HOW TO MULTIPLY YOUR
PROFIT, PASSION & PRAISE
If you haven't read Parts 1 or 2 yet, then click the button below and definitely start with those!
Now that you have created the foundation for a business that changes the lives of your ideal clients, it’s time to work ON your business and make some profit!
HOW TO MULTIPLY YOUR PROFIT
The word ‘profit’ congers up such negative feelings to so many people... women especially. We think of massive corporations, greedy bosses and that our business isn’t THAT type of business.
But if you don’t focus on making a profit, in paying yourself as much as you can, then you are out of business and can’t make the impact you want.
You need to move beyond the solopreneur/small business operator mindset that finance doesn’t apply except for tax time. You need to structure your business to give YOU the income that supports your magnet soul goals and makes a profit so you can keep growing and helping more people.
So here are the key steps to multiplying your profit:
- Set up your financial structure so profit is a priority
- Create a profitable funnel plan to increase your revenue
PRIORITIZE YOUR PROFIT AND YOUR INCOME
One of the greatest gifts you can give to your future is structuring your Finance’s so that all of your decisions become easy and so you create a business that is designed give you the income you need and for the business to thrive and grow so you can keep doing what you love.
The first step, before you can multiply your profit, is to actually MAKE PROFIT. You can’t multiply $0 profit and suddenly get $50,000 profit. You need to be making a measurable amount and then you will be able to multiply it with a profit growth plan.
I first came across this concept from a book called ‘Profit First’. Once I read it I knew instantly that it was a powerful tool that would help not only my business but clients who weren’t financially minded understand how to make spending decisions and make forecasts.
Whilst I can’t and don’t teach their entire strategy, I use the outline as the first step in the Financial Framework work that I do with clients.
CREATE YOUR REVENUE BREAKDOWN
Most businesses have sporadic revenue... it’s never the same every month. That’s why using percentages of your revenue, instead of dollar amounts really helps deal with the peaks and troughs of both revenue and expenses... and helps even them out so that as long as you don’t have consistent declining sales, your expenses should always be covered.
So let’s start making you some profit!
I am going to give you the simple version so you can get started. There are more advanced strategies that I don’t have time to go into that create security in your business, make spend cutting and purchase decisions very clear and easy... but just re-framing this will put you miles ahead of other entrepreneurs.
Use these percentages as a starting point and then based on your own profit model and history, you’ll be able to tweak them to work for you. But the key is to decide what they are and stick to them.
The main reason to do this is so that you prioritize getting paid and not just taking ‘whatever is left over’ which I see as a virus within the entrepreneurial community. I keep saying, if you can’t pay your bills with the ‘leftovers’ from your business... then how are you supposed to keep impacting the world? You will need to shut down your business and get a job and be a statistic of business failures.
That doesn’t even consider the income you need to achieve your dreams and personal goals!
Decide NOW that you will prioritize your own income and your business will thrive.
The key areas you want to break your spending into, making sure that profit and your personal income is prioritized are:
- Owner Income
Your Revenue is: 100%
Allocate a percentage of that revenue to each of the Outgoing / Spending Categories.
This means for every $100 you make, $10 goes straight to your Profit Account and at the end of each quarter you decide what to do with it... reinvest or take it as bonus income!
This means for every $100 you make, $20 goes straight to your Owner Income Account and paid out either weekly or monthly... whenever you do accounts
This means for every $100 you make, $20 goes straight to your Tax Account and saved up for the end of the financial year.
NOTE: You pay taxes on PROFIT, not REVENUE so if you put 20% of revenue away, you should have enough for tax time... but please look at your previous Tax Statements and see if this will match it based on your current earnings and your tax rate and adjust!
This means for every $100 you make, $50 goes straight to your Expense Account and used to pay all of your outgoing costs.
I get my clients to break down their expenses into the following 4 categories so if cost cutting is required, it becomes an easy decision:
- Essential Expenses
- Not essential but important Expenses
- Growth Expenses (Expenses that are used to increase Sales ie. Facebook Ads)
- Luxury Expenses (These are the first to go and are usually subscriptions, education, apps and software)
If you also breakdown the expenses categories into percentages, you may be shocked to see what percentage is being spent on Luxury Expenses, that could be going to YOU or to Growth Expenses so you can increase Sales
Now you can start to figure out what your sales needs to be to earn $X per year from your business.
Just say you want to have your first goal to make $100,000 per year before tax. That’s $8,333 (rounded to nearest dollar) per month.
This is how we reverse engineer your Revenue Targets based on what you want to earn in income!
$8,333 divided by 0.2 (20%) = $41,665
This is the formula:
(monthly amount) divided by (percentage allocated - above) = sales required
So you need to make $41,665 in Sales every month to guarantee $8,333 as owner income.
If $41,665 is the Monthly Sales, the accounts would be:
Profit 10% - $4,166.50
Owner Income 20% - $8,333
Tax 20% - $8,333
Expenses 50% - $20,832
If you are a consultant or sell high ticket programs, then you may not need this much for expenses and be able to allocated more percentage to owner income.
The flip side is that you look at that and wonder how the hell you are EVER going to sell that many ebooks to make $41,665 a month in sales... and you want to be making $500,000, not $100,000!
Can you see what an amazing tool this is to realize what needs to be done in your business to reach your goals instead of just plugging away day after day waiting for the jackpot to come in?
I hope this really gives you a sense of control and makes you realize that you need to be proactive in your business growth, regardless of whether you think profit plans and accounts are boring!
DISCOVER THE 5 SHIFTS TO CREATE A BUSINESS THAT IS DESIGNED TO SCALE TO 6, THEN 7-FIGURES
AND IT'S NOT ANOTHER MARKETING STRATEGY... THAT'S WHY IT WORKS!
FREEDOM FUNNEL PLAN
Now that you know what your targets are, you can create a series of programs which keep increasing your revenue.
The legendary business and marketing expert, Jay Abraham, said there’s only 3 ways to grow your
- Increase the number of clients
- Increase the average transaction value
- Increase the frequency of repurchase
Now to get ‘geometric growth’ you want to do ALL 3 THINGS! This means that instead of having a straight line increase, you get the results multiplying and that’s when your results explode.
Enter the ‘Funnel’.
Marketers have been selling this framework for a couple of years now and whilst there are hundreds, if not thousands, of funnel consultants ready to take your money to set up your funnel, without a strategic business model and profit growth plan underlying it... it’s just another tactic that doesn’t give you the results you need.
Digital Marketer are the Kings of the entire strategy that merges the funnel with the email marketing campaigns that set’s your Sales on fire, if you have the technical and strategic know-how to implement it all... and they were the ones who really popularized turning Jay Abraham’s ‘geometric growth’ into this funnel strategy that everyone now refers to... even though it has been around for decades.
Here is what a funnel can do for you...
LET’S LOOK AT THE NUMBERS ONLY FIRST
Using our $41,665 monthly target, we will keep the model simple and ignore the funnel to the point of sale (opt ins, tripwires etc.)...
If you have a $97 product, you would need to sell 430 EVERY month to reach $41,665 in revenue... that’s a lot and it would take a pretty big marketing dollar to reach that many people to make 430 sales. I’m definitely not saying it can’t be done BUT there is a better way to do this.
Let’s introduce 1 more product at $797... this is what we need to reach $41,665 monthly:
buy = 32
We have added only 2 of the 3 Geometric Growth Principles:
- Increase the average transaction value
- Increase the frequency of purchase
Just by adding 1 product we need LESS customers for our $97 product... 62% less! How much easier is 163 sales compared to 430?
What if you had another 1 or 2 tier of products... or added a monthly subscription... and then increased your sales up front!
This is called increasing your LCV ‘Lifetime Customer Value’ & it’s the name of the game to multiply your profit!
HOW TO DO THIS IN YOUR BUSINESS ADDING VALUE
It’s pretty easy to plug in numbers and come up with these amazing monthly figures... but how do you do this in YOUR business to ADD VALUE to your clients and not just think about making money?
The first step is to understand your customers. Now that you have figured out what your Zone of Magic is, you now need to uncover what the people who need this solution are actually feeling and searching for. What is the BIG PROBLEM that they are trying to solve?
Once you know ‘where they are at’ and ‘where they want to get to’ you can create your Customer Ascension Ladder... These are all of the steps that your customer will need to go through to get from ‘where they are’ (in pain) to ‘where they want to get to’ (solving the BIG PROBLEM).
Each rung of the ladder is a STEP that they need to go through to get the end result.
They may have 3 steps or 20 steps.
Once you have the steps you can look at this and ask ‘How can I create programs to help them get from where they are to where they want to get to?’
You don’t need to create 1 program to do it all... how can you break it down if it works, to create several programs?
How can you help them ASCEND up the ladder and be their ‘Mentor of Change’?
Get out a piece of paper and on the bottom write a emotional summary of where your customers are at when they come into your funnel.
Then write up the top what they are like AFTER they have worked with you OR have achieved their hopes, desires and goals. You may only be able to take them part of the way of their entire journey to reach their goal but it's important to know this.
Now just write all the steps they need to take (whether you can help or not) to get from 'Where they are' to 'Where they want to get to'.
Mark the ones you can help them with and the ones you can't, do some research and look for some partnerships you can form so you can add another stream of revenue with high quality, valuable affiliate sales.
The next part will help you organize this into Program and Service idea.
PROFITABLE PRODUCT PYRAMID
How do you create programs that people are happy to pay high prices for so you can move them from low cost to high cost?
The key here is to think about it in terms of value. Value becomes, how likely they are to get the results they are searching for from your program/service.
Along with the Customer Ascension Ladder which is a small part of the ‘Customer Journey Profile’ my clients create, we need to create a Profitable Product Pyramid that not only moves the Customer UP the Ascension Ladder but also up the Value and Price Level.
You don’t need to fill in every level and feel the need to create 5 different programs, but this helps my clients think about programs and how each one fits in to their business model and the clients value model.
The secondary reason for the Pyramid shape is that you can have heaps of different lead magnets, 2-3 Core offers but as you move up the pyramid you will only have 1 Elite Package.
You may never create all of the programs you map out in your Profitable Product Pyramid, but you will see your business model and it will expand what you know you can do with your business.
The Pyramid also becomes your funnel... you start at the bottom and sequence your offers as you move up!
I hope you have received a lot of actionable value so you can start creating a profitable business you love working in whilst making a HUGE impact.
If you would like to keep this in a downloadable PDF so it's easier to do the exercises then click the green 'CLICK TO DOWNLOAD' button below.