S1/E4 – Measuring Your Business with Four Vital Numbers – Megan Dahle

Perfectly imperfect transcript generated by Descript:

[00:00:00] Megan: So many times people get used to whatever their business is contributing to them, right? And so recognizing that relationship between you and your business as two separate entities. And it’s a relationship. Right? LIke, but I need you to, I need you to go do this thing for me. And I’m gonna give you all my time. I’m gonna give you all my tension. I’m gonna give you all of my, my, my happy moments. To put the brakes on that and look at your business and say, okay, I see you, I hear you. But I see what you’re capable of right now and this is my plan to fix that you can contribute more in the future. Um,

[00:00:34] Morgan: Hey everyone, welcome to the Lucky Pup Podcast, where we are taking big ideas and weaving them together in a way that makes the big picture relatable and also hopefully inspirational and educational. And I think you’re going to find that especially true today. You’re going to find candid and authentic conversations about the struggles we’ve encountered as we try to live more full and happy lives.

I’m your host, Morgan Weber. And today we are talking with Megan Dahle. Megan has been an accountant, CFO, a cashflow guru and more as she coaches small businesses to become healthier and happier. Megan has a huge passion that you’re going to hear about for helping businesses truly understand one what their numbers are And two how they affect everything that their business does.

She always knew that there was a simpler, more impactful way to explain this relationship between a business’s health and the key financial factors. And that is what we’re going to talk about today because Megan is going to completely change how you look at your business. 

Well, Megan, thank you so much for joining us today and I am just super excited for this conversation because you have so much knowledge to share with business owners about all things numbers, but also how those numbers affect the benefit that we get out of our businesses beyond just a financial benefit.

[00:01:53] Megan: Yeah. Well, thank you for having me. This is, I, I love talking to you. You’re so great to bounce ideas off of, and you, and you help me. Get my butt in gear many times. Many times.

[00:02:05] Morgan: it’s, it’s mutual. I, I was just saying before we jumped on that, I’ve been planning this podcast for a long time, and you and I got together about a month ago for a breakfast coffee, and I was telling you about this idea, and you’re like, well, . When are you gonna do it? I’m like, well, I, I guess now

So, so here we are, . So the feeling is mutual

[00:02:26] Megan: Oh yeah. So yeah, the numbers come into play all the time, right? Know your numbers. All, all that same phrase over and over again. And, and I’ve come from a perspective of numbers have always been easy for me way back in math class, my math teacher’s, like, your brain just works different. It just, it just gets it. And, uh, it’s kind of an unfair advantage. And so I’ve spent a lot of time Um, in clients’ businesses, just like, what is the pattern that I’m seeing? How do I articulate what is going on so that other people can get what I get? Um, and I’ll tell you now, it’s not found in your income statement and it’s not found in your balance sheet. There’s a lot of times where people stare at and they’re like, okay, sure. It, it looks right to me.

[00:03:10] Morgan: Mm-hmm.

[00:03:11] Megan: Now what like, that, that element right there that I think so many women, business owners especially, they feel so much like, well, I have it. I should know. There’s like some shame, maybe some embarrassment or just straight up frustration.

People just get so frustrated with it and they turn that on themselves as a form of judgment. And I, I, I, I wanna take them out of that. Like that’s not how it has to be.

[00:03:36] Morgan: Yeah. And I think there is so much like just guilt and like you said, shame and pressure that comes along with the financial side of businesses. And um, my grandma always used to say, you know, she, well, she was usually talking about other people, . She would say, know, don’t know that they don’t know. And you can’t know something if you have no idea even what to look for. You know, sometimes see people say like, oh, well just do your research. And it’s like, well that’s cool, but if I don’t even know what questions to ask, it’s really hard to do that research. And I think that also applies to our businesses.

And you know, why you have a ton of experience in that, you’ve, worked with a lot of businesses of various sizes in their financials to help predict the future, how to figure out what they’ve been doing in the past and trying to figure out a way forward.

And you have a new, well, you’re working on a book and you’re working on some really cool programs coming up, but, . , this idea of happy little businesses and how if we can have a happy little business that serves the owners well, we can also serve our team well, and we can also serve our clients well. And I know that’s something that you’re really passionate about, is making sure that that business works for everybody, that that business should be serving.

[00:04:46] Megan: Oh my gosh. Yes. Yes. I mean, my heart just grows 18 sizes. When I get to talk about happy little businesses, because it’s like, it’s not just your vendors and just your clients and just your employees, but it’s also like the community that you’re, you’re inside of. Um, You know, there’s a lot of stuff going on in the world and there’s a lot of tough things that, frankly, some things I don’t even wanna talk about because I don’t have the power to change it. But we do have the power to make a difference inside our little community. And if we can stay focused on, on that, of what we can do with what we have, instead of getting frustrated by what’s out there, um, Then, then you create a happy little life, right? Like your, your employees get to be happy at work.

Your clients get to be happy with your results. Your employees get to go home and be happy with their families and their families. That’s what, that’s what it is to love your community. That’s what it is to love the people around you. And

[00:05:43] Morgan: ANd that’s the only way the world will ever make any kind of progress of, you know, no matter again, if you’re, what part of life in the world that you’re looking at. But, um, Like you said, community and caring about each other. And I think there’s a lot of people maybe were in businesses that didn’t care about their employees and that’s why people become their own bosses or they, they start their own businesses because they’ve seen what they think is the quote unquote the wrong way to do something and they wanna do it better.

But then sometimes we get in out into the world and we realize that . You know, this is a lot harder than I thought it was gonna be, or I can now understand why something was the way it was, but how do I make a difference or how do I make a change? And I think that can be really hard for people.

[00:06:28] Megan: Yeah, and without recognizing what the alternatives are, you are going to default back to what you’ve seen done before, even if you didn’t like what was done before. And we have all these outside pressures saying, here, buy this marketing program. Hey, buy my organization program, do this thing, this thing, and it’s going to be the answer for you knowing absolutely nothing about your business. So, You are the first line of defense. You as the business owner, are the first line of defense, and I have done my job, at the end of the day, if I can give you the power to look at any opportunity or any problem and say, I know what’s the right path for me on this one, and that’s not it, or that is it, in making those decisions in a place of, of confidence and, uh, bravery and of just in your own power and your own intuition and trusting that because, You have a knowing now, right?

It’s not like, uh, I’m gonna try this and hopefully it lifts up my sales by.

Yeah. So reducing that risk, and not just telling you about it, but you knowing and understanding it inside out and backwards, because nobody knows your business like you do, but it’s really hard to say like, yeah, I know my numbers, but I don’t really understand ’em, so maybe I, I don’t know my business like I should, and that person seems to, so I’ll just go with what they’re telling me. 

[00:07:43] Morgan: I love that you say this because, uh, this last week I clicked on a link that showed up in my . Instagram, I think, and it was for a really cool program and I was like, oh, this looks really fun. And of course, the way those algorithms work, once you click on one thing, it’s like 12 million other programs start popping up. And all of these coach, you know, coaching ads start popping up. And, and of course everyone has the solution to all of my problems, right?

[00:08:15] Megan: Oh yeah. 

[00:08:15] Morgan: it’s, it’s like, how do you. Uh, like you said, if you don’t know exactly what you’re looking for, how do you even start parsing through the thing that’s going to, again, quote unquote save your business?

Right? Because there’s so many things where we think, gosh, oh, if only I had this, or only I had that. But our businesses are ecosystems and so nothing is ever as as pushing one button or changing one little thing because that thing has ripple effects. But again, it’s so hard to know even where to start.

[00:08:46] Megan: Yeah. Yeah. Like the starting point is like you said, the ecosystem, right? And you do remember those, those graphs back in elementary school where you’re learning about ecosystems and the food web, and it had all these arrows and everything, like even plotting that out for your business. Like, well, marketing goes to sales, and sales goes to delivery, and delivery goes to stewardship.

Like that’s, that’s okay. We need to see it in the context of your business, right? Like how is your business currently functioning? And then we can design what we want it to be doing. Like, okay, this is status quo, let’s get real about it. I’m gonna give you a little sidetrack story here. Last night I was playing bridge with my husband down at the Center for Active Generations.

We get like to go play bridge and get beat up on by old people and, uh, I, I played, I played a card. I did not return the suit that he wanted me to return. And I got these death dagger eyes at me. And generally Travis and I play bridge really, really well together. We’re good. I mean, we make mistakes. We kinda laugh it off like, huh, learning.

But this time like. Those eyes just like came at me and I knew, I knew he was mad at me for not for picking the wrong suit, and I was like, ah, yeah, I did it. But here’s the difference, because it was like this, this anger or this like, not even shame, but just like, what are you doing? It was that, that more negative connotation to it.

I was not receptive to that. So I knew that we had set him. He was, he was worried about us winning that particular hand, and I knew we had won it, but he didn’t know. So I was going to drag out my winning trick as long as I could just to make him suffer. Right. I was not gonna be receptive to like, you should know that you should play that too, because I did da da. Like, well, this is, this isn’t gonna go well. There was no communication there, right? So What happens in other times is like when I’m wrong and things are more, uh, like friendly. Like, Hey, did you notice how I didn’t support your spades? I really needed you to play back a spades so I could trump that, that I’m totally receptive to. I want to know when I’m wrong. Business owners want to know when they are wrong, right? They wanna see it. They do not want to be shamed. They do not want to be embarrassed. They do not want to be like, I can’t believe you don’t know that. And many times they think that’s what’s coming, right? So we brace against it and we’re like, okay, yeah, you’re right, you’re right, you’re right. And we just shrink and we, we into a mode of inactivity. So if we can see a framework where our business is functioning, how does it work? I can see for myself where I’m wrong and it has no judgment on me. It completely removes you from that. My business is, has a problem. I must be the problem. It’s me.

It’s me. Right? Creating an objective viewpoint of your business is like the number one most vital thing where you’re open to those aha moments. You can get excited about solutions and you can get brave, and you can decide like, yep, I know what to fix. I know what it is. It might not be easy, but I know what to do.

[00:11:45] Track 1: Mm-hmm.

[00:11:47] Megan: What came of all of this, what came of my last, however many years I’ve been doing this, um, We’ve talked about the growth profit paradox you and I privately before, and that is the starting point for it. But really what the business model is, is four vital numbers. And when you line up these numbers next to each other on a graph, the vital four, I call ’em, they’re just four sticks.

When you line ’em up next to each other and you can see the relationship of the size of each one of those bars next to each other, it’s like, oh. I know what it’s, I know what it’s, so, these vital four numbers are quite easy, right? It’s the size of your audience, it’s your revenue number. It’s the capacity that you have to produce revenue. And then finally, the last one is your breakeven point. So if you take all four of these numbers and you line ’em up and you see that your breakeven point is higher than your sales, you know there’s a problem. If you know your breakeven point is actually higher than any of those numbers, there’s going to be a bit of a problem. But also if you see like your capacity for revenue, Like we have all of this time, these different time slots that aren’t getting filled up. We could be doing $20,000 a month, but we’re actually only doing five. Like that difference between your revenue and your capacity. There’s opportunity there,

 Once you can see it in visual format, not number format, like I’ve, I’ve shown these numbers to clients over and over and over and over again for 20 years. In some form or another, but until it got put into a graph and those little lines drawn across and that little meaning put into the difference, that’s when it was like, okay, I get it. Now. I know what I need to do. I’m not gonna like it, but I know what needs to happen

[00:13:32] Morgan: Mm-hmm.

[00:13:32] Megan: gonna go do it.

[00:13:33] Morgan: As you were talking about it, like I can, I can envision those little bars in my head. It’s a very simple way to look at your business, but also, like you said, it’s very direct way to understand what is going on in this complex system of your business. And um, One thing I like to talk about a lot is, we are often told that growth is the only option. More volume, you need more team members, you need more managers, you need all of this capacity. But that might not be the answer. Like capacity isn’t always the answer, whether it’s just personally, you don’t want to be a team manager or a team leader. Or you , Hey, my happy little business is, I just want it to be me and maybe a few consultants who helped me out and that’s all I need. And that’s an easy way to say, Hey, here’s my capacity. Here’s how much I’m currently doing, and what else needs to change?

[00:14:20] Megan: Absolutely. I mean, you can look at your pricing through this perspective. You can look at hiring through this perspective. You can look at firing through this perspective. I mean, and even like the, you were saying earlier when these different strings are attached. Like if I do this over here, I don’t know what’s going to happen over there.

But now you can have this perspective of. Thinking about, okay, I thought I needed sales. I really don’t wanna fire anybody, but my capacity is higher if I were to go out and work really hard on converting more of my audience to sales. I know that my break even point is going to go even higher. Is it, is it more risky to go out and get the more sales?

Or is it more risky to reduce that capacity to get it back to a point where I can be profitable? And you can start designing business very, very purposefully, uh, without that outside influence of grow, grow, grow, grow, grow. If you’re not growing, you’re dying. Eh, eh, are you,

you. 

[00:15:15] Track 1: And I think for our service providers, . I know for us and personally, like that capacity number is tricky because capacity changes and like we had our busiest summer possible and now our fall is much quieter. And so it’s, um, not like I need to go out and get a ton more clients because if I do that, I’m not gonna be able to serve people in my busy times.

But at the same time, . I need to be able to, like you said, keep that break even point in check when we are in our slow times. And so do you have any suggestions for those service providers? I know you work with a variety of different businesses, but any suggestions for people who are maybe looking at that struggle and saying, I’m either at feast or famine and I’m either super busy or I’m super slow and I’d like to get a little more, a little more in the middle there.

[00:16:00] Megan: Yeah, so that capacity number is the number one overlooked number. In fact, I’ve never seen anybody else calculate it, right? Like nobody else is looking at it saying, how much can you do or should you be doing? So graph that out. That’s the first thing I do with almost every client is who’s doing the production work? What percent are they actually billable? I. What is, what is the revenue that they really could generate per month, including yourself. And people very often overestimate how much they personally as a business owner are able to produce. Like 40% tops. Billable time is gonna be 40% for a business owner. Um, I’ve never seen it go more than 40%, even when people think they’re like 70. So get super real about your capacity in the revenue. The second piece, especially when you’re plotting out in the future, is knowing like Having that confidence of, we know in December that things are going to be really great again. Now we need to know our runway number. We need to know like how much cash do we have, right? Can we get through this point of paying for this extra capacity? Which there’s a whole other strategy over there for that? Or are we, do we need to like back off on capacity? Do we need to, to, do a thing so that we’re not eating up all of our reserves waiting for December to come around? Um, and that’s where those decisions get really real and really hard sometimes because, well then we have a hiring problem.

Because if I let somebody go, okay, alright, well then how can we put them to work working on one of these other four numbers, right? How can we get them to, um, like. Go through our expenses and do an expense audit. How do we get them to go out and start making some sales? How do we get them to, to talk to other people out in the world?

How do we get their perspective that we can use it on social marketing, there’s so many things that you could put people to work since you’re already paying for that capacity already. Um, but the one thing that I worry about capacity most of the time is that when capacity gets low, employees get used to low capacity and they learn how to look busy. When they’re not. Um, I see this a lot in the interior design world, so that when things do pick up all of a sudden, like, sure, we were able to do a hundred thousand dollars a month a year ago, but now I’ve, I’ve got other things to do. I’ve got all of these other responsibilities that have piled onto my plate.

So it’s just being very deliberate as to what part of that graph that those people are contributing to in their downtime.

[00:18:21] Morgan: Yeah, I mean, I feel that right now because I was like, Hey, I’ve got some downtime. I should start a podcast . And now . Um, as work is starting to pick back up again, it’s like, oh geez, like I’ve given myself this additional responsibility of this project I need to see through. But now also my in the field work is picking back up again.

And now I’ve gotta start balancing these things. Or know, it’s, Hey, I got used to having some personal time and some like decent work life balance when things get a little bit slow and it’s like, do I even wanna go back to that higher capacity? And if I don’t wanna go back to that higher capacity, what else needs to change in order to maintain that and, and maintain a, a, like a good lifestyle at that different capacity?

[00:19:05] Megan: Oh my gosh. You so nailed that. Like what else needs to change? So many times people get used to whatever their business is contributing to them, right? And so recognizing that relationship between you and your business as two separate entities. And it’s a relationship. Right? And it 

[00:19:21] Morgan: business 

[00:19:21] Megan: take 

[00:19:21] Morgan: wait. You, You, we’re we’re not, we’re not our 

We 

we 

are 

exact same 

business.

We 

and my entire. 

personality, 

[00:19:31] Megan: it’s not. It’s not. It’s if you start treating it as a separate entity, right? In a healthy relationship with healthy boundaries, there is a limited amount that your business can contribute to you. There is a limit to what you can contribute to your business, right? And sometimes when things get slow, we forget that our business can’t keep doing what it was doing, and we demand from it.

Like, but I need you to, I need you to go do this thing for me. And I’m going to, I’m gonna give you as much as I, I’m gonna give you all my time. I’m gonna give you all my tension. I’m gonna give you all of my, my, my happy moments. Like. You know when your husband gets home sometimes and you have a really bad day, and you’re like, So he gets the worst of you and your business is getting the best of you. 

To put the brakes on that and look at your business and say, okay, I see you, I hear you. I see what you can do for me. And either I am going to have to go make a decision for myself and my personal life of how I am going to continue to live this lifestyle or how I’m going to back down. But I see what you’re capable of right now and this is my plan to fix that you can contribute more in the future. That panic that comes with needing something from your business that it can’t give. And you’re starting to put things on credit cards and you’re starting to, you know, hide a little bit more and invest in things that aren’t maybe the greatest opportunity for your business.

And, and you get panicked like that, backing away and saying, hang on. What’s the best thing that I can do for you right now to get you back healthy? 

[00:21:04] Morgan: Gosh, there’s, there’s so much there that we could talk about . Um, I, yeah, because understanding, like you said, that relationship between what can you give and what do I need, and sometimes those aren’t in alignment. And again, having that clarity of, like you said, those four vital numbers and understanding, um, what can I invest in, you know, is this an opportunity? Like, like I said, I had this great course that looked fantastic and I really wanted to do it, but I was like, Nope. Maybe next year, this is not the right time. I love this program, but it’s not the right time. I can’t put this much money and this much effort into this thing right now, and I’m very much about, the more clarity we can have and the more objective tools we can have to make decisions.

Um, then we aren’t caught up in the emotion side of business, which can be very easy because especially when we are very connected to our business, we, we don’t feel like it’s a separate entity from us. Like we feel like we are the business, even if we have a team, know? Um, and it’s hard to make those objective decisions because, Things are emotional.

Money is emotional. These decisions are emotional. We, we are emotional beings, you know, and it’s really hard to, to divorce the emotion from these big decisions. And having those four vital numbers seems like a really great tool to use to be more objective in your business, even when it’s kind of scary and it, it, kind of sucks. 

[00:22:36] Megan: yeah, yeah. I seem to think so. I’m like, I wanna, I wanna run that decision that you made just through The vital four numbers real quick. So you had an opportunity that that was going to that promise to, let’s say it was going to grow your sales. I’m just gonna pretend that that was the, the objective of that particular program. ’cause that’s a lot of times it’s what it’s, right. So if we have our four numbers, it was going to grow your sales numbers, but you could look at it and say, well this is what it does to my break even point. My break even point is going to grow by this much and my capacity is actually going to shrink because of the amount of time that I have to put into this program. So where would that theoretically put those bars now and is that a risk that I’m willing to take?

[00:23:17] Morgan: like you said, I know there’s a lot of, um, talk in the pets sitter world right now about hiring managers. So say your team is growing and you’re gonna hire a manager, and this manager is gonna be probably, you a part-time pet sitter and a part-time manager. So now you’ve got this, like you said, your break even point’s gonna go up.

You’ve got this additional overhead. And is that additional overhead going to help your team be more productive, maybe reduce turnover, maybe, you know, be a better customer service experience for your clients? Like how do you, sometimes, I dunno, I, when I look at budgets sometimes, or I look at like business plans, I think, you know, this is just a big old guess and

There’s a lot of subjectiveness that gets put onto these things because we can say, I can make a business plan that says I’m gonna serve a thousand people and I’m gonna have a team of 25 people. But that isn’t necessarily reality. But I can build a business plan and a budget that makes it look realistic. So how do you use these four vital numbers in a way where you aren’t just. Making a guess at what you wish to happen and isn’t necessarily rooted in the reality of what is likely. And maybe I’m just too much of a pessimist or too much of an optimist depending on day. I don’t always fall in the middle.

I tend to kind of be way overly optimistic or I am very conservative sometimes in my, in my expectations. But how do you find an answer to that? 

[00:24:43] Megan: Yeah, so a guess is a gap in knowledge, right? And there’s always going to be a guess a risk of some sort in any business decision you make. I, I’m never gonna be a hundred percent percent, I’m probably gonna be 60%.

You know, that’s, that’s fine. But if we can make that leap. Of that guess be, um, a smaller leap. Like instead of trying to jump over the Grand Canyon, we’re going to gather enough knowledge and make enough of a, of a guess of like, okay, this is what I think is going to happen. Um, the, in the past when I’ve done this before, this is the type of result I’ve gotten.

So I’m going to, I’m going to assume even if I’m gonna be conservative in this, guess I’m going to assume that this is what’s going to happen in this scenario. And then we can map that out, right? Like, The vital four aren’t like well you can only use historical data.

Well, blah, blah, blah. You can use it for any time period, and you can map it out and say, this is what I think is going to happen. How sure am I? And you take that gut check and how do I know that? How, how sure of this am I, am I like 90% sure that this is what’s gonna happen? Am I like 20% sure. And I, I’m just throwing spaghetti at this point because I need an answer. Um, That’s where your self-trust can come in handy big time. Right? Using that intuition silencing the outside voices who have a vested interest in you saying yes to their program and, and taking control of that decision for yourself. Right. Not just like leaving it up to the wind to blow one direction or the other, but to sit down and map it out in Okay. I really wish that this program would do more for me right now, but it looks like I don’t, I don’t think it’s gonna get me there. I’m gonna have to pass on this one.

[00:26:21] Track 1: Yeah. ’cause like you said, everybody believes that their program or their thing is gonna be the thing again, that solves all of your problems. Right? Take this one course. It’s only two $2 97 or 

problem

And, um, it, you might be trying to solve the wrong problem like you said, it’s not the right time or, um, I know I severely, overestimate. The amount of things I can get done in a day, and much, I’ve been trying to be much more cognizant in the last year especially of like, I’m gonna get one thing done today and it’s going to be like a reasonable item.

It’s not like, redo my website , or some thing that really is gonna take months to do or weeks to do if I’m gonna do it myself. But trying to find just like, what’s the one thing that if I only get one thing done today, I will still call it a success. If I get more than one thing crossed off my list, that is great, but I’m only gonna commit to one thing.

And sometimes that is like, The one thing I wanna do today is make a nice meal I get home and actually sit down and enjoy it. Because otherwise I’m like, yeah, I can write this copy and then go update this program and, you know, edit a few podcast episodes and then also go to the grocery store and then go home and make myself a fancy that’s not at all realistic, but it’s so easy when you look at a blank calendar or . , you look at a blank spreadsheet or you look at, you know, your blank capacity and you’re like, oh my gosh, I can just fill all of this. And it’s usually not very realistic. 

[00:27:54] Megan: Right, right. There was a, um, I don’t know if you watched the football, any football games on Sunday, but the chiefs were just annihilating the bears and the announcer said, There’s no victory here for the bears, but there’s definitely moral victories, right? Like there has to be something that you hang on to, even in the bad times of like, I took a shower today. I took a shower today. That’s, that’s pretty dang good. Or, I filed my sales taxes. I got it done. All right. PH 

[00:28:25] Morgan: Yeah, that was actually me yesterday. Literally it was, I need to submit my sales taxes today. And I mean, really, I needed to do it about four days ago, so it had time to process through, but yesterday was the day it was going to get done. Um, and I was like, okay, good. I got that done. I can take that note off my desk and like move on with my life.

And sometimes when those things are kind of just hanging over you too. And I, I feel like this is a lot with financial decisions or these kind of like big choices we have to make in our business. It feels like this heavy thing that is kind of hanging over us and the more we defer making this decision, and whether that’s a, a, again, a capacity decision, a revenue decision, a whatever decision that is, the longer it hangs over you, the heavier it gets.

And even if it’s something that’s kind of small, once you finally get that off your plate, it’s like, Ugh. Like I can actually relax and breathe and, and kind of move forward. 

[00:29:22] Megan: Yeah, there’s even points where the decision gets made for you if you drag your feet too much, right? And it’s probably gonna default the answer that you didn’t want, um, not to like pressure you into doing the thing. Uh, more of inviting you to just take one victory at a time. Like you said, I put my socks on today. Whew, 

[00:29:41] Morgan: Like, yes, success . And if they’re clean, you know, that’s even better 

[00:29:46] Megan: Don’t push it. it. 

[00:29:48] Morgan: Sorry. 

Yeah, just some socks. You know, I have, I have re worn socks before. I will, will admit it here in public to the whole internet that I have re worn socks. Uh, so do you have any suggestions for, again, we’re, we’re talking about these four vital numbers and how people can apply this again going back to your mission of like spreading love and helping your team enjoy their own lives as well. ’cause I think sometimes when we look at these four vital numbers, it’s really easy to prioritize what we need first. Because we often say, you know, Hey, I’m the business owner. If I am not in this for the long run, they’re not in it either. ’cause none of us will have jobs anymore.

at the same time you have to balance that with taking care of your team because if you’re not taking care of your team, they’re gonna find a different job. Especially right now when what the national unemployment rate is at an all time low or close to an all time low. And so it’s, it’s easy for people to find a new job if they wish to find a new job.

And so how do you balance some of these, taking care of yourself and also taking care of your team so you can have that long-term successful relationship. 

[00:30:54] Megan: I think at that core of that is a really, uh, tough question that a lot of people don’t even wanna hear, and that is, am I doing something that is, that is satisfying to me, not necessarily making you happy. Not bringing you joy every day, but something that at the end of the day, like I did good work and I, I enjoyed the outcome, getting that outcome from my clients.

Right. Um, we all have frustrating days. We all have days where we’re all wanna throw in the towel, but there are many times when I come across a business owner that’s still doing this for the sake of that they don’t know what else to do. Right? And so there’s a resentment that builds between them and their daily work tasks. So it starts with recognizing what you do is important, what you do makes a difference for somebody. Whether it is giving them a quiet five minutes to have lunch, whether it is giving you the assurance that when your mother-in-law walks in your house, she’s not going to criticize you, right? Whether it is like, there’s all these little things.

Making sure when, when I’m away that my pet isn’t like Frantically stressed because nobody is there for them. It’s, it’s the little things and if you can connect to what you are doing for your clients and they understand your skillset, they understand your heart and where you’re coming from. That’s the marketing portion. That’s it. And, and helping them like make that decisions to say yes, whatever it is. Like if you’re giving the gift of going second or making it super easy or inviting them, doing the uncomfortable things for them. Your sales are going to be a success, and from there it’s on you and your team to design that capacity of getting them that result in the most efficient way possible.

And finally, the like, the last part, the, the break even point, that’s the stewardship and that’s back on you as the business owners saying, I am going to be a good steward of my team’s talents and of my own talents and of our calling and, and making sure that that break even point is going to be small enough that we can continue to do our work. 

[00:32:57] Morgan: I, I think a lot of times too, people might say, Hey, our capacity’s great. Hey, our, our revenue numbers are looking really great, but . That break even point doesn’t look too great. And now they’re in the tough position of, do we need to grow because we have this much overhead and we need to apply volume?

Or do we say, Hey, we’re not gonna grow and we need to that revenue and we need to decrease our spending. You know, whatever combination of things that looks like. But having to go out to our clients and say, . Hey guys, I’m sorry. I haven’t really paid attention to our pricing the last three years or the last.

I saw someone mention their day that they hadn’t raised their prices in over 10 years. And, you know, a lot of things have changed in life in the last 10 years. And so when you start to dig in, because I know like we, for example, like we haven’t raised our prices, um, since C O I D because, well one covid happened.

We wanted to figure out what was happening there. Um, inflation was happening and I don’t know, I didn’t wanna be. The contributor to the just kind of random inflation problem of everyone’s like, well, everyone else is raising their prices. We should also raise our prices of an arbitrary amount because we don’t really know what those numbers are.

And now it’s like, okay, well now we’re gonna raise our prices. We have to pay close attention. Like what is, what is that breakeven point going to be? What is our volume? And . How do you sometimes, uh, coach people through saying, I’ve gotta go to my clients and we’ve gotta raise prices, 20%, 30%? Some have, you know, people have looked at their prices and say, I’ve gotta raise my prices 50 to 60%.

Like that’s a, that’s a hard conversation to have in a hard decision as a business owner to want to be a good steward of your team to say, gosh, if I raise my price 50%, is my team even gonna have work to do because, Is anybody gonna come back? Do I have to start all over? Like that’s a, that’s a hard conversation to 

[00:34:44] Megan: It is a hard conversation to have because this is the evolution of business, right? Like certain markets evolve in and certain markets evolve out. Services evolve in and services evolve out, and if. It’s hard to stand still and everybody else is moving forward and you’re like, I have to make a big shift.

Like something has to shift and here’s it’s one. Gonna be one of those leaps of faith, right? Like this is the decision that I’m going to make for my business. This is how I want it to evolve. we need to go see if our clients are gonna respond to that and. It may be, the answer may be that you did the right thing in raising your prices, because that is going to give you more revenue for the same amount of capacity, but you still have to decrease your capacity because more people are going to say no. And that’s how you decrease that break even point, right? Like running on empty and running, um, under your break even point isn’t good for anybody. Caring for your team might be saying to somebody, you deserve more than what I’m able to pay you. 

You deserve a living wage. In my business model, I, I have things to fix.

I can’t support that right now. So I will do whatever’s in my capacity to make sure that you land on your feet. Um, I gotta go take care of some business here inside my business. And then in terms of the communication with the clients, um, You know, that’s, that’s if it comes from a pa place of love and it comes from a part where, where I want to keep caring for you. Yeah. They might still say, no, I can’t afford that. And that’s the decision that they have to make for their family. But we can’t be stuck in while this is the way I’ve always done it and I don’t want to hurt anybody keep us stuck in a pattern or in a business model that no longer works. cause that will not end well. 

[00:36:27] Morgan: Yeah. I like to say too, if we’re not taking care of ourselves, like this is kind of the profit first version, right? Of I gotta take care of myself. ’cause if I don’t take care of myself, my business can’t be here and I can’t take, you know, take care of my clients. And so, so many people give, I, I use this phrase too, they give themselves the leftovers you know, I’ll take the leftovers that’s, that’s here, uh, at the end of the day and the end of the month.

Like, okay, cool, there’s an extra. Whatever X amount of money, I can take that home and use that as my actual salary. Um, that’s not a, a sustainable long-term way to run a business either. 

[00:37:00] Megan: Right. Right. It’s not, it’s not. Um, and that’s where we wanna be very, uh, diligent in our designing of the business. Right. If we’re looking at your, your Vital four right now, and you’re saying, well, I still don’t pay myself. Well, that’s, that’s part of the The, the break even point is what is it that you ought to be paid for the work that you’re doing? Um, so something else needs to be designed. If that’s pumping your break even point up above where it should be. It’s time for a redesign of your model. And what is that going to be? .

[00:37:27] Morgan: What is, uh, some areas that you see in general people or businesses struggling with, with these four vital numbers? Is there a. An area where they tend to, have a pain point or is it pretty unique to every business where everyone is a little bit different where that that pain point is 

[00:37:45] Megan: there tends to be a little a, a pattern, right? The first one is that they don’t really know the size of their audience or what they wanna hear, what they wanna see, right? So there’s, there’s, there’s a marketing problem. Most of the time, um, because people are shy and deep down they really don’t wanna be seen And the second part, um, is like the, the knee jerk reaction of, I gotta go get more sales, I gotta go get more sales. Regardless of what that capacity number is of the capacity number is like, hey, Uh, we don’t have room for more sales. And so then the more sales come in and, and things start breaking. Uh, but going back to that sales portion, if, if your sales are already higher than your capacity, there’s room for a price adjustment there.

That’s like an automatic. More people want what you have. That’s a supply and demand easy button. Um, but many times we reach for sales without understanding what the long tail effect of that is going to be. And that’s what the mistake that I see made the most. Well, I’m gonna have my VA do my, my marketing and do my social media Well, it’s not really connecting with anybody, Like, nobody’s like it, doesn’t connect. Nobody’s seeing your heart. Nobody’s seeing your opinion. You’re not picking any fights. I like call it poking their go. Poke a bear, go poke a bear. So people know your opinions, they know your thoughts, they know your skillset ’cause of the fights that you’re picking. Don’t punch down but that’s, that’s, people lean very heavily on the growth side, um, to fix things, when in reality we gotta take a hard look on the, the profit side first.

[00:39:13] Track 1: If someone is saying, okay, hey, I feel good with my capacity, I feel good with what our sales are. I do wanna look at the profit side. Do you have any suggestions for how people should even start having that conversation, whether they’ve got a bookkeeper or if they’ve got, you know, like a financial coach that they’re working with? You know, how do you even start looking at this? 

[00:39:30] Megan: Yeah. Yeah. So that’s when you pull up your, your, uh, detailed income statement out of QuickBooks, or you pull up your general ledger and you get down to those expense accounts. Uh, and even some of like, uh, the things that you don’t see that are stuck in the balance sheet, like your debt . Service payments and your distributions and stuff like that, and you go through ’em one by one, you’re like, what does this affect? If I’m spending $90 a month on this particular piece of software, how does that affect my my sales? Is it bringing in that much in sales? How does it affect my capacity? Is it me get two extra hours a month for billing more clients? Um, we need to look at every expense. We call it an expense audit negotiate it, right?

Like, What does this do for me? And start stripping it away. It may come down to I have no more expenses to cut. I have nothing else to cut. This is my, I, my capacity is right in line with my sales. Um, what would happen if we went back to that first number, your audience, what would it cost you to go get more of them? Right. What is the balance between, alright, what experiment can I run to see how expensive it is to convert more people to sales? And how am I gonna cover that extra capacity that I need in the meantime? Is there a way that I, either I can take something off of my plate and I’ll be that capacity. What does that experiment look like?

And it’s an experiment, right? It’s, it’s going to be an experiment, and it may be that your model needs to shift a little bit or add an additional service or take away a service that is actually eating up a bunch of your capacity, but not bringing in that much revenue. Um, it just, it’s, it’s a demand for something to change. what it is. If you’re saying, this is all I can do, this is all I can do for sales, this is all I can do for capacity, and I’m still not making a profit, then your model doesn’t work. Something needs to shift.

[00:41:20] Morgan: I love how you said an experiment. ’cause I very much believe that everything is an experiment and some of us are more comfortable experimenting than others, right? So some of us say, I no, experimenting is scary and there is no way that I am going to, you know, make this guess because it’s not certain enough. You know, maybe they have a very high threshold for what they feel comfortable with, with those experiments. But experimenting really is a vital part of being a business 

[00:41:47] Megan: Yeah. If you don’t, it’s kind of like just sitting down in the middle of the road and saying, I’m not, I’m not moving. What are you gonna do about it? And trust me, the truck will come. The the truck will come. Run you over I don’t mean to laugh at that, but the truck will come. Like, I’m not, I’m not moving. Um, Okay. Okay. But here’s the information. This is what the future looks like on the trend that you’re currently on. 

[00:42:08] Morgan: And is that something as you’re coaching business owners of, you know, again, various sizes, . Is that a, a conversation that a lot of people are, um, hesitant to have or by the time they reach out to you, they’re pretty willing to make a change because they know that something isn’t quite right. 

[00:42:24] Megan: You know, it, it, it runs the gamut. I’ve had people who we would roll this out and they’d look at it, and I was like, and I’d be thinking to myself, there’s no way I wouldn’t be brave enough to do this. I, I woo what needs to be done here? And they go and do it. Right. I get surprised by business owners all the time. Nobody has ever said, no, I’m not going to change. Once they can see what’s actually happening and remove that self-judgment, it becomes so much easier to take those steps or to make a decision of, you know what, I’m out, like I’m not gonna circle

[00:43:00] Morgan: mm-hmm. Earlier you talked about making those bold and brave decisions, and do you find that having some of these, again kind of concrete objective metrics to look at, helps people make those 

[00:43:11] Megan: And I think that’s part of it. I think, uh, another part of it is, um, The way that that connects with their inner instinct, that inner voice that has been telling them this all along, like, I am not revealing anything them that they don’t already know. It’s kind of letting that little secret come to light, be like, alright, I, I, I knew that this was what it, was. I didn’t know how to listen to it, but now I see it. And it’s really them making those decisions and taking the steps that need to happen. 

[00:43:45] Morgan: Mm-hmm. ,you’re kind of like a little, uh, little therapist for a business. , 

like here’s the thing that nobody really wants to talk about. We all kind of know it’s there. We maybe don’t to actually express it. We don’t have the words for it, but we know that something doesn’t just feel quite right and you’re like, but what if we looked at it this way? And it just like that, additional clarity. 

[00:44:08] Megan: Yeah. Mm-hmm. exactly 

[00:44:09] Morgan: So I know that you are, you’re working on a book. Do you want to talk a little bit about your book? Is it more of this framework, vital signs and trying to decide kind of this profit versus growth where we need to focus on? Is that kind of what your book is gonna cover? 

[00:44:24] Megan: It is, I am so excited for this because I want you, you know, it like the tip of your nose. Like it’s, it’s just ingrained in your brain that it becomes your new framework for running your business. And so, yeah, it’s gonna start with just a description of the happy little business and how, how inside a happy little business is this growth profit paradox that sometimes we find ourself like, I need more money for growth.

I need that from my profit, but my profit isn’t there, so I can’t grow. You know, like we get stuck in this cycle. How to get outta that cycle, and it’s done in a visual way so that it’s not a bunch of words and math. It’s called the art and Science of the Happy Little Business. It’s gonna be out this spring.

It’s going to walk you through everything you need to know for the Vital four and why it is the way it is. So it’s not just dictated to you, but you get a deep understanding of what it does for you and your business. 

[00:45:12] Morgan: Mm-hmm. .And I would love to hear too, from you about. Defining success. When people maybe look at their vital numbers and they look at, okay, I wanna feel it so intuitively, but I also to know what, what is my goal?

And I think for some of us, we think it’s like an arbitrary growth number or an arbitrary, um, revenue number or, an see, a lot of times people say, oh, I’ve done, you know, I’ve served this many clients, we’ve done this many visits, I’ve done, this much revenue. But how do people know what is success for them or what is that? Um, that enough? Because I think sometimes when we focus on these metrics, they don’t always translate Like we 

would hope they would.

[00:45:56] Megan: Yeah, so I’m gonna go the opposite way of any accountant ever on this answer. Um, your success is not gonna be found in your numbers. Like it’s great that you have a goal that’s out there in the future somewhere. That’s fantastic, and, and we can use that as something to work towards. But for me, success is in the every day. It’s in the, uh, when you come home and you feel like you did a good job, even if it’s only because you put on two matching socks that day, um, to put something out in the future. And you, you hit the goal or you don’t. If you’re not enjoying the journey, if you’re not like, ah, I got better at that. You know what? , it was a pretty stinking really good design there for that kitchen. If I do say so myself, right? If you, if we can get you to a point where you can see the growth in yourself and the growth in your business on that journey, instead of waiting for that perfect moment in the future when you get to put the down payment on your lake house, that, for me is so much better because you get to enjoy the every day. You get to find satisfaction in the every day, and you don’t have to put it on hold until you can put that down payment.

[00:47:02] Morgan: So when someone’s looking at that measure of success in their life, how does that translate into those four vital or does it translate differently for every business? Like, how do you start looking at an objective number on a of paper and help translate that into their own definition of success, their own measurement of success?

Is Do people start adding their fifth vital number, which is time with my family or, how much am I working on my passion project? You know, how do Taking the metric and actually apply that into life so you know that what you’re measuring is actually helping you where you wanna go. 

[00:47:38] Megan: So the vital four is the language of your business, right? The Vital four is the business telling you something and you are not your business. So if your Vital Four is saying, Hey, I am contributing to your take home pay in the amount of $5,000 a month, and you’re like, that’s not enough, I need more. Then that’s the conversation that you have with your business of, okay, that that’s great that you have this pattern, but it’s still not enough and we can go back and make changes in the business. To do something more or to add a new product or to say, you know what, actually, if I backed off on my business and just did half of what I’m doing, I’d be pretty good and I’d have 10 hours over here to go do this instead. So it’s, it’s a negotiation between you and your business. Uh, it cannot be responsible for your personal decisions in your life, right? It can say, this is what I can do for you. If you want more, help me make more for you. Help me, help me do more. And here’s, here’s the roadmap to do it. Um, but to define personal success through your business, I think is a trap. 

[00:48:43] Morgan: Hmm. I love thinking about that like you said as a language. And that phrase of this is what I can give you. And, either you take it, you leave it or you change it. And it’s a metric and a metric doesn’t have a value and it doesn’t have a judgment. A metric is just a tool that we use to measure with. And so that idea of, well, this is what, this is what I’ve got, and do with it what you will.

[00:49:05] Megan: Right, right. And no judgment because I’m just a business and I don’t have the ability to judge you anyway 

[00:49:12] Morgan: it not a sentient being 

[00:49:15] Megan: sometimes it feels like. 

[00:49:17] Morgan: Yeah. So how do you help your clients have those really open and honest and hard conversations? Because people carry a lot of shame or judgment because somebody at some point told them, you how you’re supposed to do it, or you’re not supposed to do it this way, or if again, if you’re not hitting $10,000 a month in revenue, business is a failure. And how do you create the environment where people can actually feel comfortable taking on these challenges that those numbers are presenting to them?

[00:49:47] Megan: Uh, first of all, giving them the space to do it right, like many times, I’d say 90% of the times that a client comes into a Zoom meeting or a personal meeting, the first thing they do is start shedding all of the shame, the things that they only tell themselves in the head.

I’m bad at numbers. I’m terrible at business. Like, you’re gonna, I’m so embarrassed to show you this. Um, please, please don’t laugh when you see this. And it’s like, I would never laugh at you. I, I have been where you are. I have been curled up in the corner, like thinking to myself, what am I gonna do? How am I gonna get myself outta this mess that I created for myself?

So first of all, there’s, nothing but empathy for where you are at. Being able to peel back to get to the part that works of why are you still doing this? Do you still want to do this? It’s okay to say no, right? It’s, it’s totally okay. But let’s get to a point where we can be objective about what is going on in the business. because it’s not you.

This is just the business. And let’s, let’s look at that objectively and see if there are answers that you are willing to, like what are the ideas that come from this, from you, right? What, what answers are you willing to follow, and which ones are you just gonna put on a shelf and be like, I would never do that. 

[00:51:01] Morgan: And then is this framework something that. you recommend people show, say it’s a business partner or it’s a spouse, or certain key members of your team, ? Or is this a tool that they should kind of use for themselves and then retranslate. Sometimes it’s a tricky balance to decide, I know I need to make this change and I’ve decided that we need to make this change, but now I need to convince all these other stakeholders that a change that we need to make. But it can be hard sometimes to know what . what to show. Cause. Sometimes if you show people too much, they, they’re like, oh, well this, this doesn’t seem like a good idea. Sometimes more is better and sometimes less is better. And It all depends. Everything depends. There’s no great answer for anything.

[00:51:44] Megan: you’re right. It depends. Um, but yes, it’s a fantastic communication tool. I would definitely be careful about who you share it with. If you take it to your tax account and they’re gonna say that it’s useless, you just need to cut expenses. Um, if you take it to your spouse, they they don’t know the same Workings of your business that they do. They’re like, oh, just go hire somebody. And you’re like, it’s not that easy to just hire somebody. Um, it is a great communication tool. Depending on what information you wanna share with who, and you just gotta know what their, uh, what their skin in the game is and how they’re answering They might be answering it from a self-preservation viewpoint, or they might be answering it from a generalized, I, I know what you’re talking about. Just do this without really knowing what you’re talking about. So just like any other communication device.

[00:52:28] Morgan: So you’ve been in this world for 20 some years, like you have had a lot of things that you’ve tried and , retooled because something wasn’t fitting here. But now if it’s here, any lessons that you wanna share with folks on that you’ve learned 

[00:52:40] Megan: anything that you can do to give yourself some breathing room from the, the frustration or the panic that you’re feeling in your business, like even a little part-time job can give you a whole lot of Perspective there is gold to be found in patience, so whatever you need to do for yourself to gain some patience is going to pay off in leaps and bounds. 

[00:53:06] Morgan: I think ’cause that’s scary for a lot of people to say, I need a, a job to support my business. People can feel like a failure when they do that, but you know, really you’re saying that can be one of the best things depending on the situation, but that be the best thing you could do to help your business survive in the long run.

[00:53:22] Megan: Yeah. Yep. And it might not be a job, it might just be, you know, taking a one month sabbatical. It might be something that, whatever, give yourself that, that breathing room in that space. 

[00:53:32] Morgan: Mm-hmm. for sure. Well, Megan, this was just, this was very enlightening and I know I am gonna go home and start working on my own little four vital numbers, uh, because it is . Just a fantastic tool for people to, again, look at their business one more objectively, but two more clearly, because these relationships are so important and that just is a fantastic tool to do that.

So if someone wanted to learn more where would be the best place for them to reach out to you to learn more kind 

[00:54:03] Megan: you can come on over to megan dolly.com and sign up for my email. I will be rolling out some workshops on this particular subject, or you can start following me on Instagram bite-sized pieces coming out on there as well. Um, so yeah, follow along. There’ll be some free handouts so you can figure out your vital four on your own. Um, and then the book coming out in the spring. 

[00:54:25] Morgan: Fantastic. And like you said, there’s be workshops, so people don’t have to do this on your own. There’s help coming. 

[00:54:30] Megan: there is help on the way. Yes, yes. 

[00:54:33] Morgan: Fantastic. Well Megan, thank you again so much for spending this time with us and know I learned things today that I am gonna implement and I hope our other listeners did as well. So thank you so much for sharing your knowledge with us.

Thank you so much for listening today. You can find show notes, transcripts, and more on our website, luckypuppod. com. Don’t forget, review, comment, like, share this conversation with your friends. Then, don’t forget to reach out. You can find us on Instagram at luckypuppod or luckypuppodcast on Facebook, or send us an email, info at luckypuppod. com. Until then, don’t forget to live a more full and happy life. We’ll talk to you soon.