Episode Transcript
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Speaker 1 (00:04):
Hi, you have done to the censure wow for you
your yo.
Speaker 2 (00:19):
It's pipe Man here on the Positively pipe Man segment
of the Adventures of Pipe Man here in W four
c Y Radio. It is Motivational Monday, and we're going
to motivate your business with our resident expert on business
who has some oh powerful business strategies. And you know,
I'm looking at today's title and I'm thinking myself, should
(00:42):
I do this interview or should I go to the
or should I go to the crap table? Because both
ways could be winners with the number seven. So let's
welcome to his show. Michael Barbarita, thank you.
Speaker 1 (00:57):
Thank you.
Speaker 2 (00:58):
Dean.
Speaker 1 (00:58):
Yeah, the seventh, seventh and seven formula is you know,
if a business owner just worked on this and nothing else,
could be a tremendous impact. But there's some you know,
procedural things that you have steps that you have to
take in order to properly implement this. And by the way,
it works excellent too in terms of bonusing managers. I've
(01:22):
seen it work really well there. But let me explain
the formula first of all. So the seven seven seven
formula is simply this, you work towards increasing sales seven percent.
You work on decreasing your cost of goods by seven percent,
and you work on decreasing your overhead by seven percent.
When a company does that, I'll give you a quick example.
(01:46):
If a company does on billion dollars in business and
they increase their revenue seven percent and they have a
forty percent margin, they increase their revenue seven percent, they
decrease their cost of goods seven percent, and increase their
overhead seven percent, the impact on profit will be a
sixty three percent profit increase. That's the that's the power
(02:09):
of the seven seven seven formula. And you gotta say, well,
one of the procedural things well, of course, the way
they increase sales and say, increase prices. You could sell
more units per customer, packaging and bundaning that we've talked about,
adding more value that we've talked about, I'll sell down
cell cross selling we talked about UH and then for
(02:32):
ways to reduce it. And this is the this is
the one that everybody says that you can't do. By
the way, this is reducing your variable costs or your
cost and good soul. You know there's ways to do that.
For asking asking for improving your process internally. That's one second.
Negotiate vendor terms with free freight, also better payment terms advertising.
(02:59):
You know, Dean, I used to get one hundred thousand
dollars of advertising money from my vendors. And it's not
because and I wasn't the biggest And and here's the
thing with a lot of the vendors out there in
the various industries, they always have a little extra advertising
(03:23):
money in addition to their standard co op, which some
have and some don't. But whatever whether they have a
standard co op or not, they have average they usually
have a budget for helping some customer in some way.
(03:44):
So I used to do a dog and pony show
every year at the National trade Show to my critical
vendors of how this advertising program that I did was
was going to help improve says and increase our order.
And when you know it, I got ten grand from
(04:07):
ten vendors. Wow. And some of that money came in
the form of free product, which by the way, is
more than ten grand, because I got the free product
that wholesale ten thousand dollars worth of product that I
can sell retail. And some of it came in just
in the form of a deduction off of an invoice,
(04:28):
but or it came in cash. But one way or
another it came in and it was able to absolutely
help my business tremendously, all for a dog and pony shop,
and to make vendors realize that some of the advertising
things that you can do and how if you follow
(04:49):
the convergent formula which we've talked about the past, captivate, fascinate, educate,
and close, it works famously to get this advertising money
and to show the vendors using the convert how you
use the conversion formula to get business. So asking for
point of purchase displays, better pricing, better quicker turnaround, minimum quantities.
(05:12):
These are all things you can ask your vendors for.
Can order to be canceled without penalty, because that's no nonsense.
If you if you're if you're penalized for canceling and order,
that's real bad. Maybe you need the product to be
more efficiently handled or packaged in a certain way, or
are you need better I think I've already said better,
(05:36):
better pricing as part of it as well, So the
negotiation of vendors and improving the process. People are afraid
to negotiate with vendors. I don't know why.
Speaker 2 (05:49):
I don't get it.
Speaker 1 (05:52):
It makes sense. Also in terms of reducing overhead, UH,
you can you can relocate. I know that that can
be a pain in the neck, but you can. UH.
You can negotiate with your existing landlord. I'll tell you
(06:12):
talk about dog and pony shows. If you invest. If
you negotiate with your current landlord, and you show the
financial statements, and you show all of the uh, all
the dirty laundry, if you want to call it, all
the financial information, you come up right up front with
the landlord. You could get discounts with landloads.
Speaker 2 (06:34):
UH.
Speaker 1 (06:35):
Your insurance policy should be audited and you should obtain
new quotes every year. You should always be You should
always ask your current suppliers for discounts always. You should
audit your internet and phone services.
Speaker 2 (06:53):
UH.
Speaker 1 (06:53):
And you should always mention a competitor when you do
uh talk to them.
Speaker 2 (06:57):
I do that all the time.
Speaker 1 (07:02):
There's plenty of write offs and tax savings that especially
through a sub chapters corporation, which you should look into.
You should negotiate blanket purchase order discounts so it allows
an organization to bump together purchases that would otherwise happen
you can look for reductions and waste, and you cancel
(07:25):
subscriptions that you forgot about.
Speaker 2 (07:29):
I mean I think also, like you know, not just
accepting things. And I'll give you an example of that.
I have a storage facility where when we do events,
that's where we put our equipment for the events instead
of storing in the studio. And basically every four months,
the storage company I'm with, they will up your price
(07:53):
like and a lot of times it's dramatic, okay, And
so what people tend to do is either forget about
it and even either just pay it, or then they
go to another storage facility so that they can get
another free month and special deal. But what they don't
realize they're going to be right back up again in
four months, and they just spent money moving all their
(08:14):
stuff and time and effort every time for years. Now
that I've gotten that increase, I call up the facility,
now even the corporation, but the facility, and somebody in
that facility actually negotiates for me. But I basically do
exactly what you're saying. Number one, I get a little,
(08:36):
you know, perturbed that they keep raising me. I've been
with you for a while and somebody can come in
and they could get a free month and they can
pay what I was paying in the beginning, and that
now I pay more, And a lot of companies do that,
you know, but people just accept it. And then I
do bring up the competition. I'm like, listen, I could
go to right down the street and I could get
(08:57):
it for what I was paying before, and they'll give
me a free couple months. I don't want to move,
so tell me what you can do for me because
I can't pay this amount. And every single time I
do that, they lower it back to almost what I
was paying when I first started with them. So, yeah,
(09:20):
they're getting a little bit more. But you know, right
now I can tell you that I'm paying a quarter
of what I would be paying had I agreed to
the increase.
Speaker 1 (09:35):
Interesting and then lots of times we'll review credit card
statements and they'll have subscriptions that you're not using anymore. Yeah,
that's another area to cut overhead, soliciting employee input for
efficiency improvements. It's another area that business owners have a
(09:59):
tendency to overl book. They overtime h I have. I
have many clients who didn't realize that they were spending
so much for overtime, where especially when sales are down right,
business is off and the overtime numbers are the same. Yeah,
(10:20):
that's it. That's a compute. The other area Dean is
transportation and vehicle costs. That's an area that that's abused
by employees. So that's another area that you can look
to see how to make that more efficient. Also, utilities,
(10:44):
lots of times lights are left on. Uh, you know,
it's it's there's so many different procedural things that you
can improve process on. And by the way, your employees
are a great resource for that. And then you have
to analyze your marketing to see if if from you know,
making sure that every dollar is working. So there's a yeah.
(11:07):
And so if you if you just focus on the
seven seven seven seven percent increase in sales, seven percent
decrease in cost of goods, seven percent decrease in overhead,
you'll see an amazing difference. And what many businesses have
done is they bonus their managers on for example, decreasing
(11:29):
cost of goods by seven percent and decreasing overhead by
seven percent, And at every level, if they decrease one percent,
they get a certain bonus if they increase in two percent,
they get another bonus if they increase in three percent.
And I can show the business owner of the mathematics
as I gave you that quick example. You're doing a
million dollars worth a business. You got forty percent gross profit.
(11:50):
You do a seven percent increase in sales, seven percent
reduction and cost a good seven percent reduction and overhead
you have a sixty three percent increase of profit, which
you can certainly share some of that. If you're with
a manager who drove that performance.
Speaker 2 (12:04):
You'll also increase sales by decreasing overhead and costs because
you'll have a more productive environment to be a little
bit to sell more.
Speaker 1 (12:15):
Right, there's a lot of things that can be done
in house, you know, to improve efficiency and cut costs.
Speaker 2 (12:22):
Absolutely lots of things.
Speaker 1 (12:24):
It's amazing. Uh and so buth so once again, Dean. Uh,
you know, we we went over a lot of stuff today,
but there's a lot more stuff to to glean from
from this. But this this formula, if a business owner
just focused on this one formula seven seven seven, very
easy and very easy to uh to focus on and
(12:47):
very productive. Uh, they would see it annoyed to increase.
Speaker 2 (12:52):
In profit, no doubt. All they have to do is
think about what happens if they get seven seven seven
on a slot machine. And you can do that for
business too, So yes, they do have to reach out
to you. There's so much more to discuss in this area,
So reach out to Michael and also there and find
(13:12):
out about all the other services. He's a wealth of
information and a wealth of expertise. And there's even a
chance at a book interview.
Speaker 1 (13:21):
That's right, okay, So go to NEXTSTEPCFO dot net, forward
slash contact, fill out the contact form, put in the
message box, book interview, and the book you do goes
just like this. It's sixty minutes on zoom. I present
strategies whom my book and I ask you, as the
business owner, what the impact would have to a business
(13:44):
in your industry if they were to implement that strategy.
I document it for the book and that's it. And
I promise you that you'll learn business and financial strategies
through that interview that your competition isn't doing. And so
we do both CFO services and strategic implementation. So we
cover both the financial and the strategic uh and that
(14:06):
differentiates us from a lot of other fractional CFOs who
really just focus on the.
Speaker 2 (14:11):
Financial I think you need both.
Speaker 1 (14:15):
You definitely need both. You definitely need both, because what
ends up happening is you can only talk about the
numbers so much. Yeah, and then you know, now it's okay,
Now what do I do? Well, here's some here's twenty
two strategies that we offer that you can that you
can implement. And we talk about implementation, we don't talk
about learning. You can go to Google to learn, so
(14:36):
next step CFO dot net. You could also download a
free copy of our book called Powerful Business Strategies. So
that's how you reach us. And by the way, you
can also go to that contact page and ask for
a consultation. We could, and we can tell you exactly
how we go about doing what we do.
Speaker 2 (14:52):
I think they definitely should and yes, you definitely do
have some powerful business strategies. So thanks once again for
bringing them to our our audience here on the Adventures
of pipe Man positively Pipeman segment, and thanks for being
here and getting and just helping businesses across the world.
Speaker 1 (15:11):
Thank you, thank you for having me, thank you for
listening to the Adventures of Pipemin i'm w for c
u I Radio