In these next few episodes, you’ll discover not only building predictability into your business finances that will get you through tough times, but you might also learn how to thrive in unstable economic conditions. Has anyone experienced some of that in the last year???
For you small and medium sized business owners out there, can you imagine a day when you start to meet and/or exceed your target projections, because your financial engine is so fine-tuned? I can, and so can our clients!
Predictability, scalability and dependability are the order of the day.
Not a business owner? Then maybe you’ll want to revisit our episodes on how to do this exact same thing in your personal finances, so check out the links below! We’ve got just 5 months until this year is over, so this is a GREAT time to get yourself ready for 2022.
Joel Fortner, Chris LoCurto
Chris LoCurto 00:00
Hey folks, how would you like to be able to predict where your business is going to be next year better than the weather forecasters actually predict the weather? We're going to talk about that coming up next.
Chris LoCurto 00:21
Welcome to the Chris LoCurto show, where we discuss leadership and life, and discover that business is what you do, not who you are. Welcome to the show. Hope you're having a fabulous day where you are, we are enjoying a great weather day today. It's beautiful, sunny, not too hot, not too muggy. So it is nice. Hey, listen. It's no secret that in times of crisis, people tend to make fear based choices, especially when it comes to finances. That's what we're gonna be talking about today is how do you better predict your finances, and we talked a lot about this on the personal side in Episode 428. But here's the deal. We have seen a lot of ups and downs, a lot of craziness.
I just found out that lumber has been on a downward spiral for a while now, which is great to hear, you know, because that's that was just ridiculous the prices that happened there. So it's great to hear that it's been, it's actually been down for a little while. But the crazy thing when it comes to finances is people have a tendency to make fear based choices. Now there's a few reasons why, maybe it's because they panic. I don't know if anybody saw lumber prices going up and said, "Hey, I need to go buy a bunch of lumber before it goes any further." However, we do see things like you know, the gas issues where the gas line went out months ago and people are-I don't know, I saw a video of a gal putting gasoline in a plastic like shopping bag and then put it in another bag and put it in a trunk. Now. I don't even know what to say to that. I don't understand.
Well, I was gonna say I don't understand the logic. I don't think there is any logic to that one. But I don't understand that except to say that there's panic, right? The whole toilet paper ridiculousness as if we were all going to run out of toilet paper, because for some crazy reason, companies would stop making toilet paper. The funny thing is people don't think on the backside. No pun intended, but it worked out. People don't think on the backside, that those companies are going to keep making toilet paper, but they're not going to all of a sudden flood the market with toilet paper, and then have a huge void. Wow, I'm just dropping puns in here left and right. You know, in their sales, because people went ballistic buying up a ton of toilet paper, right? There wasn't a big lack of ability to make more toilet paper, right? There has not been a lack of treats. There's not been a lack of wood. But people move into these ridiculous panic modes and freak out. Or maybe they just make rash decisions, right?
Maybe they're just not thinking through; what does this mean to go spend money here? What does this mean to make this financial decision right in this moment, maybe they're just not actually putting enough thought, gaining enough perspective to it, or even like all of the people that were looking to the government to take care of them with stimulus checks, I mean, for the love. Listen, I know a lot of you do not mind that you got stimulus checks, right? But I don't think a lot of people actually use that to put food on their table. I think I saw most people at like Costco or places, you know, spending that money like crazy. How many people have you talked to that use that money to make, you know, new decks or to redo their gardens or go on a vacation?
Well, probably not a great vacation. But, you know, still. Spending that money looking for that bailout? You know, how many companies looked for bailouts because of the ridiculousness of shutting everything down, that it affects them. And so hey, the government needs to take care of them, no matter what it is, we're very aware. And if you're not aware by now, then you need to be, that when it comes to times of crisis, when it comes to financial decision making, people make things worse, they make matters worse, without the predictability of where your business is going to be. And I'm not saying that you can predict exactly where you're going to be in a crisis, but you should be able to predict where your business is going. We do it all the time.
I've been doing that for decades. I live in my Numbers, I'm constantly predicting where our business is going to be I push some of my leaders to bring budgets to me for their areas. And we work through these things. And we make this into a much larger global budget for the company. And so I'm always predicting where my business is going to be, I know what I'm going to be able to pay, profit sharing, I know when something's gonna suck up a whole bunch of cash, you know, because we have large expenses, I know these things. Right? And the best part about it is, it's huge in how I make decisions for my business. For my businesses.
Knowing the numbers, being able to predict, knowing what's coming in, knowing what's going out, being able to look at my bottom line, look at what the needs are. We budget future team members, we budget future events, there's all kinds of things that we're putting into a forecast, and I'm saying "budget", because that's the term that most people utilize. But once we get past next month, it's technically a forecast. We're constantly forecasting all this stuff so that we know what's going on so I can make better decisions.
So if I look down into my business, and I see that I'm, you know, more cash flush than I thought I was going to be, I push on my leaders, what's the next hire? What's the next event that we're going to do? What's the next thing? What's another product that we can focus on? What's another service that we can focus on? What's something different that we can do? By building in predictability, it allows me to take calculated risks. By not having that predictability built in, then it makes it very difficult to take calculated risks.
Now, I will tell you, I am somebody who is constantly calculating my risks, I take some pretty darn decent sized risks. But I'm always calculating what's it going to look like? What's gonna cost me? What's going to require in resources? What's the potential outcome? What's the potential failure? I'm always looking at stuff and basing my decision on, what's the probability that I'm going to be successful with this?
What's the probability that I'm going to not fail miserably? I'm not going to have a fatal failure if it goes wrong. Knowing that my bottom line looks good, I have money, I have resources, I can take a hit, if I absolutely have to. But obviously, that's not the goal. But I know that if I do take a hit, that everything is still going to be okay, I'll probably not be happy. Because, you know, if I took a hit, I lost money, but it allows me to take those calculated risks. Those are things that we need to do on a continuous basis to make sure that we can predict where our business is going to be. So we're going to talk more about that when we come back right after this.
Joel Fortner 07:57
Hey, it's Joel Fortner here. I'm the Vice President of leadership development on Chris's team, and I oversee our Next Level Mastermind business coaching program. Most business owners and leaders lack a clear path to succeed in business. They question whether they're making the right decisions, if they're focusing on the right things to really grow their business. If this is you, you need a coach in your life.
Coaches help you make better decisions, navigate uncertainty, lead more effectively, and grow your business without sacrificing your life and your family. In their first year, our clients typically see an average of 67% increase in gross revenue and an average of 138% increase in net profit, and regained hours of time. Our clients stay in the program for three and a half years simply because of the results they get. So if you're ready to run your business at the next level and see the growth you've been wanting, then visit chrislocurto.com/mastermind. Again, chrislocurto.com/mastermind, today.
Chris LoCurto 08:58
So folks, building predictability is not easy. This is actually hard work. It's the slow and painful preparation all along the way that keeps people on course, so when storms blow through you're not just like blown all over the place. You're not sucking, you're not struggling, you're not hurting, you know, you might take a kicking in the teeth, but you're going to be able to make it, you're going to be able to be alright. When COVID hit obviously, it almost destroyed one of our events, we were not able to do our Next Level Leadership Live Event in person and that really has a big impact on our business for the year.
Praise God we were able to do it virtual, still not the same. So when we got around to earlier this year, it was great to be able to do it in person and have everybody show up and just powerful. Just a world a difference. It was great to see how much everybody wanted to get out. It was great that people wanted to come down and do the event and bring their teams and it was fabulous, it turned out great.
Why am I telling you all this? Because we are so predictable on where our business is going to be that when we had the teeth kicking of COVID on our event, we were alright. Did we lose money? Absolutely, we lost a big chunk of money. But we continue to do what we do. And it didn't take us forever to get turned back around. Proverbs 21:5 says, "Good planning, and hard work lead to prosperity, but hasty shortcuts lead to poverty." That's something we live by, that's something that we understand. We know and we put a lot of work and effort into.
So as I'm talking about this, and there's a ton that we're going to get to, in fact, we're not going to be able to make this in one episode, this is going to be a two parter. As I talk about this, I want you to know that it's not easy. Slow and steady really does win the race, as well as prepare us for future emergencies, you know, prepare us for, you know, being able to predict where we need to spend money, where we need to save money. If we do experience another COVID or something, what does that look like? So, keep in mind that making sure that you're setting up your business for predictability for knowing where it's going to be, it's going to be more like crockpots not like microwaves, right? We're not looking for that fast answer, because it's never really the right answer, right?
We need to really understand this. We're looking at, you know, savings plans, not jackpots, we're looking at diligence, we're looking at discipline. And if I have not said the word enough, there's so many "P" words, in this whole episode. If I haven't said the word "plan", enough lately, planning. So if you want to build predictability into your finances, it takes diligence. And our 400th "P" word, perseverance. So why does it all matter? We did the episode in May called, Leading by the Numbers, it was number 416, I believe, our leaders must know their numbers, you have to know, you have to know what your finances are telling you.
You have to know where you're spending money, you have to know, you know what is coming in? What is your recurring revenue, if hopefully, you've got some. Not knowing the numbers keeps you from making quality decisions in your business, period. Period, right? It's like debt removes options for you, right? When you're heavily into debt, that's your option. That's it. That's all you got going for you. When you're not, you have tons of options. Well, knowing your numbers, it's the same thing when it comes to quality business decision making.
When you do not understand what your numbers are telling you, when you do not understand where you're spending money, when you're spending it, who's spending it, how it's being spent, when you don't know all of this stuff, it makes it incredibly difficult to make good quality decisions. And I'm probably gonna throw a bunch of you off here. But a lot of you do not need to be operating in accrual accounting. Now listen, plenty of you should be. But most of you are probably in accrual instead of cash basis, because you have a CPA who told you you need to be.
And many of you just aren't that size where you don't need to be. So in other words, it's actually clouding your decision making. Because you don't understand month by month, what comes in and what goes out.
Chris LoCurto 13:47
There's times when you are in accrual, where you have booked something and it shows that you have a bunch of money because of the sale, and yet you don't have the cash yet. There are times you spend a lot of money on expenses, but it doesn't actually show up until you book it to a job. So there's a lot of stuff when it comes to making good business decisions that you need to have in place so that you can make good business decisions. And one of those things is, and probably the most important thing, is understanding your numbers.
Now to do so means that you got to be proactive, right? You can't just be reactive. "Well, Chris, my bottom line is black, it's not red. So I'm pretty happy." Well, okay, but how much better could it be? Right? How much better could it be if you were proactive, and really learning and getting to know the numbers and then utilizing that to make decisions nine months off from now, 12 months off from now, right? Knowing what what options you have, knowing when you can hire, how much it's going to cost, what you're going to spend on computers and furniture and all those things, and you know everything that goes on along with that.
What if you knew now that you could hire somebody-I don't know, three, four or five months from now, when, up until this point, you weren't even planning on any hires? What if by knowing your numbers, you see that you can actually take bigger risks. Now, one of the things I was just sharing this with one of our great clients that was in for Stratplan recently. For us, we do strap planning, once to twice a year, depending upon what's going on that year. And one of the things that we do is we take a look at all of our capacity, mine included. So we will actually take a look at me as the leader and say, you know, how much time does Chris have, windows are open on his calendar, all these things, but we look through the business and we ask ourselves, How much money do we have to spend?
What are the the team's, what are they tied up in? Is there capacity on the teams? Is there openings on the calendar? Is there time for people to put together a new event? Is there time for people to put together new product? We spend time going through and learning the capacity of our own company. And when we do that, then we make decisions. There's one year, we had a couple team members that are a little bit too excited, they're like, we're probably we're gonna be able to do like three events this next year. So okay, well, let's sit down and work through a process come to find out, we were able to do one. And it turned out to be a great event.
So on top of all of the events that we did in that year, we were able to slide one extra event in that we had manpower, that we had money in case it failed, that we had opportunity, because it was a great event to put out there. And that the people who were going to teach it were actually available. So by doing that, by knowing our numbers, by knowing all of these things, we were able to make a really good decision to add a piece to the puzzle that we would not have had. So that gave us extra revenue. It gave us extra net profit, it gave us extra clients.
And it didn't hurt us. Now, had we gone for three events, that would have taxed the team. That means that we would have been able to put on three events, but probably two or all three would not have been done with excellence, because it would have been too much for the team. So think about it. By knowing our numbers, we didn't go beyond our abilities of providing excellence. Instead, we kept it right where we could, we did add we did stretch the team, we you know, we stretched the leader, the leadership as well. And it was fantastic. So here's the key thought, you'll never get to the place where you can really grow your business until you really know your business.
And I'm talking about inside and out. Many of you have heard the story of Sam Walton, in the days of Walmart and Sam's Club been so huge. Like the times that he would go out and he would just get to a distribution center and get on a truck somewhere. And he will tell the driver, "Don't you dare radio in, and don't you dare receive any calls if somebody tries to call in. Just leave the radio alone." And Sam would ride on that truck get out, you know, "Where are you going?" "I'm going to South Carolina." "Great, fantastic." And he would spend that time talking to that driver and really getting to know what working at Walmart is like for that driver.
Chris LoCurto 18:44
What is he experiencing? How's it treating him? How are people treating him? He would spend time getting to know the driver. Giving influence as well. Interestingly enough, when Sam did not show up at the office, they knew something was up. And that's when they would start going through contacting their trucks and the truck that didn't respond back. They just see where it was headed. So sure enough, you know, would say we'll get there when that truck would get to the Walmart on the dock would be lined up all the managers inside of that store.
And he would just look at him and say, "Nope, I'm not talking to you right now. We'll talk later." And he'd go through the store, and talk to the people that are stocking the shelves, and he talked to the cashiers. He talked to the people that were unloading the docks, he talked to everybody and get a really good idea of what was going on, knowing his business inside and out. And then he would meet with those managers. And if they needed a butt kick, guess what? They got it. If they're doing a fabulous job, he'd let them know that too.
So that's a great example of the importance of understanding your business inside and out. By doing so the CEO of the business was able to make way better decisions back in his home, back in his little town, by spending time looking at his business from the road, and by spending time looking at his business by the frontline workers. So before we dive into how to build predictability, let's dig a little deeper into the why element. And we're going to do that right after this.
Chris LoCurto 20:24
Hey, folks, a couple years ago, I was visiting with a client, and the CEO said to me, "Chris, we're not going to hit our goal." I asked him what he meant. And he said, "We're gonna miss our three year revenue goal coming out Stratplan by a few months." I didn't realize it at first, that he was having a lot of fun with me by saying they were about to triple their company in less than three years. How freaking awesome is that? Folks, these are the kinds of results that businesses get by coming through our four day Stratplan event. On average, we find $2.1 million worth of revenue in the next 12 months that the company was not planning on. And this event is for all size businesses. If you're small, medium, or large, it works for every single business, because it's not industry specific.
It's about gaining all the information about all the things inside of your business that are holding you back from success, and then giving you a plan and a process on how to walk that out and be successful in your business. By discovering the things that are holding you back, it helps you get to all of those goals that you've been planning on for a long time. So if you're ready to get the perspective you need to solve what's holding you and your business back, so you can grow faster, then you need Stratplan. To learn more, go to chrislocurto.com/stratplan. That's chrislocurto.com/stratplan.
So every business is like an organism that is made up of interconnected systems. Right? So what do I mean by interconnected systems? Well, like Michael Scott says, "Break it down like I'm five." So I'm gonna give that a try. Even if you are just selling lemonade, out there on the front curb, right in your driveway, whatever, there is systems that are put together to make that happen, right? There is the system of actually getting the produce-can we call fruit produce, I'm sure we do-getting the fruit, the produce, the lemons, the sugar, the whatever else you're putting in that thing. To make the actual lemonade to sell. Right? There's the process of manufacturing the lemonade itself, there's the distribution process of getting everything pulled together the cups, the container that's going to hold the major portion of the lemonade, the napkins, if you need, I don't know, whatever it is, whatever it takes for you to be able to distribute this lemonade, right, there's the the point of sale system, there's the process that actually receives the sale itself, right?
Then if you're really good, there is the networking, "Hey, go tell all your friends about us." You know, process system of marketing, right? Market your great product to people coming in, and then cause them to be walking billboards to tell their friends that they got to come down and get your lemonade, because it's so amazing. There's every bit of that going on in your business, and most likely a lot more, right? So it's not like we're just predicting one aspect of the business. Each system serves the whole corporate entity by their individual functions.
So it's not good enough. And I know a lot of people do this, they shoot from the hip, on their business as a whole making decisions or predicting how things are going to go. And they never dig down into those individual systems and find out what's going on. How's it working? How's it doing? Is it winning? Is it failing? Right, and that's something that we've got to be able to do. That's something that we do through Stratplan a lot is help people to actually look into their teams. Or if they've only got one, and actually ask the question, how can you make this better? Instead of me telling you how it needs to be better, what are you experiencing right now?
What wisdom do you have? What things can you do differently? All of those things have to happen if we're going to predict really well, the better the systems are systematized and maintain-yes, I did just say that. All of you high D's out they're that are like, "Oh, crud. I can't stand to make systems great." Get somebody else to do it, but make sure that it's done. Right? Two huge things that almost every business comes out of Stratplan with is the need for way better processes, which we have a massive process on how to do that, or, and or, training.
Almost every company is lacking some level of training somewhere inside of their business, right? Why? Because we don't normally think, we don't naturally think, we should systematize this, right? How can you make something where it is operating on its own? And then how in the world do you maintain it? Now what we would say is review it and optimize it. But those are things that you need to be successful. And when you do these things, then the more predictable and manageable the entire organization's outcomes will be. It won't just be this number that you keep shooting for which a lot of companies keep basing their success on a number, this is the number we need, this is the number we got to hit go out to this number guys, there is so much more to your business's success than a number. And the more you focus on all of this predictability than the outcomes that you're expecting, and all of those areas are actually going to be way greater than you were planning on.
So for us, now, one of our big outcomes is serving people. Well, you know, what is the success of the person? Did we get them to the right perspective, did we get them the right information to change their lives, to change the business, to change their families? So as we focus on doing all of those other pieces correctly, then we're able to start predicting our outcomes in multiple areas a heck of a lot better. This means that you can start to really lead and grow your business at a whole new level. Because now, you're not doing the same thing you've been doing that got you to where you are, instead, you're looking, big picture.
How do I start tweaking and turning and affecting every aspect of the organization so that I have much bigger outcomes? So ready for a gut punch? When the systems are not maintained and improved over time, right? So if you're not going through checking every system, optimizing those systems over time, then they are unpredictable and volatile, which is going to be yielding unlimited profitability. You will see this, the very first time one of those systems starts to break down because it's too old. Times have changed, things have changed. People are operating things differently. Whatever it is, you'll start to see things breaking down.
Great example of that, always go back to Jim Collins Good to Great, when he talked about, I believe it was Southern Railway, that stayed a train company, instead of becoming a transportation company. So while other companies became transportation companies and railway was just part of their portfolio, Southern Railway stayed the same. And obviously, if you've ever read that book, you know that they think it was like, I don't know, seven bankruptcies, or whatever. So if you don't check these systems in place, well, first off, if you don't put them in place, well, then that's holding you back. But it's not just enough to put them in place, you've also got to go through review them, maintain them, optimize them, all that kind of fun stuff.
Chris LoCurto 28:35
Businesses who don't do these things, they tend to implode. Leaders are usually held captive to the leadership crazy cycle, being stuck in the same thing over and over and over again, not really being able to lead people to success. And systems tend to be dry, they tend to be siloed, which is horrible, they tend to be unproductive.
So in conclusion of today, this is gonna be a two parter, sloppy leadership, sloppy accountability, sloppy systemization, leads to inability to truly predict. That's what we're trying to get to. So hopefully, this has helped you today. This is a great amount of information on where you might be, you might be sitting there today going, "My gosh, I can't predict the future, I've not been able to predict the future.
I've not been able to nail down when I'm going to have money when I can make better decisions, I've not done these things. I definitely don't have the systems in place that I need. So I'm obviously not optimizing them because they don't exist." So we're going to talk more about those things when we hit part two of this, and I think that's going to be in two weeks from now. So as always take this information, change your leadership, change your business, change your life, and systematize your calendar to join us on the next episode.