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How To Be Profitable From Day One

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I want to talk about something that’s a little taboo in the business world, a mistake that many new business owners make. And a mistake I made when I first opened my consulting agency.

 

The mistake is building your business and expecting that, someday in the future, you are going to be profitable. Sounds harmless, right? Wrong. Instead, you should be focusing on being profitable from day one!

 

Many entrepreneurs start a business so that they can have freedom. So they can set their own schedules. So they can spend more time with their families. So they can finally be rewarded for their hard work in the way that they should be rewarded.

 

Before you know it, you are “investing” 12 to 18 hours per day in your business so that one day you can finally make money from your business. If you calculate out how much you are actually making, you realize that you make less than minimum wage. You could make more working at a fast food place!

 

In 2006, when we first started our marketing consulting agency, we had an offer called “Services for Stompers”. Our target audience included fellow members of the membership group “Stompernet.” The idea was that I would find people who could execute the tactics and strategies that were being taught in the membership program and create a system around it. I created operating procedures and videos so that basically anyone that we hired could come in and start doing the strategies immediately. I then made those people available to the members of the Stompernet community to help them to grow their businesses, as well.

 

Back then I thought, “Well, if I’m paying these people

$5 an hour and I charge $10 an hour, that’s huge! I’d be making 100% profit.” But what I didn’t count on was the long list of operating expenses that comes with growing and scaling a business.

 

As our consultancy agency grew, I learned about how you should have different departments in your organization, even if you are just a one person show! That way, you can allocate a percentage of your revenue to each of the departments and then designate each of your expenses to one of those departments.

 

There are six main departments:

 

1. Administration. Administration includes anything for the CEO, such as ongoing training, professional dues and fees. If you are a small business with less than five employees, you could put your salary in this category as well.

 

2. Marketing. Marketing includes anything that is done to acquire a lead or prospect, including things like paid ads and building an email list.

 

3. Sales. Sales includes anything that is done to close a sale.

 

4. HR & Finance. HR & Finance includes any bank fees, bookkeeping, CPA or anything that is human resource related.

 

5. Operations. Operations includes anything that is related to the cost of keeping the doors open, including internet and phone services.

 

6. COGS. COGS stands for the “Cost of Goods Sold”. If you have a team, then this would include all of the salaries of W-2 or 1099 team members.

 

An example of how you might allocate your revenue could be:

 

Administration 20%

Marketing 10%

Sales 20%

HR & Finance 5% Operations 20%

COGS 25%

 

When I first started my consulting agency, I had no idea about any of this. I was oversimplifying things. All I thought was that if you pay somebody $5, sell for $10, then you make 100% profit — and that’s huge. But you know as well as I do that there’s a lot more that goes into a business than that!

 

Some of what goes into a business is very nuanced. For example, how do you handle quality control in your business?

 

If you assign your employee a client project and pay them $5.00 an hour to complete it, and then pass it back to your client without checking their work first, there’s a very high possibility that there will be some important details that were missed. Spelling mistakes, broken links, broken funnels, etc. — all of this makes for unhappy clients. There’s a lot of middle management operating costs that are often overlooked and unaccounted for when you first price out your product or service.

 

I hope now you understand what I meant when I first said that a big mistake business owners make is expecting their business to be profitable over time – but not from day one. If you focus on profit from the very beginning, you can be one of those businesses that starts generating revenue well ahead of the competition. It’s actually a lot easier than you think to start generating six figures of revenue.

 

But now, as a business owner, you find yourself working twelve hour days, working 60 or 70 hours a week. You can’t go see a movie, much less take a vacation. You can’t escape from your business because everything is dependent on you. You have clients that need help, team members you need to train and work to review. You’re the link between your clients and your team and that takes up a lot of time and energy. And at the end of the year, your company may have generated six figures, but because of all of the expenses we outlined above, you’re not seeing a lot of that money.

 

You might be lucky if you’re able to take home a

$20,000 salary. (That number is pretty standard for service based businesses — the profit margins are about 20%.)

 

So let’s lay it all out on the table. You’ve just earned

$20,000 working 60 – 70 hours a week, every week, for an entire year. You thought all of those hours would be worth it…was it?

You say to yourself, “It’s going to work. It’s going to scale. I’m going to get better clients. My team’s going to get better.”

 

But your team is probably made up of contractors, and as you train them and their skill level increases, they’ll start taking on other clients and get busier. They might increase their rates. They might not be available to work the amount of hours you need them to. The bottom line is: their goal isn’t to help you grow your company.

 

Or maybe you’re doing the actual client work, but because you’re trying to balance it all, sometimes your work isn’t the best you could be producing, especially if you had more time and energy to put into it. So your clients are frustrated and they don’t want to keep paying you for subpar work. There’s been too many bumps in the road and they don’t want to keep working with you.

 

It’s a never ending cycle of losing team members and clients, and hustling to get new clients and train new team members.

 

 

We need to stop this cycle TODAY. We do not want to have a creative business where we’re working ourselves to the bone only to take home a couple thousand dollars in revenue. It doesn’t make sense because, statistically, your year two in business isn’t going to be any different. Neither is year three.

 

It’s time to figure out how to make your business profitable right now, immediately, or at the very least within the next 90 days. I personally don’t even start new projects unless I know they can be profitable from day one.

 

So, figure out what you need to do to make your business profitable within these next 90 days. You might need to take a step back to look at how you would structure your company if you had departments.

 

If you had to pay someone to do the job that you’re doing, what would that look like? Your job as the business owner is to work yourself out of a job. What I mean by that is that your business should be generating enough revenue so that if it was necessary, you would be able to hire someone to replace yourself in your own business.

 

In other words, your business should be able to pay you the same amount of money that it would cost to pay someone else to do the job that you are doing in your business today. Now that’s probably not the amount of money that you’d ideally like to be making as the business owner, but, at a minimum, figure out the amount of money that you would need to pay someone else to do your job.

 

So, for example, if your business is not able to generate $60,000 of profit, which is about $5,000 a month, the average salary that a business owner takes home, then something is wrong with the structure of your business.

Don’t let your business take over your life, especially if you’re not generating a living salary back from your efforts.

 

Don’t base your decisions in the belief that, one day, maybe in the future, your business will be profitable. Structure your business correctly today so that it is profitable from Day One.

How Much Is Your Time Worth?

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I’d like to ask you a question, “As a business owner, have you ever felt like your to do list is never ending? That you simply don’t have enough hours in the day to get things done to grow your business?” I know that I have.

 

The other day one of my kids was asking me if I had a time machine. The reason she was asking me is because it’s Christmastime and she couldn’t wait for Christmas morning to happen so that she could open up her presents. And I said, “Yeah, of course I do.” And, of course, she knew I was joking. But I said, “But if I did have it, if I did have a time machine, what I would do is I wouldn’t actually make time get faster. I would make time go slower because I have so much to do right now.”

 

There never (ever) seems to be enough hours in the day.


Does your business sometimes make you feel stressed and overwhelmed because you’re trying to figure out how in the world you are going to get everything done that you need to get done? It’s a never-ending cycle. Sometimes you are really stressed because you’re trying to get new clients for your business or new sales for your business. And then, all of a sudden, you have new clients or you have new sales, and now you have to fill all of the orders.

And so you’re stressed, either because you need more sales or you’re stressed because you’re trying to fulfill all of those new products or services that you’re trying to deliver. Maybe in your business you feel sometimes that you’re stuck on how to figure something out, that you know that you want to launch a new product or service online, but you’re not exactly sure how to do it.

Or maybe you’re trying to build your website for the very first time and you’re eager to launch it. Or maybe you want to set up an automated webinar or send out automated emails? You want to automate tasks. I had one client and we went round and round. She was getting all of this conflicting advice about how to set up her merchant account correctly so that she could connect it with Infusionsoft (Keap), which was her marketing automation platform. She had gotten a merchant account, but it was a “card present” account and not a “card not present”, which is the type of merchant account you need to get when you’re doing business online.

She had called up her merchant account, because she called up her bank and tried to explain, and nobody believed her when she said, “What I really need is a ‘card not present’ account”. I finally convinced her to just go into the bank, sit down, talk to the manager and make them fix this.

Maybe you are getting stuck with something in your business, and you’re not even sure how to figure it out. And people are giving you conflicting advice and you don’t know what the next steps are. Maybe you are telling yourself: “I just need to figure out this one thing and then I can get my business to move forward.”

Well, I want to ask you a question: How much is your time worth?

The reason I’m asking this question is because way back when we first launched our consulting agency, one of the things that I learned early on was that if I could pay someone $5 an hour to do something and I chose to do that one thing, then I was literally making or saving $5 an hour. When I learned that principle, it kind of blew my mind. At the time I was still doing everything myself.

Here I was trying to figure out how to update this page of my website using HTML, learning Dreamweaver… and I wasn’t really good at it. I was good at other things, but that was not my area of expertise. And it is taking me literally hours to figure out how to do this. And I could literally go at that time and maybe even today to Fiverr.com or other freelancing websites and find someone very easily and pay someone just $5, and they would have it done for me in probably 15 minutes. They wouldn’t even take them an hour to do those kinds of things.

And then it hit me. I realized, “Wow, I’m trying to save $5 by doing this thing myself!”If I hired

someone and gave them that job and assigned it to someone else, I could pay them $5 to do it — and they’re going to get it done faster than I ever could. They’re going to do a better job than me, and then I’m going to be able to free up my time to focus on where I should be focusing on. As a business owner, you have two jobs and only two jobs.

 

And those two jobs are to increase sales and to implement systems. If you don’t have systems in your business, you’re not going to be able to scale. You’re going to create this big thing where you are the bottleneck of your business and without sales, your company is going to die and you cannot delegate getting sales for your own company.

 

So, for example, when you’re first getting started, you may have zero revenue. That’s how we were when we first started our e-commerce business. And when we first started building that website, I did everything I could and then and pulled in my husband to help me with whatever I could not figure out. We didn’t have older kids at the time. They were all babies. So, there’s the two of us doing everything ourselves. We did not have any money at all to delegate to and even

$5 an hour was way too much to hire someone else at that time.

 

About eighteen months after we started the business, our sales skyrocketed to $30,000 a month! I finally realized that it did not make sense for me to do all the work myself anymore.

 

At the time I was still making all the edits to my website myself, creating all the graphics myself, writing all of the product descriptions myself…. on top of processing orders, taking customer service calls, and more! And it made sense when we were getting started. But once the revenues were at 30K per month, it did not make sense anymore. My time was better spent doing profit generating activities.

 

For example, let’s just take editing a video. I don’t know how to edit a video. I’ve never even tried to learn how to edit a video. But, let’s say I decided that I wanted to be the one to edit the videos for my business. Well, I’m going to have to first off, take a course or watch some videos about how to do editing. I’m going to probably have to buy some type of software tool to figure out how to edit the videos. I’m going to have questions. I may have to hire a consultant to teach me just so I can learn how to do it myself.

 

It’s going to take me hours and hours and hours to learn that new skill! Unless video editing is my core business, I literally have no business trying to learn how to do it! The time that I would take to learn that skill is not time invested. It is time that is wasted because it is not time that I can use to leverage that skill to increase the profitability of my company. My time needs me to be focused on two things which are increasing revenue and implementing systems in my business, so that the business can scale.

 

It’s time to buy your time back.

 

If you are a consultant and you charge $200 an hour and you choose to do something that you could easily pay someone $50 an hour to do, then at that moment in time, you are making $50 an hour. If we drill that down a step further, you are actually losing $150/hour because of the lost opportunities you are letting slip by.

 

This does not mean you have to go out there and hire a full time employee! You can hire a virtual assistant or a marketing consultant for only five hours per week and you’ll be amazed at how much they’re able to get done! You’ll be amazed at how different your own life will be by just giving yourself five extra hours!

Grow By Giving Back

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It was about 2007 and I had been a member of a high end mastermind coaching program for about a year when I finally decided that I just might then be able to have a little bit of information to be able to give back to the community. Back in those days, we did not have Facebook groups to post questions and get interactions. We had online forums. (Those of you who have been around for a while, you know what a forum is.)

 

People would post questions in the forums and others would answer those questions. I would be reading all of those answers that people would be giving and I’d go, “Well, I knew that. I could have answered that. I could have given that advice. That advice is wrong.”

Even though I already had huge success building my own e-commerce business from scratch with just the help from a course… even though I had been a member of the community for a year, attending four live events… I still felt kind of intimidated. I felt that I wasn’t able to contribute and give back.

After about a year, the membership program had another launch with new people coming in. I began to think that I could probably help these new people. I could probably answer a few of the new people’s questions. I knew that while I’m definitely not where these gurus are, I could definitely help the new people.

 

So, I began to contribute to the community. No one asked me to. I wasn’t a paid moderator or on the faculty. I began to contribute by answering questions. As I began to participate, people began to interact with me. I began to build credibility and authority. Then, people actually began to ask me specific questions. After a while, the people in charge of the membership group asked if I would teach a webinar about the things that I was doing in my business.

 

That was when things really began to change for me. I started to put together this material to simply give back to the community, wanting to help other people. I basically taught everything that I was doing. I didn’t hold back anything, not even secrets for myself. I didn’t try to sell a program. I just put together simple information explaining from A to Z how they could do what I had done in their own business.

 

Then a funny thing happened. Once I shared this information, my phone started to ring and there would be someone on the other end of the line asking, “Is this Nicole? Are you really Nicole? I just called your business number and you’re answering! I was just watching your webinar and everything that you were teaching is so valuable. But it’s just way too much work and I don’t want to do all that work. Can I just hire you to do that for me?” I was like, “Absolutely!”

 

One of the other things they taught us in the high end coaching program is that you shouldn’t leave money on the table. I don’t believe that today but back then the thought was, whatever opportunities you have, you should take them. Don’t leave money on the table! Take up these opportunities and say, “Yes.” You’ll get the sale and you’ll figure out how to do it later.

 

So, that’s what I did. I said, “Absolutely! We’ll help you do that!” Really, however, I had no way of knowing how I was going to do it all on my own. But, that’s what I decided to do. We went forward and that’s basically how Start Ranking Now launched. It started with me first giving back to the community.

 

And that’s my challenge for you today. You may think that you don’t have enough knowledge or that you don’t have enough information to teach the way the gurus teach or to teach a course, but you’re at least one step further than the person right behind you. Look for those people.

You can help those people and bring them along so that you not only help them but, in turn, you will be viewed as the expert you are. This is how you grow your business.

Be Ready To Pivot In Your Business

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It’s important to always be ready to pivot in your business.

 

I shared a little bit of our story, about how we started our business in 2002 with an online camping gear store, how we used dropshippers, how we went from doing $0 to $3,000 a month, and how we went from $3,000 to $30,000 a month. But I haven’t shared the story about how that all came crashing down…

 

As it usually happens in business, you have ups and downs.

I joined a coaching program called “Stompernet”, which cost about $9,600 a year, and we joined for three years. We started to hire people, train them, and build our team. About that time, something changed in the Search Engine Optimization (SEO) industry. What changed was that the big brands, specifically Coleman (and we were selling a lot of their products), figured out SEO.

 

Back in the day, SEO was a lot easier than what it is today. All you basically had to do was get links. “He who had the most links won” was the name of the game. Those were the good old days to easily get high rankings and sales.

 

Coleman and the other brands started to figure this out. And because they have big budgets and deep pockets, what they started to do was purchase large amounts of advertising online and they made sure that their advertising all included links back to their website.

 

In the past, I could get a top rank just by getting a bunch of links to the site for very cheap. But now that big players like Coleman were in on it, I was simply getting outspent. They were spending probably hundreds of thousands of dollars on PR campaigns just for branding — and that was something I couldn’t match.

 

 

That branding also helped them with SEO. As a result of that, it was no longer profitable for me to continue to invest money into SEO because they could just outrank me with their huge budget.

 

What we found is that as we begin to drop in the search engines, we shifted our business model and put all our products into Amazon. We set up an Amazon Storefront and also utilized their fulfillment center to ship our products as well!

At the same time, we also figured out that there were a lot of other businesses that we could help with their SEO and rankings because, for them, they weren’t being outbid by $100,000 budgets to get top rankings for their products and services.

 

That’s where we did a pivot from the e-commerce business into marketing as a service for other people who were members of the same communities we were a part of. This pivot led us to the formation of our first agency, “Start Ranking Now.” It started as a SEO company, but we don’t really do that anymore today. The last couple of years, we pivoted again to a new brand called, “Nicole Munoz Consulting,” where we focus on coaching and training.

 

The bottom line is that you always have to be ready to pivot in your business. One of the mistakes I made was that I waited too long to pivot. The camping gear store was our first “baby.” It was online, exciting, fun, and successful. We waited almost two years too long before making that change, always thinking we were going to figure out how to do it and how to beat the others. Of course, the reality was that we did not have the budget to do that. The other thing with pivoting is that when you do make a pivot, it allows you to open up yourself to bigger opportunities and for other opportunities, as well.

 

I thought we were being very successful in e-commerce but I found out that, while I was good at that, I was really good at helping other people to grow and scale their businesses. When someone wanted to work with me, we built up a system where we were able to get the rankings on demand because we had already created such a robust content and link generation system.

My question for you is, “Is it time for you to make a pivot in your business? How can you open yourself up to other opportunities and not just focus on one thing?”

3 Mistakes To Avoid When Hiring Contractors

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Have you ever asked yourself, “Is it finally the right time to hire someone to help me in my business?”

 

In 2006, I joined a high-end mastermind coaching program. It was an investment of almost $10,000 a year and I was a member for almost three years! One of the first things I learned in this program was that if I can pay someone $5 an hour to do something, and I choose to do that task instead, I’m literally making $5 an hour.

When I first heard that, it blew my mind. It’s true what they say, “You can always make more money, but you can’t make more time.” And time was what I really needed more of in my business. At the time, I had five kids ages five and under, a thriving business selling camping gear, and I was doing full time missionary work with my husband in Puebla, Mexico. I really needed more hours in a day if I was going to continue managing it all.

 

So, I immediately took action and hired someone. That person actually ended up being with the company for over a decade. I began to outsource and delegate some of the tasks that I had on my plate that were taking up a lot of my time. But I also had a list of things that I wanted to get to someday…if only I had the time! So by delegating the more mundane, everyday operational tasks, I was able to grow my business even more with the help of my contractor.

 

I want to share with you three things I see people do wrong when they try to hire someone.

The number one mistake is hiring somebody for strategy. You should be delegating tasks, not strategy! What I mean by that is when you first hire someone, for example for social media for your business, you look for someone to completely take over your social media. You’d want them to plan the content calendar, create Standard Operating Procedures (SOPs), and to grow your list.

 

In other words, you’re trying to hire an A-player, someone who is going to help you on a very high level, but your budget only allows you to pay them $10 to $15 an hour. And, let me tell you something, you’re not going to find an A-player willing to work for that. The problem, however, isn’t that you don’t have enough money. The problem is that you’re trying to outsource strategy rather than the tasks.

 

Strategy is saying, “I’d like you to grow my social media presence from 1,000 to 10,000 in the next 90 days.” That’s a strategic goal, but you’re not setting up a plan or a system to reach that goal.

 

Outsourcing a task, however, is when you say, “I’d like you to post four times a day, on certain hours, with these specific types of content.” Now you’ve created the strategy and you are giving that strategy to someone else to actually implement it for you.

 

That is how you do it. You’re hiring someone so that you can delegate your tasks.

 

You might be wondering, “How do you decide which tasks to delegate?”

 

It’s your job as the business owner to evaluate what tasks are taking up too much of your valuable time. Time that you should be spending strategizing ways to grow your business. Or, if you don’t have time, you can hire someone who can look at your business on a strategic level and help you decide which direction to move in. You could hire someone who is more at a level of a Director of Marketing, a high level consultant with years of experience, someone who can help you figure out what that strategic plan is. After you have that strategy in place, you can then delegate that to the people you’ve hired.

 

The second thing that people do wrong when they hire a contractor is paying too little and still expecting to get amazing results.

 

I was guilty of this in the beginning. It’s funny to look back and see how we’ve transitioned from an e-commerce business to a consulting business. When we first got started hiring people to do the SEO for our e-commerce business, I had all of the tasks down to a science. We had templates and checklists.

 

When we built these systems and strategies, I initially tried to hire people locally in Mexico, as well as in the

Philippines. I paid them a very low amount compared to the US but on par with the economy where they lived. The problem was that even though I was paying the rates that everyone said were “fair wages” for the respective countries, I was actually only paying what would be considered “entry level” wages.

 

That meant that the only people who would apply to work with me were beginners. People I had to train from zero to be at the skill level where I needed them to be. Yes, I could pull someone off the street and teach them my systems and procedures and they eventually would be an asset to the company. That’s the ideal situation. That was the goal.

 

However, most of the time that didn’t happen. Most of the time, the people who were willing to come in at the very bottom as beginners with very little or no experience took a very long time to perform at the level I needed them to. Remember, training inexperienced workers takes a long time, and in all that time you’d have spent hand holding your entry level employees, your business has not been moving forward.

 

I’m not saying that you shouldn’t have entry level people on your team as you’re growing, but that shouldn’t be the only type of person you’re hiring. After you have a team of 8 to 10 people, maybe you can have an intern come in, maybe a fresh graduate, or your son or daughter. You can bring them up from zero to 10. That would be okay.

 

The third mistake I see a lot of business owners make is that they expect their team to perform at their level. And, yes, I’ve made this same mistake

 

In the membership program I was a part of back in 2006, they taught me that no one will be able to do the job at your level. But, regardless of that knowledge, I was still under the impression that if I gave someone enough time, at some point they would be able to perform at my level.

 

The reality is that it’s a huge jump for a person who you hired to complete tasks to become a strategic player in your business. When you’re expecting people to perform at your level, that’s something you have to take very seriously, which means you need to mentor and train people so that they can develop real leadership skills. It’s a process. It doesn’t happen quickly, and you shouldn’t expect that it will. It could take 10 or 20 years, or it could never happen.

 

So what does this really look like in your business? For example, if I give a task to someone to build a marketing funnel and, once they finish it, I ask them to go test it and they come back and say they tested it, I ask them to test it again. Then if they come back a third time and say they tested it again, I ask them to check it again. I’ll ask them to make sure they send themselves all emails, click on all of the links, check the grammar and spelling. I give them a list and ask them to check all these things. I can even show them how I do it through my complicated, detailed excel file, documenting the whole process… and they follow it.

 

I guarantee you that even if you have someone doing that for you, you’re going to come in as a business owner and say, “Oh you missed this. And you forgot about this, too. The headline’s wrong.”

 

And it’s not that they didn’t try or that they didn’t give 100%. It’s not that they didn’t follow your procedures. They absolutely did and they are doing their very best. But, as a business owner, you see things that no one else sees because you know your business like no one else.

 

You have to take a step back and, instead of coming in and criticizing, you need to focus on the 99% of things that they did get right. Praise those things and say, “We missed this. Here’s an area of opportunity. Maybe we can tweak this.” Then take ownership that maybe you were the one that didn’t explain it correctly or that you didn’t provide the correct documentation and don’t blame them that they didn’t catch it.

 

That’s actually what leadership is—helping people to grow and taking responsibility for their growth.

 

A true leader would praise the team when they do something right. But if their team messes up, they’re going to take responsibility. That’s what true leadership looks like

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As you develop as a business owner and as someone who hires other people, investing in your own leadership skills is what’s going to help you to be more successful in your company — and to take your company to the next level.