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Overcoming Bankruptcy and Finding Business Success
Episode 6218th September 2021 • Success Inspired • Vit Müller
00:00:00 00:57:52

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Ean Price Murphy helps successful entrepreneurs set up an easy spreadsheet-free cash-management system that works with your existing habits to get you at a glance clarity … so you don’t have to learn accounting to be permanently profitable.

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Highlights:

  • (00:00:13) - Introduction of today's guest - Ean Price Murphy
  • (00:17:43) - Give every dollar a job and give every dollar a home.
  • (00:19:39) - Juggling money around, luck of integrity and responsibility
  • (00:22:19) - Don't treat your finances like a yo-yo
  • (00:23:36) - How to figure out your business maths and what really matters in the end
  • (00:26:59) - Ideal place to start with when trying to figure out the purpose of your business.
  • (00:35:10) - Pricing & Value, 2 ways to decide how much to charge
  • (00:36:46) - Simple maths formula to figure out how much your business needs to make per year
  • (00:40:32) - How to figure out your initial investment to start a business
  • (00:45:33) - Ean's story about overcoming bankruptcy in her early 20s
  • (00:53:21) - What happens when you declare bankruptcy

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Transcripts

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Welcome to the Success Inspired Podcast, a business and personal development

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podcast to help you accomplish more in life and realize your true potential.

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And now here is your host Vit Muller

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Hello.

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Welcome to another episode on the success inspired podcast.

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I'm your host.

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And my guest today is a survival for personal bankruptcy in her early twenties.

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That started her on the path of financial literacy.

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She was not born an accountant yet.

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She managed to turn that experience around, into launching

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a successful bookkeeping business.

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Fast forward to now she helps accomplish intrepreneurs to set up an easy

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spreadsheet, free cash management system that works with their existing

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habits to get them at a glance clarity.

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So they don't have to learn accounting in order to be permanently profitable.

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And who wouldn't want that.

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Right.

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So please welcome to the show Ean Price Murphy.

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Thank you,

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creativity in the show in

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great to be here.

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So I've already introduced you a little bit, but what's something

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that not many people know about you.

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Oh, I'm kind of an open book.

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I think most people know quite a lot about me.

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You know, all of the things that people don't know sound a

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little, a little stereotypical.

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I love to travel, but, for me that means that I had the opportunity

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to, study salsa dance in Havana.

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So there we go.

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Nice.

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And what's been happening in the wall of academy.

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Thankfully very little numbers are very reliable and they're very

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calm and, and, they either, they either make sense or they don't.

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And if they don't, it's one of the only places in the world I've found

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achievable perfection, you just got to keep looking, you'll find the

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problem and you can always solve it.

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I spoke to someone the other day about that.

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Say, you know what?

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Like you could work with people.

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You can, you can work with designers or, you know, you can do all these

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other things, but there's one area of business that you can always rely on.

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You don't have, there's no pitching.

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It's, it's always going to be true.

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It's no lying and it's numbers and it's counting always rely on that.

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And there's a, and there's piece of that as well.

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Right?

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I think so

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what do you like most about your, your, your line of work other than this?

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Well, I mean, I, I, what I, this is, I don't know that I

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love this about my industry.

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But what I love about my job specifically, or the company

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that I run is that it really is bringing those two things together.

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It's allowing me to have that ability to achieve perfection, which I definitely

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like, but because I, myself, I'm a small business owner rather than

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working in a corporate accounting firm.

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I still have the ability to interact, with really interesting,

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fun people on a day-to-day basis.

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And, you know, we, we work with people that are doing really

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amazing and cool things out there.

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And so being able to sort of, you know, support that and be a part

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of that is really satisfying to me.

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And, and I love working with business owners who are ready to make that

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transformation because watching that.

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Cloud lift, you know, the CS part, the numbers suddenly makes sense

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to them and their shoulders drop and they breathe a sigh of relief.

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you know, to me, that's, that's, that's my food.

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I live for that.

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And, and it's so nice to be able to have both of those together in the same place.

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I love it.

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And you're totally right.

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It seems to, to lose passion for, for what you initially may have left when you, when

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you not always, but not, not always the case, but, you know, in some cases in a,

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and I have noticed with some people that are, that I know, in, in, in an example

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of accountancy, initially they love it, but then they go into the corporate gig

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and, and it just, you know, it's all structured and, and, and you're just.

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You know, not being an employee it's, it's bad.

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I mean, it's nothing about that.

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About, you know, in some cases it just becomes like tutored

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or teen you're too constrained.

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It's too many roadblocks and you have to report and, and it just becomes, it

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becomes too much of a job and less of a, something that you initially like

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it because you really like loved it.

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You kind of lose the passion out of it.

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And I know a few people that, that have been too, and yeah, it's kind of sexy.

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It does suck in a lot of times it's just being, separated from the, the,

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the results that you're producing.

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You know, if all you're doing is producing the reports and not being able to see

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how that affects the decisions and being able to help people make smarter choices.

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You better hope that you've got great coworkers that you really

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like.

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Some decisions that numbers can help business owners make.

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I mean, what, what can it help them with?

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That's why I love them as I, you know, for me, I think that, especially in

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sort of small business or, or lean and mean organizations where it's

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one to three partners, you know, less than 20 employees or sometimes down

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to just one person themselves, it's so easy to get caught up in what you

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think you're hearing the trends are.

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Or you've had a brilliant idea in the middle of the night, or, you know, you

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just sort of have this gut instinct that this, this is really where we should go.

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And all of that is great and really important.

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We need that spark of creativity and it needs to be balanced

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against the reality of the numbers.

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So, you know, when.

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Because this is at least in the U S you know, 50% of small businesses go

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out of business in the first year.

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And 70% are out of business.

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After five years of the businesses that fail almost all of them, 82% say

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that it was cashflow was the reason that they went out of business.

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So not that people weren't super excited about buying their products or that they

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couldn't find the right path to market, but that they didn't know how to manage

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the cash so that they had the money that they needed when they needed it.

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And to me, that is a giant tragedy, right?

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And so either that's because you get this middle of the night, brilliant

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idea, but you haven't tested it enough.

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And so you waste a bunch of time and money trying to sell something that

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people aren't interested in buying, or they are really interested in buying it,

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but you haven't really thought through.

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The, the cycle of how we're going to get this product out.

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How much time do we need?

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How much is it going to cost us?

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Where are we going to get that money from?

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You know, and so explosive growth can take a company down.

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And we saw that however many years ago, it was 10, 15 years ago.

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Anytime a small company would end up on Oprah's list.

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They would like be blown out of the water.

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And, and a lot of them had to fail because they couldn't keep up with

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this insane demand that they had no structure or systems to handle.

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Okay.

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So chaos.

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So we like to go from chaos, chaos to clarity so that you can see

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what's happening and then make really wise decisions around it.

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You can temper your feelings about something by saying, well,

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but this is what the numbers say.

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Now when we can talk about the Kaos example, why do you think it is it, is

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it because they suddenly get so many new customers, they can't handle it.

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And the reason why they fail while it puts them down is because of the

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overwhelm, the quality then goes down, which then affects the reputation.

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And then it goes like demand goes quickly up and then quickly

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down, is that what is your right?

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or it just goes, it never goes down because they can't fulfill

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the obligation that was created and they have to refund the money.

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So they, you know, there are businesses that go out of business with people,

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clamoring for their product, but if their supplier shut down, if they had

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a single source and their supplier shuts down, or if they, you know,

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live in an area where they can't get the right kinds of employees in.

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You know, if you're, even if you're just selling pizza, if you don't have somebody

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to make the pizza, you got no shop.

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And, and so often in small business, what happens is the owner

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ends up trying to do everything.

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And sometimes it ends with right with them having a heart attack, you know,

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like it ends one way or the other

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quite literally, you're not joking here.

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That's actually what happens here

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quite literally.

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Right.

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And that happens in corporate as well.

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Just people don't see the, the fallout the same cause usually they have a really

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strong health insurance and pension plan.

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So there's, there are risks to being a small business that that

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really aren't anywhere else.

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But the rewards also, you just don't find the rewards anywhere else.

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You know, it's really interesting how you unpack that.

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What is, and this is what helps me plan understand what helps people

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buy into the idea of the number's been really important and planning.

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Cause like when you unpack it like this, what are all the different consequences

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from your business can crash down to your health, to your relationships.

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I mean, if your business going down and you're taking it on yourself, you're

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the business owner that in Australia fix everything and you're just flipping the

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heads, changing the heads in one day.

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Like it's not human possible at all to be productive.

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You're going to go nuts.

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That's going to affect your, you know, what happens at home,

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your relationship, your health.

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And then, I mean, I would, I would bet there is even cases that, that

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led into homelessness or whatever, you know, like it's it's yeah.

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It's consequences.

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So where's the fight balance though.

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Like how do you, how do you balance it out between, you know, there's,

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there's a level of in business, there's a level of embracing bit of chaos.

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to perfection because perfection kills progress.

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Right?

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We know that.

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So you can't always like have it all laid out.

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Perfect.

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And then go because then, you know, moving and you need to move and move.

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What I mean by move, you need to start making some profit.

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Sometimes that requires a bit of, a bit of chaos and bracing level of

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chaos, fixing things, improving things, tweaking things, optimizing it as you go.

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So where's what would be the right balance?

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What would you, your vice sort of be on, on that?

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A lot of that has to do with the personality of the business owner

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and what their resources are.

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So if you're, you know, a single mom who has a job and you're starting a

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side hustle on the side, you know, making candles, whatever, and.

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You want to know, like when can I leave my full-time job and really do this?

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There's going to be a period in there that's tight.

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And, so the numbers will help, you know, what's the income I need to

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replace in order for me to do this.

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you know, I th I think it's, it's like jazz, right?

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It has to be half structure and half chaos.

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Otherwise, if it's only chaos, there's no music.

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And if it's all structure, it's boring.

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Right.

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So being able to find, and so I, you know, I really think of the reason I say jazz,

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partly because my father's a jazz musician is because it is the structure that allows

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the improvisation to be music instead of.

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I love it.

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Yeah.

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Because you need to be able to pivot in business as well.

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There's trends there's yeah.

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You need technology that you might want to use.

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There's new ideas, new, new ways to do things.

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So yeah.

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That's definitely, you need that room for creativity to be

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able to leverage off, off that.

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Yep.

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So in the idea of, you know, our mom, who's making candles, that's

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her middle of the night idea, right?

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Oh, I'm an, I know how to make candles.

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My friends say they want them, I'm going to try it.

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Great.

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Well, before you go out and spend your entire life savings on

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wax, how do you do a small bat?

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And, or even before you make a batch, how do you say I, you know, everyone's

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telling me that this is a good idea, which is not the right question to ask

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the question is, would you buy from me?

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Would you buy this?

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Because everyone's going to tell you, it's a good idea.

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They love you.

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They want to support you.

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But if you ask them, would you buy one, you might get a very different answer.

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And so that's what matters, right?

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Is not.

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Do you have a likable product?

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Do you have a, a sellable product?

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And then is that a profitable product?

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People liking your product?

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Doesn't turn into doesn't turn into profit.

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No people buy it.

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Can can, unless you mismanaged the money.

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Right?

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And so same thing, if you, if you fail to factor in the labor time, right?

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If, if she's just thinking about the cost of the wax and the Wix and the

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jars and forgets to say it takes me, you know, six hours, it takes all

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day Saturday for me to make this.

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So now I have to hire some help to make sure that, you know, the house is

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cleaned to the kids are fed or whatever.

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Cause who knows, like there's other labor factors that need to be taken in.

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And so even cause that's where most people go, right?

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Well, I'll just sell more, but if you don't have a healthy profit

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margin, if you're not pricing correctly, You're you're just

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burning your way down to bankruptcy.

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it's actually a really good point.

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You're right, because you got a, you got a cost per product per

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each unit and it's, you know, it's not too difficult to work it out.

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Right.

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You've got the material used, you've got the cost of the production,

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if it's possible to calculate specifically their product.

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so that's, that's that, and then you've got, obviously your, your

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fixed costs, your company costs your everything else that you need to

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pay to keep your company running.

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so that's an important, yeah, that's an important distinction to

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make now how what's the best way to go about it because like, okay.

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The cost of the production associated today, you know, that's, that's

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an easy one, but how do you try to see how it can best say this?

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how do you best work out a financial plan?

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How do you best, how can business owners out there best.

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Structure it, the financials around it.

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Let's say if you have, yeah, because like, because ultimately you're gonna,

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you're gonna put that price in there as well, because you want to make a profit.

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Like if you sell like an example of that lady, right.

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You're selling one candle and you know, okay, this is how much it costs

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me for the box for the, for the notes.

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And then many decoration, maybe I'm putting on a little pieces of

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decoration and how many pieces.

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And I know the exact cost of that.

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And then on top of that, I've got, these other costs.

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So how do you, how do you calculate these other costs?

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on top of that?

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Yeah.

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So the idea is to keep those other costs as low as reasonable.

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And what I mean by that is you have to know the difference between what is an

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expense and what is an investment because marketing, if you're doing it right.

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And if you're measuring it, isn't.

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It's money that you spend that will bring you back more than you laid out

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at some point might not be right away versus an expense of paying rent.

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Once it's gone, it's gone, right?

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There's no, there's not going to bring you money back in,

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unless it's a storefront rent.

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so, you know, if we just continue with this exam or let's switch

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it up, let's find a new example.

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What about a photographer?

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Right.

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A photographer has to have a location to shoot.

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So, so the photographer would, you know, digital.

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So there's their sort of equipment cost, which is a one-time cost and

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some things that need to be replaced.

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mostly

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the microphones, the lights, all that.

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there's their time and labor.

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maybe they need a photo assistant.

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Maybe they don't, but they, but they'll need somewhere to shoot.

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And again, some photographers get very creative and do

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outside portraits to avoid that.

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So, you know, if, if the decision is I need to pay rent

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because that's an investment because I need to have a studio.

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Great.

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So then you have to think about, well, what's the rent on your studio and if you

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charge $250 for a portrait session, how many portrait sessions do you need to do

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in a month in order to be able to pay?

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Right.

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And is that a reasonable amount because people also forget when you're

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a business owner doing everything yourself, you really can only be

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producing about 40% of the time.

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You really need 60% to do the admin and the marketing and the sales and

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the contracts and the follow-up and the, you know, all of that other thing.

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And so people think they can work 40 hours and that gets them 120 hour

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work week and it's not sustainable.

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So being very clear about, you know, when I sell a portrait package,

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there's not just those direct costs that you were talking about and the

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indirect cost of overhead, but also all of the ancillary costs around it.

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How, how long does it take me to get a new client?

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How much does it cost me to obtain that client?

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And those are all things that are a little bit harder to pinpoint.

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And that's why, you know, the I'm deeply in love with the system that I

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teach, which is not my own it's based on the book profit first by a guy named

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Mike because yeah, he's a good guy,

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a really good book.

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I've got to get him a bookshelf.

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It's called life in half a second.

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Anyway, anyways.

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So that his system essentially comes down to give every dollar a job and

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give every dollar a home meaning put money that has a different purpose

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in an actual different bank account.

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So you have a bank account for your direct costs for the production costs.

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Really good point.

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That's a really good point.

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You know, I actually, this is funny that you say, cause I've, when I was,

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I was running a gym a couple of years back and I was about to have some

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employees for the first time and I kinda just did it like intuitively.

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I just, I just knew that, you know, like you've got to pay super and

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superannuation here in Australia.

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you guys don't have superannuation in the U S do.

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Nope.

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some other crazy.

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Oh, it's not a tax.

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Oh, it's kind of a, it's not a tax.

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It's like a, for your retirement.

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Oh, yeah, right.

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Yeah,

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no, we gotta do that over here.

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Like our social security, we have to pay into social security,

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but yeah, so we got a superannuation, work, the, the insurance, the word cover.

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anyway, so you've got these, and then you, obviously, you got your taxes

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associated with everyone's, everyone's wages that you need to deduct.

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So obviously pay them their weekly or fortnightly, whatever their paychecks,

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but, you know, there's as that mom.

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And so what I did is I had, I had an account for the superannuation, what I

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would accumulate the 99.5% from every time I did a pay rent, I had another

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account for, for the taxes and then the third account for, there was a third

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account for something else, but yeah.

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Continue because that's actually, that works as long as it goes

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to that moving things around.

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Right.

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And, and, and that's, I mean, that is the system, right?

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It's it's there, the book has an outline of a more sort of intensive

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and structured approach to it.

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But the reason that it's so great is because it does, it works right.

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Then you can look at your bank balance and say, I've got

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enough, or I don't have enough.

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And so that's where you begin to borrow from other places.

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But at least if you're borrowing from other places, you know, that

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something is going wrong, right.

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I should be able to cover my overhead out of my overhead expense.

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I've over committed to something in some way, or I have failed

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to meet my sales target.

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And so now I have to go steal from the government essentially by borrowing

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from the funds that I owe them.

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Hopefully I'll put it back before I have to pay it.

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And so it's an, it's an early warning system to say I'm running out of money.

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I can't make, I can't meet my obligations because that's what

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business owners want to know.

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They don't care much about any of the stuff that accounting cares about right.

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While they want to know is like, am I good with the government?

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Have I paid what I needed to pay?

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And have I paid the least amount that I can legally get away with?

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Is anyone coming after me?

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I don't even know.

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Nevermind the government by your employees, like you have an

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obligation to pay your employees.

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Like I've been, I've experienced so many times, like I've did

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something for somebody and, you know, I wasn't even an employee.

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I was just like doing some, you know, invoicing them for some

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services that are provided.

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They didn't pay me, you know, like they did not account, they didn't

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manage their business properly.

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I don't know what they did with their money, but like I had to

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harass them for a month, four months, four months, four months.

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It took a year.

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Yeah.

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Yeah.

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Like 15 months to get paid.

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So to anybody out there, you guys listening and you feeling like

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I've got a business and it takes hustle and you know, sometimes you

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need to like kind of, take risks.

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Yeah.

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You have to take risk, but you also have to be responsible to the

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people that are working for you that are providing you service.

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That helps you grow.

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Like if somebody did service for you that let's say, if somebody build you a website

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that has help you acquire new customers, you got to pay that guy or that lady,

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whoever did it, you got to pay them.

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If you have an employee and they're working their butts off

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for you, you have to pay them.

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That's an obligation.

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So, I'm, I'm ruthless on that.

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Cause I, I hate when people do think that, because it's, because it's, it's

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because the money is in the account.

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But they feel like it's, it's their money.

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It's not their money.

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It's someone, someone else's money that they need to pay out.

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And so the idea of having that structure and that discipline and having it in

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individual accounts and being honest and being ruthless to realize that that is it.

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Now I've put those money in there.

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That's no longer my money and I'll have to work with what I've got left

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and that's how it keeps you honest.

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And so we actually recommend that there be a specific account for the

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owners pay, because again, you know, a lot of times owners are treating

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their finances, like a yo-yo.

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And so they, they go without a paycheck for six months so

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they can pay everybody else.

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And then they get a big payment and they take it all and then it

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starts the whole cycle over again.

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And so being able to have a, an amount set aside so that again, you can see

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am I being paid a reasonable salary based on what my business can actually

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afford, rather than just what I need to take home or what I feel like taking

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today more often than not businesses can actually afford to pay their owners

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more than the owners are taking, because they're paying too much for overhead.

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And so again, once that becomes clear, I should be able to pay myself

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X percentage out of my business.

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And the reason that I can't is because I'm spending too much on rent.

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Now I have a reason to go look for a cheaper rent right now.

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I have a reason to negotiate with the phone company, or now I have a reason to

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come to the employees and say, we need to be more efficient with what we're

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doing, because if I can't get these costs down in a nice way, I'm going to

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have to start cutting and burning and, and finding the way to sustainability.

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Just while we're talking about the, the calculations, right?

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The examples of, you've got your fixed cost and then you get your, you get

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your cost per product sold or cost per particular service provided.

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Let's say if it's a day of photo shoot.

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So therefore the blueprint or like a simple formula for anybody out there,

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be, workout what's your minimum.

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What's your minimum amount that you need to spend in order to be operational.

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So what's the minimum amount that you need to put into your

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marketing, to acquire customer.

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What's the minimum amount to, you need to put into the systems.

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Let's say, if you buying a software to manage your, your workflow and manage

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your team, what's the minimum amount of things that you know, that you need to

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pay for so that you know, what that fixed costs total fixed customer needs per, and

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let's say generally we like per month.

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but it doesn't have to be whatever works for you.

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Right.

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and then work out, obviously what's the service or product that you want to offer.

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Who's the ideal audience?

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Who is your market?

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Are they, you know, low income, middle income, high income earner.

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He's your, you know, and then is your service tailor to those and

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then that will then govern, okay.

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How are you going to price it from, from a marketing perspective?

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But sometimes if you price it too low, might not be appealing.

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You might have to price it higher, whatever you do there, but work out how

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much you want to charge for what you sell.

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And then quite easily you'll then work out how many of those units you need to

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sell in order to cover your fixed costs.

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But the way I do it is you need to, I was kind of ask you about, I'm

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going to give you the answer, but let me just finish this and then

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you can expand on that because I'm sure there's more that goes into it,

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but then you need to also work out.

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Okay.

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So out of those units that you sell, out of what you sell the product or service

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out of what you sell their work out, what's the, net net, the gross profit.

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That's a gross profit.

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So the profit would be debt.

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What's the fixed cost.

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That way you've got the cream on top.

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That's like your gross profit.

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And I've worked out.

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How many of those.

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you need to sell or basically divide your fixed costs by the gross

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profit tells you how many units you need to sell and that's your yeah.

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And that helps, you know, how many need to sell.

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And then obviously on top, it you've got taxes.

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So you need to take those into account too, but they're just get the

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director to have your gross profit, which then turns into net profit.

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Would that be like a simple formula for somebody out there thinking,

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Hey, I've got this great idea.

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I want to sell this widget.

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How do I get to start it?

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How many of these would I need?

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So the short answer is yes, no.

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And the reason I say no is not because that isn't exactly the formula because

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it is it's that simple and formula don't co-exist for most business owners,

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most business owners would rather pull their teeth out than do that.

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Okay.

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And

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would that be an ideal, like if people did that,

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it would be a great place to start, but again, back to this idea of

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half structure, half chaos, it doesn't matter what you plan.

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And this gets back to what you were saying, right?

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You can plan all you want, but you're not taking motion.

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And so you're not seeing what really works.

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So I always like to start with, what problem am I solving for my ideal client?

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Is it the problem that I really want to be solving?

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Like, do I enjoy this work?

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Is this the work that makes me happy and let that kind of carry

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through some of those other answers?

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So again, I could be doing the same work that I do now in a corporate

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environment, and I would be much less.

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So it's, it's, it's crucial to know, not just that you like to do the work that

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you do, but who do you like to do it with?

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In what circumstances?

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Over what time, you know, how do you create your ideal environment and

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then who does that most appeal to?

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And that's your ideal client?

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Not a 30 year old man who lives in a suburb and has three kids.

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Like, unless you're a 30 year old man that lives in suburban has three kids.

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I don't know if that's really your ideal, like why, so, so you know,

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and I know I'm saying that this is a numbers person and then suddenly

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getting all the way from the numbers, but that's because again, I, I see so

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many business owners get held up by the, how do I even begin to think about it?

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Figuring out what it costs me to to get a client, if I've never had one, right.

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That, that thought alone is enough to stop anybody in their tracks.

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And so I go forget it.

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If you don't, if you don't know it yet, don't worry about it.

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Worry about what is it you want to do?

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Who do you want to do it for?

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And how are you going to explain how you are solving this problem

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better than anyone else for them?

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Not in general for them again, bookkeeping, right?

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It's not rocket science.

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If someone asked me what makes me better than another

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bookkeeper, I can't answer that.

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I hope that all bookkeepers.

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I know that they aren't, but I hope that all bookkeepers are.

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Honest, careful, you know, ethical detail oriented.

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I'm not different.

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That's the baseline.

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The only thing that makes me different is me.

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So if you like my personality and if you like the way that I work,

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great, we'll do fine together.

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If you are someone who wants to be able to call me and get me on the phone anytime,

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day or night, that's not how I work.

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That's not going to work for me.

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You're not my ideal client, you know?

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So you need to find someone that's a good match businesses, shockingly, like dating.

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So, so then from there you can begin to say, what is the value that I'm providing

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to this person back to our photographer?

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The value that I'm providing is not a picture.

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It is capturing a moment in time so that you can share it with others.

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Right.

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This is what my kids looked like at age, whatever, you know, this

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is what my grandparents looked like before they passed away.

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It's it's documenting the moment, the important moments in our life.

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I did not thought, are we going to talk about like, you know, like I thought

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we're going to talk about lots of numbers.

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We are, we are, but we are, and this is so important for people to

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understand this is just, you start unraveling it, it goes much more.

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It goes much more in depth.

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And there's so many like lateral consideration.

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This is actually a really good one that you just said, this is,

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this is marketing one-on-one.

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And like, I don't know if it's going to be part of the recording, but at the

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beginning we were just speaking something and I was talking to you antibody.

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You know, one of the most, one of the most powerful skills that any business owners

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need to learn and should learn when they start is the power of copywriting, because

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everything is marketing any business.

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And I don't care what business you're in.

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You need to be able to market.

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That means you need to be able to Conway your message to your target audience.

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And literally the way you write things is what's going to either make

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your advertisement convert or not.

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And in that example, you just said, well, what is the photography?

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It's not, you're not selling a picture.

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You're not selling a, you know, a snapshot.

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Here's a, a digital file of an image.

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It's the capture that experience to capture that moment, right?

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So it's understanding how to play on the wards and get to the root of what you're

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truly what the, what the true value.

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Right.

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Yep.

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And so it's just a picture.

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You can do that on your iPhone.

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Why would I pay for that?

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yeah.

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So, so, you know, so back to the planning phase, if you're trying to

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work out okay, how many things I need to sell to cover my , my fixed costs.

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Obviously, once you work out, who's your ideal market and what, what you

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truly love to do in consideration also your lifestyle as well, right?

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Like it's got to work for your lifestyle, not just what you want to do, but

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it's got to work with your lifestyle.

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like in your case, like you said, you're not just going to be picking up

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phone for, for anybody just like on the fly, because that wouldn't suit your

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lifestyle and that's, and that's great.

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so, so that's all day and then you need to work out.

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Okay, well, what's going to, how am I going to optimize it?

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Like, if I know I need to sell this man, It's the ancillary costs,

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like you said, how long is it going to take me to sell those?

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So one of those things that's going to influence that is how

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well, how quickly can you sell it?

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How quickly can you market something?

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And how can you shorten the path from somebody's eyeballs landing on your

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ad for the first time to them opening up a wallet and signing up, and that's

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marketing and sales, conversion, and copywriting, and many, many

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other things that are going there.

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Right?

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And so the reason that, that I think that that piece is important

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and framing it is important.

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And knowing what the problem you solve is which is marketing is

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because that affects your pricing.

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Because if you're saying this is me capturing, you know, a moment that

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you wouldn't have access to with your iPhone, no one else is going

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to be able to make it in this way.

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Then.

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You can charge, essentially whatever you want, the more you charge the

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different that your ideal client changes.

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Right?

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So if you wanted to do that for high school seniors, you wouldn't be able to

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charge necessarily $5,000 for a portrait because that's not in their budget.

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So that's a disconnect, but if you're talking about a

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high-end wedding photographer, go for it, that's probably low.

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So again, that's how, what you want and your pricing interfaces

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with your ideal client.

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So how that gets back to what you take home, et cetera, et cetera, the price of

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it is you, you then, I mean, what often happens is someone says, oh, I'm going

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to be a high end wedding photographer.

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I'm going to charge $10,000 a day.

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So now I have to justify that by rolling up in a really nice car and

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having the nicest camera and the best lighting and three assistants

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and a hair and makeup team and no.

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You've just, you've just taken a $10,000 income and dropped it down

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after you pay out all of those people.

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Maybe you're keeping a thousand, what a terrible business model.

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So every time you invest a dollar in any expense, anytime

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a dollar leaves your doors.

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No.

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What is it that this is going to bring back to me?

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How is this going to allow me to charge more?

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Because if spending all of that money allows you to go

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from charging 10,000 to 20,000.

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Great.

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But if it doesn't, if, if your, if your ideal client feels like the market value

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of what you're presenting is 10,000, then you want to keep your costs as

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low, as reasonable so long as it doesn't affect the quality of the product.

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Right.

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And then you've got two choices to make as well on that front.

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We thought when you talk about pricing, right, you can either try and.

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Trying to set your price based on a market pricing, based on a perception

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of what, like the market would be willing to pay, but then you're kind

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of playing the same game, like everybody else, and you're competing on price.

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And then the moment you start to do that, it might make you want to even

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start doing discounts and special deals.

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And it's just like a way down the rabbit hole option two is

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you can say you can sell based on a value, leveraged the value.

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So raise the value of what you're offering.

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Therefore you can raise the price.

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And so you no longer, you no longer competing on the price point with

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everybody else, you enter your own vacuum, you enter your own space

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and that's where you want to.

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Because that's where you're going to like, raise your prices, double your

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prices, even then you're competitive, but you will still sell as long as the

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value that you provide is much greater.

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And if you can convey what's the return on the investment for the customer

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in a clear way and predictable way and way that you've got, tried and

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proven with bunch of other customers strengthened wave some social proof.

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And then, then you're winning.

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Yep.

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And so the, the way that I approached the money numbers after knowing all of that is

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to say, how much do I want to bring home?

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How much do I want to pay myself?

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And, and then watching the profit margin, how,

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yeah.

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It's even right.

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It's even more than that because the idea is if I know that I want to pay

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myself, I don't know, $75,000 a year, then I would say, okay, so that.

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That's how much I want to take home and I can use the profit first

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framework to say, what percentage of my overall income should my wages be?

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Well, let's call it 40%.

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All right.

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So 40% goes to me, 5% needs to go, or 10% needs to go to just pure profit.

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That's my cushion.

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That's my emergency fund.

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That's my, what happens if things are suddenly the global

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pandemic happens, right?

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Where's, where's my business emergency fund for growth, for

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emergencies for all of that.

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So I want to set that aside.

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I want to set aside the money for taxes, and then I want to set

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aside the money for my operating expenses and for my direct costs.

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So that means whatever I need to do to cover all of that production cost,

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because those are the costs I know, right.

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I know how much it costs me to make a candle.

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I know how much it costs me to pay the taxes on that.

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Then whatever that number is, that has to be 60% of something.

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So if I want to pay, if I'm saying that a healthy business would pay

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its, its sole owner, 40% of the income, then, then everything else

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has to fit into the other 60%, right?

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The taxes, the profit, the owners pay, et cetera.

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And so that's what I say was okay, so, so what is that number?

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I have to actually pull my calculator out cause I can't do math in my head.

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So if I were to say, and this is so much easier than all of

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those other calculations to say, what is, what did I say?

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75,000 divided by 40%.

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A hundred and eighty seven, five hundred.

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That would be my sales target to know that I'm, that I'm able to cover all of my

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expenses, my production costs everything.

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And that's how I know that I can take home what I want to take home.

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That's awesome.

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Right?

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So

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much simpler, so much simpler.

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And then you break it down on divided by 12.

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So, you know, what's your monthly, and then you break it down to how many

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things you need to sell per month, week, day, and then off that you're all off.

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Okay.

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What's your conversion?

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How many sales calls do you need to make?

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If you know that if you do 10 sales calls and you sign up five customers,

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that's 50%, you can then play on there.

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You can unpack the rest of the numbers, and then that forms your KPIs

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or your KPIs, your key performance activities that drive your KPIs.

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Right?

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And so now you only have to look at two numbers every month.

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Did I hit my sales goal and is my business banking.

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Staying the same or getting better.

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If it's getting worse, I have to make an adjustment because

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something has been happening.

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One of my costs has been creeping somewhere doesn't matter which one, right.

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We all get obsessive about line items and budgets.

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And, oh, I spent over $10 in this category, but I spent

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under 70 in that category.

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So now what do I do?

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And it's so complicated and it doesn't need to be, all you need to know

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is what is my sales target for the month and is my bank balance holding

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strong or getting better the end?

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That's it.

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That's it

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simple, simple.

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I think we've unpacked the whole thing.

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I love it.

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I love it.

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You know, this is, this is so much value.

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I mean, I'm sure there's somebody out there right now, listening that was

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considering maybe starting a business and it was all, you know, a bit bit unclear.

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so I really hope that we've kind of helped somebody, clear that up now.

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I have one more thing to add on that, which is when you're starting a business,

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you know, you're not going to start with whatever, 187,000 in sales a year.

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Right?

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So whatever the divided by 12 is, let's just round numbers.

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Let's call it 10,000 while you're starting out.

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If you know that you need to be bringing in 10,000 in order to be

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able to pay yourself what you want.

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And, you know, you know that that's not going to happen through sales.

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The question is where is that money going to come from then?

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And so now, you know, I have to be able to invest $10,000 of my own

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money into this company a month to be able to pay all of the things.

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And so that's how I can see when my earned income starts coming up.

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Then my investment starts going down.

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But if I know that I only have $50,000 to start a business with, I now know I

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have about a five or six months, runway..

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Yeah, that's, that's actually really good.

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So bring it full circle all the way to the beginning, because we kind of

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covered only the, under the assumption that you already kind of operational.

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So this is actually really important.

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Like how much money you actually need to get started because bootstrapping

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it with nothing is super scary.

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And the likelihood that it's not going to work out is much, much higher because when

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you are not winning, you're not funded.

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Then you're more stressed when you're more stressed, your IQ goes down, it

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means you're more stupid and you make more, you know, you get worse decisions.

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So it actually is so important.

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So on that example of somebody transitioning from, let's say, they've

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got a job and they want to start, you know, their candle business.

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It is scary.

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And the best thing you want to do actually is because you've

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got a bridge already built.

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You've got one bridge there.

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You've got your income from your job.

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This other thing is not making any money.

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You got two options.

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I mean, you could go all in, which means you're going to have all the time on

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to learn that, which is, which is good.

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That's your leverage more time, but no income until they do.

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Or you could work extra at night building this thing, building that

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little bridge by bit by bit, but having that security of income, therefore

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less stress, also more workload.

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So it kind of, yeah, you kind of have to make it, make it, make a choice on that.

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but I think that's a better option.

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I think that's a better option slowly, at least at least to get to

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50% or at least establish systems establish your, operational workflow.

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So you have a clarity because if you do the first option and you

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got nothing, then you got chaos.

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But if you start with an established way of.

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establish, like if at least you got a plan, like established marketing plan

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and you've got a clarity and you've got your collateral ready for marketing, and

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you've got your production processes.

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Well, that's much easier to then go all in

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and I would say eat right even so, so I think a lot of people

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start with collateral before they have proof of concept.

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So I see a lot of people say, oh, I haven't started selling yet

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because I've been spending all my time building, building my website.

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Well, unless you plan to sell online, even if you do plan to sell online, like, are

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you sure somebody wants to buy this yet?

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Don't don't print a business card.

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You know, if someone wants your info say, oh, I'll just send you an email right now.

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I'll text you right now.

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Give you the info right now.

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Yeah, right?

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Yeah.

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That's the whole, like, don't, don't aim for perfection.

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Like don't worry about business cards.

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Don't worry about that.

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You can do it through an email.

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You can do it.

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You don't even have to have a few.

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You can just go with your own Gmail, prep, Gmail.

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Don't worry about domain go from there.

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Right?

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Because essentially it doesn't really matter that much.

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Like at the end of the day, like if there is a value behind what

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you offer, people don't care.

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Whether it's the MDM or it's a fancy website, like that stuff matters

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later when there's you want to scale.

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But if it's just like, we're looking for one or two or three customers

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who want to buy a couple of candles, literally just check it on Facebook,

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show them a picture of the candles, tell them about, you know, how they smell.

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And then literally I was like, who would want to, like, we wouldn't

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want to buy I'm building fi you know, I've got 10 next week.

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I'll have 21st people then put the hand up, I'll be me and I'll send you them.

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And then that's your proof of concept.

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And then exactly.

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And then the best, next thing you want to do is get them to get

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them to, you know, record a video or write it's just a Memorial.

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So you've got some sort of.

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Then build your website, put it on there as an example.

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Yeah.

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I mean, exactly.

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Right, right.

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Otherwise you're building a website that nobody cares about, and then

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you're going to have to try and go and get that social proof when

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you could have had that all along.

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Right.

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I mean, it's one of the things I really love Kickstarter about where you can

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create a project and see who funds it.

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Right.

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Sometimes it will be funded by people who just like doing that stuff, but it's

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a great way to see, you know, what, now that I'm ready to move beyond friends

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and family and my local influence will strangers buy this from me and

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without risking a dime of your own.

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And, and I think it's a good, it's a nice way for some kinds of products

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and services to, to test it out.

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And then your production

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is covered.

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Yeah, actually Kickstarter's a really good, really good smart option.

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I love that.

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now at the beginning I introduced you in, you went through a bit of a bit of

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a hill when you were in your twenties.

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Tell us about, tell us.

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Oh, was it like overcoming bankruptcy that goes, you know,

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that term it's super scary for.

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Some was like, you know, oh my God, this is debt.

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That would be my end.

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But is it really, I mean, you've, you've done well.

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So tell us about that experience.

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. So it happened because I was raised in a very sort of typical middle-class

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household, you know, there wasn't a lot extra, but we, you know, we, we always had

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shoes and food and, you know, got got by, but, but nobody ever talks about money.

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And so, you know, when I, when I began to be more independent, I did not have

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any guidance on how to create a budget.

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You know, I knew don't spend more than you earn, but what happens when

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you find yourself in my position where you're working for minimum wage

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and it costs more than that to live.

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And so you try to add a second job.

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But it still costs more than that to live.

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Well, if you are a dummy like me, you get a credit card.

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And so that was what happened.

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I got a credit card to try and just get me through.

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And within a few years I had tens of thousands of dollars on my

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credit card for gas groceries.

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Utilities like it was cost of living.

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It was horrible.

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And I didn't understand, you know, that I was paying like 15% interest.

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And so every month that I was making a payment, I was not

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getting my debt down at all.

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you would just, you just

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kept paying the interest.

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That sucks.

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It was horrible.

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It was horrible.

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And I went to a debt consolidation company and they charged me a fee,

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but then they weren't actually able to lower any of my rates because I am

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already a good arguable and I'd already called up the credit card companies.

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And, and I finally just gave, I gave up, I literally gave up and it took my

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mother looking at me and being like, you just, you have to declare bankruptcy.

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Otherwise you're gonna, this is going to be the rest of your life otherwise.

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And it was devastating.

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It felt like such a failure.

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You know, I take my word so seriously.

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If I tell you I'm going to do something, I'm going to do it.

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And so I had this, Overinflated sense of moral obligation to the

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credit card company who had never done me any favors, but I felt like

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I told them I would pay this bill.

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I should pay this bill, even though I had paid it four or five times

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over, it's just that they were taking all of that as interest.

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So the deal that I made with myself was if I go into bankruptcy,

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I'm never going into debt again.

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And so far that's been true and was, you know, it's been more than 30 years now.

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So, maybe almost for almost 30 years, I'm only 51.

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And, and so I had to then learn about money.

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Cause I didn't know how it really worked, you know, other

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than spend less than you are.

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And, but that's not enough, right?

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Because the time and the energy and all of that.

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So, so I became a bookkeeper.

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I, I, my, the last job that I had before bankruptcy, I was an office manager and

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learned bookkeeping as part of that.

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But when I asked for a raise in that job, she kind of said, no,

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I don't want to give you a raise.

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I was earning $9 an hour.

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She offered me 9 25.

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That was not gonna do it for me.

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So I went out on my own and started being a freelance bookkeeper and was immediately

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able to charge 25 because that's what bookkeepers get paid or did back then.

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And so now I was in charge of my own income.

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I could make these decisions about who I wanted to work with and, and

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the world opened up for me and I was able to make all these decisions.

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So I really enjoyed that part of bookkeeping, but the longer that I

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did bookkeeping, the more often I heard the questions that business

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owners were really asking, which was, oh, my books are balanced.

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Great.

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Can I afford to.

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XYZ, can I afford to buy new equipment?

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Can I afford to hire an assistant?

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Can I afford to start a new product?

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And I was like, I don't know, that's not bookkeeping, but I don't

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like having questions like that.

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Sit on answered.

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And so I began to sort of look for those answers myself, and it led me to

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learning way more than I ever wanted to know about marketing and pricing and, you

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know, fulfillment, and cash management since that's the key to everything.

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And so that's how I ended up here, you know, and it's, it's been amazing.

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I have my own business with 15 employees now.

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And, again, if I had been somebody else's employee, I never would

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have gotten to where I am.

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So I'm really, really grateful that I got such a strong message so

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early before, you know, I didn't, it wasn't my business when I was.

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I didn't ruin my life savings and my retirement fund on it.

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So of all of the terrible ways it could have happened, it really

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was kind of the best way possible.

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and I'm very grateful that I was able to turn it not only into a learning

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experience, but into the thing that I feel like it gives me an edge.

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Right.

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I'm very compassionate with people who are like, I don't get money.

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I'm not a money person.

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I don't understand it.

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It's overwhelming.

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It's frustrating.

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I just want help.

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And I go, I've been there.

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I've done that.

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Yes, I can help you.

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It's like learning to drive a car.

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Feels terrifying at first, but pretty soon it's super easy and

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we just take it for granted.

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That's what I say.

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Right?

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Don't be afraid of failures.

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Failures is it's not a failure.

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It's a learning point that moves you forward.

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And there's actually so many benefits for you there, right?

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Like one number one you've been through it.

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So you know what it feels like.

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You never want to go back.

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Number two, you've got a great selling point, right?

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You've got, you've been there.

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You've got, you've got a.

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You got to prove.

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So if you can join the costumers, yeah.

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Great selling points.

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So, I bet that if somebody asked you, if you could, you know, wave

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a magic wand, what do we call it?

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would you want that experience to have to have had happened or not?

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And I bet you would say yes.

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Yeah.

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All right.

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Yeah.

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Now what happens, when you do declare bankruptcy

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us.

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And part of the reason that my mother advised me to do is because

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the laws were about to change.

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It wipes out all of your consumer debt.

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So it doesn't wipe out, government loans necessarily.

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and it allows you to keep some of your essential assets.

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So I didn't own a home or a car at the time, but if I had those

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likely would have been protected.

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And so it just reset me to zero and it gave me a terrible

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credit rating for seven years.

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But other than renting apartments, You know, which I was living

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in Brooklyn at the time.

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And back then nobody checks your credit rating.

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They just wanted to get paid in cash every month.

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that was really the thing.

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It, you know, it had far less effect on my life than I assumed it would,

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which was also a little bit of a shock.

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You know, credit is important, but it's not the be all end,

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all bad credit is not the worst.

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It doesn't mean you're a bad person, right.

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Or that you've done something wrong and there's so many ways to repair it now.

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So basically the main thing is that you, you wouldn't be able to get any

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line of business loan or a house loan for, for that period of seven days.

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And what happens to that, to the, to the money that you owed to those credit

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card companies, does the government take over and then you have to repay it to

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the government over, but there's no more interest or like it just gets waived.

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It just got wiped away.

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I just didn't owe it anymore.

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Sounds like a blueprint to me.

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I mean, yeah, right.

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I'm sure someone out there is doing it on purpose and you know, God love them.

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I, that was, that was not my ethical plan, but

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yeah, it's not ethical.

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It's not ethical to do it.

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Don't do it.

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Don't do it.

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It's a bad idea.

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But if you have to do it, it's good.

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You, no, it's good to know.

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It's there.

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If you, if it truly needed, then it's dead.

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don't, they'll go down to the, you know, and I don't want to go old depressing

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year, but I'm sure that there's people that, you know, didn't manage it well,

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and they didn't know about what it means.

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And they thought like, this is the end.

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Then they took their life, you know, like it's, it's done.

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Like it's, like I said, it's, it's not, it's not the worst.

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Right?

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It's a renewable resource, right?

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Time is not renewable

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hurt your ego a little bit because

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it really hurts your ego.

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Really?

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Really?

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Yes.

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But again, you know, you got to sacrifice something to move

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on, let go, or be dragged.

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So Ian, so, I really enjoy.

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How can people find you if anybody needs, you know, your services for

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example, or just wants to check out your stuff, where can they go?

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So, I'm going to tell them to go to your site, cause that's the most

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direct they're already in your system.

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So if you go to the success podcast.com forward slash Moxie, you'll find me.

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Yes, it's a

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success inspired.

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Oh, I was close.

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You know what?

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I'll do that

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for you here.

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You do that part for me.

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So I'll see, where can they find me?

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And if they want to listen more, if they want to find out more,

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you've been on many other podcasts, you've got articles, right as well.

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You got some really amazing online courses as well as super easy digest

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in great for anybody out there.

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we're all stuck at home right now.

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And most people are because of the bloody COVID thing.

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So what you guys can do.

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Go to success in spot podcast.com/moxie.

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That's success inspired podcast.com forward slash M O X I E.

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And you'll be directed to an online course that Moxie has.

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and if you want it as like a $97 online course for understanding better

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financial management, and if you've got a couple of other courses, if you want

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to get more premium, like a support from Ian directly, I think there's

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even like a one-on-one or something.

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So go check it out, guys, if you want to, yeah.

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Get Ian to help you.

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if you just want to check out in stuff, I'll put all the

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links in the show notes as well.

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Include Indian socials, just go check her out.

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She's got amazing stuff and I love, I love what she does.

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and once again, thank you so much for being on the show.

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Appreciate you.

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I appreciate taking the time out of your day and, and you know, spending this

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hour providing so much value, this is what it's all about, providing value and

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trying to inspire people to achieve more in life and accomplish, what they desire.

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so it's been amazing.

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And is there any, not Annie actually quite specific, what would be the top

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three takeaway points that you'd like the listener to walk away with today?

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I would say if nothing else find that savings account that it's attached to

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your checking account and start putting in 1% of your income away as profit.

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See how fast that grows and see if that inspires you to take further

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action, to give every dollar a job and give every dollar a home.

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I love it.

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That's number.

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That's the only one.

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I mean, you can read the book too, if you want.

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There's plenty.

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I can keep going.

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I can give you all kinds of things, but I think it's good

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to focus on one thing, right?

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There's that book?

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The one thing, just do that one thing.

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That's the first step I had that

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recently, , focusing on your right, next thing, that one thing that you

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want to implement, let's say in your business that will properly forward.

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Otherwise it's chaos and you do it trying to do too many things

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at once is never going to be good.

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I love it.

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Great advice for those of you listening right now is this

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to you, a message to you.

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Thank you for listening today.

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If you enjoyed this interview and please share it with your mates that

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you think would also benefit from listening and understanding a bit

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more about financial management.

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There's links on, on my website, on the podcast, you can just easily share it

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and people can listen to it for show notes, full links, and extra tips to

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help you accomplish more in life and realize that your potential, please

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go to success in spot podcast.com.

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Thank you and have a great rest of your day, everybody.