Today, I wanted to bring you a quick video from one of my mentors. John Maxwell is an expert on leadership and has written a number of best selling books. He also puts out these short videos in which he calls them ” A Minute with Maxwell.” I really like these short videos because in them he communicates a powerful lesson in just a minutes time. So, today I wanted to introduce to his “Minute with Maxwell.” Plus, I wanted to share with you this particular one he talks about because as a small business owner we do this everyday.
So, let me ask you, “What choices are you making today that will enhance your business?” Has the economy brought you done and have you blaming it for your lack of success? Trust me, I know how easy it is to fall into that trap, but as Maxwell says, “It is your personal responsibility for the choices you make.”
Think about that over the weekend and we will see you next week. Until then remember it is the choices you make that will determine your success!
Yesterday, I wrote a post entitled ” Are You Making This Mistake in Your Small Business” and I revealed to you a shameful mistake that I made and pointed out that I believe many small business owners do as well. Today, I want to talk to you about the main reason we do business. First of all, let me ask you a question, “Why are you in Business?” Now, I assume your answer is to make money or a make a profit. With that being said let me ask you another question and that is do you know how many units or services you need to sell to Break Even and eventually make a profit? If we agree that we are in business to make a profit then it is equally or even more important to know when the business will become profitable.
Let me tell you finding this number out for me and with my business has been the best thing that could have happened to me. Like I said in yesterday’s post they teach you this the first day in business school but I, like most of us, just pushed ahead because we are ambitious to make things happen and start our business. This is a mistake though because not knowing when the business is going to be profitable leads to the business failing. Knowing when you become profitable allows you to plan how much cash you will need to have on hand to stay afloat until the business can generate positive cash flow.
Going through this with my business has been a life saver. I know now exactly when I will start making money and can plan sales and lead conversion goals around the number of sales I need to make to be profitable. Before I just started each day doing random things that needed to get done and did not have a planned approach on how many sales calls and lead conversions I would need to make my monthly, quarterly, and yearly goals.
So how do you calcualte your Break Even point?
First, you need to figure out all your Fixed Costs (FC). These include line items such as, rent, marketing, salaries, utilities, operating costs, etc… These items are consistent month in and month out.
Next, you need to figure out your variable costs (materials). Typically this will be the cost of selling each product or the cost to produce.
Then you need to take the price of your product or the average selling price of all your products if you sell more then one and make an assumption of how many sales you can make in a time period. For this exercise let’s say a year.
Now multiply the total number of units times the price of the product to get the total sales.
Below you will see the equation
Total sales(TS) -(VC)=Gross Income
Then take your gross income and divide that by Total sales to get your gross margins
GI/TS
To find your Break Even point you then do the following step:
(FC)/Gross Margin
Here is an example:
FC 5422
VC 200
Product Price 19.95
Units sold 100
Total Sales 1995
Gross Income 1795
Gross Margin 90%
Break Even Sales 6026.95
BE Transactions 302
In this example you can see that my fixed costs are $5422 and variable costs are $200 (you base the VC on # of units sold so for this example I used 100 units and each unit costs me $2 to sell)
Then do all the other calculations and you get to the following result.
I need to sell 302 units at the current price to get a total sales of $6026.95. Once I hit that level everything else is going to be profit.
So, can you see how helpful it is to know your Break Even point. Listen, if you ever want financing or investors that is one of the first things that they are going to ask for.
Go figure yours out now and if you need help you can contact me.
Stay tuned for the next post where we talk about your “Score Card!”
Having two kids under the age of six I find myself saying that phrase more often than not. If you have young kids I am sure you can relate, but what I found interesting the other day was I needed this phrase to be directed to myself. I have been told that one of my strengths is my “Attitude”. For the most part I would agree but I am human just like the rest of you and I was having a bad day. Those of you who own your own business know where I am coming from. Some days are great and you feel like you are on top of the world. And then some days you feel like you have crashed and burned. In life and business there are many things that you just can’t change or have control over, however, there is one thing that you always have control over and that is your “Attitude.” As I wrote in “Success Depends on You” the one thing you have total control over is your choice. Sure things can be bad at times but why make it worse by being negative about it. Change your attitude and realize that being positive is going to make a bad thing much easier to cope with!
And yes, it took me all day to get out of my funk but I did and you know what, had I not changed my attitude it might still be bad!
I bet if I asked you to turn off your I-Phone or BlackBerry 99% of you could not do it. Why is that? Well, my thoughts on this matter is we have become too programed and too addicted to being connected to our network. We have to see what next is coming in or see what is going on in the world every few minutes or some of us every few seconds. The sad part about this is we neglect what we are immediately surrounded by. We neglect the beauty of nature and the wonderful sights and sounds of the “real wold.” Hey, I am going to be the first to admit that I am guilty of this as well, but my trip to Colorado and experience on NY Mountain made me realize how much I am addicted to my I-CRACK and my laptop. It was so refreshing to spend 3 days disconnected from technology and re-connect with the beauty of nature. So, will you do yourself a favor and do the same? If you are interested I have the perfect group of people to take you on your own expedition. Let me introduce you to The Third Drive.
First of all I am going to tell you that the people who run the Third Drive are friends of mine. Well, at least after this past weekend we have become good friends. Actually, an old client of mine and now he is one of my best friends it is his wife and his wife’s business partner who have started up this expedition company. They are fabulous people and they have a passion for helping people become healthy and change whatever it is that is holding you back in life.
Dave and Michael at the bottom of NY Mountain
There are approach has three main components to it:
Immersion in Nature
Healthful Living
Exploration
You can read more about their approach and the retreats here.
I can tell you that my retreat did wonders for me and I know that as time goes on it is easy to slip back into the old routine, so that is why I plan on taking another trip next year. I hope you will join me and take a “break” from your Smart Phone and all the other technology noise that surrounds you and re-connect with who you are and the beautiful nature that surrounds you!
This past weekend I had an amazing life experience. A good friend of mine put together a back country skiing expedition that involved climbing to 11,200 feet and staying in a Yurt for 2 days on NY Mountain in Colorado. The purpose of the trip was to set the stage for future expeditions for a company called, The Third Drive. More on that later but today I want to tell you about my experience. I am also going to make this a three part series, so today will be about my experience, tomorrow will be my takeaway and finally the last post will be about information on retreat company The Third Base.
Okay, so let me tell you about my journey to the top of NY Mountain. We started out at the bottom of the mountain around 1:30 in the afternoon. It was 8 guys and our guide Michael, which by the way Michael is an amazing mountain guide. Anyway, we started skinning up the old mining road and planned on getting to the Yurt in about 5 to 6 hours. That right there should have been my first indication that this could be disastrous for me. For one, the last time I did cardio for six hours it was a six hour cycling class. the second thing that was not working in my favor was as we got closer to the top there was less oxygen and I had come from Dallas just the other day with no real acclimatization. Oh, and for those of you who do not know what “skinnning” is let me explain real quick. The easiest way to describe it is you put this grip or ‘skin” like material on the bottom of your skis to give you traction. Once you have the skin on the skis you shuffle your feet and perform a slow walking motion on the snow.
Alright, so we are moving along and we get to the half way point. Now at this stage in the trip I am a little tired but doing okay. The climb to this point has been gradual and steady and my bod is feeling good. Also, at this point I have a decision to make. We had a snowmobile to take our big stuff to the top of the Yurt and the guide on the snowmobile was at the half way point asking if anyone needed a ride to the top. I so wanted to jump on the snowmobile but I also wanted to reach my goal of skinning all the way to the top so I did not say anything and moved on.
So I made the decision to “go for it” and boy that is when things started to get ugly. The second part of the climb was much steeper and harder. Not too far into the second phase I started to feel my ‘hip flexor’ and ‘quad’ tighten up. Also, I was now working that much harder and my heart rate was started to climb. Being that I have been working with clients and heart rate monitors I know full well that the body just can’t maintain an elevated HR for too long. That being said, I decided I needed to stop and rest for awhile. Also, I decided it was best to just climb without the skis and use my poles to help me. That worked for awhile but I knew if I was going to make it to the top I had to put my skis back on and slug through the rest of the climb. So I put my skis back on and continued.
As I continued to climb I started to think about whether or not I was going to make it. Not a good thing, especially since there was no other option for me but to make it to the top. Just as I was thinking these thoughts we came to the sign that said, “1 mile to the Yurt.” You would have thought I was relieved but actually I was in despair. I had one more mile to go. No way! What in the world did I get myself into was what I was thinking. My thoughts were slowly turning into negative thoughts and I was not sure I was going to make it, but something clicked in me.
Over the past 14 years I have been teaching indoor cycling classes and I started to visualize me teaching my class and telling them to climb the hill and reach their goal. I was saying to them, “You have to believe, I believe in you but you need to believe in yourself.” And you know what, I started to get a pace that got me going again and gave me a second wind.
Finally, night is approaching and I just was thinking one foot in front of the other until I hear Michael, our guide, start hootin and hollerin that we made it. A deep sigh of relief came over me as I slugged the last few hundred yards up to the Yurt, which by the way is a Mongolian term for hut. I was so relieved to get there but the story does not end there.
After 6 hours of climbing I was covered in sweat and completely exhausted. Now anyone who has ever put on ski boots knows that getting those things off after a day of skiing is challenging but I had hardly any strength left in me to get changed but somehow managed to get into dry clothes. That felt wonderful and I sat down drinking water and trying to recover from the 6 hours of climbing that I just did but for some reason I just could not cool down. I started to feel really hot and my heart rate started to climb. I knew this was not good and possibly could and I was going to need to tell Michael. Obviously at 11,200 feet the first thought comes to mind is altitude sickness, but I really did not have classics signs that are associated with altitude sickness. So, Michael recommend that I lay down on my bed and put my feet up. He took my heart rate and it was elevated. The first thing that started to come to my mind was my brother had passed away because of Heat Stroke and was I going to go down that same path? Once again I knew that I needed to change my mind set but this time I had kept saying one thing over and over in my head. “I have to get back to my girls, they need me.” Now, after about an hour and a half of me lying still and just focusing in on my breathing I started to cool down and bring my heart rate down. I tell you, it was not a near death experience and I don’t know if it was heat exhaustion but it sure was close enough to a near death experience that I have a better appreciation for everything I have in life and am thankful to be writing this to you today.
That night I struggled to sleepand just laid there trying to focus in on recovery. When morning came I felt okay and decided to push to the top of the mountain with the rest of the group. This time the 45 minute climb was not as bad as the previous day for me, and let me tell you that it was all worth it when you get to the top and see how beautiful it is.
Now the top of the mountain was beautiful but I had another problem and that was getting down the mountain. You see, I am used to skiing at Vail or Breckenrdige, CO, not the back country. Skiing the back country involves going through open areas and tight areas that are surrounded by tress with tons of powder snow. Trees are not good for those of us who need to make wide turns.
Well the story of getting back to the Yurt involved me walking a little ways down and also being guided by Michael again through the tress and back to the trail head. I tell you what, if it wasn’t for Michael being a patient and great guide I don’t know what I would have done. So, I finally make it back to the Yurt and was thankful. The rest of the trip I knew was going to be hanging out in the hut and being okay with that.
I know I have gone on for awhile with the story but wanted to share with you my struggles. You may be wondering how I made it back to the bottom and I will tell you I have absoulutely no shame in letting you know that I rode down on the snowmobile. It actually was a cool experience in itself, since I have not been on a snowmobile since I was a little kid. Anyway, I made it down and was safe and sound and that is the conclusion of the first part of this series.
Here are some more videos of the trip that I wanted to share with you.
