EP 9- Audio
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[00:00:00] Welcome to the regional collective podcast. We're all about sharing stories of success, challenges, and the amazing community spirit in small and micro businesses. Here, we redefine small business with big hearts and determined hustle. Get ready to be inspired by regional entrepreneurs making a big impact.
[00:00:28] Whether you're just starting out or already on your business journey, you'll find motivation and practical tips to help you thrive. We believe in the power of community. So let's share, support and celebrate regional businesses together. Tune in and get inspired to thrive.
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[00:00:46] Speaker: This week we have a special session with Czanik, a cost accounting [00:01:00] specialist who brings a wealth of knowledge. He shares his expertise in financial clarity, managing cash flow and the crucial role of budgets for small businesses and start ups. I'm excited to hear his practical tips to help you grow your business, boost your profits and lead a sustainable business.
[00:01:18] Shelley: So welcome Johan today. Thank you for joining us.
[00:01:22] Johan: Thank you. Thank you for inviting me, . Yeah.
[00:01:24] Shelley: so you are here today to help, discuss creating sustainable business models and yes. apps because it's at the end of financial years. We're all great time to be, reviewing, you know, our costings, our budgets, which we should be doing very regularly anyway.
[00:01:41] Shelley: but can you tell us a bit about, what led you to become a cost accounting specialist? So maybe your background. A
[00:01:47] Johan: cost accounting specialist. Yes. I never knew there was a word like that when, when, yeah, well, it's actually. It probably goes back a long way since I was a kid.
[00:01:57] Shelley: Yeah.
[00:01:58] Johan: I, I wasn't really, my [00:02:00] mum was a bookkeeper, my dad was an engineer.
[00:02:03] Johan: Yeah.
[00:02:04] Johan: And,
[00:02:04] Johan: and, you know, and every week they'll give us a pocket money and, you know, we all stand waiting for money. And my sisters would grab the money and they'd run straight to the, to the deli to go and buy some sweets. And I went back to my, to my little piggy bank. I said, all right, okay, now I've got, I don't know, like, Two grand, which is not a lot of money, but I mean for those days it was a lot of money, two sided African rand, and I said okay, well this is sort of like, Not that I was a nerd or anything, I just put some money away and I thought, oh, perhaps I, and then later in life, perhaps I realized, hmm, I, I perhaps got a natural ability to, to, you know, to, to know what money and sort of like bag my money a little bit.
[00:02:46] Johan: So I like that part and I didn't like accountancy at school. I like maths and I like business economics. And then when, when school was, when I finished school and, well, we all have to go to the army in South Africa. So I [00:03:00] went for two years and then after that, going to uni, I didn't know what to do.
[00:03:03] Johan: I thought, Oh yeah, I always liked ads as well on TV, you know, when they play their ads and it's funny, I liked the humor, the advertising. So I loved advertising. So I decided I'm going to study marketing. So I studied marketing. Long story, I got a job in the bank. So I got involved with the finances and loans as well.
[00:03:21] Johan: So here I am at 21 year old and you know people in their in their mid 40s would walk in and ask me for money and you know and it's right yeah you would like fill in the application form and you know try to you know try to help them getting their loans or I spoke to business people as well so you get an understanding of oh
[00:03:39] Shelley: yeah how money
[00:03:42] Johan: works this guy won't understand do a business but all set And then, and then a couple of years later, then I, I decided, nah, I'm going to go overseas and I blew all my money.
[00:03:52] Johan: And I came back and I had a, had a job in advertising for a year as well. You probably don't need my whole story. [00:04:00] But anyway, and then I worked on, in advertising on buses. So I was, I was there to sell like advertising space on buses, which was, which was actually quite, quite nice as well. So anyway, and. And then I got involved with a, with, another mate of mine who had an idea of starting a business, a media monitoring business.
[00:04:20] Johan: So basically what you do is you, we, you, you tape and record everything that on the media and you would phone people up and say, Hey, you were on TV last night. Do you want to buy a tape or you want radio? We do transcripts as well. So we started a small company called MTTS, Media Transcription Translation Services.
[00:04:40] Johan: And then we, and then we got, and then two other people was also running a similar kind of company in, you know, a few, you know, we were in Pretoria, they were in Johannesburg. So we, we then joined forces and we started this company. So we were four directors of it. And everybody was sort of like came from a journalist, journalist background.
[00:04:59] Johan: [00:05:00] And I was the guy with a bit of a financial background. And I do the numbers and I just like the way that, that numbers they do in basically just like work in and out as well. And I started using ratios and, and really understand it. You know, we've got to look at our costings to get better efficiencies.
[00:05:24] Johan: So that's what my, that's why I got sort of like probably bullied into the accounting system. So I was never in a technical, you Decided in the early 2000s. Well, perhaps it's time for a change in my life Perhaps i'm just going to see what it's like living on another continent. All this obviously happened in
[00:05:44] Shelley: saudi arabia.
[00:05:45] Shelley: Yeah Yeah, and then I want
[00:05:46] Johan: to come to australia. I said, what can I be? You know, what is on there? You know if I want to get permanent residence, I know you're going to be an accountant Because that's that's sort of like the closest kind of you already can can come over as a business [00:06:00] person But you're going to put a lot of money in and start your business.
[00:06:02] Johan: Yeah You Or you can show that you are employed, very easily employable, like an accountant for instance.and then I said, alright, and I'll do a bit of tax law, a bit of commercial law, and you know, do a few subjects. Got my ticket to qualified as an accountant and then I came here and then I finished my CPA and
[00:06:22] Shelley: yeah,
[00:06:22] Johan: so an accountant, but I never actually want to do like the nitty gritty tax stuff and it's probably not my spi.
[00:06:27] Johan: Totally. I, I always like talking with business people. Yeah. I love ideas. I like talk
[00:06:32] Shelley: and problem solving as well. I think that's what you are good at. Yeah. Problem solving with numbers.
[00:06:36] Johan: Yeah. And I still like advertising and marketing and I like talking to. To people coming to me with ideas. Hey, I've got this great idea.
[00:06:44] Johan: Is it got a stick? Yeah, okay. Let's do it. Let's run through from my Sausage machine, you know, we put all the things in and see what comes out on the other side. Yeah This is all right. There's a market for it. Does the numbers adds up? Yeah, you know Give it time and [00:07:00] you'll be a millennia in 10 years
[00:07:02] Shelley: And that's the fun thing, I think, as well, is being able to use the skills and that natural, you know, affinity that you have for numbers, and make sure it works for you as well, to keep your interest up as well, in that smaller or medium, you know, even bigger business.
[00:07:19] Shelley: Yes. That application as well.
[00:07:22] Johan: Yeah, sometimes I work for a bigger business, you know, every now and again, you know, I might get paid. Involved with some sort of tender where you know, you involve with a big capital investment and you know, give a bit of costings on the side, but usually it's, it's smaller to medium sized businesses that I'm involved in, as you know, because we're both part of the, the regional development Australia, sort of supplies as well, the B2B program, business to business.
[00:07:48] Johan: yeah, we, we like working with small business owners, around, around the area. And then I'm also involved with the Soulsbury.
[00:07:55] Not a
[00:07:56] Johan: council specifically, it's a group called Polaris. [00:08:00] And they would work, they are funded by the Salisbury Council, but actually Got quite big now, so they actually do a lot of extra work in South Australia.
[00:08:09] Johan: So I'm wanting the mentorship program and specialist program as well to go out and help the smaller businesses in the area with their financial management and the business, business planning and business model. Because we
[00:08:22] Shelley: know how important that is. Yes. As unsexy as it is sometimes.
[00:08:28] Johan: Numbers are not very sexy, but hey, you can have a firm grasp for figures, eh?
[00:08:32] Johan: That's it.
[00:08:34] Shelley: so I guess, why is, you know, why is financial clarity, so knowing those numbers, so crucial for small businesses and startups?
[00:08:44] Johan: Well, well, you think about an airplane, you know, you can't, you can't fly, you can't fly blind in an airplane. You need a navigation, a navigation system. You need, you need, you need a clarity to, to know that.
[00:08:59] Shelley: Know where you're [00:09:00] going.
[00:09:00] Johan: Know where you're going. Know what's ahead.
[00:09:02] Shelley: Yeah.
[00:09:02] Johan: you know, what, what we probably do is a lot as accountants as well, we look to, you know, look at the back window and say, Oh yeah, how was it last year? You know, but so often. We forget or we try, you know, to focus too much on the past and not on the future.
[00:09:22] Johan: But you can but you need, you need a clarity from from stuff that you learned in the past. Yeah, sort of from
[00:09:29] Shelley: both, don't you? As life as life and world. You can't let it hold you back, but you also need to acknowledge and Yeah. Yeah. Yeah. Use it to make better decisions going forward. That's right.
[00:09:40] Johan: Yeah. And I always got a thing like clarity is obviously clarity is power.
[00:09:44] Johan: Yeah. Yeah. I have some.
[00:09:46] Shelley: And it gives confidence as well doesn't it? It gives you, yeah, it
[00:09:49] Johan: gives you so much confidence. If you know where you're going, you know, I mean, if, you know, obviously we're a bit spoiled. I mean, I grew up in times when, if you've got to go, if you've got to go be somewhere for a meeting, you've got [00:10:00] to, You've got a map and you say, all right, I'm going to go to, to Shelley's place this morning.
[00:10:06] Johan: But now you're just like, Siri, put in his number for me, your drive and you, but you've got clarity. Now we are, you know, so, and you know, what time will you be there? That's it. Yep.
[00:10:17] Shelley: You've got the calendar reminders. You've got the, you know, all of those. Yes. Yeah. I'm
[00:10:22] Johan: quite old school. I'm, I'm probably not using technology as I should use it totally.
[00:10:27] Johan: Yep. But yeah, it's great to have to use. There's
[00:10:30] Shelley: a lot that's available. And, I guess in following on from that, what sort of tools or practices can small businesses, you know, use to achieve that clarity? Like what kind of, yeah, what ways can they start to implement it? So it's not about, you don't have to do it all, all at once, but just start to build in knowing their numbers.
[00:10:52] Johan: Yeah. Well, I guess. I guess what I'll start with, I'm pretty, you know, adamant that, you know, people, people's got [00:11:00] to show me a budget, or sort of like ideas about a budget. It's almost, I wouldn't say I won't work with a person that hasn't got a budget, because that's my job, is to help people get a budget, but they have to, to understand that it's important to see, you know, what would the future be like, you know, what if scenario.
[00:11:18] Johan: So, so that's obviously one of my tools as well.
[00:11:21] Yeah.
[00:11:22] Johan: And then, and then you look at. The best at your, at your books, you know, perhaps, you know, you know, a lot of people they
[00:11:28] Shelley: operational cost
[00:11:30] Johan: scenarios people, people go there with their shoe books, shoe box full of full of receipts and they go to their calendar the ending, they say, Hey, you got it right.
[00:11:40] Yeah.
[00:11:41] Johan: So I do charge you whatever you need to do. You just get my books up to,
[00:11:45] after that. Yeah,
[00:11:46] Johan: but it's. Staying on top of your numbers, like almost like on a weekly basis, you know, do you reconciliate? I just know I'm not a bookkeeper, but there's a lot of help out there that people can actually put you in place.
[00:11:57] Shelley: And anything, even tools [00:12:00] like, you know, the online sort of the apps and the software. So like Xero, MyOB, to come to figure
[00:12:07] Johan: out, you
[00:12:08] Shelley: know, but thinking into
[00:12:09] Johan: it. Yeah. Yeah.
[00:12:10] Shelley: And what, yeah. So, so there's, even though you might say, Oh, I've got an account and who does that? I've got a bookkeeper. It's like, you're actually responsible.
[00:12:17] Johan: Yes, do it yourself, it's so bloody easy these days.
[00:12:22] Shelley: But also because you learn as a business owner what's going on in your business. Yeah, you have to, yeah. It keeps you connected, doesn't it?
[00:12:28] Johan: That's right, if you don't reconcile, I mean, and obviously you probably know some, a lot of people can probably resonate with this, is, if you don't reconcile, There's so much subscription sometimes that you pay every month.
[00:12:44] Johan: And if you do it like in a month, oh man, you know, this, this bloody,
[00:12:47] Shelley: We're spending 200 on subscriptions. Netflix,
[00:12:50] Johan: Stan, Disney, Amazon, what are you sitting with all this stuff? And you know, we've only got one night a week. We actually got time to sit down and watch a [00:13:00] movie. Well, that's, that's the household though.
[00:13:03] Johan: But as business is the same, if you, if you stay on top of it, you actually. You get in touch with things that you've perhaps been, and you can sit down. Is it, is it necessary? If you do it like every once in a few months, only when bath time arrives, then you know, then that three months worth of all the subscriptions that you didn't think about and went through.
[00:13:24] Shelley: Yeah. But if you regularly review it, like we just had the other day. Yeah. My husband was like, what's this Adobe, like what's this Adobe subscription? Yeah. What? Is that still coming out? Because. I paid for a yearly one, but then under his thing, he'd been paying monthly. So anyway, we've got to combine the two.
[00:13:42] Shelley: Something to follow up, but you know, we don't need to be spending 50 on the one app that we use. We just want to do the one we've already paid for, you know. So you can find lots of those little, little things sometimes, because they'll add up to big things. Exactly. And impacting, cash flow as well. So I [00:14:00] guess.
[00:14:00] Shelley: One of the biggest challenges for small and micro businesses is managing cash flow. Managing
[00:14:06] Johan: cash,
[00:14:07] Shelley: yes. So what sort of common mistakes can you see or you know what kind of And how can you manage cashflow properly? Like you talked about doing a budget. Yeah. I've learned how to do a cashflow forecast as well, which is actually very
[00:14:21] Johan: helpful.
[00:14:22] Johan: Nice. But that's probably
[00:14:23] Shelley: like a next step. Yeah. Very. Yeah. Keen to consider. Yeah. Cashflow
[00:14:28] Johan: is a bit, it's a bit like, I mean, cashflow on itself is not a problem. Cashflow is basically just, just the symptoms. By that time you, You know, you've got a nasty cough and you go to the doctor and he's like, Ah, I've got this nasty cough.
[00:14:41] Johan: Please give me something to take it away for you.
[00:14:45] Shelley: But the infection's already there. But it's already there. It's something
[00:14:48] Johan: that might have, could have prevented, you know. As, as like, we always say, perhaps, perhaps if you exercise more, you eat more healthy. Or you, you sleep better, or whatever. Or you go out in the mornings, you know, [00:15:00] some people talk about, you know, the first thing in the morning you get some sunlight in your eyes, or whatever.
[00:15:04] Johan: So all that kind of stuff. And, okay, I mean, you know, medicine is. But it could have been prevented and it's the same with cash, cashflow as well is, is perhaps try to, to see what can you do in your business to, you know, and, and know, well, I've
[00:15:21] Shelley: probably
[00:15:23] Johan: digressing because, you know, I'm not talking about health stuff, but from a business point of view is the, A lot of people say, yeah, but if people don't pay me, that's why I've got cash flow.
[00:15:34] Johan: I think it's, it's sort of like, yeah, that that's an issue. But the biggest problem I see in businesses is not being on top of the gross profit margin.
[00:15:42] Shelley: Yeah.
[00:15:43] Johan: Now the gross profit margin, as we would know, is your, your sales, for instance, Now I'm talking about sort of my more of a manufacturing people that manufacture And a lot of a lot of our kind of clients in the idea as well Who's you know, who's makers and you have this business called [00:16:00] makers emergency if you make so you've got to understand What is the cost that you put in to make that product?
[00:16:05] Johan: What is your direct labor attributing to cost? So then you got your Then you've got your, your costing, your sales, and then you've got your, your gross profit margin, or your gross profit, and then your margin would be your gross, your, your gross profit over your, your pricing, that will give you a margin as well.
[00:16:24] Johan: So find, find that switchboard. It's not just,
[00:16:28] Shelley: oh I buy it for five and I sell it for ten, so I get five dollars.
[00:16:31] Johan: Yeah, it's not. A lot of people, and that's what I say, a lot of people always say, you know, if you And
[00:16:37] Shelley: then turnover is for
[00:16:39] Johan: vanity, but profit is for sanity. You know, so you want to go out there and you want to make sure that you make a profit.
[00:16:46] Johan: Now coming back to the, that is where the whole profitability scenario comes back into it. And it, and it, and it, it's gonna, it's gonna eat away at your cash. If you don't make enough gross, you know, it's gross profit. Obviously we've got [00:17:00] over it. You know, you've got, you've got, you're perhaps a small manufacturing, manufacturing.
[00:17:05] Johan: Skincare or or leather products or whatever, but but that's the direct cost and then you've got to pay your electricity and your rent And you know, you've got a you've got a perhaps a car and a couple of machinery that you're paying off as well Yeah, but it's a gross profit. That's that's that's That's pretty much a big indicator of your cash flow problem and a lot of people, you see it a lot with perhaps tradies, now tradies are not out here to have a go at you, but you know, people probably like do a job and not, you know, a guy might come here to fix your, to fix your, you know, piping in your kitchen or whatever and say, yeah, no worries, Charles, I'll, I'll do it.
[00:17:47] Johan: I'll send you an invoice, you know, two weeks later, you haven't seen the invoice yet. And you find this blank. So are you, are you going to see me? He was like, yeah, you know, like, I'm just be flat out, man. I'm like a lizard drinking. I'm like, [00:18:00] never get around to seeing you and eventually end up the mom. He goes, and oh yeah, I've done that job for shelves.
[00:18:05] Johan: I better send it. He goes, and then he gives you another. Two weeks to pay which is great. It's great for you. That's
[00:18:10] Shelley: it, but it's been six weeks It's been six weeks
[00:18:12] Johan: since he actually got his money and he's probably bought some equipment as well before that time Yeah, you know, he knows he's got to go to shelly.
[00:18:21] Johan: Two week for two weeks. I'm gonna go to but hey, i'm gonna go to mitre 10 I'm gonna buy a few pipes and a few plugs or whatever and a bit of a bit of type So i've spent like, you know, 50 bucks worth of materials. Yeah, so now You're only gonna have gonna get that 50 bucks back Plus in your time that you spend or your 50 bucks.
[00:18:41] Johan: It's gonna take you two months to get it
[00:18:44] Yeah, you understand what i'm getting
[00:18:46] Johan: at. Yeah, and and that's a big thing and obviously the third thing is People are not being tough with their people that owes them money. Yeah, yeah. You know, you've got to be tough. Because it's that
[00:18:57] Shelley: leniency. Yeah. So we've just got a [00:19:00] little person.
[00:19:00] Shelley: Yeah. Audrey.
[00:19:02] Johan: We've got a little, a little small entrepreneur coming in, running in here. Can I sit here with you? Yeah.
[00:19:08] Shelley: It's okay.
[00:19:08] Johan: Oh, they're right. We can cut that
[00:19:10] Shelley: bit out. It's
[00:19:10] Johan: okay.
[00:19:12] Shelley: But, yeah, so sorry about
[00:19:14] Johan: that. So, yeah, I was, I mean, people owe you money. Make sure that, you know, A little
[00:19:20] Shelley: bit of leniency turns into a lot more leniency.
[00:19:23] Johan: Fair enough, I'll give you two weeks to pay this, two weeks come, and two weeks goes, and then, Oh yeah, I, I'm probably not gonna bother paying this, you know? Yeah. They're probably busy. Yep. But in that two weeks becomes three weeks and then four weeks and I, yeah. Alright. I'll just, and pick up phone. I'll phone you Hungry.
[00:19:39] Johan: You, you listen. Yeah. I should say, sorry, ma, I forgot you go Y with me. Sorry. Yeah, no worries. So that is, and then obviously, and, and there's also. According to statistics, I don't know exactly what statistics, but a lot of companies might be [00:20:00] profitable on e books, but they are Cashflow
[00:20:03] Shelley: negative Cashflow
[00:20:05] Johan: negative.
[00:20:05] Johan: So a lot of people are actually profitable, but they still go bust. They still go bankrupt because of cash.
[00:20:11] Shelley: Yeah.
[00:20:12] Johan: Yeah.
[00:20:13] Shelley: Yeah.
[00:20:14] Johan: Sorry.
[00:20:14] Shelley: Can you go and see dad? Hi.
[00:20:19] Yeah.
[00:20:21] Shelley: He's coming to get you. He's got what? Chocolate. You go sit. We'll be finished in a little bit. Okay, thank you. Alright. Okay.
[00:20:35] Johan: No worries. So, where were we?
[00:20:41] Johan: So it's all, yeah, cash flow is a big indicator as well.
[00:20:45] Shelley: As well as gross profit margin.
[00:20:47] Johan: Gross profit margin is the thing I always use. He's probably going to ask me about it later, but you know, I always say, you know, you've got to be Be patient about growth, you know, there's a lot of time to grow your business Yeah, a lot of people
[00:20:58] Shelley: do want a quick win, but it's [00:21:00] about small things consistently
[00:21:05] Johan: Make sure you've got, you've got your things in line and in place first, you know, before you, before you As a
[00:21:10] Shelley: foundation. Yeah, because
[00:21:12] Johan: growth takes money, you know. You know, you've got to buy new machines and you've got to perhaps employ people to help you grow before you get your, your, your return.
[00:21:23] Shelley: That's it.
[00:21:24] Shelley: Yes.
[00:21:25] Johan: Yeah. So
[00:21:26] Shelley: my next question was, talking about budgeting, but how can small businesses create and stick to a budget that supports their growth?
[00:21:34] Johan: Okay, so, so falling on that point as well, so stick to a budget that, that supports you guys. So make sure, make sure you've, you've, you've obviously found, I, I would say, make sure you've found your, your niche or, or basically what's going to stick.
[00:21:49] Johan: So make sure, you know, this, this product is.
[00:21:53] Shelley: What you want it to
[00:21:54] Johan: do. Yeah.
[00:21:55] Shelley: And it's profitable and it's going to, you know. Get you towards your [00:22:00] goals.
[00:22:00] Johan: That's right. And then, and then the most, and then, as I say, be patient with growth, but be impatient with profit. Yeah, yeah. From the start, make sure that, you know, it's all right.
[00:22:13] Johan: You know, there's a lot of other companies that, but they're big companies, but your company makes sure,
[00:22:17] you
[00:22:18] Johan: know, I'm gonna, I'm gonna buy, I'm gonna make pillows.
[00:22:22] Yeah.
[00:22:22] Johan: Alright? This is, this is my pillow. It's gonna cost me 10 bucks in leather. It's gonna cost me 20 bucks in materials. Yeah. So it's gonna cost me 30 bucks.
[00:22:31] Johan: Yeah. But I've got to know my, my margin on that has got to be, you know, 50%. Yes. So I've got to, I've got to sell this for, for 60 bucks, this pillow. Yeah. So I've got to.
[00:22:43] Shelley: And knowing those gives you that. Yeah. Even if I just like
[00:22:46] Johan: two pillows a day.
[00:22:47] Shelley: Yeah.
[00:22:48] Johan: Or sell five pillows a week.
[00:22:50] Shelley: Yeah.
[00:22:50] Johan: It's okay. It's okay, but get the fundamentals right.
[00:22:54] Yeah, yeah.
[00:22:55] Johan: That's why, and then base your, and then you can start leveraging. Then you can start, start growing. [00:23:00] And that's why I said, you know, the budget is.
[00:23:03] Shelley: And like you said, being impatient with profit because, you know, we probably go, oh, that's okay. Most businesses don't make a profit in the first couple of years.
[00:23:11] Shelley: Yeah, it's fine. It's fine, but you know.
[00:23:14] Johan: Yeah, I'm, I'm sort of probably talking about your gross profit. We understand we've got over it.
[00:23:18] Shelley: Yes.
[00:23:19] Johan: You know, you can't, you can't pay over, you know, five kilos a week.
[00:23:22] Shelley: But if you have a budget, then you can say, well, we can see that with six months of us, you know, in operation, that turns into
[00:23:31] Johan: That's right.
[00:23:32] Johan: Then you can start, start modeling it out and say, what if scenarios, or what if I buy a machine that makes 10 times more offensive and I can actually use some, you know, some marketing and social media, you know, get some email marketing going, I can, I can triple my, my, my turnover.
[00:23:50] Shelley: And one of, one of my things that I've put into my budget as well is after, you know, after six months I look at what's my [00:24:00] expected income or sales.
[00:24:01] Shelley: And then my marketing budget that I'll put towards Facebook ads and things will be 10 percent of that. So it's always proportionate to, the sales that I'm seeing, so that I can keep a cap on it, because it is, it is sometimes, you know, I'm going to spend a thousand dollars and I'm many sales, like, well, maybe you won't, because you wouldn't have built that amount of growth, but I want it to be proportionate to, just because I want, so I want steady growth, you know, and that's understanding what you want to get out of your business as well.
[00:24:28] Shelley: And you can,
[00:24:28] Johan: then you can start playing around. You throw your spaghetti against the wall and see what sticks, because you, you know, Facebook advertising might work for you. It's probably not working for me. Yeah, you know tiktok might work for for a guy You know selling selling fancy kind of shoes Or whatever, but it's not going to work for a guy that that's selling life insurance Yeah, so
[00:24:50] Shelley: and that's it finally.
[00:24:51] Shelley: Yeah and working out where your
[00:24:53] Johan: best spend your money
[00:24:55] Shelley: Yeah,
[00:24:56] Johan: but but but it's only only going to work once you get it done [00:25:00] Did we did we actually stick to that that question? You Because was about elements. yeah, the budget. Yeah. ,
[00:25:08] Shelley: I guess. Yeah. How can they, how can you create and stick to a budget? So I think it's putting in, you know, the key components of a budget, but then also, and then stick
[00:25:19] Johan: sticking to a budget is monitoring.
[00:25:21] Johan: Yeah. Because Peter, Dr. Is a guy who wrote a, wrote a book or a lot of business books back in the, you know, the early 20th century. He said, you know, if you. If you can't manage, if you can't measure it, you can't manage it. Yeah. Yeah. So, so now that you've got your budget, make sure that you measure against it every, every month.
[00:25:40] Shelley: And it's okay if it doesn't meet those expectations because of circumstances or whatever, but Keep looking at it. Keep reviewing it. Keep adapting Because if you push it to this, yeah There's going to be a
[00:25:52] Johan: big surprise A lot of people say oh, I don't want to look at my numbers because I don't want to I don't want bad news But it's all right.
[00:25:59] Johan: It's only it's only [00:26:00] you Better to know where you're at Yeah, it's worse than you know, three months later, you know the bank managers If I just say yeah, sorry mate, we've got to pull stubs. Yeah And
[00:26:12] Shelley: that's it so yeah Keeping it simple as well. You might say, Oh, I'm not making very many things or I'm only a small business, but it's still Operate as if you are a big business, which is have a budget know what your costs are Yeah, know what your margins are to be or what they need to be.
[00:26:30] Johan: Yes
[00:26:31] Shelley: And then you can also see a bit like in Wine making so my you know previous, life was yeah, you might taste a wine and go something's not right here The numbers confirm the numbers can help you confirm what's going on or dig deeper into what's going on so that's sort of where
[00:26:47] yeah
[00:26:48] Shelley: the numbers are so important to know no matter what size because it can help you identify yeah
[00:26:54] Johan: because technically you're a scientist yeah yeah yeah that's it and where's
[00:26:59] Shelley: and [00:27:00] you tweak
[00:27:00] Johan: it a whole time yeah and
[00:27:03] Shelley: and even though in a business i think we're going okay but there might not be something quite right by having a really good handle on your numbers yeah Yes, you'll be more quickly to go, oh, do you know, we're actually not making as good a margin as I thought we were.
[00:27:16] Shelley: Or this is, you know, if I've suddenly gone to wholesale a lot more, you may be, you know, that can change the, the outlay of things. So, yeah, yeah, yeah. Having a, having a budget as a base can then help you. Do some of those modeling scenarios. So, well, what if I wanted to just do wholesale and not retail or, you know, those sorts of different things, can't it?
[00:27:36] Shelley: Yeah,
[00:27:37] Johan: that's right. And that's going to have a major influence on your margin as well. Because if you do, if you do, well, if you decide you're going to sell direct, just put your stuff on Shopify, that means all the margin, okay, pay a bit of commission for Shopify, all the, you know, the whole margin comes to you.
[00:27:51] Johan: Bye. All right, I'm going to sell my products and I'm going to use it to a retail store. You know, you've got to, you've got to give some of your margin away, [00:28:00] but you might have a lot of more traction through a retail shop. So you understand, and that's probably where it comes back into you to what kind of business model that you're going to have that's going to stick to you as well.
[00:28:11] Shelley: Yeah. And
[00:28:12] Johan: what's going to work for you. Yeah.
[00:28:14] Shelley: excellent. And so looking at sustainable business models, what would, what can, I guess some key things that startups can ensure they can have as part of their model to, again, be in business in two years, in five years, in ten years.
[00:28:30] Johan: Yeah.
[00:28:31] Shelley: Some key things to consider.
[00:28:32] Shelley: Well,
[00:28:33] Johan: I guess, yeah, I guess, well, one of, there's a lot of people that say, You know, they, they're afraid for. I'm just digressing a little bit. You know, people get invited to go to a network session.
[00:28:44] Shelley: Yeah.
[00:28:47] Johan: I'm a bit scared going there because everybody's gonna say, so Johan, tell me about your business model.
[00:28:52] Shelley: What do you do ? What? What the
[00:28:54] fuck?
[00:28:54] Johan: What is it? That's all I know. It's not Joe Rogan. We are, are not swearing in this podcast. Cut. [00:29:00] I can see it . Okay.what is my business model? But I think, yeah, the plain, plain idea about a business model.
[00:29:08] Johan: It's, it's not, it's not complicated. It's just something that technically, it's, it's something that's, that's going to work for you in terms of that. It's, and it's a two S's. It's got to be scalable and it's got to be salable basically. Not that you want to. You know, if you started a business, it's your baby and you want to treasure it.
[00:29:28] Johan: You want to protect it. And so I've got to sell it in five years time. Oh, I'm going to be sad, but you basically got to start your business with the idea. To be able to sell it and that's where with budgets and forecasting You know because it can give you and then if you interlink it with your balance sheet as well Which is a bit more technical stuff.
[00:29:48] Johan: You're not going to go to this podcast now. Yeah, people can listen to my show But you know then you can see how it fits into a balance sheet and what is the worth of the [00:30:00] company So it's all about the scalability and the salability of all of your business and technically what? You What is your, what is your business and how to build a sustainable thing?
[00:30:10] Johan: He's again, coming back to, to my, my previous answers almost is like, what's going to stick for you? You know, where is, where's my customers, where, you know, I might go retail, not getting that bigger margin that I would have got if I got straight online, but I get a bit of traction for, for my clients, you know, my clients and perhaps people like to go to the, to the co op store in, in, in, in Bury.
[00:30:36] Johan: as and as you scale though,
[00:30:37] Shelley: you go, well actually, well, I know I can make more. Yes. I'm guaranteed more so I'm order a bigger quantity of stock, for example, which can then drive down your That's right. Your price, which then can impact. So you've got some benefits to
[00:30:50] Johan: economies of scale, economi of scale.
[00:30:52] Shelley: Yeah. Yeah. Economies of scale comes
[00:30:54] Johan: and, and, and fitting. Yeah.
[00:30:56] Shelley: Yeah. And you've kind of, yeah. And you want to know, Well, and yeah, have that [00:31:00] in, in mind.
[00:31:02] Johan: Yeah. So, so, so your question was, how do you, how do you build a sustainable business model?
[00:31:08] Shelley: I think, yeah. So the key components,
[00:31:11] Johan: yeah. The key component is make sure it's, it's, it's going to work for you.
[00:31:15] Johan: It's sort of like in line with your vision, in line with your values, perhaps. Yeah. And that's perhaps another topic as well. And in, Make sure I understand and then as you as you as a winemaker would know you keep on tweaking it you know every day you go and you know, you take your wine out of the barrel and you throw it in the glass and you have a sniff and oh now i'm gonna Keep
[00:31:36] Shelley: yeah, just keep tweaking it as it evolves.
[00:31:38] Johan: Keep tweaking. I don't know what winemakers does. Do you put a lot of extra sulfur and shit? It's a secret
[00:31:45] Shelley: That could be another show
[00:31:49] Johan: It could be interesting So Yeah. But yeah,
[00:31:52] Shelley: you might, but you might look at it. So from a wine making point of view, yeah, you might, you might taste and you go, oh, do you know what?
[00:31:57] Shelley: That oak doesn't match the profile of the [00:32:00] wine and where it's at. We actually tell you need to change it out. 'cause we have, yeah, different ages of o, different types of oak. So yeah, you might say, oh. brand new American oak isn't doing anything for this. You're going to take it out and put it into some older French oak.
[00:32:11] Shelley: So you, but you make those changes then and there. You don't wait until after three years of maturation and go, Oh shit, it was in the wrong oak the whole time. cause then you have a, not as, you know, not as good a wine as you could have had. So
[00:32:24] Johan: it's like some, you know, it's like, it's like a story I heard back, In South Africa, this guy was making ballpoint pens and then he went to the retail shop and said, Here you go, you know, we'll package it nicely and put it on the ground and we sell it for, for 50 cents a pen.
[00:32:41] Yeah.
[00:32:43] Johan: And the retail owner said, Yeah, that's all right, you know, and displayed. And then, It didn't sell for 50 cents a pen. Yeah. So what, what, what? The owner of the business money, he took everything out of the packages and put 'em all in a glass bar.
[00:32:57] Yeah.
[00:32:57] Johan: And he says 99 cents each. Yeah. [00:33:00] And then it's all like hot cakes.
[00:33:01] What? Yeah.
[00:33:03] Johan: So you just change your, your model and I mean, there was nothing wrong with the product. No. So you've doubled the price and you don't have to worry about that. You just putting it there looking like, whoa, that's a bargain. Oh, nice.
[00:33:13] Shelley: Yeah, yeah. And it is, it's testing those things. Testing, testing that
[00:33:18] Johan: model.
[00:33:19] Johan: So, so tweaking that business model, you know.
[00:33:25] Shelley: And having something that you can, that you can be agile with. So I think going, well, and as a, as a business model, not being stuck in one way of thinking as well. So we've, you know, we sort of have looked, looked a bit about that. Agile thinking and, resilience as well, going, okay, we've got some setbacks, things haven't worked.
[00:33:43] Shelley: Yeah. But you really, almost like a muscle as a business owner, you learn how to deal with it, move on, problem solved, tweak, try something else. It's this strength that you'll grow to, to have, I think, because, you know, it's, it's There's nothing worse than things not [00:34:00] working out and you've put your heart and soul into it.
[00:34:02] Shelley: But, you know, but that's where having, you know, people like you to look at things from another point of view, which is really looking at the, you know, that cost analysis, the, the budgets and that profitability, I think is a really good resource for, and partner for people who are in business. And we're just sort of saying that nobody has to know all of those things because that's your area of expertise, but we want a really good foundation.
[00:34:26] Shelley: As a responsibility for a business owner, don't we?
[00:34:29] Johan: Do, yes, yes
[00:34:31] Shelley: you do. And in that way we know how to drive our own cars. Car, ship, into whichever direction we want to go in. So, but yeah, I just wanted also to tell us about your podcast. So your number
[00:34:43] Johan: man, and
[00:34:44] Shelley: what can listeners expect and how can it help them on their journey?
[00:34:48] Johan: Well, I guess, well, I've recorded 12 episodes. Yeah, probably 12 episodes. I've done my series once, I've started with series two and, and it's great. [00:35:00] So the first. I sort of like try to try to match it up with guests as well. So I've got interesting guests on there, you know, some were talking about a bit of that mindset as well.
[00:35:13] Johan: And then I had a guest who's, you know, he's a business mentor as well. And then people with, with small businesses comes in and inspire us. And what did they do? Where did they start? And how did they try? And they went broke, but they start again. So it's that kind of mix. But I also. I do a few solo episodes of myself, which, which is probably more boring, but I actually do get a lot of traction because the people, you know, the people, you know, I try to get guesting that, that, you know, everybody's got a story to tell.
[00:35:45] Johan: Yeah.
[00:35:45] Shelley: So
[00:35:45] Johan: the boring stuff is the numbers, but you know, I actually do get a little bit of attention. Decent traction on that as well. Yeah. We sit down and say, this is the business fundamentals. This is your financial fund. And you know, so you go into your, your profitable loss. How many [00:36:00] people out there, perhaps, well, yeah, profitable.
[00:36:03] Johan: We understand what a profit, but we understand where, how profit and laws actually give, gives you drive in the business. You know, your gross mar, your gross profit margin. Where's your overheads coming? How do you. But how can you basically did, you know, get, understand what, key performance in the case of KPIs as we like to talk to him, what key performance in the case is going to work on a business?
[00:36:29] Johan: How many people have you got in your, in your business that actually, Drives the business.
[00:36:35] Shelley: Yep.
[00:36:36] Johan: So, but
[00:36:36] Shelley: delving into those things, I, yeah, you talk about
[00:36:40] Johan: pricing strategies and, you know, budgets and forecasting. So that was series one a, series two. I'm probably going to focus a bit more on, on modeling, like what's in the future, like what if scenarios, what if I got my bus this stage and now I want to.
[00:36:57] Johan: I have to, I had to spend [00:37:00] $200,000 to buy this fancy machine, but I can, all my turnover, if my gross profit is gonna go down, is it worth it? Do I do, how do I do a cost benefit analysis? Yeah. How do I leverage over time to pay off that machinist thing as possible? How? What is, and you get. You get debted, but a lot of us sit with debt in business, you know, what is good debt and what is bad debt, you know?
[00:37:22] Johan: And how do you always? Leverage it or gear it for that matter. So we'll talk about it. You know, I love my guests. I'm Trying this season. I'm gonna try and get a tax accountant in there that somebody can talk about like capital gains And you know, your GST and your friends' benefit tax, all that kind of stuff.
[00:37:45] Johan: That's a little bit, you know, but stuff important to know though. I think I wanna talk to another accountant about financial strategy. Yeah. You know, your business strategy.
[00:37:54] Yeah.
[00:37:55] Johan: And, and then people with, with interesting stories. Yeah. And, [00:38:00]
[00:38:00] Shelley: but I think also you're putting that spin and we were talking about before of,
[00:38:03] Johan: yeah.
[00:38:04] Shelley: Making sure that we talk more about this as business owners. Oh, we have to, yeah. Because there's, you know, there is sometimes shame in not understanding it. Or embarrassment. Or not wanting to seem greedy to talk about the money side of things. And then to, Please pay me for the thing that I love to make, and then I've got to pay, but building confidence in people to be able to.
[00:38:28] Johan: And as you, as you can see in people, you know, your listener or your, your viewers can see, you know, we are, you know, we are normal people in business.
[00:38:37] Shelley: Sitting in the front
[00:38:38] Johan: now. But, and, and we're all in business to, well, probably make a profit, but profit is not a dirty word. Profit is your sustainability. It is something that.
[00:38:49] Johan: It is there for you to continue to do what you're doing. And we, and we fuel the economy with our, with our profits. You know, we supply employment. [00:39:00] We, you know, we, we help the regions.
[00:39:04] Shelley: When you think of how many small businesses there are in each region. And you're thinking, well, if we can make all of those small, micro, medium businesses be sustainable business models that are profitable, and contributing to their regions and communities.
[00:39:20] Shelley: Small business is so
[00:39:21] Johan: important, so important for today's, for the region specifically, you know. Yeah. We don't wanna, you don't wanna
[00:39:29] Shelley: be relying on external and overseas corporate. You know,
[00:39:33] Johan: I know the money's gonna stay in Australia, it's gonna stay in your region if you've got a regional business, you know, that's it.
[00:39:38] Johan: Yeah. You know you're gonna buy Woolies. I don't know how much money is going out of the country. Yeah. Go to your farmer's market people. That's right. Right. Yeah. Yeah. Go and buy
[00:39:48] Shelley: and go buy local stuff. Go. Yeah. And that goes, it keeps that kind of closed circuit sort of economy, doesn't it? Yes. And that means it's sustainable.
[00:39:59] Shelley: [00:40:00] Yeah. and if there's any, I guess, piece of advice for every small business owner. Yes. There's no pressure, to take away, what would it be? financially.
[00:40:11] Johan: Financially. Okay. Well, I've said it before. It's like stay on top of your numbers.
[00:40:16] Shelley: Yeah.
[00:40:16] Johan: Clarity, you know, work on your costing system. Be confident with your, with your costings.
[00:40:21] Johan: Confident, you know, you know, you can walk into somewhere and say, I'm charging you 60 bucks for this pillow.
[00:40:29] Yeah.
[00:40:30] Johan: I think 60 bucks is too much. I'm not sure what it might cost him is actually. Be confident in your business. Be confident in what you sell. And understand the business. Understand your interests.
[00:40:43] Johan: And, And also have fun in your business. Yeah. You know, it's, it's not all gloom and boom. Yeah.
[00:40:50] Shelley: There's a reason why lots of people do it is because there's lots of highs. Yeah. It's just we wanna mitigate and manage the highs. Yeah.
[00:40:56] Johan: And the numbers are not usually the fun side. Yeah. But [00:41:00] it is fun to, to sit down and, you know,
[00:41:03] Shelley: especially if you are in control, if you've got some, you,
[00:41:05] Johan: if you build a puzzle and you, you get an idea how it's gonna look and, or you, you sit down and you clip out, you know?
[00:41:13] Johan: You take a travel magazine, you click. Oh, yeah. I want to go to Africa. I want to go and see the elephants and I want to go to see the pyramids. And you put them all on a wish board. To put a
[00:41:24] Shelley: vision out there. Yeah, it's
[00:41:25] Johan: fun. It's great. So what do the same with your numbers. Play around. Say, well. If I get my profit margin right here,
[00:41:32] Shelley: yeah,
[00:41:32] Johan: it's it's it's vision, you know, it's gonna
[00:41:35] Shelley: be
[00:41:36] Johan: exponential You know, it's it's gonna be fun.
[00:41:38] Johan: And I mean, you know, we all like to dream. It's not just about dream But be a realistic.
[00:41:43] Shelley: Yeah,
[00:41:43] Johan: there will be hard work, you know You know, your life is a business and your business is your life, you know, we are small business owners, but we have to find a way to make it enjoyable. Otherwise, why do we do it?
[00:41:58] Johan: And if it doesn't work, so what? [00:42:00] You know, you've learned a lot, you know. Don't go, no, sulk. No. Just like, you know. Dust yourself off, you know. Have you got a bit of, have you got music on this podcast? Yeah. Can we bring in the Rocky music? Something
[00:42:11] Shelley: like, Eye of the Tiger? Eye of the Tiger,
[00:42:14] Johan: you get pulled down and you get up again.
[00:42:16] Johan: You know, bump and you fall down. You're gonna get a lucky shot in the end. Yeah. You know, you're gonna
[00:42:24] Shelley: You'll make it.
[00:42:24] Johan: You'll come out on top, you know, keep that eye on the tiger. We will do.
[00:42:31] Shelley: But no, I also want to say thank you so much. You're welcome. I love your insights. Yeah. And look forward to talking about finance again soon.
[00:42:40] Shelley: Yes. Because you're our numbers man.
[00:42:43] Johan: Yeah, that's right.
[00:42:45] Shelley: Okay. But I encourage people to have a listen to your number man on the website. Yes.
[00:42:53] Johan: Thank you.
[00:42:54] Shelley: [00:43:00]
