Welcome to the eCommerce Podcast! In this episode, Matt chats with Duncan Lloyd from eCom Profit Genie about how the Profit First methodology can transform your eCommerce business. Duncan, a chartered accountant, shares his insights on using behavioural psychology to help eCommerce clients manage money and generate wealth. Discover how the Profit First system, which involves distributing income into specific accounts like profit, tax, and owner's pay, can provide immediate clarity on your business's financial health and drive sustainable growth.

Key Takeaways:

1. Implementing the Profit First Methodology: Duncan emphasises the importance of using the Profit First methodology to manage business finances. This involves setting up multiple bank accounts (income, profit, tax, owner's pay, and operating expenses) and allocating funds according to predetermined percentages. This system helps entrepreneurs gain a clear and immediate understanding of their financial health, reducing the risk of financial mismanagement.
2. Engineering Financial Stress for Innovation: By deliberately creating a scarcity of funds in the operating expenses account, businesses are forced to innovate and optimise their spending. This stress can lead to more efficient operations, cutting unnecessary costs, and prioritising essential expenses. It helps prevent complacency and encourages continuous improvement and strategic decision-making.
3. Managing Debt and Building Financial Stability: The Profit First methodology can also be used to manage and eliminate business debt. By allocating a portion of income specifically for debt repayment, businesses can systematically reduce their financial liabilities. Additionally, maintaining a consistent habit of saving a percentage of revenue as profit ensures long-term financial stability and growth, allowing business owners to reap the rewards of their hard work.

If you're looking to revolutionise your eCommerce strategy or simply want to stay ahead of industry trends, don't miss out on the invaluable insights shared by experts like Duncan Lloyd. Subscribe to the eCommerce Podcast today and get ready to transform your business with actionable tips and strategies —take the first step towards eCommerce success now!

Upcoming Event:

Join Duncan Lloyd and other experts at the Profit First workshop in London on September 10, 2024. Visit ecomprofitgenie.com for more details and to register.

Duncan Lloyd | Transform Your eCommerce Finances With Profit First

Matt Edmundson: Welcome to the eCommerce Podcast with me, your host, Matt Edmundson. This is a show all about helping you deliver eCommerce. Wow. Oh yes. And to help us do just that today, we are chatting with Duncan Lloyd from the eCom Profit Genie. We're going to get into all kinds of go.

I know it's going to be good today. We would have just been chatting before we hit the record button. I've got a lot of questions already, but before we get into all of that, All of the wonder of today's show, a shout out to anybody who is new to the eCommerce Podcast. It's great that you're with us.

net. There you'll find all the info about the show. All the past episodes are on there. And of course you can sign up to the newsletter and we will email you out once a week with the latest podcast episode information. All of the notes and the links come straight to your inbox, so you don't even have to look around the internet for them.

They're just there. Uh, of course, they're also in the show notes as well, so you can get those underneath wherever you're getting your podcasts from. Uh, but yeah, great to have you with us. And of course, if you're a regular guest, You're a legend. Thanks for subscribing. Thanks for staying with us. Uh, why not reach out to me on social media, like Matt Edmundson, just go search Matt Edmundson, not the radio on DJ, obviously, uh, but, you know, come find me on social media, come and say hello.

And so we've got some great ones getting actually scheduled to be recorded. So I'm really looking forward to them. So if you run an eCom shop and you would just like to come onto the show, just tell us a little bit about your business, what you're doing. I'm gonna ask you some questions. Uh, you might even get a chance to ask me one or two if you really want to.

Uh, but we would love to hear about your story, what you're doing. Come promote your company on the show. And to share with everybody what you've learned from eCommerce, get in touch with me. Uh, just find me through social media or reach out to us through the eCom podcast website, which is eCommercepodcast.

Duncan, welcome to the show, man. Great to have you on. How are you doing, my fellow Brit? Thank you so much for having me. I'm doing really good. Thank you. Good. Good. Did you watch the game last night?

Duncan Lloyd: I did, but let's not talk about that.

Matt Edmundson: So at the time of recording, ladies and gentlemen, I appreciate, uh, this is maybe going to tell you how long it is between when we're recording.

When the show comes out, we had the England Euro finals last night where we lost 2 1 to Spain. Um, and so I think we're just, you know, just slightly bitter, maybe not bitter, upset maybe, I don't know what the word is, but you know, it is what it is. We're used to it, Matt. We're used to it. I'll tell you what, it's like we're getting used to getting in the finals now.

Duncan Lloyd: I'm an import. I moved here temporarily about 25 years ago.

Now I have two daughters with Leeds accents, so that was never in the plan, but it's been a joyful accident and I'm very happy to be here.

Matt Edmundson: Fantastic. Fantastic. Wow. It's great to, it's great to connect, great to chat. And I'm, I'm intrigued by, um, your experience. Uh, I mean, we were, again, we were talking before we hit the record button about the book Prophet First.

Um, obviously you're a bit of a raven evangelist for that book. So, uh, let's explain why, why that book, why has it impacted you? Why has it impacted your business? Why have you come onto the show to talk about it? The, the, I,

Oh, wow. Those accounts will be income, profit, tax, owner's pay, and operating expenses. And the idea is that you, you distribute money on pre agreed percentages at given times in a month, normally twice a month, based on the money that's coming into the company. Um, and the first account you move money into is the profit account, hence the name Profit First.

And the idea is to deliberately, um, engineer stress in your business is to make money scarce. Cause if you just see money in one bank account, basically your company's lying to you. It gives you mixed signals. So if you're used to thinking, great, I've got loads of money, I'll buy a MacBook, I'll book, I'll go to that conference in New Orleans.

We've all got a mobile phone in our pocket with a banking app, um, and we look at that phone probably every day. And I want to encourage that. I want to work with that natural entrepreneurial desire to look at cash, but make it useful to you rather than making it misleading.

Matt Edmundson: The, uh, I mean, this all sounds wonderful, uh, cause I, I'm sitting here smiling because the amount of times I've logged onto our bank account and gone, man, I'm absolutely minted.

And then the next day I logged on and there's actually a whole chunk of money that's gone out on the, the, the, the accountant has paid HMRC, the VAT, you know, or sales tax as we call it here in the UK. Um, you know, it's, Whatever, you know, 20, 30 grand has just disappeared out of the account. You're like, goodness me.

She understands the business. She knows, we know, We're going to owe this much in tax, we're going to owe this much in sales tax. And so she'll look at the account and she'll go, well, that's not really how much money we've got because a whole chunk of it doesn't belong to us. Um, I look at the account, I don't know that information.

Uh, as bad as that sounds, you know, I, I, I can go and find it out. I can ask her that information. I just look at the account and go, Oh, well, that's a nice chunk of cash in there. So what you're talking about here is quite fascinating because you're talking about Money coming in and then immediately going across these five different accounts.

Yeah. Um, yeah. How do you. How do you talk to someone like me who's maybe slightly sceptical of how that's going to work in reality? I love a bit of scepticism.

Duncan Lloyd: That's the way living leads, right? That's why I'm here, Matt. That's why I'm here. Yeah. Yeah. Um, whenever we take on a new customer, we, we, we'll have, we'll have a, a detailed conversation at the start because we know there's going to come a day where we're going to say, there's not enough money in your OPEX account.

Matt Edmundson: I

Duncan Lloyd: can tell you now that's going to happen.

Matt Edmundson: Yeah.

Duncan Lloyd: And that's a, and that's a bad day. But it's also a good day because that's. That's you knowing that day there is something not quite right. You're not waiting for your year, your year end accounts. You're not waiting for your management accounts. That's your bank account saying something's not quite right here.

And until you've done that, you haven't got a full view of the, of the, of how you're performing.

Matt Edmundson: Yeah.

Duncan Lloyd: And that takes time, right? But the account bank accounts are black and white and they're immediate. So I can tell you now, if you were to become a customer of ours, I can tell you now, there'll come a point where you and I are having a conversation and it's going to be a difficult day where we say, there's something wrong in your business.

Let's try and work out what it is. But the point is we've identified it and we've identified it quickly rather than a month or three or six or even 12 months going by and that problem getting worse and worse and worse. So by the time you get to it, it's a really big hairy problem.

Duncan Lloyd: is, it is not, it's not a magic wand.

You still got to work hard. You still got to solve the right products. I do find, especially, it's really helpful with inventory and advertising. These are two things that are going to use your cash, right? We call it the inventory insanity, where a lot of customers will come to us in the first place and they're not really sure You know, even where their inventory is or what it's worth or what, what, what it, what it means on, on their balance sheet.

Well, let's just, let's, let's, let's just strip that back into cash. Let's just make sure there's money going into your inventory account, and then you can buy stock out of your, out, out of that bank account. And if there's not enough money in there, something's wrong with your existing pricing or your cost structure, something's wrong in your business, and we want to find out why so we can solve it.

Does that answer your question, Matt?

My degree is actually in accounting and law, right? So I remember doing all the balance sheets and the, uh, profit and loss and figuring all that out at university, you know, back before calculators were invented and I had to use my fingers and toes to make all the calculations. But it's, it's always intrigued me.

There's this, there's this, uh, a good friend of mine called Mark Buchanan. He's a big fan of something called 4DX. I don't know if you've come across 4DX. The Four Disciplines of Execution. It's a really interesting idea, came out of the Stephen Covey Foundation. He wrote the book, um, The Seven Habits of Highly Effective People.

In other words, if I have to wait until the end of the financial year, send all the data off to the accountant, the accountant then comes back and gives me a profit and loss and says, oh, by the way, you've made a 20 grand loss this year. I'm already like 12, 18 months behind. That's why they call it a lag measure, right?

It's not, it's one of those things where. Companies fundamentally chase profits, but profit in itself is a lag measure in the traditional sense. Maybe not with a profit first sense, but in the traditional sense is a lag measure. And what I like about what you're saying is if I've got these five accounts and I'm keeping them up to date, I should be able to tell quite quickly just by looking at those figures how well my business is doing.

Exactly. Almost in an instant. I'm not the 12 months behind. I'm sort of there straight away. Right.

Because they are the guardrails. They are the, they are the, the system that will give you that inarguable information that then it's up to you to act on.

Matt Edmundson: Yeah, and so and I can see how this could work super well for a company that like ours we've got a number of staff, we've got a number of expenses, um, we're monitoring stock, we've got salaries to pay and we can look at, um, you know, what's our break even every month, how much do I need to pay the staff and so on and so forth.

In the sense that it forces you to innovate, it forces you to not get complacent, um, to cut back on unnecessary expenditure because I'm one of these guys that will be subscribed to 25 different things. And every now and again, I do a big fat call. Um, but I'm in a position where I don't need to do that.

So I don't think to do that, if that makes sense. It's because you've got one big fat bank account with everything going out of it. Um, so I can see how it's going to keep me on my toes, which is great. The other thing which I'm very bad at doing, uh, and, uh, maybe you can speak to this. Maybe it's, is this just me?

It's, [00:15:00] and don't get me wrong, I'm not on the bread line because I've just always thought I'd just, I've taken more and I just kind of leave everything else in there. I think the older I get, the more I'm not quite so sure that's the right philosophy. So is that just me or is that a common thing?

Duncan Lloyd: That's definitely not just you.

That is, that is a very common thing. And we, we, what we say to our customers is that we want them to get paid three times, right? We want them to get paid a salary for doing a job. We want them to get paid a bonus for doing a job well. So that's where your quarterly distribution comes in. So you'll put money in a profit account.

We like our customers to take half that amount every quarter. Okay. I'll come back to that in a moment. And the third, the third way you get paid is that if you're doing that right, if you're, if you're getting, if you're getting paid a salary and you're getting paid a bonus. You're building a machine that generates cash.

Well, that's worth some money to someone else, right? You're building enterprise value in your business.

Matt Edmundson: Yeah,

And so after one year of getting married, I bought my wife some shares in Carphone Warehouse just so it was paper. That was papers about year one, so she got the paper certificate. And every year she then gets 20 pounds of dividends from Carphone Warehouse every quarter. And we never once think to send that back to Carphone.

Say, no, no, you keep it. No, we don't need it. You can reinvest it. And that's how eCom entrepreneurs, well, all entrepreneurs. You should run a company, you should get paid and you should get paid a reward for how the business performs based, based on profits.

Matt Edmundson: And

Duncan Lloyd: I said, I come back to the profit point. I totally get that you as an entrepreneur don't want to take out loads of money from your company.

But then at least you're putting in 1 percent of your revenue into the profit account. You're getting, you're getting a nice distribution and maybe if your business is small, that's a cup of coffee and a donut. Great. You know, take it, celebrate, that's your reward. And in five years time, maybe that's a holiday.

But it is important that you set that rhythm up. And that you run your company like a, like a, like a proper enterprise, because that's what, I mean, I heard, I was listening to Ben Leonard, the um, conversation you had with him, and he was talking about developing your brand, and running your company properly, with good foundations, and that's exactly the principles that we're applying to finance.

The other half I just leave in there, just leave it in there. And then the next quarter I've added another 10 grand. So it's now the profit account is now back up to 15. Yeah, I take out another five again, or I take out, am I just being really pedantic? Am I taking out seven and a half?

Duncan Lloyd: I got seven and a half, just take it half that amount, take it half the account every quarter.

Matt Edmundson: Right. And then your business

Duncan Lloyd: forms, well, you're getting more money. And if it goes downhill, then you'll take, you'll take less of a bonus.

Matt Edmundson: Okay, so that's, I guess that's my next question, is like how, am I doing this regardless of what's going on in the rest of my company, or am I, am I actually going, no, well the company needs some of that profit, I need to, I can't put 10 percent in this month, I've got to put 5 percent in because of whatever.

And they all say, yes. Okay, great. Put 1 percent in the profit account. Do it today. Have Just set up a bank account, call it Profit, and at the end of this month, look at all the money that's come in, and 1 percent put that in your Profit account, and then just forget about it for another month. And the next month, put 1 percent in it, and then forget about it.

Do that for three months. Well, you've started a fantastic habit. You can now, you don't need to go from naught to a hundred straight away. You just need to start. But to answer your question, we don't, we don't really want you to go from 10 percent profit down to five. If that happens, something structurally has gone wrong in your business.

Matt Edmundson: 1%, I'm just writing this down, 1 percent per quarter over two years. So what, this might be a question like how long is a piece of string, what, what would I be aiming for in this profit account?

I think

Duncan Lloyd: a business performing really well will make between 10 and 20 percent profit, right? So obviously we're taking a percentage of cash, so if your business is back registered, you probably, if you're putting in between 10 and 15 percent of your income, cash income. you into your profit account, you are doing really well.

You prepare a set of accounts for a customer, You say you made a 100 grand, and the client says, great! Where is it? You And we say, well, it's, you know, it's gone into working capital, you've bought more stock and you've sold stuff and, um, it's working its way through your company. Well, that's not much use to an entrepreneur.

If they made a hundred grand, they want their cash. We want our customers as entrepreneurs to get their cash out of their business, into their personal pocket so they can do what they want with it. Whether they, it's a four day week or a holiday home or a coffee and a donut with your, with your loved one.

It doesn't really matter. You, you have to get cash out of your business. Otherwise you haven't got a business. You just got a job.

Matt Edmundson: Yeah. Yeah. No. Very Michael Gerber. Um, yeah. And it's, and it's sort of a, another old school, but which is very good. The e myth. Um, how does this work? Again, I, you know, I, I don't mean to be a flippant, but I can see how that would work in our company.

Duncan Lloyd: That's, that's another really, really good question. And you mentioned earlier about as your business has grown, you haven't really increased the amount of money you take. Because you do kind of take your eye off the ball a bit, don't you? And when you start a business, you do, like as you say, you bootstrap it.

I get that.

Matt Edmundson: Mm.

Duncan Lloyd: First entrepreneurs, they've gotta make money from day one.

Matt Edmundson: Mm-hmm, ,

Duncan Lloyd: right? So just put 1% of your profit, put 1% of your revenue, beg your pardon, 1% of your revenue in, into a profit account and start hardwiring that habit because if you find you can't do that, something's wrong with your, your business model.

Yeah. Your products, your product mix. And that's where you want to look. That's what you want to solve before you make it any bigger because all you're doing to make it bigger, you just got bigger problems.

Matt Edmundson: Yeah.

Duncan Lloyd: You find yourself borrowing money from Amazon and credit cards and from loved ones. That is not a route to happiness.

That's a route to stress and misery.

Matt Edmundson: Yeah. And if you're in that

Duncan Lloyd: situation, sorry to interrupt you Matt, if you're in that situation where you are, you've got those Amazon debts, you've got capital on tap, this is your way out. Okay. Even though you're not making a profit, these principles are your way out.

This is a good way of doing it.

Matt Edmundson: Yeah, no, it's great. I I I've seen a lot of accounts. I've talked to a lot of people actually recently, cause one of the things we do is we acquire eCom businesses. You know, we're building our own group over there. Don't really talk about it loads. We can talk about it a bit more, maybe on the show at some point.

Taxman. Um, the, I see a lot of just sort of general debt in the account, um, where people have had to finance and build the, you know, the, the way out of things. And it's strike and it strikes me as I'm seeing it more and more. I don't know if that's just me. It's totally anecdotal. It's just purely based on what I see, but actually more and more, you know, a business turning over I was looking at the accounts the other day, business turnovers, it was about a quarter of a million, um, had about 80, 000 in debt.

I'm like, how in the world That debt to turnover ratio for me is quite high. Um, and I'm like, and half of that was Amazon debt and half of it was bounce back line. And you're kind of like, wow, that's, there's a lot going on there. And I think it's causing a lot of stress to a lot of people at the moment.

Duncan Lloyd: Yeah, I'll answer it slow and that's the case. Um, well the way that we work with our customers is that we would do a Um, a forecast starting off with a profit and loss forecast.

From that we would then work out what the cash flow of that, of that profit is. So if you're making, let's say a hundred grand, you've then got to, you've then got to pay maybe dividends to the owners. Maybe it's bounce back loans. Maybe there's time to pay debt, which is the UK government's, um, when they, when they formalize a, a, a, a government debt, um, that then, then you've got what's, what's left over.

Okay. Um, and the rest of the cash goes, just goes to smashing that debt. And every month we're just gonna monitor that progress. We're going to monitor where we think we should be against, against where we are. And we're either on track or we're not. And if we are great, why not? But because we've got these accountability sessions with our customers and we're given that data and we're asking them hard questions, you know, it's not, it's not easy being a customer of ours.

We, you know, we, we do tend to poke our customers in the eye now and again, but it's because we've got their best interests at heart and we want to, we want to push them in the right direction. And sometimes that means making hard decisions in your business. Sometimes it's a difficult conversation, but a member of staff has got to go.

Sometimes those are things that you have to do to get on the right side of the line and actually build a business where you can grow and take on more staff and do the things that you want to do. But you've got to have a plan and a benchmark for whether you're on target or not.

Matt Edmundson: Fair play, fair play.

Duncan Lloyd: Yeah, there's there's loads of stuff online. I mean, you can go to our website and get some information that's www. ecomprofitgenie. com, um, the book is, is pretty short. You can smash your way through or read the, uh, have the, the Audible. There is in fact a derivative book called Profit First for eCommerce Companies, written by my good friend, Cindy Thomason, who's a U.

S. based accountant. Um, that book's a bit shorter, um, I'd recommend that as a very good starting point.

Matt Edmundson: That's really good. I saw a photograph of the three of you on your website.

And so, yeah, I work very closely with Mike and Cindy, and we're putting on an event later this year in London, which maybe I can give some details about at the end. Um, we'd love, we'd love people listening to this podcast to attend that event. It's going to be a workshop event. Anyone who comes to that is going to be doing some work, but I've come away with some really good actionable insight, which will hopefully help them to build a business of their dreams.

Matt Edmundson: Tell us about the event now, let's not wait until the end. Right. Okay. Well,

Duncan Lloyd: uh, Tuesday, the 10th of September, Borough Market in London. Um, if you go to our website, ecomprofitjunior. com, you can just click on the, uh, on the, on the link and just give us your details and we'll, we'll let you know, um, more information when it's, uh, when it, when it's available.

Matt Edmundson: Fantastic. That's Tuesday, the 10th of September, 2024. Um, and, uh, hopefully we can get this show out then before that date. So people can at least find out about it. Uh, and if we, well, I think we can make something happen. Um, so this is, uh, this is just a really interesting, uh, one of the things that I do want to ask you about, uh, being aware of time, Duncan, I'd, I'd, I'd Before we hit record, you talked about your daughters at university doing this methodology.

And I'm really curious. I appreciate it's nothing really to do with eCom at the moment, but we've all got kids. And so I'm kind of like, um, I'm curious, what, what did you mean? How have you, how has this been adapted to someone at university? How's it helped them?

And that's because I've, I've seen, I've seen the difference it makes. In people's business and, and therefore their lives. And that's why, that's why I'm here, Matt. 'cause I want, I wanna tell people about it. Um, I, I run a system in my company, um, I've taught my daughters how to use it as well. And you might be there thinking, look, it's really simple, Duncan, honestly, what are you, what do you on about?

And I said, well, yeah, it is simple. It is simple, but it's, but it's not easy.

And when my daughter went to university, we went through a process of how the money they're going to, they're going to get in, how much that was for rent, how much that was for going out, how much of that was for travel. And they run that process in Monzo accounts, they have different pots in Monzo accounts.

It's not any more complicated than what my grandfather, after the war, worked at Portsmouth Docks and got paid on a Thursday and went home with some cash and put some in the rent jar, and lost him on that. We're just doing that for a business, right? It's that embarrassingly simple. But to embed it and get it right takes, takes effort and, and graft.

So I

Matt Edmundson: wouldn't, I wouldn't want people to underestimate it or the power of it. So just remind me again, the five accounts. So I've got my profit account.

Duncan Lloyd: So the foundational accounts are the income account, money comes in the income account and then gets distributed to the profit account, the operating expenses account, the tax account and the owner's pay account.

Matt Edmundson: So what's the owner's pay?

Duncan Lloyd: So owner's pay is what you as the business owner, you're working your business, you need paying.

Matt Edmundson: So it's my salary, which is different to my profit distribution.

So if you're one of those people who breaks into a sweat in January and July, we want to get rid of that. We want to make sure there's enough money bleeding into that account so that that is dealt with.

Matt Edmundson: So that's your, so the owners pay, so what I'm going to pay myself is I'm going to figure out what my, I suppose what my basic costs of living are for my household.

Let's say it's, I don't know, two and a half thousand pounds a month by the time I've included the mortgage and the council tax, maybe a little bit more because council tax in Liverpool is blinking expensive. But let's say for the sake of arguments, two and a half grand. I'm going to pay whatever, two thousand pounds in January for my self assessment tax.

Duncan Lloyd: Exactly that. Yes.

Matt Edmundson: Great. So I've understood that correctly. Yeah, spot on. Great. Um, so what about, um, what about general staff then? Do they come out of the OPEX account? Yes, they do, yeah. And how do you, how do you run the accounts? Do you, does each account have to have like, um, a minimum level? Like charities like to have reserves, don't they?

Duncan Lloyd: That's a really good question. Yeah. You always want a float in that account because you want there to be money to, to pay your direct debits. But also we implement what we call the 10 25 rule. So we move money and pay suppliers on the 10th and 25th of the month, which we tried a few different, a few different variations, but the 10th and 25th seems to work, seems to work really well.

And it just means when it's in the end of the month and you're paying salaries, you You've already dealt with all the cash transfers. If there's a problem, you've got some heads up on it, but the money's there to pay supplies and pay stuff.

Matt Edmundson: 10. 25 roll.

Duncan Lloyd: Okay. By the way, the, the five accounts I've given you, they're, they're, they're called the five foundational accounts.

We would encourage all eCommerce owners to have an advertising account and an inventory account.

Duncan Lloyd: the system to any way that works for you. But for the people listening to this podcast, Um, an inventory account and an advertising account are that they're the two areas that cause headaches and surprises and, and, and problems.

We want to get ahead of them

Matt Edmundson: by having it. Love that. So the inventory account is obvious. That's where I'm, I've sold three of these products. I'm going to put into that account the money to buy three or four of those products because demand is increasing or whatever. So that's what I'm using to buy my stock.

The advertising account, I think is a really fascinating one because it's becoming a bigger and bigger part of eCommerce's budget, isn't it? And it's always been that thing where, um, I say it's always been that thing. The thing that I've noticed is you don't take the profits out of the business because you just buy more advertising.

so your advertising account is where you're paying all your ad agency bills, your Google AdWord bills, uh, from that. And you're just, and again, you're, I'm assuming you're just putting a fixed percentage in there. So sales increase your advertising budget increases. Exactly that.

Duncan Lloyd: Yeah.

Matt Edmundson: Great.

Duncan Lloyd: But it's good to go back to, you know, you mentioned earlier about, you know, you looking at other companies and seeing that they, that they borrowed money.

I suspect that's probably for stock for inventory, right? That's how they've got themselves into that situation. Whereas if they had an inventory account. And they didn't have enough money in there to restock, that would give them cause to stop. Look at their margins, look at their products, look at their product mix, make some changes to that sooner rather than later, because those changes happen, they're just avoiding making those changes at the time.

We, we, we need to think sort of 12, 18 months out of the line, uh, down the line. Um, so when we order stock, we, we tend to order big, like hundreds of thousands of pounds at any one, but it's a bit like we don't bring it over from China, but it's the equivalent of a guy just going, right, I'm gonna buy a container load and bring it into the country.

Because we've got minimum order quantities that we need to manufacture to meet the the costs that we've then figured out for the, for our products, if that makes sense. Um, and so

I'm curious to see how it would work with something like that. Would we be able to build up over time enough to pay the hundreds of thousands of pounds? I think it's a really interesting scenario that we, I'd like to run through. I'm not quite sure on the answer.

Duncan Lloyd: Well I to go, to go, to go back to borrowing money.

Matt Edmundson: to

Duncan Lloyd: funds to, to buy that extra amount of stock, but then rather then you, the money that you forecast coming into your inventory account services like debt.

Matt Edmundson: Yeah.

Duncan Lloyd: Did

Matt Edmundson: you see what I mean? Yes, No, I do. Totally. Um, I, uh, it makes a lot of sense. Uh, I, I, I'm the kind of guy that would actually, uh, and again, I don't know if this even makes sense from a financial point of view. I'm the I'm the kind of guy that likes to build our cash up so that actually I then have the cash to buy the stock going forward.

So I'd start off with debt, but I would then build it my, I would retain enough profits that actually when I buy stock, I'll buy it. I own it. Um, I'm not using debt to do it. Not always the most sensible thing to do. I appreciate that. Um, from a liquidity point of view, but just from my peace of mind point of view, I'm just not a big fan of, of, of unnecessary debt.

So here you've got someone like me, I'm, oh, I'm intrigued, Mike, I mean, uh, Duncan, sorry, I'm intrigued. And there's Michelle who's done bookkeeping the way she's done 20 years. Boom. This is how, you know, finances have been managed. And I'm gonna walk into the office and I'm gonna go, Shell, I've got a great idea.

And she's gonna go, Oh, shut up. Because that's normally what Michelle says to me when I say I've got a great idea. And just based on, on history, really. Um, how do you, how do you work in situations like that?

Duncan Lloyd: Yeah.

Matt Edmundson: Um,

I was an accountant with a big firm, um, and when I read the book and I could see how effective it would be for my customers, it was a really, really humbling moment, actually. I had to really Dig deep and reflect on that, um, because, you know, we accountants like things to be quite complicated. We get paid quite nicely for that.

Thank you very much. But it doesn't serve the customer very well.

Matt Edmundson: Yeah.

Duncan Lloyd: So I, I suspect Michelle would probably quite like it because she might get asked by you, um, can I foresake on a member of staff, um, they haven't got enough money for this advertising campaign. And this framework would allow you to say, well, If there's money in the advertising account, you can afford it, or if there's X in your account, you can afford to take on a member of staff.

So I would love to have a conversation with Michelle, um, and who knows what she might say.

That's why the staff that are with me are just amazing people, you know, we've worked together for a long time. Um, and I can see the benefit actually of someone, of, of Cheryl saying to me, right, you want to start that. How much are you going to take to start up? 10 grand. Right. There's 10 grand in the account.

Once it's gone, it's gone, bro. Make it work. Whereas before it's always been a bit, well, it's always been a bit gray and fluffy, really, because we've just put the money there. We'll just keep going. Um, so I think it could be a really interesting idea. Um, okay. So if people want to find out more about you, about eComm Profit Genie, about this whole methodology, this idea, you've mentioned obviously the, the workshop in London in September.

Um, How do people connect with you?

Um, and do you mind if I, if I make a request of, uh, all of your listenership?

Matt Edmundson: Go for it.

Duncan Lloyd: If, if there's, if there's one thing that I would love you to do, it would be just to open that profit account, open a bank account, call it profit, and just put in 1 percent next month and after, and a month after, and just see how it goes.

Because I am confident. That it will deliver fantastic results for you because it makes, it's the start of a great habit. It's a bit like starting training for a marathon. You don't just run 20 miles on day one. You kind of work your way up to it. Um, and that, that profit account, your business is there to serve you.

Matt Edmundson: Genius. Definitely do that. I've got some good friends actually who run a charity called Be 1%.

Based on the whole similar thing, just give 1%, um, and it seems an insignificant amount when you put it as 1%, but it quickly adds up. Uh, in so many ways. So no, I love that. Duncan, what's your question for me? So we do this thing where you ask me a question, question from Matt. I do definitely need a better name.

Um, and I'm going to answer it on social media. It's not in the podcast. I'm going to answer on social media. So what's the question you want me to answer?

Duncan Lloyd: If there was one thing you wish someone had told you before you started, Working in the eCommerce space, what was that, what would that one thing be?

But they probably should do.

Duncan Lloyd: It's fascinating.

Matt Edmundson: Yeah, yeah, absolutely. Absolutely. So thanks for coming on the show, man. Thanks for sharing your thoughts and insights and wisdom on the whole thing. Um, uh, it's been, it's been really, really inspiring. So thank you so, so much.

Duncan Lloyd: Thank you for having me. And thank you to your team as well.

It's been great.

Matt Edmundson: Oh, well, they'll love you saying that that can accelerate your podcast through now team, like, why don't we ever get a shout out? Uh, but no, they, they definitely should do so, um, uh, thanks for that. Uh, of course we will link to Duncan and the website and his LinkedIn profile, uh, all in the show notes.

Basically everywhere. You can't help but find them if you need them. Uh, and do reach out to Duncan. I'm sure he would love to hear from you. Uh, now be sure to follow the eCommerce Podcast wherever you get your podcasts from because we've got yet more great conversations lined up and I don't want you to miss any of them.

And in case no one has told you yet today. And I know that there are people that listen to the show just for this one moment, Duncan, we have since found out. Uh, in case no one has told you yet today, let me be the first. You are awesome. Yes, you are. Created awesome. It's just a burden you have got to bear.

Duncan's got to bear it. I've got to bear it. You've got to bear it as well. And actually today I'm supporting, you can just see see it on the YouTube video if you're watching the video, the created awesome t shirt, which my daughter designed for me. Now, Merch is not available for sale yet, but if she ever wants to sell it, I'll let you know.

net. But that's it from me. That's it from Duncan. Thank you so much for joining us. Have a fantastic week wherever you are in the world. I'll see you next time.