How To Control Fixed Expenses In Your Business!

Yo, what's up everybody? It's Justin live from B2BVault, the Biz to Piz podcast sponsored by Nationwide Payment Systems, hosted by this guy, the Art Shell of payment processing himself, Allen Kopelman. And we'll be providing you educational information about fintech, small business payment processing, and the technology businesses are using in the world today. And in today's podcast, We're going to be talking about how to control fixed expenses at your business. Uh, Allen came up with a few ideas that he wanted to, uh, run down, and it's quite a lot, so we're gonna take it in different parts. So this is part 2 of, uh, how to future-proof your business, survive and thrive in this crazy economy. Um, so how was your weekend, man?

Weekend was good. Rosh Hashanah.

Rosh Hashanah. Happy Rosh Hashanah.

A lot of exciting football on this past weekend. We had the Colorado-Deion Sanders game.

Oh, you watched it?

Yeah, it didn't start till 10. I had to take a nap because it didn't start till 10 at night, and it was with double overtime. I think by the time it was over, it was about 2:30.

Why did it start at 10?

Oh, because they're on the mountain time. So it started at 10 at night. I don't think that's a good idea for college.

I mean, it's there.

I guess it's only good for the players.

I guess it's good for you, right?

7 o'clock at night there, right?

That's what I'm saying.

So not bad, but at 10 o'clock Eastern time, that's a late game. I'm sure that was one of the most watched football games.

I didn't watch it.

I'm okay. Well, it was a very good game.

I heard. Shout out to Coach Prime.

Very exciting. He's exciting. It was a big show before the game. I mean, they had Lil Wayne come out and lead the team on the field and rap.

Oh, really?

Yeah. That The Rock showed up unexpectedly.

I've seen a clip of that. That's why Lil Wayne was there.

Yeah. Okay. And he came out. Yeah. There's probably videos on. Yeah.

No, I seen the video. I didn't really know what it was for.

Yeah, he just like came. Yeah, he was there. And they gave him a jersey, and then he went out on the field before the game when they came out of the tunnel.

Yeah.

And he did a song.

Oh, wow.

And, uh, like I said, The Rock showed up. They had game day there.

What's his beef with Deion Sanders?

Who's— who has a beef with Deion Sanders?

The Rock?

No, they were all friendly. I mean, the— back in the day, The Rock went to the UM and Deion Sanders was at FSU, so that was, you know, the big rivalry in Florida.

Oh, that's why they were— okay, now I get it.

But they were all friendly, and he said, oh, Rock should run for president. Everybody was all excited. The Rock even put on the Deion Sanders glasses, which he sold— how many did you say?

I said that day, in one day, he sold $1.2 million worth of merch.

That's crazy. In pre-orders of the sunglasses. Yeah, I mean, he's got all kinds of deals. I saw his son is riding around in some $180,000 Mercedes.

Yeah, I mean, it's cool that the college players can finally make money. Yes, it's definitely cool.

They You deserve it.

For, I mean, it's kind of sad and sickening to think of all the, you know, the greats of college that, you know, from the early, I mean, just in my time, you know what I mean? That never made the league.

Right. They didn't make it to the pros.

Yeah.

But they were big in college.

Yeah. And they're probably not doing so well. You know what I mean? Well, hopefully they're doing all right, but.

Well, now they can go back and they can start making money off of their jerseys and stuff like that now. Some of the past players.

Yeah, right. I don't know how exciting that is, but, but yeah, I'm talking about for the guys who didn't— who they wouldn't even know who you're talking about, right? You know what I mean? I mean, who's Terrell Buckley?

Yeah. Oh, so Terrell Owens showed up. Deion Sanders' mom was in the locker room.

I've seen that. That's cool.

Uh, then he also had that lady who's like 90-something years old. Yeah, and Deion Sanders got to be on 60 Minutes again. Yeah, they interviewed—

I mean, he's shaking up the, the NCAA for sure. I mean, I can only imagine like what other coaches are saying.

And yeah, one thing that's crazy is when I'm watching college football, because I started getting into college when my daughter went to college, I started following like UF. But when my kids were growing up, we used to go to UM Kane games. Okay, now it's just like transfer portal. It's crazy. They can bring in, like, they can just bring in kids from all over the place that are already experienced instead of— but it's not good for the high school players because then your high school guys, very few of them getting into college now, or they got to go to like a Division II or Division I college school, you know, college to play football. Unless they're really, really a top, top recruit.

I was going to say, then you got to get better.

Yeah, I'm just saying it's taking away scholarships from, from in-state, from in high school schoolers from in the state, all over, taken away from high school scholarships.

I would assume that there have to be like a cap.

They don't have a cap right now. Let's say Deion Sanders brought in 50 players 5-0.

He didn't bring in 50 players when he came. I, I know this. Yeah, because I had to look it up. Um, when he came, went to Colorado, he had a team meeting.

Yes, I saw.

And he told the players that just be basically saying that it's not just the coach's fault, right, that you guys were 1-11.

Right.

So y'all gotta go, right? And so 50 players requested to transfer, go to the transfer. So he didn't bring in nothing, right?

Well, then he had to go get 50 guys.

I'm sure it was not hard.

No, not hard at all. But believe me, every recruit in the country is calling.

They want to go to college.

They all want to go to college.

The guy who's, uh, supposed to be the number one quarterback next year is was just out in Colorado. Yeah, talking to Prime.

Yep. So I mean, he's gonna get a lot of attention, so it's, you know, it's crazy.

Yeah, that's cool.

And the Dolphins won, so that was a— that was good. Beat the Patriots. We don't like the Patriots.

I don't know, I like their jerseys, the throwback jerseys.

Yeah, the throwback. It's cool when they wear throwbacks. I like that.

And I don't like the Green Bay Packers throwback jerseys. No, the Packers lost. They blew it. But 5 of the, you know, starters are out. For them to— yeah, the defense definitely blew through it away in the second half. I didn't watch the game, I only watched the highlights. All right, but, uh, how was your weekend besides the Saturday? Was a busy day for me. Um, what did I do Saturday?

I only got my hair cut. All right, cool.

Shout out to the Cuban barbershop that I stumbled upon. No one speaks English, but you know, the one OG in there, we made eye contact. I was like, yo, do this, I got you. And he did a good job, I think.

He looks pretty good.

My wife said it looks nice. So, and yesterday I I don't know, I played around in the dirt.

Yeah, you like that. You're that garden king.

Yeah, man. I planted my guava tree and then I did some research on my guava tree and I come to the realization I need a total of 3 guava trees to even get fruit.

Wow.

So I need—

Because they cross-pollinate?

That's part of it. But yeah, you just— 3's, you know, 3's company.

Okay. 3's company on the guava. Yeah.

No, it's definitely a pollination thing. And then I got Tore some weeds out that been— I don't know, I was telling Samantha this morning I've been putting it off for like 3 months because I had— I bought a box of the, you know, like the new weed whackers. They got like the little spools. Yeah, it's not like how you would wrap it yourself, right? Like how I'm accustomed to doing things, right? So I don't know, I left the spools in the box in my outside container.

Right. They melted?

No, it got wet.

Oh.

So I don't know if, you know, from getting wet, dry, whatever. And so as soon as I turn it on and it would touch some, it would just break. Wow.

Cheap plastic. Terrible.

But it works great because I, you know, it's like this is the Ryobi brand, right? Like, so it's like whatever. You know, it works because I got— finally I ordered some and it came on Saturday. So I was like, I was happy that it was pouring rain on Saturday because I didn't feel like doing it. But then Sunday I'm like, I got to get to this because some of this stuff is just, it's just kind of out of control, right? So yeah, I spent my Sunday afternoon outside picking in the weeds and planting things.

So now let's talk about some crazy business stuff.

How to control fixed expenses. At your business? Emotional damage.

Listen, it's, you know, bookkeeping. We've talked about this, but like bookkeeping and paying bills and all that is, you know, usually like it's, that's the rough part of owning a business, you know?

I mean, it's not, it's not. So just a little backstory, whatever. Me and Allen talk about topics about this podcast all the time. We try to figure it out. We try to make it entertaining. We try to make it consumable, etc. And sometimes the stuff that we talk about, Allen says I use the word boring. It's not that it's boring. It's just like almost webinar-ish. But needless to say, it is very useful information. And, you know, pay attention to what Allen's talking about because it's useful. That's it. That's all I was That's all I'm sprinkling in.

It is useful information because it's things that people don't realize what's going on in your business. You know, one of the things I put on here is, you know, your biggest expenses in your business.

Well, before you hop into that, like people who are entrepreneurs or starting a business, what is a fixed expense versus a variable expense?

So your fixed expenses are things you're gonna have to pay every month, your rent, your utility bills, you have to deal with payroll, and then you're always dealing with cost of goods, which fluctuates, which is a variable expense.

Right.

So, you know, things that you're in control of, you're usually one of the biggest expenses.

What's a variable expense?

You know, expenses that change.

Would be?

Like your cost of goods. Let's say you're buying shirts. You know, or you're buying, you know, accessories, or you're selling this in your store, whatever, you know, those are your variable expenses that you have. And payroll, you know, how do you control these different expenses? The— your biggest expense, you know, is going to be your lease, going to be one of your biggest expenses if you're renting an office space, a warehouse space, or let's say you're a restaurant, you're going into a or retailer and going into retail space. Okay. You know, you need to make sure, you know, number one, read the lease because you want to make sure what are the terms and conditions, what are you responsible for, what is the landlord responsible for. Can't tell you how many times I hear people and they go, oh, I didn't know I was responsible for the air conditioner, or I didn't know I was responsible I moved into a restaurant and the grease trap was all backed up and the last tenant never emptied it. And now it's going to cost them $5,000 to have it emptied, you know, because they didn't check it. So you have to make sure, you know, what's in the lease. How long is your lease? You have options in the lease. You have right of first refusal on the spaces that are on either side of you. Maybe you want to expand. Is there restrictions on what you can do in your space? Oh, I can't tell you how many, you know, you know, that can happen. Let's say you want to have an ATM in your business and there's an ATM machine in the grocery store, or maybe there's a bank with an ATM and they have— and your landlord restricts you from having an ATM. Really? That can happen.

Or they could restrict you from Oh, you mean like in a, like, the vicinity of the bank? That's messed up.

Like, one time, you know, I'm involved in another where I'm a board member of a nonprofit. And, you know, we bought a building and the building is inside in an area where there's a shopping center. And the shopping center was trying to impose restrictions on us. And we're like, we own the building. So you can't impose a restriction on what we're going to do in our own building. So we're not renting it or we didn't buy it from you. Interesting, right? And another friend of mine opened a restaurant recently and they wanted it and they found out. He showed me the lease and I go, what are you doing? He's like, what are you talking about? He goes, I just wanted to show you the lease. What do you think? I was like, you can't go in this place. There was a McDonald's in the outparcel. And there was a restriction from selling hamburgers. I was like, dude, that's what your business— you, you're going to open a hamburger restaurant?

What?

I go, what are you doing? Does it— didn't the landlord say anything? They know the name of your place. It's a burger place. Really?

Yeah.

They're trying to find a location and they sent me the lease. I said, says right there, no hamburgers.

And how can McDonald's do that?

Because they're renting the space the same. It's the same landlord. So there's restrictions.

The same. Okay.

Because a lot of times McDonald's, they'll, you know, they'll go into a shopping center and then they'll just put restrictions. I mean, you think that Publix wants to go, you know, let's say, you know, I'm thinking like in my head, like, like in a mall, right?

You see a McDonald's. There is no— you can't get a burger from anywhere else, right?

Yeah, they want to have a restriction. Or let's say there's a pizza shop, unless it's Burger King, they usually not next to each other. They might be close, but they're usually not like next to each other. Maybe when you get off the highway, like—

no, I'm saying like in a shopping mall, like back in the day, you go to a food court.

Yeah, well, that's different. And even in a food court, let's say, you know, people freak out, but, you know, Chick-fil-A moved out of a lot. They used to be in a lot of food courts and Chick-fil-A's never—

Ooh, I learned some stuff.

They're never open on Sunday.

Well, they're supposed to be owned by the church.

I know, but I'm saying it's never open on Sunday. So they always had to get special leases. So you have to make sure there's no restrictions. Let's say there's a piece of—

Hey, real quick, just for all you Chick-fil-A lovers out there.

Yeah.

They use MSG in their chicken. Oof. That's why you love it so much. You're literally addicted to it.

I believe it, man. There's a line around those places.

It's literally addicted.

My dad tried to buy one, but we weren't of the correct faith, so we didn't get a shot at buying them. You—

so you're saying that they can do that?

They did it. Interesting. That was like that. I remember because that was back in the 1980s.

So Allen's Jewish, if anyone didn't know.

Yeah. And we wanted to—

oh, my dad was like, what if there's any like Muslim owner Chick-fil-A's or like Buddhist-owned Chick-fil-A's?

I don't know. I never went and checked.

You should check.

I just remember my dad went.

That's grimy, dude. I don't like it.

They opened one up. They were just starting out.

Wait, wait, wait, wait, wait. Did you see the commercial of the guy? I mean, it's like a spoof or whatever. It's the guy is like, he's literally outside of Chick-fil-A on Sunday.

Oh yeah.

And he's selling Chick-fil-A sandwiches.

That's on YouTube.

That's great. Shout out to that guy.

So, you know, you got to read your lease. You don't want to get into a problem where what are you responsible for? Do they have air conditioning unit hours that you're open? Are you responsible for the AC? You say you're buying a restaurant. Did they, you know, you tell the landlord, well, I want the lease, but is the— when's the last time the grease trap was cleaned?

Right, right.

You know, you know, you have other stuff you have to pay. Electric bills, gas bill. Garbage. Is garbage included or do you have to get your own dumpster? That every, every place is different. Like we're in an office complex and they have just a dumpster outside. It's for everybody. So it's included in the rent.

Right.

But you could be somewhere where it's not included. Everybody's responsible for their own garbage. Or maybe you don't have a lot of garbage and you got to go make a deal with your neighbor. Hey, can I use your dumpster?

Right.

Because I'm not going to use a lot of garbage. I'll give you $50 a month.

Go halves, right?

Go split it with people, you know, like in a retail place. You know, that's like I did that when I had my restaurant. There was, there was a grocery store and they had a huge dumpster and dumpster for restaurants, really expensive. They have to come a couple of times a week. So I went to the grocery store and asked them, I said, hey, can I dump my garbage here? I'll give you $100 a month because otherwise it's going to be like $500, $600. $100? Yeah. Yeah, but they're already paying like a ton of money for their garbage.

So I'm going to give you $100. I'll dial it.

Well, that was like 20 years ago.

Okay, that's nice.

20-something years ago. But then you got to deal with, you know, internet, telephones, and that all adds up. So when you're making your business plan, You got to think about all these things. And then, you know, payroll is another big expense. You know, how are you going to pay people weekly, biweekly? You know, I suggest to people now, especially about tight— the economy is pay weekly. You'll have to deal with less problems with your employees constantly asking you for money, you know. You have inflation. How are you going to find employees? You know, and then, you know, is there technology that you can use to help you, you know, control wages and things like that, like point-of-sale system? And then you have to deal with buying whatever it is you're going to sell in your business, you know. So with that, you know, there's a lot of people like with the gig economy. Yeah, a lot of people want to get paid every day. Now payroll companies are starting to incorporate a way for people to get paid daily.

I mean, that's cool. It makes sense. I mean, like, I don't know, I'm an entrepreneur for as long as I have been. Like, I've— I kind of know what that feels like, I guess, you know what I mean? Like the gig economy, right? Get paid instantly, bro. You know, I would go into a place of a business and we'd strike a deal and I'd build a website on the spot for, you know, a couple hundred bucks. That's how I used to go, right?

But I'm saying like if you have employees, maybe you have waiters and waitresses, there's not a lot of cash, they want to get their tips every day. You need to get with a—

for that I think it makes a lot.

So we're working with a new payroll company and they're just incorporated an app in there for daily pay. Cool. For tips. So, you know, they can get like 50% of their tips, not 100%, because you got to have money left over for taxes.

Got it.

So they give people up to 50% of their tips. So once the tips are calculated for the day, they can put it into the system. And then if the employee wants the money, they take some of the money out. There's a small transaction fee.

Oh, I'm sure there is.

But you know, gotta pay the piper, you know, that's the cost, you know. And then cost of goods, you know, like, I don't know why a lot of rep— you know, like in stores, obviously, let's say you have a clothing store, you say, oh, I'm going to sell these hats, right? I'm going to sell this shirt, I'm going to sell the hoodie, right? You can go out, you can maybe— you can go find deals where you can buy this stuff cheaper because there's a manufacturer or a vendor who's trying to get rid of stuff. To turn it over for the newer stuff that they're trying to bring in, right? And they have stuff from last year. Are people still going to buy it? Yes. So you can buy things for less money, sell it for good money, make a good— better profit margin. And you have to think about that. And then, like, I don't know why a lot of restaurants don't switch to either just—

man, I know a guy back home in Milwaukee who opened a clothing store and would buy all of the seasons before.

Right.

And he would come back to Milwaukee.

Right.

And Milwaukee not being a huge market, right?

Yeah.

It's a big city, whatever. But he would make a killing because nobody had that anyway. Even the, from, you know, even like stores didn't have the new season drop.

Yeah, it didn't come yet.

No, they just didn't have it, right? They weren't stocking that brand or whatever. Like, back in the '90s, in the early 2000s, there was Averex jackets. They're like leather jackets, right? Hip-hop, we love them, you know? And that was the store you went and got them from, you know what I mean? And it was— this just genius, just smart. That's just a smart thing, business move.

So me and like one of my friends, my— this guy that I knew, he was like telling, you know, and somebody that I knew from my dad was like, oh, you know, you can go down to Valdosta, Georgia, and you can go to the— there's a building there and you can get like socks, underwear, t-shirts, a bunch of other kind of different shirts, and they're all like factory seconds, right? And so we used to go down there and fill up like a whole U-Haul truck full of this stuff that we would buy for like 10 cents, right? Right. And then we used to go to the flea market back in the day on the weekend, the weekend flea market. We literally would just pull up, the place had like an— if you paid extra you could be inside, you know, but you could just be outside. We would be outside, we would just get a folding table, put up a tent, you know, t-shirts, and we'd be selling like you know, bag of socks for like 10 bucks, 3, like 2 for 10 bucks of big, you know, tube socks and ankle socks and the no-show socks. And I could dig it, t-shirts and all that. People would come over and we would just have— sometimes we would empty the truck out in one day.

Nice.

You know, and, you know, we used to buy stuff like that. So, you know, you have to think about those things in your business. For restaurants, I don't know why more restaurants don't go to like market price Cut your menu down. You know, I used to have in my restaurant a very small menu. I had 7 items and then I had specials and the specials would just be based on what I could get a good deal on.

A lot of you chefs are stubborn, bro.

I don't know why.

It's just like an artist.

But it's not that. It's like in any restaurant.

You and art, chefs and artists have a lot in common.

Yes, they do.

You know, I'm a very—

I mean, you're—

You're more business savvy, right?

Yeah.

That's different. You know, like, so like one of my clients, he's an artist, but he's business savvy, so it's easier to work with him.

Okay.

You know what I mean? But it's nothing is— it's always, you know, something is evolving, right? So, oh, we're going to change this and turn it into this. So like with chefs, like restaurants, I can only imagine how hard it is to just to have like a 7-item menu.

Well, you know, you pick out items where it's not going to be that variable.

I say pick out stuff that's selling, bro.

Right.

I don't understand like why that's so hard for people to get. Like just because it's something that you like.

Oh yeah, I don't cook what I like.

No, that's what I'm saying. So if you got 3 specific entrees.

Yeah.

3 appetizers that are selling through the roof.

Yeah, just concentrate on that.

Cut the other stuff out, bro.

Yeah, make the menu smaller.

You're not going to make everyone happy, but you'll make more money, and that's the point, right?

Yeah. Another thing that we used to do when I was doing the flea market thing, we used to go down to this one place in Atlanta, and we would go there and we would buy all the sample clothing Oh yeah, from these guys. And they, a lot of times they just want to get rid of it. They're like, okay, we'll give you this whole box for like $20. They just get it out of here because we don't want it. Because they're just like, sometimes this stuff was over a year old and they're want, you know, and they need room in their showroom. And then we'd go down there and everything was usually like medium and large. It was no smalls, no extra large, medium and large. That's all you could get. And we would go get all that stuff and then we would, you know, we would set it all up on a rack. We just go, everything is $10. That's it. It's $10. You know, it's all $10. Maybe medium, large. Everything is $10 because you couldn't— and some of the stuff was $40, $50 in the store, even in the '80s.

Oh, so it's name brand?

Yeah, name brand clothing. And but it was samples, so they were all basically like one of a kind. Not for, for us, they were one of a kind. Yeah, they had it in the store and it was already in the store.

Yeah, yeah, yeah. No, that's cool though.

But so we used to—

they still have that around.

Yeah, you can go probably to the Merchandise Mart and go buy sample clothing if you can get in there.

Because there's some like we would go down into Chicago and get our socks and, you know, like our t-shirts and all that. Same thing, you know, post up.

So, so, you know, you gotta, you gotta do things in your business. You gotta, you know, but the most important thing, read your agreements, read the lease.

Absolutely.

I can't tell you how many times, like, I've talked to people and like one of the things is utilities, right? Make sure the utilities, in your utilities, you're getting the business rate, not the residential rate.

That We—

that has happened before where I've gone into businesses and doing consulting when I was doing restaurant consulting for— and hotel consulting, and we would find they were using— paying the wrong rates, right? So, you know, read your agreements, you know, make a spreadsheet, put all your expenses down so you know, hey, this is the nut that I have to crack. What is the payroll?

Do your research, man. Like, there's, you know, do your research on the, the services that you're gonna, you know, like internet. You might not need super crazy powerful internet or whatever it is that you're paying for, you know, downsize or expand and, you know, figure that out.

Do—

and it's for me, I'm a numbers guy, so do the analytics, man. Figure out like what's making money and what's not.

Yeah, and try to find items where you can Buy low, sell high.

Exactly.

You know, create profit margin.

All right.

So there's your, you know, how to control fixed expenses at your business.

Part 2 of the Future Proof Your Business pod.

Yeah. How to survive and thrive in today's economy. Peace out. Carpe diem. Let us know.