MBA2134 How To Negotiate and Cut Your Expenses

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Hey. Oh, welcome to the $1. Because a better business begins with you. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014. And in today's lesson, you'll learn how to negotiate and cut your expenses. As you heard in our extended interview with Ayman Abdallah, who took AppSumo from 3 million to $80 million a year. Profit is king. Okay? Money, cash and cash flow is the oxygen of every business. So you want to make sure that you're always profitable and you have a healthy margin. This means making sure you're not spending more than you're making. In fact, you want to spend a whole lot less than you're making. And one way to do that is to negotiate better prices, better rates, better fees on all your expenses. And I'm going to show you exactly how to do that, how to go down the line and get a better deal on any service contract, consultant, whatever it may be. I'm going to show you exactly how I regularly cut my expenses from 25 to 30% every 18 to 24 months. Let's get into it. Let's get down to business ADP knows.

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Today'S lesson on negotiating better rates and lowering your expenses. We're going to categorize your expenses into a few buckets. The first one is software or or online services. Could be web hosting. This could be aws. This could be your email marketing service. That's one bucket. The next bucket is labor. People actually doing the work for you, your team, your consultants, your freelancers. And third is your fixed running costs. This could be the rent, your storefront, if you have a physical business, your office, your Internet connection, things like that, that no matter what you're going to spend because it keeps the lights on and allows you to function. And the last bucket is miscellaneous. This could be travel, this could be events. This could be one off expenses for marketing, like sponsoring a live event. We're just going to call this bucket miscellaneous. Those are four buckets again, software and online services, two labor, three fixed costs and four miscellaneous. Let's talk about the easiest one to negotiate which is your online services and software. You're going to go down the line and look at all your you should have a P and L which is a profit and loss sheet. And basically you should have a list of all the things you spend your money on to run your business. And you want to isolate or highlight the ones that are software and online services. And you want to reach out to every single one of them via email. If you have an account manager, that's best. If you don't have an account manager, just go straight to customer support and email them. And really what you're doing is you're asking for a long term deal or a better fit deal. And I literally write them an email and say hey Company X, we've been using your service for xyz. Our monthly expense is this much money and it's a little bit outside our budget for what we're getting out of the software or the service. Do you have any options where we can save 10 to 15%? I usually go straight to 20%. I say is there any way we could save 20%? Do you have any other options? I thought I'd ask before we look at alternatives or cancel. And then I say PS happy to jump on a call if that helps. You're basically just being honest with them. Hey, I might look for some alternatives to save some money. I am looking for some sort of discount. Maybe you have a plan that I don't know about that's better suited to me. Maybe you are going to offer me an annual plan that's going to save me some money. Put the ball in their core. This is like a red flag email for any product or service or company. They're going to be like, oh man, we got to help this person as quickly as possible to salvage this customer because they don't want you to churn. They might even hop on a call. I have found that every time have this conversation with one of my service providers, I get some sort of discount, some sort of savings or they recommend a plan that I didn't know that they had or a better suited service that is needed for my business or that I need that can help me out and I can save some money. Sometimes I've saved up to 50% because they just put me into a better plan. So this is going to take an afternoon or something where you just email every single one of these services with the same exact script I just gave you. Done deal. You can save hundreds if not thousands a month by just doing that. But let's move on to bucket number two, labor. Now if you have a full time staff meaning to get a full time salary, this is something that I'm not going to talk about because these people depend on the salary. You've hired them on these terms and it's best for you to keep it that way. Unless they're twiddling their thumbs and you don't actually need them full time for some reason they're not doing full time work. Maybe you need to shift them to part time or better yet, fill their time with money making activities. Whether that's marketing, running webinars for you, running ads, whatever it might be. Find out what they do and get them to do more to bring in more business. For example, our customer service agents had a lot of time on their hands because our product really got better. Our help articles are super helpful so no one's really asking customer support any questions. So we got them to help out with our testing, making sure everything looks great before we push out a new feature. We also got them to do something called Salutation Offers which is to sell a product, a service, a program, a course that we have that might be best suited to a customer that they're talking to. Now, if you have contracted freelancers, you're using services that do work for you. I'm not a big fan of a retainer. Some people like people that run ads for you or do design work, they just say, hey, here's my retainer. You're gonna pay me $3,000 a month. And regardless if I do all a lot of work that month or a little work or produce results for you, you going to pay me a retainer? I'm not a big fan of a retainer because it's not very cost effective and it doesn't actually result or correlate to the actual results you're getting or the things that you will contribute to your growth of your business. So really what I like to do is tie that type of freelance work to results. So instead you can buy a block of hours. This is essentially what they need. They need a bulk sum. So say, hey, I want to work with you long term. How much for 100 hours, for 500 hours, for a thousand hours. And they should give you a discounted rate as you increase the hours. Buy those block of hours, get them to time report the work they do, and only get them to work on things you need them instead of paying them a retainer. I find that this is way more cost effective. And you start to realize how much work you actually need from this person on a regular basis. You buy a bulk of, let's say maybe a thousand hours. It could last you over a year. Bucket number three, fix expenses. This is rent. This is your Internet connection office space, maybe your utilities bill, you know, like your electric bill. Maybe you have a company car because you do a lot of driving for meetings or deliveries or whatever it might be. How do you negotiate these expenses? Well, the best way, because there's not a lot of wiggle room here, is to negotiate an upfront long term deal. For example, when it comes to office space, this is a very common practice. You lock in a deal for years. So like I want a two year contract, three year contract. This gives security to the landlord, that I'll have a resident, I'll have somebody who's in this space. And you lock in a deal of the rent rate not going up. I've even seen people negotiate the rate in exchange for a long term deal. So they say, hey, the rent is $2,000 a month for this office space. They counter and say, hey, how about 1800amonth? But we're going to sign a three year contract. So you got 1800amonth, coming at you for 36 months. We're not going anywhere. Most landlords will shave 200 bucks to have that peace of mind. Your electric bill, your Internet bill, whatever it is. There are a lot of competitors out there now in most local areas. If not, that's okay, you can kind of skip this one. But for most of us, there are competitors out there. You can shop around, you can get a new customer's discount. Most of them are using the same lines anyway, so it's not like you're going to get worse service. So shop around. Same thing for a company car. Shop around for a better car loan, refinance your car, or trade it up for something that's a little bit cheaper.

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Expired in 2012.

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It feels good to save big. It feels good to geico. All right, we covered the first three buckets, which is software and online services. Bucket number two is labor, and bucket number three was fixed expenses. Let's talk about now miscellaneous. This is travel. This is one off costs. This is going to a conference, all that kind of stuff where it's not part of your normal expenses, but you do spend here and there. And sometimes they're big expenses, like going to a conference where you have flights and accommodations. The ticket for the conference, it can total up to 5, 6, $7,000 sometimes. So my advice here is to use what my buddy Dale Beaumont calls the preloaded year. You schedule everything in advance, a year ahead. Most big events are announced, you know, nine to ten months, even 12 months in advance. So you know when this event's gonna happen way in advance. Why is this important? Because when you book early, whether it's tickets or buying tickets to the conference or hotel, you're gonna save a ton. I find that you save more than 50% sometimes on all those when you book months in advance versus like a few weeks in advance, especially flights and hotels. And of course, these events will have early bird discounts. To sell tickets. Jump on these. These are great, great value.

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One way to save money on all of this or even not have any of these expenses is to be a speaker at the conference. Now, if you are an up and coming speaker, if you have great content, if you have a subject matter that you can add value to this conference, you can approach the conference organizer. Well, in advance before they, you know, announce speakers or lock in the speakers and pitch to them and say, hey, love what you're doing with this conference. I have a session that might be interesting to you or might be interesting to the to the audience that's going to attend this conference. This is what it's all about. This is what they're going to learn. These are the takeaways. Here's a video of me delivering it at my local meetup, or some other video of you speaking on stage to show that you are actually pretty decent in front of an audience. And by being a speaker of the conference, it's going to save you the conference ticket for sure. Most events will cover your expenses for hotel and even flights. Some might even pay you. So that takes care of that and you're adding value and growing your audience through that activity. Anytime you have a one off event, like let's say you want to sponsor an event or you want to throw your money at some sort of initiative, ask yourself, how can I get an immediate roi? How can I make this a net positive instead of a net negative? For example, we sponsor a lot of live in person events with webinar Ninja where we get a booth and all that kind of stuff. But when we go and become a sponsor, our job is to go home with more sales that equal or are greater than the expenses that we paid to be a sponsor. So we literally sell the product there, we get people to sign up, we do an incredible offer for them, we set up their first webinar and all that kind of stuff with our software and do a little tech support right then and there so they are signed up and ready to go for the next year. And if you have any kind of one off expense, whether it's for marketing, whether you're meeting for somebody or having a dinner, how can you make this an ROI positive experience? Well, that wraps up today's episode. How to lower your expenses. How to negotiate better rates. Whether it's for services or labor or fixed expenses or miscellaneous things that just pop out of nowhere, plan for them, save money. Negotiate your way to lower expenses and more profit. If you love today's episode and want to give us some love, just leave us a rating or review on your favorite podcast app or or better yet, share it with your friends on social media. Go ahead and let them know. Go to 100 MBA Net to subscribe to your favorite podcast, the $100 MBA Show. Before I go, I want to leave you with this. Most businesses go out of business because they spend too much. Not that they don't make enough. Yes, you have to have sales. Yes, you have your revenue. But if you keep your expenses low, if you keep your expenses in check, then it's hard to go out of business. Your job is to be proactive for that, so your margins are fat and your profits are well above what you need. Thanks so much for listening and I'll check you in tomorrow's episode. Q and A Wednesday. I'll see you then. Take care.

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We've all been there. You hold on to a coupon but forget about it and suddenly it's Expired.

Expired in 2012.

Dang it.

Fortunately, by switching to Geico, you could save about 900 on car insurance without ever touching a coupon.

It feels good to save big. It feels good to Geico.