Welcome And What We Do

Dave 0:02

Welcome to the Business Encrypted Podcast. We're here to share real life insights, practical strategies, and the added lessons that we have learned from our own state and we have been in your field. So whether you need help with operations, accountability, financial knowledge, details, or maybe just getting your mindset right. We are here and it's the right spot for no fluff conversations and cool. So grab your favorite cup of Joe. Let's jump into the show. As I said in the intro, everybody, welcome to another Friday. Man, these weeks seem to fly by. I feel like I was just in this chair talking to y'all last week. But here we are, another episode and another week. And hopefully it has been full of wins and excitement, just like I was just talking with Dwarne about. So, Dwarne, welcome back to the episode. And hopefully you enjoyed last week, kind of taking some time and working through some things. But welcome back.

Duarne 0:58

Thank you, Dave. Good to be back. And hello to everyone listening.

Dave 1:03

Yeah. So if you're an aspiring business owner, we do this every single week, or maybe you are a business owner. We talk about things that we've gone through in our business, things that we're going through in our business, because we're just like you, business owners, and ways that we've helped our clients and with different strategies, different solutions. So if you're looking for a place for you to grab some of that information and potentially implement it in your business, you're in the right spot. We do this every week. We do it live. So feel free to share your questions down below. If you have any questions on anything, you can drop them and we'll answer them live. Or if you're watching the recording or maybe listening to us where we do all the fun audio versions of the podcast as well, you can drop them there, or you can email us at business unscripted at drivebusiness solutions.pro, which is our email address. So we look forward to continuing to do this. I think what episode 62 now, Tauren. I mean, we're yeah, that's what it was that I shared on Dina.

Duarne 1:56

Yeah. I was a bit surprised by that. It's big numbers.

Dave 1:59

It's it is, and like I said, we've only missed we've missed one week. And it was the week that I, you know, we just had our baby, you know, uh, well, not just four months ago now, but other than that, we've been here every single week. So it's like it's awesome. I love it. And I think there's a lot of stuff, as I was kind of mentioning, I think there's ways that I can and we can continue to kind of tweak what we're doing and and make it a little maybe even a little bit more structured and and help you guys even more. So if there's any feedback that you have, feel free to share it with Dwarne and I as well. Because we want to, you know, basically, this is for you. We're sharing conversations that Dwarne and I had had for years every Friday morning, and we're just kind of bringing them to you now in a live format so that we can help you. So it's basically for y'all. So feel free to share.

Duarne 2:45

We could have named the podcast conversations of Duane and Dave, but we thought that might be a little bit boring for you.

Dave 2:52

Yeah, I agree. I agree. But Dwarne,

Landing A Large Contract

Dave 2:55

so let's start. Obviously, you were just talking, and we've mentioned on the show before, but a win, brother. Like, congratulations. So, share with us, you know, kind of the good news, and and maybe we can jump into that for a minute.

Duarne 3:08

Yeah, yeah, sure. Like we've talked over the last few months now about putting preparation into some pretty large opportunities. And when's the right time to basically call it and say, bugger, I've had enough. This is not happening. Move on. Well, this is one of the ones we didn't do. I didn't do this with, and this is one of the ones that I've been working with a partner on, and we managed to get it across the line. We got an email through this morning from my partner saying at 1:30 in my time, 3:30 his time in the morning. We just got the signed contract completed, it's happening. We're kicking off in July. So pretty incredible feeling. We've been working on this since November. So for anyone out there who's working on these big opportunities that you know is going to be groundbreaking for your business or very instrumental in you know growth for your business, don't give up on it. Keep pushing forward. These things can happen and they do happen. And sometimes it's just a case of persevering, persevering. In our case, we had direct line of contact, we had all the C levels ready to sign. We had the CEO sitting there completely baffled again this week why the individuals who were assigned to do do the sign-off hadn't done it. Legal had been looking at an old version of a document as opposed to the new version, and it just became a whole thing. So when the CEO found out about it, he jumped on the call and said, Hey, look, just make this happen. Enough's enough. We stuff these guys around, they're still here.

Dave 4:51

I don't the CEO jumps on, it kind of kind of pushes things forward a little bit quicker than normal, right?

Duarne 4:58

That's the and it's a good feeling when you know the CEO is there going, I want this to happen, don't mess this up for me.

Why Big Deals Take Months

Dave 5:06

Well, and I think too, you know, a couple things. You know, one we we chatted about how sometimes you got to figure out when's the right time to walk away. But also, you also have to factor in. In this case, we're not talking $500 a month. You know, it's it's a significant investment budget funding project that that you guys are rolling out. And for those, the the larger the number, most of the time, larger and longer is that sort of buying process. And being on that side, being in corporate and understanding that you know, you can't just push through a decision, even if it's if it's needed and it's for the betterment of that company, it still takes months to push those things through because there's planning, there's a lot of you know, back end sort of approvals and red tape that everybody talks about. So really kind of uh I guess setting your expectations that way, you know, where you understand that something like that is gonna take months versus you know, maybe selling a $500 service or uh selling a $100 a month, you know, SaaS software or something like that to a department head. Like there's a different buying structure. And so sometimes you you might have to take a little bit of a step back and look at that and analyze that and set your expectations that way, and then appropriately set your follow-up structure and your appropriate your follow-up system that same way. So but so now that it's signed. What for those of you know, for those that are watching that might be hopefully getting something like this going on in their business, what are what are those first steps

First 60 Days After Signing

Dave 6:44

now? Like what are you doing? Like obviously, this is brand new, like you just heard about it this morning. But absolutely. What are those first sort of things that you need to get rolling and that you know that you're thinking about to kind of make sure that you in the first 30 to 60 days deliver a big win for them so that they feel like the investment was right?

Duarne 7:05

Well, for us, is we're actually we've got to be putting on about seven or nine staff to be able to do this. So it's a significant opportunity from that point of view, from the staffing. So thankfully, we've already done a bunch of the pre-work on this, preparing all of the job roles that we need ready, and we'll be able to start advertising those roles. We'll start the recruitment process, the interviewing, building out that team. And once we get that team built out, that'll be the first few weeks to a month. Well, during that, we're going to also be working directly with the client to build out the onboarding program agenda so we can get that right and set expectations from that point of view, and then start building out the primary framework and delivering some quick results to show that we're on track. And we've already built out a predominant, like a long-term project milestone scopes, but this is going to be about filling in the smaller details, get extracting information from the client now that we're all signed and under NDA, etc. etc. So there's a lot of work. So whilst the initial feeling this morning when I woke up and I saw that and went, Yes, finally, it then was like, shit, that's a lot of fucking work.

Fair Agreements And Clear Terms

Duarne 8:29

Yeah, so it's kind of interesting because like one of the things uh I initially got a little hung up on when I was reading one of the requirements, because there's a lot of back and forth with legal to get the scope of works and a contract agreement just right for both parties. And obviously, we've talked about this before, like, you don't have to make your agreements all one-sided, it has to be a little bit fair, it has to be and you can push back on things just because your client wants it, if you're the one providing the service, sometimes you have to hold fast on certain things and be able to back up why you're doing it. And so there was a bit of that in the last couple of weeks, which is one of the reasons I couldn't make it last week because I was working on a lot of that. I'm in the background. But one of the things we noted was the first time you look at some requests from clients, it may look unreasonable. Or it's like, really? I don't want to do that. That's a lot of work. And then you take if you take a minute like I did at one point here, I'm like, hang on, that wouldn't be me doing that. That's one of the people I'm hiring's job to do that. They have time to do that, bugger it. Let's that's fine, that's not a problem. We can incorporate that. We have this, we have that in the scope already. And the initial emotional reaction, of course, is sometimes like, no, I don't want to keep giving. I've been giving too much. But sometimes it's just that moment to reflect, like we've talked about in the past. Yeah, actually, yeah, that's pretty that's a that's a pretty fast option. We should be doing we can offer that.

Dave 10:02

And it's funny because last week, while you were gone, you're working on agreements, and I was talking about agreements, and that was one of the things that I had mentioned was that agreements are not meant to necessarily be one side wins and another side loses. You know, agreements are meant to be, hey, these are the expectations, here's what everybody's agreed. It's in the damn name, right? Agreement. This is what everybody agrees to. And if your initial approach to creating a document like that is like, oh, I gotta protect my ass and I gotta like not give any protections to the other side, that's a first impression. And so if they read that and they're like, oh my god, this is one-sided, like are they really do they really not care about us? That's a bad first impression. So, but if versus if you send an agreement to them that is mutually acceptable and it's just covering expectations, deadlines, what you guys are gonna do, what they're gonna do, you set that partnership up from the get-go, right? I love that. And yeah, and I and it's it's crazy because it that's one of the things that we we didn't even talk about, and you mentioned it, and I had already said it last week, and so it's just like, hey, it's synergy, man.

Duarne 11:13

And you know what's interesting, right? Is when you start looking at this, I've had contracts that for software development companies have put in front of me as to pass along to clients when we used to partner with some software and development firms, and I've looked at it and went, I'm not putting this in front of my client. This is nonsense, this is so one-sided, and honestly, the amount of time, the amount of work it would take to pull this in line to make this fair, right? I wouldn't get anything that the client wants. It would purely just be what everything, just making it reasonable. And if they're at that point already, there's no improving it to a point of fairness, in my opinion. Because when I look at an agreement, it's gotta it's gotta be building clarity around what you're offering and who's responsible for what. It's about creating that clarity to allow both parties to understand what the agreement is about. And if you're reading any component of your agreement, and there's something you're just like, I don't really understand what that means, well, you know what? You probably need to dumb it down a little bit because most people reading it are gonna feel the same way.

Dave 12:24

More than likely, yeah, for sure. And and I think ultimately, you know, you don't necessarily, and we talked about it last week, we'll so we won't dive too deep into it. So go listen to episode 61 if you want to learn about a little bit more about agreements and high level. But you the ultimate goal is have it so you mentioned it's easy to understand, each side knows exactly what they're gonna be providing, when they need to provide it, the impacts if they don't provide it, you know, some sort of termination or renewal clause or anything like that, where it especially because a lot of clients that I've talked to, they're like, I don't want to lock people in. You know, it's like okay, but you don't have to. But this the the idea of an agreement is that it's for a certain term, and during this term, these are the things that we're agreeing to do together. Now, yeah, if you don't want to be locked in, you can easily put a termination clause, whether it's hey, with 30 days notice, you know, with no you know, reason, you can let us know and we'll let you out of the agreement. Or if there is a reason, like you have to give the reason, like what is it? And so those are the important things to really kind of put in place for the agreement.

Pricing A Multi Year Project

Dave 13:31

So go listen to episode 61. We won't get into too much of that now, but I I think the important thing that you we mentioned last week that what we want to talk about today would be you know pricing. And I think a lot of people struggle with pricing. And so let me just get your your thoughts on this because you just signed a big contract. I how what did you go through? What was the process that you went through for that particular project to price it for a monthly basis? And I and it's also a multi-year. So how and what considerations did you go through in order to make that work so that people listening, if they're going through something similar, can hopefully learn from that?

Duarne 14:14

So you know that children's party game, pin the donk tail on the donkey. Yeah, definitely don't do that. That that's never a good idea.

Dave 14:26

Okay, so don't so don't just blindfold Lee and put like some prices on a wall and don't blindfold and walk up and go there, or you don't put pictures of your ex with the price on you know, a price of you know, on each one of their faces and throw darts, right? Like got it. Okay, good. So you didn't do that.

Duarne 14:43

So avoid avoid that button. That's not like no. Look, what we did is we worked out what was the worst case scenario for the hiring the staff, what was the real cost involved in doing that, and I've said it a bunch of times, but knowing that information is key. So knowing the exact role, knowing the maximum budget we have for each one of those roles, and then what the real costs for those roles are for the business, including all the overhead and additional staffing requirements, then factoring in my time, and anyone else who's will be involved in the consulting component of this is time on top of that, and then factoring in a healthy margin for error and you know something that's gonna happen that you can't foresee, which generally tends to happen. We built it and then we built out milestones based on deliverables. And in this particular instance, we based it on with an overage, which was a percentage, which I'm not gonna share here, but there's you need to work out what your percentage overage is on that. So that way, even with all of your extra margins built in, you've got a little extra backup in there just in case. A couple of weeks here and there, where you might take a little longer to deliver this and a little less time to deliver this one, etc. And then we added our healthy margin on top of that, which we wanted to see for our profit margin, and that's what we presented.

Dave 16:12

And so, and I want to clarify a little bit here too, right? So when you say profit margin, the that's a that's gross profit margin because I think what some people like get confused on is they're like, oh, well, you're making that because I've actually it was a client we we worked through with a client and it was like a girlfriend or whatever of like an employee or something like that, and you know it was like, oh my god, you you make all this money on this on this you know, jobs, and you can't even take care of employees, and and it's it's that completely different understanding of business versus being an employee. So the one thing I just want to clarify for a lot of people that are watching it, or if you're in business, this gross profit margin is the most important part because it allows you to cover everything else that goes on in your business, right? So when you build a project, you're typically you're not going to be building in and trying to charge 100% of like your admin costs or your overhead or your HR costs or your payroll you know expenses for employees. It's it's really what are the direct costs of creating and doing that service, okay, with you pointed out a great piece, the contingency piece, right? Because there may be overages, there may be some extra payroll that you're not thinking about. So typically a good percentage of that is maybe a 10 to 15% contingency or you know, sort of expense buffer to cover a lot of those things. And then any other direct related cost, whether it's licensing costs that are only related to that project, or you know, subscription costs, usage things, anything like you know, new equipment that's that needs to be bought for that job, all of that, right? And then on top of that, this is where a lot of people we've talked about it in the past, but this is where I think it's really important because some people would calculate their gross profit wrong and and the total invoice number wrong, right? So, Darren, before I give the right answer, and I think you know it because we talked about it previously, but for this job, how did you guys calculate what that add-on needed to be without giving away right like what it is? But how did you guys calculate that gross profit that you added to your expenses to figure out what you needed to charge monthly?

Duarne 18:34

Yeah, so we had already quoted this prior to you telling me this formula, right, which I thought was pretty amazing. And I want to hear I want you to tell this formula again. So for us, we picked a big number and put it on top of the other number, and then went back and looked at it and went, that's a healthy margin, and that gives us a little bit of flexibility to do what we need to do. But let's add a little bit more just to be safe, and we can always negotiate back if we need to.

Dave 19:05

So that advice about the pin to tail and a donkey sounds like it was a little bit like that here, where it was just kind of and then thinking, like, huh, that seems about right, maybe.

Duarne 19:16

Well, we knew what the real cost was gonna be, and that part was very that was very well calculated. The profit margin was the part that we were a little bit more blase on, I guess you could say, as opposed because we knew what we wanted, we knew what we needed, and we needed to make sure that it was still reasonable, and we got to that number.

Dave 19:41

Here here's here's something to also consider if you're listening to this, right? Is that you know this was more of almost like a one-off sort of project, which does require more of a profit margin. Because if that project goes away or anything, like you're stuck with a lot of expenses, right? You're stuck with all these things that either have to be repurposed or let go right away, or something. But so when you're you're pricing a one-off project where you know it's a larger project, you do have to have a larger gross profit expectation because it's not something that's recurring. Versus if you're trying to price something that is like a monthly retainer or something that you're going to be selling to the masses, right? That's where your gross profit margin can be a little bit smaller in terms of percentage-wise, because you're the idea is that you're selling it across many, many more people. And so those expenses that you're trying to cover on the admin side get covered across more people instead of a small slip number. But I don't want you to thanks for being honest in terms of we just kind of looked at it.

Duarne 20:49

I'm gonna made up something pretty fancy, but you know what? At the end of the like, this is like you said, it's a one-off project, and there's considerations like a warranty period which needed to be factored in on top. So we built those in place. We had to factor in contingency for hosting, AI spend, etc., for components of it. There's a lot of moving parts which were a little hard to quote, especially if we look at this project's quoting cycle started back in November. We didn't know how long it was going to take for closing. So we needed to factor in a little bit extra buffer just in case things changed. And the landscape obviously did change.

Dave 21:26

Yep. And so a couple things.

Quotes, Currencies, And Cost Swings

Dave 21:29

One, when you do something like that, and I'm sure you guys did it, but it sounds like you did. You know, you want to put a stop gap on, especially if it relies on invoicing costs or you know, material costs, like those things change drastically.

SPEAKER_02 21:44

Yeah.

Dave 21:44

So if you're not considering that, you're not saying, well, this is only good for 30 days, or we reserve the right to adjust based on market fluctuations, like put that in the quote. Like, and you're not being you know, dishonest there. Like you're literally like. Price can go up, and you shouldn't variant as a business owner because they drag their feet. Like, hey, this price is good today because I used our pricing today. But next week it could go up, and you know, depending. So you have to understand your market. This is where it really comes down to that we we can talk generalities here, but you have to understand your market, your industry, your suppliers. Like, how often are they changing their pricing? If your suppliers change your price every year, then then maybe you can give a little bit longer on your quote. But if you're if your people are changing every week, well, then your quotes can't be good for two months because who knows what's going to happen in four weeks or eight weeks, right?

Duarne 22:39

Well, here's the big thing with this, like with ours there. Sorry to cut you off, Dave, but we have currencies. We have three currencies involved in this deal. Oh, so you got a lot. Yeah. There's a lot of there's a lot of variables going on there with three currencies when you start playing with that. We start talking currencies, then during the final days of this, we've got the energy crisis going on, which has driven up prices and values are all over the place. Currencies are ridiculous against each other at the moment. We're playing on the worst case scenario that we picked a currency level, which was a pretty worst-case scenario as an average base for the last three years. So, you know, there was a lot of like there was a lot of there was a lot of strategy went into the original component, working out what our real costs were, and we built enough margin into that for contingencies, etc. Right. And then we put a margin on top of it to make sure we have a healthy profit margin. Because, like you said, these one-off projects or these short-term projects, you've got to make them worthwhile. It's not a case of just going out and winning at one time. It there's gonna be contingencies, like we may have to double up on staffing at some components of this. If one staff member doesn't work out, we have to replace them and we can't just wait 30 days to find someone. There's gonna be a crossover period.

Dave 24:02

Well, and so some of the two would be, you know, you mentioned depending on the complexity of the agreement situation, like some of those things could be built into a agreement, which we talked about. You know, so like basically the exchange rate changes, fluctuates percentage, like you can it it changes a, you know, it automatically kicks off an adjustment to the rate, right? Or if supply costs or energy crisis things like that happen, right, and and energy costs go up, you you reserve the right where it could automatically have an automatic kick-in of some sort of you know extra charge until that that goes away, right? So it's like all these things that can be built into these agreements that protect not only like the you, and it could go the other way. Like if you sign an agreement in an energy crisis, you could put it in there for the benefit of your client that, hey, when this energy crisis goes away and and prices drop by X percent, you know, we'll take away this extra charge. Like it's to your benefit as well. So that's why we talked about you want things to be mutually beneficial between both parties, and then it's not feeling like one side's winning over the other.

Duarne 25:04

Absolutely. You know, I've dealt with companies in the past that when I was doing vendor distribution for hardware components, and back in Australia, geez, 15, 20 years ago now, I guess. And one of the things that we used to find is we'd be buying in from the dollar from the US on these products, and we'd be this in distribution land, like you might only be able to put six to eight percent margin on things. So six to eight percent margin with taking into consideration the dollar slippage, that's really tough. And we were doing like US to Australian dollar, and this is when the Aussie dollar was you know fluctuating between 65 and 73. So, I mean, it's a bit of a bit of a slide back and forth. And some of these projects would take up to six months for closing because so when you quoted it, you'd have to go in with a quote that was reasonable, and this vendor that I worked for was maybe 5% of the total value of the full proposal that the reseller partners would go in and quote to the end client. So you start to realize you've got to get this right because you are such a small component that they don't want to be messing around with you, changing that around all the time. So you've got to be able to know your numbers. This is something you and I have spoken about at length, and you know, it's just advice that you've been given for a long time. You've got to know your numbers. It'd be great.

Dave 26:34

So let's let's get back to that. Let's

The Correct Gross Margin Formula

Dave 26:36

get back to that. Let's get to get back to gross profit. And you know, the important thing for you to consider is in your example, you know, you're adding in all your all your salary costs, all your direct costs, everything that goes into actually providing that service, whether it's uh a repair costs, maintenance costs, anything like that. You want to add all of those up. And then from there, most people would take, let's say it's uh let's say it's a thousand dollars, just for round numbers. Okay, so a thousand dollars, they're like, okay, I want to make 40% gross profit. So they would take a thousand times 40 and 40, so 0.4, and they would add $400 on there. So they would then invoice the client $1,400. Well, the problem with that is that your actual gross, and then they look at their financials and like, I don't understand. Like, I do I add 40%, and at the end of the day, my gross profit margin is always less. So just grabbing my calculator here. So, you know, if we then so in order to figure out the actual gross profit calculation is what is your gross profit margin? So in this case, it would be $400, and then you divide it by the total revenue. So in this case, it would be $1,400, not a thousand. So $400 divided by $1,400 is only 28.5%. So the customer, the client, and I fixed this in so many people's businesses already, which is it's a quick fix that you can take right now from this episode and do it. Is they thought they were getting 40, they were getting 20 and a half percent. They were losing 11.5% off of their margins that they had no idea what was going on. They're like, I can't, I I don't understand it. And so how you actually price for gross profit margin would be you have your thousand dollar cost, okay, you then divide that by one minus uh your gross profit margin as a decimal. So if you want 40%, you have to take 1,000 divided by 0.6, which would be 1 minus 0.4. And so that tells you what you need to invoice in order to get a 40% profit margin. So in this case, you instead of invoicing 1400, you should invoice 1,667. So and just to confirm, if you take 1,667 minus the thousand, that's $667 of debt profit, divided that by the $1,667 that you invoiced, and that's 40.01%. So in reality, the calculation is the important piece. So if you feel like you can't get your profit margin right, you know you want to have a 50% or a 60%, or it's a one-off project like this, and you're like, I got we got to build in an 80% profit margin for this because we have a lot of costs that are gonna go into it on the back end, too, that we need to recoup. Don't just take your cost times 0.5 or 0.8, whatever it is that you think, because it's gonna cost you in the end. So the actual calculation for it is total costs that are associated with that project, and then you divide that by one minus whatever the percentages that you want for gross profit margin as a decimal. So anywhere from, you know, I would say nothing less than 0.3, but if you want 60, 70, 80, whatever it is. So one minus your gross profit margin, that's gonna tell you the amount that you need the invoice in order to get that gross profit margin. So I hope that there is hundreds of you that are watching this or watch the replay that are gonna be like, oh shit, I need to go change my pricing structure. And then you're gonna start making more money and you're gonna be you're gonna go back here and you're gonna thank us for giving this away today to you, because it's the simplest thing that you can do in your business to impact the pricing and impact your success, is making sure that you're getting the right gross profit margin. And then with that, what you need to do, and why I say you have to have a minimum of 30%, is that 30% is going to cover the rest of your operations. So if your goal, let's say your goal is to have a 25% net profit organization in the company at the end of the day, and you're like, I can't get there. I can't figure out why I can't get to 25% when your gross profit margin is 30. Well, you're only leaving yourself 5% of your total revenue to run the back end of your business on. So like insurance, rent, admin costs, subscriptions. It's hard to do unless you're like, you know, 10 million to 15 million organization, maybe if you're you know lean. But for most small business owners like you and I, you know, when you're when you're talking 100,000, 200,000, even a million, you know, five percent is anywhere from five to fifty thousand dollars at a million-dollar organization. Can you really run the back end of your organization on fifty thousand dollars, including owner salary, right, insurance costs, rent? Probably not, which is why, right, if you want a 25% organization, you probably have to have at least a 50% gross profit margin, if not more, to cover all your admin costs, depending on your size. And so these are what this is why it's well add to that.

Duarne 32:04

When you when you take on a big project, one thing that you tend to overlook is you may increase your overheads for administration as well. That you may need to get more administration team members in, and that's gonna cost you. You have to cover it.

Dave 32:22

But you can't charge, yeah, and for those those, because most people would be like, Oh, I'll just charge it to the job.

Duarne 32:27

You can't do that either, because you got to factor it into your margins so that that becomes part of your cost of business. Because what tends to happen is you tend to if you go factoring that into the cost of the job, then you're gonna blow it out too, and that's gonna be inaccurate. And that person could be spread across multiple things. We why I worked for a company many, many moons ago, and that company that I was the same company I was referring to before, actually, they I remember they told me that they'd had this really big contract prior to me getting there. And I'm like, Oh, that's amazing, that's a great contract. That that must have been really good for you. Oh, we canceled it actually about two months ago. Oh, what happened? Well, we had three salespeople handling it, we had five people in the warehouse packing and sending out orders every day, and we had a stock rotation that we had to honor so that if there was a price change within three months, we had to provide credits or do stock rotation for old stock. And I was like, oh, so what they didn't factor in at the time was all that extra cost that that would be involved in all of that. So the minute they could get out of that contract, they cancelled it because they realized it had actually cost them more money to deliver that service than what they'd actually ever made from it, because the client had very high demand, so they had got their profit margins wrong, but because they thought the volume would be enough to cover it. But what ended up occurring is that there were factors involved where hiring that many people to do the job, it was just something they hadn't even considered at that time.

Systems, AI, And Process Automation

Dave 34:18

And this is this is why going back to your initial point, pricing is not blindfolded, trying to pin the tail on a donkey, right? It's a a legitimate conversation, a research to really understand what it is that you're doing, especially when you're in like a service-based business that's not like a professional service where you're just providing you know a B2B type type thing. If you're if you're doing some sort of manufacturing or you're providing some sort of you know project work, it does take a lot of thought to go into what your pricing is, but it doesn't necessarily have to take a lot of time. You know, and so once you've identified what your pricing process is, everything we've talked about already on the show recently, you have to build a system around it. Yeah, you can build the automation around it, you can and this is why you know you're going it back into you know AI, and it's something that we're pushing heavily now, because once you figure that out, you now build the skill to then help you do all that research for you, right? Help you go out and figure out what the price changes have been, you know, give it all the generality so that you don't have to do it. That's the beauty. Think of yourself because you are, and you have to, and this is a mindset shift, you have to think of yourself as that CEO, the leader of the business, and look at every successful business around you that's large. The CEO is not the one doing research, right? Attorneys aren't the one doing research, unless they're a solo attorney, and a lot of times they're still overwhelmed. You have to have team members to do a lot of that heavy lifting for you. But if you don't have the money to invest in team members, the best way to do that is to train your own AI systems to do that stuff for you. Do the research, take the template that you've already created and run it for you, right? And update it for the next client, understand the client meeting, understand the client notes that you've created for that client, that prospect, it brings all that in, and then it creates your pricing proposal for you. That's why, that's how you're gonna win with AI. So I tell people this all the time. I'm not going to talk about anything that you can't do yourself. I'm not gonna show, I'm not gonna build anything that you can't do yourself with AI systems, skills, anything like that. Because the beauty of that is it comes down to investment and what you want to do investment-wise with your time, your business, and your next steps. And here's what I mean by that. First, a lot of people are like, well, I don't have the money to invest in somebody or something else to help me with AI. Great, that's fine. You don't have to have a lot of money to get started. You have the most valuable resource, which is time. You have to take the time then, if you don't have money or you don't have the capacity to invest in somebody else because of where you're at size-wise, well, then you have to invest the time in learning what you can be doing to look at your processes and begin to systematize and build those out, right? This is why I said there's two lists that you need to be paying attention to. One is what are all the things that you're doing right now manually? And then two is what are all the things that you wish you had time to do that you just don't have time to do. And then those two are gonna help you direct where you should be investing your time, because that is your most valuable resource, your time into learning AI and doing it yourself. And you're gonna make mistakes, don't get me wrong, but at least you're doing something. And I saw the statistics the other day because I did a presentation earlier this week. 80 it's 84% of small business owners have played around with AI, right? So they've used ChatGPT or they use you know Gemini or Claude or whatever it is. And and use it in workflows and helping them actually be more efficient. What do you think that percentage is? If 84% have used it and are aware of it, I'd say well, less than 5% a little bit more, so it's 8%. 8%. Yeah. So and it's going up and it's continuing to go up. So don't think like you're behind, because 92% of people in their businesses aren't utilizing it in a way that's making them more efficient, making them more effective. And here's the thing that I say that I've done for myself in terms of talking to other people. I don't push. Right? It's not my problem. I know what I'm doing on a regular basis with AI. Jordan, you know what you're doing. I listen to all these people have conversations all the time about I'm so far behind. It's like, hey, I we could potentially, you know, kind of show you something with that, right? But it's like, oh, I don't have time to do that. It comes down to this, it comes down to your priorities. Because when you're like, oh Dave, I don't have time to invest either. Like, I don't have money, I don't have time to invest, like, I'm so busy, blah, blah, blah, blah, blah. It's a priority. And if it's not a priority for you, you're right. You're gonna make excuses. You're not going to you know take time away from something else to actually make AI a priority to be more efficient in your business. So, my question and my my response to a lot of people on that is like, well, you don't have time now. You're never gonna have time then. Because if you don't build a system around what you're doing, you're just gonna keep doing the same thing and expect a different result. Like, that's the definition of what insanity? You know, doing the same thing over and over and over and then expecting it to change the outcome. No, you have to say, you know what, enough's enough. I'm gonna take a look at my calendar next week and I'm gonna make my list over the weekend and I'm gonna put the time aside. Right? That's the scenario for you if you're out there and you're like, I just don't know what to do. I don't know, I don't I don't have money to invest to help have somebody help me. You have to, you have YouTube, free university. We have our AI studio, Triumph AI Studio, which is a community for people looking to build to, and we're helping you with skills, things like that. So if that's something you want to learn about, go to studio.triumph business solutions.pro or just get started on your own. Like just get started. Like that's the big thing. And and so, and then the second piece of that is is I also understand that there are and I've had this conversation with other people as well, is say, like, I I know about AI, but I don't want to take the time to learn it. I don't want to take the time to stay up on it, but I want to start doing things in our business with it. Now, see, those are the people, if you're in that scenario, well, then there's gonna be some investment of somebody coming in and sort of helping you out and building that for you. And then that's completely acceptable as well. You know, you're still involved, but you also your passion isn't like Dwarne and I'm like my passion has now turned into really how do we build things that are going to make people's lives better that they can focus on everything that they're already doing successfully. You know, so for example, my one client, they're in real estate, like they're already successful. They have a bunch of business, they have a couple, three different businesses doing different things, but they're on the back end, they don't have the support, the visibility into their actual business, their projects, everything. So for me, it's like, well, I can run something up like that. Like, let me draft something up for you. And this was a conversation on Monday, and so we're about to draft up a couple different things for them to actually help them implement better in their business and while utilizing AI. And so that's a passion now because one, I love it, I love learning more, and they don't. And it's not not them specifically, but that group of people.

Duarne 42:19

But people get saturated, right? And it's not a bad thing. I mean, some people just get saturated. I mean, you could be in lawn care and you could be really passionate about what you do, but you just have no interest in doing the marketing component or the AI component, you know, learning AI to help do parts of your business, and that's completely okay. If you but you either use time or you trade time for money, you can't, you know, if you've got both, power to you. But most of us, we have either money or together.

Dave 42:50

Well, that's our goal. That's our the end goal is right, that we have our time and we've made a lot of money so that we have the freedom to do, but what you had to do to get to that point, and you're still doing, is you're still trading some of the money that you would have in your bank for people to do the things that are still generating you money, and that's a long-term goal for everybody. It should be, at least when you're in business. Otherwise, I would question why you're there. And so the biggest thing that I would say around kind of this is what is your priority? You know, is your priority to just test it and maybe you know make some videos and some images? Well, that's not really gonna impact your business. But if your priority is to figure out how can I do what I love, which is your business, and serving clients, hopefully, how can I do that more efficiently to give myself more time back and I don't have to feel as stressed? Well, that's gonna be where AI is gonna come in. And that's where the the processes, the efficiencies, the systems are all gonna help you do that. But if it's not a priority and you don't make it a priority, it's never gonna happen. Never. I could It just won't. Things that you make a priority happen, you know.

Duarne 44:05

If you start looking at systems, and let's I I saw a snippet for a movie which I've watched, which I thought was great, and it was like the start of McDonald's, right? With what's his name? Keating in it. And yeah, Alan Keating, right? No, not he's um I don't I don't know what movie you're talking about, right? Yeah, so yeah, yeah. So he was like Birdman and a few other movies as well. But this McDonald's movie in particular, there was this little snippet, it was a reel, and it's where he's sitting in, he was a traveling salesman, and he's sitting in his car, and fast food joints kept coming up and dropping the food in his car. It was the wrong order, it would take too long. It was just this whole nightmare. And this one time he's like, Oh, where's the drive-thru? And it was at this McDonald's, the first one. And the lady in front's like, It's okay, it won't take long. He's like, Okay, he gets up there, he orders, and he gets his meal within 15 seconds. And he's like, Oh, no, I just ordered. Yeah, here's your meal. No, this could be this can't be right. Yeah, no, this is, and anyway, he goes away. He goes, Oh, this is a great burger, and just happens to meet one of the owners, one of the brothers, who's out there sweeping the car park, right? He says, Come on in, I'll show you around. Right, and what you witness is a system, an absolute perfect system, and that system is so perfected. And when we start talking about knowing your costs and having the right systems and quoting out things, it makes me think of places like fast food places or subways. And then if you have a system in place and the people are not trained in your systems that are using this, you're meant to be using them, you can lose money very quickly as well. So in Subway, one of the things that can be done is there's a certain number of items that are meant to go on a particular sub sandwich, and there's a particular amount of cheese, there's a particular amount of meat, there's a particular amount of everything. If your person making it is doubling up or putting an extra dollop of sauce on or something, that's gonna keep adding up. If you've got a detailing business and you've got employees out there who throw a rag away rather than finishing a job with it and working it all the way through the job, you're gonna spend extra money on rags. You're gonna if they're using the wrong product to clean with, and that product might cost twice as much as the right product, and you've factored that in, but you haven't trained them how to do it, or you don't have a system in place to make so make sure they're doing it the right way, these things will cost you money as well.

Dave 46:52

And this is I mean, I guess that's a good that's that's a good point, you know, that there's systems that can be automated, and there's systems that can't be automated yet.

Duarne 47:01

Exactly. You need to know which ones in your business you you have, and you need to make sure that you understand that there's gonna be times that AI will help, there's gonna be times it won't. And you can set up automation, but if you're not monitoring and you're not improving, every system is a self has to be a self-improving system. It has to be something that's got a capability to improve and monitor and provide feedback along the way.

Building Self Improving AI Skills

Dave 47:31

Well, part part of speaking of that, like part of our process is I have a routine. You know, I don't know, I think we have something like I mean it's growing all the time, but it's like 60 or so skills or something like that that I run on a regular basis, you know, in our clock. And so every every night I have a skill audit that runs that tests five to seven of them, and it does about five to six different runs, and every time it will make an improvement or make a change, and each time the different skills have their own scoring system. And so at the end of the run, based on that change, did it increase or decrease the score? And so if it increased the score, then that change stays. If it decreased the score, it rolls back. And so and it does that about four or five times per each skill every single night. And then in the morning, it says, Hey, by the way, here's the ones we tested, here's the improvements that were made, here's the ones that stayed the same because the changes we made, you know, didn't improve. And then it gives me the updates to then save to the file and save to the system. And so you yourself can do that. You and you need to be doing that with your skills, because your skills are what's really gonna generate and drive your systems and your processes, because that's what you're gonna teach the repeatable steps and what needs to happen. The task is not itself what you need to be auditing, it's really the skill which is gonna have the step by step that needs to happen. But you also have to realize as well that your skills should be really direct. Okay, you shouldn't build out a skill that just does everything, otherwise, it's gonna be too convoluted, it's gonna use up a lot of tokens, it's gonna be and it's gonna be a good thing.

Duarne 49:13

Well, it's like a super agent, you don't use a super agent one. It's the same as when you hire someone, you don't hire unicorns that can do everything, you hire specialists in different areas to do the right thing, and so your skills are are are that exact same way, right?

Dave 49:26

So you have you know so what you want to start thinking about is how do I build a skill system? And this is still something that we're building out even further, and it's it's that learning process that okay, let's analyze is this too is this too convoluted? Is there too many things happening in this skill that we can break it out into multiple skills so that other potential systems or processes can pull that skill in and not have to pull the entire thing in, you know? And so it's really important to do that as well. Uh, and then another thing is to test to ensure that your skills are being invoked when they should be invoked. So early on, one of the biggest troubles that I had was we built a skill around, we've talked about NEPQ and the messaging sequence. And so I built a skill for our voice to understand what stage somebody was in, whether it was just connecting on LinkedIn or something like that, so that it would understand how I wanted that message to be created. Well, when the LinkedIn skill would find a new connection, it would just draft a message without invoking the actual outreach skill that I trained. And so part of the process was running the all the message uh skills against the idea that until the output a hundred percent calls on the outreach skill, you do not stop updating the skill until it reaches a hundred percent. And then then you are done. And so you can do those types of things using different commands and different your sort of you know prompting. And so the command for that is backslash goal, especially in Claude. I don't know what it is in in some of the other softwares, but in Claude, it's automatically built in, backslash goal. And so the idea for that is that it's not you give it an output or the objective that you want for the process, and then you tell it what it should be doing it on, and then it doesn't stop until it's reached that objective. So sometimes, a lot of times it'll it'll just stop when it thinks it's done because it didn't have that clear objective when you initially do a prompting or anything like that. But when you use hashtag goal, or not hashtag goal, sorry, backslash goal, you actually have to tell it, I want you to do X. And so in this case, it was I want I want 100% of the tool calls when a message is being created to call on our outreach skill, go test these skills to ensure that that happens. And it, I mean, it ran overnight, and then finally it said, Hey, all of them are now 100%.

Duarne 52:06

And so I saw something similar the other day, right? I saw a guy who he does a lot of development cycles, and what he does is he says, I want you to make one improve, suggest one improvement or make one improvement every hour on what we've done. And he said, It's amazing what it was able to produce, but it melted my credit card. So he said, The token you every hour is pretty crazy, I guess, but yeah, and he was he's like in his instance, he was like, Yes, he's a vlogger, you know, he gets he kind of did it, he probably went a little over the board, and he said, Yeah, I don't do it that often. I just thought like, you know, once every night or something now, give me a new suggestion. He said, Because my credit card was getting melted. He's like, I walked away one month with a thousand dollar bill from doing that, and that was just a few weeks worth of work that I'd done, and I didn't really think that one through very well, but I got a great result. And this and this is the key, right? I mean, when you are using these tools, you just have to make sure you understand them, you make sure that you understand how the billing works. If you're using an API-based tool, there is cost per token.

API Keys, Tokens, And Security Risks

Dave 53:18

If you're using that one hard, yeah, no, no, I mean I knew I knew it, but you know, all right, lesson learned. So thanks, Jordan, for for pointing out.

Duarne 53:25

No, no, it's okay.

Dave 53:27

Now I have to share my experience. So obviously, if if you don't know, you know, APIs are what allow different softwares to talk to each other on the back end. It's basically a confirmation number at a high level. But some companies charge you depending on how much you're calling on their tool. So, like, for example, Anthropic, you know, we're talking a lot of these things in Claude. You're gonna have a subscription, so you're not even gonna need an API. Yeah, however, Anthropic does allow you to create different API keys that you can connect to your own softwares so that you can call on Claude or whatever it ends up being or whatever model, and then you just pay per usage in terms of the tokens that are going in and out. And you don't have to have necessarily a subscription for that. Well, I learned the hard way. I knew about it, like it was an issue that when we so we're developing our forecasting software, and in the early development, I had an initial key. Uh, this is back in like March. And what we had found was when in the initial development, it took my Gemini key and it took my API key, and it happened to not be marked as private in the front end versel, which kind of builds the front end, so we had to rotate it. Well, I took it out, we took it off the code, and and I was like, oh, well, it wasn't live. You know, I never it would the software wasn't live, so you know it's fine. Well, it was not fine. I made a new key for the live site, which is not out there now, and that hasn't been touched yet. But yesterday, I'm eight eight, nine a.m. I'm sitting here and I'm going through a couple things, and I happen to get pinged that I have like six new emails. And I'm like, what the and they're all invoices from anthropic. I'm like, what the hell? I'm like, what am I doing? Like, I'm going to, I'm going to like my coding, like my collect code. I'm going to, I'm like, what is running so crazy? Like, wait a minute. I'm like, I'm not on my APIs. Like, what do you mean? Like, so I thought like something was like it like messed up. And so $500. They, you know, it ran up in usage cost on an API. And I'm like, what? Go to find out. It was this old key from March. So there's scrapers out there that are looking for this now. And so it had apparently scraped it back when it was on a domain and was just holding on to it until they wanted to use it. And so, in the matter of, I think it was like 30 minutes, they had done something like 20 million tokens on this API key. And I was like, obviously disabled, deleted the key, but it's a lesson learned. And I had thought that I didn't have auto reload on, but apparently I don't know. And and also I didn't have a monthly limit. Well, I did have a monthly limit set, but then when I went to check it, it changed it to $200,000. I'm like, I would never set a hundred. Could you could you could you imagine if I just you know had a $200,000 API budget?

Duarne 56:21

I mean, who even allows that to happen, right? I mean, like what software platform thinks that's a reasonable number?

Dave 56:27

Yeah, like who it and I was like, I was maybe five dollars of API usage, like the two months since before this day, and then like in a matter of 20 minutes, it jumped up to 500. Like, you don't think that that's a red flag, or that you know, maybe you shut it off. Like, how is that not something that's in the back end of these softwares? So, to protect yourself to learn from my issue and my error, right? Would be one, make sure that your your monthly usage is set to a number that you're comfortable with, that even if something were like this to happen, you're probably gonna I kind of find out I'm probably just I'm probably out that $500 because according to their chatbot on their website, because you can't actually talk to anybody, which is an important one.

Duarne 57:10

Customer support sucks for a lot of these platforms. They choose not to put humans in front of people. All their chatbots, yeah.

Dave 57:20

And according to that, it's like, well, your term says that as soon as the API token usage is done, we don't give credits or we don't give refunds for it. I'm like, yeah, but this is obvious theft. It's like we don't, you know, according to your terms, and again, it's typical, typical Claude, improve your stupid chatbot. Okay, it said the same exact wording back to me no matter what I said, like 10 times in a row. Like, I was so frustrated, as you can tell. Well, lesson learned, okay. One, set your monthly budget to something that you're actually comfortable with. And two, make sure that you're rotating your API keys if you're using them. And and three, run regular checks, right? And you could do that even in like your clawed subscription. Like, hey, check the code. Is anything public? Like, you know, go to my sites and have an automated checker on that. Because if it is, you want to rotate it and delete the old one. That's that was my mistake, right? I didn't disable or delete the old one uh because it was just an afterthought. $500 mistake, but mistake nonetheless that you can learn from from me. Here's the thing though, this is not exclusively related to AI either, though. Well, it's not or quad in general, like it's just any API. You know, QuickBooks as an API that you know you could charge down depending on how much you so it's like any of those things for sure. Absolutely.

Duarne 58:31

Like, and this is it. I mean, for if you want, and this is where you need to be just a little bit cautious and educate yourself in relation to using these tools a little bit too. Like, if you're using platforms like Brilliant Directories, for example, you've got an option to link Google Cloud to get Google and Google Maps working on it. Well, that's an AI, but for the majority of people, they'll never go over the free threshold. But you have to put a payment gateway in, like a credit card or a debit card, in order to use that. So if someone came along and hacked your site or did something to it and just started abusing that or managed to get your API kit, it's the same thing that can happen. So, big things here is cybersecurity comes into play here. We you need to be aware of cybersecurity in your business if you're going to be using online tools. You need to make sure that you set budgets. One thing that I suggested to Dave pre-show when he was sharing this with me was I put virtual debit cards with hard limits so that you can't bill more than an amount in rapid fire. And the reason I did that is because I had a similar scenario about a year ago, but I was using Go High Level at the time, and we had somebody come through and exploit with a bot one of our forms, our sign-up forms. And at that time, capture wasn't a standard feature on the forms within Go High Level. So I ended up having 600,000 people supposedly sign up to through my form and do an email verification process. And the consequence of that was my domain got tarnished. We had to change domain. I spent three weeks trying to repair that domain's credibility so we could use it again. Eventually, we got it back to creditable, but it was a nightmare, an absolute nightmare. And again, like we we didn't know where it was coming from initially. I was on with support, they didn't know where it came from. The fact you're able to identify it so quickly is incredible, and that's kudos to you. And one thing you should always be aware of if you are using like API keys and you do retire them, just make sure you go and delete them straight away or disable them straight away. Because it's so easy, especially when you're vibe coding and you're just in there and you're in the zone. All right, I'm just gonna get rid of that. You forget to go back and do that. You're doing so many things, and as a business owner, you're doing so many things every day. So if you are gonna be doing that and it is your credit card details in there on your account, and even if someone else is building this for you, be aware that these things can happen and ask the questions what's the limit? Is there a limit? And I don't see how anthropic can justify putting a $200,000 limit on a budget that doesn't use the service. I'm pretty sure open AI, you have a minimum, a hundred dollar minimum, and you have to uh use that to a certain extent and over a period of months before they'll lift you up to the next tier for budget.

Dave 1:01:47

And some of that's like again, too, come would come down to you know, do you have auto reload on as well? Like, yeah, you can have a budget for a monthly budget, but if you have and then you set your reload at like $50 and your monthly budget's maybe $400, you could turn auto reload off, even still, where you know it would that's your loss limit is $50. Um, and and so it does it will require you to kind of go back in and you know fund it every time, you know, depending on what your threshold is. But again, that your threshold, you have to make that determination for your business. But that's kind of the lesson learned that you can totally do from my experience would be make sure that you have these budgets that I like I like your suggestion because a lot of times on these virtual cards, you can actually set a monthly limit. So it's not like, hey, I'm just gonna set a $200 limit you know on this card, and then now I got to refresh the card every this card has a $200 and you know ten dollar limit every month, and then it resets every month, and it's just for that software. And so that's where it's kind of nice because then you know, hey, I'm never gonna go over that unless I approve it, and then I go in and I increase the limit, whatever it ends up being for that card.

Duarne 1:02:52

So well, it's I use Brex, and Brex has the ability to create a virtual debit card with a and you can enable a 10% variance, so it'll do a 10% overage on that card up to, and you can also it's monthly or one-time spend, and it also has the functionality built in, how often that resets, is it daily, weekly, monthly, which is quite nice. And one of the other features you can do is you can go in and do a temporary increase and set a date period. So if I need to go and increase it for during the month, because when I was doing some vibe coding with Google, I had to keep doing that. And I'm like, oh, I spent more tokens than I intended. Let's go fix that, like you were talking about just before. And it went so I'd just creep that up a little bit, and I just temporarily increase that for a couple of days, you know, for a few days for it to work, and then it'll get back to its regular limit for you. But learn from our mistakes. This is why we share these stories. It's not to you know shame ourselves, it's to admit that a little bit, maybe I like some public shaming. No, not either. But I mean, like there is you know, you live and you learn from these things, and if you can learn from our mistakes in business and not make them yourselves, I mean that's that's one of our goals here for doing this.

Dave 1:04:16

Absolutely, you know, but and there's and there's so many, there's so many mistakes, and this is why they're kind of going back to as I was talking about, like the priority and your investment. You're gonna make mistakes, especially when you're doing it yourself. Like the ultimate goal is to learn a little bit more every single day. You're almost like the skill audit, like you're you're doing it for yourself. Like, did I improve this? You know what I mean? And if you did, great, keep it. If it's something that you're like, you tried it and it didn't really help you or it didn't really improve your efficiency, then get rid of it. You don't have to keep anything you learn for a long time. Like, learn what works specifically for your business, and that's why there's no perfect solution, there's no perfect setup for everybody. Like, you know, you and I want or could need different things on a regular basis. So don't think that like what I'm doing has to be exactly what you're doing. So and again, what we're talking about, what we're teaching is is not nothing that you can't do on your own. But what we could do is save you time, and we could eventually save you right the headache of it. And that's the ultimate thing that we're we're kind of partnering with a lot of people on is we're saving them time, we're saving them the stress around it, and on top of that, they get to be more efficient and get some of that time back from their business and their operations, and ultimately that's what it's all

Avoid Tool Noise And Start Simple

Dave 1:05:43

about.

Duarne 1:05:43

So that's it. The consulting and advisory aspect of what we offer, I think, is very valuable for a lot of business owners, right? Because the research that we do is probably far more than we need to in some cases. And it's like I mentioned to you earlier, it's like, how many tools do you find yourself researching to use only to think about later going, what's my real outcome for this? What am I really researching this for? What do I actually want to do with this? Or am I just researching this because it sounds really cool or it's trending right now? Right. And it's so easy to do. It is so, so easy to do. There's a lot of noise out there, and sometimes you have to block that noise and just get in and focus on the on your what you're trying to achieve and your outcome. And these tools can be like that. So everyone's out there talking about open claw, they're talking about paperclip, they're talking about Hermes. Like all these things are great, but these are like level up sort of tools for agents and stuff. What we're talking about today is just using your subscription-based models. Like Claude has co-work agents built in as part of a subscription, it's got some coding built in, it's got some regular researching capabilities, it's got image generation. Just start using those. Then explore more if you've got the time. If you feel like you hit that level that you want to do more. If you're going to go to an outsource partner and start this journey, and you're starting from nothing, and the outsource partner is saying, All right, you need to buy 10 mini Mac minis or 10 virtual machines, and you're gonna run 10 open claw agents, and they're all gonna be doing these things. I'd be pulling back and go, Hold on, hold on. Why is that what I really need? Because for a lot of cases, as a as a small business owner, you don't need everything. You can get you can get away with using the simpler tools initially until you hit their limitations. Right.

Dave 1:07:51

And I said it last week. Start with one or two. One or two from your first list of processes that you're doing manually right now. And the thing is, is that you don't necessarily have to automate 100%. It would be nice if you could, but automate 70, 80% of that process and build it into a skill that's going to save you time. And that's something that could literally be done in a couple days, maybe even like a half a day, depending on how much time you actually dedicate towards it. But that's where you get started. That's it. That's it. You just get started. It's not that it's not difficult, it's not rocket science. Like nothing we're telling you right now is rocket science. Nothing that we've done is rocket science. And if somebody tries to tell you, oh my god, you can't do what I do, they're lying to you. They're lying to you, they're lying to you. Right.

Duarne 1:08:49

People have never been capable of.

Dave 1:08:53

Let me classify that a little bit, right? Because I don't want like there's probably some things that people like there's there's skills that I have, there's skills that you have, right? That somebody just off the street couldn't go and do in terms of getting it to the right outcome, because we know how to explain it. So there that's the piece that would be differentiated between each person. But there's nobody that says, hey, with my AI, right, or my work with Claude, nobody else can do it. Right. If you find somebody else that's similar that understands your business, like that's ultimately like I don't care about like you. I care in terms of like that person, like I don't care what they did for their business or what they think that is exclusive to them. I'm more worried about what does the client need, and then how can we build that? Yeah, right.

Duarne 1:09:47

And when you're all about there's so many understanding the outcomes, like we talk about, right? Understand what those outcomes are, what is your ideal outcome here, and then go away and try and build it. And this is one thing we talked about earlier, right? Is understanding what your outcome is rather than just going in and start playing. Once you understand what your outcome is, describe your outcome and ask for instructions on how to get to your outcome. And you may just be surprised at how well these systems, these AI tools can help you and guide you through the process to get there. And this is something that I saw in a video there a couple of days ago, and it was about perplexity computer or complexity compute, which is effectively the same as co-work, right? With Claude. And trust the AI a little bit, trust the agent a bit, tell it what you want to do, and let it go and do it. And if it gets stuck, get it to ask you questions and answer the questions and see what happens. Don't feel like you have to constrain it initially. If it goes off on the wrong angle, sure, bring it and pull it back in and do it. But initially, just try and let it give it the instruction on what you're trying to do and see what it can come back with. It may surprise you.

Dave 1:11:05

Well, that's that's why that's why it's it's ultimately the outcome that is more or less the prompt, right? And I can't remember where I heard it recently, but it was it's not necessarily about prompt and engineering anymore. It's more about like outcome and letting the the the LLM or the model like figure out how to get to that outcome because it is smart and it'll figure it out. And so that's why like the goalslash goal is important because you're giving it the outcome and then telling it what to go to go do, and it's gonna go find that outcome for you and generate it how you want it. And then your your files, right? Your contacts, all that kind of stuff kind of keeps it in the guardrails as you set those things up. So it's not going to be this long, convoluted just get started learning. It's you're gonna learn something the moment you open it up and you start talking to it and saying, hey, here's my process.

Duarne 1:11:59

Yeah.

Dave 1:11:59

So you an hour a day, like even somebody, what was it? It's 10 hours, 10 minutes a day for a year, like puts you into the top like X percent of people in terms of like the knowledge and the mastery of something. So give yourself 15 minutes a day, an hour a day. Like it just think how much quicker you're going to get into the mastery of that particular process or skill for your business. You know, it's a lot different for somebody like myself who's doing it 10 to 12 hours a day. But for you, it's how can I just put 30, 60 minutes into this every day that is going to help me grow my business? And ultimately, that's your ultimate goal. That's your priority that you need to set up in your mind. And if you do not, I I kind of want to question like, well, then what is your priority? You know, so I know we talked about a lot, and I can't believe it's already been an hour and 15 minutes,

Key Takeaways Know Numbers

Dave 1:12:50

brother. But what's something as we wrap up, what is something from today's episode that you hope they walk away with?

Duarne 1:12:58

Jeez, that's a it's been a lot of a lot of stuff discovered to uh discuss today. I guess for me, it's I mean it's it's it's hard to pinpoint. I mean, for me, it's really I know it's gonna sound really cliche, but know your numbers. Know your numbers in your business and make sure you're using the right equation to work out those numbers. And if you're not sure, if you're not sure that you've got your numbers quite right, add a little extra in just for your own ignorance initially until you get those numbers right. And you're not gonna get it right every time and every quote, but if you play the averages, you should you should be able to start building that system out properly. And after three to five quotes that have been accepted and you're doing the work, you're gonna know for sure that you're either got the right system in place or you need to make some serious adjustments to it, or some slight adjustments. But it's a learning cycle, like everything we talk about. It's not gonna happen straight away, you're not gonna get it right perfectly every time, and it's not gonna be that situation where you look at someone else and go, Well, they're only charging this much, so I I need to charge a little less, or I'll just charge the same.

Dave 1:14:13

Well, the minute you start competing on a price, it's to race to the bottom.

Duarne 1:14:18

You know what I mean? Exactly. Stop thinking about that, think about what your actual real costs are and what you need to be able to feed your family at night as well, because that's what you really need to be billing. And then positioning yourself with another value, obviously, but that's the conversation we've had another time. But yeah, know your numbers and make sure you memorize that uh equation that uh Dave shared earlier. I'm sure Dave's gonna share it again just to make sure you remember it. If you need that, tell us, and we'll get Dave to record a special video and put it up on his YouTube channel here so you can go play it back as often as you need to.

Dave 1:14:55

Love it, love it. So, well, now you put me on the spot, so I guess I have to share it. To calculate your gross and to kind of reiterate what you know, kind of Dwarne was saying here. You add up all your costs, direct costs. And then, as Dwarne said, if you're unsure of what those are, or if you're worried that you didn't cover everything, you can add a contingency cost that's equal to you know five, 10, 15% of your total cost. It kind of gives you that miscellaneous buffer. It's not the same calculation as trying to add in the gross profit margin, but you're just taking total expenses and then adding 15%. So that's where you would take total expenses times 15%, and then that's your miscellaneous buffer amount. And then in terms of the gross profit, once you add up those costs, don't just take your total costs and multiply by 40% or 50%, whatever it is that you're looking to get. That's the wrong way. The correct way would be to take up all those costs and then divide it by one minus the gross profit percentage that you're aiming for as a decimal. So if you want 60%, it's one minus 0.6, which would give you 0.4. So again, you divide your total cost by 0.4, and then that's gonna give you an invoice cost that would result in a 60% gross profit margin. So it's important for you, and every single person listening to this, watching this, you know, your gross profit's gonna be different from everybody else's. You have to determine what you want it to be for your business. And the reason why gross profit is so important is because it's that's basically out of every dollar you make in your business, that's the amount that you get to keep to pay for your overhead. And then at the end of the day, the ultimate goal is the net profit of the organization to either reinvest in the organization to grow or to help you live right your life and pay yourself, which is the goal of any business. So if you don't understand it or you still need a breakdown in terms of like how do I price, which is very important there, but we talked about it. Value pricing and outcome-based pricing is is first. Don't think about like hourly rates, but we'll get to that in another episode, I'm sure.

Duarne 1:17:08

You the you the app builder, you might want to have a little play around and put a little tool up on your website. Well, I mean, I have yeah, yeah, we have a lot of this. Yeah, if you you know, and as part of one of you one of the groups that you can uh sign up with from the Triumph Business Solutions group.

Dave 1:17:28

The uh studio.triump business solutions.pro, that's our big community that we're launching. Yeah. Started creating it last week because a lot of people have asked, like, how do I get support? How do we get you know the ongoing, we do weekly phone calls in there to really help the business owners level up, get the support they need. But I also have my a lot of my skills are being templated there so that you can download them for yourself to your business profile. You fill out your business profile and then they get trained and kind of customized for you before you install them into your computer. And so for yourself, right, is make sure that you're using the right number, otherwise, you're gonna be feeling the pain, which I'm sure you might have already been. I've had a conversation so much the last couple months about I can't figure out my net profit. Why is my net profit wrong? Well, it probably starts from your gross profit margin. So we we take a look at that and then we've edited their calculations. But with that, I don't want to go too much longer, but for me, I I would say the one thing that I want you to take away from this episode is your priority. Like, really think about what is what is my priority around my time, my business, and is it aligned with ultimately the long-term vision of where I want to be with my business? And that's seems like it could be deep, because it is, right? Because if you're not always aligned with your long-term vision, you're off your path. And so now's the time. Hopefully, this is like your check-in. Like, hey, I gotta get back on the path. If your long-term vision is to give you a business that is going to, you know, provide you the freedom to live on a beach or take road trips or whatever it is, and it just pays you a monthly you know amount from profit, are you really on that path? Working 15 hours a day without automation, without growth, because you're too busy to do any of it, you're not your priorities aren't aligned. You need to reprioritize yourself. And so once you set your priority, that's where then you'll be able to kind of your calendar aligns with that, your actions align with that. And so if you're not and you have not set your priority, maybe this is a kick in the ass you need to do

Questions, Sharing, And Wrap Up

Dave 1:19:43

it. So with that, we we appreciate everybody watching, whether it's live or the recordings. If there's something that you took away from today's episode, one, let us know down below what it was. But two, if you have any questions, drop them down there as well. Do all that fun algorithm stuff. Give it a like, give it a subscribe, share it with your network. There's probably a few people in there that probably also need to hear all of this stuff and have that reminder for themselves. But until then, we go live every single week. We'll see you guys in next week. But Warren, thanks for joining me again, brother. Thanks, Dave. Bye. Congrats on the win this week, the big contract.

SPEAKER_02 1:20:16

Thank you.

Dave 1:20:17

Now get started to get to work. Enjoy the weekend and then go get to work.

Duarne 1:20:21

That's right. I'm gonna take the weekend to enjoy it, and then Monday it's all into all hands on deck.

Dave 1:20:26

Exactly. All right, guys. You guys have a good one. We'll see you in the next one. So yeah.