January 15, 2025 • 11 mins
Master business finance for free with 100+ video lessons—no gimmicks, no hooks, just valuable knowledge: https://www.byfiq.com/
Are you leaving money on the table without even knowing it?
In this episode of BYFIQ, Steve dives straight into the four levers of profitability—the critical factors that can make or break your bottom line. Learn why most business leaders get it wrong, how a simple 1% change can transform your results, and why pricing is your most powerful tool (if you use it correctly).
Don’t miss this game-changing breakdown—because if you don’t know these four levers, your competitors will.
Time is ticking to take your financial acumen to the next level. Tune in now and start maximizing your profits today!
Disclaimer:
BYFIQ, LLC is a wholly owned entity of Coltivar Group, LLC. The views expressed here are those of the individual Coltivar Group, LLC (“Coltivar”) personnel quoted and are not the views of Coltivar or its affiliates. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Coltivar has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
That's where I was not confident, because I didn't
know my numbers.
I didn't know how to readfinancial statements, I didn't
know how all this worked andtherefore I did a lot of work,
put in a lot of time, wasted alot of energy, not making the
money I could have early on.
This is BYFIQ.
Wealth and success come fromunderstanding how finance works
in business, and together we'llexplore the most important
(00:20):
topics to 10X your financialresults.
My hope is that we can worktogether soon.
Please share and enjoy.
There are four levers toprofitability.
That's it, just four.
So if your business isn'tearning the profit you believe
it deserves, there are fourthings that we're going to talk
about, and I'm going to tell youwhat is the immediate impact if
you increase any of these by 1%on the bottom line.
(00:44):
So are you ready?
Because here's the deal.
So many people are distractedin business.
They're focusing on all thesedifferent items that aren't
necessarily moving the needle.
So today I'm just gonna give itstraight to you talk about the
four levers of profit so you canapply these things in your
company to drive higher profits.
And if you're not running acompany, if you aspire to run a
(01:04):
company, if you aspire to run acompany one day, to be an
entrepreneur or to be a businessleader, understanding these
four things will be supercritical.
I was doing an interview onceto hire a controller for a
company.
I had interview after interviewset up with these individuals
and I would ask them thequestion what are the four
things you could do to driveprofits?
And guess what I would say.
Over half of them couldn't giveme a straight answer.
(01:27):
They're all over the place,they're talking about random
things and I was like, okay,obviously you don't know because
you can't answer this questiondirectly.
And today I'm going to give youwhat you need to know to answer
the question directly.
Before we get into this, I hopeyou're enjoying the financial
pro program.
I just want to give a shout outto a few people who are kicking
some serious butt.
They just started the programrecently and they're already on
(01:49):
level two.
Remember, there are six levelsto become a financial pro.
So let me give a few shout outsto some individuals that are
making great progress.
Number one I have Eric.
Eric with a K no last nameDoing a great job.
Keep up the good work, eric.
I have Robert G.
Robert is doing an excellentjob.
He's making his way rightthrough the program.
(02:11):
Good job there.
Also, andrew S.
Good job to you.
Direct Farm, doing a wonderfuljob, making great progress.
Keep up the excellent work.
Juan S Okay, I'll keep yourlast names private in case you
don't want your name out there.
Doing a wonderful job as well.
Next, joey in, keep up thefantastic work.
(02:34):
You're making your way throughlevel two and I'll give more
shout outs in future episodes.
I just want to encourage all ofyou to become financial pros.
So if you aren't enrolled inthe free program, it's totally
free.
No gimmicks, it's my best stuff.
I'm not here to upsell you on afuture program 100% free.
Over 100 video lessons andquizzes everything you need to
(02:55):
become a financial pro and tofast track your way without
going through all these boringclasses.
I'm just going to give itstraight to you in this program,
so be sure to check that out.
All right, let's go ahead andhop into these four levers of
profitability, because these aresuper critical.
Okay, there's four levers, veryeasy to remember.
This is something you shouldremember because if I ever come
face to face with you, I'm goingto say, hey, what are the four
(03:15):
levers?
And you should be able to spitthem out.
Okay, here we go.
Number one, that's lever numberone.
Lever number two is decreaseyour fixed costs.
Lever number three decreaseyour variable costs.
And lever number four increaseyour pricing.
Now, out of those four volume,decrease your fixed costs,
(03:36):
decrease your variable costs orincrease your pricing, which one
do you think has the biggestimpact on the bottom line?
Now, if you just said pricing,you get a gold star.
Make yourself a gold starhanging up on your fridge
because I'm so proud of you.
Yes, that's correct, increasingprice is value driver number
one, that's your number onelever.
And number two is decreasingvariable cost.
(03:59):
All right, let me quantify theimpact of a 1% change in any of
these areas.
So I'm going to explain.
If you increase volume by 1%,you decrease fixed cost by 1%,
you decrease variable cost by 1%or you increase your pricing by
1%.
I'm going to explain.
What is the impact?
Right, the percentage impact onprofitability.
(04:20):
Okay, first, here we go.
Pricing from best to worstprofitability.
Okay, first, here we go.
Pricing from best to worst.
Increasing pricing by 1% willhave a 12.5% impact on the
bottom line for just the averagecompany.
Now, these percentages changefor every company across
different industries.
So the numbers I'm sharing withyou are just a general rule of
(04:40):
thumb.
Okay, this is just for yourgeneric standard company.
Right, generic advice, becauseI have to apply it across
multiple industries.
But I want to give you somenumbers so you can understand
the variability between each ofthese levers.
Right, the scale, in otherwords, right.
So, increasing price by 1% onaverage, we'll have a 12.5%
impact on the bottom line for ageneral generic company.
(05:01):
Right, decreasing variablecosts a 7.7% impact on the
bottom line for a generalgeneric company.
Right, decreasing variablecosts a 7.7% impact on the
bottom line for every 1%.
Increasing your volume sogrowing, growing your top line,
doing more sales will have a4.8% impact on the bottom line
and decreasing fixed costs by 1%will have a 3.8% impact on the
(05:22):
bottom line.
All right, there you have it inorder.
Pricing, number one.
Decreasing variable costs yourcost of goods sold.
Lever number two volume islever number three.
And decreasing fixed costs islever number four.
Now, that can vary by industry,but the majority of the time,
I'd say for 98% of the companiesthat I work with, pricing is
(05:43):
the number one lever, andimproving cost of goods sold is
lever number two.
Right, it may change bypercentage.
But there you have it.
Check this out.
You may wonder why don't morecompanies just increase their
price?
Because, remember, when priceexceeds value, customers don't
buy.
When perceived value exceedsprice, customers buy.
(06:04):
The reason why they don't goraise their prices number one
they may not even understandwhat pricing should be, so they
just look at their competitorsand that's what they price their
services at.
Number two it takes work,because in order to increase
your perceived value, you haveto enhance the customer
experience, you have to be moreinnovative, you have to improve
the quality of your products,you have to invest in your brand
(06:25):
, and all of those things take alot of work, and sometimes it's
easier just to discount yourproducts.
Right, bad strategy, badstrategy.
I'm going to get into that.
But hey, that's what somepeople do.
So that's why a lot ofcompanies don't focus in on
their pricing and also, I'd saythey don't have strong offers.
When it comes to selling aproduct or service, you should
(06:45):
have an offer that is soirresistible that when
prospective customers comeacross it, they're like yes, I
would be an idiot not to buythis product or service because
it's going to solve my painpoint.
It's the only product out therethat can solve my pain point in
a unique and personalizedmanner and therefore they're
willing to buy your offer.
Okay.
(07:06):
So if you don't have a strongoffer compelling offer that's
going to be one of your numberone problems.
And then the pricing thingsometimes it comes from
confidence too.
I remember when I was young,when I was 16 years old and I
was just starting my landscapecompany, I would go out to jobs
and I would measure the siteright.
So I'd get the square footage.
I would plug in the number ofsquare feet of rock and sod and
(07:28):
mulch and number of trees, thenumber of plants, how big the
irrigation system was going tobe.
I measured everything and thenI put it into this little
calculator that I built.
And then I would look at theprice and I'm like, huh,
something's off, it's too high.
So then I would discount itbecause I was approaching
pricing from my relativefinancial position and at the
(07:48):
age of 16, I didn't have a lotof money.
I was raised by a single mom.
I left home when I was 16.
I didn't have a lot of moneysaved up and therefore when I
was starting out, I saw theworld in terms of my financial
position.
So when I measured outsomebody's yard and gave them a
quote for landscaping and itended up being 10 grand, I was
like, wow, that's a lot of money10 grand Because I didn't have
10 grand.
So therefore I discounted downto eight.
(08:11):
I'd go do the work and guesswhat?
It would still cost me the sameamount of money I calculated
and I would just lose money orleave a ton of money on the
table.
That's where I was notconfident, because I didn't know
my numbers.
I didn't know how to readfinancial statements, I didn't
know how all of this worked andtherefore I did a lot of work,
put in a lot of time, wasted alot of energy, not making the
money I could have early on.
(08:32):
Then I started to figure out howto strengthen my offer, how to
build my portfolio and, throughmy reputation in the industry
since our company was winningawards I was able to raise my
pricing.
But even still, looking back,if I knew what I knew today, oh
my gosh, it would make such adifference and I would have
captured so much more profit.
So that's what I want to leaveyou with today are the levers of
(08:53):
profit.
So you know exactly how toimpact profitability.
Now, what comes with it?
What makes you even stronger andmore powerful in the world of
finance, is by applying strategyto these four levers.
Because if you just say, yeah,you know we need to raise our
price, and then somebody says,well, okay, how are you going to
do that?
And you're like, I don't know,let's just go raise our pricing.
If you don't understand thingslike customer acquisition costs,
(09:15):
your lifetime gross profit of acustomer, how to create an
offer, how to build a funnel,how to create a website that
converts, and all the componentsand actions and strategies that
allow you to raise your pricing, then you're just throwing out
a bunch of random stuff and it'snot going to be super powerful
and impactful.
(09:36):
So, if you want to beinfluential as a leader in
business, if you want to run amore profitable company, be sure
to check out, like I said, thefinancial pro program.
It's like free, like literally.
I have nothing to gain from itother than seeing more people
become financially literate inthis world, and that's my
mission.
10 million people, folks.
That's what I want to do.
I want to empower 10 millionbusiness professionals with
greater financial literacy, andit starts with you.
All right, I hope you enjoyedthis episode.
(09:58):
Be sure to share with the worldbecause, hey, if we can educate
more people in the world ofbusiness, the world will be a
much better place.
I hope you have a great weekand until next time, take care
of yourself.
Cheers.
That's where I was not confident, because I didn't
know my numbers.
I didn't know how to readfinancial statements, I didn't
know how all this worked andtherefore I did a lot of work,
put in a lot of time, wasted alot of energy, not making the
money I could have early on.
This is BYFIQ.
Wealth and success come fromunderstanding how finance works
in business, and together we'llexplore the most important
(00:20):
topics to 10X your financialresults.
My hope is that we can worktogether soon.
Please share and enjoy.
There are four levers toprofitability.
That's it, just four.
So if your business isn'tearning the profit you believe
it deserves, there are fourthings that we're going to talk
about, and I'm going to tell youwhat is the immediate impact if
you increase any of these by 1%on the bottom line.
(00:44):
So are you ready?
Because here's the deal.
So many people are distractedin business.
They're focusing on all thesedifferent items that aren't
necessarily moving the needle.
So today I'm just gonna give itstraight to you talk about the
four levers of profit so you canapply these things in your
company to drive higher profits.
And if you're not running acompany, if you aspire to run a
(01:04):
company, if you aspire to run acompany one day, to be an
entrepreneur or to be a businessleader, understanding these
four things will be supercritical.
I was doing an interview onceto hire a controller for a
company.
I had interview after interviewset up with these individuals
and I would ask them thequestion what are the four
things you could do to driveprofits?
And guess what I would say.
Over half of them couldn't giveme a straight answer.
(01:27):
They're all over the place,they're talking about random
things and I was like, okay,obviously you don't know because
you can't answer this questiondirectly.
And today I'm going to give youwhat you need to know to answer
the question directly.
Before we get into this, I hopeyou're enjoying the financial
pro program.
I just want to give a shout outto a few people who are kicking
some serious butt.
They just started the programrecently and they're already on
(01:49):
level two.
Remember, there are six levelsto become a financial pro.
So let me give a few shout outsto some individuals that are
making great progress.
Number one I have Eric.
Eric with a K no last nameDoing a great job.
Keep up the good work, eric.
I have Robert G.
Robert is doing an excellentjob.
He's making his way rightthrough the program.
(02:11):
Good job there.
Also, andrew S.
Good job to you.
Direct Farm, doing a wonderfuljob, making great progress.
Keep up the excellent work.
Juan S Okay, I'll keep yourlast names private in case you
don't want your name out there.
Doing a wonderful job as well.
Next, joey in, keep up thefantastic work.
(02:34):
You're making your way throughlevel two and I'll give more
shout outs in future episodes.
I just want to encourage all ofyou to become financial pros.
So if you aren't enrolled inthe free program, it's totally
free.
No gimmicks, it's my best stuff.
I'm not here to upsell you on afuture program 100% free.
Over 100 video lessons andquizzes everything you need to
(02:55):
become a financial pro and tofast track your way without
going through all these boringclasses.
I'm just going to give itstraight to you in this program,
so be sure to check that out.
All right, let's go ahead andhop into these four levers of
profitability, because these aresuper critical.
Okay, there's four levers, veryeasy to remember.
This is something you shouldremember because if I ever come
face to face with you, I'm goingto say, hey, what are the four
(03:15):
levers?
And you should be able to spitthem out.
Okay, here we go.
Number one, that's lever numberone.
Lever number two is decreaseyour fixed costs.
Lever number three decreaseyour variable costs.
And lever number four increaseyour pricing.
Now, out of those four volume,decrease your fixed costs,
(03:36):
decrease your variable costs orincrease your pricing, which one
do you think has the biggestimpact on the bottom line?
Now, if you just said pricing,you get a gold star.
Make yourself a gold starhanging up on your fridge
because I'm so proud of you.
Yes, that's correct, increasingprice is value driver number
one, that's your number onelever.
And number two is decreasingvariable cost.
(03:59):
All right, let me quantify theimpact of a 1% change in any of
these areas.
So I'm going to explain.
If you increase volume by 1%,you decrease fixed cost by 1%,
you decrease variable cost by 1%or you increase your pricing by
1%.
I'm going to explain.
What is the impact?
Right, the percentage impact onprofitability.
(04:20):
Okay, first, here we go.
Pricing from best to worstprofitability.
Okay, first, here we go.
Pricing from best to worst.
Increasing pricing by 1% willhave a 12.5% impact on the
bottom line for just the averagecompany.
Now, these percentages changefor every company across
different industries.
So the numbers I'm sharing withyou are just a general rule of
(04:40):
thumb.
Okay, this is just for yourgeneric standard company.
Right, generic advice, becauseI have to apply it across
multiple industries.
But I want to give you somenumbers so you can understand
the variability between each ofthese levers.
Right, the scale, in otherwords, right.
So, increasing price by 1% onaverage, we'll have a 12.5%
impact on the bottom line for ageneral generic company.
(05:01):
Right, decreasing variablecosts a 7.7% impact on the
bottom line for a generalgeneric company.
Right, decreasing variablecosts a 7.7% impact on the
bottom line for every 1%.
Increasing your volume sogrowing, growing your top line,
doing more sales will have a4.8% impact on the bottom line
and decreasing fixed costs by 1%will have a 3.8% impact on the
(05:22):
bottom line.
All right, there you have it inorder.
Pricing, number one.
Decreasing variable costs yourcost of goods sold.
Lever number two volume islever number three.
And decreasing fixed costs islever number four.
Now, that can vary by industry,but the majority of the time,
I'd say for 98% of the companiesthat I work with, pricing is
(05:43):
the number one lever, andimproving cost of goods sold is
lever number two.
Right, it may change bypercentage.
But there you have it.
Check this out.
You may wonder why don't morecompanies just increase their
price?
Because, remember, when priceexceeds value, customers don't
buy.
When perceived value exceedsprice, customers buy.
(06:04):
The reason why they don't goraise their prices number one
they may not even understandwhat pricing should be, so they
just look at their competitorsand that's what they price their
services at.
Number two it takes work,because in order to increase
your perceived value, you haveto enhance the customer
experience, you have to be moreinnovative, you have to improve
the quality of your products,you have to invest in your brand
(06:25):
, and all of those things take alot of work, and sometimes it's
easier just to discount yourproducts.
Right, bad strategy, badstrategy.
I'm going to get into that.
But hey, that's what somepeople do.
So that's why a lot ofcompanies don't focus in on
their pricing and also, I'd saythey don't have strong offers.
When it comes to selling aproduct or service, you should
(06:45):
have an offer that is soirresistible that when
prospective customers comeacross it, they're like yes, I
would be an idiot not to buythis product or service because
it's going to solve my painpoint.
It's the only product out therethat can solve my pain point in
a unique and personalizedmanner and therefore they're
willing to buy your offer.
Okay.
(07:06):
So if you don't have a strongoffer compelling offer that's
going to be one of your numberone problems.
And then the pricing thingsometimes it comes from
confidence too.
I remember when I was young,when I was 16 years old and I
was just starting my landscapecompany, I would go out to jobs
and I would measure the siteright.
So I'd get the square footage.
I would plug in the number ofsquare feet of rock and sod and
(07:28):
mulch and number of trees, thenumber of plants, how big the
irrigation system was going tobe.
I measured everything and thenI put it into this little
calculator that I built.
And then I would look at theprice and I'm like, huh,
something's off, it's too high.
So then I would discount itbecause I was approaching
pricing from my relativefinancial position and at the
(07:48):
age of 16, I didn't have a lotof money.
I was raised by a single mom.
I left home when I was 16.
I didn't have a lot of moneysaved up and therefore when I
was starting out, I saw theworld in terms of my financial
position.
So when I measured outsomebody's yard and gave them a
quote for landscaping and itended up being 10 grand, I was
like, wow, that's a lot of money10 grand Because I didn't have
10 grand.
So therefore I discounted downto eight.
(08:11):
I'd go do the work and guesswhat?
It would still cost me the sameamount of money I calculated
and I would just lose money orleave a ton of money on the
table.
That's where I was notconfident, because I didn't know
my numbers.
I didn't know how to readfinancial statements, I didn't
know how all of this worked andtherefore I did a lot of work,
put in a lot of time, wasted alot of energy, not making the
money I could have early on.
(08:32):
Then I started to figure out howto strengthen my offer, how to
build my portfolio and, throughmy reputation in the industry
since our company was winningawards I was able to raise my
pricing.
But even still, looking back,if I knew what I knew today, oh
my gosh, it would make such adifference and I would have
captured so much more profit.
So that's what I want to leaveyou with today are the levers of
(08:53):
profit.
So you know exactly how toimpact profitability.
Now, what comes with it?
What makes you even stronger andmore powerful in the world of
finance, is by applying strategyto these four levers.
Because if you just say, yeah,you know we need to raise our
price, and then somebody says,well, okay, how are you going to
do that?
And you're like, I don't know,let's just go raise our pricing.
If you don't understand thingslike customer acquisition costs,
(09:15):
your lifetime gross profit of acustomer, how to create an
offer, how to build a funnel,how to create a website that
converts, and all the componentsand actions and strategies that
allow you to raise your pricing, then you're just throwing out
a bunch of random stuff and it'snot going to be super powerful
and impactful.
(09:36):
So, if you want to beinfluential as a leader in
business, if you want to run amore profitable company, be sure
to check out, like I said, thefinancial pro program.
It's like free, like literally.
I have nothing to gain from itother than seeing more people
become financially literate inthis world, and that's my
mission.
10 million people, folks.
That's what I want to do.
I want to empower 10 millionbusiness professionals with
greater financial literacy, andit starts with you.
All right, I hope you enjoyedthis episode.
(09:58):
Be sure to share with the worldbecause, hey, if we can educate
more people in the world ofbusiness, the world will be a
much better place.
I hope you have a great weekand until next time, take care
of yourself.
Cheers.
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