Over the last few weeks we’ve been diving into the world of economics, and this week we’ll continue looking at building predictability into your business finances.
As a business owner, can you imagine a day when you start meeting and/or exceeding your target projections because your financial engine is so well-tuned?
Well, I have to tell you that I can, and so can our clients!
Predictability, scalability and dependability are the order of the day.
This is your future, if you want it!
If you haven’t listened to part one of this podcast, then you might want to start there as it will help to set the direction we go from here.
In these episodes, you’re going to discover not only how to create predictability, which will get you through tough times, but you’ll also learn how to thrive in unstable economic conditions.
Full Podcast Transcript
business, clients, leaders, chris, predictability, leads, predict, yeses, number, important, levers, bunches, creates, sales, people, sooner, team, phenomenal, optimizing, incredibly
Joel Fortner, Chris LoCurto
Chris LoCurto 00:00
If you want to build predictability into your finances, it takes diligence and perseverance, that is coming up next.
Chris LoCurto 00:16
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 folks, we are on part two of, Building Predictability into your Business Finances. And these are not back-to-back, we had a phenomenal interview with Chris Camp last week. If you have not listened to that you need to go back and listen. Here's what we're trying to accomplish with these episodes on building predictability in your business. You're not going to be able to scale well. So I'm not saying you can't scale. But I'm the guy people come to when scaling ends up sucking really badly. I'm the guy people come to and go, "Man, we did all these things, we grew in numbers. But man not only we have we plateaued, but now we're taking a downturn because for some reason, things are just not going the way that we thought." Well, there's reasons for that. So if you've not listened to the Chris Camp episode, go back and listen to that, and listen to how well he scaled the business. Right? And businesses. I mean, he's in a phenomenal position now. And that's because he's done things with perseverance. He's done things with predictability, and many more other "P" words, these two episodes have more "P" words than any-there's a whole lot of "P" in here. Anyways.
Chris LoCurto 01:49
Yes, got Brian laughing on the episode. So practical examples, marketing and sales. So if you're in the marketing system, we know that if we invest a certain amount of money, and we pull these specific levers, and we utilize these outlets, and we SEO stuff, and we use platforms, and etc, you know, if we produce X number of leads, then we can predict, we should be able to predict, X number of sales. Now, if it can be one-for-one, man, let's sit down and talk because I'd love to know how you put that system together. But usually what happens is when you're doing a lead generation sale system, we generate X number of leads, let's say I don't know it's 100 leads, right? We do that, because we've spent so much time making so many phone calls. So let's say we generated 100 leads, which is fantastic, or I don't care, maybe it's 10. Maybe we generate those 10 leads, because we made 100 phone calls, right? And out of that 100 phone calls, we got 37 yeses, and out of those, some of those were brand new, and some of them were repeat clients. So really, that breaks our average down on the new leads to a smaller number, right? And so maybe that breaks it down to us having 10 quality new leads that we can go after new business for. Now that all of that was just made up. So you know, don't hold me to those specific numbers. But you get the point. What does that tell me? That if I make 100 phone calls, and it's probably going to be more than that for 10 leads, but let's just say it works out that way. If I make 100 phone calls, I get 37 yeses, I have this percentage of new clients and this percentage of repeat clients that I should be able to end up with this percentage of brand spanking new clients that I can move forward with, and maybe even possibly this percentage of repeat clients is consistent as well. All of that helps me to predict my sales in the business. All of that, and that's just one marketing aspect, that's just one sales aspect actually. All of that helps me to know, that if I continue this process, if I can make 100 calls a day, if I can get 37 yeses a day, which again, would be phenomenal, then I should have 10 brand spanking new clients a day. Or if it's a week, okay then, if I make, you know, maybe I'm making, you know, 500 phone calls to get 37 yeses to get 10 brand new clients, whatever it is, but it creates a predictability. So that's a practical example utilizing the sales process, right? If we do that every single where in our business now we can really start predicting, we can predict other income streams, we can predict other levers that we need to pull when we do this, this creates this over here, right? When we push this button over here, this creates this over here. And by doing so it gets us to a greater understanding of money, we should make revenue we should make. Well, we don't stop there. So if we continue this and we do it in the expense side, then we really start saying, what are our fixed expenses? What are our variable expenses? When do we have highs and lows? Do we have stuff that seasonal, we start really looking at what does it take to systematize our expenses as well, so they can become incredibly predictable? It's the systemization of your internal process that allows you to see beyond the day today. So when we come back, we're going to talk about what it looks like to win at accurate forecasting.
Joel Fortner 05:47
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 over 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 06:49
So three rules that I'd like you to use one, creating predictability, okay, these are these are important things to to follow, because without them, it makes it almost impossible. The first thing you must know, the first rule you have to follow is, you have to know your current state. Now, I'm not talking about the state that you live in, which may be the state of confusion, I'm talking about the state of your business, right? You have to understand where your business currently is, I cannot tell you-so if you're sitting there going, "I'm pretty sure I know." Or "Man, I don't really know." Guess what? You're not alone. Folks, so many business leaders, so many business owners, really do not actually understand where their business is right now. Instead, they're just happy that things keep moving forward, which again, makes it only predictable to the, "Well we're still winning, but we don't know how." You've got to measure it, you have to define it, you have to take inventory of it, right? You've got to take a look at your whole business and say, "Where are we with everything?" Now, obviously, there's a ton of details that go with that. But I want to hit the things that keep you from doing so. For some of you, fear is the biggest reason. Fear of what you're gonna find out. Fear that you may discover that things aren't as good as you think they are. Fear that you may discover that you don't know what you're doing. Right? That's a huge fear for leaders. We don't want people to find out that we're frauds. Guess what? They already know we're frauds, right? We've got to know that we're frauds from time to time when it comes to leading-and what I mean is, is that there's times we don't know what the answers are. The sooner you can get to the place of being okay with not knowing the answer, and not having the answer, the sooner you can find out better answers. The sooner you can free yourself up to actually go gain perspective, right? The sooner you can free yourself up to go measure stuff, to find stuff, inventory stuff. So if fear is keeping you from really knowing the current state of your business, or the current state of your team, depending upon you know what role you're in, then you've got to crush that. It will continue to hold you back and keep you from being in a place where you can predict what's going to happen in the future. Right? Another thing, trusting others, many of you trust other people to tell you the state of your current business. For some of you, it's trusting a CPA. Listen, most CPAs are fantastic, right? But there are some odd balls out there that actually don't do a really good job advising their clients. And many times they're just flat wrong. Like I remember, I had a client who had a CPA who kept saying you have to hit 7% growth every single year. And when I asked him, "Where is he pulling the number from? Where's he getting that?" He's like, "He doesn't actually have one, he says that's just what you should be doing. There's nothing behind that. There's literally nothing behind that. He just says that that's a really good number of growth every year." That doesn't even make any sense. That has nothing to do with a specific business. Maybe he's pulling something from something industry wise somewhere. But that's not somebody you want to listen to. You want somebody who can actually look at your business and go here, here, here, here, here, here, do these things. These are areas that are lacking, these are areas you can grow in, these are areas that are suffering, these areas that are doing phenomenal, you need to understand this, this, this, this this, don't just trust somebody to tell you what's going on, dig in, ask questions, find out understand, learn the numbers, if you've never done that before, then get with somebody who actually has, you know, the desire to teach people how to know this stuff. Another thing is, lack of prioritization. You will not know your current state, if it's just not that important to you. If everything else is more important, if the tasks that you have today are more important, if seeing your bottom line is, you know, in the blocking, considering that being winning without knowing how you got there is more important, then you're not going to prioritize getting in there and learning where you are.
Chris LoCurto 11:29
For a lot of you owners, and a lot of you leaders, one of the biggest mistakes you can make is not digging into your team, and finding out where they say the business is, or the team is. It is incredibly powerful. When you spend time with the smart people that you hired, if they're not smart, why did you hire them; and find out their perspective of where we are as a team or as a business. So here's a fun fact, if you don't know where you are, then you cannot see where you're going. Think about that. Alright, number two rule, you must know your capabilities, you have got to get to a place where you understand your capacity, your capacity as a leader, your capacity as an owner, your capacity as a team, your capacity as a business, whatever it is, you've got to get to a place where you understand the capabilities of everything, right? When you know that if you do X, you should receive Y, then you can really start predicting X and Y, right? You can start predicting which levers to pull, which buttons to push, the things that you need to do to create a bigger business, more profitability, more product sales, more clients, whatever that is. So the sooner you can know your capabilities, the sooner you can start testing, the sooner you can start measuring, the sooner you can start optimizing the very things that you're doing. And that's when we just rinse and repeat, right? When we know that we pull these levers and we get this type of sales or this type of profits, crud, how many more times a day can we do that? But, you're gonna have to find out what are those factors, because probably at least one of them is going to point to an area that if you do this thing, then you continue to grow. So we've got one of our clients, that they're what we call "X Factor". And we steal that probably from Jim Collins, I'm sure somewhere along the line. When you look at their X Factor, it's adding crews during the construction industry. So every time they can add a full crew, they can literally predict their profitability going forward with that crew. They've got it nailed down that well. Everything else falls in line, they just got to pull together great crews. And when they do that, they can start really predicting sales, they can start predicting, you know where they're going to be after a while, how much that crew is going to be able to accomplish, all of those pieces. So, experience yields information, information is critical to forecast, Alright, we're going to hit number three, the number three rule when we come back right after this.
Joel Fortner 14:32
Hey leaders, this is Joel Fortner, VP of leadership development at Chris Locurto's company. I have some questions for you. Do you as a leader feel like you are caught up in a crazy cycle of stress and tasks that never ends week to week? Do you ever have to deal with tough conversations with team members and you sit at home the next day, the night before, worried about how's it going to go, what am I going to say, what are they going to say, can I think fast enough on my feet, is it going to be total failure? Are you experiencing culture problems or that stuff that just breaks down trust in unity on your team? Well, if you can relate to any of this, this is a pretty typical leadership story and situation. Here's the thing, though, it doesn't have to be that way, and we can help you solve these things, we can help you become the leader that solves these problems and leads their team to greater success. I want to introduce you to the Key Leaders program. This is an ongoing leadership development program that gives you the lesson track, coaching, and accountability you need to become the leader you can become, to actually implement what you're actually learning in this program. Things fall apart without great leadership and intentionality. If you want to solve the problems that are holding you back from being a great leader, we can help you with this program. Get in touch with [email protected]
Chris LoCurto 15:58
Okay, we're back. And we are talking about the number three rule for creating predictability. And again, guys, there's so much to all of this. But if you will hit these three rules, you'll be amazed at how well you'll do. Number three is calibrate accordingly. One of the big pieces that people leave out is the understanding that you can't just put things in place and expect them to be okay. You can't just put things in place and expect them to rock on forever, you're going to need to review the things that are going on, you're going to need to find out how well things are working, you're going to have to find out if things have broken, you're going to have to find out if there's things that you can change. And then when you gain enough quality perspective on the system, the process, then you optimize the daylights out of it, you prune the vine, right? If you don't know what that means. What it means is, is that when you have great grapes on the vine, if you will prune the vines back, then it'll cause more grapes to grow. And if you do what's called dropping fruit, getting rid of some stuff that's unneeded, right? So a fantastic winemaker will have a tendency to drop one out of every three bunches. "Well, Chris, that doesn't make any sense. Why is he cutting down the amount of wine he can make?" Because those two bunches that remain pick up the extra nutrients, the extra complexity, the extra boldness, that that the third bunch, if you want to call it that, that they dropped to the ground, actually would have taken. So now the vine feeds the other two bunches. Why is that important? Because by removing something that's not needed, you can make a way better wine which you can charge way more money for. So think about it this way. You keep the three bunches, you can make a $15 bottle of wine, you drop one bunch, you can make a $45 bottle of wine. So it works, right? So-well. It doesn't always work. But great winemakers that have great farmers making great grapes, allow you to make great wine. How did they get there?Continuously optimizing the process over and over and over again. So here's the bottom line, folks. Predictability is built on consistency. It's built on diligence, it's built on experience, the more predictability gets created. So in other words, the more you are proactive, the more you focus on this, the more you create predictability, the further ahead you can see inside of your business, the further ahead you can see inside of your business, the better decisions you can make, the wiser decisions you can make, the less you'll spend time, waiting for your bottom line to increase because you keep doing the same thing. And the more you'll pro actively do things to increase that bottom line way faster than just sitting around winning and waiting. So hopefully that makes sense. The further out you can see the better off it will be for you and your team, no matter what the fluctuations in the market may come. So I want to share a story we just had Chris Camp on, again, I pointed out that at the beginning of the show, the episode that was right before this, if you did not hear that, go back and listen to that. But I wanted to share a story of Chris's president which is Wes Dill, who took over a lot of the operations and Chris has elevated himself to a great place got multiple businesses going on. He's leading and energizing those leaders incredibly well. So we always have our clients for Next Level Mastermind. Give us some wins that are going on inside of their business. And this is what Wes sent in, in the first quarter. This was in March of 2021. So here's what he said; "Yesterday, best February in company history, gross profit margins up 35%, one year to date after COVID arrived." So folks, in 2020, they knew the foundation was being set, they knew that 2021 would be phenomenal. They have such a great handle on it right now. Why? Because they have great measurements, because they have great tools, because they're no longer guessing what the future holds. They are literally proactively building it in. They are literally building in predictability. That is what I want you to do.
Chris LoCurto 20:51
That is what I want you to utilize this information for. Why? Once again, you will make your best decisions when you have the clearest picture of not only where you are, but where you're going. Well, folks, hopefully this has helped you today. And seriously, if you have questions, send them in, [email protected] If any of this is confusing it's that making sense, reach out to us. We'll help you to understand it. As always, take this information, change your leadership, change your business, change your life. And join us on the next episode.