Thank you, Chet Holmes

The passing of Chet Holmes this week saddened me greatly. I am an ardent fan of this author of the bestseller The Ultimate Sales Machine, which I have read or listened to dozens of times. Intensely disciplined and fiercely competitive, Chet reengineered the sales process into a finely tuned piece of machinery resulting in his extraordinary success. He has inspired thousands of people seeking business acuity and excellence. I can only speculate at the hundreds whose lives have been profoundly influenced by this brilliant man. I know mine has been. May he rest in peace.

Life Beyond the Profit & Loss Statement – Do You Know Your Lifestyle Ratios?

Each month, you may anxiously await the reports that provide the numbers that help you manage your business. Revenue, net income, total expenses, and payroll costs are just a few of the items that you may be monitoring on your profit and loss statement. Those numbers will help you meet and improve your business goals, but the question is, what numbers are you using to determine if you are meeting your life goals?

It might be fun to come up with a few lifestyle ratios to help you measure and move toward your personal goals. Here are a few for your consideration:

Passive vs. Active Income

If you’d like to work less as time goes by, then you’ll want to create your passive vs. active income ratio. Make a list of all of your sources of income (not just business) in a spreadsheet. You might have interest income, rental income, and investment income along with your business income or salary.

Then write down how many hours you spend working to earn each type of income. For interest income, it is likely to be very little. Investment income will only include the time you take selecting your investments and managing your portfolio. If you are active in your business, this will be the lion’s share.

Income is passive if you spend almost no time earning it. Income is active if you spend time earning it. (These definitions correlate to your time spent, not the IRS definitions.) Put the income in the appropriate column, passive or active. You can allocate if necessary.

In the example below, this person is well on their way to retiring. They also might question why they are spending so many hours working so hard for a fraction of their monthly income!

  Income Monthly Hours Passive Active
Interest Income $5,000 0 $5,000  
Rental Income $6,000 2 $6,000  
Investment Income $20,000 1 $20,000  
Business Income $10,000 167   $10,000
Totals $41,000 170 $31,000 $10,000
Passive/Active ratio     76% 24%

The “aha” comes when you see the numbers. The numbers often drive people to action. You might decide to be more intentional about moving your income to passive sources so you can do the things you want to do.

Leveraged vs. Unleveraged Revenue

Leveraging your business revenue is a way to work less while making more money.

Measuring leverage is business-specific. Examples of revenue that are not leveraged include seeing clients one at a time and selling hours-for-dollars services without a staff. Revenues that are partially leveraged include group programs such as classes and events like webinars and conferences as well as hourly consulting that your staff performs with your limited oversight. And revenue that is fully leveraged includes product sales. Once the product is developed, it takes little incremental time to sell (unless you’re in retail).

Here’s an example, assuming this business owner has a staff of five people. Both hourly consulting and training classes are partially leveraged because the business owner spends time teaching, consulting, and supervising.

  Revenue Leveraged Unleveraged
Book sales $500,000 $500,000  
Hourly consulting $3,000,000 $2,500,000 $500,000
Training classes $2,500,000 $1,500,000 $1,000,000
Total $6,000,000 $4,500,000 $1,500,000
Ratio   75% 25%

If your revenue streams are flexible, you can work on moving more of your business income over to the leveraged side. To create more leverage in the example business, the owner could sell or develop more products, hire another teacher, hire an additional consultant, and/or hire someone to review the consulting work of the employees.

Days Off vs. Days Worked

This ratio measures how much time we are able to spend away from the office. It’s simple to compute, and you can estimate it if you don’t track your time.

Assuming a 5-day work week, there are about 250 working days in a year, not including about 10 holidays. Estimate the numbers of days you were off, and divide by 250. For example, if you took 5 1-week vacations from work last year, that would be 25 days, resulting in 10%. This assumes you worked the rest of the year.

Your Lifestyle Goals

What’s on your “bucket list?” (This is a list of things you want to do in your lifetime before you die.) Figure out the metric that will get you thinking about doing your dreams sooner rather than later.

You can have fun with metrics and ratios in and out of your business. Here are some more ideas to think about:

  • The number of customers you have that really fit your ideal client and how many more you need to go.
  • How many countries (or states) you want to visit each year vs. how many you’ve already visited.
  • How many volunteer hours or dollars you spend vs. how much more you like to.

When you put your goals into numbers and on paper, they seem more real and achievable. You can get an “aha” just by computing these ratios. Hopefully, life beyond the profit and loss statement will get you closer to your dream life.

The Power of Permission

What have you been wanting to do in your business for a really long time? Perhaps you’ve been wanting to raise your prices. Maybe you want to hire an assistant or another team member but haven’t gotten around to it. Or maybe you want to work less and focus on personal time, but you haven’t taken action for one reason or another.

Ask yourself what project you’ve been thinking about forever but haven’t taken action on. We all have a wish list. The question is, why are we waiting?

What causes us to put these important, yet inconvenient or uncomfortable items on the back burner? In many cases, there’s a really simple answer. Here are three questions you can ask yourself if you would like to get unstuck and move forward with your list of items.

  1. What’s it costing me to delay this decision? In six months, will I be better off or worse off having done nothing? This helps you bring a sense of urgency to an item.
  2. Do I simply need to give myself permission? It’s surprising how this simple revelation can create the shift you need to gain momentum. Going deeper, this can be a deservability issue, i.e., do I deserve to charge a higher fee? If that’s the case, working on your confidence is something that will help you get unstuck.
  3. Am I getting stuck because I don’t feel like I have the skills, or is it possibly a mindset issue? Making the distinction between the need to build skills and the need to work on your mindset can help you determine the next logical step to take. Often, however, it can be both, and in that case, start by parsing out the skills you feel like you need. When you do that, often the mindset will take care of itself.

By habit, we wait for other people’s approvals since we’ve done this all our lives. We’re used to getting the approvals of teachers, parents, professors, bosses, spouses, and relatives, but when we’re in business for ourselves, we don’t need to ask anyone!

Is there something you’ve been delaying that you need to give yourself permission for?

  • Giving your business or yourself a long-wanted gift?
  • Starting a long-awaited project?
  • Hiring someone or making a staffing change?
  • Launching a new product?
  • Raising prices?
  • Making a purchase?
  • Working less?
  • Taking your business to the next level?

If there is, ask yourself what you’re waiting for. The power of permission might just set you free.

Are You Fully Supported in Your Business?

Click above to see enlarged image

Whether we run a large company with dozens of employees or run our own solo business, we rely on a support team of vendors, customers, employees, contractors, and other associates that help us carry out our business goals.  Here’s a fun exercise to discover the strengths and weaknesses of your business support team and how you can increase and strengthen the support you have.

Take out a blank sheet of paper, and draw a small circle in the middle.  Write your name in the circle.  This represents you.

Draw a little larger circle next to your circle.  Write your employees’ names and major functions in this circle.  Draw a similar circle for contractors’ names and functions.   If you have partners and/or affiliates, include them in a big circle.

Draw a small circle for your five largest clients, and write their names in the circles.  Draw another small circle for your five largest vendors, and write their names in the circles.

Draw one more circle for your business mentors and coaches, and write their names inside the circle.  If you have any more major groups related to your business, draw them now.

These circles represent your business and all of the people you rely on to get your job done.

Now, think about what groups you belong to that relate indirectly to your business.  It could be a professional association, a licensing agency, or a networking group.   Make large circles for each of the groups you feel connected to, and write some of the key names you know that are part of each of the groups.

Add a few more circles in the same way if you have more business associates to list or other groups that you didn’t add above.  If you want to, you can also include your personal support team:  the nanny, cook, gardener, esthetician, wardrobe consultant, makeup artist, nail artist, hair stylist, nutritionist, personal workout trainer, butler, chauffeur, masseuse, travel agent, and water boy.  Okay, maybe listing the water boy is getting a little carried away.

The sheet should now represent all of the important people in your business that support you in one way or another.  It’s a lot, isn’t it?

Now is where the aha’s come in:

  • Take a look at your to do list and see if there are holes in your team that you need to fill.  Are there job openings or are you ready to bring in more support?  Mark the openings or potential openings with a yellow highlighter.
  • With a green highlighter, mark the people who are most positive and supportive to you.  You may want to let them know how much you appreciate them if it’s been a while.
  • With a red highlighter, mark anyone who is costing you more than supporting you.  It may be time for a change in team members.
  • With a purple highlighter, list the five people you most look up to and can count on for great advice.  These people should either have expert advice or be ahead of you in business.

We’ll stop here, but you can continue selecting colors to evaluate the relationship of the people in your circles.

When you take a look at your social circles, what do you notice?

  • Where are you fully supported?
  • Where could you use more help?
  • Where do you need to make some replacements?
  • What else do you notice about your business network?

Make a list of action items you can do to strengthen your business support network.

This is a great exercise to allow you to consciously evaluate and improve the ever-important support system in your business.  When you have a great team, you can accomplish so much!

5 Extraordinary Personal Development Leaders

Mandy Cohan believes personal growth contributes to the success of your business and recommends these personal development leaders.Many of my clients that had been to my old office are aware of the extensive library of personal, professional and spiritual books, tapes, CDs and videos that I have accumulated over the last 20 years. The audio programs tend to be the most useful for me since they are so easy to listen to while I’m driving, cooking or cleaning. Okay, it’s true. Watching The Secret with other enthusiasts and a big bowl of popcorn would be my idea of a great evening, but I’m a little passionate. Since I was recently asked the question, I thought I would share with you five of my favorite leaders in the personal development realm. [Read more…]

Chet Holmes has Leukemia

Chet Holmes is one of my favorite mentors. He wrote the book The Ultimate Sales Machine, which I highly recommend to anyone in business. I received an email yesterday from Mitch Russo, President of Business Breakthroughs International saying that Chet was just recently diagnosed with Leukemia. His white blood count was at 178,000 (normal is 4,000 to 11,000). The doctors, of course, want to start him on Chemo as soon as possible. Chet, known for his pig-headed determination, decided to use his mind and spirit and the collective power of the universe to turn this around. Using the Internet to take his message viral, he got thousands of people praying for him. That was on Sunday. By Monday, his blood count was normal. Is that not awesome?

[Read more…]