Episode 21 : Money, Money, MONEY

Welcome to the Unstoppable Profit Podcast. This podcast will give you all the tools to grow your business and live life on your terms. Millionaire agents and entrepreneurs think and act differently than others. This podcast will give you a simple, proven three step blueprint to grow your business. Over the past 31 years of research in your industry, Mike Stromso has created a unique philosophy called the three people process and promotion. This outside the box thinking and guidance provides agency entrepreneurs just like you the knowledge and tools you can quickly implement to explode your agency business. He has been there, done that, and he's still doing it. Wherever you are today, if you're starting with nothing or are well on your way to the success you desire, with the right people, processes and promotions in place, you will be unstoppable. And now I'd like to introduce your host, Mike Stromso.

Hey friends, it's Mike Stromso. And welcome to episode 21 of the Unstoppable Profit podcast. Again, this is Mike Strompso coming to you live from the Living Agency laboratory. And today we're gonna be talking about money, money, money, money. And I know that my singing talents are not where they need to be. And I've been told that not only do I not have singing talents, but I don't have any rhythm. And there's some friends of mine who over the years that told me of my certain ethnicity that I that contributes to not having any rhythm. But hey, it is what it is. I got what I got and what I'm gonna got, I gotta keep bringing what I got. And what I'm gonna bring to you today is all about money. And our subject today is about money. If I haven't mentioned that yet, the title is watch your money. And you have to have a watchful eye if you're in business, you know, my response is my responsibility. And if you're in business, it's your responsibility to know what's going on with the numbers. It's absolutely critical in the evolution of your business. So you have to have a focused habit somewhere in your schedule to make sure that you keep your finger on the money pulse. You know, we're so quick to say in business that we're here to serve our independent insurance agency business or any other service business or any business for that fact, you know, our customers do allow us to earn income and so sometimes we say so quickly that hey, we're here to serve our customers, etc, etc. But at the end of the day, why are you in business?

Think about that for a minute. By the way, I constantly forget to remind you, please have something to write with and. And right on. So you're going to get some ideas. Throughout these podcasts, make sure you write them down so that you can implement, execute and take action on them. Don't think about it too much, don't talk about it too much. Only taking action. I had a comment on my calendar yesterday that face your fears with action. Only actions can get you to the next win or the next lesson. That's the critical mass. Back to what we were talking about. We're so quick to say that we're in business here and here to serve our customers. But at the end of the day, I'll repeat, why are we all in business?

Because ultimately, at the end of the day, we need to earn money for some reason, whether it's to support our family, put a roof over their head, to put food on the table, to put our kids through school, to buy what we want, buy what we need, there's a difference there, etc. Etc. We need to earn income to support and support us, to also support ourselves. You know, one of my very favorite quotes of all time is from one of my very favorite books of all time, the little inspirational book by Earl Nightingale, originally recorded in 1955, called the Strangest Secret. And it's out there on YouTube for free. Just go ahead and type in Strangest Secret by Nightingale on YouTube and it'll be yours in front of you instantly. He said, the only people who make money work in the Mint. The rest of us have to earn it. That is so true. Okay, so we've got to earn it. We all have to earn the money. But once we earn it, it's also what you do with the money. And as critically important, it's what you become when you're earning the money that defines our level of success and financial security. So ultimately, that's what gives us the freedom that we enjoy in our lives and our businesses. And you know, I keep seeing posts as people continue to join our UPP family, and I'm so grateful for the opportunity to stand by their side. There's a couple of members that know that there's work involved, okay? And so they say, hey, welcome to the family. Get ready to work. Because that's what it takes. It takes planned, strategic work and small choices plus consistency over time equals the results that you're looking for. So you have to know that it's not just it doesn't grow on a tree like the old fable says. We've got to do the work. So I've got four things for you today that's at the core of watching your money, and that's what I wanted to share with you. Okay? Number one, you've got to keep your finger on the pulse. I'll repeat that. Number one, you've got to keep your finger on the pulse. It continues to amaze me.

The entrepreneurs that I speak with all of the time. And I will say, you know, how often do you look at your bank accounts?

That's exactly what I get. Silence. Because they don't know.

Not that we have to lose focus by worrying about that or thinking about that all the time, but it's just the art. Not the art, the habit of looking at them often that keeps us in the sink and keeps our mind on the numbers. Okay? So you got to keep your finger on that pulse. And thanks to the Internet and online banking, our financial picture is at our fingertips all of the times. That monetary dashboard, which is a measure of how we're doing. Okay, not the reason, complete reason for what we're doing. Let's get clear on that. But it's a measure of how we're doing from a business standpoint. See, the more often that you manage your financials and strategically plan and forecast and manage your financials, the more you strive to understand exactly what every line on your balance sheet looks like. How often do you sit down with your P and L? How often do you sit down with your balance sheet and make sure that everything is lined up? If you were to have to part with your business tomorrow, would your numbers be in order? Critically, Critically important. We never know when that day is going to come. Are you going to leave somebody a horrific mess? Are you going to have things in order? Really, really important? Okay, that's part of the love picture, right? And the more that you have your finger on this pulse, the better you're going to become at planning, forecasting, and actually handling your money and investing your money wisely and making every dollar count as you continue to reinvest in your business and everything else you might have in your own personal financial picture. Okay, so it takes planning. You know, Benjamin Franklin said, if you're failing to plan, you're planning to fail. Winston Churchill said, the war wasn't one with the plan. It was won with the planning. It's all very important in this picture. So number one is keeping your finger on the pulse. Number two, why it's important to look at your bank accounts every day. People ask me when we have that dialogue, they say, well, how often do you look at your bank accounts? I look at them, I'm going to say out of.

Six days a week because I look at them on Saturday as well. Just a quick look.

Six days a week, 24 times a month is when I look at them. And how long do I look at them? Less than a minute for sure. I know exactly what's supposed to be there. I know exactly when big transactions take place. I know almost the day of every month when deposits should be there. I know when something is off. I know it just like that. Does it preoccupy me? Absolutely not. I just know. And through the habit of doing it, doing it, doing it, doing it and doing it, doing it, doing it for so many years, I just mentally have a sense of exactly what should be happening. And I think it's kind of led to a sixth sense in my own gut in every aspect of business. I just know. So you build these habits by doing it, doing it, doing it every day. It's just like everything you should be doing marketing every day, you should be doing it, doing it, doing it, you shouldn't miss. And if you don't do it yourself, have somebody else that can do it. Alright, so why do I look at it every day? I need to know what I have so that I can handle my financial responsibilities and make payments accordingly at certain times. Alright? And I know that I've got this roller coaster of a year because we're an S corporation. Both of our, yeah, both of our companies are taxed as X S corporations. So I know what this roller coaster looks like throughout the year and it helps my tax planning so I don't have to write these massive checks at the end of the year. Not that I'm not willing to pay my taxes, but in my humble opinion, and I'm not going to go on a political rampage right now, but they don't know what to do with it. So I'm going to reinvest in myself, in something that matters, right?

And I pay attention to this every day so that I can learn that if there's something missing, I'm going to know it right away. Because I built into my gut and my mind through this habit of knowing, knowing, knowing every day, okay? And ultimately at the end of the day I get compensated to sit in the chair that I'm in because it is my responsibility to, to not only handle but to manage everything that goes on with the business. I'm not going to go into this lesson, but I had some time in my recent history where I completely. The story that I tell is I threw the fishing line out in the water and I let the line go out with a piece of bait on it, which was ultimately turning it over to somebody else. And that was not done well. And I identified that these things were not being done in a manner that was conducive to a profitable company. And I challenged it and it kind of led to conversations that led to, you know, parting in ways, so to speak. So it is what it is. That's because I had that history of watching things. I knew exactly when something wasn't smelling right, if you will, if you know what I mean. So anyway, it's because of that knowing what should be going on and when something doesn't, isn't going right or might be heading in the wrong direction, you will know it. So it's really, really important. And by looking at the balances every single day just again creates those habits. Just like reading your daily goals. I mean, it's one of the first things I do in the morning after I sit down is I read my goals. It's the very first thing that I do before I do anything else. I read my goals because I see them differently every single day, alright? I've got them in paper, I've got them on my desktop. Depending on where I'm at, they're always there for me, alright? And then after I do a couple of other things and it gets to the point where I look at the bank accounts and just a quick, you know, 30, maybe 60 seconds if I got to click on something and see what's going on, but it's done and I'm good and I move on, alright? So it just reminds me of where we're at. It sets the tone for the day and it helps me to be a better leader. Okay, so we've got, number one, keeping your finger on the pulse. Number two, why it's important to look at your bank accounts every day. The third thing is what should you be looking at and how often should you be looking at it? Alright, so we talked about the bank accounts, looking at those daily. Fantastic. Your financial statements. It includes things like your profit loss, your balance sheet, how often to dig into your profit and loss and really look at the expenses. Do you know what the percentage of every one of those expenses is.

Like? Do you know the exact percentage of your employee payroll as an example? The best of the best say it should be between 30 and 40%. And if it's elevated above that, it's not a bad thing. But you Got to understand why. I mean, it's all critically important. Our largest line item is our employee payroll and benefits.

And then we invest heavily in marketing and we invest heavily in it. Those are at the top of the ladder. I know exactly where those expenses and the percentages of expense those are. Because the cool thing in business, it's so simple. It's income minus expenses equals net profit. It's not that difficult. But you got to understand your way around the profit loss statement. And the balance sheet is critically, critically important.

So you have to understand, especially in the insurance agency business, if you've got producers and you're paying commissions and all this kind of stuff, is it an investment in future income? And we talk about that, and we've talked about it in other podcasts, and we'll be doing one on this specific subject coming up in the near future. The lifetime value of a client, and we'll expand on that in great ways, but it all has a play. And then ultimately, like I mentioned a couple of minutes ago, it's about taxes. Okay? So it all leads to, at the end of the day, depending on how you're taxed, that net is going to be what you're taxed upon ultimately. And that picture is not getting any easier. Okay, in preparing for this, I thought I would also share with you. I have an Excel sheet that I've been running at least 12 years. I'm looking at it right now. And so it's year by year. And it has our gross revenue, by the way, in our business, I think about revenue, I don't think about commissions. It is what it is. That's not what gets deposited in the bank. Only revenue or commission income, same thing, get deposited in the bank. So I've got my running revenue year over year over year over year. Okay, then I've got our goal for the revenue that we set on the beginning of the year. Our fiscal calendar year ends on 1231, so it's calendar year. So the goal that we set, January 1st, it's listed right next to it. And then we got profit sharing, and then we got the goal for that on January 1st. Then we have a total income goal, which is combining the two, by the way, for those of you who might be newer in the business and might not have entered into that arena yet, you don't ever want to depend on profit sharing to run your business. It's a luxury, an absolute luxury. Do not count on it as part of your operating revenue. Just trust me on that. Okay? So again, I have the total Income and then have the goal that we set January 1st. Then we have results. Okay, so we set the goals and we said we wanted to do this out of the gate. Then we have the results. Okay, so I have the results and then I have a percentage of increase. You know, I can see year over year, plus 10.5, plus 11.3, plus 9.09. You know, I've got a running total and I can see historically where we've been. And then I have the separate results line as far as profit sharing is concerned as well. You know, we had one one year plus 211%. We had one one year minus 46.2%. It's up and down. And we know how that works. Okay, so and then I have a net profit column and that has a running total that just gives me a picture, you know, based on. And it should obviously match up my tax returns, but it just gives me a separate line item to be able to look at that. Okay, so if I also look at the next column, it just gives me your results and the profit as a percentage, plus or minus. It should always be in the plus, by the way. And then I've got it separated out into line of business. And we separate our business out into three items. Personal lines, revenue, commercial lines, revenue, and life and health revenue. So it's those three separate segments. I've got my exact revenue for the year for all of personal lines and the number of policies right next to it. Then we have all of our revenue for commercial lines and the number of policies right next to it. And then we have life and health.

And the number of policies right next to it. And then after that, we have the number of applications that we the new applications that we generated that year. And then we have a goal for the number of new applications. Then we have referrals, the number of referrals that we got for that particular year. We have our goal on referrals for that year. And then we have the last column, which is actually referrals written. So in my world, this is all part of the financial picture that, you know, I've got to have my finger on that pulse all the time. I went a little expansive on what you should be looking at as far as the money's concerned. But. But I want to help you think a little bit differently about how you look at all this and more importantly, how you think about it. Now. It all has to do with a budget as well. And I've never been a huge getting it written down budget guy. I've got in my mind and I have a rough budget penciled out. I'm more of a driving revenue type guy. My goal is to keep that revenue, the gross revenue driven to the bottom line. And I'm really, really good at that. And now I'm getting really, really good at how it's distributed and laid out and managing it and all that kind of stuff. And that's what I want to encourage you to be able to do today. Okay, so quick recap. Keeping our finger on the pulse, number one. Number two, why it's important to look at your bank accounts every day. Three, what you should be looking at and how often. And I don't think I mentioned this under what you should be looking at how often your bank accounts, daily financial statements, two to four times a month. You know, we talk about the profit and loss, the balance sheet expenses, payroll, we do our payroll twice a month. And then all of those things that I was just talking about, those are, I'm going to say, a couple times a year I look at that kind of stuff. Definitely the beginning of the year, definitely at the end of the year, maybe once mid year, depending on, you know, how we huddle with our leadership team and that kind of stuff. So that's what we should be looking at. How often, number four, invest in somebody who knows more than you do to help you with all this stuff. And really it's just about having a great CPA partner, maybe a bookkeeping partner as well. We have both and any other financial partners out there who can help you make great decisions. I have three on our team. Okay, I've got the cpa, I've got the bookkeeper, and I have another financial partner that helps me make decisions about the higher level.

Long term investments and that kind of stuff. So what does it do? Well, it keeps you on track, number one. Number two, it keeps you accountable to somebody else. Number three, the first thing I told my CPA when I started working my cpa, I said, look, I want to plan top of the table all the time and I do not want to go through an audit. That's what I told her. And absolutely it's not happened. And I'm grateful for that. So, you know, invest in the people who know more than you do. I don't have the patience to sit there and deal with the accounting or the numbers. I know what they should be and I can direct them in any way necessary. But you know, I don't have the long drawn out time to sit there and do reconciliations and all that. Kind of stuff. I know exactly what I'm looking for because I've done it, done it, done it for so many years. But so invest in those people. What does this mean for you? It's really simple. We talk about the three Ps, people, processes and promotion. And this is all of that, right? It's having people, yourself and other people that you rely upon, having the process of doing it, doing it, doing it at certain times. And it's not so much the promotion, but when you do this and build the habits, what does it mean for you? You're going to have a very clear view of your entire financial picture, which is going to allow you to reach as high as you want to reach in your agency business. We just eclipsed the pinnacle because some of the big steps that we took a few years ago, and they were hard steps, it was acquisition and some other things, we just culminated all that. So, I mean, what a good feeling that was. It was flipping awesome. Now we're able to if we want to. If the right deal comes along, we're able to re. Reach. I was just adjusting it this morning. We are completely lined up to take some major steps if that's what we want to do. Maybe we will, maybe we won't. It's all in the cards. The good news is, as a little side note, from out of left field, my buddy sos, my squirrel is looking at me, said, don't go too far, okay? But as it's lined up with our leadership team, one of the goals of our leadership team is focusing on acquisitions. So we're lined up. That's what we want to do. Okay? So you're going to be. What does this mean for you? You're going to have that clear view of your financial picture, allowing you to reach as high as you want to reach. You're going to be in complete control of your financial future and you're going to have more freedom to live life on your own terms. We say the result of the three Ps in our philosophy is you're going to grow your business, you're going to create financial wealth, and this is a part of creating the financial wealth, and that's what we want for you. And again, you're going to have more freedom to live life on your own terms. My friends. I hope you've got the notes. Keep your finger on the pulse. Why it's important to look at your bank accounts and other financial picture every day. What should you be looking at and how often, and invest in CPAs, bookkeepers and other financial people to help you get where you want to go. Friends, I hope this helps you. This is Mike Stromso coming to you live from the Living Agency Laboratory. And don't forget, you can refer this to anybody that you want to just send them to unstoppable profit podcast.com that's unstoppable profitpodcast.com up at the top. Just ask them to subscribe and they will immediately get all of the notifications and everything concerning these podcasts. Podcast I hope this has helped you. I will see you on the next episode. Until then, remember, Make a difference, be unstoppable, and above all, leave no regrets. We'll talk to you soon. Thank you for listening. If you would like to listen to more episodes or share this podcast with someone you care about, please visit www.unstoppableprofitpodcast.com now go out and make a difference. Be unstoppable and leave no regrets.