- Am I in frame?
- [Josh] That's exactly what I need you to do.
(upbeat music)
How to turn around your business.
This is a very serious video.
If every month you're looking at the numbers and it's going slim,
alright, if you're feeling embarrassed because you don't
feel like you've made some great decisions or your arguing or
frustrated or you have loved ones that care about you and
have been telling you this.
If you know in your heart that it's that if you don't do
something today that you might sacrifice the whole business,
and a lot of guys may even have personal lines of credit or
personal guarantees in your business.
I want to teach you guys a very simple here's what I do,
you know?
To turn businesses around to the point where
they're profitable again.
They're actually generating cash and you know what you're getting
paid a great salary.
I mean that that's one of the first things he goes.
I'm not gonna take a salary.
That's not gonna solve the problem.
I'm gonna walk you through exactly how to do it so that you
have the financial optics to understand how your decisions
impact revenue, impact expenses and profitability.
Alright, that's what I'm gonna share today because,
you know, a few months does work with one of my clients and they
had great growth. This is the challenge is.
Most entrepreneurs are growing really well, right?
They were doing a little under a million revenue but they're up
from 300,000 the year before so when they're looking at it
they're thinking we've doubled or tripled the business in the
last year but they didn't look at their profitability.
They didn't look at the expense structure to say,
"Where's the profit?"
Do we have the cash to actually scale the business and are we
charging what we need to actually grow and continue this
rate of growth. Right?
That is the challenge of most businesses run into or they make
a decision and they go off in an open up a new location or a new
division in their business and they don't ask themselves what's
the capital requirement, the cash,
that we need to do is?
What's my timeline and horizon?
What's my marketing program to make sure that I get those new
clients to support that new business and it's always this
game and then once it's out there
how you shut it down, right?
So the first thing I'm gonna encourage you
to do is get the numbers.
Here's how it works.
You call the accountant, okay?
Most of you guys probably don't have great accountants.
Here's what I want you to know.
Accountants don't give a crap if you fail as a business owner.
They don't.
And it's not because they're bad people.
Their job is not to run your business.
Their job is not to understand your decisions.
Their job is to take the numbers you give them and post it based
on GAAP accounting practices and to give you back the reports and
for you to understand the financial literacy
to make the decision.
So you might be upset with your account and say well I have the
dumbest accountant in the world.
Why didn't they tell me things were this bad?
Trust me, it's not their fault.
It's yours.
You should've built financial literacy into your understanding
of running a business.
But the number one thing you need to do to start the
turnaround is get all the information.
Get all your credit card transaction.
Get all your lines of credit transaction.
Get your bank accounts.
Get everything.
Get the expenses.
Get all the numbers.
Your P&L, your income statement, your cash flow statement
whatever you get from the accountant.
How much tax do you owe?
How much payroll stuff?
Like all your exposure, your liabilities.
Get all the information, the real numbers not what you think
it is because a lot of entrepreneurs when they're
watching this video they're like that's where I'm at right now.
It is you're probably worse than you think 'cause you probably
don't want to look at it.
You need to get all the numbers.
Number two, is create a financial model.
A simple, I'm gonna give you the simple financial model is
essentially a cash flow projection.
It's saying what's my income, what's my expenses,
what's my profit and then what's my liabilities?
Understand how your business operates.
How much money does it make?
What's the profitabilty level?
Most businesses because they have so many decisions they've
made they don't have this in one spot.
It's a spreadsheet each month it's projections, right?
Wherever you're at now this month just get the information
and then start a new spreadsheet and put it there.
Look at the customers, look at the previous year's revenue to
get some estimations but don't make it up.
Make sure that it's real numbers because I don't want you end up
back in his position. Right?
The worst thing you could do right now is put the time and
energy in and make half-ass decisions.
That's not gonna support you.
I really want to help you turn things around so
you get all the numbers.
You have those uncomfortable meetings,
you talk to your accountant.
You give them a sense of urgency and say look I know you haven't
finished the books and we're only halfway or we're at the end
of the year, I need the numbers.
I'm gonna come to your office with my shoe box of receipts and
we're gonna get this worked out but you gotta get the numbers.
Creating that financial model is gonna allow you to understand
how bad it is.
You know, and unfortunately every time I've been asked to
come in and turn around a business it's always worse than
the entrepreneur thought.
They're always losing money, this new division is sucking the
profit from this business.
This new software initiative, I get that one all the time.
I've got a service business, I want to start a software company
and I'm funding it and I never occurred to me that even though
this is highly profitable that new business or division or
department is sucking the profit out of the business.
So we need to get real on where we're at.
Then you do number three which is the toughest one and I always
encourage entrepreneurs just
get ready for the worst case scenario.
You're not gonna lose sleep anyway.
You might as well just get ready for the worst case scenario and
that means cutting deep.
When you do layoffs in your business
you can't do surface level things.
You can't do surface level expense cutting.
You need to go deep.
You need to cut through the fat and hit the bone like it needs
to cut all the fat off the business and say what only
absolutely need to run our business. Okay?
If you're not profitable, it's only a matter of time.
If you look at a cash position in your bank account and you go
okay we have a few thousand bucks but all that's accounted
for, you're weeks away from insolvency.
If your line of credit's maxed out,
if your credit cards maxed out, all these things.
If you only get a small percentage of available
potential borrowing avail, like that's just bad.
Your business shouldn't be like that so you're gonna have
to cut the expenses.
You're gonna have to cut deep.
I always say cut past just the fat,
get into the bone you want to hit the bone.
You're gonna have those uncomfortable conversations.
Look the reality is if you got to lay somebody off,
you're not obligated to pay them past that point you have a
business to save, right?
And I know that you want to do what you can and do right and
these are family and these are people you care about and
I totally get that but the truth is if you're at this position,
the decision's made for you.
Right, if you just logically look at the numbers and say you
know every month I'm losing thousands of dollars in revenue
then you're giving that up.
You're causing potential for your family to lose their home.
Especially if you have personal guarantees.
That's the part that hurts me the most is when I see these
businesses and they don't realize like that credit card's
personally guaranteed.
That bank loan, that line of credit,
that's a personal guarantees.
If the business falters it's not the vendors that you money to
it's the fact that the bank's gonna come for everything else.
You're putting your family and your children's lifestyle at
risk and that to me should be enough for you to make
those tough decisions.
Look, if you feel about laying people off just think of this
way go and serve them by trying to find their dream job.
That's what I always do if I got to lay somebody off,
you know, I'm gonna make the decision.
I'm gonna follow the law, I'm gonna give their termination
notice and then three days later I'm gonna sit down and do the
work to find them a dream job.
That's, if that's hurting you for making this big decision,
that's the way you can approach it.
If you have a new division or business and you're just you're
feeling embarrassed of cutting it off or shutting it down,
it just is what it is.
Look at the end of the day when you turn this around and I know
you will if you follow this process nobody will
remember the failures.
They only remember the success.
You could be, you know, you could have to lay off more than
half your team and turn the business around and people will
only remember that part.
And I know it's tough to see today but that's what you do.
Number three is go deep get the cuts.
Four is focus on your customers.
If you have customers still around you need to get on the
phone with them and just ask them how can I create more value
for you in the work we're doing?
You need to make sure that the current customers are happy
because if you've been in that spot,
you've been probably putting out fires.
You haven't given everybody the right attention and
they might feel neglected.
So you want to get on the phone, schedule the calls,
make sure they're happy 'cause the last thing you want at this
point is to have somebody not paying an invoice.
Or have somebody fire you or have a bad customer experience
moment within your service business,
your product company, whatever it is.
Make sure the customers are happy.
That's number five.
I think that that is the best way and if you give you're a
great entrepreneur you probably have customers that want to tell
you how much they appreciate you.
They don't need to know about the restructuring but you need
to make sure that they're happy.
Then it's all about sitting down and saying what are the lessons
learned because at the end of the day these are tough
decisions and if you don't sit down and reflect and do a
postmortem then your you're very likely to make them again.
What caused you to get in this position?
Likely it's taking your eye off the financials.
It's not looking at your cost structure.
Thinking you're doing great top line revenue but
you're not being profitable.
It's not hiring the right people.
It's not having the right advisors in position
to help advise you.
Maybe it's not having the accountant but I'm not blame
the accountant because at the end of the day you hired them so
how did you end up deciding that that was the right person?
How do you change that decision and approach so that you don't
get another person just like them, right?
So having great advisors be able to guide you is key.
The last step for me, number six,
is to build it back up.
Right, once you get your top line revenues in check,
you reduce your expenses and cut deep,
you get the business righted you start paying off those debts.
You put a plan together and you start being profitable again,
giving yourself a fair market salary for the work you do then
you need to start really thinkin' about
how do I build this up?
Not doing something crazy, not investing another business,
not opening another division in my company but doing more of the
things that I know how to do that works.
Is it repricing things?
It is insuring that you have the right margin structure.
It's going after the market and doing marketing or whatever it
is but building it back up is the next steps to
turn the business around.
So the truth is is business is all about
expansion and contraction.
It's never a linear growth.
It's always step functions of growth and if you find yourself
in a spot where you're literally month-to-month,
you have no cash in the business.
You've been challenged.
You're frustrated you're not sleeping.
You know you need to make those tough decision,
this video is to give you the encouragement,
the steps, the process to get the numbers, right?
Step one, get everything all the information.
Build the financial model and the projections to know what is
this really look like going forward if I don't make
decisions and if I do how does that change my projections.
Cutting deep, getting rid of the fat,
hitting the bone, that's key.
Focusing on the customers that you do have left over and make
sure that they're super happy then figuring out what are the
lessons learned out of this whole process so they don't end
up back here in another three years?
And then finally, focus on building it back up so that you
can be proud of yourself and rebuild the confidence that you
may have taken a hit on as an entrepreneur.
So I hope this video find you incredibly well even though it
sounds like you're probably having a challenging time,
I want to give you that framework to help
you get through it.
But step one's schedule the meeting get the numbers,
get the financial projection and just look at what it is for
really what it is and take the emotion out of it.
I want to challenge you to live a bigger life and a bigger
business and I'll see you next Monday.
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