Bad Math. Good Business
Having done well over 300 coaching days, I can tell you that hitting your income goals comes down to doing ONE THING consistently.
What’s the one thing?
That’s different for every business.
Just check out the video below that I created with my buddy Mike Koenigs and let me know what you think.
If you’re in a hurry, below is the (unedited) transcript of the video…
Hi. Welcome to another episode of Success Leaves Clues. This is Mike Koenigs
My names Ed Rush and today we’re going to answer some questions that we got on our Facebook page.
That is correct. Our first one if we take a look at the screen right now comes from our very own Melody Rush.
No relation. No relation to the rock band I should say.
There we go. Yeah. Good for you. “Where should I spend my time in building my business for 2016 to get the most bang for the time spent?”
All right, so great question first of all and a really good question to be asking as you’re moving into a New Year, which is where do I spend my time and allocate my resources? We’ve got resources of time, and energy, and money, and staff, and all of those things, but really the time one is the one that we run out of the fastest. Most entrepreneurs I know feel like they don’t have enough time to do everything they want to do and so the question is, where do I spend my time? We’re going to take a crack at answering that question. In a moment I’m going to run over to the white board and do a math equation, but what I’ll tell you to start out with … Maybe we can talk about this for a second is most entrepreneurs in my opinion this really falls into three categories.
Number one is building capability. You can get more, and earn more, and live more, and give more when you know more. One of the first things that I would do with my time and I certainly do is become a life long learner and to grow your knowledge base more and your skill set. You can do that with books, videos, events or information products.
The second one, and I think this is really important and I’ll talk about this in just a minute is increasing your marketing activity. Most business owners and entrepreneurs do everything first and then eventually get to marketing when that should be the first thing you do and everything should follow after that.
The third one is to use your time better and we’ve talked about time allocation and time management so we’re not going to do that here, but we are going to talk about how to increase your marketing activity and get better. We’re going to do that in just a second.
All right, so why don’t you go over and …
I’m going to take my pen over to the white board and …
Ed’s taking his pen over to the white board. He’s going to sit down in a moment. What I will tell you is, if you have some other questions, we’ve created a series of Success Leaves Clues videos that can help you just about every step of the way. I also remind you make sure to post any comments, questions that you have below. Follow us on Facebook and subscribe to this channel. The reason being is we are frequently answering questions just like this. Ed, are you ready to take it away?
I’m ready to go. I just wrote up an equation on the board which is M+M=M. It’s horrible algebra. It doesn’t even make sense if it was a math equation, but it makes great sense as a business equation. Let me explain what this is. This is Math plus Marketing equals Money. Now, this one shouldn’t scare you away. I know most folks are like, “Ah. I don’t even want to think about the math.” I’m going to do in a second some real simple math to show you how to think about your next year. Let me give you an example of this.
Mike and I had a client who came into the office recently who said, “Our goal over the next year is to make an extra $500,000.” Melody, you’re asking the question about the next year. The first thing you start with is a goal. Most people’s goals fall into one of three categories it’s either income, impact, or life style. My recommendation is to set goals for all three.
First of all, most people have a goal. If I had to ask you what you want to make in the next year, you would be able to answer it fairly quickly. I’m positive of that. Most entrepreneur business owners can. Most people start out with a goal. Now, because a lot of us have seen movies or read books about the law of attraction this is where most entrepreneurs stop. They go like this they’re like, “Okay. Five hundred thousand dollars. Five hundred thousand dollars. Five hundred thousand dollars.” What they expect is that the sky just opens up and five hundred thousand dollars will at some point over the next year will fall onto their lap. That doesn’t happen. What you need to do is you need to set your subconscious mind on something that’s more tangible than simply five hundred thousand dollars. Let me explain how Mike and I did this with a client and this is where the math comes into play.
We asked her was, “How do you make your money?” Here is basically how the math worked out. She has an event where people pay five hundred dollars to come to the event and she has a coaching program that people pay ten thousand dollars to come to the event. Now, there was some math involved here which we asked her which is, when people come to the event roughly twenty percent of the people who come to the event enroll in her coaching program. Okay, so that’s kind of important to know. The average event attendance is about a hundred people. Let’s run some math here.
If they have a hundred people, I already know that twenty percent of the people are going to turn into her coaching members which means twenty people turn into her coaching members, which means that’s two hundred thousand dollars. Now, at a hundred person event. Five hundred times a thousand, unless my math is completely wrong is … What is that? Help we out with this Mike. That’s fifty thousand dollars, right?
Okay. Type is fifty times a hundred. Fifty, fifty thousand dollars. Yes. One, two, three, four. Four zeros. Yes, we’re good.
Okay, so now what we know is with one event our coaching member has just made two hundred and fifty thousand dollars. It’s actually pretty convenient when it comes to the math because now you know that she needs to do two events a year to make her number. That doesn’t include any other income. It’s just the income projected right here. She needs to do two events. Now, she’s already starting with a better focus for her subconscious mind for this next year which is I want to make a half million dollars. Nope, that wasn’t good enough for the subconscious mind. It’s I want two events, okay? Two events.
What we started to do was talk to her about how she fills her events. She fills events by going to speak at other people’s events. Now, typically when she goes to speak at other people’s events she gets roughly twenty percent of the people who come into the event to sign up for her future event. We’ll start doing the math on here. She gets twenty percent of the people at these events. This is super basic math you can do it on a calculator really easy. Twenty percent of the people that come to events to show up at her event, okay? The events are typically about two hundred people per event. Every event, she gets forty people to sign up for her event.
Now, there’s another number that comes into play here which is not everybody who signs up for an event shows up at an event, so to be really conservative I divided this by two and made it twenty. Now, we know that she needs to do two events and we know that she needs to do two hundred people. We need two hundred people and each event she does gets twenty people to sign up for her event. How many events does she need to do? How many speaking events does she need to do? She needs to do ten speaking events over the next year. Ten events over the next year to promote her two events to make the money that she wants to make. Ten events at two hundred people over the next year. Here’s what we did. We said these two months you’re not going to do it, so you’re going to do one event per month.
Then I asked her the last question. The last question was, “How many calls do you have to make to people that you know who are event promoters to get to one event?” Some people might not be having an event. Some people might be full with speakers. How many calls do you need to do and the answer was roughly five, okay? I’m going to move this up here just so we can keep the board on the screen. It took five phone calls to get one event. This is the kind of math I’m talking about because what she knows now is if she makes five phone calls every single month she will get one speaking event per month that will put her in front of two hundred people that she’ll close twenty percent of the people into her event that half of those will show up. Twenty people times ten events is two hundred people and at two events a year she’ll get paid a hundred thousand dollars for those two events. She’ll get forty people that are signed up for her coaching program for four hundred thousand dollars and five calls a month just made her … Where’s the number?
Five calls a month just made her five hundred thousand dollars. Now, think about this. If I told you all you need to do was make five phone calls a month to the right people and you would make five hundred thousand dollars, would you do it? Does that make a lot more sense about how the math works and that’s what I’m talking about. The math is what I just did there, okay? That’s making the numbers work so that you can get to your goal.
The marketing is the phone call, okay? It’s just making the marketing activity. Remember I said earlier, the key to an entrepreneurs growth is number one increase skill and capability, number two increase marketing activity. That’s what this is right here. The third one is best increased use of their time. Now, think about this. When she does this of course with some variations. You might have more people some might have less people at these events, but it’s pretty close. When she does this she hits a half a million dollars. How simple is that Mike?
Well, first of all, awesome math and what’s key is this is universal. It will work in any business, anywhere in the world, and it’s applicable even if you have a business where you’re looking at it going, “Well maybe I don’t have an event opportunity.” I think any product has an event possibility, an event opportunity whether it’s an online event or a physical live event. These days of course we’re all about doing webcasts. One thing I will tell you is if this sounds interesting to you, I would definitely recommend you check out my best selling book The Webcast Profit Toolkit. It’s right over here. Let me get that for you.