This week on the podcast I’m chatting with Melanie Miller.
Melanie is a lover of the unsexy side of business. After breaking up with the corporate world of soul-sucking employers Melanie became a successful business coach and chose to financially empower women; inspiring them to create safe, secure and financially abundant futures.
This means dishing up the hard unsexy business truths and encouraging female business owners not to shy away from the hard stuff, because “Profit is NOT a dirty word”!
In this episode we talk about:
and so much more.
This is a conversation that we should be having more and I’m always happy to bring these types of conversations to you.
Grab the Free download that Melanie shares:
Suzanne Chadwick 00:00
Melanie, welcome to the brand builders lab podcast.
Melanie Miller 00:03
Thank you for having me Suz.
Suzanne Chadwick 00:05
Pleasure. I'm so glad that you're on because we get to talk about one of our favourite topics. Uh Money Money money money. My listeners are just like, oh my gosh, are they gonna sing? No, we're not gonna sing, it's fine. But, but I am excited to have you on, we connected a couple, I want to say a couple of years ago now for
Melanie Miller 00:30
like the last year and a half's just fallen into an abyss. So do you know what it could be five years could be one wouldn't know. Suz.
Suzanne Chadwick 00:39
Anyway, at some point in time, we connected and I love what you do, because we are we both do love numbers. Yeah, we both love reports. We love money, all the rest of it. And so you and your business, which is the profit lovers great name, by the way.
Melanie Miller 01:01
And here's a fun fact. Yeah, I never called it the profit lovers on purpose. It was just like my community started to self identify. And I ran with it. So basically, I didn't choose the name the profit lovers my community did.
Suzanne Chadwick 01:17
I love that. So we they were like, We're profit lovers.
Melanie Miller 01:21
Yeah. Just started calling themselves that. And I was like
Suzanne Chadwick 01:25
That's so good. I love that. And so how did you get started? Why are you here? What happened?
Melanie Miller 01:32
Oh, I can tell you exactly what happened...I think most people have a defining moment story, do they? I have a definite defining moment story. I was travelling around the US with a friend. She lives in London. And so we try and catch up somewhere in the world every few years. And we were doing this drive through the US through my California into Vegas. And we were on our last night and we were in this really lovely Hollywood hotel. And I said to her, I feel sick about going back to work.
What were you doing?
So I was working for a global brand as, doing business training, okay. And the micro managing was like nothing I'd ever experienced. And what they had done is instead of recruiting from within, which is what they'd normally done, they'd started bringing in outside, you know, people who were much better skill set fit for the type of role that they were trying to fill. But basically, that didn't work because they brought people in, like me, who had vast experience in the business world, and wanted us to fit into their model. And it just didn't work. It was quite disastrous. And it was a bad move for me to even go there was a horrible company, which is
Did you work for them for long?
Yeah, I worked for them. They actually don't exist in Australia anymore. So I probably could, but I won't. I worked for them for 367 days, which was two days enough to take home my bonus
So, and I usually would stay at any job I was at for like three or four years. But this one 367 days. And I was in that hotel. We were having these lovely cocktails. And I said to my friend Lacey, I feel sick. And she said that's not right. It's bad. She's really career driven. And she said to me that night you have to make a change. If you're physically feeling sick, she said, Surely you should be feeling like holidays over and disappointed back to reality. She said but sick is not the way you should be feeling. I felt sick. Leaving the US I felt sick sitting in the airport. In Singapore on my layover, I was checking my emails, I was already anxiety ridden. And so on. That week that I got back, I Googled my skill set. And up came an ad for a franchise called Small Fish Business Coaching and my skill set fit and I'm like screw it, I'm doing this. So basically I gave my notice it was probably about 14 days later that I gave my notice.
Suzanne Chadwick 04:27
Melanie Miller 04:29
And the kind of one the one thing that pushed me over the edge was my manager asked me to fax through my diary pages. So she could tell me where I could fit more work into my day. [Suz - Awesome]. I was at Apple. Yeah, I was their second. Number two in the country in Australia, Australia, New Zealand. Their second lead I took out you know the second biggest bonus in the company. And you want to take my Diary pages, and try and shove more into my day. And it was a humiliating experience and a belittling experience. And that was it. I was done.
Suzanne Chadwick 05:12
And what did what did they do when you resigned?
Melanie Miller 05:16
They were very. I don't know that there was anything that was a kind of a scare a standout as they were super disappointed or disappointed, of course, but yeah, it wasn't really any big. Just kind of exited. It was one of those companies where you are really just a number.
Suzanne Chadwick 05:36
Yeah. You know, I just remember back in corporate as well. And I mean, I had amazing corporate experiences and stuff. But really, I always used to think everybody's, you know, expendable. Like, when you're in that kind of environment, it's like, the people are like, Oh, that's disappointing. And then they're like, Oh, next, like, it's a very, very transactional, you know, very transactional,
Melanie Miller 05:59
it is a session with a friend not so long ago, and we were talking about, you know, in those corporate environments, if you dropped dead, God forbid, they would be sad, they would send your family flowers, and then they would replace you. And when you understand that, then the hard slog of being self employed becomes so much less painful slog, I love it.
Suzanne Chadwick 06:22
And so you bought a franchise called
Melanie Miller 06:29
Big Fish Business Coaching. And it was really very cool, very unique. And that's basically where I started. It was a group of dudes. And I was very, very lucky that it was the right group of dudes, because that could have gone very wrong. But yeah, it gave me a really good confidence in pricing. If I hadn't have started with those men surrounding me. I probably would have gone into the market far too cheap. And I probably wouldn't be here today. Amazing. Yeah, because they will like you don't matter like, Yeah, I'm worth 500 bucks an hour and then I just don't even question it. Yeah. And so for me to not be pricing at the same level as them wouldn't have been a good look. So I just priced at the same level they did. And I kind of rode their white dude, coattails. The white dude, confidence coattails. Yeah, and then when I decided that I really wanted to go on a very specific tangent around women, and profit. That was a good, good evolution into where I am today at the profit lovers.
Suzanne Chadwick 07:52
Yeah. And so how long did you do that for? With the franchise?
Melanie Miller 07:56
I was with the franchise for maybe about two and a half years.
Suzanne Chadwick 08:01
Okay. And then you did your own thing.
Melanie Miller 08:04
And then I did my own thing. So 11 years. And the amazing thing about the franchise was usually when you buy into a franchise model, you're not getting out, right? It's so restrictive. This was not like that at all. And the guys that own the franchise, they're still friends today. And you know, still biggest cheerleaders.
Suzanne Chadwick 08:26
Amazing. Yeah. So interesting. And so when you went into business for yourself, and you started working with women, what do you think? Or what did you say was the biggest struggle that women,
Melanie Miller 08:41
the transition was actually driven by me, as opposed to kind of that like market? You know, looking for me, in that my mom had terminal breast cancer. She passed away, she had no assets, no superannuation, no insurances. She been a single mom, and had it not have been that I had the resources, she would not have had the level of care, or even been able to stay in her own home, right. There were a lot of things that I was able to financially provide for her. And it was that that changed everything. Like it was like, right. All the money in the world, great. Financial security is where it's at. This is what I want women to have. I want no other woman to have to be reliant on. Someone coming in when they've been diagnosed with a terminal illness to save them because that was not a fun time for my mum. She didn't want to have to rely on me. That should not have been something she was worried about. And I know it really, really wore on her. But that was it. That was the shift and the change was that realisation of the importance of financial security for women. And how Many women are in relationships where they control the finances, or a relationship is broken down. And they've been left with very little. All of those things that happen to women. I just wanted to be able to financially to pay attention to how your business could financially support you.
Suzanne Chadwick 10:22
Yeah. And I love that you do talk about women creating a liveable income from their business. What does that mean?
Melanie Miller 10:29
So the mantra of the profit lovers is profitable, liveable, and lovable, profitable, and you have to ensure that you're financially secure, first, liveable in that it does need to fit in with your lifestyle. A lot of the business advice that we follow today is written by mediocre white men. And it is based on their experiences. And their experiences, often, you know, have a wife at home who's cooking and cleaning and raising their kids. And so it's fine for them to get up at five o'clock in the morning and start their day and do all of the things that we're told to do. But women have obligations, we have societal obligations, family obligations, I'm single and I don't have kids, yet, I still play a very maternal role within my family, it's not really family it's just me and my sister. But um, you know, like, I still paid, you know, when my mum was ill, I was the one who stepped in and played the role the that female nurturer take care of it or role. Then when she passed away, I took the role, you know, of my mum, in caring for my grandmother. And then when my grandmother passed away, now I've got a sister who's much younger than me. So even when you are single, and you don't have kids, you still play a particular role. I want women to have businesses that allow them to live without guilt, to like mum, guilt, that being torn, not knowing where to put your time, all of that we want your business to be, you know, liveable, and that it just fits into your lifestyle. And then obviously lovable because if you and you're not going to love it all the time, disclaimer, businesses suck, sometimes, you're not always going to love it, suck it up. If it was super fun all the time, everyone would be doing it. But we want you to have a business that's lovable in that you actually do enjoy it for the most part and you enjoy who it is that you work with, or create a product or service for.
Suzanne Chadwick 12:35
Yeah, and when it comes to profit, like where, what conversations are you having with women around profitable businesses? Because you know, I talk about this too, I love this conversation. But what kind of conversations are you having?
Melanie Miller 12:49
So the conversations that I have are always around, shifting from taking the crumbs of what's left, and planning for the entire cake. So women will, and I feel like this is a really good analogy, you know, baking a beautiful, incredible cake, serve it around to everybody else. Everyone takes their chunks. At the end of the party, there's a few crumbs left, and she might hoover up a few of the leftover crumbs or the squish last bit or somebody else's bit that was leftover and half eaten. I want you to serve yourself. Because when you are financially served and you plan for your profit first, then your ability to create your financial security and that stability, obviously, is increased thousandfold. And when women are financially taken care of financially taking care of themselves, I should say that has a real trickle down effect. Women, you know, tend to be very generous with their profits. So it does have a triple a trickle down effect to everyone else. It shows daughter's a strength in managing their own money. It shows sons, you know how to be how to respect women and money. I think it's a really powerful thing when women have financial security.
Suzanne Chadwick 14:11
Yeah, absolutely. And I wanted to like ring a little bell when you said profit first. Because I know that I know that we both love the philosophy around that too. And I just think, you know, when you first went into business did obviously I assume that you sort of learnt how to run the financials of a business when you were in the franchise, like what
Melanie Miller 14:38
I so I hadn't been running financials many, many, many years before that. My background was in sales and marketing management and then general management. So I came into that franchise with a lot of business experience. And what's interesting is I came in with a lot of business experience yet i was still very nervous about charging what the guys were charging. And a lot of them didn't understand business financials at all. So it's interesting, isn't it? Once again, that dynamic of women, you know what we're willing to charge, but I had been managing other people's businesses for years. So I already knew about all of the financials.
Suzanne Chadwick 15:21
And so when you came into your own business, did it all come naturally to you? Like, what?
Melanie Miller 15:27
Much easier to run someone else's business?
Suzanne Chadwick 15:30
What challenges did you have when you started your business?
Melanie Miller 15:33
Well, I didn't want to charge what, you know, I needed to be challenging. I still have resistance around visibility and talking about my success. So that's obviously still a challenge today, lots of challenges, the same challenges that every other female goes through. Just putting yourself out there and charging what you're worth. And all of those things, were hugely challenging when you're doing it for somebody else's business. There's, it's not personal. If somebody says, No, it's not personal, right? If somebody challenges you on the price, well, the price is the price. It's not personal. And you go into business for yourself, and all becomes very personal.
Suzanne Chadwick 16:20
I was about to say like, Why do you think women shy away from it? Like you were just saying, You struggle still with visibility and all the rest of it? Like, what is that? Is it just a fear of being seen, it's a fear of like standing in your worth, as far as like, I will charge what I want to charge. And, like, it's such an interesting, dynamic, that men just don't have this yet. We do.
Melanie Miller 16:45
By nature, I am surprises a lot of people, but I'm really introverted. And I don't require a lot of positive reinforcement. Like a lot of people do require that they need to have people praise them and hear that they're doing a good job and all of that sort of thing. I just don't require a lot of that. So maybe it's that, who knows, I probably should put that on the list to talk to my therapist about it. Yeah, I just, I'm terrible at and I had this conversation with a former client. A few weeks ago, we were talking about how because I don't require a lot of visibility, or, you know, public praise and stuff like that, that I also then don't give that to my profit lovers. Isn't that funny? Right. And, and they're craving that. So that's something that's really shifting and changing next year, in my business is helping my members be more seen and more celebrated. Just because I don't need it doesn't mean other people don't? Yeah, absolutely.
Suzanne Chadwick 17:52
Yeah, that's so interesting. And I was talking to a client recently, as well, I just think it's really interesting. I do want to talk more about the whole dynamic of charging profit growing your revenue as well. And so I'd really love to know, for my amazing listeners, what have been the key things that you found when you've worked with clients that have really shifted the growth of their income when it comes to earning more, and then managing that money.
Melanie Miller 18:27
So from a very basic unsexy business perspective, cash flow management is huge. And we have been told that it is so complicated and that only your accountant can do it. And if you're not running a multi million dollar business, there's not even any point and all of this really trash messaging around cashflow management, but there are really simple strategies that you can use that will help you get a really good idea of how much is coming in how much is going out and how much is left over. Right. And with my clients, we take that one step further by once again planning for Profit First, and when I say I hate using actually that terminology Profit First, because I'm not talking about what happens within the Profit First Book, which in my opinion, is overly complicated for most people. Unless you already really love the numbers. At first as a very complicated model. I don't use it in my business far too complicated. I'm far too
Suzanne Chadwick 19:31
interesting. See, I find it really easy. And so yet so easy to manage it that way.
Melanie Miller 19:39
Yeah, just as I'm, I kind of worked things backwards where I'm planning for profit. I just don't require all the bank accounts and all of the moving money around and all that stuff. But when I'm talking about profit, planning for profit as a priority, we plan for that payoff priority profit and then we build the business or readjusts the business to achieve that profit. Whereas most people are creating a business and then waiting for whatever falls out the bottom. Yeah, we are looking at a number and then really putting pressure on that number, how achievable is it? What does the business need to look like? What is an average sale or client value need to look like for you to be able to achieve that? What does an average sales conversion need to look like for you to be able to achieve that? How many people do you need to see or offer? What you know, how many do you need to convert all of those numbers like building up a map of what those numbers look like? And then matching that, obviously, with cash flow. Now that's the mechanics. That's the unsexy mechanics, I find it hugely sexy, and the numbers are my kink. But I get that that's not normal. But it's unsexy for most people. Aside from that a lot of the conversations that I have our conversations with women about the real cost of the decisions they're making, when you discount a product or a service, or you under price an offer, you're not making a decision that day to give a customer or client a little bit more than what you should, you're not making a decision that day just to you know, undervalue yourself, this time, you're making a decision about your future financial security, you're making a decision about whether or not your kids are going to be able to attend the school that you want them to, the decisions are much bigger than just giving somebody a discount, they have much bigger implications. It's like the butterfly effect, the $100 discount you give today could have been worth 1015 $20,000, if you had have invested that money. So it's about making that connection between how the decisions that you make today, and how they may seem small, are easy to brushed under the carpet, or insignificant or, you know, I'll do better next time, I'll make sure that I price effectively next time, how those small decisions are having these lifelong impacts. When we start to talk about that, and I start to haunt them with, you know, these these words of, I'll give you an example, a client of mine. A few weeks ago, we were talking about her pricing strategy, and she was really pushing back on her older clients would need, you know, the older pricing strategy, because they've been around for years, and they wouldn't like the change in all of this. And I said, Oh, that's cool. So you just don't want your kids to have university education then. And she was like, That was brutal. That was brutal. Now I get it, do you know what I but that is the decisions that you're making. It is the decision of, you know, what your your kids or your family are going to have in the future, what kind of security that's the biggest shift I can help somebody make, and then back that up with the mechanics of the numbers, the unsexy profit planning and Cash Flow Planning. It really, really just floats my boat and tickles my fancy, borrows my biscuits. When I have clients say to me, can you do a quick review of my cash flow, I'm pretty sure I'm all on track, I just want you to cast your eyes over it. And I'll go and look at and go, Yep, we're all good. And these will be the clients that in the beginning had said to me, I don't understood it, I'm never going to get it, it doesn't work for my business. My accountant says I don't need it. All of those fighting, you know, and all of that resistance when it finally comes around. It's really amazing. Because I'm finally watching a woman in control. And that just is fantastic. When you know what's going on with your business, and you know where your cash flows at, you can make really good informed decisions. And you can take up opportunities, you can choose that you want to work with somebody that maybe doesn't have the budget, but you know that it would be a great partnership, all of those decisions can come when you know that you have good cash flow, and that you can afford to make those decisions.
Suzanne Chadwick 24:06
Yeah, absolutely. And so for somebody who's kind of sitting there listening, going, I actually don't know where to start with this. What are some of the key things like? What's the baseline stuff that we need to be thinking about looking at, and starting to kind of get our heads around,
Melanie Miller 24:25
sit down with a piece of paper and throw a number on that piece of paper? What is it that you want your business to pay you? What do you want to what makes it worthwhile? You're getting up and working at this business? And obviously, you've got to be reasonable with that if you're new to business or if you've never made more than $10,000 a year, putting a million dollars on that piece of paper is ridiculous. Be reasonable with it. What is it that this business could pay you and a good place to start or something to think about is what would I be being paid somewhere else? If I had to go back in to full time work, where what would I be paying, because if we can get you at least to the point where you get more in your business than you would as an employee, and the decisions become a little bit easier, right, and then we can build on that, but figure out what that number is, and then how much of your product or service you need to sell to hit that number. It's a very simple basic calculation to get you started, you can add your expenses into that number as well. But that's a basic way to get started. And then that is going to give you what it is you need to be working towards every week, most people don't know what they're working towards every week, you should have a number every single week that you're focused on. The great thing when you have that number is when you reach that number. Or if you manage to reach that number really early in the month, you can then go and focus on scaling things in your business, what I find a lot of women are doing is completely ignoring those numbers. They never know whether they're close or not. So then they panic, do a whole lot of stuff like dropping their prices, taking every customer or client that comes to them, putting out new offers all of the time, working in this, like fury and flurry, when actually all they needed to do was slow down, set a sales goal, hit it, soon as you hit it work on the other aspects of your business that are going to enable you to scale up. Yeah, sounds so simple when I say.
Suzanne Chadwick 26:31
Yeah, but I do want to talk about the number as well, because I think it was really interesting ages ago, but one of the one of the girls that I know in business is like, I've been working so hard for so long to hit six figures. And now that I've hit six figures, I didn't realise how little I would be any hmm. And I think that that conversation around revenue and profit, and what you pay yourself in that is an important one as well. Because just because you create 50,000 100,000 in revenue doesn't mean that that's what you're paying yourself.
Melanie Miller 27:04
And so had she have had worked that out backwards and said I need 100,000 in profit. It costs me $50,000 a year to run this business. I'm already at 150. You know, there were already we've got a starting number. We know that 150 Anything below 150 means that she's not taking a whole lot out of that business. Yeah, the difference, you know, people really do work it the other way where they're like, I want to reach six figures in sales, but they don't know what that equates to. And you'll go to your accountant and your accountant will give you this wishy washy answer. And we'll just wait until the end of the tax year. Anybody right now can go on to a tax calculator and stick in 100 grand and see how much tax you're going to be up for. Yes, your accountant will do some magic and try and reduce that down for you. But there isn't really any excuses for not knowing these numbers. You have to be the one in control. accountants and bookkeepers make mistakes all the freaking time. And I've seen them make massive mistakes. And at the end of the day, they'll get you to sign a piece of paper that says that everything that they've prepared for you is all your liability anyway, you have to take ownership and responsibility if you want your business to truly generate life changing money for you. The skills that you learn at 50 or 60, or 70 grand and these are the conversations that I often have with people in private member's club is, you might feel like this skill is not necessary right now that you don't have that much money coming in or out. But when I 10 actual business, you're going to need those skills. And so that's the other, you know, part of the arguments with my clients about you need to know how to manage your cash flow. Because I'm working with them at 30 or 40 grand a year, we'll get 2345 600 grand a year. They've got it sorted their tax planning ahead. They're managing their cash flow, their forward forecasting. That's how you scale and then maintain a multiple six figure business. But how many people do you know Sue's that had a six figure multiple six figure business that no longer around? I know a few. Yeah. Because they had all of the fears and floss and none of the substance they didn't manage their cash flow. And in the beginning of beers or not even in the beginning midway through not that long ago. Really, if I'm honest about it. I was like green monster. How are they affording to do this? How are they on first class flights all the time? How are they going to these 50 grand masterminds like these women just seem to be living this incredible life? I'm like, I don't understand. Well, that's because they weren't paying their taxes and they weren't, you know, they burnt their cash flow whenever exists, I've had to go back and get jobs. That's what I don't ever want, I never would have to go back.
Suzanne Chadwick 30:07
I know, I know, I, I did say I'd probably go get a job at Goldman, if I ever had to go back.
Melanie Miller 30:13
I mean, I just I, I, I don't even know what I would do I'm unemployable at this point.
Suzanne Chadwick 30:21
So if any, but I do have to say that I totally agree with you, I really wish that I had managed my cash flow so much better in the early days, and I was working a corporate job, like I had my businesses as a side hustle. But it was making money, but because I wasn't managing that cash properly. Once again, I just burned through it, I would just I'm like, if there's money in the bank, I must be able to spend it. And so those first couple of years, when I was working in corporate and had a salary coming in the money that the business made, I didn't manage it, well, I didn't manage it to, like grow the business invest in things that I that probably could have got the business up and running and more unprofitable a whole lot sooner than what it originally was. And so I do wish I had gotten an accounting software sooner I wish that I had, you know, understood all of the different, you know, things when it came to my tax and my profit and my pay and all the rest of it and my operating expenses. And it's the reason that I asked you how you were when you first came into business is because I used to run like, million dollar profit and loss, you know, portfolios when I ran recruitment across Europe for Deloitte and I had a team of like 20 people, and all the rest of it. But I don't feel like I had the same. Like, I think I don't think I brought that savvy into my business until later down the track. Like I was still, you know, running a brand consultancy, I understood pricing, I understood profit margins and things like that. But I really don't feel like I ran my business with the same savvy that I was doing it in corporate. And then I kind of had a bit of a moment where it's like, What the hell are you doing? Like, you've got to start being a bit more savvy and sorted and organised with your own business finances. And it took me a little while.
Melanie Miller 32:22
I'm not sure if that is more of a result of being single, maybe like there was no other option if I wasn't paying the bills, nobody else was going to. So I might have been that. But I definitely bought across those skill set, you know, that I had and applied that to my business? Had no, I'm yeah, pretty like numbers driven. Anyway, so it probably is more just a natural inclination.
Suzanne Chadwick 32:54
Yeah, so interesting. And so what sort of things should we be tracking? So you mentioned a little bit before, so you kind of start with a number and you work backwards around what you want to be paid? And then is it increasing prices? Is it just increasing volume of sales? Like what are you kind of working with clients to focus their energies and efforts in all of the above,
Melanie Miller 33:20
it's kind of all of the above, and maybe none of the above, depending on the individual business. And this is something that I just don't apply the same Yeah, sure, that of like rules, or whatever, to every client or the same kind of process to every client. So it really, really just does depend on who the client is. Mostly, obviously, pricing strategy is really important. And when you start to look at the profit that you want to generate the expenses to run your business, you get a real reality check about what you really need to be charging. And then it becomes a little bit less emotional, because you've got a number that either you charge that and you make money and you put food on the table you don't. So it helps you take a little bit of the emotion of that person probably can't afford to pay that kind of stuff out because I won't be able to afford to eat if I don't charge them that. So there's that aspect of it. It's building up things like, like the brand, right and creating really amazing brand experiences, customer experiences, it's ensuring that they're selling the actual outcome, which as you would know, most business owners fail at terribly selling the actual outcome or the transformation or the benefit of what their offer is, it is brand messaging. It's all of that stuff that helps you build a really profitable business. And then you've got the aspect of getting rid of the things that you're not particularly good at. Getting rid of the things that take too much time. Somebody else needs to be doing them for you. I do have a big focus on increasing profitability over decreasing expenses. I would say on the whole, and I'm sure that there would be people out there that this does not apply to. But on the whole, the profit lovers that come to me are all very spend adverse, they're all quite nervous to spend, generally, they'll come to me, they'll have money in the bank, and they'll be too scared to pay themselves are too scared to spend it because they don't really know who the money belongs to. Is it mine? Is it tax? Is it like, Well, how do I know whether or not I can spend it. So that's what we focus on is making sure that they're understanding what they can spend what they need to outsource, when they can afford to outsource. And those questions are answered by cash flow forecasting.
Suzanne Chadwick 35:45
And so talk a little bit about that. What is cash flow forecasting? Melanie,
Melanie Miller 35:50
cash flow forecasting is making an assumption about what's going to happen in the future, based on what's happened in the past. And it's really no more complicated than that. And if you're new to cash flow forecasting, you don't need fancy spreadsheets or anything, you could literally just get a notebook and write the money that has come into your business in the month of May, June, July, whatever it might be, the money that left your business, and the profit that was left over. And then you know, that if that's what happened in May, June or July, there's a good chance it's going to happen in October, November, December, there might be some seasonal fluctuations. But the more you pay attention to what's come in and what's gone out, the more you'll start to see the ebbs and the flows, and the more detail you'll want to go into. I've worked with a client food manufacturing, and we did cash flow forecasting. And I said to her, you need to let me know if this is not going to be something you're going to stick to because we have to create a strategy that you're going to stick to, she came back and she said, I can't stick to this. It's too much detail. And I said no problems. Let's take out a heap of the detail. As we take out in detail. Sure, we get less and less accurate. But we're still within 10 to 15% assumptions, that's better than knowing nothing at all right. And so we literally just did that exercise with her where she every single week, I would say to her, you've got this much that needs to come in, and you're allowed to have this much go out. If more comes in great. If more goes out, we've got a red flag. And that's all we did until she was like, right, I get it now, can we have a bit more detail? And it might take you a year to get your head around it? I don't think it will. It might. So what if it does? Don't? Do you want a multimillion dollar business? Do you want to have profitable and really secure financials really predictable financials, then pay attention to the business basics, pay attention to the unsexy stuff, because manifesting is not going to save you from a financial disaster. I can even get me started.
Suzanne Chadwick 38:06
I love it. I love it. So I've got a couple of questions for you on that. So I am in love with my zero profit and loss report. It's something I run on a regular basis, like from a tech perspective. And from a reporting perspective, how often do you run your reports like what what are you kind of focusing on?
Melanie Miller 38:27
Every day I track sales revenue every single day, I have a planner and A1 or an A2, I can't remember the size of it, a planner from Kiki-K. Every single day. At the end of the day I write down how much revenue has come in [Suz -wow], every single day, because it keeps you paying attention, right? And if three or four days is gone, and our revenues come in, you better believe I'm going to start looking and seeing what's going on. Whereas most people will wait until the end of the month. And then they'll reflect back it's too late to do anything. Yeah, so I always want to be seeing if things are dropping off or changing or not consistent. So every single day I track my sales then once a month I will update my cash flow forecast, run my profit and loss report. Keep an eye over all my numbers. Now I've got the plan and track which is been around for us since 2015. We discovered this morning. And that is the one thing that I use every single Monday morning I open up my plan and track I enter in my weekly sales from the week before I enter in site traffic inquiries, conversion rates, social growth if that's what I'm focused on, and it tells me whether I'm on the right track or not.
Suzanne Chadwick 39:47
So interesting. So we do that monthly, but now I'm like need to maybe do a little bit more.
Melanie Miller 39:52
Do with the with the weekly I just feel like I'm more likely to stick to a habit if it's every Monday morning If it is the first of the month, because the first of the month might come and go, and I just don't pay attention. The every week really sets me up for the week puts me in a good headspace.
Suzanne Chadwick 40:12
Yes, so good. And I'd love to know what percentage of revenue should your profit be?
Melanie Miller 40:20
depends completely on what industry you're in
Suzanne Chadwick 40:24
let's say service based, because a lot of my clients are service based.
Melanie Miller 40:29
service based, I'm always looking for around 65%. Net Profit service base should be pretty high, right? Because there's, there's generally not a lot of expense. And there's not a lot of cost of goods or cost of sales, if you've got a trade based business, for example, you know, plumbing, business construction business, well, then those numbers gonna be vastly different if we can get 20 25% net profit margin out of the bottom of that, and we're having a good time. So it really does depend on the industry. But there's also an element of your own personal goals in there as well. I am risk adverse, I would prefer a lower, more predictable income with higher profit margins. But I have clients who are a lot less risk adverse. And so they're happy to have highly fluctuating incomes. You know, with low profit margins, it really is very, very much based on what your personal goals are. I would prefer to have a business that was saved 250k a year for the next 10 years than a one off $1 million launch. And then not knowing what was going to come after that. Yeah. I am predictability all the way, please. And thank you. So those margins are really it's really, really difficult to give you a number and be like, that's what you should aim for. There's an old school approach that I see get thrown around in Facebook groups all the time. Can we talk about Facebook groups just being a festering pit of misinformation? Pure dumpster fires of trash business advice? Aye. Aye, I see this, like 3030 3333 3333 rule. Were like, well, 33% should be I think they say 33. I can't even I don't even know how they break it down. But like 33 should be your expenses and 33 should be fair,
Suzanne Chadwick 42:24
that's the profit first model.
Melanie Miller 42:27
Oh, is that profit first? Yeah, well, that really depends on the type of business you've got. What it is that your personal goals are. I don't like a lot of complexity. In my business. I actually don't outsource a lot. And I don't have a lot of people involved in my business. Because I like it. And I like I like simplicity and ease, right? The other thing is that your business is only one element of building up your profitability. So sometimes people are like, Melanie, you could be making three or four times as much in profit, if you did X, Y, and Zed, and I'm like, Yeah, but I take my profit, and I invest it and my weird kink outside of business is share investing. So there's all of those things to consider as well. If you want a business where you have enough time where you can pay attention to learning new skills, renovating properties, buying other businesses, then maybe you're happy to outsource more, or maybe you're happy to have more staff.
Suzanne Chadwick 43:28
Yeah, yeah. So interesting. I, I do work offer so I do at about think taxes around about 35% or something. And then my operating expenses are about 20 Superannuation is 10. And then profit pay slash pay is around about 4045. I think it's pretty good. So that's my, those are my numbers. So you're factoring
Melanie Miller 43:53
in superannuation and taxes there. So then that sets really well.
Suzanne Chadwick 43:58
Yeah, so um, and I just Yeah, I just find it easy to divvy that. And then I, I think, oh, used to just be like, Oh, I'll pay myself a bit. I was the cake person. Yeah, I'll just, I'll pay. I'll do all the stuff on
everybody else's eating. Yeah. And then I'll just
Suzanne Chadwick 44:17
pay myself whatever. So once I started to implement that, then it was just super easy just to, like, have that lump sum that I was just paying myself all the time, which was fantastic. Yeah.
Melanie Miller 44:29
You know, I know of quite a few businesses that are very, very close to like very high six figures, close to seven or low sevens, where the owner of the business is taking less in profit than I am. There's choosing to have a very different, very different business. Do they have a lot of people involved? They have a lot of overheads they have a lot of ad spend and that sort of thing. My view is how lazy Can I Be to make the most amount of profit as possible. And that's great.
Suzanne Chadwick 45:06
Whatever works, whatever works
Melanie Miller 45:12
Whatever works, but there's nothing wrong with wanting a million dollar business, either. It's just, you know, do you want everything that comes with that? And are you going to maintain your profit?
Suzanne Chadwick 45:20
Yeah, it's so interesting. And these conversations, and I mean, I've spoken to you about this as well, is that, you know, I'm, I'm in a mastermind with a lot of million dollar businesses, and it's not always rosy.
Melanie Miller 45:34
No. What is that saying? New Level? Next level? Next level, new devil, new level new devil, Devil new? Yeah, basically, it's, you know, that's it exactly. The more you grow, it's not like we hit a magical number, and all of a sudden business becomes easy. That's different. And if you can get those basic skills in cash flow, forecasting, planning for profit, when you're doing those smaller numbers, your ability to retain that business when you're doing those bigger numbers. I mean, you just, you're going to know what's going on.
Suzanne Chadwick 46:09
Yeah, and I call them professional practices, as well as just like professional practices that you do all the time that no matter whether you're at, you know, 50, or, you know, 500 or a million, those professional practices allow your business to run smoothly. And yeah, like, you know, there'll be fluctuations and changes and things like that. But at least you know, you've constantly got that foresight and the view, and clarity around where money is what's happening, you know, if you need to shift and change things, and I think that
Melanie Miller 46:42
I've got a client at the moment, and we've already identified that in October next year, there may be a dropping cache, but like, we're already identifying what's going on in October next year. So we know that there's going to be a dip. And that we're going to have to fill that dip, we're already planning for it. Now. The alternative would be, she'd hit the dip, have no idea why the wheels would fall off, and she'd fall into a black hole. We don't need to worry about that. Because we're already planning for something that is 12 months away, 10 months away, 11 months away, something like that. Yeah, absolutely.
Suzanne Chadwick 47:17
Love it. So good. I could talk about this, you know, you and I have long conversations.
Melanie Miller 47:24
Oh, I love geeking out on the numbers with you.
Suzanne Chadwick 47:27
I know it's so good. And I do have to say that. And I can't remember, I think I shared this on Instagram as well. I was talking to you about
Melanie Miller 47:36
making a bad decision.
Suzanne Chadwick 47:41
You're a cheeky sod, about about services and the different ideas that I had around a couple of services. And you asked such a good question. You were like, do you want to have a service that creates $100,000 for you? Or do you want to focus on a service or product that makes you a million dollars? And it's sometimes you've got to have people in your life that ask great questions like that we feel like, I kind of knew that. But thanks for like, kind of giving me a reality check on it. And I think that when you're around other women that can talk about money and do talk about money and where it's okay to have those conversations. I think we all make better decisions.
Melanie Miller 48:24
100% agree. And having people around you that aren't just going to agree with everything you put out there is really important. But then you want to find that person who's the right balance of they're not poo pooing a really good idea, but because on that day, quietly as as destructive, but to having those conversations and finding your people to have them with where you can be really open and honest, so important in business, because at the end of the day, we're all still human, and we're all still got emotions. And we all still have our own lens through which we see things, which isn't always the clearest. So it's good to have people to bounce things off to stop you from creating a service that would have sucked.
Suzanne Chadwick 49:11
It would never have sucked. It just might not have made
Melanie Miller 49:14
Let me let me clarify. It would have been amazing for everybody else. Listen, I probably would have bought it and loved it and take it every crumb of it. But yeah, it wouldn't have been a good necessarily a strategic move for you.
Suzanne Chadwick 49:32
Yeah, so good. And I'm glad that we had that conversation. Because sometimes when you're in it, like when you're in something and you're thinking about it for a really long time, it kind of seems like a good idea. And sometimes you kind of got to Yeah, you kind of got to be pulled out of it and ask some great questions.
Melanie Miller 49:49
We're all trying to solve the next problem kind of in front of us, which isn't necessarily the best idea. Yeah, so sometimes That's that person's like, well, you're going to solve this problem but down the track your co create this one.
Suzanne Chadwick 50:04
True. Absolutely. So good. Awesome. Melanie, thank you so much for being on the podcast, where can my listeners connect with you?
Melanie Miller 50:14
I'm going to tell them to head straight to the profit lovers.com forward slash plan and track. And to get themselves that downloadable plan and track. It's a Google Doc, and it will get you started with the important numbers in your business. It'll start to get you into the habit of paying attention. The more attention you pay to things, the more you can see what works, what doesn't. And the more you'll become your own coach really, because you'll be able to make very strategic decisions. So go to the profit lovers.com forward slash plan and track get started with your tracking.
Suzanne Chadwick 50:51
I love it so good. We'll obviously have all of Melanie's details and links in the show notes as well. But thanks so much for hanging out and talking money and process.
I love ya.