MBA2436 Your Only Goal In Your First Year of Business & How to Achieve It MBA2436 Your Only Goal In Your First Year of Business & How to Achieve It

0:08Heyo! Welcome to the$100 MBA show. No fluff, just the good stuff with our practical business lessons. I'm your host, your coach, your teacher, Omar Zinhome. And in today's lesson, you will learn what your only goal in your first year of business should be and how to achieve it. When you're starting a business, it can be incredibly overwhelming. There's so much to think about. There's so much to do. You could feel like you're chasing your tail. I'm here to tell you that you need clarity. You need focus. That first year of business is so incredibly important because it's going to make or break the longevity of your business.

0:44and its ability to continue to grow in the years to come. So today, I'm going to give you a gift. I'm going to show you exactly what one goal you should be setting for your business in its first year. And then we're going to detail the steps on how to get to that goal each week, each month, each quarter. This is going to be your North Star. And what's great about this is that anytime you make a decision in your business, you can ask yourself the question, does this get me closer to my one goal? or does it not? And if it doesn't, we don't do it. Let's get into it. Let's get down to business. Let me start by saying that even if you're not in your first year of business, this could be incredibly helpful because you might need it now more than ever.

1:29You're foggy on why you're doing what you're doing. You don't feel like you're making progress. You don't feel like you have a vision or direction. You don't have something that you can show your team and say, hey, this is where we're supposed to be heading. If that resonates with you, then you're going to love today's episode. So let's start by identifying what is this one goal that you need to have in your first year of business? And it's a magic number. Let's talk about what this magic number is and how to calculate it. Your most important goal in business, especially at the start, is to be profitable, is to make enough money to breathe and have a little bit of buffer just in case things go sideways a little bit.

2:08When you go from not having a business to having a business, your expenses mean the world, okay? And I'm not only talking about your business expenses. I'm talking about your own personal expenses. I'm going to assume that you are going to be going all in full time on your business and need to dedicate all your time to it so that it can grow and be sustainable in that first year. If that's the case, you need to get paid a salary. And that salary has got to be enough to cover your own expenses. So first, we're going to talk about your salary, your personal expenses, then we'll talk about the business expenses, and then we're going to talk about the revenue and how we get to our magic number.

2:45Don't look at your salary right now, okay? Because that number is skewed, and it's not a number that's fair on you or your business. It's also not accurate because you're getting other things at your company that you're probably not thinking about, whether it's insurance, maybe some benefits like a company car, other perks that is specific to your job or role. The point here is that you want to start from scratch, from zero. Think to yourself, look at your credit card bills, your regular bills. How much money do you need to bring in? Now, you need to account for the fact that you might have some savings, for example, and we want to calculate how much money you need to bring in for the year.

3:22So say, for example, you looked at all your expenses and you spend$60 ,000 a year on your basics like food and utilities and rent, as well as some of the other things like your transport, dining out, clothes, whatever it might be. Let's say it's$60 ,000. Those are your expenses. But maybe you have like$25 ,000 in savings. So you really don't need$60 ,000 for that first year. You need more like$35 ,000 to cover your expenses. So you divide$35 ,000 by 12 and you'll have your monthly amount of money that you need to make. Now, keep in mind, there might be some things you need to pay for. So you're going to factor that in.

4:00Everybody's circumstances different, whether they need to pay for insurance. You might live in a country like Canada or the UK or Australia where there's public health care. You don't have to worry about that. But the point here is that make sure you put down all your expenses before you do the tally. Ask yourself, is this essential for this coming year? Not forever, just temporarily. Do you need all these expenses? Do you need to have brunch every Sunday? Do you need to go on three holidays or weekend getaways. Maybe one or two will do. Maybe brunch once a month or once a quarter will do. You got to be brutal with your expenses to make things a little bit easier for you in the first year, just when it comes to your own personal expenses.

4:41So once you've done that and you have your number, your monthly number of how much money you need to take home, again, factor all the phantom costs, emergencies, taxes, whatever it might be, and you got your number. Let's say it's$5 ,000. Now you got to look at your business expenses. What do you need to spend to make your business happen? It could be server costs. It could be a few employees, their pay. It could be tools. It could be supplies or product that you need so that you could sell those products. Write a tally. You're going to do the same thing. What's absolutely essential? Once you have that number down, it's, let's say, another$5 ,000.

5:17So now your expenses for your month is$10 ,000, including paying yourself. Now that you have your total, you want to add 20%. What's 20%, Omar? Well, 20 % is you never know. You never know what's going to happen. You need a little bit of buffer. Maybe your estimations are a little bit off. Maybe they're not. Maybe you're actually more conservative. But the point here is that we want to have a little bit of a buffer just in case things don't go as planned. So we want to add 20 % to that. So in this case, it'd be$2 ,000. That's$10 ,000 plus$2 ,000,$12 ,000. That's your magic number. You need to make$12 ,000 a month minimum every month for the next 12 months.

5:58This is very, very clear now. You have a target. I need to make this much money. How will I make it? How much are my products worth? What's the average revenue per customer? How many customers am I getting every month? How many calls am I making to get those customers? Or how many emails am I sending. You can work backwards now. But now that you have a magic number, this is your goal. This is what you put on your whiteboard. This is what you put on your post-it note and slap it on your monitor. This is your dashboard. This is the only thing that matters because this is what makes your dream possible.

6:28When you have$12 ,000 a month in this situation or in this example, you could pay for your expenses and pay for your own personal life, pay for your business expenses. You have a little bit of buffer so you're not totally breaking even. This is an incredible, incredible step. If you have gotten your magic number down on a piece of paper, most business owners do not even do this. The math scares them. They think it's not important. They're lazy. They rather be distracted by something else. What I have learned over 20 years of business that most of business is about doing the numbers. If you do the numbers and you have direction, you have clarity, it's so much easier for you to be successful because you have a target.

7:10They say numbers don't lie. I like to say the right numbers don't lie. You got to do the math right, right? You got to do it properly. So now that we have our magic number, now that we know this is our singular goal, you got to think, what do I need to do to get to that amount every single month? This is the how now, the how to achieve it. So the street numbers are really important. They're going to help you achieve that number. One, number of customers. Two, the average revenue per customer. And the frequency. Three, how many times do they buy? So I like any kind of business that's reoccurring, that has a regular fee, because it costs you time and money and energy to acquire a customer.

7:50Let's say it costs you$100 to acquire a customer, and you gotta make 10 sales calls to just get one customer. If that customer only pays you once, you gotta do that over and over again. But if that customer pays you every single month, it's going to be a lot easier for you to hit that target for every month when they're a reoccurring customer. Now, a lot of people think this is just SaaS businesses or memberships or courses or coaching or something like that. No, it could be a product that people need to consume every single month. For example, I used to use any kind of shampoo that was available that was on sale in the supermarket.

8:25I used to use the hotel shampoos. I didn't care. But as I got older, I started to realize, okay, I should be taking care of my hair a little bit more as I'm getting older, as it's getting thinner. So I now use this shampoo that's really great that I buy online. Shampoo is a consumable item. I need to replenish my supply regularly every single month. So they have a product that even though it's not a subscription and they do offer a subscription, I will go back to their site and buy it every single month because I will run out. It's not a once and done purchase or a purchase that I buy every five or 10 years.

8:58So look at your business and ask yourself, are there ways I can, one, increase the average revenue per customer, two, get them to pay me on a regular basis, reoccurringly? These are the two best levers to play with when it comes to reaching your magic number. Most people try as hard as they can to get more customers. That's harder than playing with those two other levers, average revenue per customer, as well as making sure they're reoccurring more transactions. Once we've exhausted our efforts there, then we try to get more customers. Now, the best way to get more customers is to have more leads and have more communication.

9:34The more people that you speak to, that you contact via phone, email, whatever it might be, the more sales you'll make. It's just that simple. Trust me, I've been through all kinds of sales. That's how it works. The more people you speak to, the more you reach out to people, the more sales you make. It's that easy. Most people don't want to admit that because they just don't want to make these calls or they don't want to continue to send these emails. But like they say, business is a contact sport. The more contact you make with people, the more sales you make, the more money you make. So in order to do that, you need to increase your leads.

10:05How can you get more leads into your database, into your email lists? What great content can you offer in exchange for their email? If you have an offer for$500 and you email a thousand people, a decent conversion rate would be like 20 to 30 sales, which is two to three percent. That's very good. But if you had 10 times as many leads, 10 ,000 people on your email list, you'd get 200 to 300 just on the same conversion rate. Much, much better. So I want to tie this all together so that it's super clear. Number one, you need to have a magic number. The magic number is your personal expenses, your salary, plus your business expenses, plus 20%, add on 20%.

10:49This is your goal. This is how much money you need to make. How do you achieve it? You pull the levers first that control average revenue per customer, meaning you might have to increase your prices and how often somebody buys. Repeat business. Sometimes that's enough for you to hit your magic number, but then you want to tap into the number of customers that you're able to serve or you're able to sell to. And the best way to give your best chance of getting more sales is to get more leads. So what are some ways that you can make it front and center in your website to grab more leads? What kind of opt-in can you offer to get more emails?

11:23What kind of guides or courses or even a discount that you can offer in order for them to hand over their name and email address? If you just focus on this in your first year business, you will not regret it. You will feel like you're winning every day because you're getting closer and closer. And by the end of the year, you have a business that's sustainable, that's paying for your lifestyle, that's paying for your business expenses. And it's just a start. Now at that point, it's time to grow. It's time to scale. It's time for us to really make some money and make some serious profits. But the goal of any business in the beginning is to be alive and sustainable and healthy.

11:59We got to walk before we run. And that's why our magic number is so important. Thanks so much for listening to the$100 MBA show. If you love what you hear, If you've gotten anything out of the lessons that I love to deliver to you, the best thing you could do is hit subscribe, hit follow on Spotify, on Apple Podcasts, on any app that you like to use to listen to podcasts. By following us, you get our next episode automatically. You also get access to over 2 ,400 episodes in our archives. And it's the best way to show your love for the show, to support us. Because the bigger the show gets, the more we put into it, the better it gets to help you grow the business of your dreams.

12:36Before I go, I want to leave you with this. Everything I talked about today, you don't have to do every day. It's a once and done thing. You're going to set this up. It's going to take you 30 minutes from now to work out the numbers. You're going to have your magic number. You're going to have a strategy to make sure you hit that magic number as we discussed. And you're just going to have that focus. A lot of business success is about doing the hard thing in the beginning or at some point, getting it done and just putting it behind you. Everything after that gets a whole lot easier. Thanks so much for listening.

13:04And I'll check you in Monday's episode I'll see you then. Take care.