038: The Connection Between Profit and Health

Hello and welcome again to the Scaling Up Business podcast. I'm your host and Gazelle's business growth coach, Bill Gallagher. On the show today, Dave Fuller from Prince George, British Columbia. And we're talking about the surprising connection between profit and health. Right? And Dave's going to share with us his view. So this Dave Fuller from Prince George in Canada. He's also a business coach and he works with small companies and he wrote a book called Profit Yourself Healthy. He's an mba, he's a serial entrepreneur, he's a family man, he's a cyclist, a skier, every kind of thing. And welcome to the show, Dave.

Hey, thanks, Bill.

So tell us the bear story.

Well, Bill, I'm not a hunter, but you know, I got a couple buddies who are and we went out into the backcountry, we go out every year and we go hunting. And we went a couple years ago, we went out and we set up, you know, I got out there a little early. They're hunting for moose typically. So we were hunting for moose and there's, you know, we sitting around, we're going to get up early and we're going to float this river down. It's three hours from our community, which is 500 miles north of Vancouver. So it's really remote. Three hours from the nearest hospital, as it turned out. And there's three tents. At night. I went to bed and heard this noise as the bear came into our camp and knocked something over. And I knew it was a bear because it was something big. The hunters were in one tent and so I didn't move. There was Paul, Dave and their two kids, 16 year old boys and myself and another professor. I'm not a professor, but he was a professor. We were sleeping in this other tent. I heard this, this something get up. And then the next thing I heard was bear in a camp. And so Paul's yelling, there's a bear in a camp. And the bear grabbed his leg and started dragging him out of the tent. And he started yelling and he said, shoot the bear, Dave, shoot the bear. And so this, my other buddy Dave grabs his gun and shoots the bear. And then the next thing I hear, because I'm laying in my bed, I'm trying to get up at this point, good lord, pitch dark. And I hear him yell, my arm. You shot my arm off. You shot my arm. And then I can hear him fighting the bear again. He says, shoot it again. I hear the gun going off and now I get up, I grab my flash that I go to the tent Door, and I turn on my flashlight, and they're yelling from the other tent. And I look across, and these eyes come right out of the tent. The bear comes right out of their tent and right towards my flashlight into my tent. I opened the door, and the bear brushed by me. I had tried to wake up the other guy. I tried to wake up Neil before this, and he jumped on me. So I pushed him back on, and he went back to sleep. But when the bear came in, he woke up and started screaming. And I thought the bear was on top of him, but the bear had been shot twice. He was on the other side of the tent. Now. Neil ran into the other. He ran across to where he woke up, got out of there. And Dave, the other hunter, the hunter with the gun, I said, dave, shoot the bear. But he couldn't shoot the bear because he was in shock. And the bear came out again, and then it went into the other. You know, this is over a period of a few minutes. I'm telling you. It's really short, but it seemed like a long time. But it was over a couple minutes. But the bear went into the first tent again and dropped in the middle of the floor, and one of the kids shot her with a shotgun right in the middle of the tent. So we find, you know, we got Paul back to town. We drove him back to town. It took us three hours before we met, two hours before we met an ambulance. We got him into the hospital, and, you know, he went in for surgery. And luckily enough, there was no, you know, there wasn't a lot of bleeding. I didn't have to put a tourniquet on him. And we got him into town, we got him into the hospital, and he had his elbow replacement, but he's okay. But the thing is that a few months later on, and this is why I kind of wrote the book is a few months later on, I was thinking about the fatigue that happened to me after that attack. So when we. When we have a traumatic event, Bill, there's adrenaline. You know, all this adrenaline is built up in our body. It comes out. And after a couple days, if you've been in some sort of trauma, you get this real fatigue. And a few months later on, I was. I was thinking about this, and I realized that I'd felt that fatigue before. I'd felt all that adrenaline rush. And it took me back to 1998 when I had started a second business. So I. You know, like you said, I've been in business for a while. I have a multimillion dollar business. And in 1998, we decided to open a second location. And I opened that location and a lot of things went wrong, just like a lot of things do when you start a new venture. We had cost overruns, we had equipment failures, I had staffing issues, I had my sales. I'm pretty good at marketing, so I got a lot of people in the business, but my average sale was low. And so as a result, I was bleeding money. I lost a couple hundred thousand dollars, which is a lot of money in the first year for a startup small business. And, you know, I had the bank manager calling, I had my partners calling me, and it was really stressful. And that's the kind of stress that happens as small business owners, you know, when our businesses aren't working, when things aren't being profitable. And so I wrote this book, Profit Yourself Healthy, you know, to help business owners who are struggling with their business figure out ways that they can get them profitable.

Yeah, well, I immediately. So as you're telling the story, I'm riveted by this bear in the middle of the night and thrashing around and shots being fired in the dark and all of that, the overwhelm of a moment like that. And I think in business, a lot of times our traumas, our stresses don't happen quite that fast, but they are literally like we're gripped by some crisis and we deal with it, whether it's issue with a supplier or a key customer or a toxic employee or a financing issue, and suddenly we're overwhelmed with it. And it takes enormous amount out of us physically, emotionally, and then we lose sight of all kinds of other things in the middle of a crisis like that. And then we're not taking care of ourself. Right?

Well, that's right. And Bill, the other thing that happens when we're under stress like that is we get this adrenal fatigue. So I'm in the health industry, and so I get people in the health food industry. And so people are coming into my businesses all the time with adrenal fatigue. But business owners get it as well. You start, you know, when you're under stressed, when you're under the severe stress, you know, whether it's your employees, whether it's your bank manager, whether it's your customers that are on your case, whether it's just something going on in your mind and you can't figure it out, you put yourself under a lot of stress. And if we get under the stress for a long period of time, what happens is we start waking up at 2 o' clock in the morning. You ever wake up at 2 o' clock in the morning, Bill your mind.

Going, of course, I'm an entrepreneur.

So that's a sign of adrenal fatigue because we get this cortisol level rushing in our veins at a different time than it should be. And so what happens when we get we're waking up at 2 or 3 in the morning is that we're lying awake and maybe we fall back to sleep for an hour or two, but we get up in the morning, we're fatigued, so we need to eat, we need energy, so our body craves carbohydrates and we end up eating 30% more carbohydrates. So what does this do? Well, it drives our blood sugar up and down. So now we're not thinking straight. Our moods are up and down. So we're, you know, we're in crisis with our family. We're, you know, we're not relating well with our staff because our moods are up and down. And the other thing is we start putting on belly fat. So we start feeling bad about ourselves because we're putting on this weight. We don't understand it, but we're craving these carbohydrates, we're not sleeping properly. And so as a result we're gaining the weight we got. You know, then people start getting depression, all these other things that happen as a result of this stress. And so it affect really affects our health.

Totally get that and can definitely see the connection. We know that when we're healthy, we can handle more things. And conversely, when we're handling on other things, it has an impact on our health.

And so, you know, I give you an example of a dentist who was under attack. One of my clients, he's a dentist, small business owner. He had, he hired an associate to work with him. Well, the associate, he started training the associate, the associate started learning his business. After about three months, the associate left. And not only did it take some of his clients with him, but he took some of the staff. So the dentist is all stressed out. Then a few weeks later, he finds out that, you know, one of his employees just took a chunk out of his bank account. So just like the bear took a chunk out of my buddy's leg. Well, you know, here's an employee that took a chunk out of this guy's bank account. $60,000, he finds it. So he has to fire that, fire this front end people. And now, you know, he's, his adrenaline is his cortisol levels are out of whack. He's all stressed out. And so he comes to a business coach like you or me, and he needs some help.

Yeah.

And so, you know, when business owners, what we need, what they need to do is find a way to reduce their stress levels so that they can get their business, you know, and get their businesses working so that they don't have that stress. And so, you know, and that's where guys like you come in and you're working in, you know, with big corporations or bigger companies that are really, you know, when they're under attack, they're under attack, you know, and so there's a lot of stress going on. And so what you're doing is really helping these guys not only solve their problems at work, but it helps by solving, you know, that lack of stress at work leads to better relationships, it leads to better health. It leads to the fact that they can, you know, get involved in their community and they're not thinking solely about, you know, the issues at work in their business.

And what I got from your message before as well was that like so many entrepreneurs, you and many of the companies that you work with are a lot focused on the top line. Just the revenue is everything. And you get focused on that, but you neglect the profit and the cash position of the company. Or you look at the top line, you look at the cash, but then you find yourself in trouble with the profit. So your book Profit Yourself Healthy talks about then the need to get that profit so that you have some peace of mind and some room to handle these stresses.

Yeah, well, that's right. And, you know, I think as business owners, a lot of the time, you know, we're driving, we're thinking about that top line, we're thinking about getting our sales. But really there's three things that happen. There are three things that we need to be focused on as business owners or CEOs of a business or, you know, management team of a business. We have to have the mindset, you know, so first of all, we need a mindset that we're going to get that business profitable, that we're going to find ways to reduce the stresses that are going on. But, you know, a lot of small businesses are focused on sales, but they're not focused on profitability. We have to have a mindset that we're going to get that business profitable. Second thing we have to do is understand what do we want for ourselves. So we have to be able to have, you know, we need to have goals for ourself from a personal level and understand that, you know, the business is just one part of that. You know, our work environment is just one part of that. But if we don't have clarity about where we're going personally, how can we run a business? The third thing, the third factor that helps with profitability is having a business strategy. How many businesses do you know that don't have a business strategy? And so whether they're small businesses or big businesses, they have to have a clear strategy of where they're going. And when we have that, then we can start focusing on the areas of profitability.

Yes, yes, totally. So we use a one page strategic plan. We use a one page vision summary, and I think you advocate a one page plan as well. And the focus on an understanding of the factors that affect the profitability.

Yes, that's correct. Those one page business plans just give the business owner a lot of clarity about what they're going to do in the next year, what they're going to do in the next five years, whatever it is.

So narrowing it, focusing on it, committing to a particular direction. And then how do you approach your view on improving the profitability for small companies?

Well, you know, typically there's about seven areas that business owners need to focus on to ensure increased profitability. Lots of times, you know, we're trying to drive sales and we're trying to focus on getting more customers. But in reality, most of our profits are coming from our current customers. So if we can improve our customer service levels, if we can improve our relationships with those customers, and we can use our databases, which most small companies don't have, but they need, they need to have some sort of form to figure out who are their current customers, what they're buying, and how can they improve that relationship and add value to those customers. And once we do that, we can get more profitability from those customers. The other thing is, you know, we're focused on prospective customers. But a lot of times our marketing is lackluster, especially in small business. You know, in the range that you're working in. Those bigger businesses, they understand what they need to do for marketing, but the small business forgets that they have. You know, there's really three things in marketing. You have to be able to attract the attention of your ideal prospective customer. And you know, we're trying to, in a lot of cases, appeal to the whole world. We don't understand that there's just a small niche that we're after. So we got to attract their attention. Then we have to give Them a reason to believe in our advertising and our marketing. And third thing we need to do in all our marketing is to have a call to action. And if we don't have that, you know, maybe we're doing some branding. But you know, these small companies, they're really not about branding. They need to get customers in the door. The third area that small businesses need to focus on, or every business needs to focus on is our past customers, because these are customers that are not doing business with us, but at some time had a relationship with us. And we've let them go, we've let those relationships fall. And if we understand what the value of a customer, of a lifetime, value of a customer is, then we wouldn't be so lax in letting those customers fall off our radar. So if we can put some effort into building those relationships with their past customers and drawing them back into our, you know, into as current customers, it can go a long way, especially if we understand why they left us. Right. So we need to understand why they left us and invite them back.

Got it.

The fourth way we need to focus on is that conversion rate. So we got all these customers coming to us. You know, we got prospective customers, we got past customers. The conversion rate is what percentage that are coming in contact with our business, whether in our website, whether they're coming into our brick and mortar business, or whether they're phoning us, whatever they're doing. What is our conversion rate of people that we're actually converting into sales? So, you know, by having sales training programs for our staff, even our, you know, the people that are answering the phone can go a long way to having that conversion rate. So we need to figure out to focus on that conversion rate. Fifth area is average sales. You know, we can drive, we can increase our profits if we understand what our average sale is now and have an idea of where we want to go with that. So whether Your average sales $25,000 if you're selling big software, or if it's $25 if you're in a store or even less, improving that by 10% can be huge to the bottom line. Sixth area is margins. One percent margin increase on a million dollars is $10,000 profit into a business owner's pocket. You know, there's really two ways to increase margins. We can increase our sales price or we can decrease our costs. Lots of times we just focus on increasing our, our sales price. But there's usually a lot more areas to focus on increasing our margins by decreasing our costs. So as small business owners or as business owners of any size, you know, we need to understand what is the benchmark margin in our industry and then try to figure out ways that we can either get to that or exceed it. And finally, the last area that, you know, that business owners need to focus on for profitability, to increase their profitability is to reduce their expenses. And if you've been around for a while in your business, there's usually a lot of crap on your expense side of your income statement. So, you know, just stuff that builds up over the years. Maybe it's extra hours that, you know, that you got staff working that they don't need to be working. Maybe it's expenses, subscriptions that you're, you know, you've signed up for that you're not using, or software, you know, all kinds of travel expenses. So there's all kinds of things that we can focus on in that expense side that have been built up that, you know, we can tweak a little bit, can make a big difference to our bottom line.

Yeah. So in our world, we look at some, a very similar thing in an exercise that we call the Power of One from, from Greg Crabtree and from Alan Miltz, and that's in our book in the Cash section. And we look at the impact to profitability of seven big factors. So the volume, the pricing, the gross margin, our expense level, our days payable, our days receivable, our inventory levels. We look at all these kinds of things both from a profit and a cash standpoint, and we understand the small changes. And I think that while you're looking at a slightly different list here, that would include some other areas, the value of looking at and understanding those things and even appreciating the importance of small changes there and how valuable even small changes can be to that picture and the kind of peace of mind that can give you and then the impact, your stress, your health, your weight level and everything else can go along with it. Right.

That's huge, Bill. Yeah. And you know, really what you're saying, you're talking about cash flow that can be huge. But, you know, as we're speaking off air, what we're talking, what I was telling you about is that, you know, a lot of these small business owners, so I'm talking, you know, guys up to $10 million. Lots of times they're just looking at their bank balance and they're thinking that if they got money in the bank that they're profitable. And so, you know, they feel good about it. But the reality is they really need to be looking at their financial statements on a regular basis, and I'm talking on a monthly basis. And those have to be comparative because if you're not looking at comparative financial statements, you're at a loss because you don't know what to compare in terms of what's going up or what's going down and what areas that are improving and what areas you're failing in.

Totally get that. So the seven areas again that you look at is the current customers, the prospective customers, your past customers, the conversion rate, your average sale, the gross margin and your expense rates. And those give you a pretty strategic view of running the business. Your book is Profit Yourself Healthy, and it talks about and you share many great stories like the gripping Unfortunately Bear Story. And I think in those we can see impacts of moments in our own personal and business life. And of course, we all realize that none of us leaves our personal life at home when we come into work, and nor do we really leave our work life in the office when we go home. There's a inner connection between all of them and that connection is us. So there's no separation. And paying attention to the relationship of all these things is critical to being both financially successful and happy and healthy in the process, right?

That's right, Bill. You know what, and also, you know we're talking about it. If your listeners want a copy of the book, I know that it's up on Amazon, but if you want a free digital copy, you can go to my website, profityourselfhealthy.com free and I'll send you a free digital copy if you like, if it'll be of benefit to you.

I'm sure our listeners will love that. And that link, link to you and to Profit Yourself Healthy will be in the show. Notes for the show, and I think it's super helpful. Thanks for sharing your story and your work with us today on the Scaling Up Business podcast. As always, I'm your host and growth coach, Bill Gallagher. A reminder that you should subscribe to the show on itunes or you can also find us our shows on YouTube. Some of them are in video, some are audio only. Of course, on our own, we have a growth guide with all that. You need to begin doing your own planning sessions on our website@scalingupbusiness.com and we'll see you soon.

Sam.