think it's a good, it's a nice way for some kinds of products

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and services to, to test it out.

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And then your production

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is covered.

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Yeah, actually Kickstarter's a really good, really good smart option.

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I love that.

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now at the beginning I introduced you in, you went through a bit of a bit of

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a hill when you were in your twenties.

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Tell us about, tell us.

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Oh, was it like overcoming bankruptcy that goes, you know,

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that term it's super scary for.

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Some was like, you know, oh my God, this is debt.

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That would be my end.

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But is it really, I mean, you've, you've done well.

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So tell us about that experience.

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. So it happened because I was raised in a very sort of typical middle-class

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household, you know, there wasn't a lot extra, but we, you know, we, we always had

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shoes and food and, you know, got got by, but, but nobody ever talks about money.

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And so, you know, when I, when I began to be more independent, I did not have

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any guidance on how to create a budget.

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You know, I knew don't spend more than you earn, but what happens when

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you find yourself in my position where you're working for minimum wage

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and it costs more than that to live.

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And so you try to add a second job.

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But it still costs more than that to live.

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Well, if you are a dummy like me, you get a credit card.

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And so that was what happened.

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I got a credit card to try and just get me through.

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And within a few years I had tens of thousands of dollars on my

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credit card for gas groceries.

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Utilities like it was cost of living.

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It was horrible.

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And I didn't understand, you know, that I was paying like 15% interest.

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And so every month that I was making a payment, I was not

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getting my debt down at all.

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you would just, you just

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kept paying the interest.

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That sucks.

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It was horrible.

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It was horrible.

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And I went to a debt consolidation company and they charged me a fee,

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but then they weren't actually able to lower any of my rates because I am

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already a good arguable and I'd already called up the credit card companies.

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And, and I finally just gave, I gave up, I literally gave up and it took my

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mother looking at me and being like, you just, you have to declare bankruptcy.

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Otherwise you're gonna, this is going to be the rest of your life otherwise.

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And it was devastating.

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It felt like such a failure.

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You know, I take my word so seriously.

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If I tell you I'm going to do something, I'm going to do it.

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And so I had this, Overinflated sense of moral obligation to the

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credit card company who had never done me any favors, but I felt like

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I told them I would pay this bill.

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I should pay this bill, even though I had paid it four or five times

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over, it's just that they were taking all of that as interest.

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So the deal that I made with myself was if I go into bankruptcy,

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I'm never going into debt again.

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And so far that's been true and was, you know, it's been more than 30 years now.

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So, maybe almost for almost 30 years, I'm only 51.

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And, and so I had to then learn about money.

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Cause I didn't know how it really worked, you know, other

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than spend less than you are.

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And, but that's not enough, right?

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Because the time and the energy and all of that.

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So, so I became a bookkeeper.

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I, I, my, the last job that I had before bankruptcy, I was an office manager and

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learned bookkeeping as part of that.

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But when I asked for a raise in that job, she kind of said, no,

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I don't want to give you a raise.

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I was earning $9 an hour.

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She offered me 9 25.

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That was not gonna do it for me.

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So I went out on my own and started being a freelance bookkeeper and was immediately

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able to charge 25 because that's what bookkeepers get paid or did back then.

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And so now I was in charge of my own income.

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I could make these decisions about who I wanted to work with and, and

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the world opened up for me and I was able to make all these decisions.

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So I really enjoyed that part of bookkeeping, but the longer that I

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did bookkeeping, the more often I heard the questions that business

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owners were really asking, which was, oh, my books are balanced.

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Great.

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Can I afford to.

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XYZ, can I afford to buy new equipment?

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Can I afford to hire an assistant?

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Can I afford to start a new product?

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And I was like, I don't know, that's not bookkeeping, but I don't

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like having questions like that.

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Sit on answered.

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And so I began to sort of look for those answers myself, and it led me to

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learning way more than I ever wanted to know about marketing and pricing and, you

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know, fulfillment, and cash management since that's the key to everything.

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And so that's how I ended up here, you know, and it's, it's been amazing.

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I have my own business with 15 employees now.

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And, again, if I had been somebody else's employee, I never would

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have gotten to where I am.

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So I'm really, really grateful that I got such a strong message so

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early before, you know, I didn't, it wasn't my business when I was.

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I didn't ruin my life savings and my retirement fund on it.

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So of all of the terrible ways it could have happened, it really

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was kind of the best way possible.

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and I'm very grateful that I was able to turn it not only into a learning

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experience, but into the thing that I feel like it gives me an edge.

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Right.

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I'm very compassionate with people who are like, I don't get money.

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I'm not a money person.

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I don't understand it.

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It's overwhelming.

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It's frustrating.

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I just want help.

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And I go, I've been there.

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I've done that.

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Yes, I can help you.

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It's like learning to drive a car.

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Feels terrifying at first, but pretty soon it's super easy and

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we just take it for granted.

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That's what I say.

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Right?

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Don't be afraid of failures.

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Failures is it's not a failure.

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It's a learning point that moves you forward.

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And there's actually so many benefits for you there, right?

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Like one number one you've been through it.

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So you know what it feels like.

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You never want to go back.

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Number two, you've got a great selling point, right?

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You've got, you've been there.

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You've got, you've got a.

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You got to prove.

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So if you can join the costumers, yeah.

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Great selling points.

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So, I bet that if somebody asked you, if you could, you know, wave

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a magic wand, what do we call it?

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would you want that experience to have to have had happened or not?

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And I bet you would say yes.

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Yeah.

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All right.

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Yeah.

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Now what happens, when you do declare bankruptcy

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us.

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And part of the reason that my mother advised me to do is because

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the laws were about to change.

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It wipes out all of your consumer debt.

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So it doesn't wipe out, government loans necessarily.

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and it allows you to keep some of your essential assets.

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So I didn't own a home or a car at the time, but if I had those

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likely would have been protected.

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And so it just reset me to zero and it gave me a terrible

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credit rating for seven years.

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But other than renting apartments, You know, which I was living

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in Brooklyn at the time.

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And back then nobody checks your credit rating.

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They just wanted to get paid in cash every month.

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that was really the thing.

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It, you know, it had far less effect on my life than I assumed it would,

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which was also a little bit of a shock.

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You know, credit is important, but it's not the be all end,

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all bad credit is not the worst.

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It doesn't mean you're a bad person, right.

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Or that you've done something wrong and there's so many ways to repair it now.

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So basically the main thing is that you, you wouldn't be able to get any

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line of business loan or a house loan for, for that period of seven days.

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And what happens to that, to the, to the money that you owed to those credit

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card companies, does the government take over and then you have to repay it to

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the government over, but there's no more interest or like it just gets waived.

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It just got wiped away.

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I just didn't owe it anymore.

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Sounds like a blueprint to me.

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I mean, yeah, right.

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I'm sure someone out there is doing it on purpose and you know, God love them.

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I, that was, that was not my ethical plan, but

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yeah, it's not ethical.

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It's not ethical to do it.

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Don't do it.

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Don't do it.

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It's a bad idea.

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But if you have to do it, it's good.

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You, no, it's good to know.

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It's there.

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If you, if it truly needed, then it's dead.

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don't, they'll go down to the, you know, and I don't want to go old depressing

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year, but I'm sure that there's people that, you know, didn't manage it well,

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and they didn't know about what it means.

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And they thought like, this is the end.

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Then they took their life, you know, like it's, it's done.

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Like it's, like I said, it's, it's not, it's not the worst.

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Right?

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It's a renewable resource, right?

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Time is not renewable

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hurt your ego a little bit because

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it really hurts your ego.

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Really?

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Really?

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Yes.

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But again, you know, you got to sacrifice something to move

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on, let go, or be dragged.

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So Ian, so, I really enjoy.

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How can people find you if anybody needs, you know, your services for

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example, or just wants to check out your stuff, where can they go?

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So, I'm going to tell them to go to your site, cause that's the most

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direct they're already in your system.

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So if you go to the success podcast.com forward slash Moxie, you'll find me.

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Yes, it's a

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success inspired.

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Oh, I was close.

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You know what?

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I'll do that

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for you here.

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You do that part for me.

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So I'll see, where can they find me?

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And if they want to listen more, if they want to find out more,

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you've been on many other podcasts, you've got articles, right as well.

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You got some really amazing online courses as well as super easy digest

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in great for anybody out there.

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we're all stuck at home right now.

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And most people are because of the bloody COVID thing.

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So what you guys can do.

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Go to success in spot podcast.com/moxie.

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That's success inspired podcast.com forward slash M O X I E.

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And you'll be directed to an online course that Moxie has.

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and if you want it as like a $97 online course for understanding better

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financial management, and if you've got a couple of other courses, if you want

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to get more premium, like a support from Ian directly, I think there's

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even like a one-on-one or something.

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So go check it out, guys, if you want to, yeah.

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Get Ian to help you.

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if you just want to check out in stuff, I'll put all the

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links in the show notes as well.

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Include Indian socials, just go check her out.

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She's got amazing stuff and I love, I love what she does.

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and once again, thank you so much for being on the show.

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Appreciate you.

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I appreciate taking the time out of your day and, and you know, spending this

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hour providing so much value, this is what it's all about, providing value and

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trying to inspire people to achieve more in life and accomplish, what they desire.

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so it's been amazing.

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And is there any, not Annie actually quite specific, what would be the top

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three takeaway points that you'd like the listener to walk away with today?

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I would say if nothing else find that savings account that it's attached to

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your checking account and start putting in 1% of your income away as profit.

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See how fast that grows and see if that inspires you to take further

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action, to give every dollar a job and give every dollar a home.

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I love it.

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That's number.

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That's the only one.

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I mean, you can read the book too, if you want.

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There's plenty.

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I can keep going.

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I can give you all kinds of things, but I think it's good

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to focus on one thing, right?

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There's that book?

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The one thing, just do that one thing.

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That's the first step I had that

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recently, , focusing on your right, next thing, that one thing that you

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want to implement, let's say in your business that will properly forward.

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Otherwise it's chaos and you do it trying to do too many things

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at once is never going to be good.

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I love it.

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Great advice for those of you listening right now is this

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to you, a message to you.

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Thank you for listening today.

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If you enjoyed this interview and please share it with your mates that

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you think would also benefit from listening and understanding a bit

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more about financial management.

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There's links on, on my website, on the podcast, you can just easily share it

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and people can listen to it for show notes, full links, and extra tips to

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help you accomplish more in life and realize that your potential, please

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go to success in spot podcast.com.

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Thank you and have a great rest of your day, everybody.

About the Podcast

Show artwork for Success Inspired
Success Inspired
Business and personal development oriented Podcast that can help you accomplish more in life and realise your true potential.

About your host

Profile picture for Vit Muller

Vit Muller

Hi my name is Vit Muller, I'm a dynamic, innovative and results-oriented management professional with expertise in the fitness industry. Specialty skills include facilities management, member acquisition and retention, marketing and sales incorporating a strong growth mindset

I regularly meet fitness business owners who are struggling with the juggling act of keeping their businesses operational and are unable to grow it successfully and fast enough to live the life they deserve. Instead of looking at the bigger picture and developing their business strategically and with the right systems in place, they are often the operators within, the ones who provide end services for their members. As a result they are tired overworked and can't seem to get the ends meet.

I have a proven experience in launching new fitness facilities and re-designing existing businesses. Including business process design and the implementation of effective business systems, sales funnels, automation processes and standard operating procedures.