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…profit in the bank. That’s what we’re going to be talking about and the reason why I want to talk about this is because this was a recent meeting that I had with my partner and with my team about this new brand.
I want to really go through the mindset on how we came up with this, how we’re following the 10 by 10 by 1 strategy and really how we can get to that number because the one thing I see a lot of people doing and I’ve been guilty of this in the past is just saying I want to make a lot of money or I want to be able to replace my income or I want to be able to maybe buy I don’t know something new for your home or whatever.
You don’t necessarily reverse engineer or go backwards or reverse the process to get there. You need to start with the end in mind or the goal. A lot of people just say, “Hey I want to make $100,000 a year.” What is the exact number that you’re shooting for and why? Now you guys have heard me talk a lot about the ‘why’ and really how important that is and I’m not going to go into all of that stuff right now.
I have done that in the past and you guys know how I feel about that and I’ll be definitely reminding you guys of that and helping you really get crystal clear with that. The one thing I want you guys to take away today is really about how to find that number and then once you find that number how to create a plan or a road map to hit those numbers. I’ll explain why we came up with and how I came up with $100,000 to $300,000 and really I’m going to go into the exact process on how this actually works and really how it all does start with something I call the 10 by 10 by 1.
[00:02:03] Scott: Now you guys have heard me talk about this a lot and I’ll explain that but this is really what we’re going to be diving into. Now before I do dive into this stuff I think you guys are ready to rock and roll. I know you guys, you guys love this stuff as far as like getting into the numbers getting into the nitty-gritty. I want to remind you that if you want to download the show notes, the transcripts to this episode you might to, you can head over to theamazingseller.com/422 and you’ll get all that stuff there.
The other thing I’d like to do is remind you especially if you’re brand new. I would like to remind you that we do have workshops where we do these free workshops where I walk you through the five phases. The five phases that I’m talking about is exactly how we’re building this new brand, exactly to a tee. If you’re interest in registering for an upcoming workshop head over to theamazingseller.com/workshop and you can register for an upcoming one there.
Don’t leave this episode right now. You’re probably in the car or on the run anyway. When you get a chance register for that and you can see the next upcoming one there depending on the time of year that is. If we’re around the holidays we might be doing less of those. Just go check it out and register for one. I think that it will really show you the roadmap as well from what I’m giving you here today in a little bit more of bite size pieces in how to get there.
I started with talking about how to come up with this number. Now the number to me is really, really important. Number one start with the end in mind. What is your goal? What is your marker in a sense? What is that number that’s going to do it for you? I don’t want you getting caught up in all of the gurus out there pushing out these numbers or publishing these numbers. Look at me I did $2.5M. Oh, look at me I did $10M, oh look at me. Those to me are a way to get your attention.
[00:04:04] Scott: We don’t really drill down to the nitty-gritty of that stuff. Now I’m not calling anybody out but I’m sure you’ve seen this and it’s been happening for years even in the affiliate marketing space. People flashing their cars and flashing their jewelry or flashing their designer handbags or whatever always doing that because they know that that’s probably what would interest you and you also think to yourself, “Oh they must be successful. They can buy a Lamborghini,” or whatever.
Again not saying that these people aren’t making money they could be. You know as well as I do you're probably doing this and trying to figure out a way to make money online so you can either maybe replace your income or work less and spend more time with your family. Those are the things. It’s usually now I don’t want to I guess call out the younger crowd but generally it’s the younger crowd that are like, “Oh, I want to go get that new motorcycle or I want to go get that new car,” or whatever.
As you get older and as you start to say, “You know what I’ve been working my butt off for the past 10 years. I’m in a corporate job I don’t see any growth. I see myself hitting a ceiling. I’m getting burned out,” all of those things. Then you have a number of what it’s going to take to get you out of that environment or out of that job. That’s the number you need to get crystal clear on.
It’s really, really important that you do that. An exercise for you to do after you listen to this is do that. Figure out that number and then we can reverse back to where you want to go. Now we didn't start this little process here of coming up with $100,000 to $300,000 in profit. I didn’t just pull that out of the air. I looked and seeing what we were currently doing and I put together a plan of how we could get there and then again that would give us a marker. That would give us something to say, “Okay, we’re on the right track, we’ve put in all this time.”
[00:06:02] Scott: Now we’ve started this brand over well the time that this is airing it will be about six months, a little over six months approaching seven months. We have yet to pull out a profit. We have not pulled out a profit, I’m going to talk about that as well because we tend to hear that we want to keep rolling our profits and rolling our profits and I’m a big fan of that.
The problem with that is you’re never going to pull a profit out because you could always be releasing new products. There is got to be a stop point at some time in this process at least temporarily so you can start to pull some of that profit back out. I am a big fan in taking the profits up front and rolling them back in to get some products out there and not just one product but get a few products out there.
Here is what it looks like. I’m just going to give you that 10 by 10 by 1 strategy real quick if you guys are brand new. The way that that works is and again I like looking at 100 hours per day profit. That’s what I look at and the way that you would look at this is you would say, “Okay, if I can find one product, one SKU that does 10 sales a day at $10 profit.”
That’s one product by the way that’s $100. All you would have to think to yourself is I have to go out there, do the work and get one product selling on Amazon only Amazon. We’re only talking Amazon at this point but we could do this other place but let's just say Amazon. That would be $100 profit per day. That would turn into $3000 per month in a 30 day month. So $100 a day $3000 a month.
You have that okay. Now let me give you the breakdown on how you work through these numbers to come up with this number of $10 profit. I get a lot of people say, “Well Scott, how do you figure out the profit?” There are other expenses and you’re right. Generally there is cost of goods. How much does it cost you to order your product and lend your product in your warehouse, let’s say.
[00:08:01] Scott: That would be let’s just say $5. That’s your cost of goods and you can even figure maybe the cost to get it to Amazon whether you ship it directly or if you ship it to yourself and you pay 20 cents a unit to ship to them, whatever it is. Figure that in, that’s your cost of goods. Let’s call that $5.
Now let’s say that our Amazon FBA fees and you can just go to Amazon or just search on Google Amazon FBA calculator and you’ll come up with a calculator there punching your numbers and it will tell you how much it’s going to cost you in fees for Amazon. Let’s just call it $6 is going to be your typical fees and that’s going to range depending how much you’re charging.
Then let’s just say we have a dollar in a pay-per-click per sale, let’s say. Now we say, okay, we have just spent $12. If we charge $24.99 we would have a profit of $12.99. It’s pretty easy math hopefully I did the math right. Let’s just call it $10 profit, let’s say that we spent $2 or $3 on pay-per-click to acquire that sale. Again you see how I’m figuring that cost into it. That would leave us with $10 profit.
Well, now if we take five products, now we’ve done this with one product, we just repeat this and now we come up with $500 a day. $500, this is profit this is not revenue number. If we were to take that other number and total that up you would get a higher number because that’s your revenue. I’ll give you an example here in a minute but for $500 per day just $500 a day in profit for 365 days a year that’s $182,500 profit.
That’s not your revenue that is your net, that is your take home. Yes you’re going to pay taxes I get that question too. “Scott how much am I going to have to pay in taxes?' Whatever tax bracket you’re in, if you’re in that range as far as income goes you’re probably going to be paying 35% somewhere in there 32%, 35% depending on where you live and all of the other things.
[00:10:07] Scott: How much maybe your wife earns or your husband earns like that’s all going to come in. Yes, you going to pay taxes. You pay taxes in any money that you earn. Just look at this is like you just got a paycheck and then yes you’re going to have to pay taxes that’s a given. Now let’s look at this here for a second and this is an example of what is happening in our new brand and this is where I came up with some of my numbers.
We had 50 sales per day, okay let’s just say we have 50 sales per day at $21.97. We have one product right now that we have sold 50 sales per day at $21.97. That equals $1,098.50, that’s revenue. That’s money that came in the door. We are netting right now 35% approximately 35% margin and we’re going to be increasing that but that leaves us with $384 profit from 50 sales.
All we need to do is figure out a way to get 50 sales of a product that’s selling $21.97 and have our margins at 35% and we can walk away with $384 profit per day okay 50 sales a day. That could be between one SKU, that could be between two SKUs or five SKUs. It does not matter, 50 sales per day, $21.97 would be the sale price and I would net 35% and I would get $384. Let’s do the math on that. $384 for 365 days in a year that’s $140,160 from 50 sales a day at a product that sales for $21.97. Revenue is $1,098.50 my net margin is 35% that’s $384 profit.
[00:12:03] Scott: Hopefully I’ve done my math correct but I’m pretty sure I did. $384 a day clean, profit, $140,000 a year. Now again we hear all these numbers of people stating what they’re making in this one in that one and everybody gets these oh my gosh I’m going to be a millionaire. Do you need to be a millionaire right now in order to get to where you want to go, like right now? Would $140,000 a year be a good salary for you? Ask yourself that question. Would $140,000, would $100,000 be good for you?
I mean you gotta ask yourself these questions. A lot of people six figures a year that’s big money for a lot of people. I know myself personally it was a huge deal when I hit six figures even in our photography business in a brick and model business, big deal. We worked our butt off to get that. We’re talking right there. If you just follow that one little example that I just laid out for you that’s $140,000 just from Amazon.
That’s 50 sales a day, that’s it. We’re not talking 100 sales a day but here is the trap or the hamster wheel that happens once you start getting profit. Number one we call this cash flow. So we have cash flow on the business. We want to start launching more products and we start investing all the profits back into new products. That’s exactly what we’re doing right now.
We have pulled zero out of the business right now. We are planning on hopefully after fourth quarter pulling a little bit and from there still reinvesting. We’re going to basically be able to do that after fourth quarter, that’s our plan. Right now we’re investing all the profits back in the new products. The trap or the hamster wheel as I call it in the cash flow is that you’re always going to be doing this.
[00:14:01] Scott: For us we have more products that we want to launch than we’ve launched. That’s just because well my partner is just always finding new ones that we can add to our product line just always. You might have some that you launch and then they don’t do so good so you’re going to liquidate them and then you’re going to do another one. That’s been my suggestion actually to my partner and to my team is this.
We’ve got 10 SKUs in there what are the top performers? Which ones aren’t performing well? Should we take those, liquidate the ones that aren’t doing well and then reinvest that money back into the new products. That’s the way to do it once you get eight, ten SKUs going on.
This way here you’re not continually taking your profit and just keep reinvesting it because then you’re never going to see profit you’re just going to keep reinvesting because think about it. If you have a product that you make $5,000 on you can now take that $5,000 and you can invest that $5,000 into a new product so that profit went away. Now with that product hopefully you can earn another $5,000 so now eventually you can go ahead and have a $10,000 with two products pay day.
You can just keep going on that hamster wheel of just launching new products, new products, new products. You got to be able to set up these stop points in a sense and that’s what I’ve did in fourth quarter here. We had two other SKUs that we wanted to launch and I had to talk to my partner I said, “Listen, we’ve got to stop for a second here.
We’ve got to take on what we have, put all of our energy behind these, get inventory, get more inventory for fourth quarter and really double down. Then from there the first quarter we can have one or two new SKUs that we want to roll out.” That’s what we’ve done so that’s our plan. We again have created our plan for the next 12 months and we’re sticking to it.
Again you may need to launch 10 test products to find three to five winners. Again you maybe in that stage of I’m going to go out there and create a brand that has five really solid SKUs.
[00:16:02] Scott: If that’s the case then you’re going to have to reinvest the profit back in as we’ve done and then just continually grow. Now again I want to give you guys some of our numbers really quickly on this new brand. Again a lot of people say, “Well Scott does this still work? Isn’t it saturated? Is there still opportunity?” The answer is yes 100% and everything that I teach on our workshop and inside of our class is basically everything we’re doing. There is no secrets, it’s basically what we’re doing.
We build an email list. Once we get the email list build and we start nurturing that email list and giving them great content. We let them know that we have a special or we do a contest. All that stuff that I talk about here on the podcast in our workshops, in our class it’s exactly what we’re doing. There is nothing held back all right. Six months in we’ve had more profit that we’ve pulled.
We’ve had profit but we’ve just reinvested into new products. We have not pulled it and as of right now in six months we’ve done just over $111,000 from zero from a brand not even existing to $111,000. Pretty good. July we had one of our best months because one of our products did really well and it’s still doing really well. We ran out of inventory so in August we had a drop in sale almost half of what we did in July.
July we did over just over $35,000 in revenue and that was about a 32% margin on that. We reinvested into new products though. August we had a drop we were out of inventory for five weeks, it killed us. We had a whole bunch of problems. If you guys haven’t heard our TAS power hours of Chris and I going through all that stuff you definitely want to tune in to those that’s where I fill you in on those.
August we dropped to about $16,000 because we were out of inventory. September which depending on when you’re listening to this would have just ended and that one there we did just over $25,000 and it’s climbing. We’re on track to do another $35,000 a month. Then as we go into fourth quarter we’re predicting we’re probably going to have some $50,000, $60,000 a month's. That’s what we’re predicting.
[00:18:07] Scott: Can’t say for sure but that’s what we’re predicting so we’re on a pretty good course here and the cool thing is we are geared up for the fourth quarter now and we’re ready. We’ve done a lot of the work, we’ve done a lot of the sourcing. Now we’re just reordering, we’re doing better marketing, we’re building our Facebook fan page. We’re building our email list we’re just making it stronger and better and bigger and we know that it’s going to pay off in the end.
I wanted to again just share this with you just to show you that you have to go out there reinvest in the beginning and then this right here you’re allowed to get more SKU, you’re allowing yourself to get more SKUs and then that way there we can get to those 50 sales whether it’s two SKUs or three SKUs or even one SKU that can do that. We have one SKU right now that consistently does 20 plus a day.
Now we just have to have 30 additional sales or 25 additional sales from three other SKUs. One might do 12, one might do eight, one might do nine a day. We get to that 50 sales a day and if we get to the 50 sales per day, our average ticket price is $21.97 thereabouts. Then our net margin is at 35% and that’s actually low our margin because we’ve done everything air up into this point.
We have one of our products that’s coming over by sea right now and we’re going to save almost $1.75 per unit. Our margin is probably going to go up to 40%. That’s big so go from $384 profit to maybe $400 profit. That’s huge okay over the course of the year. That’s big actually you know what I’m going to do this on the fly while we’re here I’m going to pull up my phone and I’m going to get the calculator out here. I want to see what that difference is, so at $394 profit for 365 days that’s $140,000 at $400 times 365 that’s $146,000.
[00:20:01] Scott: We just added let’s see $6,000 to our profit for just basically getting shipping cheaper. We didn’t do anything we just increased our margin so that’s pretty awesome. I guess I wanted to go through this stuff because I think it’s important for you guys to see that you don’t have to start with this massive thing I want to be a millionaire. I want to go out there and I want to replace my income or I want to add an extra $5,000 to my income.
Whatever it is you got to be able to reverse back, start somewhere but then reverse back and see how to get there. Heading into the fourth quarter we currently right now have two new products, we’re holding off on releasing these because we want to double down. Again if you guys are at that point, you gotta ask yourself are you going to be to launch these products for fourth quarter and be able to capitalize on that?
If the answer is yes, then do it if not hove off. We have one product right now they are only allowing us to do a minimum order of a 1,000. We thought we were going to be able to do 500 but they’re only going to allow us to do 1,000. That hasn’t happened often but because it is what we’re going to end up doing is the air shipping on those is really high. It’s like $3 a unit on top of the cost of $3.75 so that’s $6.75.
We’re going to bring the other half by boat which will get here probably after the first of the year. Those we’re only going to pay like 75 or 80 cents per unit to have them shipped. We’re going to save a ton of money but we want to get that one SKU here for our fourth quarter because we think that we can use that traffic to do that.
That’s what you got to consider. But you want to focus on the winners and then pull a small profit once you get to that point or once you set that goal for you. There is a book out there called, “Profit First” and I’ve read that book, I like that book a lot because it talks about as a business owner you’ll generally never pay yourself or you’ll never put yourself in as an expense. If you don’t you generally never get paid, you just keep rolling the money back in, rolling the money back in.
[00:22:11] Scott: There is got to come a time that you have to say, “You know what I’m going to pull even if it’s 500 bucks.” Maybe you just profited 3,000 and you want to roll 2,500 back into another product pull 500 and pay yourself. I think it’s okay to do that and if you put yourself in this a line item in on the expenses then it’s just part of the business at cost.
Some people will take it the other way they’re like well, I’m going to take all of it and only invest $500 into product. Well, that’s going to slow your growth as well. You don’t want to do that. So the other thing that we’re doing just to give you guys the play by play here is we’re going to reevaluate after fourth quarter and we’re going to take our profits and the money that is in our cash flow and we’re going to invest in some new products that we have in queue or on deck in a sense.
That’s what we’re doing for fourth quarter. Now here is the goal for the next 12 months. We want to push this to 100 sales per day across all products. Now I talked about 50 sales a day, we’re already there, we want to get to 100 sales per day and this is why. Then we’re going to get to $3,000 in sales a day, per day that’s $3,000, that’s revenue.
If we have only a 35% margin, that’s going to be $1,095 profit per day so $1,000 a day almost $1,100 a day is what we’re going to have as our profit. Now here is the cool thing look what happens. At $1,095 I should have just rounded that up to $1,100. Well let’s just call that let’s call it $1,100 and a 35% margin that’s $382,250 profit.
[00:24:00] Scott: That’s the plan, our goal over the next 12 months now that we got some momentum, we’ve got some sales coming in 100 sales per day across all products. If we have 10 products then we have to spread them out over those 10 products. It doesn’t seem like it should be that hard. $3,000 in sales, 35% margin, just about $1,100 per day that is going to be a huge thing for our business because that’s going to be $1 million brand, a seven figure brand.
It’s actually one million, ninety five thousand dollars and a 35% margin would be $383,250 profit. Our goal is to build a $1 million company in under two years. That’s our goal, that’s what we’re working towards. That would be pretty nice. I don’t know who would turn down a business that you start within two years that can generate almost $400,000 in profit, almost half a million dollars a year in profit.
That’s what we’re going for and I’ll be giving you guys the play by play of course. I wanted to really outline this for you guys to give you guys exactly what we’re doing. This was actually a meeting that we had just the other day with my partner and our team and we talked through this. Chris Shaffer you guys know I’ve publicly said this. Chris Shaffer and I and my team are working within this brand with my partner.
We’re really doing this to build this brand to something great. We think that we can do it, we think this is going to be bigger than we actually even imagine. We’re doing it one step at a time just as I tell you guys to do. You got to start with those numbers, you got to work backwards from the number that you want to achieve. A few reminders here I want to you give you guys five little takeaways here. Number one, understand the numbers, understand your numbers. Understand where your numbers are and what you need to do to accomplish those.
[00:26:06] Scott: Number two understanding pushing off profits now to grow, understand that. I just went through how we’re doing it and you can do it anywhere you want but I definitely think in the beginning in order to get products going and new SKUs out there you got to sacrifice the profits and just reinvest into new products. Number three create a plan to possibly pull some profits.
Again I say roll it all in but there is got to come a time that you got to put yourself on the payroll in a sense of you got to be able to pull a little bit. This right here you can see that there is light at the end of the tunnel. There is actually going to be a pay day. Then number four, create a goal, a money goal so you can measure progress.
You see how I did that before I said okay, for us to be able to get 50 units sold and we make… I’ve forget what the number was there let me go back to my little cheat sheet here. 50 sales a day at $21.97 that’s a $1,100 a day let’s call it, okay $384 profit. We know that that’s the number so now all we got to do is go after it and build it but that’s the goal.
You got to create the goal. We’ve got one now that’s going to be hitting a 100 sales per day across all products. $3,000 in sales per day, 35% margin. We can check these things to see how we’re doing, see how the business is growing, see how well we’re on target or if we’re off target. That’s going to be able to build it into a seven figure brand.
That’s our goal and then the last thing number five be willing to cut loosing products and liquidate. One thing that I had to talk to my partner about was this. I said, “Listen before we keep rolling all the profits off of these winning products and we keep the losers right now what we’ve got to is we’ve got to stop with the new products until we liquidate these other products.
Let’s liquidate these two products that we have inventory that’s locked up maybe $3,000 in inventory. Let’s liquidate it, get our $3,000 back and then we can go ahead and invest that into a new product.
[00:28:04] Scott: That way we’re not pulling necessarily from our profits. Does that make sense. Shake your head yes if it does and if it doesn’t then go back and listen to that. No just being funny I want to make sure you’re paying attention. I mean that makes sense. It’s like you have to be able to cut the losing products. Don’t hold on to a product that’s sitting there in your warehouse you’ve got 1,000 units. They are sitting there, you’re selling two a day and there is no hope for you to get those to 10 a day or 20 a day just liquidate and move on and find the product that will get you 8, 10, 12 sales a day.
You have to liquidate that and cut your losses in order to invest that back into another product or a new SKU. Just understand that this is a process as you guys can tell and the reason why I wanted to do this episode really was to give you guys the play by play also look into my thoughts in my mind and how I look at business in general. This is just this business. If I was going to go into a hair cutting business or if I was going to go into being a bar owner I would have to go through the same process.
How much do I need to make to stay at afloat? How much do I need to maintain my business? How much do I want to make in profit? Then I got to say how many people do I got to get in the door? How many beverages do they have to drink? How many plates of food do I have to sell? Then from there I can start to work backwards and start to push the ones the products and maybe the specials to help me hit my targets.
You have to have this stuff in place. This is just something we’re doing on Amazon or in ecommerce so we can easily set up these targets and then have something to shoot for. Guys I hope that this has helped you. I hope that you guys get value from looking at these numbers and I really want you guys to do this yourself. I want you to maybe go to the show notes and download this and print it out even and really just follow along.
[00:30:03] Scott: Come up with that number that you’re shooting for and then reverse it back and then from there you can say, “Well, should I be launching product it’s only $16.95 I’m going to get for it. I’m paying this I’m only getting a net margin of 22%. I’m only going to make about $4 a unit.” Is that going to get you to where you want to go? Probably not so then you got to find a different product.
Don’t fall in love with the product that’s another takeaway. Do not fall in love with the product. That’s it guys, that’s going to pretty much wrap it up I want to remind you guys if you want to download the show notes which I think you should on this one. I think this is a good one for you guys and again even leading up to the first of the year here depending on when you’re listening to this but you’re getting ready for making resolutions and all of this stuff.
This is a great way for you to have a mental or a mind map of really what you’re going towards and moving towards and the other big thing that you should do is create a why on top of that page. Why you’re doing it and what is that going to allow you to do? The money is there to allow you to do stuff. It’s not necessarily there to make you happy. It’s just that’s a way for you to have security and to do the things that you want to do maybe and that is maybe freedom.
Maybe not having to worry because your job is in question, maybe they’re going to do away with your position. A cousin of mine who has been working with the same company for probably gosh over 20 plus years they just got rid of her position. Now she’s got to go find a new job that she’s been at for 20 years and it might be hard to do that.
You never know but you just have to understand what it is you’re doing it for and that will make it so much more powerful when you’re struggling or when you’re saying to yourself is this really worth it or I’m not making progress. You can go I am going to make progress because this right here and I’m pointing but you’ll be pointing at that why.
[00:32:00] Scott: The why is the reason I’m going to just make this thing work. To me the only time that you fail is when you give up, so don’t give up. All right guys the episode again is theamazingseller.com/422. Go check that out. If you guys are brand new and you’re like, “Scott I love this plan thing but how do I actually launch the product?” Head over to theamazingseller.com/workshop and register for an upcoming workshop there.
We’re there to show you the five phases but then also answer any questions you have along the way. That’s it guys. That is going to wrap up this episode. Remember as always I’m here for you, I believe in you and I am rooting for you but you have to, you have to… Come on say it with me, say it loud, say it proud, go ahead and make that plan today, “Take action.” Have an awesome amazing day and I’ll see you right back here on the next episode.
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