April 29, 2023
Canmore, Canada

“Sorry, I won’t be joining you on the slopes. Working for the government this week…” 😑

(Can’t read the full email – click here for the online version.)

This Monday is the deadline for filing one’s income taxes, here in Canada. For many, it’s a simple filing to report their employment income. They hope to get a refund of the interest-free loan they’ve made via the automatic deduction made by their employer. Thus, do they not see or feel the pain of the tax – such is the intent of governments everywhere.

It's a different story for those of us who are self-employed or own a business.

Then it’s a combination of finalizing our bookkeeping and maximizing all the deductions that are legally available. Which is no easy matter.

If you’re like me, you resent the complexity and necessity of the hours of labor required to meet this obligation. You know how heavy handed the government lackeys can be when it comes to compliance, so you spend the time but you wish you were spending it on something productive.

Many owners rely on their bookkeeper and accountant to compute and compile the necessary documents. While this kind of accounting satisfies the compliance issue, it does not provide the owner with the necessary tools he needs to grow the business.

What is lacking is what Dan Kennedy coined in a recent article – “Money Math”. 

Here’s an excerpt of what he had to say on the matter:

“Success in marketing is really about two things. It’s roughly 50% about behavioral psych, about how the people that you are marketing to actually think, behave, etc, and 50% about math. The math that’s important, is the math that I call Money Math.

Invariably people who are easily stumped with their Money Math questions and don’t know, start to express opinions. So, when I ask members to tell me about their efficacy at getting referrals, I hardly ever get Money Math answers. They will not say, “Well, we average 1.6 referrals per active client per month.” Instead, they say, “we do great” or “we don’t do very well.” 

Well, what’s great? What’s not very well? They don’t know. 

And because they don’t know this base answer… then you for sure don’t know what’s the average per client, per month, per quarter, per year. And if you don’t know that, now you can’t dig in to see if all referrals come in the first 30 days or does it take three months. 

See, you can’t do anything because you don’t know anything. It’s remarkable that people can go for years in their business and not know any of this. And my referral question, that is just one example… 

The purpose of Money Math is to ensure that you are doing as many of the MOST profitable things you can do and as few of the last profitable things. Most businesses are just doing without understanding or knowing the difference. 

For example, that could include getting rid of unprofitable customers and keeping profitable customers. But if you don’t have good data to tell you who is a profitable customer, you treat them all the same and you wind up doing a lot of things that aren’t very profitable.

Or maybe, you know your cost per sale – but you can’t tell me your cost per sale per source. You might be getting customers from EDDM, from the sign in your window, from referrals, from Facebook. What is the cost per sale by each of those sources? Now you have some raw numbers.

Now we have to think about whether a higher cost per sale from one than the other is a bad number? Is a lower cost per sale a good number? 

Well, most will say yes to both questions. “Here are the 10 things we do and here are the four that have the lowest cost per sale and here are the four that have the highest cost per sale. We are going to quit doing these four.” 

But if you don’t track the differential value of the customer acquired from each of those sources over some period of time you could be shooting yourself in the foot, because the customer that comes in the door with the higher cost per sale might have a much higher one year, three year, or five-year value. And the one that you got at a bargain price may have a very low customer value. If you are not careful, you’re catching all the minnows and you’re throwing the whales back. 

So you have to carry the Money Math all the way through."

This lack of “Money Math” is so commonplace amongst every business owner I have met and worked with; we created a specific training to help them. This online course is like an express version of a 4-year Finance Degree but takes far less time and cost much less. Improve your Money Math and profits by grabbing the training here.

Until next week, 

Stay healthy and focus on profit! 

 - Hugh 
The “Profit Accelerator” Expert

P.S. If you’d like an additional $10k, $50k or $100,000 or more in additional revenue and profit – then Accelerate Your Profits and let me show you how in under an hour, without spending a dime on sales or marketing. ->StreetSmartsMBA.org/pas

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