October 27, 2025 • 50 mins
Right Thinking with Steve Coplon.
This week's show is called "Personal Finance and Small Business Ownership - Part 2 | Encore Edition #16." Tune in and hear Steve as he continues to share valuable insights and provide tools on how to give yourself the best chance of success if you are thinking about starting your own small business.
https://www.talknetworkradio.com/hosts/right-thinking
This week's show is called "Personal Finance and Small Business Ownership - Part 2 | Encore Edition #16." Tune in and hear Steve as he continues to share valuable insights and provide tools on how to give yourself the best chance of success if you are thinking about starting your own small business.
https://www.talknetworkradio.com/hosts/right-thinking
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:14):
There must be live starting lighter somewhere. Got to be birds. Why, Hi.
Speaker 2 (00:26):
Sky, good morning, welcome to Right Thinking with Steve Copeland.
I'm your host, Steve Copeland, and thank you for tuning in.
Let's have a great day.
Speaker 1 (00:40):
Good morning, everybody, Happy Memorial Day. I hope that all
of you that are traveling today are safe and just
be very very careful. There's going to be a lot
of people on the road today, so be very careful.
I would like to just start off by saying that
yesterday's Memorial Day, and on the radio, we're not supposed
(01:02):
to have any silence, so to speak. But let's just
take a moment for a second to honor all the
many men and women that have thought for our country
so that we can have the freedoms that we have. Okay, thanks,
but let's celebrate today. Let's celebrate our freedoms. I'm going
(01:24):
to share something with you that means an awful lot
to me now that I'm part of Top Network Radio,
Jeff Heiser's organization. There's a magazine that's an online magazine
called Connect ten and it is it's an online magazine
and it is just one wonderful, wonderful magazine and I'm
(01:45):
honored that I've been able to write an article for it.
And the main issue that came out earlier in the
month was for Memorial Day was the theme, and so
I wrote an article and I'd like to share that
with you. And if you want to be able to
read the article yourself and read other wonderful articles in
(02:09):
the magazine, go to Talknetwork Radio dot com and click
on at the top Connect ten. And I think you're
going to love that I've introduced you to Connect ten.
It's just an inspirational, wonderful articles and so I hope
you visit that. But I dedicate this to the many
(02:30):
men and women that have served our country, and I
hope that you enjoy this. Who is your favorite hero?
For heroes in American history? Recently, our First Lady, Milaia
Trump give a speech at the International Women of Courage
Awards ceremony about true heroes. She said many incredibly powerful
(02:54):
words about the twelve women being honored. Quote, these are
on the stage with me have thought for their rights
and for the rights of others. Each battle forces such
as governments, the courts, gender bias, terrorism, war and corruption.
(03:16):
And we're willing in each moment to face harsh penalties,
including imprisonment and death, as they continue to persevere against
unimaginable odds. These women are extraordinary examples of reaching within
to find the courage that lies inside us, all to
(03:38):
change the world. End quote. As I listen, I thought
back to a question that I've asked many times since
being in the fourth grade study in Virginia History. Who
is your favorite hero or heroes in American history? Since
memorizing Patrick Henry's give me Liberty or give me Deaths,
(04:01):
which he delivered at Saint John's Church in Richmond, Virginia,
on March twenty third, seventeen seventy five, just prior to
the Revolutionary War, he became my favorite American hero. His
passion and willingness to die for freedom has inspired me
my entire life. It was the beginning of my deep
(04:23):
love of freedom and respect and admiration for the men
and women who have fought and died so that we
can enjoy the freedoms that we do in this great
country of ours, the US of Aid. I'm proud that
I memorized that speech over fifty years ago and still
share it often. Gentlemen may cry peace peace. But there
(04:45):
is no peace. Is life so dear, or peace so
sweet as to be purchased at the price of change
and slavery. For ben At Almighty God, I know not
what course others may take, But as for me, give
me liberty, give me death. Patrick Henry remained my favorite
American hero until I had the honor and privilege to
(05:09):
visit the Alamo in San Anton, Texas in nineteen seventy five.
Since standing on that sacred ground, I can say without
hesitation that my favorite American heroes are the heroes of
the Alamo. While answering the calls for Texas freedom, they
knew they were going to die. Standing there brought back
(05:34):
a million memories of watching the original epic nineteen sixty
movies The Alamo with John Wayne as Davy Crockett, Richard
Widmark as Jim Bowie, Lawrence Harvey as Colonel William Travis,
and Richard Boone as Sam Houston. The two thousand and
four remakes starring Billy Bob Thornton as Davy Crockett, is
(05:54):
also a great movie. On October second, eighteen thirty five,
while under Mexican rule, the Texas Revolution began during the
First three months of the revolution, the Texians were able
to drive out all Mexican troops. General Antonio Lopez de
Santa Anta, president of Mexico, personally led over seven thousand
(06:17):
troops into Texas to put down the rebellion. Sam Houston,
the leader of the Texians, needed more time to build
his army to fight Santa Anna. He placed Colonel William
Travis with a small number of soldiers in the Alamo,
a Roman Catholic mission and fortress compound founded in the
eighteenth century to hold off Santa Anna as long as possible.
(06:42):
The Alamo was strategically located in the path of General
Santa Anna as he entered Texas. The car went out
throughout the United States for those believe it in freedom
to come to the aid of Texas and its fight
against Mexico. Davy Krackt, Jim Bowey, and others found their
way to the Alama and joined with Colonel Travis. One
(07:03):
hundred and eighty two men fought in the Alamo. These
brave men miraculously held the Alamo for thirteen days, giving
Sam Houston the time he needed. From March sixth, eighteen
thirty six, Santa Anna's troops attacked the Alamo, killing all
of the Texian defenders. Remember the Alamo became the war
(07:25):
cry of the Texian army, who, six weeks later, on
April the twenty first, eighteen thirty six, at the Battle
of San Jacinta, defeated Santa Anna's army that had been
seriously depleted by the brave, courageous men who gave their
lives for the cause of freedom at the Alamo. Heroism
(07:47):
is timeless. A quote again from Milania Trump's speech quote,
ask yourself, if you would have the fortitude of spirit,
the courage of your convictions, and the enormous inner strength
required to stand up and fight against such overwhelming odds
(08:09):
the heroes of the Alamo did. I thank them for
what they did and for the love of freedom that
they instilled in me. I thank all of the men
and women who have thought and died for our country.
We are the land of the Free because of the
(08:30):
brave Ask yourself, who is your favorite hero or heroes
in American history? It's worth thinking about. Thank you very
much for listening to that love. I love this country,
(08:52):
and again, I thank all of the men and women
that have fought so bravely for the freedoms that we have.
God bless well. Today is part two of personal finance
and small business ownership, and I want to thank the
many people that have reached back to me to let
(09:14):
me know what they got out of the show last week.
One of the best things that I got as a
response was I had mentioned that I am mentoring several mature,
wonderful women over in Newport News that are working to
start their own adult daycare. And when I went Monday
night after my show last week Elena, she told me
(09:42):
that she had heard my show that day. The timing
was perfect for me because the very things that I
had talked about on the show about the thinking like
an owner and the risk of going into business and
needing to do a slow chart to get your ideas organized,
(10:02):
and being able to understand the personal and business relationship
as it depletes your resources as you start your business
and it makes your personal budget harder to meet and
your credit worthiness can suffer, the importance of creating the
profit and planning to have enough working capital to weather
(10:24):
the storm until you get further along in your business.
Those are the very things that I was working with
her and Jackie, and the fact that she had heard
my radio program that morning and told me how much
she got out of it and thanked me. I just
(10:45):
want to tell you, I hope more people, I hope
a lot of people can get that out of this show,
because that's what this is is to tell you that, yes,
you can succeed, but you have to do things in
the right order. You have to have the right mindset.
And so I'm here to start at wherever we start
(11:08):
and then go from there. I always try to give
some biblical spiritual insights as to what I'm going to
be talking about. And Donna and I my wife, as
we've prepared for today's show, we talked about it and
what we want to just put out there today is
(11:30):
this very straightforward and it's coming from Second Thessalonians, chapter three,
verses six through twelve, and I'm just going to read
it real quick. This is Paul on his journeys talking
to the Thessalonians. Now we command you, brothers, in the
name of our Lord Jesus Christ, that you keep away
from any brother who is walking in idleness and not
(11:53):
in accord with the tradition that you received from us.
For you yourself know how you ought to imitate us
because we were not idle when we were with you,
nor did we eat anyone's bread without paying for it.
But with toil and labor, we were night and day
that we might not be a burden to any of you.
(12:16):
It was not because we do not have that right,
but to give you and ourselves an example to imitate.
For even when we were with you, we would give
you this command. If anyone is not willing to work,
let him not eat hurry. That's some pretty serious stuff
(12:39):
that I just put out there. Basically, what I'm trying
to say is one of my main themes of everything
that I do is I teach and try to help
people succeed and have a better life. It's about taking responsibility. Now,
let me tell you, if you're down and you need
a help in a hand, then that's fine to receive
(13:04):
from others and to and to get yourself moving in
the right direction while you have others help you. But
what I'm talking about right now is for those of
you that want to take that responsibility and want to
be an entrepreneur, want to have your own small business,
(13:24):
that's the kind of mentality that you need to have.
In other words, and some of the best books that
are out there in personal finance, Jim stove All. The
subtitle of his book on the Ultimate Financial Plan is
get your Get your Life in Order. I don't have
the book right in front of me. It's get your
(13:44):
life in Order, balance your life and your money. That's
what it is. I apologize Jim for taking so long
to spit it out like that, but he's saying, in
order to succeed financially, you need to be very much
focused with who you are and what your goals are,
what your vision is, and get your life in order
(14:07):
and then put together the plan to have it happen.
So right before I got on the air to day,
I listened to my show from last week, so that
I said, this is part two. We're you're just going
to try to pick right up where we left off,
and I gave people the listeners, all of you a
homework assignment. I said, if you really want to be
(14:32):
self employed, then this week do your float chart. And
the flow chart is just a very very simple layman's
way to lay out your thoughts in an organized way
to start to focus what it is that you're getting
ready to get into and if you don't get organized,
(14:55):
and you just get out there and say, hey, let's
do it, let's get started. In this business. You are
going to be hit upside on the head with things
that come out of nowhere, and you can't just go
out and take an idea that probably will succeed if
you do it the right way, but not do the
(15:16):
proper preparation. Last week, one of the things that I
talked about and in the seminar that's on the website
right think dot org under documents go to Personal Finance
and Small Business Ownership, and you will have the seminar
that I'm that I'm teaching in this in this series
Personal Finance and Small Business Ownership. It's right there. And
(15:39):
I talked about one of the early pictures of graphic
that I have in my in my my workbook. There
it's the seminar. It's a picture of a boy scout
and and it says be prepared. Well, if you're not prepared,
you might not do so well. That's just the basic
point that I'm trying to give you. So one way
(16:02):
to be prepared is to get focused and get organized,
and that's what I'm trying to teach how to do.
I was over at a Chiebel Dream Academy, the high
school that I teach financial literacy at a couple of
days a week, and I've got the students doing a
cash flow budget. That's their final exam, and I've been
there all year, and to be perfectly honest about it,
(16:24):
it's been very, very difficult in trying at times because
fifteen year old high school kids, you don't think they're
paying attention. They're multitasking, they're doing a million other things,
and it's hard to hold their undivided attention. And I
wasn't really sure based on some of the quizzes and
(16:46):
things that I've given them, that they understand what it
is I'm trying to teach them, because all I'm really
trying to teach them is if you learn how to
do a cash flow budget and think and plan ahead,
your life will be eat here. Well, I gave them
the exam last week and it's due next Friday, and
(17:07):
I was so thrilled because when I walked in there,
one young lady, Jasmine, she had a big smile on
her face and she greeted me and said, I'm already
on the fourth month and it's a sixth month cash
flow budget based on a twenty four year old person
that we told them, this is what they do, this
(17:28):
is what their income is, this is their expenses, and
they have some discretion to put in different things other
than his hand out to them about expenses that might
be unique to them with birthdays and other things that
they want to do. But when she's a six month project,
when she told me that she was already in the
(17:49):
fourth month and had a big smile on her face,
I said, that's wonderful. Can I see it? And I
looked at it, and it's beautiful. She's really doing it.
And I gave her a high five, and I said,
I just want to thank you. You made my year. Well,
we started talking over it. I was answering questions for
the students, if anything they need to know while they're
on this assignment. And this one young lady, Jaketah, she
(18:14):
asked me a question, and I'm going to tie that
into what we're talking about here. For personal finance and
small business ownership one of my central themes of and
last week I told you that it's all laid out
on page twenty two of the seminar. It's the relationship
between your personal life and your business life. And I
(18:38):
go through the business cycle of selling your products or
your services and covering your direct costs and then covering
all your overheads and then coming down to your profit
and bringing money across to pay yourself. And I show
that if you don't bring enough money across to show
yourself that I'm right. If you don't bring enough money
(19:01):
across to pay yourself, you're going to have some difficult times.
And the graphic shows that your personal resources that you
have are going to start to be diminished. Your budget's
going to get harder and harder to meet because you're
going to start using credit card debt and other things,
and you won't have enough income coming in that you need,
(19:22):
and your credit worthiness or your ability to have secure
more credit starts to be greatly reduced. And so when
I teach entrepreneurship small business ownership, I make the statement
that the sole purpose of your business is not for
your ego to be able to say check that off
(19:44):
I did. That, it's to be able to support your lifestyle. Now,
I'm very pleased that that comment that I made last week,
that direct statement to support your lifestyle is the purpose
of going into business. That my good friend Gary, that's
my racketball player at the why whose opinions I respect greatly?
(20:04):
And I want to thank Gary right now because Gary
he listens to every one of my shows since the
beginning and has conversation with me so that I can
get some direct feedback and improve what I do, so
that I can just keep getting better at this and
reach more people. And Gary's opinion I respect greatly. He said.
(20:28):
I took some notes Steve, and I wrote down that
the purpose of going into your own business is to
support your lifestyle. And he asked me to explain that
a little further, and he said that he's not so
sure that it's to support your lifestyle, and I said, well, well, Gary,
(20:49):
basically what I'm saying is is that when I say lifestyle,
that's whatever you choose to do with your life. Now.
By definition, maybe lifestyle is layer the way that you
go about doing it, but my definition, it's not a dictionary.
Definition is basically whatever you have done to decide who
(21:11):
you want to be and lay out your budgets and
your plan to get there, to set your goals and
to start working toward them in your lifestyle. Each person
has a different lifestyle that they designed for themselves. And
part of the lifestyle that I did say on the
(21:33):
show that I teach is your lifestyle may be that
you want to make sure that you save money put
it away for your retirement. Another part of your lifestyle
may be to be able to save money for your
children's education. Another part may be to live in the
house that you live in and pay your mortgage. And
(21:55):
another may be to be able to give gifts and
clothing and keep your family fit. I'm just using the
term lifestyle very broadly, and so I just really like
it that Gary challenged me on that and wanted some
clarification because I'm going to stand by what I say
though in the concept, and that is going into business
(22:18):
is so serious that don't just do it because you
think it would be a fun thing to do. Because
if you go into business and you invest so much
of yourself into it and your resources and put your
savings up and put your credit up, and you didn't
think it out properly, you're going to fail. And there
(22:41):
might be some failures that are very very difficult to
rebound from. So I'm saying that one of the very
first steps of being able to succeed in business is
to know your personal need so that you can established
how much you have to be able to make as
(23:04):
far as your profits or how the cash comes out
of your business back to yourself, to be able to
stay on top of your personal your personal budget and
cover your personal needs. And when I talked last week
all about getting your mind so that you learn to
think like an owner, even if you're an employee in
(23:26):
training to maybe have your own business someday or to
never have your own business, just to think like an owner.
I want to reinforce that thought one more time, and
that's this as we take full responsibility for ourselves, kind
of with the biblical passage and second Tessalonians for us today,
as we take responsibility and make our contributions and not
(23:49):
just take from others. Again, it's okay if we're down
and we're in a rehabilitation period or a rebuilding period
and others are there for us, because it does take
that supposed to move forward. But the bottom line to
that is as we as we move forward, if you
decide that in this life, I take full responsibility for
(24:14):
myself and that I am going to do the best
I can to live up to meet those responsibilities. And
you think that way as a as a winner, as
a survivor. As you learn perseverance, as you learn not
to quit, as you learn to not give up, you
will succeed. And I'm just saying, a journey of a
(24:35):
thousand miles starts with the first step. And so as
you embark on your on your on your journey to
to succeed in lights, it may never be having your
own business. But as long as you know that those
freedoms that all those brave men and women fought for
(24:56):
so that we can be here in America and enjoy
those freedoms are yours to enjoy and embrace. No matter
where you are, no matter what job you've got, just
remember that was your choice to do what you're doing.
And so that is the entrepreneur attitude, that is the
spirit of freedom. Now I caution you, and I'll give
(25:20):
you another example from my class today at an achieveabl
Dream Academy. My workbook has a yellow cover on it.
We call it the yellow book. And two weeks ago
I instructed all the students to make sure that you'd
be bringing your workbook to class as we start to
(25:42):
get ready to do this exam well high school. Out
of thirty kids give or take eight of them, maybe
ten of them have their work books, the other twenty done.
So last week we really reinforced it because as they
do this cash flow exams, there's an example in the
workbook that I want them to understand and I wanted
(26:04):
to go into the workbook and show it to them.
Well today, I said, okay, who has their workbook? Hey,
we're making progress. Maybe half the kids raise their hand,
I said, who doesn't have it? Well, when you ask
who doesn't, it's not a true measurement because those that
don't don't raise their hand anyway. And I said, how
(26:27):
come you didn't bring them? You know you're instructed to
bring it. And one of the students said, it's on
the board. The teacher wrote it on the board. I
turned around and I found it on the board and
it said for Friday. This was my class on Friday.
I'm talking about on Friday. You make sure you bring
(26:48):
your workbook to mister Colfland's class. So I just said
to everybody, you know what, I just want you to
think about something. If later in life things aren't going
so good for you and you're struggling and you're having
a hard time. I just wants you to remember that.
In that class back then in Achievable Dream of High
(27:11):
School with mister Copeland, he pointed out to you that
the better prepared you are when when you're learning something
or trying to do something that is in your own
best interest, the better your chances for success are. Well.
In business, it's critical and if you don't prepare yourself
(27:33):
properly and know how much working capitaly you have to have,
if you do all the other things in your business
plan to move forward, there's usually going to be a
period where it's going to take some time. And this
is a business term right now. One of the terms
you have to understand and starting your own business is
called ramp up r a MP space up, ramp up,
(27:57):
and it's a term that's kind of graphical. Imagine a
delivery truck, an eighteen wheeler that's coming to a store
like a costco and they're bringing the supplies and it
backs up. Well, in that case, you don't need the
same kind of ramp because it's got a loading dock
that's level. So that's a bad example. But imagine that
(28:18):
there's a truck comes to a store a facility, and
the driver gets out, he opens up the back gate
and he pulls down the ramp and he pulls it
out about six or eight feet and then he lets
it down. And you've got a ramp, an in climb
ramp that you can walk up and down and take
(28:39):
his delivery cart and move things in and off the
truck using the endcline with the cart. Well, a ramp,
excuse me for that. The ramp that I'm describing, if
you look at it, it's a triangle and it's a wedge.
(29:00):
So imagine the ramp. The ground side is on the
left and it slopes up to the right. Well, that
in a timeline that, if you picture it over time,
represents from the left toward the right. It represents how
(29:22):
in business we say things move to the right. On
day one, when you open up your your your door
to start your business, you may not have very many
sales established unless you've got advanced contracts and things of
that nature if you're in some kind of a service business.
But what you're what you're really doing here is you
(29:45):
start off and you need to establish your sales for
your income. And as time goes on and you get
the word out, you advertise, you mark it. Whatever whatever
happens keeps on going. It goes from low sales or
(30:05):
zero sales, and they slowly increase, and the goal is
is to have them always increase as you go from
January to February to March April. As you go through
the calendar, the ramp should start getting steeper and steeper
and steeper and steeper as your sales go up. So
(30:25):
that's what the ramp looks like. Now. If when we're
talking about expenses, I wanted to find one category of
expenses right now called overheads. Your overheads are those expenses
that you are going to incur to have to be
(30:49):
stuck with, to be obligated to have to pay in
order to operate your business, whether or not you make
any sales or not. For example, if you go into
business and you have a retail clothing store and you're
(31:10):
going to have your first day of business and you
open up your store, you're paying rent somewhere, and you've
got lights on, and you've got a phone, and you've
got just different things. And when you open up that door,
if you don't sell anything at all, if you get really,
(31:30):
really sad because you come home that night to your
family and they say, how we're sales today, and you say,
I must have done something wrong. Nobody knew that I
was opened. Yet you must have not done your grand
opening up marketing properly because you didn't have any sales today. Well,
(31:51):
even though you didn't have any sales today, it cost
you money to be in business and have your store open.
The rent that you're obligated to has to be paid
whether or not you had any sales. The utilities have
to be on, and the phone has to be paid
(32:12):
each month, and there's many other other expenses that you're
going to have whether or not you have sales or not.
But the distinction that I'm making right now is overheads
are the category of expenses obligations in business that you
are going to have whether or not you make sales,
(32:34):
so they're not directly related to sales. And some good
examples of overhead are rent, telephone, utilities, insurance, loan payment
on a vehicle, office supplies, things like that. Okay now,
(32:55):
and the example I'm giving you where I'm trying to
teach what the ramp up phase is the period of
time where the amount of sales or other income that
you have coming into your business is not enough to
cover what all of those overheads are. And all overheads
(33:16):
aren't aren't always exactly fixed the same amount. Sometimes they
can carry a little bit, like your rent may be
higher because it may be tied in your location to
a percentage of your sales, for example. But let's just
call these overhead these are the fixed expenses that are
going to be there. I've made my point pretty clearly.
I believe they're going to be there whether or not
(33:38):
you have sales. So let's say that on mark one
of your new business, you have one thousand dollars a
month of fixed overheads that you're going to incur whether
or not you have an income or not. Well, let's
say that your total in month one in your new
(34:00):
business was only five hundred dollars. Well, you're five hundred
dollars short from being able to pay those bills. In
month two, your fixed overhead is still the same one
thousand dollars. But you do pretty good. In month two.
(34:20):
You get your sales up to seven hundred and fifty dollars,
You get a few repeat customers, you get a few
new customers, and you seem to be moving forward. I
purposely are given some very very simple numbers here I
could use. I could use numbers that are into thousands,
but let's just keep it simple. So month one, your
overheads are one thousand, but you only do business of
(34:43):
five hundred dollars. In month two, your overheads are still
one thousand, but you only do business up seven hundred
and fifty. So in month one, you're five hundred dollars negative.
In month two you're two hundred and fifty dollars negative. Okay,
so you get the month three, and we'll talk about
how you get there without making enough money to pay
(35:05):
your bills in a moment. But you get the month three,
and you have a wonderful thing to announce to everybody,
your family especially. Your overheads are one thousand, but you
hit one thousand dollars sales in month three. So it
took you three months to get to where your income
(35:26):
was enough to cover your sales. Apologize, your income was
enough to cover your overheads your expenses, Well, you were
down by seven hundred and fifty dollars until you got
you have gross sales, and this example of five hundred
(35:47):
and seven to fifty thousand. So you have two thousand,
two hundred and fifty dollars of income, but you've had
expenses of three thousand dollars. Well, there's a couple of
terms here that I want to hit you with. And
before I hit you with him, I want to tell
you I was with Johnny Thomas the other day. Now
that he's working and he's making some pretty decent money,
he came to me and he said, Steve, now that
(36:09):
I got money coming, and before I go too far
with not knowing how to handle it, I want you
to teach me how to budget. And there's three things
that I want to be able to do, he said. One,
I want to know how much money I gotta set
aside to pay all my bills. Those are basically as
personal overheads, as monthly expenses that are there. And he says,
(36:30):
and I want to know how much money I can
teary around for just pocket money, spending money that I
don't really have to keep close track of, but I
know how much. I want to know how much I
can spend before I spend too much. And the third
thing he said is I want to be able to
set aside money for savings so that I can start
to invest. Well. I was with Johnny the other day
(36:50):
and I started teaching this and I had a work
sheet for him, and it was kind of overwhelming to him.
But I just wanted to learn the idea, the concept.
But I had a hard time getting Johnny to focus
on it because it was very kind of complicated. I said,
come on, Johnny, come on, Johnny, this is good. You
asked me to teach you this, so come on, try
(37:10):
to concentrate with me. And he just burst out laughing
and he said, Steve, this is like real accounting that
you're trying to get me to do here. And I said, yeah,
it is, Johnny, it is, I said, but it's not
really that hard. And it's true. I'm a degree to
count at nineteen seventy five DCU, Virginia Commonwealth University, my
(37:32):
alma mada, and I've been working, you know, my whole
career and finance and stuff. So yeah, I got a
whole lot more of a handle of this than most
people do. But what I've tried to do with my
program that I'm trying to present on the air to
all of you that are taking the time to listen
to me, is I'm trying to take my forty five
years of what I've learned in business and the concept
(37:55):
of cash flow management and bring that into the personal
budget more than most other people that teach budget you,
most budget courses are this is how much I make
in the month, this is what my expenses are, this
is how much I have extra, or this is how
short I am. Mine is more of a planning thinking,
(38:18):
a dynamic approach to your personal budget so that you
can use your budget as a living tool. I know
that this is personal finance and small business ownership Part two,
but I can't just go into the business side without
bringing the personal side into it with you. That's one
of my main points I'm trying to get across is
(38:39):
no matter what you do, if you want to go
in your own business, it's going to affect your personal
life greatly because if you don't make enough money from
your business and you're not working another part time job
to supplement, then you're not going to make enough money
to stay stable and you're going to start having problems.
So let me pause this for a second because I
just hit on something that I want to I want
(39:00):
to reinforce one of the very best things that you
can do if you're serious about starting your own business
beyond going into it properly prepared and trained and knowledgeable
by working for somebody else, perhaps that's already doing that
learning on their nickel and getting so that you really
feel like, I know enough about it to succeed. I
(39:22):
know all the different parts of the business because I
had a job for so many years doing it for
somebody else, and I learned the business and now and
I'm ready to go out on my own. One of
the one of the things that that is a very
very good way to succeed in your small business is
to start small and grow big and not try to
(39:45):
go big on day one. Don't put everything into it
and and have all that risk to where if you're
if you're really not going to be able to get
get it off the ground, you'll lose too much. So
this is lesson is keep go into your business on
a part time basis in the beginning and then transition
(40:08):
it to where it's full time. If you're like a
husband and wife and y'all have an idea to start
a business, then maybe one of you keeps your full
time job and the other one goes into the business.
And the one that stays full time in the other job,
works part time in the business, or any combination there up.
But the point is keep your income coming in. The
(40:30):
proverbial don't quit your day job does apply here, So
if it's feasible to have supplemental income continuing to come
in outside of your business opportunity, that's my suggestion for
you on one of the best ways to embark on
a small business. After you know that you probably have
(40:51):
all the right qualifications, don't start your business until you
have all the right qualifications, all the right experiences, all
the right knowledge, have enough working capital. So now I'm
going to go back to finishing up the concept that
I want to give you today on the ramp up period.
So in the example that I'm working today, we've got
a three month period from the day you started your
(41:13):
business where you start off with zero sales, and by
the first month you had five hundred dollars in sales,
the second month you had seven hundred and fifty, and
the third month you have one thousand. So if you're
looking at that on a line that's going upwards as
your sales is increasing, at the point where the income
(41:33):
in your business is equal to the expenses that have
to go out. That's called the break even point, where
that's where it intersects at a point where I now
am bringing in enough money to cover my expenses. Now
I'm going to hit the pause button with you here
(41:54):
for a second. This is very very simplistic, and for
those of you that are way beyond this level of education,
I thank you for being patient with me, because I
have to tell you a whole lot of people that
want to start their own business aren't seeing what I'm
(42:16):
talking about yet. Now, if you go to one more level,
to make it a little bit more complicated, if you're
at a break even point, you're not making any money
to pull out to pay your own bills. So the
traditional example of a break even point is not paying you,
(42:41):
the owner, what you need to pay your own bills.
So what do you do? What you do is two things.
One is you redefine what your expenses are and you
put a dollar amount in there for what you need
(43:04):
to pull out. Because I go back to my statement,
the purpose of your business is to be able to
support your lifestyle, to be able to earn the amount
of money that you need. And so when you set
your goal here. Don't just have a goal to hit
your break even point, because people that only hit their
break even point failed because they don't have any money
(43:24):
for themselves. So I'm just redefining a little bit of
a definition here about that. We're going to call that
more of your need your need now in business, If
it's going to take you three months to hit that
point that we're calling the break evening right now of
(43:46):
where let's add two thousand dollars in and it takes
you another three or four months to get to where
you're making enough money to cover the full three thousand
thousand of your overhead and the two thousand of which
you really need. So you got to know your personal
budget first. You got to know what your need is
so that you can aggressively and proactively start directing your
(44:08):
business to that. So however long it's going to take,
what I'm trying to teach you is this, there's a
period of time that you can see on paper, that
you can see in black and white, where the ramp
that you are doing as you grow your sales to
cover your expenses. When your sales are less than your
(44:33):
expenses and you're in the negative, you can add those
numbers up over whatever period of time it is until
you hit that break even. Another word for the break
even that I want to give you is stabilization point.
Where it looks like you're stable now because you got
enough to cover things. You can add all that up
(44:54):
and that is the calculation for how much working capital
you're going to need to be able to weather the
storm to sustain in your business until you start really
making good money, until you make the business starts to
(45:15):
support you instead of you supporting your business. And so
it's a little technical, like Johnny said, Hey, stay man,
this is accounting. Well, let me tell you something. You know,
we got to separate the week from the chef here.
Do you want to be in business? Do you want
to succeed? Then put in the homework, do the study,
(45:36):
learn what you got to learn, face the reality, because
I'm telling you, if you go into business uncocked, half cocked,
they call it unsure what you really got to do,
You're probably not going to succeed. So I'm trying to
do your favor here. When I was a business consultant
for fifteen years with the Small Business Development Center of
(45:58):
Hampton Roads, I had hundreds and hundreds of businesses and
people that wanted to start their own business that I counseled,
and a lot of those people that I counseled, they
didn't really like me too much because they thought that
I was too straightforward. They were like, all set to
go out there and get all giddy about what they
(46:19):
want to go do. But I took them through the
exercises of focusing on what they really want to do.
And I apologize to anyone that thinks that I didn't
love them and like them, because I do. But I
wanted them to understand what they were getting into. And
if you don't understand what you're getting into, you're probably
going to fail. And so probably ninety percent of the
(46:44):
small business owners that I counseled that wanted to go
into their own business. I did not want to pop
their bubble, but I wanted them to put the proper
planning and put the proper time frames into it. And
the Small Business Development Center, I'm honored to say, gave
me some wonderful awards. They recognized me for the work
(47:06):
that I did, and I thank them for that, but
they thanked me also for what I did with the
reality for so many people of sparing them the hardship
of going into something that they would have failed at.
On page twenty four of the workbook, I answer this
question as to so, what is the best way to
(47:28):
avoid this dangerous path to failure when you go out
and you're not bringing enough money in. Here's a six
part answer. The following approach will give the business owner
the best chance at success. One. Prepare a complete business plan.
(47:48):
Be four big bold capital letters, be foar starting your business.
Do not start a business without doing a complete business plan.
Get with professionals that can help you do that, but
do not go into business without having it tied down. Two.
Know the personal budget needs that the business must fund.
(48:11):
I've talked a lot about that last week and again today,
just trying to encourage you to make sure that you
know what you need going into it, because if it's
not gonna be able to produce it, and you don't
have enough capital or investment or savings or credit to
back you until you hit stabilization, hits your break even point,
(48:31):
you're gonna be like going across a river and you
drown before you get to the other side. So let's
be very terrible about that. You got to know your needs. Three.
Properly capitalize your business. You've got to know how much
capital you're gonna need, and you've got to have reserve capital.
And if it takes more than what you thought you're
(48:52):
gonna you better be in shape to have some extra
credit sitting out there. Three full up rather full it.
Protect your personal Remember that as your personal resources get diminished,
you don't have credit worth that it's much more avoid
credit card debt and keep your personal credit in tech.
So I'm gonna stop for today. We're gonna pick back
up on this the next lesson, But I want to
(49:14):
tell you this wall Line Horn Insurancers, principal of one
of the main partners, Marty Einhorn, is a very close
friend of mine, and he's been incredibly supportive of Right
Thinking Foundation. He believes in what I do. He's there
for you also, and he's going through some personal health
issues right now. And I just want to lift Marty
up today and say Marty, I love you, and get
yourself well soon, and I'm there for you. And so
(49:36):
today I just want to have everybody enjoyed the rest
of today, enjoy your cook out, and God bless each
one of you.
Speaker 2 (49:44):
Thanks for listening to right Thinking with Steve Cooper. I
look forward to being with you again next week and
remember don't quit. Plan ahead. It will get better. God
bless you and have a great week y
There must be live starting lighter somewhere. Got to be birds. Why, Hi.
Speaker 2 (00:26):
Sky, good morning, welcome to Right Thinking with Steve Copeland.
I'm your host, Steve Copeland, and thank you for tuning in.
Let's have a great day.
Speaker 1 (00:40):
Good morning, everybody, Happy Memorial Day. I hope that all
of you that are traveling today are safe and just
be very very careful. There's going to be a lot
of people on the road today, so be very careful.
I would like to just start off by saying that
yesterday's Memorial Day, and on the radio, we're not supposed
(01:02):
to have any silence, so to speak. But let's just
take a moment for a second to honor all the
many men and women that have thought for our country
so that we can have the freedoms that we have. Okay, thanks,
but let's celebrate today. Let's celebrate our freedoms. I'm going
(01:24):
to share something with you that means an awful lot
to me now that I'm part of Top Network Radio,
Jeff Heiser's organization. There's a magazine that's an online magazine
called Connect ten and it is it's an online magazine
and it is just one wonderful, wonderful magazine and I'm
(01:45):
honored that I've been able to write an article for it.
And the main issue that came out earlier in the
month was for Memorial Day was the theme, and so
I wrote an article and I'd like to share that
with you. And if you want to be able to
read the article yourself and read other wonderful articles in
(02:09):
the magazine, go to Talknetwork Radio dot com and click
on at the top Connect ten. And I think you're
going to love that I've introduced you to Connect ten.
It's just an inspirational, wonderful articles and so I hope
you visit that. But I dedicate this to the many
(02:30):
men and women that have served our country, and I
hope that you enjoy this. Who is your favorite hero?
For heroes in American history? Recently, our First Lady, Milaia
Trump give a speech at the International Women of Courage
Awards ceremony about true heroes. She said many incredibly powerful
(02:54):
words about the twelve women being honored. Quote, these are
on the stage with me have thought for their rights
and for the rights of others. Each battle forces such
as governments, the courts, gender bias, terrorism, war and corruption.
(03:16):
And we're willing in each moment to face harsh penalties,
including imprisonment and death, as they continue to persevere against
unimaginable odds. These women are extraordinary examples of reaching within
to find the courage that lies inside us, all to
(03:38):
change the world. End quote. As I listen, I thought
back to a question that I've asked many times since
being in the fourth grade study in Virginia History. Who
is your favorite hero or heroes in American history? Since
memorizing Patrick Henry's give me Liberty or give me Deaths,
(04:01):
which he delivered at Saint John's Church in Richmond, Virginia,
on March twenty third, seventeen seventy five, just prior to
the Revolutionary War, he became my favorite American hero. His
passion and willingness to die for freedom has inspired me
my entire life. It was the beginning of my deep
(04:23):
love of freedom and respect and admiration for the men
and women who have fought and died so that we
can enjoy the freedoms that we do in this great
country of ours, the US of Aid. I'm proud that
I memorized that speech over fifty years ago and still
share it often. Gentlemen may cry peace peace. But there
(04:45):
is no peace. Is life so dear, or peace so
sweet as to be purchased at the price of change
and slavery. For ben At Almighty God, I know not
what course others may take, But as for me, give
me liberty, give me death. Patrick Henry remained my favorite
American hero until I had the honor and privilege to
(05:09):
visit the Alamo in San Anton, Texas in nineteen seventy five.
Since standing on that sacred ground, I can say without
hesitation that my favorite American heroes are the heroes of
the Alamo. While answering the calls for Texas freedom, they
knew they were going to die. Standing there brought back
(05:34):
a million memories of watching the original epic nineteen sixty
movies The Alamo with John Wayne as Davy Crockett, Richard
Widmark as Jim Bowie, Lawrence Harvey as Colonel William Travis,
and Richard Boone as Sam Houston. The two thousand and
four remakes starring Billy Bob Thornton as Davy Crockett, is
(05:54):
also a great movie. On October second, eighteen thirty five,
while under Mexican rule, the Texas Revolution began during the
First three months of the revolution, the Texians were able
to drive out all Mexican troops. General Antonio Lopez de
Santa Anta, president of Mexico, personally led over seven thousand
(06:17):
troops into Texas to put down the rebellion. Sam Houston,
the leader of the Texians, needed more time to build
his army to fight Santa Anna. He placed Colonel William
Travis with a small number of soldiers in the Alamo,
a Roman Catholic mission and fortress compound founded in the
eighteenth century to hold off Santa Anna as long as possible.
(06:42):
The Alamo was strategically located in the path of General
Santa Anna as he entered Texas. The car went out
throughout the United States for those believe it in freedom
to come to the aid of Texas and its fight
against Mexico. Davy Krackt, Jim Bowey, and others found their
way to the Alama and joined with Colonel Travis. One
(07:03):
hundred and eighty two men fought in the Alamo. These
brave men miraculously held the Alamo for thirteen days, giving
Sam Houston the time he needed. From March sixth, eighteen
thirty six, Santa Anna's troops attacked the Alamo, killing all
of the Texian defenders. Remember the Alamo became the war
(07:25):
cry of the Texian army, who, six weeks later, on
April the twenty first, eighteen thirty six, at the Battle
of San Jacinta, defeated Santa Anna's army that had been
seriously depleted by the brave, courageous men who gave their
lives for the cause of freedom at the Alamo. Heroism
(07:47):
is timeless. A quote again from Milania Trump's speech quote,
ask yourself, if you would have the fortitude of spirit,
the courage of your convictions, and the enormous inner strength
required to stand up and fight against such overwhelming odds
(08:09):
the heroes of the Alamo did. I thank them for
what they did and for the love of freedom that
they instilled in me. I thank all of the men
and women who have thought and died for our country.
We are the land of the Free because of the
(08:30):
brave Ask yourself, who is your favorite hero or heroes
in American history? It's worth thinking about. Thank you very
much for listening to that love. I love this country,
(08:52):
and again, I thank all of the men and women
that have fought so bravely for the freedoms that we have.
God bless well. Today is part two of personal finance
and small business ownership, and I want to thank the
many people that have reached back to me to let
(09:14):
me know what they got out of the show last week.
One of the best things that I got as a
response was I had mentioned that I am mentoring several mature,
wonderful women over in Newport News that are working to
start their own adult daycare. And when I went Monday
night after my show last week Elena, she told me
(09:42):
that she had heard my show that day. The timing
was perfect for me because the very things that I
had talked about on the show about the thinking like
an owner and the risk of going into business and
needing to do a slow chart to get your ideas organized,
(10:02):
and being able to understand the personal and business relationship
as it depletes your resources as you start your business
and it makes your personal budget harder to meet and
your credit worthiness can suffer, the importance of creating the
profit and planning to have enough working capital to weather
(10:24):
the storm until you get further along in your business.
Those are the very things that I was working with
her and Jackie, and the fact that she had heard
my radio program that morning and told me how much
she got out of it and thanked me. I just
(10:45):
want to tell you, I hope more people, I hope
a lot of people can get that out of this show,
because that's what this is is to tell you that, yes,
you can succeed, but you have to do things in
the right order. You have to have the right mindset.
And so I'm here to start at wherever we start
(11:08):
and then go from there. I always try to give
some biblical spiritual insights as to what I'm going to
be talking about. And Donna and I my wife, as
we've prepared for today's show, we talked about it and
what we want to just put out there today is
(11:30):
this very straightforward and it's coming from Second Thessalonians, chapter three,
verses six through twelve, and I'm just going to read
it real quick. This is Paul on his journeys talking
to the Thessalonians. Now we command you, brothers, in the
name of our Lord Jesus Christ, that you keep away
from any brother who is walking in idleness and not
(11:53):
in accord with the tradition that you received from us.
For you yourself know how you ought to imitate us
because we were not idle when we were with you,
nor did we eat anyone's bread without paying for it.
But with toil and labor, we were night and day
that we might not be a burden to any of you.
(12:16):
It was not because we do not have that right,
but to give you and ourselves an example to imitate.
For even when we were with you, we would give
you this command. If anyone is not willing to work,
let him not eat hurry. That's some pretty serious stuff
(12:39):
that I just put out there. Basically, what I'm trying
to say is one of my main themes of everything
that I do is I teach and try to help
people succeed and have a better life. It's about taking responsibility. Now,
let me tell you, if you're down and you need
a help in a hand, then that's fine to receive
(13:04):
from others and to and to get yourself moving in
the right direction while you have others help you. But
what I'm talking about right now is for those of
you that want to take that responsibility and want to
be an entrepreneur, want to have your own small business,
(13:24):
that's the kind of mentality that you need to have.
In other words, and some of the best books that
are out there in personal finance, Jim stove All. The
subtitle of his book on the Ultimate Financial Plan is
get your Get your Life in Order. I don't have
the book right in front of me. It's get your
(13:44):
life in Order, balance your life and your money. That's
what it is. I apologize Jim for taking so long
to spit it out like that, but he's saying, in
order to succeed financially, you need to be very much
focused with who you are and what your goals are,
what your vision is, and get your life in order
(14:07):
and then put together the plan to have it happen.
So right before I got on the air to day,
I listened to my show from last week, so that
I said, this is part two. We're you're just going
to try to pick right up where we left off,
and I gave people the listeners, all of you a
homework assignment. I said, if you really want to be
(14:32):
self employed, then this week do your float chart. And
the flow chart is just a very very simple layman's
way to lay out your thoughts in an organized way
to start to focus what it is that you're getting
ready to get into and if you don't get organized,
(14:55):
and you just get out there and say, hey, let's
do it, let's get started. In this business. You are
going to be hit upside on the head with things
that come out of nowhere, and you can't just go
out and take an idea that probably will succeed if
you do it the right way, but not do the
(15:16):
proper preparation. Last week, one of the things that I
talked about and in the seminar that's on the website
right think dot org under documents go to Personal Finance
and Small Business Ownership, and you will have the seminar
that I'm that I'm teaching in this in this series
Personal Finance and Small Business Ownership. It's right there. And
(15:39):
I talked about one of the early pictures of graphic
that I have in my in my my workbook. There
it's the seminar. It's a picture of a boy scout
and and it says be prepared. Well, if you're not prepared,
you might not do so well. That's just the basic
point that I'm trying to give you. So one way
(16:02):
to be prepared is to get focused and get organized,
and that's what I'm trying to teach how to do.
I was over at a Chiebel Dream Academy, the high
school that I teach financial literacy at a couple of
days a week, and I've got the students doing a
cash flow budget. That's their final exam, and I've been
there all year, and to be perfectly honest about it,
(16:24):
it's been very, very difficult in trying at times because
fifteen year old high school kids, you don't think they're
paying attention. They're multitasking, they're doing a million other things,
and it's hard to hold their undivided attention. And I
wasn't really sure based on some of the quizzes and
(16:46):
things that I've given them, that they understand what it
is I'm trying to teach them, because all I'm really
trying to teach them is if you learn how to
do a cash flow budget and think and plan ahead,
your life will be eat here. Well, I gave them
the exam last week and it's due next Friday, and
(17:07):
I was so thrilled because when I walked in there,
one young lady, Jasmine, she had a big smile on
her face and she greeted me and said, I'm already
on the fourth month and it's a sixth month cash
flow budget based on a twenty four year old person
that we told them, this is what they do, this
(17:28):
is what their income is, this is their expenses, and
they have some discretion to put in different things other
than his hand out to them about expenses that might
be unique to them with birthdays and other things that
they want to do. But when she's a six month project,
when she told me that she was already in the
(17:49):
fourth month and had a big smile on her face,
I said, that's wonderful. Can I see it? And I
looked at it, and it's beautiful. She's really doing it.
And I gave her a high five, and I said,
I just want to thank you. You made my year. Well,
we started talking over it. I was answering questions for
the students, if anything they need to know while they're
on this assignment. And this one young lady, Jaketah, she
(18:14):
asked me a question, and I'm going to tie that
into what we're talking about here. For personal finance and
small business ownership one of my central themes of and
last week I told you that it's all laid out
on page twenty two of the seminar. It's the relationship
between your personal life and your business life. And I
(18:38):
go through the business cycle of selling your products or
your services and covering your direct costs and then covering
all your overheads and then coming down to your profit
and bringing money across to pay yourself. And I show
that if you don't bring enough money across to show
yourself that I'm right. If you don't bring enough money
(19:01):
across to pay yourself, you're going to have some difficult times.
And the graphic shows that your personal resources that you
have are going to start to be diminished. Your budget's
going to get harder and harder to meet because you're
going to start using credit card debt and other things,
and you won't have enough income coming in that you need,
(19:22):
and your credit worthiness or your ability to have secure
more credit starts to be greatly reduced. And so when
I teach entrepreneurship small business ownership, I make the statement
that the sole purpose of your business is not for
your ego to be able to say check that off
(19:44):
I did. That, it's to be able to support your lifestyle. Now,
I'm very pleased that that comment that I made last week,
that direct statement to support your lifestyle is the purpose
of going into business. That my good friend Gary, that's
my racketball player at the why whose opinions I respect greatly?
(20:04):
And I want to thank Gary right now because Gary
he listens to every one of my shows since the
beginning and has conversation with me so that I can
get some direct feedback and improve what I do, so
that I can just keep getting better at this and
reach more people. And Gary's opinion I respect greatly. He said.
(20:28):
I took some notes Steve, and I wrote down that
the purpose of going into your own business is to
support your lifestyle. And he asked me to explain that
a little further, and he said that he's not so
sure that it's to support your lifestyle, and I said, well, well, Gary,
(20:49):
basically what I'm saying is is that when I say lifestyle,
that's whatever you choose to do with your life. Now.
By definition, maybe lifestyle is layer the way that you
go about doing it, but my definition, it's not a dictionary.
Definition is basically whatever you have done to decide who
(21:11):
you want to be and lay out your budgets and
your plan to get there, to set your goals and
to start working toward them in your lifestyle. Each person
has a different lifestyle that they designed for themselves. And
part of the lifestyle that I did say on the
(21:33):
show that I teach is your lifestyle may be that
you want to make sure that you save money put
it away for your retirement. Another part of your lifestyle
may be to be able to save money for your
children's education. Another part may be to live in the
house that you live in and pay your mortgage. And
(21:55):
another may be to be able to give gifts and
clothing and keep your family fit. I'm just using the
term lifestyle very broadly, and so I just really like
it that Gary challenged me on that and wanted some
clarification because I'm going to stand by what I say
though in the concept, and that is going into business
(22:18):
is so serious that don't just do it because you
think it would be a fun thing to do. Because
if you go into business and you invest so much
of yourself into it and your resources and put your
savings up and put your credit up, and you didn't
think it out properly, you're going to fail. And there
(22:41):
might be some failures that are very very difficult to
rebound from. So I'm saying that one of the very
first steps of being able to succeed in business is
to know your personal need so that you can established
how much you have to be able to make as
(23:04):
far as your profits or how the cash comes out
of your business back to yourself, to be able to
stay on top of your personal your personal budget and
cover your personal needs. And when I talked last week
all about getting your mind so that you learn to
think like an owner, even if you're an employee in
(23:26):
training to maybe have your own business someday or to
never have your own business, just to think like an owner.
I want to reinforce that thought one more time, and
that's this as we take full responsibility for ourselves, kind
of with the biblical passage and second Tessalonians for us today,
as we take responsibility and make our contributions and not
(23:49):
just take from others. Again, it's okay if we're down
and we're in a rehabilitation period or a rebuilding period
and others are there for us, because it does take
that supposed to move forward. But the bottom line to
that is as we as we move forward, if you
decide that in this life, I take full responsibility for
(24:14):
myself and that I am going to do the best
I can to live up to meet those responsibilities. And
you think that way as a as a winner, as
a survivor. As you learn perseverance, as you learn not
to quit, as you learn to not give up, you
will succeed. And I'm just saying, a journey of a
(24:35):
thousand miles starts with the first step. And so as
you embark on your on your on your journey to
to succeed in lights, it may never be having your
own business. But as long as you know that those
freedoms that all those brave men and women fought for
(24:56):
so that we can be here in America and enjoy
those freedoms are yours to enjoy and embrace. No matter
where you are, no matter what job you've got, just
remember that was your choice to do what you're doing.
And so that is the entrepreneur attitude, that is the
spirit of freedom. Now I caution you, and I'll give
(25:20):
you another example from my class today at an achieveabl
Dream Academy. My workbook has a yellow cover on it.
We call it the yellow book. And two weeks ago
I instructed all the students to make sure that you'd
be bringing your workbook to class as we start to
(25:42):
get ready to do this exam well high school. Out
of thirty kids give or take eight of them, maybe
ten of them have their work books, the other twenty done.
So last week we really reinforced it because as they
do this cash flow exams, there's an example in the
workbook that I want them to understand and I wanted
(26:04):
to go into the workbook and show it to them.
Well today, I said, okay, who has their workbook? Hey,
we're making progress. Maybe half the kids raise their hand,
I said, who doesn't have it? Well, when you ask
who doesn't, it's not a true measurement because those that
don't don't raise their hand anyway. And I said, how
(26:27):
come you didn't bring them? You know you're instructed to
bring it. And one of the students said, it's on
the board. The teacher wrote it on the board. I
turned around and I found it on the board and
it said for Friday. This was my class on Friday.
I'm talking about on Friday. You make sure you bring
(26:48):
your workbook to mister Colfland's class. So I just said
to everybody, you know what, I just want you to
think about something. If later in life things aren't going
so good for you and you're struggling and you're having
a hard time. I just wants you to remember that.
In that class back then in Achievable Dream of High
(27:11):
School with mister Copeland, he pointed out to you that
the better prepared you are when when you're learning something
or trying to do something that is in your own
best interest, the better your chances for success are. Well.
In business, it's critical and if you don't prepare yourself
(27:33):
properly and know how much working capitaly you have to have,
if you do all the other things in your business
plan to move forward, there's usually going to be a
period where it's going to take some time. And this
is a business term right now. One of the terms
you have to understand and starting your own business is
called ramp up r a MP space up, ramp up,
(27:57):
and it's a term that's kind of graphical. Imagine a
delivery truck, an eighteen wheeler that's coming to a store
like a costco and they're bringing the supplies and it
backs up. Well, in that case, you don't need the
same kind of ramp because it's got a loading dock
that's level. So that's a bad example. But imagine that
(28:18):
there's a truck comes to a store a facility, and
the driver gets out, he opens up the back gate
and he pulls down the ramp and he pulls it
out about six or eight feet and then he lets
it down. And you've got a ramp, an in climb
ramp that you can walk up and down and take
(28:39):
his delivery cart and move things in and off the
truck using the endcline with the cart. Well, a ramp,
excuse me for that. The ramp that I'm describing, if
you look at it, it's a triangle and it's a wedge.
(29:00):
So imagine the ramp. The ground side is on the
left and it slopes up to the right. Well, that
in a timeline that, if you picture it over time,
represents from the left toward the right. It represents how
(29:22):
in business we say things move to the right. On
day one, when you open up your your your door
to start your business, you may not have very many
sales established unless you've got advanced contracts and things of
that nature if you're in some kind of a service business.
But what you're what you're really doing here is you
(29:45):
start off and you need to establish your sales for
your income. And as time goes on and you get
the word out, you advertise, you mark it. Whatever whatever
happens keeps on going. It goes from low sales or
(30:05):
zero sales, and they slowly increase, and the goal is
is to have them always increase as you go from
January to February to March April. As you go through
the calendar, the ramp should start getting steeper and steeper
and steeper and steeper as your sales go up. So
(30:25):
that's what the ramp looks like. Now. If when we're
talking about expenses, I wanted to find one category of
expenses right now called overheads. Your overheads are those expenses
that you are going to incur to have to be
(30:49):
stuck with, to be obligated to have to pay in
order to operate your business, whether or not you make
any sales or not. For example, if you go into
business and you have a retail clothing store and you're
(31:10):
going to have your first day of business and you
open up your store, you're paying rent somewhere, and you've
got lights on, and you've got a phone, and you've
got just different things. And when you open up that door,
if you don't sell anything at all, if you get really,
(31:30):
really sad because you come home that night to your
family and they say, how we're sales today, and you say,
I must have done something wrong. Nobody knew that I
was opened. Yet you must have not done your grand
opening up marketing properly because you didn't have any sales today. Well,
(31:51):
even though you didn't have any sales today, it cost
you money to be in business and have your store open.
The rent that you're obligated to has to be paid
whether or not you had any sales. The utilities have
to be on, and the phone has to be paid
(32:12):
each month, and there's many other other expenses that you're
going to have whether or not you have sales or not.
But the distinction that I'm making right now is overheads
are the category of expenses obligations in business that you
are going to have whether or not you make sales,
(32:34):
so they're not directly related to sales. And some good
examples of overhead are rent, telephone, utilities, insurance, loan payment
on a vehicle, office supplies, things like that. Okay now,
(32:55):
and the example I'm giving you where I'm trying to
teach what the ramp up phase is the period of
time where the amount of sales or other income that
you have coming into your business is not enough to
cover what all of those overheads are. And all overheads
(33:16):
aren't aren't always exactly fixed the same amount. Sometimes they
can carry a little bit, like your rent may be
higher because it may be tied in your location to
a percentage of your sales, for example. But let's just
call these overhead these are the fixed expenses that are
going to be there. I've made my point pretty clearly.
I believe they're going to be there whether or not
(33:38):
you have sales. So let's say that on mark one
of your new business, you have one thousand dollars a
month of fixed overheads that you're going to incur whether
or not you have an income or not. Well, let's
say that your total in month one in your new
(34:00):
business was only five hundred dollars. Well, you're five hundred
dollars short from being able to pay those bills. In
month two, your fixed overhead is still the same one
thousand dollars. But you do pretty good. In month two.
(34:20):
You get your sales up to seven hundred and fifty dollars,
You get a few repeat customers, you get a few
new customers, and you seem to be moving forward. I
purposely are given some very very simple numbers here I
could use. I could use numbers that are into thousands,
but let's just keep it simple. So month one, your
overheads are one thousand, but you only do business of
(34:43):
five hundred dollars. In month two, your overheads are still
one thousand, but you only do business up seven hundred
and fifty. So in month one, you're five hundred dollars negative.
In month two you're two hundred and fifty dollars negative. Okay,
so you get the month three, and we'll talk about
how you get there without making enough money to pay
(35:05):
your bills in a moment. But you get the month three,
and you have a wonderful thing to announce to everybody,
your family especially. Your overheads are one thousand, but you
hit one thousand dollars sales in month three. So it
took you three months to get to where your income
(35:26):
was enough to cover your sales. Apologize, your income was
enough to cover your overheads your expenses, Well, you were
down by seven hundred and fifty dollars until you got
you have gross sales, and this example of five hundred
(35:47):
and seven to fifty thousand. So you have two thousand,
two hundred and fifty dollars of income, but you've had
expenses of three thousand dollars. Well, there's a couple of
terms here that I want to hit you with. And
before I hit you with him, I want to tell
you I was with Johnny Thomas the other day. Now
that he's working and he's making some pretty decent money,
he came to me and he said, Steve, now that
(36:09):
I got money coming, and before I go too far
with not knowing how to handle it, I want you
to teach me how to budget. And there's three things
that I want to be able to do, he said. One,
I want to know how much money I gotta set
aside to pay all my bills. Those are basically as
personal overheads, as monthly expenses that are there. And he says,
(36:30):
and I want to know how much money I can
teary around for just pocket money, spending money that I
don't really have to keep close track of, but I
know how much. I want to know how much I
can spend before I spend too much. And the third
thing he said is I want to be able to
set aside money for savings so that I can start
to invest. Well. I was with Johnny the other day
(36:50):
and I started teaching this and I had a work
sheet for him, and it was kind of overwhelming to him.
But I just wanted to learn the idea, the concept.
But I had a hard time getting Johnny to focus
on it because it was very kind of complicated. I said,
come on, Johnny, come on, Johnny, this is good. You
asked me to teach you this, so come on, try
(37:10):
to concentrate with me. And he just burst out laughing
and he said, Steve, this is like real accounting that
you're trying to get me to do here. And I said, yeah,
it is, Johnny, it is, I said, but it's not
really that hard. And it's true. I'm a degree to
count at nineteen seventy five DCU, Virginia Commonwealth University, my
(37:32):
alma mada, and I've been working, you know, my whole
career and finance and stuff. So yeah, I got a
whole lot more of a handle of this than most
people do. But what I've tried to do with my
program that I'm trying to present on the air to
all of you that are taking the time to listen
to me, is I'm trying to take my forty five
years of what I've learned in business and the concept
(37:55):
of cash flow management and bring that into the personal
budget more than most other people that teach budget you,
most budget courses are this is how much I make
in the month, this is what my expenses are, this
is how much I have extra, or this is how
short I am. Mine is more of a planning thinking,
(38:18):
a dynamic approach to your personal budget so that you
can use your budget as a living tool. I know
that this is personal finance and small business ownership Part two,
but I can't just go into the business side without
bringing the personal side into it with you. That's one
of my main points I'm trying to get across is
(38:39):
no matter what you do, if you want to go
in your own business, it's going to affect your personal
life greatly because if you don't make enough money from
your business and you're not working another part time job
to supplement, then you're not going to make enough money
to stay stable and you're going to start having problems.
So let me pause this for a second because I
just hit on something that I want to I want
(39:00):
to reinforce one of the very best things that you
can do if you're serious about starting your own business
beyond going into it properly prepared and trained and knowledgeable
by working for somebody else, perhaps that's already doing that
learning on their nickel and getting so that you really
feel like, I know enough about it to succeed. I
(39:22):
know all the different parts of the business because I
had a job for so many years doing it for
somebody else, and I learned the business and now and
I'm ready to go out on my own. One of
the one of the things that that is a very
very good way to succeed in your small business is
to start small and grow big and not try to
(39:45):
go big on day one. Don't put everything into it
and and have all that risk to where if you're
if you're really not going to be able to get
get it off the ground, you'll lose too much. So
this is lesson is keep go into your business on
a part time basis in the beginning and then transition
(40:08):
it to where it's full time. If you're like a
husband and wife and y'all have an idea to start
a business, then maybe one of you keeps your full
time job and the other one goes into the business.
And the one that stays full time in the other job,
works part time in the business, or any combination there up.
But the point is keep your income coming in. The
(40:30):
proverbial don't quit your day job does apply here, So
if it's feasible to have supplemental income continuing to come
in outside of your business opportunity, that's my suggestion for
you on one of the best ways to embark on
a small business. After you know that you probably have
(40:51):
all the right qualifications, don't start your business until you
have all the right qualifications, all the right experiences, all
the right knowledge, have enough working capital. So now I'm
going to go back to finishing up the concept that
I want to give you today on the ramp up period.
So in the example that I'm working today, we've got
a three month period from the day you started your
(41:13):
business where you start off with zero sales, and by
the first month you had five hundred dollars in sales,
the second month you had seven hundred and fifty, and
the third month you have one thousand. So if you're
looking at that on a line that's going upwards as
your sales is increasing, at the point where the income
(41:33):
in your business is equal to the expenses that have
to go out. That's called the break even point, where
that's where it intersects at a point where I now
am bringing in enough money to cover my expenses. Now
I'm going to hit the pause button with you here
(41:54):
for a second. This is very very simplistic, and for
those of you that are way beyond this level of education,
I thank you for being patient with me, because I
have to tell you a whole lot of people that
want to start their own business aren't seeing what I'm
(42:16):
talking about yet. Now, if you go to one more level,
to make it a little bit more complicated, if you're
at a break even point, you're not making any money
to pull out to pay your own bills. So the
traditional example of a break even point is not paying you,
(42:41):
the owner, what you need to pay your own bills.
So what do you do? What you do is two things.
One is you redefine what your expenses are and you
put a dollar amount in there for what you need
(43:04):
to pull out. Because I go back to my statement,
the purpose of your business is to be able to
support your lifestyle, to be able to earn the amount
of money that you need. And so when you set
your goal here. Don't just have a goal to hit
your break even point, because people that only hit their
break even point failed because they don't have any money
(43:24):
for themselves. So I'm just redefining a little bit of
a definition here about that. We're going to call that
more of your need your need now in business, If
it's going to take you three months to hit that
point that we're calling the break evening right now of
(43:46):
where let's add two thousand dollars in and it takes
you another three or four months to get to where
you're making enough money to cover the full three thousand
thousand of your overhead and the two thousand of which
you really need. So you got to know your personal
budget first. You got to know what your need is
so that you can aggressively and proactively start directing your
(44:08):
business to that. So however long it's going to take,
what I'm trying to teach you is this, there's a
period of time that you can see on paper, that
you can see in black and white, where the ramp
that you are doing as you grow your sales to
cover your expenses. When your sales are less than your
(44:33):
expenses and you're in the negative, you can add those
numbers up over whatever period of time it is until
you hit that break even. Another word for the break
even that I want to give you is stabilization point.
Where it looks like you're stable now because you got
enough to cover things. You can add all that up
(44:54):
and that is the calculation for how much working capital
you're going to need to be able to weather the
storm to sustain in your business until you start really
making good money, until you make the business starts to
(45:15):
support you instead of you supporting your business. And so
it's a little technical, like Johnny said, Hey, stay man,
this is accounting. Well, let me tell you something. You know,
we got to separate the week from the chef here.
Do you want to be in business? Do you want
to succeed? Then put in the homework, do the study,
(45:36):
learn what you got to learn, face the reality, because
I'm telling you, if you go into business uncocked, half cocked,
they call it unsure what you really got to do,
You're probably not going to succeed. So I'm trying to
do your favor here. When I was a business consultant
for fifteen years with the Small Business Development Center of
(45:58):
Hampton Roads, I had hundreds and hundreds of businesses and
people that wanted to start their own business that I counseled,
and a lot of those people that I counseled, they
didn't really like me too much because they thought that
I was too straightforward. They were like, all set to
go out there and get all giddy about what they
(46:19):
want to go do. But I took them through the
exercises of focusing on what they really want to do.
And I apologize to anyone that thinks that I didn't
love them and like them, because I do. But I
wanted them to understand what they were getting into. And
if you don't understand what you're getting into, you're probably
going to fail. And so probably ninety percent of the
(46:44):
small business owners that I counseled that wanted to go
into their own business. I did not want to pop
their bubble, but I wanted them to put the proper
planning and put the proper time frames into it. And
the Small Business Development Center, I'm honored to say, gave
me some wonderful awards. They recognized me for the work
(47:06):
that I did, and I thank them for that, but
they thanked me also for what I did with the
reality for so many people of sparing them the hardship
of going into something that they would have failed at.
On page twenty four of the workbook, I answer this
question as to so, what is the best way to
(47:28):
avoid this dangerous path to failure when you go out
and you're not bringing enough money in. Here's a six
part answer. The following approach will give the business owner
the best chance at success. One. Prepare a complete business plan.
(47:48):
Be four big bold capital letters, be foar starting your business.
Do not start a business without doing a complete business plan.
Get with professionals that can help you do that, but
do not go into business without having it tied down. Two.
Know the personal budget needs that the business must fund.
(48:11):
I've talked a lot about that last week and again today,
just trying to encourage you to make sure that you
know what you need going into it, because if it's
not gonna be able to produce it, and you don't
have enough capital or investment or savings or credit to
back you until you hit stabilization, hits your break even point,
(48:31):
you're gonna be like going across a river and you
drown before you get to the other side. So let's
be very terrible about that. You got to know your needs. Three.
Properly capitalize your business. You've got to know how much
capital you're gonna need, and you've got to have reserve capital.
And if it takes more than what you thought you're
(48:52):
gonna you better be in shape to have some extra
credit sitting out there. Three full up rather full it.
Protect your personal Remember that as your personal resources get diminished,
you don't have credit worth that it's much more avoid
credit card debt and keep your personal credit in tech.
So I'm gonna stop for today. We're gonna pick back
up on this the next lesson, But I want to
(49:14):
tell you this wall Line Horn Insurancers, principal of one
of the main partners, Marty Einhorn, is a very close
friend of mine, and he's been incredibly supportive of Right
Thinking Foundation. He believes in what I do. He's there
for you also, and he's going through some personal health
issues right now. And I just want to lift Marty
up today and say Marty, I love you, and get
yourself well soon, and I'm there for you. And so
(49:36):
today I just want to have everybody enjoyed the rest
of today, enjoy your cook out, and God bless each
one of you.
Speaker 2 (49:44):
Thanks for listening to right Thinking with Steve Cooper. I
look forward to being with you again next week and
remember don't quit. Plan ahead. It will get better. God
bless you and have a great week y
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