WEBVTT
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This episode is brought to you in part by Pool Brain.
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Pool Brain gives pool professionals the tools to run smarter, more efficient, and more profitable service businesses.
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Check them out at PoolBrain.com.
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Good afternoon, good evening, good morning, good whatever time of the day it is.
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It is time for Mondays Down Under on the Talking Pools podcast.
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Hi, my name is Lee Salisbury, and I am the pool shop coach.
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And today I am joined by only one esteemed colleague, Nick in Brisbane.
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Hey Nick, how are you?
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Good Lee.
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I'm back from holidays, back from the Gold Coast, back home, so good to be home for a little bit.
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Yes, we've had two weekends of footy, two long weekends in lots of different states.
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So footy season is now behind us.
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Both of them were riveting games like the AFL and the NRL.
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They were both terrific games.
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So a couple of good weekends of footy.
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But we are now in daylight savings, so you and I are split by an hour.
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How complicated does that make everything?
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It's so difficult now.
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When you messaged me earlier, I went, shit, I completely forgot a different time zone now.
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So when you said can we push it back an hour, I thought, thank God for that, because I was already pushed it back an hour.
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But anyway.
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Unfortunately, Shane is not with us today.
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A couple of months ago, Shane took some time out to go to England to visit his mum who and mum and dad who haven't been in the best of health.
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And unfortunately, his mum has passed away.
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So our deepest sympathies go out to their extended family, but especially to Shane.
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It's a a big loss losing a parent.
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So most definitely.
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Our thoughts and prayers and love are with him.
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So we will miss him, but until he returns, we will hold down the fort.
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But there will always be a spot here for him.
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We have to have someone from across the ditch, don't we?
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Most definitely.
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Okay, so today we thought we would hit a topic that actually is very much Australian-based.
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So it's probably a good one to do while Shane's not here.
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And that is last week on the 1st of October, and I know that this will be a couple of weeks out because we are ahead with our recording, thank God.
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But we on the 1st of October in Australia can no longer pass on credit card surcharges to the consumer.
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And I know that this is something that a lot of businesses are doing, but I want to say stop, put the price gun down.
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You are madly running around adjusting the prices on everything, aren't you?
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Or maybe you have been for the last couple of weeks.
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And I'm saying to you, don't.
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I'm not saying don't increase your prices.
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I'm just saying do the maths first.
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Because chances are you aren't increasing your prices enough.
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We've all seen our coffee prices gone up a few cents or maybe 20 cents.
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Bits and pieces all around the place, all the prices have been adjusted in all businesses.
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And we're doing the same in ours, like not mine in particular, but I know a lot of people in the industry are.
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But I implore you, if you are taking a moment to review your prices, really review them.
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Look at the whole picture.
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Everything's gone up of late.
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Yeah, it's not the only, it's not the only price increase that we've got recently, is it?
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No.
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Freight has gone up significantly.
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And fuel costs, they're back like I think diesel's nearly$3 here.
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So how is it in Brisbane?
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Uh I've seen it as high as almost$3, and it's dropped back down to around about$270, I think,$280.
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But yeah, it doesn't seem to be heading down anytime soon.
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I think it's going up, up.
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Yeah, yeah.
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So I think a lot of businesses probably need to stop and and take a good look at all their pricing.
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But before we dive into pricing, let's actually talk about the surcharge in the first place.
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I know in my business, like I've been out of it now three years.
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It wasn't something that we passed on except if it was a quoted large purchase.
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Then if they wanted to pay by credit card, we always charged the surcharge then.
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And that was put on the quote because we were talking like eight, ten, fifteen thousand dollars worth of plant stock and equipment and labor.
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And it was like, that's a lot of money.
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When you're counting 90 degree bends and lengths of pipe and all the little bits and pieces to actually measure up the quote your quoting price to give the customer the best deal and have them then walk in with their credit card and want to charge it on their credit card so they can get their flyby points or their quantus frequent pliers or whatever it is, yes, we're paying for their next holiday.
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Then yeah, that$300 surcharge came out of my pocket, out of my profit.
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And that's a big hit.
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And I think most of us in business have looked at the merchant accounts and add them up over 12 months.
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And it's in the thousands or tens of thousands of dollars.
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And I'm sure you're the same, Nick.
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Yeah, we looked at it oh maybe 12 over 12 months ago from those merchant fees.
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Should we should we on charge them?
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Uh we never we never did.
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But it was sort of one of those hidden costs in the background that you don't really account for, you don't see.
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Um and then when you do sit down and look at the big picture, it's like this does, you know, this is the cost of a Yeah, yeah, this is the cost of a technician or or something that's, you know, we're just not not accounting for at all.
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So I think like everybody, we jumped on the bandwagon, some people were starting to on charge it, so we decided to start doing it to the customer because everybody sort of accepted it.
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I don't know why it was such a big deal uh for our government when everyone was sort of happy with with with how things were going along.
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Well, in our neck of the woods anyway.
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Yeah, no, I I completely agree.
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I think for years we have we just swallowed it when we were booking an F airplane flight, there was always a surcharge on it.
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And I'm going back here five years ago when surcharging wasn't the norm, it wasn't standard, and it even longer, ten years ago, easy.
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I you were paying, if you went to a hotel and you were paying, there was a credit card surcharge.
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If you were booking a flight, there was a credit card surcharge.
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So clearly it was okay for the big end of town.
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But the moment small business went, hey, hang on a minute, I'm paying surcharges for a lot of the things that I'm buying, or for when I'm I'm paying my accounts.
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So maybe I need to do the same in my business.
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And especially like as you say, when you you stop and you look at that profit and loss figure at the end of the year and you see your merchant fees are thousands of dollars, and you think about it, like if you have a a business turnover of 1.5 mil, which is not out of the question for a lot of pool, decent-sized pool businesses these days.
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So 10% is what's that 150,000.
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1% is 15,000.
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Is that right?
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That works out, yeah.
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That's about right.
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Moving, I'm moving the decimal point.
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That's what my math teacher told me in high school.
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Move the decimal point, it gives you the answer.
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So yeah, that's fifteen thousand dollars on 1.5 million, but that doesn't sound like a lot.
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But most businesses these days are actually lucky to clear a couple of percent in net profit.
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And so when you're taking one percent away, that could be the difference between somebody making in this case like fifty thousand dollars net profit down to thirty-five thousand dollars net profit.
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And that really hurts.
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That really hurts.
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So it's I think, and it absolutely dumbfounds me.
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And I'm sorry, listeners, I'm gonna get political here, but it doesn't matter which political party who you vote for at the moment, because I think they're all F wits, let's say.
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Love to swear, but I will tr I will refra try to refrain.
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But the thing is, when we saw Elbo, our esteemed prime minister, standing there saying everybody's going to be saving money from today.
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The Labour government have saved you money today.
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Bullshit.
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Yep, your coffee's gonna be cheaper.
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No, no, it's not.
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Your coffee's actually not gonna be cheaper because before you would have paid five dollars for the coffee and about eighteen cents for the surcharge.
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Now the business owner's going, well, I'm gonna put my coffee up to five dollars fifty.
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Yeah, yeah, I'm not gonna charge eighteen to five dollars eighteen.
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I'm gonna put it up and make it a nice easy number.
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I'm gonna we're we're gonna round up because that's human nature.
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We're going to round up.
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So it might have been five dollars eighteen.
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Well, now it's five dollars thirty, or now it's five dollars fifty.
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And so your coffee price has gone up.
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And we are in an inflation problem at the moment.
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Like we are we are dealing with high inflation, and they're telling everybody to stop spending.
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Well, they've just added to the inflation problem because now everything costs more, but they're still claiming they saved us money.
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How?
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All they've done is out and they've added more dollars to their pockets because as you pointed out, there's now GST on the price increase or included in the price increase.
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So the government's making more money off us, we're paying more as consumers, and the business owner is the one that's being accused of you're greedy and you're making too much money and you won't pass now you just because you can't pass the surcharge on.
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Well, I'm sorry, who's looking at the top end of town?
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The banks are the ones that are profiting from this.
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Yep.
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Yep.
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They do sweet fuck all to get that money.
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Sorry, I've got to swear.
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I've got to swear.
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It's driving me insane.
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All they're doing, they they don't handle anything.
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They don't handle any cash for this transaction.
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They don't, it all happens electronically.
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It's all done for them.
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They pushed us to credit cards and FPOS cards years ago, years and years and years ago.
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And I'm going back here to before, way before I entered the pool and spire industry.
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I'm going back to when I was 18 and just out of high school and worked for one of our major big four banks.
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And I remember us telling customers that FPOS transactions were free.
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And when they would come into the bank and want to make a cash withdrawal, it was like, oh, you don't have to do that anymore.
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Here you get this fancy plastic card, and now I'll walk you out to the front and show you how to use the F-POS machine.
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Yep.
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Or the the cash ATM.
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And we went through that.
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So the banks pushed everybody to electronic transactions and then went, yay, let's rake in the money because we can now make all these fees from the merchants, from the small businesses.
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Let's squeeze the small businesses a little bit tighter.
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So the government has successfully put a knife in the back of small business that this country rides on the back of the biggest employers in the country, and yet they are the ones that are paying themselves generally the least amount of money and working the most amount of hours, and then the government wants to screw them on capital gains tax as well when you sell your business.
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So yeah, it is just diabolical.
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And now the surcharges we're expected to absorb without increasing our prices.
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It drives me absolutely barny.
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And the credit, the credit card rewards points and everything like that, because of that, that's all been cut now.
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We don't get many of them, but you know, I would get some gift cards, I'd get some bits and pieces through just through my personal.
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But yeah, that's all that's all sort of, you know, cut being cut as well.
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Yeah.
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Like if anybody was going to have to pay for this, it should have been the banks.
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They make billions every year.
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Why should small business that's being screwed over left, right, and center, be made to foot the bill when the big banks are rubbing their hands together with glee, going, we make$1.6 billion a year from this kit?
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Yeah.
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Stupid.
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I I would things would be different if I was in charge.
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That's what that'd be very different if I was in charge too.
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I'd be cutting all the politicians' bloody superannuation funds and all their lurks and perks, and that's yeah.
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Anyway, we digress.
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So if you're a small business out there and you have been passing on that surcharge or haven't been passing on that surcharge to your customers, I'm sure your customers are very grateful.
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And it is, as many people say, it is a cost of doing business.
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But the problem is not everybody pays with credit cards.
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So if you're rolling the cost of those electronic transfers, those EFT payments or FPOS payments, whatever you want to call them, if you are rolling them into your prices, your customers who are paying cash or paying by direct deposit are actually paying more than they should.
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So a lot of businesses are doing that at the moment.
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I've seen a big push towards, okay, well, if we can't surcharge, we're going to discount for cash and we're going to discount for direct deposit.
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So that's something you can consider with your business.
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So look at the prices, up the prices a bit.
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Obviously, we're going to talk about doing a full audit on your your true numbers and knowing your the cost of your outgoings and the percentages you should be allowing for.
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But we'll get to that in a minute.
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But with your prices, up your prices so do you that you're covering your costs, but then offer a small discount for those that pay cash or pay by direct deposit so that you're actually rewarding those that aren't using cards.
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Because let's face it, if we're increasing our prices, everybody's being disadvantaged.
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That's what I did like about the surcharge.
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It was very clear.
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If I chose to pay by credit card, I chose to accept that there would be a small surcharge.
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And I did that knowingly.
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So I didn't actually have a problem with paying a surcharge.
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Yep.
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But I have a problem paying an increased price when I'm paying cash to cover the people who are paying by credit card.
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Yeah, we my first option for customers, yeah, would be the BSB, the account number, the transfer.
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Like, you know, you don't want to pay any surcharge.
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That's that's your option.
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You know, you can do that.
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There's a little bit more work for them, obviously, to put in all the details.
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And but once we're saved as a payee and everything like that, it's nice and easy for them to do it.
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So that was always the go-to.
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Um, you know, cash.
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Hopefully we see a comeback of cash and more cash, people, people using it and and maybe offering the offering the discount, which was big, I think, back many, many years ago.
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You know, cash was king and you would prefer cash, but maybe it will pee to point more people towards that option.
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All I can say is that I'm grateful that this all happened before cash disappeared, because then it would have been too late.
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Like a lot of people have had that push towards a cashless society.
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You hear it every now and then go through social media and whatnot.
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We talk about a cashless society, and yeah, it's clear that people want to go back to cash now.
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Yep.
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Mind you though, banks now count charge for counting cash.
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Isn't that the most ridiculous thing you have ever heard?
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If you can find a bank that hasn't closed, because I know a lot of a lot of checks.
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Again, another problem.
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Yes, yes.
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They're closing branches at a rate of knots because people are all doing it by internet and electronic transfer and and whatnot.
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So the branches are needed less, mind you, as we had to do, walk people out front and show them how to use the ATM so that the teller's time was not taken up.
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Yep.
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And then, yeah, I had this happen to me.
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So this was while we had our business.
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I was going through my bank statement, as we do, reconciling things, and there was a$17 fee there.
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And next to that$17 fee was cash counting fee.
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And I went, What the?
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Like, seriously?
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It's a bank.
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So I rang my business bank manager.
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So I had a dedicated business bank manager, and rang him and said, Can you please explain this to me?
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Like, what is it?
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And he went, let me look into it, come back.
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Yes, you banked$8,000 in cash and there's a surcharge of so much percent for counting cash.
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And I went, You are kidding, aren't you?
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Like you are a bank.
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If you're not there to count cash, what are you there for?
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And and he went, Oh, well, it is part of like it's a service where it takes time.
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And I went, takes time.
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I had it folded.
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Like I used to work in a bank.
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I had it counted and put into flats, which are you like counts of ten notes or whatever it is, depending on the the notes, but generally ten notes.
00:19:13.589 --> 00:19:20.869
And so you have ten and then you put them into like bundles of ten, ten lots of ten, and you count them that way.
00:19:21.109 --> 00:19:29.509
Anyway, I had handed them over to the counter, all with rubber bands around it, all counted, with a breakdown, a whole lot.
00:19:29.829 --> 00:19:32.309
And this teller didn't even care.
00:19:32.629 --> 00:19:35.109
She did not count one note by hand.
00:19:35.349 --> 00:19:44.229
She took all the rubber bands off, she stuck the notes into a machine, she pressed one button, and that told her how many notes there were and what the count was.
00:19:44.469 --> 00:19:57.669
You take in a money box these days and they jingle the whole thing, they empty the whole thing into a automatic sort of machine which sorts it and then weighs it and tells you the value of it.
00:19:57.909 --> 00:19:59.829
And they don't count nothing.
00:20:00.309 --> 00:20:02.149
Yeah, not getting their hands dirty.
00:20:02.469 --> 00:20:03.669
And yet they charge you for it.
00:20:03.829 --> 00:20:06.069
So I said to the bank manager, this is crazy.
00:20:06.149 --> 00:20:08.309
And he said, Well, there is one way around it.
00:20:08.549 --> 00:20:09.509
What's that?
00:20:09.750 --> 00:20:12.869
He said, You can put the money in the telling machine out front.
00:20:13.109 --> 00:20:18.709
So had I banked it through the ATM, I would not have paid a cent for it.
00:20:18.869 --> 00:20:30.229
And you can bet your bottom dollar, they would have counted it in exactly the same way coming out of the telemachine as they did over the counter, and yet I paid$17 for that privilege.
00:20:30.389 --> 00:20:38.069
However, fortunately for me, my business manager did actually reverse the fee for me and just said, okay, next time don't do it.
00:20:38.229 --> 00:20:39.589
So that's what I used to do.
00:20:39.750 --> 00:20:44.469
Every time after that, I banked my cash through the ATM.
00:20:44.629 --> 00:20:46.949
You can't put coins through the ATM, though.
00:20:47.429 --> 00:20:49.429
You didn't put it under the mattress at home?
00:20:49.750 --> 00:20:51.589
No, I don't do that.
00:20:51.829 --> 00:20:53.269
I'm a good person.
00:20:53.669 --> 00:20:55.109
I am a good and honest.
00:20:55.269 --> 00:21:05.829
Actually, I did have a bookkeeper one day say to my mother, actually, that I was the most honest per uh business owner she'd ever met.
00:21:05.990 --> 00:21:13.189
So, and uh yeah, I probably lived with a bit of fear of being audited, having a tax man go through me.
00:21:13.349 --> 00:21:22.949
Not that I had done anything wrong, but I was always concerned I'd missed something along the way and that I would be in a lot of trouble for it.
00:21:23.109 --> 00:21:31.189
Um, probably comes from the fear of my parents actually went bankrupt when I was in my early 20s.
00:21:31.509 --> 00:21:42.869
My dad had bought into a business that unfortunately was in hocke with the government to a lot of money in tax and superannuation and and whatnot.
00:21:43.109 --> 00:21:48.069
And they um my parents unfortunately lost their home that they owned over it.
00:21:48.309 --> 00:21:58.949
And the weird the stupid thing about it is my father had only been a part of that business for like six months and didn't know anything that had gone on, and it was a pre previous owner's issue.
00:21:59.029 --> 00:22:08.309
And but my father had stupidly not being a smart businessman, had not done his due diligence on the actual state of the company that he'd purchased.
00:22:08.549 --> 00:22:11.189
So um, yeah, unfortunately they lost their home.
00:22:11.349 --> 00:22:14.789
So because of that, they had been audited, they'd gone through the process.
00:22:14.949 --> 00:22:19.990
It was an extremely grueling and and very anxious and stressful time for my parents.
00:22:20.069 --> 00:22:26.469
And I think that probably resonated with me and left on in me when I when we established our own business.
00:22:26.549 --> 00:22:29.829
So I always made sure I crossed the T's and dotted the I's.
00:22:30.149 --> 00:22:37.349
So and fortunately for me, touch wood, looking around that is a wood I haven't been audited ever.
00:22:37.509 --> 00:22:41.029
So you want to keep on the right side of those guys, do the right thing.
00:22:41.269 --> 00:22:41.509
Yeah.
00:22:41.669 --> 00:22:42.789
Yeah, absolutely.
00:22:42.949 --> 00:22:44.869
So, no, my cash was banked.
00:22:44.949 --> 00:22:51.589
I used to just actually have to pick the amounts that I was actually going to to bank so that I could round it out to the nearest dollar.
00:22:51.750 --> 00:22:52.869
So the weird and wonderful thing.
00:22:53.269 --> 00:22:55.669
things that you do to try and get things to work.
00:22:55.990 --> 00:23:01.589
But yeah, so the surcharges really, really get to me for small business.
00:23:01.750 --> 00:23:03.429
Small business is doing it tough.
00:23:03.589 --> 00:23:04.949
The economy's tighter.
00:23:05.109 --> 00:23:09.029
We know we're living with high inflation at the moment.
00:23:09.269 --> 00:23:10.629
Interest rates are going up.
00:23:10.789 --> 00:23:12.629
Things are getting payday super.
00:23:13.189 --> 00:23:13.509
Yeah.
00:23:13.750 --> 00:23:14.949
Payday super now.
00:23:15.269 --> 00:23:16.549
Affecting cash flow.
00:23:16.869 --> 00:23:18.789
That's exactly it for a business.
00:23:18.949 --> 00:23:23.109
And and so our customers are dealing with their own constraints.
00:23:23.349 --> 00:23:25.990
We're dealing with constraints as well as well.
00:23:26.229 --> 00:23:37.750
And then having this added to us, it was just it was almost like saying to the government, here just let me give you another nail and a hammer and you can put another nail in the coffin of small business.
00:23:37.990 --> 00:23:45.909
It it it hurts when you're out there and you're trying to employ people and you're keeping your money local in local economies.
00:23:46.069 --> 00:23:56.789
They we're keeping things moving along for a lot of people and it's it's really hard when you feel like you're always getting the the tough end of the stick.
00:23:56.869 --> 00:24:06.389
So I do feel for business owners out there at my even some of like the the freight charges or surcharges like they're coming in like we're not getting voted those figures.
00:24:06.469 --> 00:24:09.909
They're just coming in on the invoice like you know we're not seeing them before.
00:24:10.069 --> 00:24:16.709
So how we and I had one recently with a chlorinator sell you know extra freight on there we'd already quoted the customer.
00:24:16.949 --> 00:24:24.069
You know it's like well we know we've got to cop this now like yeah and and those that's where it really hurts.
00:24:24.229 --> 00:24:46.949
And I think a lot of businesses really need to I think I think what happens is a lot of people go into business and it's just like they grow organically and we we get bigger and we start to do more, we start to sell more we sell big ticket items we we assume when we put a 100% markup on something that we're actually making a decent amount of money.
00:24:47.189 --> 00:25:00.069
But do we actually know how much we're making do we know what our overheads are and the problem is when we give a discount it might go well it's 10% let's say we're talking a thousand dollar item here.
00:25:00.229 --> 00:25:00.549
Yep.
00:25:00.789 --> 00:25:06.549
We go okay we'll give you a 10% discount that's$100 off it comes down to$900.
00:25:06.789 --> 00:25:17.029
Now you might have paid$500 for that item you were selling for a thousand but the thing is you now aren't making$500 you're only making$400.
00:25:17.109 --> 00:25:22.949
That$100 comes off your bit not the bit you pay to the supplier they get theirs guaranteed.
00:25:23.269 --> 00:25:27.429
So you're actually discounting your your profit.
00:25:27.509 --> 00:25:41.029
So you're actually when you like you were making$500 now you're making 400 you're actually giving 20 of your mark of your markup or your margin that your profit that you were making.
00:25:41.429 --> 00:25:52.389
And so you're losing more so think about that I'm a very big advocate for value adding not discounting.
00:25:52.709 --> 00:26:06.229
So instead of giving somebody$100 off I'd be more inclined to give them a$100 in-store voucher to come back and and get chemicals at a later time or hopefully perhaps buy more.
00:26:06.469 --> 00:26:40.469
I have mentioned this before on the on the show because Harvey Norman who are one of Australia's biggest electrical and furniture stores in the country they give you a 10 they do that they give you a 10% voucher and but the thing is what they don't tell you is that you've only got 30 days in which to spend it because it's a discount voucher like an incentive it's not under the same rules as a gift voucher which has three years so to for you to spend it.
00:26:40.709 --> 00:27:15.029
So these are come under a different ruling so a lot of people aren't aware of that and then all of a sudden they found that that voucher that they had sitting in their wallet or the the the card that they had sitting in their wallet with a couple of hundred dollar discount on it because they've just bought a big screen TV for two and a half grand and they've got a a$250 voucher to spend at Harvey Norman and they go, oh yeah I'll still stash that away for a a rainy day rainy day comes and you pull it out and it was out of month out of date months ago because you thought you had three years up your sleeve but you didn't and you had 30 days.
00:27:15.109 --> 00:27:18.069
So do watch that if anybody's buying from Harvey Norman.
00:27:18.629 --> 00:27:27.509
But that you can do those types of things in your business too and it does incentivize customers to come back and hopefully spend more.
00:27:27.990 --> 00:27:34.789
So and that then means that you're not discounting the full value of of your profit margin.
00:27:34.869 --> 00:27:41.990
You're actually we know we we buy what we buy chemicals for we're actually only discounting to the value of that.
00:27:42.149 --> 00:28:02.149
So yeah we offered that to a customer recently you know worked um they were happy customer was happy you know we don't have to cop the full discount amount um so it just worked out well for everybody I think and to the customer they look at that and they go well it's a hundred dollars off this item and it's a hundred dollars I save later on because I'm not spending it.
00:28:02.309 --> 00:28:05.429
So the customer is actually out of pocket no different.
00:28:05.990 --> 00:28:09.909
Yep and but for us it's a big dis a big difference.
00:28:10.069 --> 00:28:15.269
So definitely look at value adding as opposed to discounting.
00:28:15.509 --> 00:28:30.869
The other thing that I'm really concentrating on with my coaching clients at the moment and this is what I would implore with our listeners out there that are got the price gun out and they're madly running around changing those prices for a few cents or maybe a dollar.
00:28:31.509 --> 00:28:38.069
I haven't seen a price gun in so long I think I think we used to have one back when I first started if I haven't seen one of them in years.
00:28:38.309 --> 00:28:49.109
Well say the imaginary price gun because that's technically what it isn't it you could say the scanner we don't price anything with or put a price on anything with a scanner but we do check prices with the scanner.
00:28:49.269 --> 00:29:07.109
But if you're running around the shop and you're madly putting up those prices a few cents or a a couple of dollars for the bigger items do put the price gun away or that imaginary price gun away and pull your calculator out and actually look at what your overheads are.
00:29:07.589 --> 00:29:10.949
And this can be quite scary for a lot of businesses.
00:29:11.509 --> 00:29:16.309
So if you actually sit down and the best thing you can do is grab your last profit and loss.
00:29:16.469 --> 00:29:31.429
So if you've done your figures for last year, congratulations you're probably one of the few businesses that have when I say financial year I mean 25 and 26 most of us put it off until May the death knock of the next year so that you can get as long as possible repay it.
00:29:31.589 --> 00:29:35.669
Some accountants like to do that so that they've got as long as possible to do it.
00:29:35.990 --> 00:29:38.069
But pull out those profit and loss figures.
00:29:38.149 --> 00:29:48.309
You might be able to pull them out of zero or your mile and then you can plug them straight into well I have a calculator that I'm going to share with all our listeners.
00:29:48.469 --> 00:30:02.469
So listeners out there if you are interested in actually working out what your overheads actually are and what your percentage of costs is that you should be taking into account when you're doing your pricing this is absolutely for you.
00:30:02.629 --> 00:30:08.709
This is a small I suppose snippet of what I work with with my actual coaching clients.
00:30:08.869 --> 00:30:11.750
Their calculator is actually 14 pages long.
00:30:11.990 --> 00:30:24.629
Mind you it's not 14 pages of putting figures in but it's for it allows all the figures to be dissected and we us to actually look at the profitability across multiple different areas of your business.
00:30:24.709 --> 00:30:33.909
So whether we look at your profitability in service in retail in admin like the whole lot and then we also look at markup versus versus margin.
00:30:34.149 --> 00:30:40.789
So it is actually quite a diverse operations cost calculator but that's for my coaching clients.
00:30:41.109 --> 00:31:37.189
This one is a free one that I have pulled out the important bits to give you a quick insight into the overhead costs of your business and you can plug in the figures straight from your profit and loss or straight from your zero accounting package and you take into consideration things like your your rent and your lease or uh or if you've got a mortgage on your shop, maybe that your wages for your staff your wages for yourself because a lot of businesses owner owners don't include themselves in the actual wages of the business but we all need to make it a wage so you need to make sure you account for that too vehicles all your vehicle costs your Regio, your fuel, your servicing, your lease payments the whole lot your insurances, your utilities so electricity, water, internet, phone, computer software, all of it we include bookkeeping marketing, the whole lot they've all gone up as well.
00:31:37.349 --> 00:31:39.509
They've all gone up every one of them everything.
00:31:39.990 --> 00:31:44.469
Electricity electricity something that you know has gone up massively here.
00:31:44.789 --> 00:32:06.389
Yeah absolutely and it is scary that all of those things that have gone up but have businesses actually taken stock of that and actually adjust their prices for that those price increases are significantly more than the few cents of the surcharge but yet here we are all panicking about the surcharge.
00:32:06.549 --> 00:32:17.589
So that's why I'm saying hold the horses put the price gun down let's actually take a look at the full picture and actually look at really what you should be marking your products up.
00:32:17.829 --> 00:32:38.149
So then we take all that into account we then obviously look at your your annual turnover excluding GST and then we get a percentage figure and that percentage figure actually tells us what we need to be charging on top of our product cost to actually cover our overheads.
00:32:38.309 --> 00:32:45.269
That's before we even make a profit and it can be really scary for a lot of businesses.
00:32:45.509 --> 00:32:57.109
In some cases they're going backwards and on especially on some products we see like mass merchants do loss leaders for those who don't know the term loss leader.
00:32:57.269 --> 00:33:22.549
A loss leader is a product that often mass merchants or generally business offer at a very low price that's very attractive to the consumer they come in they buy that cheap salt they buy those chip that cheap chlorine and while they're there they'd buy an algebra and they'd buy buffer and they'd buy this and then buy something else from the other end of the store or whatever they're doing.
00:33:22.949 --> 00:33:29.909
And they came in to buy that$750 bag of salt because it is so cheap.
00:33:30.229 --> 00:33:34.869
Mind you it's pretty shit salt but that's another subject guaranteed disdain.
00:33:35.189 --> 00:33:42.549
Guaranteed disdain that's it they come in for this very cheap salt but then they spend a lot of money on other things while they're there.
00:33:42.709 --> 00:33:46.469
And that's what these mass march merchants do.
00:33:46.869 --> 00:33:52.869
They they ride on those key products to be lost leaders.
00:33:52.949 --> 00:33:58.229
So they are willing to take a loss on that because they're going to make a massive gain on something else that you buy.
00:33:59.189 --> 00:34:11.030
So but in our businesses we can't afford to have lost leaders or if we do they have to be very calculated and sometimes we actually have lost leaders and we're not aware of them.
00:34:11.190 --> 00:34:47.429
It can it can be quite scary when you look at your overheads and your overhead cost is let's say 35% of your your overall numbers and then you go okay well I'm going I put a a 50% markup on product on a bag of salt let's say for example well a 50 markup on a bag of salt if I buy that for$10 that means I'm putting five on it that's$15 now that I'm charging that out for plus I've got to then put GST on it$1.50 so that then becomes$1650.
00:34:47.590 --> 00:34:52.550
And$16.50 is probably not too far from a lot what a lot of people are charging on salt.
00:34:52.710 --> 00:35:07.990
So then you go though 50% markup is only a 33% margin and if my overhead costs are at 35% I'm making a loss you're in trouble.
00:35:08.470 --> 00:35:17.110
You're in trouble every bag of salt means you're going backwards every bag of salt you sell means you're going backwards.
00:35:17.590 --> 00:35:38.470
So and that's okay if that's a decision you want to make in your business to be a lost leader but the the the the whole point of having lost leaders is that you then sell other products and those other products are at a higher margin that covers the loss on that product.
00:35:38.870 --> 00:35:41.590
So very very important that people are aware of it.
00:35:41.670 --> 00:36:10.870
So the difference between markup and margin knowing the difference between the two so the markup is the is the value you put on it the margin is the percentage so knowing the difference because I've like if I buy an item like I say for for$10 and I put a 50% markup on it it's only a$5 margin sorry a five dollar markup yep but it's a 33 margin.
00:36:11.030 --> 00:36:19.670
So just knowing the figures is really really important so yeah if listeners out there are interested this is completely free.
00:36:19.910 --> 00:36:32.070
I will get Rudy to put a link in the show notes I really employ you this is a really valuable tool for you to take advantage of get to know your figures get really familiar with them.
00:36:32.150 --> 00:36:49.750
Sometimes it can be incredibly uncomfortable but until you actually face them you don't know how you're truly running your business whether you're running it at a true profit or not and you might actually open your eyes to a lot of things that you really need to be aware of.
00:36:49.910 --> 00:36:59.430
If you stick your head in the hand in the sand just the problem doesn't go away yes well you don't want to have a busy summer and then realize at the end of summer that you've made no money.
00:36:59.670 --> 00:37:13.990
So that's exactly it summer's upon us it's upon us and you everyone's going to get busier and busier and things are going to be walking out the door and if no one's making any money by the time wintertime comes it quitens off again there'll be no there'll be no buffer there.
00:37:14.309 --> 00:37:19.110
No that's exactly it and I I I know this happens to a lot of businesses.
00:37:19.190 --> 00:37:30.070
They go but I'm really busy and they and they go and there's money in the bank so I must be doing well that does not equate to profit.
00:37:30.309 --> 00:38:00.309
It does not equate to profit and so it's it's really important that busy does not necessarily mean profitable and money in the bank doesn't necessarily mean profitable because the moment you get that GST bill and the P A Y G bill and everything else that comes in and you pay those suppliers that are on 60 or 90 days for the start of the season as we all have put on early buys and whatnot then all of a sudden it's not actually looking so good because that money in the bank isn't actually yours.
00:38:00.470 --> 00:38:00.870
Yep.
00:38:01.110 --> 00:38:06.070
So it's it's really important to know your figures and be well and truly aware of them.
00:38:06.230 --> 00:38:12.870
Like I said sticking in your your head in the sand doesn't make them go away it just prolongs the inevitable.
00:38:13.110 --> 00:38:14.150
So yeah.
00:38:14.470 --> 00:38:18.789
But anyway so that's not a great note to end on I'm sorry.
00:38:19.110 --> 00:38:32.870
It's it's it could be it could be a little bit like you know it could be the difference between 20 cents and 50 cents or you know 50 cents and 75 cents on a product like salt that you said that you might sell I know we sell a lot of bags of salt it's going to add up.
00:38:33.030 --> 00:38:37.030
So you know spend the time to look at it and you know you're going to be better for it.
00:38:37.269 --> 00:38:47.829
And quite the case of if you look at salt salt was something like obviously full shops in Australia we sell a lot of and we go through pallet after pellet after pallet.
00:38:47.990 --> 00:38:56.870
Now if you think about all of those pellets and every bag of salt you're selling you're making a loss those pellets look so different.
00:38:57.269 --> 00:39:07.030
And if you've got a retail and a service business you're carrying them to the site and you're on your shoulder or on a trolley and putting them into someone's pool for nothing.
00:39:07.349 --> 00:39:11.030
Yes yeah that's exactly actually not for nothing.
00:39:12.390 --> 00:39:19.349
You're literally paying them really you're going backwards for them for putting salt in their in their pool.
00:39:19.510 --> 00:39:21.990
So it's really yeah important.
00:39:22.150 --> 00:39:34.550
And I know like yeah you you raise a really valid point there our business we actually had to hand offload the salt power salt bags into the shop because my front door was too narrow and I couldn't get a callet through it.
00:39:34.789 --> 00:39:44.150
That was a bane of my staff's existence I'm sure but yes those things we so we were hand offloading every bag of salt that came into the business.
00:39:44.309 --> 00:39:52.230
We were hand offloading every bag of salt that went out the door whether it go into a cut client's vehicle or into the service vehicles.
00:39:52.390 --> 00:40:02.470
Fortunately the warehouse we obvious we had a warehouse that was where the service guys picked up their bags so we're very grateful they didn't have to hand off load those both ways.
00:40:02.630 --> 00:40:04.789
But still I digress.
00:40:05.430 --> 00:40:13.269
Check your prices get on top of it let's turn a less profitable business into a more profitable business.
00:40:13.430 --> 00:40:18.470
You're not working for free yes we love our businesses or we hope I hope you love your businesses.
00:40:18.630 --> 00:40:23.510
If you don't you need to talk to me but we we want to make this profitable for you.
00:40:23.670 --> 00:40:28.470
You want to have something to sell in a few years' time you want to have a profitable business.
00:40:28.630 --> 00:40:42.470
You still want to be in business and you want to have a profitable business that somebody actually wants to purchase so making sure that you're being profitable along the way that you're being smart these types of calculators can can really help.
00:40:42.630 --> 00:41:05.750
So don't hesitate to reach out like I said Prudy will have a link in the show notes where you can grab um your free know your numbers calculator so this is know your numbers work out what every sale has to earn before you even make a cent for joining me today.
00:41:05.990 --> 00:41:16.390
Thank you for listening and we love having you as part of the Monday is down under crew because without you listeners we don't have a podcast.
00:41:16.630 --> 00:41:17.750
So thank you very much.
00:41:17.910 --> 00:41:29.990
Remember if you have any questions any topic suggestions drop us a line at talkingpools at gmail.com and Rudy will dish those out to the most applicable host.
00:41:30.710 --> 00:41:43.590
But again we thank you for um being with us this week we hope that you will join us again next week for another riveting episode of Mondays Down Under on the Talking Pools podcast.
00:41:43.829 --> 00:41:45.590
Thanks very much see you guys.
00:41:45.910 --> 00:41:46.230
Bye
00:00:53.269 --> 00:00:56.149
This episode is brought to you in part by Pool Brain.
00:00:56.390 --> 00:01:02.869
Pool Brain gives pool professionals the tools to run smarter, more efficient, and more profitable service businesses.
00:01:03.109 --> 00:01:05.109
Check them out at PoolBrain.com.
00:01:05.349 --> 00:01:08.789
Good afternoon, good evening, good morning, good whatever time of the day it is.
00:01:08.950 --> 00:01:13.189
It is time for Mondays Down Under on the Talking Pools podcast.
00:01:13.430 --> 00:01:17.269
Hi, my name is Lee Salisbury, and I am the pool shop coach.
00:01:17.430 --> 00:01:22.710
And today I am joined by only one esteemed colleague, Nick in Brisbane.
00:01:22.789 --> 00:01:23.989
Hey Nick, how are you?
00:01:24.310 --> 00:01:25.109
Good Lee.
00:01:25.189 --> 00:01:29.670
I'm back from holidays, back from the Gold Coast, back home, so good to be home for a little bit.
00:01:29.990 --> 00:01:35.189
Yes, we've had two weekends of footy, two long weekends in lots of different states.
00:01:35.430 --> 00:01:38.229
So footy season is now behind us.
00:01:38.549 --> 00:01:42.950
Both of them were riveting games like the AFL and the NRL.
00:01:43.109 --> 00:01:44.549
They were both terrific games.
00:01:44.710 --> 00:01:46.950
So a couple of good weekends of footy.
00:01:47.509 --> 00:01:51.990
But we are now in daylight savings, so you and I are split by an hour.
00:01:52.310 --> 00:01:54.629
How complicated does that make everything?
00:01:54.710 --> 00:01:56.229
It's so difficult now.
00:01:56.549 --> 00:02:02.390
When you messaged me earlier, I went, shit, I completely forgot a different time zone now.
00:02:02.549 --> 00:02:08.870
So when you said can we push it back an hour, I thought, thank God for that, because I was already pushed it back an hour.
00:02:09.030 --> 00:02:09.670
But anyway.
00:02:09.909 --> 00:02:12.310
Unfortunately, Shane is not with us today.
00:02:12.629 --> 00:02:21.829
A couple of months ago, Shane took some time out to go to England to visit his mum who and mum and dad who haven't been in the best of health.
00:02:21.909 --> 00:02:24.790
And unfortunately, his mum has passed away.
00:02:24.949 --> 00:02:30.069
So our deepest sympathies go out to their extended family, but especially to Shane.
00:02:30.310 --> 00:02:32.469
It's a a big loss losing a parent.
00:02:32.550 --> 00:02:33.670
So most definitely.
00:02:33.990 --> 00:02:36.230
Our thoughts and prayers and love are with him.
00:02:36.389 --> 00:02:40.230
So we will miss him, but until he returns, we will hold down the fort.
00:02:40.629 --> 00:02:42.709
But there will always be a spot here for him.
00:02:43.349 --> 00:02:46.230
We have to have someone from across the ditch, don't we?
00:02:46.550 --> 00:02:47.509
Most definitely.
00:02:47.750 --> 00:02:53.990
Okay, so today we thought we would hit a topic that actually is very much Australian-based.
00:02:54.069 --> 00:02:56.629
So it's probably a good one to do while Shane's not here.
00:02:56.790 --> 00:03:06.069
And that is last week on the 1st of October, and I know that this will be a couple of weeks out because we are ahead with our recording, thank God.
00:03:06.389 --> 00:03:16.709
But we on the 1st of October in Australia can no longer pass on credit card surcharges to the consumer.
00:03:16.949 --> 00:03:25.910
And I know that this is something that a lot of businesses are doing, but I want to say stop, put the price gun down.
00:03:26.470 --> 00:03:30.310
You are madly running around adjusting the prices on everything, aren't you?
00:03:30.709 --> 00:03:33.350
Or maybe you have been for the last couple of weeks.
00:03:33.990 --> 00:03:35.750
And I'm saying to you, don't.
00:03:35.990 --> 00:03:38.230
I'm not saying don't increase your prices.
00:03:38.389 --> 00:03:40.870
I'm just saying do the maths first.
00:03:41.269 --> 00:03:46.709
Because chances are you aren't increasing your prices enough.
00:03:47.670 --> 00:03:52.310
We've all seen our coffee prices gone up a few cents or maybe 20 cents.
00:03:52.629 --> 00:03:57.990
Bits and pieces all around the place, all the prices have been adjusted in all businesses.
00:03:58.149 --> 00:04:04.310
And we're doing the same in ours, like not mine in particular, but I know a lot of people in the industry are.
00:04:04.550 --> 00:04:12.230
But I implore you, if you are taking a moment to review your prices, really review them.
00:04:12.470 --> 00:04:14.149
Look at the whole picture.
00:04:14.310 --> 00:04:15.829
Everything's gone up of late.
00:04:16.069 --> 00:04:20.230
Yeah, it's not the only, it's not the only price increase that we've got recently, is it?
00:04:20.470 --> 00:04:20.709
No.
00:04:21.029 --> 00:04:23.430
Freight has gone up significantly.
00:04:24.069 --> 00:04:29.189
And fuel costs, they're back like I think diesel's nearly$3 here.
00:04:29.350 --> 00:04:31.430
So how is it in Brisbane?
00:04:31.750 --> 00:04:38.389
Uh I've seen it as high as almost$3, and it's dropped back down to around about$270, I think,$280.
00:04:38.550 --> 00:04:42.069
But yeah, it doesn't seem to be heading down anytime soon.
00:04:42.149 --> 00:04:43.670
I think it's going up, up.
00:04:44.230 --> 00:04:45.189
Yeah, yeah.
00:04:45.430 --> 00:04:51.589
So I think a lot of businesses probably need to stop and and take a good look at all their pricing.
00:04:51.750 --> 00:04:57.110
But before we dive into pricing, let's actually talk about the surcharge in the first place.
00:04:57.350 --> 00:05:01.509
I know in my business, like I've been out of it now three years.
00:05:01.750 --> 00:05:07.430
It wasn't something that we passed on except if it was a quoted large purchase.
00:05:07.670 --> 00:05:12.629
Then if they wanted to pay by credit card, we always charged the surcharge then.
00:05:12.710 --> 00:05:22.230
And that was put on the quote because we were talking like eight, ten, fifteen thousand dollars worth of plant stock and equipment and labor.
00:05:22.550 --> 00:05:25.430
And it was like, that's a lot of money.
00:05:25.670 --> 00:05:49.830
When you're counting 90 degree bends and lengths of pipe and all the little bits and pieces to actually measure up the quote your quoting price to give the customer the best deal and have them then walk in with their credit card and want to charge it on their credit card so they can get their flyby points or their quantus frequent pliers or whatever it is, yes, we're paying for their next holiday.
00:05:50.389 --> 00:05:57.590
Then yeah, that$300 surcharge came out of my pocket, out of my profit.
00:05:57.830 --> 00:05:59.750
And that's a big hit.
00:06:00.069 --> 00:06:08.230
And I think most of us in business have looked at the merchant accounts and add them up over 12 months.
00:06:08.550 --> 00:06:13.830
And it's in the thousands or tens of thousands of dollars.
00:06:13.990 --> 00:06:16.470
And I'm sure you're the same, Nick.
00:06:16.870 --> 00:06:21.509
Yeah, we looked at it oh maybe 12 over 12 months ago from those merchant fees.
00:06:21.590 --> 00:06:23.350
Should we should we on charge them?
00:06:23.430 --> 00:06:24.790
Uh we never we never did.
00:06:24.949 --> 00:06:29.990
But it was sort of one of those hidden costs in the background that you don't really account for, you don't see.
00:06:30.069 --> 00:06:41.830
Um and then when you do sit down and look at the big picture, it's like this does, you know, this is the cost of a Yeah, yeah, this is the cost of a technician or or something that's, you know, we're just not not accounting for at all.
00:06:42.150 --> 00:06:52.230
So I think like everybody, we jumped on the bandwagon, some people were starting to on charge it, so we decided to start doing it to the customer because everybody sort of accepted it.
00:06:52.470 --> 00:06:59.509
I don't know why it was such a big deal uh for our government when everyone was sort of happy with with with how things were going along.
00:06:59.670 --> 00:07:01.430
Well, in our neck of the woods anyway.
00:07:01.750 --> 00:07:04.470
Yeah, no, I I completely agree.
00:07:04.629 --> 00:07:15.750
I think for years we have we just swallowed it when we were booking an F airplane flight, there was always a surcharge on it.
00:07:16.069 --> 00:07:26.069
And I'm going back here five years ago when surcharging wasn't the norm, it wasn't standard, and it even longer, ten years ago, easy.
00:07:26.230 --> 00:07:31.350
I you were paying, if you went to a hotel and you were paying, there was a credit card surcharge.
00:07:31.509 --> 00:07:34.629
If you were booking a flight, there was a credit card surcharge.
00:07:34.790 --> 00:07:37.670
So clearly it was okay for the big end of town.
00:07:37.830 --> 00:07:48.310
But the moment small business went, hey, hang on a minute, I'm paying surcharges for a lot of the things that I'm buying, or for when I'm I'm paying my accounts.
00:07:48.470 --> 00:07:50.790
So maybe I need to do the same in my business.
00:07:50.949 --> 00:08:14.230
And especially like as you say, when you you stop and you look at that profit and loss figure at the end of the year and you see your merchant fees are thousands of dollars, and you think about it, like if you have a a business turnover of 1.5 mil, which is not out of the question for a lot of pool, decent-sized pool businesses these days.
00:08:14.629 --> 00:08:19.350
So 10% is what's that 150,000.
00:08:19.670 --> 00:08:23.189
1% is 15,000.
00:08:23.590 --> 00:08:24.150
Is that right?
00:08:24.389 --> 00:08:25.110
That works out, yeah.
00:08:25.350 --> 00:08:25.990
That's about right.
00:08:26.389 --> 00:08:28.069
Moving, I'm moving the decimal point.
00:08:28.310 --> 00:08:31.430
That's what my math teacher told me in high school.
00:08:31.750 --> 00:08:34.149
Move the decimal point, it gives you the answer.
00:08:34.309 --> 00:08:40.789
So yeah, that's fifteen thousand dollars on 1.5 million, but that doesn't sound like a lot.
00:08:41.429 --> 00:08:51.029
But most businesses these days are actually lucky to clear a couple of percent in net profit.
00:08:51.909 --> 00:09:08.230
And so when you're taking one percent away, that could be the difference between somebody making in this case like fifty thousand dollars net profit down to thirty-five thousand dollars net profit.
00:09:08.710 --> 00:09:10.149
And that really hurts.
00:09:10.870 --> 00:09:12.149
That really hurts.
00:09:12.549 --> 00:09:17.509
So it's I think, and it absolutely dumbfounds me.
00:09:17.590 --> 00:09:26.070
And I'm sorry, listeners, I'm gonna get political here, but it doesn't matter which political party who you vote for at the moment, because I think they're all F wits, let's say.
00:09:26.389 --> 00:09:30.149
Love to swear, but I will tr I will refra try to refrain.
00:09:30.389 --> 00:09:41.029
But the thing is, when we saw Elbo, our esteemed prime minister, standing there saying everybody's going to be saving money from today.
00:09:41.110 --> 00:09:43.590
The Labour government have saved you money today.
00:09:43.909 --> 00:09:44.789
Bullshit.
00:09:45.029 --> 00:09:46.870
Yep, your coffee's gonna be cheaper.
00:09:47.110 --> 00:09:48.230
No, no, it's not.
00:09:48.389 --> 00:09:58.230
Your coffee's actually not gonna be cheaper because before you would have paid five dollars for the coffee and about eighteen cents for the surcharge.
00:09:59.029 --> 00:10:03.990
Now the business owner's going, well, I'm gonna put my coffee up to five dollars fifty.
00:10:04.230 --> 00:10:06.950
Yeah, yeah, I'm not gonna charge eighteen to five dollars eighteen.
00:10:07.190 --> 00:10:09.269
I'm gonna put it up and make it a nice easy number.
00:10:09.590 --> 00:10:13.509
I'm gonna we're we're gonna round up because that's human nature.
00:10:13.750 --> 00:10:15.269
We're going to round up.
00:10:15.430 --> 00:10:17.750
So it might have been five dollars eighteen.
00:10:17.990 --> 00:10:21.190
Well, now it's five dollars thirty, or now it's five dollars fifty.
00:10:21.509 --> 00:10:23.750
And so your coffee price has gone up.
00:10:23.909 --> 00:10:26.789
And we are in an inflation problem at the moment.
00:10:26.950 --> 00:10:32.550
Like we are we are dealing with high inflation, and they're telling everybody to stop spending.
00:10:32.710 --> 00:10:41.430
Well, they've just added to the inflation problem because now everything costs more, but they're still claiming they saved us money.
00:10:41.750 --> 00:10:42.389
How?
00:10:42.789 --> 00:10:54.870
All they've done is out and they've added more dollars to their pockets because as you pointed out, there's now GST on the price increase or included in the price increase.
00:10:55.110 --> 00:11:09.669
So the government's making more money off us, we're paying more as consumers, and the business owner is the one that's being accused of you're greedy and you're making too much money and you won't pass now you just because you can't pass the surcharge on.
00:11:09.909 --> 00:11:12.710
Well, I'm sorry, who's looking at the top end of town?
00:11:13.029 --> 00:11:16.950
The banks are the ones that are profiting from this.
00:11:17.110 --> 00:11:17.350
Yep.
00:11:17.509 --> 00:11:17.750
Yep.
00:11:17.990 --> 00:11:21.990
They do sweet fuck all to get that money.
00:11:22.230 --> 00:11:23.590
Sorry, I've got to swear.
00:11:23.750 --> 00:11:24.550
I've got to swear.
00:11:24.710 --> 00:11:25.909
It's driving me insane.
00:11:26.789 --> 00:11:30.389
All they're doing, they they don't handle anything.
00:11:30.710 --> 00:11:33.830
They don't handle any cash for this transaction.
00:11:34.070 --> 00:11:37.190
They don't, it all happens electronically.
00:11:37.430 --> 00:11:39.190
It's all done for them.
00:11:39.350 --> 00:11:45.909
They pushed us to credit cards and FPOS cards years ago, years and years and years ago.
00:11:46.070 --> 00:11:50.149
And I'm going back here to before, way before I entered the pool and spire industry.
00:11:50.310 --> 00:11:57.190
I'm going back to when I was 18 and just out of high school and worked for one of our major big four banks.
00:11:57.669 --> 00:12:03.750
And I remember us telling customers that FPOS transactions were free.
00:12:03.990 --> 00:12:09.669
And when they would come into the bank and want to make a cash withdrawal, it was like, oh, you don't have to do that anymore.
00:12:09.750 --> 00:12:15.990
Here you get this fancy plastic card, and now I'll walk you out to the front and show you how to use the F-POS machine.
00:12:16.230 --> 00:12:16.389
Yep.
00:12:16.629 --> 00:12:19.269
Or the the cash ATM.
00:12:19.590 --> 00:12:21.509
And we went through that.
00:12:21.590 --> 00:12:35.990
So the banks pushed everybody to electronic transactions and then went, yay, let's rake in the money because we can now make all these fees from the merchants, from the small businesses.
00:12:36.149 --> 00:12:39.269
Let's squeeze the small businesses a little bit tighter.
00:12:39.430 --> 00:13:02.070
So the government has successfully put a knife in the back of small business that this country rides on the back of the biggest employers in the country, and yet they are the ones that are paying themselves generally the least amount of money and working the most amount of hours, and then the government wants to screw them on capital gains tax as well when you sell your business.
00:13:02.310 --> 00:13:05.590
So yeah, it is just diabolical.
00:13:05.750 --> 00:13:11.990
And now the surcharges we're expected to absorb without increasing our prices.
00:13:12.550 --> 00:13:17.029
It drives me absolutely barny.
00:13:17.350 --> 00:13:22.710
And the credit, the credit card rewards points and everything like that, because of that, that's all been cut now.
00:13:22.870 --> 00:13:28.550
We don't get many of them, but you know, I would get some gift cards, I'd get some bits and pieces through just through my personal.
00:13:28.710 --> 00:13:33.269
But yeah, that's all that's all sort of, you know, cut being cut as well.
00:13:33.590 --> 00:13:34.070
Yeah.
00:13:34.310 --> 00:13:37.990
Like if anybody was going to have to pay for this, it should have been the banks.
00:13:38.230 --> 00:13:41.190
They make billions every year.
00:13:41.669 --> 00:13:57.350
Why should small business that's being screwed over left, right, and center, be made to foot the bill when the big banks are rubbing their hands together with glee, going, we make$1.6 billion a year from this kit?
00:13:57.750 --> 00:13:57.909
Yeah.
00:13:59.110 --> 00:13:59.830
Stupid.
00:14:00.310 --> 00:14:03.350
I I would things would be different if I was in charge.
00:14:03.430 --> 00:14:06.789
That's what that'd be very different if I was in charge too.
00:14:07.029 --> 00:14:13.830
I'd be cutting all the politicians' bloody superannuation funds and all their lurks and perks, and that's yeah.
00:14:14.230 --> 00:14:15.669
Anyway, we digress.
00:14:15.990 --> 00:14:29.830
So if you're a small business out there and you have been passing on that surcharge or haven't been passing on that surcharge to your customers, I'm sure your customers are very grateful.
00:14:29.990 --> 00:14:34.710
And it is, as many people say, it is a cost of doing business.
00:14:34.870 --> 00:14:38.470
But the problem is not everybody pays with credit cards.
00:14:38.710 --> 00:14:59.669
So if you're rolling the cost of those electronic transfers, those EFT payments or FPOS payments, whatever you want to call them, if you are rolling them into your prices, your customers who are paying cash or paying by direct deposit are actually paying more than they should.
00:14:59.990 --> 00:15:02.710
So a lot of businesses are doing that at the moment.
00:15:02.789 --> 00:15:10.149
I've seen a big push towards, okay, well, if we can't surcharge, we're going to discount for cash and we're going to discount for direct deposit.
00:15:10.310 --> 00:15:13.430
So that's something you can consider with your business.
00:15:13.750 --> 00:15:17.269
So look at the prices, up the prices a bit.
00:15:17.669 --> 00:15:28.629
Obviously, we're going to talk about doing a full audit on your your true numbers and knowing your the cost of your outgoings and the percentages you should be allowing for.
00:15:28.710 --> 00:15:30.389
But we'll get to that in a minute.
00:15:31.029 --> 00:15:46.950
But with your prices, up your prices so do you that you're covering your costs, but then offer a small discount for those that pay cash or pay by direct deposit so that you're actually rewarding those that aren't using cards.
00:15:47.029 --> 00:15:51.590
Because let's face it, if we're increasing our prices, everybody's being disadvantaged.
00:15:51.830 --> 00:15:54.149
That's what I did like about the surcharge.
00:15:54.389 --> 00:15:55.430
It was very clear.
00:15:55.590 --> 00:16:01.269
If I chose to pay by credit card, I chose to accept that there would be a small surcharge.
00:16:01.430 --> 00:16:03.350
And I did that knowingly.
00:16:03.830 --> 00:16:07.269
So I didn't actually have a problem with paying a surcharge.
00:16:07.430 --> 00:16:07.750
Yep.
00:16:07.909 --> 00:16:16.310
But I have a problem paying an increased price when I'm paying cash to cover the people who are paying by credit card.
00:16:16.789 --> 00:16:22.230
Yeah, we my first option for customers, yeah, would be the BSB, the account number, the transfer.
00:16:22.310 --> 00:16:24.550
Like, you know, you don't want to pay any surcharge.
00:16:24.629 --> 00:16:25.509
That's that's your option.
00:16:25.590 --> 00:16:26.470
You know, you can do that.
00:16:26.550 --> 00:16:29.590
There's a little bit more work for them, obviously, to put in all the details.
00:16:29.750 --> 00:16:34.070
And but once we're saved as a payee and everything like that, it's nice and easy for them to do it.
00:16:34.230 --> 00:16:35.669
So that was always the go-to.
00:16:36.070 --> 00:16:37.430
Um, you know, cash.
00:16:37.590 --> 00:16:46.950
Hopefully we see a comeback of cash and more cash, people, people using it and and maybe offering the offering the discount, which was big, I think, back many, many years ago.
00:16:47.029 --> 00:16:54.710
You know, cash was king and you would prefer cash, but maybe it will pee to point more people towards that option.
00:16:55.430 --> 00:17:03.430
All I can say is that I'm grateful that this all happened before cash disappeared, because then it would have been too late.
00:17:03.590 --> 00:17:07.430
Like a lot of people have had that push towards a cashless society.
00:17:07.509 --> 00:17:11.109
You hear it every now and then go through social media and whatnot.
00:17:11.269 --> 00:17:19.430
We talk about a cashless society, and yeah, it's clear that people want to go back to cash now.
00:17:19.589 --> 00:17:19.829
Yep.
00:17:21.109 --> 00:17:27.349
Mind you though, banks now count charge for counting cash.
00:17:27.509 --> 00:17:30.309
Isn't that the most ridiculous thing you have ever heard?
00:17:30.950 --> 00:17:34.869
If you can find a bank that hasn't closed, because I know a lot of a lot of checks.
00:17:35.269 --> 00:17:36.629
Again, another problem.
00:17:36.789 --> 00:17:37.509
Yes, yes.
00:17:37.829 --> 00:17:46.069
They're closing branches at a rate of knots because people are all doing it by internet and electronic transfer and and whatnot.
00:17:46.149 --> 00:17:56.950
So the branches are needed less, mind you, as we had to do, walk people out front and show them how to use the ATM so that the teller's time was not taken up.
00:17:57.189 --> 00:17:57.509
Yep.
00:17:57.750 --> 00:18:00.309
And then, yeah, I had this happen to me.
00:18:00.389 --> 00:18:02.869
So this was while we had our business.
00:18:03.429 --> 00:18:10.469
I was going through my bank statement, as we do, reconciling things, and there was a$17 fee there.
00:18:10.789 --> 00:18:15.829
And next to that$17 fee was cash counting fee.
00:18:15.909 --> 00:18:17.589
And I went, What the?
00:18:17.829 --> 00:18:19.029
Like, seriously?
00:18:19.189 --> 00:18:20.309
It's a bank.
00:18:20.469 --> 00:18:23.269
So I rang my business bank manager.
00:18:23.669 --> 00:18:31.669
So I had a dedicated business bank manager, and rang him and said, Can you please explain this to me?
00:18:31.909 --> 00:18:32.709
Like, what is it?
00:18:32.789 --> 00:18:35.029
And he went, let me look into it, come back.
00:18:35.669 --> 00:18:45.990
Yes, you banked$8,000 in cash and there's a surcharge of so much percent for counting cash.
00:18:46.229 --> 00:18:48.469
And I went, You are kidding, aren't you?
00:18:49.109 --> 00:18:50.709
Like you are a bank.
00:18:50.869 --> 00:18:54.309
If you're not there to count cash, what are you there for?
00:18:54.469 --> 00:18:58.389
And and he went, Oh, well, it is part of like it's a service where it takes time.
00:18:58.469 --> 00:19:00.149
And I went, takes time.
00:19:00.389 --> 00:19:01.429
I had it folded.
00:19:01.509 --> 00:19:03.029
Like I used to work in a bank.
00:19:03.189 --> 00:19:13.429
I had it counted and put into flats, which are you like counts of ten notes or whatever it is, depending on the the notes, but generally ten notes.
00:19:13.589 --> 00:19:20.869
And so you have ten and then you put them into like bundles of ten, ten lots of ten, and you count them that way.
00:19:21.109 --> 00:19:29.509
Anyway, I had handed them over to the counter, all with rubber bands around it, all counted, with a breakdown, a whole lot.
00:19:29.829 --> 00:19:32.309
And this teller didn't even care.
00:19:32.629 --> 00:19:35.109
She did not count one note by hand.
00:19:35.349 --> 00:19:44.229
She took all the rubber bands off, she stuck the notes into a machine, she pressed one button, and that told her how many notes there were and what the count was.
00:19:44.469 --> 00:19:57.669
You take in a money box these days and they jingle the whole thing, they empty the whole thing into a automatic sort of machine which sorts it and then weighs it and tells you the value of it.
00:19:57.909 --> 00:19:59.829
And they don't count nothing.
00:20:00.309 --> 00:20:02.149
Yeah, not getting their hands dirty.
00:20:02.469 --> 00:20:03.669
And yet they charge you for it.
00:20:03.829 --> 00:20:06.069
So I said to the bank manager, this is crazy.
00:20:06.149 --> 00:20:08.309
And he said, Well, there is one way around it.
00:20:08.549 --> 00:20:09.509
What's that?
00:20:09.750 --> 00:20:12.869
He said, You can put the money in the telling machine out front.
00:20:13.109 --> 00:20:18.709
So had I banked it through the ATM, I would not have paid a cent for it.
00:20:18.869 --> 00:20:30.229
And you can bet your bottom dollar, they would have counted it in exactly the same way coming out of the telemachine as they did over the counter, and yet I paid$17 for that privilege.
00:20:30.389 --> 00:20:38.069
However, fortunately for me, my business manager did actually reverse the fee for me and just said, okay, next time don't do it.
00:20:38.229 --> 00:20:39.589
So that's what I used to do.
00:20:39.750 --> 00:20:44.469
Every time after that, I banked my cash through the ATM.
00:20:44.629 --> 00:20:46.949
You can't put coins through the ATM, though.
00:20:47.429 --> 00:20:49.429
You didn't put it under the mattress at home?
00:20:49.750 --> 00:20:51.589
No, I don't do that.
00:20:51.829 --> 00:20:53.269
I'm a good person.
00:20:53.669 --> 00:20:55.109
I am a good and honest.
00:20:55.269 --> 00:21:05.829
Actually, I did have a bookkeeper one day say to my mother, actually, that I was the most honest per uh business owner she'd ever met.
00:21:05.990 --> 00:21:13.189
So, and uh yeah, I probably lived with a bit of fear of being audited, having a tax man go through me.
00:21:13.349 --> 00:21:22.949
Not that I had done anything wrong, but I was always concerned I'd missed something along the way and that I would be in a lot of trouble for it.
00:21:23.109 --> 00:21:31.189
Um, probably comes from the fear of my parents actually went bankrupt when I was in my early 20s.
00:21:31.509 --> 00:21:42.869
My dad had bought into a business that unfortunately was in hocke with the government to a lot of money in tax and superannuation and and whatnot.
00:21:43.109 --> 00:21:48.069
And they um my parents unfortunately lost their home that they owned over it.
00:21:48.309 --> 00:21:58.949
And the weird the stupid thing about it is my father had only been a part of that business for like six months and didn't know anything that had gone on, and it was a pre previous owner's issue.
00:21:59.029 --> 00:22:08.309
And but my father had stupidly not being a smart businessman, had not done his due diligence on the actual state of the company that he'd purchased.
00:22:08.549 --> 00:22:11.189
So um, yeah, unfortunately they lost their home.
00:22:11.349 --> 00:22:14.789
So because of that, they had been audited, they'd gone through the process.
00:22:14.949 --> 00:22:19.990
It was an extremely grueling and and very anxious and stressful time for my parents.
00:22:20.069 --> 00:22:26.469
And I think that probably resonated with me and left on in me when I when we established our own business.
00:22:26.549 --> 00:22:29.829
So I always made sure I crossed the T's and dotted the I's.
00:22:30.149 --> 00:22:37.349
So and fortunately for me, touch wood, looking around that is a wood I haven't been audited ever.
00:22:37.509 --> 00:22:41.029
So you want to keep on the right side of those guys, do the right thing.
00:22:41.269 --> 00:22:41.509
Yeah.
00:22:41.669 --> 00:22:42.789
Yeah, absolutely.
00:22:42.949 --> 00:22:44.869
So, no, my cash was banked.
00:22:44.949 --> 00:22:51.589
I used to just actually have to pick the amounts that I was actually going to to bank so that I could round it out to the nearest dollar.
00:22:51.750 --> 00:22:52.869
So the weird and wonderful thing.
00:22:53.269 --> 00:22:55.669
things that you do to try and get things to work.
00:22:55.990 --> 00:23:01.589
But yeah, so the surcharges really, really get to me for small business.
00:23:01.750 --> 00:23:03.429
Small business is doing it tough.
00:23:03.589 --> 00:23:04.949
The economy's tighter.
00:23:05.109 --> 00:23:09.029
We know we're living with high inflation at the moment.
00:23:09.269 --> 00:23:10.629
Interest rates are going up.
00:23:10.789 --> 00:23:12.629
Things are getting payday super.
00:23:13.189 --> 00:23:13.509
Yeah.
00:23:13.750 --> 00:23:14.949
Payday super now.
00:23:15.269 --> 00:23:16.549
Affecting cash flow.
00:23:16.869 --> 00:23:18.789
That's exactly it for a business.
00:23:18.949 --> 00:23:23.109
And and so our customers are dealing with their own constraints.
00:23:23.349 --> 00:23:25.990
We're dealing with constraints as well as well.
00:23:26.229 --> 00:23:37.750
And then having this added to us, it was just it was almost like saying to the government, here just let me give you another nail and a hammer and you can put another nail in the coffin of small business.
00:23:37.990 --> 00:23:45.909
It it it hurts when you're out there and you're trying to employ people and you're keeping your money local in local economies.
00:23:46.069 --> 00:23:56.789
They we're keeping things moving along for a lot of people and it's it's really hard when you feel like you're always getting the the tough end of the stick.
00:23:56.869 --> 00:24:06.389
So I do feel for business owners out there at my even some of like the the freight charges or surcharges like they're coming in like we're not getting voted those figures.
00:24:06.469 --> 00:24:09.909
They're just coming in on the invoice like you know we're not seeing them before.
00:24:10.069 --> 00:24:16.709
So how we and I had one recently with a chlorinator sell you know extra freight on there we'd already quoted the customer.
00:24:16.949 --> 00:24:24.069
You know it's like well we know we've got to cop this now like yeah and and those that's where it really hurts.
00:24:24.229 --> 00:24:46.949
And I think a lot of businesses really need to I think I think what happens is a lot of people go into business and it's just like they grow organically and we we get bigger and we start to do more, we start to sell more we sell big ticket items we we assume when we put a 100% markup on something that we're actually making a decent amount of money.
00:24:47.189 --> 00:25:00.069
But do we actually know how much we're making do we know what our overheads are and the problem is when we give a discount it might go well it's 10% let's say we're talking a thousand dollar item here.
00:25:00.229 --> 00:25:00.549
Yep.
00:25:00.789 --> 00:25:06.549
We go okay we'll give you a 10% discount that's$100 off it comes down to$900.
00:25:06.789 --> 00:25:17.029
Now you might have paid$500 for that item you were selling for a thousand but the thing is you now aren't making$500 you're only making$400.
00:25:17.109 --> 00:25:22.949
That$100 comes off your bit not the bit you pay to the supplier they get theirs guaranteed.
00:25:23.269 --> 00:25:27.429
So you're actually discounting your your profit.
00:25:27.509 --> 00:25:41.029
So you're actually when you like you were making$500 now you're making 400 you're actually giving 20 of your mark of your markup or your margin that your profit that you were making.
00:25:41.429 --> 00:25:52.389
And so you're losing more so think about that I'm a very big advocate for value adding not discounting.
00:25:52.709 --> 00:26:06.229
So instead of giving somebody$100 off I'd be more inclined to give them a$100 in-store voucher to come back and and get chemicals at a later time or hopefully perhaps buy more.
00:26:06.469 --> 00:26:40.469
I have mentioned this before on the on the show because Harvey Norman who are one of Australia's biggest electrical and furniture stores in the country they give you a 10 they do that they give you a 10% voucher and but the thing is what they don't tell you is that you've only got 30 days in which to spend it because it's a discount voucher like an incentive it's not under the same rules as a gift voucher which has three years so to for you to spend it.
00:26:40.709 --> 00:27:15.029
So these are come under a different ruling so a lot of people aren't aware of that and then all of a sudden they found that that voucher that they had sitting in their wallet or the the the card that they had sitting in their wallet with a couple of hundred dollar discount on it because they've just bought a big screen TV for two and a half grand and they've got a a$250 voucher to spend at Harvey Norman and they go, oh yeah I'll still stash that away for a a rainy day rainy day comes and you pull it out and it was out of month out of date months ago because you thought you had three years up your sleeve but you didn't and you had 30 days.
00:27:15.109 --> 00:27:18.069
So do watch that if anybody's buying from Harvey Norman.
00:27:18.629 --> 00:27:27.509
But that you can do those types of things in your business too and it does incentivize customers to come back and hopefully spend more.
00:27:27.990 --> 00:27:34.789
So and that then means that you're not discounting the full value of of your profit margin.
00:27:34.869 --> 00:27:41.990
You're actually we know we we buy what we buy chemicals for we're actually only discounting to the value of that.
00:27:42.149 --> 00:28:02.149
So yeah we offered that to a customer recently you know worked um they were happy customer was happy you know we don't have to cop the full discount amount um so it just worked out well for everybody I think and to the customer they look at that and they go well it's a hundred dollars off this item and it's a hundred dollars I save later on because I'm not spending it.
00:28:02.309 --> 00:28:05.429
So the customer is actually out of pocket no different.
00:28:05.990 --> 00:28:09.909
Yep and but for us it's a big dis a big difference.
00:28:10.069 --> 00:28:15.269
So definitely look at value adding as opposed to discounting.
00:28:15.509 --> 00:28:30.869
The other thing that I'm really concentrating on with my coaching clients at the moment and this is what I would implore with our listeners out there that are got the price gun out and they're madly running around changing those prices for a few cents or maybe a dollar.
00:28:31.509 --> 00:28:38.069
I haven't seen a price gun in so long I think I think we used to have one back when I first started if I haven't seen one of them in years.
00:28:38.309 --> 00:28:49.109
Well say the imaginary price gun because that's technically what it isn't it you could say the scanner we don't price anything with or put a price on anything with a scanner but we do check prices with the scanner.
00:28:49.269 --> 00:29:07.109
But if you're running around the shop and you're madly putting up those prices a few cents or a a couple of dollars for the bigger items do put the price gun away or that imaginary price gun away and pull your calculator out and actually look at what your overheads are.
00:29:07.589 --> 00:29:10.949
And this can be quite scary for a lot of businesses.
00:29:11.509 --> 00:29:16.309
So if you actually sit down and the best thing you can do is grab your last profit and loss.
00:29:16.469 --> 00:29:31.429
So if you've done your figures for last year, congratulations you're probably one of the few businesses that have when I say financial year I mean 25 and 26 most of us put it off until May the death knock of the next year so that you can get as long as possible repay it.
00:29:31.589 --> 00:29:35.669
Some accountants like to do that so that they've got as long as possible to do it.
00:29:35.990 --> 00:29:38.069
But pull out those profit and loss figures.
00:29:38.149 --> 00:29:48.309
You might be able to pull them out of zero or your mile and then you can plug them straight into well I have a calculator that I'm going to share with all our listeners.
00:29:48.469 --> 00:30:02.469
So listeners out there if you are interested in actually working out what your overheads actually are and what your percentage of costs is that you should be taking into account when you're doing your pricing this is absolutely for you.
00:30:02.629 --> 00:30:08.709
This is a small I suppose snippet of what I work with with my actual coaching clients.
00:30:08.869 --> 00:30:11.750
Their calculator is actually 14 pages long.
00:30:11.990 --> 00:30:24.629
Mind you it's not 14 pages of putting figures in but it's for it allows all the figures to be dissected and we us to actually look at the profitability across multiple different areas of your business.
00:30:24.709 --> 00:30:33.909
So whether we look at your profitability in service in retail in admin like the whole lot and then we also look at markup versus versus margin.
00:30:34.149 --> 00:30:40.789
So it is actually quite a diverse operations cost calculator but that's for my coaching clients.
00:30:41.109 --> 00:31:37.189
This one is a free one that I have pulled out the important bits to give you a quick insight into the overhead costs of your business and you can plug in the figures straight from your profit and loss or straight from your zero accounting package and you take into consideration things like your your rent and your lease or uh or if you've got a mortgage on your shop, maybe that your wages for your staff your wages for yourself because a lot of businesses owner owners don't include themselves in the actual wages of the business but we all need to make it a wage so you need to make sure you account for that too vehicles all your vehicle costs your Regio, your fuel, your servicing, your lease payments the whole lot your insurances, your utilities so electricity, water, internet, phone, computer software, all of it we include bookkeeping marketing, the whole lot they've all gone up as well.
00:31:37.349 --> 00:31:39.509
They've all gone up every one of them everything.
00:31:39.990 --> 00:31:44.469
Electricity electricity something that you know has gone up massively here.
00:31:44.789 --> 00:32:06.389
Yeah absolutely and it is scary that all of those things that have gone up but have businesses actually taken stock of that and actually adjust their prices for that those price increases are significantly more than the few cents of the surcharge but yet here we are all panicking about the surcharge.
00:32:06.549 --> 00:32:17.589
So that's why I'm saying hold the horses put the price gun down let's actually take a look at the full picture and actually look at really what you should be marking your products up.
00:32:17.829 --> 00:32:38.149
So then we take all that into account we then obviously look at your your annual turnover excluding GST and then we get a percentage figure and that percentage figure actually tells us what we need to be charging on top of our product cost to actually cover our overheads.
00:32:38.309 --> 00:32:45.269
That's before we even make a profit and it can be really scary for a lot of businesses.
00:32:45.509 --> 00:32:57.109
In some cases they're going backwards and on especially on some products we see like mass merchants do loss leaders for those who don't know the term loss leader.
00:32:57.269 --> 00:33:22.549
A loss leader is a product that often mass merchants or generally business offer at a very low price that's very attractive to the consumer they come in they buy that cheap salt they buy those chip that cheap chlorine and while they're there they'd buy an algebra and they'd buy buffer and they'd buy this and then buy something else from the other end of the store or whatever they're doing.
00:33:22.949 --> 00:33:29.909
And they came in to buy that$750 bag of salt because it is so cheap.
00:33:30.229 --> 00:33:34.869
Mind you it's pretty shit salt but that's another subject guaranteed disdain.
00:33:35.189 --> 00:33:42.549
Guaranteed disdain that's it they come in for this very cheap salt but then they spend a lot of money on other things while they're there.
00:33:42.709 --> 00:33:46.469
And that's what these mass march merchants do.
00:33:46.869 --> 00:33:52.869
They they ride on those key products to be lost leaders.
00:33:52.949 --> 00:33:58.229
So they are willing to take a loss on that because they're going to make a massive gain on something else that you buy.
00:33:59.189 --> 00:34:11.030
So but in our businesses we can't afford to have lost leaders or if we do they have to be very calculated and sometimes we actually have lost leaders and we're not aware of them.
00:34:11.190 --> 00:34:47.429
It can it can be quite scary when you look at your overheads and your overhead cost is let's say 35% of your your overall numbers and then you go okay well I'm going I put a a 50% markup on product on a bag of salt let's say for example well a 50 markup on a bag of salt if I buy that for$10 that means I'm putting five on it that's$15 now that I'm charging that out for plus I've got to then put GST on it$1.50 so that then becomes$1650.
00:34:47.590 --> 00:34:52.550
And$16.50 is probably not too far from a lot what a lot of people are charging on salt.
00:34:52.710 --> 00:35:07.990
So then you go though 50% markup is only a 33% margin and if my overhead costs are at 35% I'm making a loss you're in trouble.
00:35:08.470 --> 00:35:17.110
You're in trouble every bag of salt means you're going backwards every bag of salt you sell means you're going backwards.
00:35:17.590 --> 00:35:38.470
So and that's okay if that's a decision you want to make in your business to be a lost leader but the the the the whole point of having lost leaders is that you then sell other products and those other products are at a higher margin that covers the loss on that product.
00:35:38.870 --> 00:35:41.590
So very very important that people are aware of it.
00:35:41.670 --> 00:36:10.870
So the difference between markup and margin knowing the difference between the two so the markup is the is the value you put on it the margin is the percentage so knowing the difference because I've like if I buy an item like I say for for$10 and I put a 50% markup on it it's only a$5 margin sorry a five dollar markup yep but it's a 33 margin.
00:36:11.030 --> 00:36:19.670
So just knowing the figures is really really important so yeah if listeners out there are interested this is completely free.
00:36:19.910 --> 00:36:32.070
I will get Rudy to put a link in the show notes I really employ you this is a really valuable tool for you to take advantage of get to know your figures get really familiar with them.
00:36:32.150 --> 00:36:49.750
Sometimes it can be incredibly uncomfortable but until you actually face them you don't know how you're truly running your business whether you're running it at a true profit or not and you might actually open your eyes to a lot of things that you really need to be aware of.
00:36:49.910 --> 00:36:59.430
If you stick your head in the hand in the sand just the problem doesn't go away yes well you don't want to have a busy summer and then realize at the end of summer that you've made no money.
00:36:59.670 --> 00:37:13.990
So that's exactly it summer's upon us it's upon us and you everyone's going to get busier and busier and things are going to be walking out the door and if no one's making any money by the time wintertime comes it quitens off again there'll be no there'll be no buffer there.
00:37:14.309 --> 00:37:19.110
No that's exactly it and I I I know this happens to a lot of businesses.
00:37:19.190 --> 00:37:30.070
They go but I'm really busy and they and they go and there's money in the bank so I must be doing well that does not equate to profit.
00:37:30.309 --> 00:38:00.309
It does not equate to profit and so it's it's really important that busy does not necessarily mean profitable and money in the bank doesn't necessarily mean profitable because the moment you get that GST bill and the P A Y G bill and everything else that comes in and you pay those suppliers that are on 60 or 90 days for the start of the season as we all have put on early buys and whatnot then all of a sudden it's not actually looking so good because that money in the bank isn't actually yours.
00:38:00.470 --> 00:38:00.870
Yep.
00:38:01.110 --> 00:38:06.070
So it's it's really important to know your figures and be well and truly aware of them.
00:38:06.230 --> 00:38:12.870
Like I said sticking in your your head in the sand doesn't make them go away it just prolongs the inevitable.
00:38:13.110 --> 00:38:14.150
So yeah.
00:38:14.470 --> 00:38:18.789
But anyway so that's not a great note to end on I'm sorry.
00:38:19.110 --> 00:38:32.870
It's it's it could be it could be a little bit like you know it could be the difference between 20 cents and 50 cents or you know 50 cents and 75 cents on a product like salt that you said that you might sell I know we sell a lot of bags of salt it's going to add up.
00:38:33.030 --> 00:38:37.030
So you know spend the time to look at it and you know you're going to be better for it.
00:38:37.269 --> 00:38:47.829
And quite the case of if you look at salt salt was something like obviously full shops in Australia we sell a lot of and we go through pallet after pellet after pallet.
00:38:47.990 --> 00:38:56.870
Now if you think about all of those pellets and every bag of salt you're selling you're making a loss those pellets look so different.
00:38:57.269 --> 00:39:07.030
And if you've got a retail and a service business you're carrying them to the site and you're on your shoulder or on a trolley and putting them into someone's pool for nothing.
00:39:07.349 --> 00:39:11.030
Yes yeah that's exactly actually not for nothing.
00:39:12.390 --> 00:39:19.349
You're literally paying them really you're going backwards for them for putting salt in their in their pool.
00:39:19.510 --> 00:39:21.990
So it's really yeah important.
00:39:22.150 --> 00:39:34.550
And I know like yeah you you raise a really valid point there our business we actually had to hand offload the salt power salt bags into the shop because my front door was too narrow and I couldn't get a callet through it.
00:39:34.789 --> 00:39:44.150
That was a bane of my staff's existence I'm sure but yes those things we so we were hand offloading every bag of salt that came into the business.
00:39:44.309 --> 00:39:52.230
We were hand offloading every bag of salt that went out the door whether it go into a cut client's vehicle or into the service vehicles.
00:39:52.390 --> 00:40:02.470
Fortunately the warehouse we obvious we had a warehouse that was where the service guys picked up their bags so we're very grateful they didn't have to hand off load those both ways.
00:40:02.630 --> 00:40:04.789
But still I digress.
00:40:05.430 --> 00:40:13.269
Check your prices get on top of it let's turn a less profitable business into a more profitable business.
00:40:13.430 --> 00:40:18.470
You're not working for free yes we love our businesses or we hope I hope you love your businesses.
00:40:18.630 --> 00:40:23.510
If you don't you need to talk to me but we we want to make this profitable for you.
00:40:23.670 --> 00:40:28.470
You want to have something to sell in a few years' time you want to have a profitable business.
00:40:28.630 --> 00:40:42.470
You still want to be in business and you want to have a profitable business that somebody actually wants to purchase so making sure that you're being profitable along the way that you're being smart these types of calculators can can really help.
00:40:42.630 --> 00:41:05.750
So don't hesitate to reach out like I said Prudy will have a link in the show notes where you can grab um your free know your numbers calculator so this is know your numbers work out what every sale has to earn before you even make a cent for joining me today.
00:41:05.990 --> 00:41:16.390
Thank you for listening and we love having you as part of the Monday is down under crew because without you listeners we don't have a podcast.
00:41:16.630 --> 00:41:17.750
So thank you very much.
00:41:17.910 --> 00:41:29.990
Remember if you have any questions any topic suggestions drop us a line at talkingpools at gmail.com and Rudy will dish those out to the most applicable host.
00:41:30.710 --> 00:41:43.590
But again we thank you for um being with us this week we hope that you will join us again next week for another riveting episode of Mondays Down Under on the Talking Pools podcast.
00:41:43.829 --> 00:41:45.590
Thanks very much see you guys.
00:41:45.910 --> 00:41:46.230
Bye
