From the studios of Fractal Recording, this is the Profit First Podcast Episode 3! You're just singing along to the sword so much head gobbling going on! Wow, welcome everyone to the Profit First Podcast, I'm Chris Curran and I'm Mike McHallowatz. And we're having too much fun probably. Oh my God, dude, I was laughing so hard last episode, a little booker slipped out, hit the microphone, and that's why I faked I had to go to the bathroom. It was for a bat check, you were the bat in the cage.
Oh really, okay, that's cool. So this is, tell everybody about the show. Yeah, so what we talk about here is profitability. I call it the alpha omega of business. Everyone talks about the top line, how big are you, blah blah blah. At the end of the day, I don't care how big you are, I care about how much money you're making, you care about how much money you're making, that's what we need to live off of, so that's what we're going to talk about.
Right? That's right, and it's been cited in a previous episode as the metric that matters. Yeah. Profitability. Our last cast gave us some really good terms. Yeah, we did really good, and we're available as a podcast and iTunes and Stitcher, and of course on our website, profitfirstpodcast.com. By the way, let's talk about our sponsor for a second. Oh my God. Who's our sponsor? Nextiva. Nextiva. Nextiva, they've sponsored all of our episodes. I hope we've mentioned them on every episode. Yes.
You know what they make? Voice over IP phone systems. That's right. Yeah. A phone system that goes through the internet and other things, and I'll tell you, you cannot distinguish it from the old traditional phone systems. The ones you use have your office, and these phones are literally like one fifth to one tenth of the cost of the traditional phone systems, and among the VoIP community, because of course there's many VoIPs out there, I personally use nextiva. Love them.
It's a professional phone system, you have the capabilities of a Fortune 500 at the price of a startup. I have a Fortune 500. Fortune 1 million. Yeah. Exactly 1 billion. Yeah. So nextiva.com, check them out. I highly recommend them. Right, you use it. No, I totally use it. I have five phones on them. I have two remote offices that are now connected in. I use it with my laptop. We could actually hop on nextiva right now if we wanted to. Cool. Yeah. So my aunt was in from Seattle.
Oh yeah, how is that visit? Last night they came to the studio. Oh really? So here's my aunt 70, something years old, early 70s. Yeah. Having seen her in like 10, 15 years. Okay. Don't know her very well. Okay. But yet they came to the studio, put on the headphones. Are we playing around or do they do podcast?
No, no, no. Just they were visiting my parents and everybody, so my family came by and just, because you got to give people the experience when they come by the studio, you got to say, hey, sit down, put on the headphones, let's record. So let me get, I don't know your aunt. She held it, she. 74. Okay, so her name's not mod. 74. Arlene. No. Oh, Patricia. Yeah. Yeah. Okay. Yeah. Okay, that's like 50 to 70 years old. I don't know many in Patricia's nowadays. Right.
But if you are a Patricia listening in right now, you get to choose the word of the day. So what do you been up to? I noticed when I was in the bathroom, I don't get my hair cut that often. I mean, I get it cut. Not short as you have your words, but I get cut down and then it just grows and grows and grows. And then it starts flipping forward on the side here. Okay. So kind of like if Elvis had a pancake, doesn't make sense. A worthy, worthy, worthy, worthy.
Yeah, if you had a worthy, kind of flattened out, it's kind of like a stick that comes out of my head. It's just bizarre. That's awesome. So guess what? I like it. Yeah. Barry Moltz is joining us today. Yeah. So Barry Moltz is the author of an awesome book. I promoted it aggressively to my readers and I got great feedback. It's called Unstuck, the 25 ways to get business growing. Barry Moltz, are you with us? What up guys? What is it? Hey Barry.
By the way, we didn't, uh, can we place you on hold for one second Barry? Oh, we forgot to do one thing. I forgot. I can definitely do that. Yeah, I'll hold. Okay, hold on a second. That's the best introduction ever. It worked. Genius man. All right. Is he muted? Yeah, he's muted. Okay, so the word came from our prior guest. Right. Michael Port told, uh, you, Chris, he said you have to use cherry chapstick. Right. In the conversation. No, you just have to use it during this whole episode.
Just keep putting on your face more and more and more. Right? So that's the gig we give. We have a word and we, I have to use it. Yeah. In the conversation. In the conversation. And our guest doesn't know because our guest is muted. We're muted right now. Yeah. Okay. So it would be fun. Okay. And take number two Barry Moltz. Barry. That was, you know, for our third podcast, that was still, even though we're in Neophyte, it's pretty pathetic that we did a bad intro like that. But whatever.
Okay. Just dump it more experience. Yeah. And you're lucky, Barry. Our first two podcasts, the first one was, was episode one of one and the second one was two of two. Yeah. But now we're, now we're official. Now we're numbers. Now you're three. So, um. Okay. I'm up to number 300. So it just takes a while, guys. It just keeps getting better. Yeah. And his is actually broadcast like on an actual AMFM. It's like a real radio. Yeah. It's like a real radio session.
It's real. Yeah. Cool. So Barry, first question. You do a lot of consulting in family business. What is that like? Uh, I say it's pretty horrible actually. It's kind of like what I imagine Chris was mourning being and not enough presence being grounded there ofksen.
And when you're probably just now speaking about qualifying day-to-day過去, the wage increase in church or your district, that's some other factors like the resign gegenboo in an area tried to do nothing and I've just shown that there's no battleำ, there's no business that can support grace in a while, but so we're building meetings and whether there's any trade sign or offentering or anything like that.
what happens is there in so much pain there will be losing money or the own talk to each other there's no dysfunctional that they have no choice and one person brings you in and then what i need to do is really earn the trust of everybody else
so they understand that i'm really working for all of them not just one of them oh so you're like little jimmy's favorite is kind of how plays out at how it starts and you gotta make sure that you know you're not little jimmy's favorite that you really work with a company
the problem is the first time you go again jimmy he's been oh alright so um... let's get to the profitability yeah that's what the shows all about yet so when it comes to a family business and i think you better you've consulted other businesses you've owned some of yourself uh...
do you probably gobbled up in a family business is there anything different when it comes to the bottom line of course because most of them are lifestyle businesses they're just not thinking about how much properly left over but i guess what i get work in the family business i have no money to support myself they really don't track the financials and stuff goes money just goes to their fingers because they're paying for all the different kinds of things and they don't even know it
because many of these people didn't start the business that's a generation that's a generation they see it as a right of passage is there right they don't necessarily focus on the important things like profit right cuz i i remember my my family has a family business that i worked in and and like
you know sometimes you get a guess card like a company gas card and you're just driving around and you just fill up your tank with the company gas car you don't even think about it because it's your family your company exactly that family business is great yes so there's there's lots of abuse so
how do you wrap your hands around that is everyone feels that they rightfully deserve all they're getting plus some but they're you sound like they're eating up the company alive how do you address that well the question is do you really belong to family business are you really qualified
i've said that your last name is mccalowicz right i mean you have to really think about it you have to feel do your job and the first thing you have to do is figure out what are the jobs in the company that need to be done and who's the best match for those and make sure that everybody has a job
description that has to be a reporting structure that everybody support that's the key part of people can't embrace their roles and you gotta problem and do you find when you go in that most people are in mostly the wrong roles
i would say that fifty percent of the people shouldn't be in the company at all and i would say that twenty five percent of remaining people are in the wrong role so it takes a long time businesses will fall and change and i would say that a lot of them can't really change but they they do so
when things start to go not so well when profit is down or sell without so we know at least half of our listeners are affiliated with family businesses because christ listen and i listen to you that's half of us uh... the christmas of family business
uh... how do you tell people that own it or in the family business you can't be here anymore or can you say that uh... you can say that just as long as you give them some kind of perhaps long-term value a lot of folks don't work in a business but they still shareholder
and you try to convince me or something you'd be happier working someplace else a lot of folks are really miserable okay so what how do you have the conversation around profitability because everyone feels privileged and deserves more than just the gas card i'm not being paid enough
what do you do to get to the conversation about money again i think you do exactly what you're doing your book and for a lot of your uh... for the interrupt you every guess so far promoting my book so clearly the checks of made it so thank you thank you very much for the course we're having a good run tonight you know joy i'll get the key point first thing i could do is you have to really explain what i call the financial fact of life to them you know we always say
uh... you know sales event cashflow is that you have to really explain what the financial state and look like and what are those funny numbers actually mean on the page so you can educate them on that then you can try to get the difference focus on what matters most is you said problem
yet so but i think the funny numbers right so the entrepreneurs these family owners they don't really get the real numbers but quite frankly it's true for any entrepreneur how do you bring clarity to these funny numbers well hopefully you have a good cp a or count in
or advisor that can really help you that doesn't make it feel stupid for an honest and what the numbers are for asking questions and if you don't have one of those you really should find one of those and i think that there are a lot of those proper first and by the other that you can really use
right yeah well yeah he knew he's plugged me again yes i've never been plugged twice in a row like that the best guess we've had so far i know exactly so uh... you know seriously enjoy that state dinner tonight okay so yet of course you bring an outside advisor they see that
the the farce from the trees but still i'm curious about your conversation with people to really understand this i mean can you convince family owners that they have to become more profitable that they're they're kind of eating their business alive while they're doing
yeah only if they'll do profits are down if they're taking out less money been quote unquote they used to for the father used to with a grand father used to any events that it's going along by you know like they're just like a big and shit
you're not going to be a major mind at all you know people only change when they're in pain but there's no pain there's no change it's another quotable we're just generate on the show like crazy we have to uh... unstuck now that's his his uh... his book is website and stuck everywhere's got tape and
stuff is very right so we're talking about family businesses being profitable and of course you got egos involved that it's a family business and my dad and i'm entitled but what about it but egos involved in any business even a solo pernorph it's not a family business there's some ego that says
i want you know i want to spend this much or i want my expenses to be really high it right everyone's up against that yeah it's uh... but you have to understand is much more common in family business because i'm not only an employee but i'm a shareholder but also maybe your son or your brother
so i don't know how you're from wester gianne all uh... we have no listeners anywhere so i'm safe but uh... in the future i apologize to everyone yes we have a big big record i love what we have a lot of you have sent to you and i'm just say that say your
i was just thinking it's for a company many people and in-custom all business i have a hard time differentiating between i'm an employee but i'm also a shareholder now i'm an employee shareholder and i need to be a father's son for a relative that gets really screwed up
and where do most uh... when you're working with these businesses where do do you have them look at expenses first or sales first like how do you boost profitability initially is there a first step you know what i think where the hell is all this money going right now
we sell all this stuff we have nothing left how come so first we look at the gross margin of course we say yes what if you have a higher gross margin you can actually have more of a chance of money being left over they don't focus on the simple things and then where all this money actually
going what is every employee actually doing really focus on the money and the expenses and people are amazed about where their money is actually going and then they start to realize oh my best i'm getting left over well and just for our audience barry could you define when i say our audience
for me and christ could you define what gross margin means was that mean exactly what is it cost to actually was a direct cost for providing that product or service of example if i'm a distributor of a product what is it cost me to acquire that product
before i resell it it was a safe self-consulting services what is it really caught for it actually sell that service so perhaps i have someone for example that i pay fifty dollars an hour that's my cost of service but then my fail might be a hundred dollars now because i'm charging the customer
for a product i make sell products for a hundred dollars but actually buy that product for fifty or i see and what what you understand your gross margin what's the opportunity here so now i know it but what do i do so the opportunity is that if you can increase your growth margin
no matter what your cost are you have more of a chance to make me feel for example if i have a decent gross margin other words it only cost me twenty cents a dollar actually divided service or a product a lot more chance to make money to bring money home that i only make it fifty percent margin
it doesn't matter what the volume is you're making more every single product or service companies that are possible higher growth profit margin to simple that okay so there's step one that's where you get started what do you do next or usually the next part is to look at
the senses and for a lot of the business is a big part of it is people and so what are we really paying people for which job function and it's a really competitive to the market but so what's really going on there so i think this is looking at the financial the the proper law statement
to really make sure you cover all the senses but the most important thing is to look at expenses that are versus those that are variable fixed expenses are one that no matter how much you sell it's always going to be saying every month kind of like rent
the variable expenses are the only go up when i sell more you want to try to make as many of your expenses variable as possible so in business goes up and down you don't get hurt okay so it's almost like a percentage of your sales is would be variable
and fixes us a dollar number that happens every month right it does not very compared to what you sell for example if you have a bar staff it may not matter how much you sell you still have a paper that staff so if you have a massive staff oh god uh...
if you have a massive staff you're talking about this a bag a bag on stock i thought that that that that that that that that that that that that that that so if you have a massive staff what you do you cut back uh... i mean if you're overstaffed you got to make sure you have to talk to questions
which people are not really really with customers how many really support the sales of the effort either pre-for-post sales because you get a lot of overhead administration and organization especially a family on business gotcha depends who's on who's on your step you're so giggly you're so giggly
hey i was so we're talking about expenses but i want to talk about uh... this like the sales price like one of the ways to become more profit profitable is to raise your prices is that ever come up with a that they're absolutely because unfortunately most of the stores are raised
to raise their prices because someone along the line they got some high school economic that the more the higher the price i get the less of the customer's over the half and i will tell you that price is a lot less than to that's all your product is a lot less than to surprise
if you tell a product that the customer sees it has value but a lot of folks in the way to do that because they're fairly in customer most of the stores don't charge enough that's really what i think uh... do you uh... bury were speaking with bary molts do you ever and i just took us off i'm sorry
child's joke and you're just done for the uh... you know what it is it's like um... bary what do you ever you know sitting your car and put on cherry chapstick and and just listen to the radio like before you go into a client meeting or something like that what is it
i only do that if you know i'm uh... and what's for jenya that's the only yeah let me be clear about the west virginia i i love people from west virginia by don't like west virginia university that was my whole job because that was my archival in college so uh...
i went for jenya tech and uh... when we go through school they would pummel our team every year so that's that's why i was sick a stick uh... an issue yet you actually have a cherry check i was very happy with them okay when you go and bary what's the success rate of making these changes with these
family businesses these family own businesses i would say it's about fifty percent you know any self-respecting control would tell you that's a hundred percent yeah was about a long lasting fact is about fifty percent a lot of folks lie back in the old habit you know things are difficult to change
okay what no that's that's good i mean fifty percent is good no you know fifty percent great i like yeah so now i want to know about unstuck you have these twenty five principles bary can you share from your book what are one or two of your favorite principles that get businesses moving forward again you know the biggest problem that most businesses faces that sometimes are really busy in terms of the really slow but they only do sales and marketing when things are slow this soon as
things get busy and they get some business as well as a market and get what they stopped doing sales and marketing exactly the same thing that helped them get away want to go what happens is their business days flat they get caught in what i call this double helix trap where
they alternate between working on sales and marketing and then doing the work also a self-marked doing the work to the business those nowhere so what is important is the things about like McDonald's right where they have a process to put together a sales and marketing process that can be executed
automatically in five to fifteen minutes a day no matter what's going on the business okay i love that one was a second tip from your book everything is that so many folks confused being busy with being productive right yeah i'm a busy all the time but very few of us are productive because
we constantly get these interruptions from all the bells and things and with the old and and people walk into office and emails and we got a shut back craft off and we have to do instead is that okay the night before with a two things that i want to get done before i'll put on my email
with my facebook and my twitter and i'm going to do those things first and now or now and a half so no matter what happens the rest of the day my day will be productive not just busy and my tip would be to to prioritize the most productive stuff right
so if twitter and facebook is yielding profit for you bring in money that should be your top two in my opinion so very but do it but do it but do it with intention right a lot of people just go on facebook because the board or yeah like that do it with intention yeah exactly
so here's a question we asked of all of our guests how important is profit in your business profit is the only thing that matters as i see you know as i said cash is keen it's also every other case called in the deck nothing matters besides cash it's the amount that you take
home okay only thing that matters let me go to college the colleges don't want to count receivables they don't want sales they want cash that's true that's true uh you read my the script i sent you perfectly by the way that probably nothing matters as much as profit
um so all right so tell us about where we can find out more about you where our listeners can go and and hang out with you visit your house come over that stake dinner you're having with your wife tonight of course www dot barry mold dot com slash
unstuck they can learn all about how to take their business the next level because isn't it time that you made more money in your business you've been working hard for a long time and it's just not working out busy or you should change yeah i totally agree with that and by the way
everyone we focused on barry's work with family business but that's not his primary work barry is probably one of the most acclaimed speakers when it comes to small business topics uh in the nation probably globally i've seen his name on the headliner of more events literally than
any other speaker in the world so barry real privilege to have you on board thank you appreciate thanks thanks to having you guys yeah thanks for joining us barry hi we'll catch you yeah we'll catch you later oh oh barry so there you's barry yeah could there was one word uh
phrase that we mentioned that was a secret code did you guess it i mean it was so i have a blue it had to be the cherry chery exactly yeah i was pretty obvious Chris i gotta tell you i know so i was i don't know if you've heard of our other episodes there
they're circulating like wildfire right now but uh on each episode barry we have our prior guest pick a code that we have to use so the prior guest we had on board was michael port michael port heard that you're coming aboard and he goes oh barry is total cherry chaps tech other words other words were 72% cocoa and uh the first one that our first show was skid mark um so do you have a word you'd like us to use with our next guest oh god i gotta i gotta have a word i mean
you guys have any suggestions you'd like to have more edgy the better better like massive staff is a good one i thought we meant because we mentioned that in a separate episode i think we'd only natural cast a forward and play it forward right well you could you could i mean the whole
reason i threw out the whole reason i threw out massive staff was that was a bluff technique i was trying to cover for my comrade here with the cherry chaps dick so that i wanted you to say oh clearly the key word is your massive staff word well i i i really think one of my favorite phrases that
what she said and i think that makes it really well in your show yeah really that's what she said that's it that's it that's the phrase yep that's what she said all right Barry you've been a scholar and a gentleman in the sports thank you i think around me on guide i'll say
all right she said Barry molds so good yeah well we got a little sloppy there um i got thrown off when you did that cherry chapstick i'm not blaming you oh yeah i'm blaming me no no no come on i just got thrown off and i forgot what my next question is for Barry welcome to the world of
spontaneity my friend yeah and then i went into this apology i was like i'm surprised i didn't cry about my apology to west virginia i don't know i just uh that's so funny so what was your takeaway so yeah my takeaways from this conversation were um well gross margin that's on my list well i mean i just like that he he he talked about that i i don't know i is is that really hard to figure out or depends on the business so from my experience when it comes to gross margin you need to bring in that
outside expert some of that knows the numbers because i think a lot of entrepreneurs just see sales that's your income and expenses which is everything else but gross margin represents the subtraction of certain types of expenses like labor as he was saying and certain types of materials and goods
it can get a little bit heady i think for your for most entrepreneurs bringing an account right i also like to talk he actually said when you look at your expenses try to make as many as you can variable instead of fixed yeah i love that yeah because it's more like a
percentage like if you sell very little then your expenses are smaller but if you sell more your expenses might be more but that's cool because you sold more no it's totally right and let me give you a tip about um variable expenses you can do this with your employees too it's called part-time
labor or contractual labor i think some people just hire full-time people because we know i need an employee consider bringing on a part-timer who can maybe work five hours one week and if you need ten hours in that guy next week he can turn to ten hours consider a contractor maybe you need a
good salesperson you can hire you know someone that's a great salesperson and she can sell for you and she's getting commission or she can be also an hourly type way an hourly type contractor for you so that's how you do variables with people nice that's good so we have a
fortune cookie yeah can you push that sound effect button we have which one the sound the cookie it was bad no that was good oh that was good yeah i thought it was pretty good all right so we just opened my quenching cookie and out comes a phrase from mark twain or is it twine oh god
who I mess up all the names so uh mark twine says uh the lack of money is the root of all evil oh that's deep so wise that's deep right yeah that's really deep the lack of money is the root of all evil there you go so think about that and uh i mean money's not everything but
but the lack of money is the root of all evil so it's important there you go this has been awesome thank you Mike McAllowicz next episode we have my friend John baits coming on board he's going to rock your skid marked cherry chaps picked underwear 72 percent go go well thanks
everybody for listening to the profit first podcast that's right Chris Kern and Mike McAllowicz we're available as a podcast on iTunes and Stitcher and the website is profitfirstpodcast.com thanks to our guests and thanks all our previous guests as well which you could see if you go there so thanks for listening everybody see you so Chris if people while learn more about you and see what you look like what's she do oh yeah they can't see us right good thing um so they can go to
fractalrecording.com that's fractal fractal fractalfraactal fractalrecording.com yeah and check out what this cool studio is all about yeah we do a lot of shows here we help local people host their own shows it's that's awesome and you can do remotely too you can do remotely yeah yeah and a lot of stuff there we have a cool product called the blog generator yes definitely check that out yeah yeah and how about you yeah so you want to learn more about what I got
going on you can go to my site Mike McAllowicz.com but if you really want to learn about profit the place I encourage everyone to check out is profit first professionals these are folks that are helping small businesses become profitable so it's accounting some bookkeepers and coaches and if you're an accounting bookkeeper or coach and want to help others do profit first it's the same thing go to profitfirstprofessional.com profitfirstprofessionals.com.com.com.com.com.com.com.com.com.
awesome thanks thank you