Do THIS To Become a MILLIONAIRE in 2024 | Robin Waite

When you actually drill down into it the really successful business owners, rather than choosing 4,000 things and doing them 12 times, they've chosen 12 things and done them 4,000 times. So it's a very patient, very slow process. Simon Sinek talks about it in terms of the infinite game. It's not like a win, lose or draw scenario in business, which if you've got short term thinking, I have to win, I have to get a client to put food on my table to pay for my mortgage and things like that, that short term thinking. Whereas the infinite game, it's about not win, lose or draw, it's about how do I stay in the game for as long as I possibly can do. And that means building a profitable, sustainable business. And I think this is where the distinction is around marketing. People think the goal in business is to collect as many clients as they possibly can do in as short a time as possible. Whereas actually the goal in business is to make a profit and sustainably make a profit.

Guys, welcome our good friend, Robin Waite. Dude, what's going on, man? I'm super excited to talk to you.

Likewise. I was just really humbled when your team reached out to me for us to have a conversation today. So now I'm super, super stoked to get started with the interview.

Well, the reality is the team only reaches out when we find extreme value for the audience. And you know, one of the things that we do obviously unstoppable is we're focused on, you know, heavy duty life strategy and heavy duty business strategy and scaling and all kinds of stuff. As you know, part of my story is, you know, starting from bas nothing and then building a good size company and then starting other companies and then starting other companies and so on and so forth. And one of the things that I really appreciated on some content I stumbled across of yours specifically was this methodology on pricing. And a lot of the entrepreneurs that we've worked with undervalue or underserved themselves. They never actually bring in enough revenue to actually control their operations so they can actually scale. And you know, I started listening to some of the content, I was like, man, this is really good stuff. So I'm going to hop around all over the place. You are a wealth of knowledge. You've been very successful in your own right. And I think the audience is going to just enjoy a ton, you know, so maybe if we could maybe let's start in the. In what most entrepreneurs are doing wrong in how they're selling their products, goods or services.

Yeah, absolutely. I mean, the Biggest mistake I see people making in 2023. And obviously this is going to roll through into next year as well. But.

It'S going to sound really awful, Steve. Marketing like that. And it's not, it's not the marketing which they're doing per se, it's the fact that they're constantly having to market to top up their client base. So I call it the sales cycle of doom. So sell, deliver, sell, deliver, sell, deliver, sell, deliver. They're going around in this cycle and then they get ill or maybe, I don't know, they take a holiday or something like that and then they take a big deep breath and then they're chasing the next client. And it, and it seems, and it just ruins business owners. It ends up getting them to a point whereby they're burning out. Now look, it goes without saying you need to do some marketing. You've obviously got to do some sales in order to enroll clients into whatever business it is you've got, whether it's a product or service based business. But I believe in an ideal world, the perfect business has half the clients but double the revenue.

Yeah.

So by virtue of that, we need to be finding a creative way to do less marketing and instead of more, which means being able to leverage the partnerships that we've created, being able to elevate your own personal brand so that you're not having to constantly do things like posting on social media. Because again, there's some relevancy, you do need to do some amount of posting on social media. But if you find yourself spending like, you know, seven hours a day posting on social and it just disappears off the news feeds, you would have to do the same the next day and the same the next day and the same the next day. And quite often I see business owners just like, well, I'm doing all the things the gurus and experts are telling me to do. I'm, I'm doing all of this posting on social and marketing, but I'm not getting any clients.

So you're social rich, but income.

Yeah. Yeah, exactly. Like you've got a ton of content that you're just punching out all the time, but actually it's not really landing or resonating with people at a big, big scale. So the first, the first way to look at it is instead of asking yourself the simple question, which is like, where's my next client coming from? Which is the mindset, short term thinking, the mindset that a lot, lot of business owners are in, if you asked yourself, where are my next hundred clients? Coming from, you end up with a completely different plan in order to attract those clients. And if you had to get 100 clients, Stephen, by this time next week.

Yeah.

What would you do? It would be, it would be very.

I'm actually leaving this office and knocking on some doors and some windows, honestly. Yeah, well, first of all, I'm going to get gritty. I'm going to get gritty.

Take action. Absolutely. But, but how, how, how else would you get in front of a hundred of your ideal client in one go? What else would you do?

You know, one of. Well, in today's environment, one of the easiest ways for me to get grain. Immediate attention in a, in a larger scale is to step on a stage.

Yeah.

And then, and then just to teach from my wisdom and then offer a chance for the audience members to stay connected, you know, via maybe some kind of training resource I can give them to start the dialogue. And if they really like what they're doing, they'll actually, they'll actually, you know, want to talk to me and then schedule a call and go through that process.

Yeah, that's it. And what does, what does that require? You know, what if you had to do in order to earn the right to step onto that stage in front of hundreds of people? What have you done?

Oh, gosh. I mean, I built a, A business from homelessness to well into the nine figures. You know, it's. And everything that went with it. All the leadership failures, all the, all the monetary failures, all the broken systems, all the broken processes, all the, you know, that's. To me, that's actually where the, the real value for me actually comes from with a potential client is not the successes, it's actually all the crap that I learned not to do. You know, I've cost myself millions of dollars of mistakes. So.

And mindset wise, though, if you could summarize that in a sentence, like, what's your approach mindset wise to making that happen?

My mind, my current mindset is to serve the person I used to be.

Yeah.

So always come from a heart of service, but also come from a heart of service in an essence that does not require me to downplay what I have had to experience and learn. I've had a very expensive college education because I have a ged. So I've learned everything on the fly. Like, you know, I've learned I built the entire business structure and leadership and communication and team member issues and, and though it would blow people's mind, with the amount of things that you build over 25 years building any kind of business. So for me, my mindset, in order for me to serve the person I used to be, I have to have a constant nature for myself of always becoming more. Which means I have my own coaches, I have my own people that I go to, my own strategist that, that help me. I, I also got really good at specializing. You know, I'm, I specialize in this specific thing. I can help you double, triple, quadruple your results in this area, you know, while I've got four other coaches that help me in four different areas.

Yeah. So what I, what I heard there was, first of all, you made a practical investment in your education and you've continued to do that. So that takes a lot of time and it takes a big investment of financial investment as well. Let's be fair.

Yeah.

But then there's that continuing process of like, you know, lifelong learning, effectively surrounding yourself with people who are smarter than you, no more than you, you can give guidance, but that's a very slow and very patient approach. And I would argue, and I don't know whether it's, it's just by virtue of the fact that we see other people doing all these amazing things and seemingly like overnight success that we feel that that's the way that business should be done. But the reality is like that when you actually drill down into it the really successful business business owners, rather than choosing 4,000 things and doing them 12 times, they've chosen 12 things and done them 4,000 times.

Yep. Right.

And I think that you may even have.

Very true. Yeah. I call it compounding.

Yeah, exactly.

Yeah.

So it's a very patient, very slow process. Simon Sinek talks about it in terms of the infinite game, that it's not like a win, lose or draw scenario in business, which if you've got short term thinking, I have to win, I have to get a client to put money on, you know, food on my table to pay for my mortgage and things like that. That's short term thinking. Whereas the infinite game is about not win, lose or draw, it's about how do I stay in the game for as long as I possibly can do?

And that means building, you know, a profitable, sustainable business. And I think this is where the distinction is around marketing. People think the goal in business is to collect as many clients as they possibly can do in a shorter time as possible. Whereas actually the goal in business is to, is to earn money, make a profit, and sustainably make a profit.

No, I 100% agree. In fact, I would even take a Step further, that most business owners.

You know, kind of have what we would refer to as a Walmart approach. They want to have as much stuff on the shelves as they can possibly happen and hope that as much traffic comes in as they could possibly get, you know, but when you look at the numbers, a lot of your more focused and strategic retail providers do better from a profit standpoint. Therefore they have less overhead because they're not having to hire. It's just the whole structure is different, you know, and I made it. I had to make a decision, I don't know, probably 10 years ago before I entered into the thought leadership world and started to start offering value. Was I going to be a low cost leader or was I going to be someone seeing that can actually offer the value? And then what I did, and I'm weird, I back my way into what my hourly rate is. So I know that there's roughly 20, 80 hours in a workable year, you know, if you're working a 40 hour work week. So I took my net income and I divided it by that 2080 and that told me what my hourly rate should be. And I started there as not to go in the hole of what an hour of my time is worth, you know, and then I also decided that I was only going to work with 10 or 12 people to the course of the year. And then in the, in working with those 10 or 12 people, they get all of my attention rather than trying to give a hundred people my attention with all different levels of life and business confusion and all kinds of stuff, you know, And I know that one of the things that you've helped do, help a lot of coaching businesses specifically do, is help them understand what that structure is. That's why, that's why I'm very curious to know how you backed your way into kind of your theology and how, how you help them. Because I think it's, I think it's a twofold problem. I think it's, I think it's a price issue, but I also think it's a value issue. Like one of the biggest things that I had to work through was the value issue. Am I worth being paid $20,000 an hour? Well, what is it costing me? You know, that kind of scenario. And it took me a while to kind of get there. It's like, what have, what have you been through? What have you learned? What, how much money can I save? An entrepreneur, a business, a relationship, you know, you got a marriage that's on the rocks or something like that. And I And I can offer value to help, maybe stave the tie. Those things are priceless.

Yeah.

So anyway, I'm curious to know kind of where. So now we've talked about a little bit about the marketing side, but how do we position ourselves from a. From a mental state to basically know our worth and know our value and then charge accordingly?

Yeah, well, so it's important to. So way you made that calculation, that mental calculation of 2000 hours a year that you work, and you kind of did the backwards sort of calculation on that and figured out your hourly rate. A lot of business owners just don't understand what their effective hourly rate is from, from the word go. So, yeah, and we're talking here mostly, you know, service providers, so coaches, consultants, freelancers, those types of businesses. And they don't realize, they haven't understood what these natural constraints are.

So, for example, if, if you have 200 hours in a month, for example, which you can deliver services to somebody and you're charging 30 bucks an hour. Well, you're ma. And. And this happens all the time. I get people like, right. I Wanna, I wanna six figure business. I want to win $10,000 a month. Okay, great. So what's your hourly rate? 30 bucks now. Oh, right. Okay, so if we multiply that by 200 hours, your maximum earnings potential is $6,000 a month. You can't earn any more than that. Oh, well, I'll hire some people. Do you know how much it costs to hire people these days? Right. It's not cheap.

And when you hire the people, it's not just the money, it's. It's all the stuff that comes with the people that you hire.

Yeah.

Relationship stuff.

All the, Everything, all the baggage which comes with it. Absolutely. So then I'll be like, okay, cool, let's backtrack a sec. Tell me how you came to the conclusion that $30 now is like, you know, the appropriate amount to charge for this service which you're selling. And again, the most common answer I get is, oh, well, I looked at what everybody else was charging and, and I didn't want to be the cheapest because I knew that I probably wouldn't make any money or, you know, I'll go out of business or whatever. People would perceive me to be the cheapest, so why would they me? But I also didn't want to be the most expensive because, like, you know, and that's an interesting reflection because often they don't want to be the most expensive because based on their own internal value system, they don't normally buy the most expensive themselves. So therefore, who am I to be the most expensive in the market? We'll come back to that in a second. So what they do is they kind of opt for this middle ground, this very safe space, not being the most expensive, not being the cheapest, but yet they're still unhappy. And there's like a, a law, a diffusion, a law of diffusion with, with earnings. So like what, what ends is you've got this mass group of people who are in the middle, you know, earning not, not quite enough money, but just enough to make a living, but not enough to be super happy. And there's this top 10% who actually take 60% of the revenue out of every industry. They're like the highest paid out of, you know, everybody. And they're the ones that we see on Instagram, on the, on the yachts and, you know, super happy in theory, that's what they choose if they're not.

Stumbling their way in front of everyone.

Or alternatively to that, we just don't see them because they're just busy working. Yeah, Earnings, earning a good living. And why do they need to shout about it?

Yes.

But the key thing is that in any market, doesn't matter what market you're in, whether a coach, consultant or a free web designer, whatever, it doesn't matter. If you look at 25 other web designers in your local area, there can only be one of them who is the most expensive. But there's also some trends that we start to see about of the most expensive in the market. So the most expensive in the market typically has the most number of Google reviews, and they're generally quite positive. Okay. So the market is telling us, is signaling to us that this guy's all right, he's genuine and he's good. They've probably been around for the longest amount of time. So like you, they've probably had, during that time, they've invested in their education, they've got better at mastering their craft, they've done their 10,000 hours. So you know that they're good in practice at what they do. And so they deliver good results and they deliver results fast. Right?

Yeah.

So, and that's not an assumption, that's actually a, a rule for, for life and business. I studied with a. In the uk, there's a group called Sherlock Coaching. So I studied with them and they studied about 10,800 businesses. And these were just common trends across all professional services. Lots of reviews, they've been around for the longest. And here's the important Thing they are the most expensive and yet they're still able to get clients. Magical.

Interesting.

Right? So it's a clue. Right. All we're looking for here is clues. If somebody else can do it, probably we can too. But most small business owners, one, they haven't had the education and the training necessarily that you or I have had and understand pricing and how to productize the service and how to articulate the. The value around that service in terms of the results it can generate for their clients.

So they kind of. They end up in this place where the only thing they can measure their value against is their own past experiences. Which unfortunately some case. For some cases fortunately a small number, but in most cases unfortunately is made up of our parents stories and our parents struggles and our parents attachments to money. The arguments which they used to have when they were growing up. My parents were no different to this. I've had to learn my way out of this Me too history that my parents, you know, gifted me. They gifted me lots of amazing things and opportunities. Opportunities. But the thing they argued the most amount was money paying for my school fees, paying for new shoes, paying for an extension on the house, paying for everything. Like it was always an argument in the weight household when I was growing up as a little child. Little boy.

Yeah.

And I've done a lot of therapy work around that. I've also done a lot of coaching work with coaches around that as well to understand that. But that story is like very typical of most small business owners. The, the thing is though, most people don't. They see that then when they hear about it, they're like, oh, oh. They see it as like they've been gifted this thing which is like quite negative and quite toxic. But actually it's likely the thing which made them an entrepreneur in the first place. It's likely the thing which drove them to want to start up their own business.

True.

And many don't realize this to unpack some of that story that their parents left them because they don't want that struggle. So we become an entrepreneur because it's exciting and we get freedom from it and fulfillment from it and it's fun and we make our own money and all of those things. But what happens is because we haven't dealt with that story, we end up going back to old patterns and creating a job for ourselves and a struggle. Yeah, I just, I see it all of the time. Yeah.

So what needs to change? Like let's say that we've got a listener or some viewers right now. They're like, look, I've got a business. I started the business to, to find freedom. What I've found is a more intense job for myself. You know, thinking that I'm, you know, I'm, I'm, I'm in charge of my own future, but yet I'm not really taking charge of my own future. So how do we get them out of the rut, the beliefs? And I mean, one of those weird financial beliefs for me growing up was that money was evil. Like, I was always told that if you had money, you must have gotten it by stealing, robbing, killing, doing something, you know, something horrible.

Obviously I've learned that that's not. Not the case. But you know, it takes time to work yourself out of that, that, that area or an awareness, bare minimum. So if we have people watching or listening right now that are in that zone where they're. It is the $30 an hour, the $40 an hour or the equivalent, you know, and in order for the hip, this hit their six figure, I mean they need to be making 100, 200, 300 an hour, you know, kind of scenario. What, what, what needs to change.

So the first thing is, so where you had that, that money is the root of all evil, that, that very common sort of thing. And a lot of people attach that similar sorts of things like that money doesn't grow on trees. There's all the sayings. Remember that. That's little Stephen's story is a part of you. He still lives inside you. Yeah, but he also is a little separate, separated to you. You're now grown up Stephen. You have your own grown up Steven responsibilities. And we've got this little boy here who also, he just needs a cuddle and he needs reassurance to say it's okay, you know, it's not something to worry about anymore. It's dealt with. That's. Those are things your parents used to argue about and stories they used to tell you. You see, you can see the emotional attachment there about, you know. Yeah, you can't see my hand. My hand was out of the camera. I'd imagine Stephen was little, so he's off. Off camera.

Yes. Steven is big Steven's little, let alone.

Let alone little Steven.

So we got little Stephen who just needs a little bit of nurturing and he needs to just be told it's okay. But also big Stephen needs to know that that was all like little Stephen's life. That was, that was, that's done now. That's in the past.

The second thing we need is Once we have that emotional sort of detachment, detachment from our old stories, we can then start to look for evidence about what the new truth looks like. What does the. What does our future world look like if that's no longer true? What does the future truth look like? Because until we've experience it, we've got no basis for it to be tangible, for it to be real. So, yeah, I always, and I mentioned this earlier on, I always look for, well, has somebody else done this? I've not jumped out of a plane. It's really bloody scary, like, you know, for weeks in advance. I mean, I've never, I've never done it. I'm kind of imagining here. I don't know. But. But probably for weeks in advance, you what, you worry about it and you think about, you know, the training that you're going to get and getting into that jumpsuit and being strapped to somebody else, being ushered to the, you know, planes going up now to have many thousand be ushered to the door, and then you got that kind of jump out. But millions of people have jumped out planes. Thankfully, most of them are all okay. And it's all right. They've had a wild time doing it. Okay. And who knows, maybe one day I'll have a go at it. Yeah.

Well, it's always a good goal for 2024.

So just to make this story better. Right. Maybe I should just go and do it. Right.

Anyway, as long as you attach a GoPro to yourself, that'd be kind of fun. We can reflect, we can. We can tie it back to the podcast show just for that reason, like, hey, guys, see what we started here?

Yeah. Cascading chain of event where Robin does something utterly fearless.

Yeah.

So, so, but. So first of all, we just need to see that other people have done it and they've. It's been okay. So I always look for evidence. And then the business world, like, nothing is really actually as in our mind, it is things always much worse than imagination. Nothing is as scary in businesses jumping out of a plane. Like, the two worst things that can happen in business are you might lose a bit of money.

Attached to that old Stephen with the trauma that's there. Okay. That could feel bad, but it's actually in reality, it's not that bad. Many people have come back from losing money and started again and had been crazy successful.

Yeah.

Or the other thing is maybe we look a bit dumb.

Yeah.

And the reality is probably if we look a bit dumb, our genuine friends who, who love us, they won't care because they'll be like, they'll be there to nurture us and look after us. The people who actually think we're dumb we probably don't want to associate with anyway. So actually it really isn't that bad. Right?

Ye.

So this, this is where we shift from. Right. Somebody else has done it into right now. Now that I don't think it's that scary, I'm going to give it a go and let's see what happens. So for example, on the pricing side of things, it's like a step by step process that we go through to, to show people the evidence around how do we escape time for money and those attachments and how do we create some really cool packages that our clients prospects love. Like they can see the value in it and they can see themselves buying it. So take a, take a coach, for example, selling a transformation program. Right. So up to this point, maybe every six months they sell 12 sessions at $80 a session. So that would be typically what, $960 for that, that package. Okay.

Yeah.

So all we do, the first thing we do is we say it's still six months, it's still 12 sessions. What outcome are you delivering for those clients? We want to transform their life. Whatever that looks like could be getting fatter, fitter, healthier, making more money. Whatever type of coach you are will tie the outcome into to that time period and to that fixed sum of money. We're not going to change. It's still $80 now, but now we're not going to sell it as 80 a session. You're going to go and sell it as a six month transformation program and it's $960. The money doesn't change. All we're doing is we're just getting comfortable selling at a higher.

Yeah, so a higher ticket. Yeah, that makes a lot of sense, especially to retrain the mind.

Yeah.

It'S very simple. I like to say to people is right, go and pitch the next 10 prospects. Now instead of saying 80 bucks an hour or 80 bucks a session, we now just say it's 960 for the transformation.

Yeah, no, that makes a lot of sense. Well, I know another thing that you're super passionate about in this, in this segment, and I think I agree with you, is the importance of not discounting or you know, discounting your products, your good or your service. Once you've established what your pricing structure is going to be, what experiences have you had, both positive and negative that had you get to that come to that conclusion as well.

So, so we we kind of used to do this. So for like the web design space is kind of quite rife for this. So we're told that we need to get people booked into like care plans, maintenance plans. And so what we used to do is some. To give a bit of context, actually, people listening. So I ran a marketing agency for 12 years from 2004 to 2016 before setting up Fearless Business. We used to do web design and branding primarily. So just for a bit of context. But once we built the website, we used to sell care plans. And what it meant was if somebody then booked, let's say they wanted, they were a big site and they needed 5 hours, 10 hours, 20 hours worth of updates each month just for SEO or for security or whatever. And what we would do to encourage people to buy bigger care plans, we would offer a discount for it. So if they book 20 hours, we'd give them like a 30 discount off that. And then I didn't, I didn't know this at the time. I didn't know what I know now because otherwise I probably wouldn't have done it. I certainly would have done it differently.

Real life entrepreneurship.

But, and it took, it wasn't until I sold the agency, until I said, oh God, what a mistake. I looked at the results we got for those clients that booked loads of hours with us and they got better results than a majority of the clients who didn't book those extra hours with us. Right. Because we're doing more work, naturally. Better results.

Yeah.

Yet they were paying less for it. Right. So it just didn't make sense. So that's the first, first thing to bear in mind. The second thing is more practical than that. So let's, and, and I have to come up with an example that kind of makes sense to everybody. So let's say, for example, a business is doing a million dollars a year revenue, okay. And their net profit is 100k.

Now if in order to win business, we go out and we offer a 10 discount in order to attract people in, well, technically our revenue is now 900k and our profit's gone. Do you see?

Because there's this compounding effect as the money trickles down through, from revenue, down through the profit and loss, and it gets eaten up by overheads. There's this compounding effect which happens and most people assume, oh, if I offer a 10 discount, I've only got to sell 10 more of the same thing in order to make the same amount of money. Well, actually, when you take into consideration this compounding effect, typically a 10% discount actually means you've got to sell nearly 25% more same product or service to make the same net profit. By the time you get to 20, 20 to 25 discount, you've got to sell double. Imagine working twice as much just to earn the same amount of money.

Yeah, it's like compound interest the wrong way.

Exactly. That's a really nice way to describe it. I'm going to steal that. Yeah, that's a, that's a perfect way to describe it. And, but the reason most business owners, as their business scales, they, they don't see the, the negative impact of discounting is because they've got loads of customers, loads of different projects going on, different amounts of money and it's coming in and out the bank every day. And maybe, you know, a million, if you see a million dollars come in and out of your bank over the course of a year, you're like, I made it, I'm rocking Steve. I'm doing really well and I'm so successful. And then, then you get to the end of year and your accountant goes, well, hang on, he made $10,000 profit. WTF? I thought I was really successful. I was a seven figure business, right?

So that paying attention just to the basics of like profit and loss accounting and not discounting, you know, the I, the ultimate is actually we want to be going up with our prices, not, not down.

Yeah, no, I totally agree. I was actually working with a retail provider that was, I met during a live event and they had never done a brick and mortar store before and there was already a year into their first brick and mortar store. And it surprised me. And again, I, I guess it shouldn't surprise me because I made the same, I've made the same boo boos along the way. But when I started talking to them about, okay, well what is, you know, what's the structure of your lease? How are you, how are you closing the day? What do you, how are you closing the week? How are you closing the month? How are you closing the year? We, it became very evident that, you know, for, especially for a retail business, you gotta, you gotta watch your inventory turn. So how quickly is inventory coming into your shelves? How long is it sitting on your shelves? Because there's, there's a cost associated to how long that is. How are you, you know, what is the liquidation plan? Should you have long standing inventory on your shelves? What the. There was no daily accounting of the transactions that occurred that day. And we started walking through that and I realized I've, I always Say that to me, there's five drivers in a business. The first driver is spending a lot of time on the front end, like just getting the business set up properly, getting your roles, responsibilities, the ideation phase, all things from vision, mission, core values, you know, all of, all of the infrastructure.

Right.

Then you got sales, fulfillment and then you got finance. And the, one of the biggest mistakes I made in building businesses was not paying enough attention, attention to learning how to read financial statements or making sure that the information going into the financial statements was coming through a reliable channel.

Yeah.

And I think that a lot of businesses go out of business because of those two things specifically. Either they don't have a financial mechanism to track what's going, what's going on or in or around the business, or they have the mechanism but they don't know how to read it. And I'm a little embarrassed to say that I had built a.

Fairly substantial eight figure business before I could ever actually physically read my, my balance sheet, my profit and loss statements, my income statement, my cash on or my, what we call was a cash trajectory plan. So a cash management tool. And I can't tell you how much money I left on the table because of that. I mean, and I, I see this a lot with businesses specifically. And.

To me, if you're not managing your finances well, you're also not going to be able to manage your pricing structure well because you don't know what you don't know, you know. So what do you think about cost plus base pricing? So figure out what all your costs associated with that product, good or service and then compounding from there, is that something that you think can be successful or do you, do you prefer more of a. Set the tone. We're going to go with a high ticket.

So I mean lots of different business models. So is this going to be very much a catch all type answer here As a, as a, as a baseline, what I always recommend to the businesses that I work with, they should be, they should be aimed, aiming as best you can towards at least a 50 gross margin. What that means is so if you have a, and this doesn't matter whether you're a bricks and mortar business or a service based business or whatever it is. So even if you're a service business hiring in consultants, if a consultant charges you 500 a day, you charge them out a thousand dollars a day. So you double up on whatever you're doing to create that 50 margin. If you buy materials in, if you're a product based business, you buy a Tin of beans in at 10 cents, you sell it at 20 cents as a minimum. To create that 50 margin, you need a good solid gross margin, cover all of the overheads and expenses. And if you have a business that is.

For example, very, very overhead heavy in terms of marketing and management, you know, you've got to eke out even more of a margin than that. So many businesses where I see just, they, they. Oh, God. One of the. One of the. I'm gonna have a bit of a rant now about some of the practices that are out there, for example, so there's a. I don't know whether this is. This happens in other countries, but for some reason in the uk, UK accountants will take any. Any members of staff, whether they're related to admin or direct, like delivery to clients. Yeah. They'll always put it in the overhead column, like down in the bottom half of the. The profit and loss. I am constantly correcting people where they have staff which is related directly to whatever the thing is that they're delivering to put it above the fold and the direct cost of sales. Because otherwise you see this, you know, they got a massive gross margin and you're like, oh, tickety boo. No, no net profit. And it's like, well, your staff. The cost of staff isn't being taken into consideration in the right place in the profit and loss anyway. That's a very technical thing, which I've just said there about accounting.

Yeah.

But it's true at a basic level, though. I. And it irks me a lot. Sorry, Stephen, if I'm ranting a bit now.

It really irks me where people say, I don't get numbers. I don't understand numbers. I'm like, you have no right to run a business that is just a really poor excuse for financial mismanagement.

Right.

I believe there's three rows that you have to understand in a profit and loss.

Right.

Revenue, gross profit, net profit. Can't even get the basics of those three things. You should not be running a business. Okay. And I believe you need to understand those three things well enough so that, yes, you can go and hire an accountant, but you need to be able to delegate responsibly, you know, to that accountant. Yeah. And be able to translate your business needs, financial needs across to that accountant to be able to make astute financial decisions. Yeah. Like if you don't even get it and you're just like, no, I don't do numbers. And give it to an accountant, and then you're surprised that you make no Money at the end of the year. Well, that's probably why.

Yeah. And there's. In a lot of, in a lot of ways, there were probably tea leaves, if you will, if you could read your own financial numbers, that you would have. See, oh, I'm off track here. Let me shift. Let me change. Let me, Let me, you know, pivot a little bit. I know for me.

Early starting in business itself, not getting to a place I could understand, those basic three that you're talking about opened me up for embezzlement.

Wow. Gosh.

Because the financial leader that I had hired knew that I wasn't paying attention or knew that I couldn't even if they were, they were making these massive spreadsheets and stuff, but I didn't know what was going into it or what was being tracked on it. And therefore he could make it whatever he wanted to make it. Yeah. You know, and it wasn't until a forensic accountant after the fact went and found it that you realize, oh, my God, I almost went out of business because I wasn't paying attention. And I would agree with you that you should not be running a business unless you can read the basic financials. And that's coming from someone who couldn't read basic financials, who built a sizable company before they ever got to where they could read financials. Yeah. And I'm telling people that because it was a huge mistake, it cost me well into the seven figures over the course of five years.

You know, of just goofiness, I've lost seven figures more plus in not being able to understand that my pricing was wrong, the structure was wrong, because I wasn't paying attention to my cost. I just couldn't see it. It. But the reality was, it wasn't that I couldn't see it. It was, I wasn't looking for it. You know, and I, I always tell CEOs or, you know, founder, founder, entrepreneur, business owner, CEOs that you need to spend at least four hours a week doing nothing but reviewing your financial data at least one time a week.

Yeah, I, I'm, I'm fanatical about this as well. Like, I mean, a lot of my finances now are very nice, neatly automated show the joys of technology these days. But I, I, I review Xero every day. I look at my profits every day. And I, and I, I feeling, I'm feeling control. I'm able to make sound financial decisions for my business based on that.

Yeah.

Whether I need to bring more revenue in or whether I need to cut my expenses, you know, you can make those simple decisions just by, you know, checking in with your accounts every day. And, and one of the biggest mistakes I see people make, and this is, this is linked to little Stephen again. This is like Stephen's financial story that, you know, in his trauma that, that happened when he was raised. And I'm not. This is for everybody. It's the raw you, Stevens.

Okay. Everybody can be Stephen today. It's fine.

Everybody can be Steven. So I see some really successful business. You see, you see their revenue take off like, and you see their business tracking up like that. Wow. It's amazing. Business is growing. But what we don't tend to see is that their expenses are tracking up at the same rate. Right, or higher. Yeah, yeah. And so people listening to the audio are like, they can't see my hands. I don't know what's going. So I'm pointing up at a 45 degree angle and expenses are just below it, going up at the same rate. Rate, right. So then the moment you have a little bit of a dip in revenue, you and your expenses are still like skyrocketing because you've made these commitments. So what? One of the things I've noticed is you, it's really easy to make money fast. You can make money like quickly and the cash comes in, you make a few adjustments to the business and go from a negative to a positive cash flow cycle. And it can literally happen overnight. You know, bigger businesses, it might take 14 to 30 days to see the benefit. Where you have expenses, though, to unpick expenses like staff, maybe contracts, marketing contracts that you've taken on or various things like that.

Any kind of monthly, any kind of monthly reoccurring thing.

Yeah. It can take months to unpack those. So. So your business cash flow takes a hit and it's instant. But now your expenses are still ticking up because you've made those commitments to it. So I just as a, as a reminder to business owners, when you're going through good times, don't be tempted just to go and spend all the money because that's linked to little, little Stephen.

Yeah.

It's like easy come, easy go. And that's why his parents argued over it and Robin parents argued over it.

Yeah.

And that's where all the trauma came from. So in business, we don't realize that's what we're playing out. That little Steven Robin story again, easy come, easy go. All of our money just gets spent. You know, there's nothing left at the end of the day. And we're Back to the struggle again and the arguments. Yeah, so. So I like to remind people, ride the success, don't get complacent, and save for a rainy day.

Yeah.

And widen that gap between your expenses and your income. And set. Set it aside. It's that investor mindset of, I mean, look, let's face it, if you made so much money, you want to go and blow it on a Lamborghini, fine, but at least have a savings potential got set aside at the end of the day for, you know, three to six months worth of operating expenses, pay your staff to pay your own mortgage if you need to, and put. To continue to put food on your table and any contracts you're committed to. Three to six months worth of operating overheads in the savings account is like, de facto. Every business needs to have that. And it might take like two or three years to build up that savings pot over time. And it's really interesting how the mindset of a business owner shifts when they've got $100,000 in their bank account or 50k or even 10k in some cases, it doesn't have to be much. They choose not to work with clients they ordinarily would have worked with, who they might have taken on for the money. Now because they've got the money, they go, oh. They start to listen into their gut, and their gut might say, oh, this client's a pain in the ass. Maybe I won't work with them today.

They start to be fearless without thinking about it in terms of their pricing. So whereas they might have packaged up their coaching program for 3K, they think, sod it, I'm going to charge this client 5k and I can take it or leave it whether they say yes or no. So they're very much detached from this outcome. It's like the opposite of the old story of little Stephen or little Robin. It's like they, all of a sudden, they have this safety net that they haven't had at any other point in their life, and it gives them that freedom that they've been craving all the time, albeit they didn't know how to.

That's what they were looking for in the first place.

Yeah, I love it.

We can lose it in an instant. We could go back to the old ways and the money's gone. And, hey, we're back to that scarcity mindset. And I'm, I'm. I forever am reminding my fearless crew, you know, on coaching call, I'm like, guys, let's celebrate the fact that you've managed to Save this money up. This is a big deal now. What decisions are you going to make and how different are you going to make those decisions?

Yeah, well, and here's the other thing too is as an early entrepreneur, I've made the. I've made the mistake of, oh, I got 50 grand in the bank, I'm gonna go spend 30 of it or 40 of it on a new. Back in the day, it was a new truck. I wanted a new truck, right? Because the large business that I built was a construction company. So, you know, everybody's gotta have a cool truck if you're in construction, right? And plus, you go. You go without it for so long. What I also realized was, is my first mentor. You know, they have bull and bear markets, so they talk about, you know, there's a bull market to bear market. So the bull is, obviously, things are going great, bear market, things are going horrible. And he always used to tell me that the bear is always trying to bite the bull and the bull was always chasing the bear. So basically he was trying to help me understand that regardless of what market it is, you have to run your business fiscally responsible. So when things are going south, you're in a position of positive cash flow to either make sure you can hold on to your business or do what many of us are able to do now in a down economy, and that's buy things on sale. Most wealth is actually created in down economies and markets, but that wealth is only created by people who were fiscally responsible when the bull was running rampant all over the place. And a strategy that I used to use pricing wise, or not pricing wise, but. Or a strategy I use team wise, is everybody, all of your team, every year is going to want to make more money regardless of their performance. And I need, I need everyone to understand, regardless of the point, as an entrepreneur, you're like, well, if they perform well, then yes, I, I have a responsibility to reward them accordingly. And you do. But your team is not going to see it that way. Your team is going to see, I've been here a year or two years or three years or four year, and I'm. My expenses are going up. I just bought a new house, I just bought a new car, whatever. And that that responsibility is going to get put on you. I say that loosely because when that happens, I learned a long time ago I almost salaried my way into bankruptcy because when people would come in, say, hey, I need X number of dollars for whatever, for my, you know, for my annual increase or whatever, and then I'd give it to them. And the next thing I know, I've got this massive payroll, but yet I'm getting less performance than I was the year before. You know what I'm saying? So what I did strategically was I went to Payroll solutions, meaning organizations that provide payroll data. I agree to be slightly ahead of market. I use that payroll data to then drive the role, responsibility in the team member, which gives me my bucket. And then rather than just throwing money at people for salaries, we created bonus and incentive programs. So if the company is successful, I'll share a little bit of this with you. The company is successful, I'll share a little bit of this with you. And what that was able to do is as revenue was tracking up, my costs were staying marginal without, you know, kind of following suit. And the reason I bring that up is because I felt like it was such a good point that you mentioned that a lot of businesses have revenue go up and cost it, just rise right with it. And that's a. That is one of those experience things that I don't think business owners actually see until they see it. And a lot of times by the time they see it, it's too late and they have to make significant cutbacks to hold onto their company or whatever. All of this goes back to. You need to be watching your numbers.

Yeah.

You need to know where you're at with that retail business. I was telling you before, you know, we call it indirect labor and direct labor. So that's, that's the different payroll categories you mentioned above, the fold and cost of goods versus below. And one of the things I was telling them is you need to understand, especially if you're gonna, if you're gonna operate on that 50% margin tool, which I think is great, I think it's a great rule of thumb. Then you also need to understand that your every, every one of your things that you're selling has a little piece of the light bill attached to it, has a little piece of the lease attached to it, has a little bit. A little piece of the person running the register attached to it. You know, and I believe that people, if they will focus long enough, they can drive into that cost structure and then apply that methodology. And then it just becomes, okay, well, now we. Now the tools are there to automate. You know, a lot of entrepreneurs I've worked with, Well, I have QuickBooks. I'm like, yeah, but what data are you putting into QuickBooks? Yeah, like, I made a complete mess of my QuickBooks back in the day.

So Well, I was going to say as well like that there are, there's even remind me of something, there's, there's benchmarks in every industry and if you do your research, if you, whether you know, whatever stage your business is at, there'll be people possibly listening to this who are in startup land that maybe, I don't know, somebody's starting an accounting practice for example. So they're going to be a one person business. There will be benchmarks of how much a one person accounting firm makes in like year one, year two, year three. There will be benchmarks about around how much five person accounting practice, a 10 person accounting practice makes and then from industry to industry obviously it's going to differ. So as a rule of thumb, for example like I always look at turnover versus number of heads in the business. If you've got a million dollar a year business, I would anticipate that typically there'd probably be eight to 10 people working in that business. I would say yeah, you give, you know, plus or minus. If you look at a million dollar a year business and they've got 25 people in there, we divide the two numbers together and like so they're benchmarking at like 30k per head revenue, you know that they're probably not going to be in business by this time next year.

Yeah.

Because it's just too little revenue per person they've got employed in that business. Now that, that will shift. Law firms for example, their benchmark will be higher. They might be making 175, 200 a year from there per head. Accounting firms might be like $125,000 ahead. A small web designer creative agency, the benchmark might be $75,000 ahead for example. So it, it just you know, slightly different but and again like different industries have different benchmarks around gross profit, net profit. So I've got rough rule of thumb 50 gross profit is a good place to start. But you know there are businesses out there where a 10 net profit margin is normal as a benchmark. There are businesses out there where 30 is a, is as a benchmark. But if you go and Google it, what's the, what's the benchmark gross profit in whatever your industry is in insert? Yeah, what's the, what's the benchmark? Net profit insert, you know, industry here you'll be able to find that information out and then it's just a matter of right, let's punch numbers in and see how close we are. Yes.

How we're doing.

And another really simple calculation as well. Is what I call goal focused pricing. So because a lot of people, so we kind of talked about hourly rates. How, how do we transfer that into selling packages? So now we're, let's say for example, that coach is a thousand dollars. And that coach goes, right, well actually I want to win six figures next year. I want to win a hundred thousand. And you're like, cool, so 100,000 divided by a thousand dollars for your package. Have you got the capacity to work with 100 clients next year? And watch their eyes pop out their head and they go, oh no, crikey, no. I could probably work with like 20 clients next year. Great. We need to figure out then how we're going to add $4,000 worth of extra value to your package here. We need to get you from 1,000 to $5,000 for that six month transformation ASAP.

Yep.

Sometimes it's as simple as they hear it and they go, well I'll just charge 5,000 for it. And they go and pitch next 10 prospects and they get a couple of sales and like, Great, it's now $5,000. Other times though, it might be that gradually we just have to. And this is around their level of confidence, their own internal value system which we're fighting. So it might be right. Okay, well let's pitch the next 10 people at 1500 and get a couple of yes. It's next. Pitch the next 10 people at 2500 and get a couple of yeses. Let's pitch next 10. And so it's just an incremental process to get people up to dream Income goal versus capacity. Hopefully there's a nice balance. And they're not working 70 hours a week.

Yeah, well, that's the crazy part. If you get the pricing structure right, you get determined, you get to determine what your workload is.

Yeah.

You know, that's. And you know, when the first company I built, top line, it looked great, you know, bottom line. I mean it was, I mean I, I did well, but it was like, it wasn't like, like other industries that you know, have, you know, 60, 70% net incomes. Like, you know, just. I've seen some stupid numbers in different industries. I'm like, how the heck does someone do that? And it all comes down to what you can price. Yeah. You know, they're selling their service at or product go to service that here. You know, this industry is specifying or kind of whatever is here. So I want to get this raised in this low, lower industry, meaning it's a, it's the industry itself. Has like a, a, a ceiling of sorts. You have to offer more value, more value, more money, you know, kind of thing. So I mean, I used to hear this with my construction business. Well, you guys are a little more expensive. But I know what I'm getting with you guys. I went ahead and chose you guys. Well, when you factor in an extra three or five hundred per unit, over the course of three to five thousand units, we just added significant money to the bottom line.

Yeah.

You know, and trying to get people to fully understand how important this, this game of value and pricing is, you know, and I'm also a big believer to always give more value than you're pricing in. Like, so if I'm gonna, if I'm, if I'm, if I need to make 4,000 per package, I want to give $7,000 of value because that, the likelihood of that person re upping or telling a friend or family member or whatever is twice as likely, three times as likely as if I had not done that.

That. Yeah. Well, it goes back to sales cycle D. So sell, deliver, sell, deliver. If you charge more money, you've now got more time to deliver a better quality product or service client, which leads to better referrals, better results and outcomes. You make more money on the back end. So it's like a virtuous cycle. I got something interesting for you. And whether this will work or not might be a nice sort of way to sum up our conversation today, Stephen. But I mean, you're a very experienced businessman, so I don't think I'm going to necessarily teach you anything new. So you might just have to play along for virtue of adding some value here to your list. Business.

I disagree. I've already learned some stuff from you.

Good, good. So give me an idea about in one of your businesses. Give me an idea about.

The most expensive product that you currently sell in one of your businesses.

The most expensive product I sell is me. For, it's me for a retainer at $25,000.

25. So, and define a retainer for me. What, what do I get for my 25,000?

So it's a retainer of $5,000 a month for the five or six. Well, it's five months, but you get a bonus month. You're gonna have a 45 minute business strategy call where I'm actually involved in your business with you. Kind of like, kind of like hand holding. 45 minutes of call is focused on life because I don't think you can do business in life exclusively. I think they're Uniquely enjoying together. There's also 15 off of retreats, so we do immersive retreats at different resorts and stuff like that for a very small group of people. And I'll typically bring in a well known a list thought leader that's part of that program as. But the core thing is me. It's time with me. I have helped people basically 4x their net income goals in, in under a year just by doing actually some of the things we've talked about today in just one facet. So that's kind of like the bulk.

Let me ask you this, Stephen. What would I get for $100,000?

You'd probably get me probably more times throughout the course of that month with more, with more intensity.

That doesn't excite me. What could I, what, What could you build that's just remarkable? Better than anything else out there on the market currently for a hundred thousand dollars.

I gotta go to work. I have to go to work. The thing is like meaning I need to dream. I need to dream it up and actually ask me to ask myself that question.

But tell me now like that there will be something and you've already got a. There'll be. I know you dream Stephen. I know big Stephen dreams.

Right.

There will be something which every now and then you dip into and you, you kind of are a little bit scared of. But it's, it's a big idea. Yeah.

Well, my big idea currently is I have an entire.

School based solution that comes alongside with everything I've ever produced, but organized throughout the course of the five drivers. Yeah, but on top of that, it's like the holistic approach of. It's, it's basically having a coach in your corner constantly. But I need to formalize it.

No, it's amazing. No, but all we need for now is just an idea, right? So yeah, Starbucks. Many people won't be familiar with this and actually they, they've stopped kind of doing it more recently because everything now has kind of shifted more so online. But back in the day, you'd walk into a Starbucks and you could get your latte or whatever it was. You could get a bag of beans, but you could also. Then they had an espresso machine on the shelf. Right. And it had a price tag on it. Now that espresso machine used to be more expensive than most of the premium brand espresso machines out there. But this particular one was design for somebody like, who loved coffee. They wanted the latte and the beans and they wanted the Starbucks experience at home. So they would buy the espresso machine. And Starbucks knew that for every 3,000 customers that walked in, one of them would eventually say yes and buy one of those espresso machine. And the profit margins that were built into it were equivalent net profit wise of serving 3,000 cups of coffee.

Oh, wow.

Right. So.

Every business, I believe, needs to introduce some kind of an espresso machine product into their market. Right?

Yep.

There's two, two fold. Right. So the first one is a practical, tactical one. So let's say we have three products that are $5, $10 and $20. And the average order value ends up being like $12. Right. It's kind of dragged down because we probably sell more of the five and ten dollar products and the occasional twenty dollar product. So if we, if we drop the five dollar product and we have a dollar ten, dollar twenty and a dollar fifty product now, naturally our average order value is going to jump because we no longer sell the cheapest product.

Yeah.

So that's the first thing. The second thing is that again, this goes way back, full circle back to what we were talking about at the start. We base our prices based on our own value system. Many people don't see themselves walking into Starbucks and buying an espresso machine. Starbucks kind of know this, but they also know that there is a certain person in their audience who's happy to come in and spend a bit more money.

Yeah.

Just need to be inspired. They just need to see the product on the shelf.

Yeah.

And for you, you don't need to design it, you don't need to map out a business plan around it. You don't even need to do any marketing around it. Stephen. But that 100k products, all I've done is I've just sparked an idea of what your espresso machine product is. And it's like, you know, yellow cars, right. They're really annoying right?

Now, I told you this the moment you walk out of your studio today and go for a walk in town or whatever, you'll see yellow cars everywhere and you'll be like, B.L. robin, that's really annoying.

Stupid reticular activating system.

Yeah, yeah, but, but now I told you about your espresso machine and just sparked that idea. Your, your equivalent of yellow cars is a potential customer walking into your office or on Zoom or whatever. And Stephen, this thing you're talking about, the 25K, that's great, but I don't think that's mean. You'd be like, ah, I know exactly the thing just for you. And. And you can pitch it. And there's no jeopardy in that. It's not going to cost you anything. They say no, you're no worse off. Off. This is just an idea. If they say yes to it now, you've got a hundred thousand reasons to build something spectacular for them.

Yeah, very true. And I think. I think a heart of service is where everything stems from. I know we're over on time, brother. I love you so much. I can't. Thank you for coming on and sharing so much, guys. I will put all the show notes and all the. All the links and stuff to Robin just so we can get them out of here in a more timely fashion. He has written several books. All of them are fantastic. Make sure you check them all out. Check the show notes. Everything will be there. Robin, thank you so much, brother. I can't wait to do this again with you, man. Man.

My pleasure. Thank you, Stephen.

All right, take care. See you, buddy. I hope you liked that video. And if you did, make sure you check out this next video right here.

You need to do kind of a survey of what's in your heart and what's in your head, because so much of it comes down to your interests, which is your heart and your head, which is your ability.