understanding net profit

So well done on being in business for yourself! Now it is time to judge your financial success. You may be working with purpose, in your area of passion or just had a change of lifestyle and decided to start your own business. Whilst these areas are fundamentally important and personally satisfying you need to measure the financial success of the business.

As business owners under the financial title comes a multitude of different areas including sales, cost of goods, income tax, balance sheets, assets, liabilities and the list goes on. The best indicator of your financial success is your net profit.

A successful net profit sits between 12% - 33%.

Understanding these terms...
So net profit is the amount of money remaining following sales (total amount of revenue) less expenses (the amount of dollars spent). Expenses include taxes, loans, rent, and all the other associated business costs that are included in running your business including your wage.

Therefore if you have turned over a $100,000.00 this year and your net profit is at $12,000 or more and you have paid your taxes, all your business expenses and most importantly yourself then you have a financially successful business.

Now the exciting component for business owners is what that $12,000 can represent. Firstly if you wanted to sell your business a fair asking price would be 2 to 3 times the net profit of your business. So $24,000 to $36,000 for the sale. Secondly if you want to start a wealth creation plan than there are many great tax minimising options available. Thirdly if you want to borrow money from the bank then net profit (and wages) are the figures banks consider in lending money. Generally a 10% deposit is required for borrowing so $12,000 becomes $120,000 upon approval from the bank. Finally if you aren’t at a 12% minimum of net profit then you would be better off financially getting a job and putting your money in the bank at 8% or 9% without the business owner challenges.

Your scorecard for measuring your net profit is your profit and loss statement. Most fitnesspreneurs switch off when these kinds of accounting documents are put in front of them. Profit and loss is the financial indicator of your business. You don’t need an accounting degree you just need to know your bottom line.

Start seriously looking at your net profit if you want to get ahead financially.

hot spots and wi-fi… are you regularly in a hotspot?

In my business if I am in the hot spot things get done.

You know those places that are popping up in airports, cafes and shopping centres? A place where you get access to the wireless internet, for me a place of productivity. The business is so internet based that I rely heavily on these places to get things done.

I was working with a guy the other day who has a great business model, products, website and knew his technical stuff. However he just wasn’t getting the result. It was bothering me.

It came to me in between meetings looking for another wi-fi hotspot. See I had the flash laptop, the wireless connection, even the new iphone but without being in the hotspot it was useless.

Back to my guy. He wasn’t in the hot spot often enough. Not the wireless internet place, but the hotspot where the deals are done. The place where you are in front of the key decision makers, people who want to use your products and services. Hotspots are the place that gives your business long jeopardy. Where people hand over cheques.

Understand it is great to have all the tools, the right business model, the brand, business cards and attend all the workshops. Unless your regularly putting your business in the hotspot, in front of the right people, chances are your not connecting.

inspired by a bigger cause

You know those documentaries that change your thinking well I just watched one.

Put together by the ABC’s Australian Story on a guy by the name of Peter Andrews. My first tip would be to get your hands on this documentary, it serves as a inspirational teaching point about following your passion. In short it tells a story of a guy with an obsession for the environment, particularly the Australian bush. Over the last 30-40 years he has worked to turn salty, arid lands into fertile lavish environments. The scientific world originally deemed his farming methods as unsafe, unconventional and claimed him to be crazy. In a nutshell Peter observed the land then created natural style dams to increase the water table above the ground. Peter tried selling his method to businesses and governments, initially without any success. Without income he was unable to make the payments on his pride and joy, his farm. The bank later took possession of now beautiful property, which was once a salt pit. He also split from his wife and son and suffered the loss of his daughter through suicide. During the process, he fought government agencies, has been investigated by environmentalists, all whilst juggling legal, financial and family challenges. He admits to giving up for a day or two on several occasions, however he stuck to his cause.

In watching Peter in action, following the loss of his daughter, he had a bigger purpose as he was determined to do it for her. He had more dedication and commitment to go about his work. Peter was deeply moved by the loss of his daughter and in his words "he become more motivated and committed to the environment and his cause, through her loss”. This purpose played a significant role in him becoming a world recognised expert in the area of land repair and degradation. During the documentary an acclaimed professor declared. “Peter is the single greatest cause for the environment that we will ever see”. The outcome of his work is mind-boggling.

This confirmed a common belief I have learnt as a Personal Trainer. That is “we will do for others what we wont do for ourselves” I know myself when I have an early morning session booked with my PT, getting out of bed is a lot easier than trying to do it for myself. I don’t want to let my PT down. It is the same for our clients, why wont they do the extra session, train themselves or eat the right foods? They wont do it for themselves, when left to their own devices but they will do it for you, the PT.

Another interesting observation of Peter was the two-part documentary was shot over a number of years. The first part of the documentary was when he was going through the bankruptcy, family split and grief of his daughter, Peter looked liked a weary old man, minimal talk, seemed to be confused and had lost his earlier ambition. The highlight for me was to see a gracefully aged man gladly declare on the property of millionaire Gerry Harvey (who has supported him financially) that governments had removed a lot of previous legislation, different departments where working together, the science and holistic departments had aligned and he was oozing with excitement and zest as he talked about the amount of ground that had been won since the airing of the first show. His farming techniques had been recognised on a global scale and are being initiated on a National level.

Peter is not a scientist, he has no formal schooling he has learnt from getting his hands dirty on the land and engrossing himself to a life commitment of failing and learning. Yes he has failed. Through observation and reassessment and an ongoing focus on researching the areas to better improve what needed to be done, he has written a formula for an expert. However don’t be fooled, the guy is able to mix it with the best of the scholars, explain his concept to professors and average punters. What inspired me was how he has gone about his process of becoming a leader in his field. Through careful observation, deliberate work, overcoming roadblocks but being very clear on his vision. He has written his own course on leadership.

In summary I feel a need for bigger accountability, a need to back a charity, a person, a cause. Someone or some cause beyond coaches, mentors and advisers. A need to do for others what you won’t do for yourself. A reason to make significant differences. A need to start your own cause or back an existing foundation by committing time, effort and money.

It is time to define that bigger cause.

energy vampires

As I jumped out of bed at 5am for a 6am client, I had a quick “ ah no” as I remembered I would be training Carly today. I slowed, hesitated and thought she is not on until 4pm. However it already has an impact on my energy levels, my thoughts process and if I am being honest, I was hoping to get the cancellation text, which is a more regular part of Carly’s training than her turning up.

It is a bit like this with Carly, she whinges and whines about her life for each and every session. We talk about how unhappy she is at work, how fat she has become, why she can't get a boyfriend, how her parents are wrong blah, blah, blah and on it goes.

In regards to her health, she needs to lose body fat as she is straight out of the syndrome x textbook and moving towards diabetes. She is unmotivated to train, so if she doesn’t train with me, exercise is a foreign word in her life. She eats all the wrong foods and binges. Finally she has no ambition or goals; she has no desire to achieve anything with her health and in her life.

Also Carly hangs out with other Carly’s and talks about Carly stuff. So from a business perspective Carly brings to the table:
- A zapping of my energy levels
- A negative thought process
- All her issues
- A lot of my resources and time
- Zero referrals

As Personal Trainers one of the things we regularly do is say yes to everyone. I enjoy a challenge and in saying yes to Carly, knew that I was taking on someone who would benefit from the factors of working with a PT. However Carly was not willing to help herself.

The lesson of the Carly story is sack your energy vampire clients. Life without Carly is so much more enjoyable.

leave

I am writing this whilst sitting on a plane going around New Zealand. A realisation that it doesn’t matter whether it is Sydney, Brisbane, Coffs Harbour, Perth, London or any other part of the world, there is a group of high achievers who just refuse to leave. They don’t take holidays, they are the first to get to work and last to leave and they take on the responsibility of the whole business. These guys are regularly working in senior management positions or business owners.

So learn to leave.

See at the end of your innings how do you want the obituary to read? “We never really knew him because he worked all the time”. This would be a concern.

Learn to do what has to be done and leave. In life it is not how many hours you do at the office however it is way more effective to get things done. Get done what has to be done today and get out of there.

So on any given week you are working 40-60 hours. Occasionally you may do more and rarely less. However why is it that we flog ourselves continuously night after night at the risk of things we enjoy and people we married or once loved.

So learn to leave.

New York changed it’s reputation from the crime capital of the world to have one of the lowest rates of crime following a zero tolerance of any misdemeanor. Anyone that looked suspicious was locked up. Have a zero tolerance on your available work hours and educate yourself and others about your availability.

Why you won’t leave?
1. You’re a high achiever who has hung around other high achievers and have been led to believe more is better. You have seen your mentors and idols work ridiculous hours, so you do the same thing.
2. You’re incompetent and are inefficient at your job. If you are continuously doing more than 60 hours per week then consider how well you are delegating, communicating, prioritising and the skill of your staff.
3. You don’t know what to do with yourself when you are alone or finished early.
4. Work has become your obsession and you have put aside hobbies, your health and chill out time therefore moving you to become out of balance.
5. You feel guilty when you are not at work.
6. Your energy levels are low from being overworked and therefore your promotion of negative thoughts is high. Anything other than work is an effort.

So consider the 5-7 things that are most important to you. Review your diary over the last few days, weeks and months and consider how much time you have put into these areas. We all have 168 hours in a week and and average 4000 weeks in our lives. How will you be remembered?

circle of trust

I have a favourite scene in the movie 'Meet the Parents' in which the father (played by Robert DeNiro) talks about the 'circle of trust'. His reference to the 'circle of trust' is the people he allows into his life.

Whilst the comedy hits the funny mark it led me to thinking about the circle of trust in our business lives.

Who do you turn to for credible, proven, reliable advice?

In the same way our clients rely on us.

Whilst there is a heap of information on the internet, books, workshops, webinars, teleconferences. For peace of mind, you cannot beat face to face business to give sound advice. In doing this we are building a circle of trust of advisers.

In our personal lives we know the address of our rock stars, we know the birth date of our sporting heroes, and we follow the celebrities on their holidays. Imagine the outcome if we put that same effort into building a circle of trust of business stars.

the busy badge

There is a great saying “If you want something done, give it to a busy person”. Having worked with CEO’s, senior managers, stock brokers and mums with multiple kids, it has been my observation that busy people have a high rate of achieving success in their jobs, relationships, with their health and the many other areas that occupy their interest.

When your busy you get on a role, creating momentum in a number of different areas in your life.

So if the opposite of being busy is not busy; are we lazy? I know when I am not busy things take twice as long, I procrastinate and my mind plays tricks on my thought processes. Yeah I get lazy.

Be aware of being to busy and leaning towards being overwhelmed as this leads to burnout.

Are you in the business of being busy ON your business or are you busy thinking your busy? Quite often the thought of being busy can lead us to thinking we are busier than what our bank account tells us.

So what are you busy doing?
Get busy on the right things, the things that matter, the things that will get you results and the ones that create happiness.

I recall, wanting to derive an income from writing. For months I thought about what I would write, the title, the pictures and all the other irrelevant components. What I needed to do was get busy writing. It seems kind of obvious in hindsight however the action was seriously lacking because I thought I was busy.

The busy badge has become a very popular trademark. It starts at the point of introduction when asking “so how are you doing?” the common response is “ah I am so busy”. What happened to “ great mate” or “ yeah good” or “life sucks at the moment”. It seems that we are all busy, busy, busy.

So if the busy people are busy getting it done, how are they doing it? Maybe ask a busy person !