Lessons

Lesson Info

Be Honest Within Your Business, Yourself

So, when Tiffany started her business, she had money in the bank and she was tight fisted. She'd been in her corporation for a long time, and what she was doing was trying not to spend any money. Like her goal was, if I spend no money, I'm safe. I'm tight fisted, my money is in the bank, I'm safe. Okay, I had no money, and all I needed to do was make enough money to survive. So I had a number that I was driving towards. I need to make $10,000 a month to survive. Can you see the difference in energy to how we started our business? She's tight fisted, I'm on a wing and a prayer, and the truth is is I had nothing, so I was hustling to survive. Now the weird part is, it matches our personality types perfectly. She's tight, and she's not going to spend a dime, and I'm like, you want to motivate me? Then you give me an empty bank account and tell me I've got to make $10,000 in four weeks and I'm going to go, and I'm going to find that money, and I'm going to make it happen, because I'm hustl...

e, hustle, hustle, and she's save, save, save. So the irony is we set ourselves up exactly to suit our personalities. And some of you will resonate with her, and some of you will resonate with me, but nothing motivates me more than starvation. (audience laughter) Like to me, the fact that I was gonna starve, to her it was buying the next meal when they hadn't made any this week. Because then she's taking away from her principle. For me, it was like, motivate me to hustle. So, most of you do not know what your cost of doing business is. Whether you're selling a product or a service, you need to go through your cost of doing business. There are amazing business calculators out there that will get you to do your cost of doing business. Now, you do not pay tax unless you make a profit. You cannot sustain an income unless you make a profit. If you're paying tax, it's because you're making a profit. Now, I love paying tax, okay? I used to avoid it. Once I avoid paying my tax and I got a fine. I avoided paying my tax because I was in a full state of avoidance back then, I got fined. I got fined for late payment of my tax. Guess how much I got fined? $38,000. (crowd murmuring) You should have heard the moment when my accountant said you've filed late, you're going to get fined. And I was like, oh, you know, it's a $5,000 fine, I guess that's life. And he was like, it's $38,000, and I go. (gasping) It took me a long time. Avoiders keep avoiding and avoiders avoid and get stung. And every time I've avoided confronting someone or something in my life, I put my head in the sand like an emu, and it gets bigger and bigger and bigger and bites me on the ass. Because you cannot avoid it, you cannot avoid money, it grows and grows and grows and bites. So for me, my cost of doing business, whenever I'm making a profit now and I'm paying tax, I'm grateful for the tax. I'm like, I have now made a profit because I am paying tax. I'm grateful for my tax. Also, I'm smart enough now to know that my business is operating charging tax, because it's not mine. So to me, it's on top of what I want to earn as my day rate. The tax is subsidiary, which means it goes into a tax account, and then goes to the tax department, because that means I'm making an equal amount in profit. And everything I pay in tax, I know I've made for myself, and I don't get upset about the energy of exchange for tax because it's not my money. It was never mine. I had budgeted appropriately to charge for the tax. Now you only get resentful about tax when you're giving the tax away thinking it's your money, it's not your money. It's not your money. Okay, so if you charge appropriately and keep your proportion, then your proportion is here, the tax proportion is there, he gets an equal amount as you, the tax man does, you get to keep this amount. Now the reason you are being resentful is because you're giving the only amount of money to the tax department, and you're holding onto it, and the tax department's like, that's our money, and you're like, but it's all I've got. It's all I've got. And the the tax department says well sucker, you should have kept some for yourself. (audience laughter) But you didn't because what you did was you priced out your product, you priced out everything, you priced out everything, your service, your expenses, you priced out your tax, you even squirreled away enough and then the tax department took it all, and you made nothing, because you did not put yourself in your cost of doing business. You did not value yourself enough to price yourself in your own cost of doing business. And you got nothing. So guess what I saved that year? The year that I got fined $38,000, guess how many savings I had in my bank account? Would you believe this, $38,000. So I had to write a check to the tax department for a bill that I had paid late for the amount of money I had kept for myself. Because it wasn't for me, never at any moment did I say, this money is for me. Tiff and Matt taught me this, when I get paid now, I get the cottonmouth, I say how much, I get the money, I get the money into my bank account, and I divide it here. I need to budget this amount into my business, this amount of money, I need to break even, and pay myself, and pay my staff, and save money. And then, I say this percentage goes into my tax account, and then I created a third bank account called Sue house, because I decided that if I called it a house then I would save and buy myself a house. And every week I transfer the money into Sue's house account, but what I say when I do it is this is for my business, this is for the tax man, this is for Sue's house. And I'm filled with gratitude, because for the first time in my life I'm actually designating money to me that I keep for myself. Now, every since I started doing that three years ago, that bank account is just getting bigger and bigger and bigger every week. This is for my business, this is for my tax man, this is for my house, and I gratefully put it in there. And for the first time in my life, I've actually accumulated a nest egg that is mine. It's not the tax man. This year I paid my tax in advance, you know how you pay in advance the year before because they're like hey, we just want to take this money every quarter that you're not going to get interest in, they'll find every way to take it, so do not withhold it from them. They'll find every way. This year I went to pay my tax and I had my nest egg. Now remember, I'm protecting my nest egg that's Sue's, and then I've got my tax account, and I'll I'm praying for is that I've saved enough in my tax account. I've overpaid my tax this year. I'm in credit for 2017. (crowd cheering) I'm like, for the first time in my life, I did that gratefully with no pain, there was no pain in what I did, and it was extraordinary. So, I want you to do your cost of business again, but I want you to do the cost of business involving you being in the air as part of the cost of doing business. Now this is how I did it. The biggest shock I got in business was in when I went to a business coach who was a very wealthy man, and he said to me, well you'll pay yourself 20%. And, we were a partnership, a business partnership. And I went, each? And he's like. (laughing) (audience laughter) Oh, I thought, well, you mean 20% each, and he's like, ha ha, again, and I'm like, why is everybody laughing at me? And he goes, no 10%. So an average business should pay themselves 20%. And I was like wait a minute, so if we earn $4,000 a week, I get 400 bucks. Like, yeah. Well, where does the rest of the money go? Well, it goes to the business, it goes in the business savings, business tax, and expenses. And I was like, but I don't get much. And he was like, well, you have to work harder. And I left that thing, I left that appointment, because here's the thing. Let's say you give a service and you get $1, and you're a photographer, and you're like hey, I've got $1,500, I'm going to buy that new lens. So you go and buy that new lens. But, you know, that was profit that you just made, and half of that money goes to the tax department. And that lens was not 100% tax deductible. And so you go and put that lens and you're like, yeah, this will make my ship go faster, not really, you've got eight lenses, you're lying to yourself. The truth is at the end of the day, the end of the year comes, and they're like how much money in there for your tax, and you're like, you've barely got enough to pay your taxes, and there's nothing for you. And never at any moment did you actually look at the cost of doing business as being part of you earing money in there. In fact, you're so disconnected from being part of that percentage that you're not even actually operating a business. What you're doing is floundering somewhere between getting arrested by the tax department, and getting yourself in trouble and getting a divorce. Because the reality is is that somebody has to pay the piper, and it's going to be you. So the best thing you can do in business is take all of your income and put it straight into the bank and then not touch it, which would be the best thing you could do for a lotto win, but that's not what you're going to do, because you're going to fall into this trap of using that money and you're going to overspend, you've got no boundaries, you're going to give it away. Or even better, you're going to not receive it, you're going to struggle with the guilt and shame of having it or getting it, you're going to avoid managing it. And then the best part is, is it's going to come time to get into trouble, you're going to resent everybody that you gave the money to when the tax man comes knocking and says, where's my portion. And suddenly you're left going, your portion, where's mine? Where's mine? What about me? And you did that! And so, here you go, you are stuck right now in this whole I'm not starting a business. Because the reality is is these are the stages you have to go through to get to the next level. And it's okay, because I'm telling you right now I broke through it, and now I manage it like a boss. (audience laughter) And I'm so filled with joy managing my own money now. I used to avoid it to a point it gave me physical pain. And now I just enjoy it so much. And yes, I'm lucky that I have Tiff and Mark to talk to, because let me tell you something, people lie about money. People lie all the time about money. And the first thing that I did is had a friend that I could be completely honest with. And the humiliation of going up to somebody four years ago and saying I'm making all this money and I can't keep it, and Tiffany just looked at me and she said, where's it going? And I said, I don't know, it just falls through my fingers. And she said, no, it's going somewhere. You're giving it away to somebody. Who are you giving it to? And when she started to talk to me about why I was pushing it away, it opened this world, and now I'm standing here, with a savings account, and you are all about to smash down some of the biggest blocks of your life. How did I work out how to price myself, I de-constructed what I wanted. So let's look at it like this, if I pay myself, if I pay myself, let's say, I want to earn, I'm 20% of my income, and I want to earn $1,000 a week. Okay, that's $4,000 a month, 20% of my income is 20 K. And then suddenly, the reality of making $20,000 a month is terrifying, but then, if you want to go and get a job and earn $1,000 a week, you can go and get a job and earn $1,000 a week without the hustle. And so, where is the bit in the middle, that it's like, why would anybody be in business? It just seems like this massive hill to climb and a whole lot of stuff to manage because you have the ability to make $20,000, $30,000, $40,000, $50,000 a month, 50 million dollars. It's entirely up to you. You have the freedom to choose your hours in your life, but unfortunately the road to pain is what's going to trip you up. Because that's the hardest part, is the pain that comes with what you have to do to get it. And in business there are multiple levels to making money and having the life you want. You just need to decide on a number that you're worth. Okay, now, again, you thought you were going to get given a number. How can I price the difference between a crocheted beanie and a wedding photographer? I cannot, your industry already dictates what the good people are earning. Are you one of them? Step up and start giving service. You know, how many clients, how many clients and how many units. Break it down, it's so simple. All we do is make goals for money, and never at any stage do we make goals for work. All the time we're like, I just need $1,000 this week, I just need $1,000 this week. But if I said to you, I said to you, I just need eight clients this week, you would go looking for eight clients, instead of going looking for $1,000. Now when you chase money, it runs away from you. Okay, when you chase money, you never catch it. I'm always chasing money, I'm always chasing money, I'm always chasing money. Now if I'm talking to Tiffany and I'm permeating as I talk, I'm stinky, I'm powerful. So if you're stinky and powerful, then you're powerful stinky, right. So, let's say I'm talking to Tiffany and I'm like, I just need money, I just need $1,000, I need to pay this debt, I need to pay this bill. I'm resentful, why are they getting money. Everything I'm permeating to her is chasing money, want, want, want, want, want, want. But if I look at Tiffany and I say, the studio is set up, I'm doing really well, if I get eight clients this week, I'm so ahead. I am absolutely loving this, I'm looking for work, this is what I'm doing right now. I'm completely in love with it. The energy is entirely different. Then she'll look at me and go, oh I know eight women that would love to do this. Or I know a family that would love to do this. Or, my friend said to me the other day I would love to have my family photographed. And then all of the sudden you're doing a five, $6,000 sale, when you just needed a grand. And the energy that you're looking for is entirely different. Make goals for units, make goals for your average sale. Business is not about your self value, business is about the service you offer and the units you sell. So if you offer a service for $3,000, and you offer that service four times a month, then it stands to reason you're going to earn $12,000 a month. Okay? It's that simple. It's not about are you good enough, how are you doing this, what are they doing, do they like me enough, am I good enough to earn this much money. It's about offering a service for a unit and keeping you out of it. In fact, keep your own emotional self out of your business numbers, just for one minute, so you can see them for what they are. I ask every single business owner I know. Ask them, what is your average sale. Now, if you sell one product for $19.99, stands to reason your average sale is going to be $19.99, unless you have a product where people buy two or three of them, you might tell me that your average sale per unit is say $69.99, whatever it is. I ask people all the time, what is your average sale. And they go, um, well, it's um, nobody can tell me. And I go, just tell me how many products you sold last year, how many units you sold, for how much. Divide it by that and give me your average sale. Because if somebody was buying your business right now, the first question that they're going to ask you is how many units did you sell last year and for how much. And you're going to say, well I moved 74 units at $2,000, and they're going to calculate that as being around $152,000 in income, and then they're going to say cool. What were your expenses and what was your profit margin? Because they're going to base it on how many units you could move, at what average it was and what your profit margin was, because that's all that matters, because you can sell your business for five times five years of profit. So if you have a highly profitable business and you add up five years of profit, that's what is, plus goodwill, you can goodwill, and price goodwill based on the service you offer, that's what you can sell your business for. And all you're worried about is whether you're good enough. So you're not actually operating a business, you're operating a, I'm going to call this, self indulgent protagonist in your own drama. (audience laughter) Okay, because not of that had anything to do with economics and everything to do with me. Okay, because everything about you was like, am I good enough to even receive money, am I good enough to even have money, I don't even want to look at my money, I don't want anybody to touch my money, I hate everybody who has my money. You know, I can't stop spending my money. I have no boundaries, I have no boundaries, take it, take it, take it. (audience laughter) Take it, take it, take it, take it. Look how awesome I am, take it, take it, take it. And all of that somehow got caught up in you, with your little colorful wheel of hell. (audience laughter) And you, it's like, you know when you get, on your computer and you get the rainbow wheel, somebody goes, can I pay you, and you're like. (humming) (audience laughter) And you're like, oh that's the rainbow wheel of hell. Because you know you're computer's going to crash and you just wrote a letter that took you two hours and you're going to lose it.