Welcome And Solo Show Setup

Dave 0:12

Whether you need help with integration capabilities and sales, maybe just getting the mic. We're here to help us. So grab your favorite cup of Joe. Let's jump into the show. Let's jump into the show as that pretty cool guy on that voiceover just said, right? So grab your favorite cup of Joe. Let's jump in to another show here with the Business Unscripted Podcast. It's July 31st. So I'm going to start this podcast off by saying happy birthday to my oldest daughter, Lizzie. I hope you enjoy your day and uh get to make a lot of memories over the next year. Man, I cannot believe that uh I have a girl as old as you. I'm not gonna say it because you know you don't do that with a woman, but happy birthday, honey. I hope you enjoy your day. With that, we're here. It's episode 72 of the Business Uncrypted Podcast. We're here live every single week, Friday morning around 8:30. And as you noticed, I'm solo today, so it's just me. Typically, I'm always here, but Dwarne, he's a business partner of mine, and he'll join us sometimes as a co-host. But today he uh got pulled off with a family dinner. And for those of you that don't know, he's in the Philippines, so he's basically 12 hours ahead of us. So it's dinner time over there. But Dwarne, hope you're enjoying your dinner, brother, and uh look forward to seeing you back next week. But if you're a business owner, maybe you're an aspiring business owner, and you're looking for a spot to learn some lessons, get some strategy, ask questions. This is a good podcast for you. Every single week we're here, we're we're talking about things that we're going through, talk about things that we went through ourselves, things that we've seen with clients, strategies that we've implemented, helped them implement things where we're moving things forward, not only in our businesses, but other people around us in our network. And we want to share that with you. Biggest reason why Doran and I decided to kind of turn our weekly conversations into this podcast. And so that's why we're here. So if you're watching this or you're watching a replay, do not feel afraid to drop a question down below. Uh, you can definitely put those there. I will be, you know, kind of watching throughout the show. So if you have questions, drop them down there. Or after the show, if you're watching the replay, feel free to you know email us, message us, wherever you you kind of are watching this. Again, we're we're live on Facebook, LinkedIn, and YouTube right now. But we do post like the audio versions to you know Apple and you know a couple of the main audio streaming podcast thingies that they got out there. So uh make sure you're following along and feel free to share your feedback as well. We appreciate that. Looking to grow, looking to continue to kind of make an impact. So, with that, last last week we brought up the topic of 8020, and then we there's a couple other concepts that Dwarne and I wanted to get to pre-show, but we never got to because the conversation kind of uh went unscripted, as we say, which is why we kind of named our show this way. So we'll we'll get into those as well in today's episode, since it's just me, and I typically don't go off the rails when it's just me.

Using 80/20 To Find Profit

Dave 3:38

But so first I want to start with the 80-20 concept because I think it's impactful, you know, as myself, and and this this applies to not just your business and your clients, but it applies to almost anything. And so what you'll realize is you may not even take the time to you know kind of think about this or even like do this type of review in your business. And I think it's impactful. Um, and it's worked for us with our client reviews, and and so the the concept, right, is that you know, 80% of your outcome will come from 20% of your input. So in your business, 80% of your gross profit will more than likely come from a roughly around 20% of the client work that you're doing. But if you don't know where that's coming from, or you don't know who's prov, you know, who's providing that to you, then you don't know where to put your attention. And so what I've seen is that a lot of business owners, especially small business owners, right, are focused on how do I bring in more revenue? How do I just get more money? Instead of being targeted with that approach and look at their numbers and look at, okay, of our client base, maybe it's different programs, maybe it's different service lines, maybe it's different products. What is actually be you know becoming more profitable for us? And with that concept, then paying attention that, well, if 20% of our products are making 80% of our gross profit, we shouldn't be investing our marketing dollars in product B because product A or service A, whatever it program A, whatever it ends up being, is making the majority of your gross profit. So what you can do is you now can use this information to streamline either your products or your services to maybe cut off the ones that are, you know, the the you know excess fat, as they say, and then refocus all your resources into the things that are actually growing the company. And when I ask clients or you know, just conversation people right in in our network as we're having just general conversations, hey, when was the last time that you actually performed a review on your services? Most will say never. In fact, just just the other day, I was having a conversation with somebody on LinkedIn who had mentioned that they have like seven or eight different offerings that they provide to people in in any given sort of scenario. And really, I was like, Well, how much is that is taking your time? And they're like, Well, it's all a time suck, really, you know, and it's just so really the nitty-gritty now is what's actually paying the bills, right? What's the gross profit on each one of those, and which ones can you cut out? You know, because when you think about it, just as you know, you may be overwhelmed by having too many services or too many offerings, right? Your client probably feels that same way. So, how do you streamline that offering or that program or service so that it's an easier transition, an easier roadmap to your clients as well. And by doing that, it's performing this 80-20 sort of review of your business and kind of having that in the back of your mind that your gross profit is gonna come from about 20% of your clients, and it's always gonna be rotating. So I I saw

Cut Services That Drain Time

Dave 7:34

this as well. This is um when it comes to staffing, maybe you have employees that you want to look at, right? 80% of your output is gonna come from about 20% of the people on the team, and the other the other 80% are gonna be producing that 20%, and some are even gonna be dragging the team down. So, what you may realize is you you you really need to cut the fat because if you don't do these types of reviews on your services, on your team, etc. That 20% that's producing, they become worn out, they become overwhelmed, and then they leave. So you may have worked for companies where all the top performers have left. And the question is always probably why? Like, why are they leaving? Well, it's because nobody ever made it easier for them to complete their job like because they they kept all the fat. So they were picking up all the slack from all the fat of the organization. So develop a standardized regular process in your business, whether it's every quarter, every six months, to do this sort of review, and then decide for yourself what are we gonna cut out? Like what is our threshold to cut something out and either downsize it, eliminate it, or you know, kind of grandfather those clients into another offering or something like that, depending on what type of business you are. And it's probably gonna be hard at first. You're gonna be like, oh my god, I'm gonna lose so many clients, or you know, nobody's gonna want to go to another offering. Like you have to believe in it just as much as they should believe in you. If you don't believe in what you're offering, if you don't believe in the new reduced services, then your clients are gonna feel that same way. They're going to be able to see that, and they're gonna feel, well, if you don't believe in the new service line and the streamlined service, why should I? So this is why it's really important for you to kind of think through this before you just go and do it. Like, don't go and just, oh, I'm gonna go look at my services now. Because there's a few things that go into that,

Build A Repeatable Review Process

Dave 9:50

right? One, on the financial side, you need to make sure that you're actually like tracking your output and your inputs by those programs, services, etc. Otherwise, you're gonna have to go and recreate the data or put together the information in order to kind of perform the review. You can't just kind of go and guess about it. So if you have three different programs or three different services, are you tracking all your expenses, right? The direct expenses by those direct services? Or is it just all kind of grouped together and you have no idea? Because if you don't have the data, you can't actually perform the review effectively in order to determine what you need to cut or what's actually producing gross profit for your organization and your business. The second part is like time, like give yourself the time to actually go through it effectively. It's not something that you should do in an hour. Like this 80-20 review of your business is something that you should probably set aside, maybe you know, a morning or an afternoon to really sit down and analyze, whether it's with your team, whether it's with an advisor like myself or somebody else that you have, to really talk through what's actually working and where you should pay attention to moving forward. And then the third piece of that is then once you've made those decisions, right, create the plan to implement them, but also reassess where you need to be, you know, whether it's putting your marketing dollars into product B versus product A, whatever that ends up being, you have to have that plan developed afterwards at the end. Otherwise, it just becomes a flat sort of another work effort that you did that you're not following up on. So make sure for yourself that you have the time, you have the data, and you have the capacity to actually implement a plan. Otherwise, an 80-20 review is just going to be kind of a waste of time for you, but it's really important for you to do in your business. So uh if you have questions on that or you know you want to talk through or maybe look at what an 80-20 review in your business might look like, right? Feel free to drop a question down below and feel free to you know reach out if you have any questions on that. Next, just a quick sort of off, I guess, off-topic thing here. Thinking through a conversation I had with with a client this past week, since your last episode. And this is again not, I guess I do go off script. I said at the start of the show, I don't go off script myself, but here I am going off script. Just a conversation I have with a client about pricing. And I feel like it's really important

Pricing Confidence And Real Competition

Dave 13:09

for everybody in their business to have an open mind around pricing and analyzing how they fit within their market. And so in this particular case, the client produces a high volume, high quality service, low volume, right? So low volume, high quality. And the pricing needs to reflect that because they are that high quality and they do take their time. And they are against let's say private private owners or private business owners, they're probably at the top. However, their real comparison is not other private business owners because they're trying to compete to go to the bottom. Where their comparison is, which they're still cheaper as is more of the corporate bigger offerings. And I'm not going to give the industry or anything like that. So, but the idea here, it's a service-based business. So they're cheaper than their actual competitor. But when we talk about price in the conversation, they're trying to compare the, you know, they're thinking that they're already the highest price of their, in their mind, the made-up competitors. And so in reality, when we think of price increases, you know, we have to think of we have to think of like who our true competitors are. Like who are we trying to compete with? And in this conversation, it it's a start of a process, because you know, this thing doesn't happen in just one conversation to change the mindset. It's a start of a process where we have to start seeing ourselves as a competition to a higher level of other business versus lower level, right? Especially when you're focused on quality. Like if people from the lower, like customers from the lower services are coming to you to fix because they couldn't fix it, you are now at a higher level of service than them. So you can't compare your prices to that same level, then otherwise you're underselling yourself. And so the conversation was around the pricing. And then instead of just testing a price change, the first objective that we're going to be working on is actually reaching out to their actual clients to do a survey, right? A post survey to get some feedback, right? And actually get some data around their

Gather Pricing Data With Surveys

Dave 15:49

pricing, where they're at, the service quality, all of that to make sure it aligns with what we were talking about in the conversation. And so this could be as simple as a quick five, six question, right, sort of a survey. Give an offer, like, hey, next time you come in, we'll do X, Y, and Z for free, right? High value to them, right? Low cost, low investment on the business owner. So maybe it's something that you charge, you know, a couple hundred dollars for, but really, you know, it maybe takes an extra 15 minutes of your time and doesn't really have any cost associated with that, but it has a high perceived value in the client's mind. Throw that in at, you know, if they respond to the survey. So the goal here would be building that process of sending the survey out to their clients, getting the data back, you know, in the next 30 days, and then making that shift based on the data. And again, we've said it multiple times in this conversation so far. You have to have the data. So many times in corporate, when I worked in the corporate world, people wanted to make decisions based on feeling, like, oh, I feel that we're doing this incorrectly, or I feel like the staff may, you know, get mad at us if we make this decision, not using data to drive that decision-making process. And so, in this is a great example of that, where we're gonna now send out a survey to all the clients. I mean, obviously, you're not gonna get 100% response rate. So, in this case, we'll probably be shooting for something around maybe like 15, 20% response rate. But that's still enough to give us the information we need to decide, okay, do we have to? Can we increase our price? Can we increase the received value and not lose customers? Because that's the biggest fear that business owners have when they talk about increasing pricing, is I'm gonna lose customers. And the second piece of this was what is your average purchase, right, as a customer? So what you know, when when you have a customer with you and you're thinking, I'm gonna lose customers. Okay, well, let me ask you this if

The Math Behind Price Increases

Dave 17:54

your average customer purchase from you was $1,000 and you were high quality, and people loved what you did, they keep coming back to your business program, whatever, and you needed to do a 10% price increase. Do you really think that somebody is going to turn away from $1,100 if they were willing and are already doing $1,000 with you? If you're providing value, you're providing support, you have right the outcomes that you've told them that you're gonna get them. Like 10%, while it may initially seem like a lot, is not. And when you think of your average right purchase, so that's what you have to be thinking about is okay, am I really even 5% price increase, right? A 5% price increase goes, especially if you're a profitable business, that goes directly to the bottom line. If all of your every time she sends me a message, gets me. Love you, honey. If it goes to your bottom line, right? I think that's what I was saying before you distracted me. So let's say you have a thousand dollars and you want to do a 5% price increase, right? So $1,050. Do you think people are gonna say no for $1,050 if you drop $1,050 versus $1,000? Probably not, especially if you have the social proof, you have the experience, you have the you know the trust of your customers. They're not gonna turn you away. Now that extra $50 per purchase, right? Because you're already profitable in gross profit, you're already profitable in net profit, that flows directly to the bottom line. So therefore, you don't need to pay anything else to make that extra $50 per transaction. You don't have to pay anything else operational wise. I get it. If you those of you that are out there, like, well, you got to pay merchant fee, okay. Get it. You're gonna lose 3% of it. Big freaking deal. High level, that's gonna flow all the way to the bottom line. Now, the follow-up from the 20th was well, I don't see how $50 is gonna make or you know, make or break it. Well, that's if you look at it as a singular transaction, but when you do a thousand transactions a year, that fifty dollars extra a transaction now becomes fifty thousand dollars at the end of the year. So that's fifty thousand dollars extra to your net profit that you didn't have. So when you think of the numbers, right, when you think of the actual like how this all flows, right? So if you did a thousand dollars, thousand transactions, it's a million dollars, right? Million dollars, typical, let's say you're a 50% gross profit, so you made $500,000 of gross profit, and then you were the typical 10% net profit. So on the million, you had profit of a hundred thousand dollars. You would think I have a 10% net profit. Great, I'm awesome, doing good, 100 grand. I don't see how 50 bucks is gonna make a difference. Well, now let's look at the same scenario. You have a thousand, you have one million fifty thousand dollars of revenue. Your gross profit now goes from 500,000 to 550,000 because you don't have any other increased cost there. So there's a a 10% increase in your gross profit margin, right? 50 out of 500 is 10%. But your net profit now goes from 100,000 to 150,000. So you actually have a 50% net increase, right, in your net profit by a 5% price increase for the same number of transactions, same number of clients, 5% price increase in this scenario. Now, if you were doing a 10% price increase, you'd go from $500,000 to $600,000 of gross profit, right, to about a 20% net increase in your gross profit, but your net profit would be a hundred percent increased. You'd go from a hundred thousand dollars in net profit to two hundred thousand dollars of net profit by just increasing your revenue a hundred thousand dollars. So you see how small price increases when you have the clients, you're already profitable, can truly impact your business and your profitability. So this is why you know, when you say, or you think, well, small price increase, how's that gonna affect my business? You have to run it through. Have to look at the entire picture, right? Don't stay stuck in. I need to stay where I'm at because I don't want to piss anybody off. I don't want anybody to leave. Well, in reality, even if people left, right? And you did, and you were able to get the same amount of revenue, the same amount of net profit in less hours or less services. So you actually were able to reduce payroll or overhead, but you had the same amount of revenue, you would still be increasing your revenue or your net profit because your overhead costs would be less, right? Or your cost of goods are also going to be less. So there's other offsets that increasing your price can do for you, especially if you're looking to level up in your business. If you're looking to reach that next level in your business, increasing your price is the best way to either one, make you more profitable by the services you're already providing, or two, free up your time to be able to invest in the business, your efforts to reach that next level. So there's two benefits of looking at a price increase in your business. And if you haven't looked at it in the last six months, nine months, twelve months, you need to start looking at a price increase now. Because it does take, depending on your actual relationship with your clients, price increases aren't just, hey, I'm gonna increase my price next week. Price increases for your current clients take a differing amount of time, depending on your relationship, to implement. And we said this before. If you have a very intimate relationship with your client, so it's one-on-one, you're doing advisory, fractional, et cetera, and you're looking to raise your price, that requires at least a 60 to 90 day notice. A lot of those

Pricing Changes By Client Relationship

Dave 25:06

are also going to be in agreements, so you know they're gonna be coming up to the end of an agreement period. That's when you want to have that conversation, but you want to do it in enough time. Here's why. One, you need to decide if you're one-on-one, what that price increase looks like. If you're getting rid of their service level, what does that look like? Are you are you trying to increase their price because you're the pro the service they're on, the program they're on is no longer going to be available? Well, then you give them the option. You have a conversation with them and say, hey, you know, we're we're changing our we're changing our services, our support for next year. We've been doing it for the last couple months, but your agreement's coming up. Here's what it looks like either you can jump up, right, which I would say is the next clear path for you. You jump up to this new program that we're offering, which adds right, X, Y, and Z of value to them. And again, remember we've always talked about value, but we'll talk about that in another episode, right? Your value always wants to exceed the increase that they're gonna be you know experiencing, but highlight the value, right? You're gonna get X, Y, and Z more services, X, Y, and Z more support, X, Y, and Z more, right, you know, sort of whatever it is that you're doing for them. And if they feel like that's not right for them right now, or they feel like they aren't ready to make that jump, then you can offer, hopefully, you have a lower offering that eliminates some of the services that they're doing, right? So what you would say is let's say that this client's at you know, $1,000 a month, and your middle package, which is where you really want everybody to be, is about $1,500 a month, right? But it adds two or three extra levels of service. And again, this is going to be individualized depending on your business, which is why I'm not giving you a set added value here. So you would have the conversation, Jane. I know we're coming up to the end of your agreement here. Glad everything's been working out. We've achieved X, Y, and Z so far. At the end of your agreement, there's a couple options that we have coming up, which we're updating our services and our program and our support for our clients. Based on your progress, I really feel like the next option for you would be this new program that we're putting together, X, Y, and Z program. The price would be or the investment is $1,500 per month. And the difference is that you're getting X, Y, and Z more value, more services than what you're currently getting today. Do you have any questions? And then you can also say, like, this is why I feel like it's the logical next step, and explain to them based on your relationship, based on their goals, based on anything else that you had conversations with them about why that is the best next step for them. Now, Jane has free will, right? Jane can say, Yeah, I don't I wanted to kind of keep the cost the same. Do you have anything that's possibly similar? Well, actually, we know we have our new service, it's a little bit less than what you're getting right now, right? So maybe that's like an $800 a month plan. We have our $800 a month plan, however, like the services you're getting today, you know, A, B, and C, those aren't included in that plan. So you would have to like give those up at the end of the agreement, and then your cost would go down to about $800 a month. And then you break it down for them and let them decide, like be their partner. Like that's what you're building the relationship for, is to be their partner. So give them the options and let them decide. You know, do you have any questions? How could I, you know, what do you feel is the best next step for you? Do you want to like detail some of these a little bit more? Great way to do it. The other way that you know, when you're approaching this type of you know, price increase with a current client is you could say to them, you know, hey Jane, I really um I respect our relationship, love the progress you're making, the momentum. If you you know go ahead and and lock in right the $1,500 a month plan, I'll actually give you, we'll increase your services for the next two months to meet that at your current rate. So that way you could start seeing the benefits of that increased program today. And so again, they're getting value, right? Because they're saving $500 a month for the next two months. You're able to then kind of rotate them into the next service plan. And now when it comes to that next agreement for the next 12 months or whatever your agreement periods are, you've got them locked in at the higher price. In this case, it's a 50% increase in the average transaction price. So in reality, it all comes down to presentation, it all comes down into support and value. So that's if it's a one-on-one. You want to have so one-on-one, it's a direct conversation. It's not just an email, it's not just a quick notification on your website, right? It's an actual conversation. If you typically meet in person, make sure it's in person. If you are virtual, make sure it's a you know, a virtual Zoom, Google meet, whatever it ends up being. But it's that one-on-one face to kind of talk through what that new program looks like. If you have more, let's say it's more of a group setting, right? It's more of a group or it's a smaller, non-personal type relationship that you have with your clients. Well, now it can be more of an email or an announcement to the group where it's not, it doesn't have to be one-on-one, right? It can be, you know, put out there, but you depending on the amount of the price increase, that determines the amount of time that you want to give people. So if it's a group that you're upping the you know your mastermind charge for or something like that, and it's like 10% or less, maybe you just let people know 60 days. If it's something where you know you're the it's gonna completely you know change, you're you're doing different levels, whatever it is being, maybe now you need to give them 90 days notice. And then you can let them know, hey, if you want to have a conversation about it, we can schedule a quick 15-minute chat to walk through it. But it's more impersonal. And then if you're lower cost, like the average, like you know, $100, $200 or less, right? This can be an email to people just letting them know, hey, by the way, like effective, you know, September 1st, right, where all prices on all plans are going to go up 10%. That could be very impersonal. That's more of like if you're doing like a SaaS service, you know, maybe it's a you know, if you're a restaurant or something like that, where you know, you have a more impersonal, you know, one-on-one kind of conversation with people throughout the transaction, but you still want to make them you know aware of what you're doing, more than happy. That would be the good price increase. And some people, like depending on how, like if you're at a restaurant or you're yeah, I mean, you think of like a McDonald's, right? McDonald's doesn't announce every time they're raising prices, they don't put it on the door, they don't send us an email, right? Anything like that. Because the price increases are typically small, there's no need for them to do that. So if that's something like yourself, like you know, maybe the the average, like you're a storefront, you know, and you're deciding that you're gonna raise prices, you know, 5% or 10%, but your average price is like $5 or $10. Like you don't have to put a notification on the door that you're raising all your prices 10%. Just do it. Now, if you're more of a specialty store and you know, you have a more of a high-selling product that people are coming to you specifically for, then you would want to make the decision do I put something on the door related to that? You know, and you may see some of this in in stores that you frequent often. You would go to that, right, and you would put on the door, or maybe you have a client list that you can send out an email to that that buys that specific product, just letting them know, you know, effective September 1st, all prices on XYZ products will be you know increased by 10% to cover, and then you let them know why, right? Like maybe it's like extra, you know, increased cost, inflation, whatever it ends up being, like just be honest with them and they're gonna understand. So many people that I've had conversations with, am I falling into this too? You know, you don't you don't want to increase your price, even though all your prices that you're paying have increased. And I had this, kind of goes back to this conversation, is if you are willing, and this is a very good piece of knowledge to remember for yourself, and let me just drink a cup of Joe for this. What you are telling yourself, right? If you don't want to increase your price, yet all of your prices have increased over time, what you are admitting and telling yourself is that you are willing to do more work for less

Inflation Costs And Profit Erosion

Dave 33:48

money, even though the revenue coming in is the same, because the buying power of your dollar year over year over year reduces, right? And so not only are you getting less of a net profit, right, because your costs are going up, but the dollars that you do have less actually buy you less. So you're actually literally doing a double disservice to yourself by not increasing your price to offset not only inflation going on in the world, but offset the price and the expense cost that it is to you to provide that service. So many people say, Well, I just want to absorb it, you know, it's just cost. Great. Let's go back to our example. You're a million-dollar business, right? Your cost and you were at 50% net profit, all right. Your costs go up 5% to provide that service. Your direct costs go up 5%, right? So that $500,000 goes up to right $525,000. Right? So now your growth profit goes to $475,000 from $500,000. But your net profit goes from $100,000 down to $75,000. So a 5% increase in your direct cost of goods sold reduces your net profit by 25% if you don't offset that price increase by your own price. So you're really literally saying, okay, I'm willing to absorb this 5% price increase, but the actual number you need to pay attention to is it's actually a 25% reduction in your net income. That's what you're actually absorbing. Because it's literally $25,000 out of your pocket. And then if you continue to do that year over year over year, that $75,000 that you have left over buys you less because costs of goods are going up even outside of your business. So you're basically double screwing over yourself as a business owner by saying, I'm just going to absorb price increases and I'm not going to charge it back to the customer. And this is why like my whole mindset around business price increases have really changed because of this by seeing it on the other side. You know, I have to increase my price. Like if my direct costs go go up to provide a service to you, I have to increase my price to you. I'm not trying to make any more money in terms of like growing like percentage-wise, I'm just trying to cover the cost that it does that it costs to do the business. And again, this is why it goes back to the first segment that we talked about of doing the 80-20 review and assessment in your business because those two things in tandem will truly begin to set you apart. And it goes back to one understanding why did you get into business? Right? More often than not, the chances of anybody starting a business and blowing up to be a billion-dollar business is small. You can start a business, become a multi-million dollar business. Great. That's successful. You don't have to be 50, 60, 70, 80 million dollars, a billion dollars, whatever it ends up being, in order to be successful in business. A successful business owner is really what does it take to live the lifestyle that you want? That's successful in business. But if you're in business and you're trying to live the lifestyle you want while not being willing to make the adjustments and the changes needed in order to get there, you're fighting a losing battle. You're literally fighting yourself. You know, I saw that, you know, it's like it's literally the snake eating its own tail. That's what you're doing in your business, right? You're eating yourself as you're as you think you're making progress, you're really just making progress off yourself.

unknown 38:57

Right.

Dave 38:57

You're just eating yourself. So I think I'm gonna leave with those. I think I think I'm just gonna leave with those two topics today. Again, I I well let me I guess not. I can I can talk about the last one real quick. It's only been 37 minutes. So the the last the last thing that I kind of wanted to, you know, kind of talk about real quick was impactful for me over the last week, week and a half. For longest time, you know, obviously everybody knows I do a lot of Claude, a lot of co-work, helps me with a lot of the stuff that I'm doing. And I always heard

Hermes And The Modern AI Stack

Dave 39:38

of Hermes, always you know knew it was out there, but I never took the time to really understand. I was like, oh, it's just Hermes, right? It's just another kind of agent. I have agents, right? I have cowork doing things, I have all this kind of stuff working. But what I didn't really understand, I still had I was just this nagging, like, why? Like, I couldn't do all the things I wanted to do away from my desk that I knew I could possibly do. I'm like, what is missing? And from that was understanding that Hermes is actually part of the the tech stack. And so here's the benefit of Hermes with Claude, or you know, obviously you can't use it with your cloud subscription, so it's connected to like open AI. But very quickly, we won't go into depth of the setup and all this kind of stuff because that's not what this podcast is about. It's just really kind of understanding concepts. But before co-work, if you if you're a big cloud user, you know, they have the app on your phone, you're able to do cowork tasks, right? Specifically only things that co work has access to. Now, cloud has made a lot of changes to their to their app and to their process that has really frustrated me lately in terms of like just changing and putting on all these you know beta testing settings that really stink. And especially because co work, I had all my individual projects, I had my folders there, I built my obsidian vault that way, and then all of a sudden they merge chat in with cowork, and now all the projects are gone and you have to recreate them all from the get-go. Just a pain in the ass, right? So, what I couldn't do from Claude on the desktop app was code locally on my computer, which is where all our projects for our mainframe software, right? Our command center, all of that. You know, we have you know a local version of it that is where we're doing all of our editing, all of our you know, adjustments, improvements, etc. And then we push it up to the live repo. I couldn't access that from my app with cowork because it's it's limited, right? Now, what I've understood from Hermes is, and I've been implementing it now fully, is that's the bridge to work locally on the rest of your computer that you can't necessarily do from co-work. And so here's the benefits, just some things that I've done and implemented over the last week related to Hermes and our workflow. So, one, we've integrated in Slack, which is I think is the best thing that you could do with Hermes because it literally is a bot now in Slack. You can have all your different channels, you can communicate it in channels, it's threaded. Typically, people like to use Hermes in Telegram or WhatsApp. The problem with that is that the conversations aren't threaded, it's literally just

Slack Workflow For Local Automation

Dave 42:31

one big string in Slack. All the responses get threaded into the specific topic and responded to. Love it. Uh, it still works on your main computer, it's open source, so there's no like subscription that you need to have in order to you know work with Hermes, but you do have to have some sort of back end with it, whether it's open AI or API keys, whatever it ends up being. But now I'm able to do the work. For example, yesterday I'm at my daughter's, you know, um all-star game. So before the game or during the game, I have an idea or something that I think of that I want to improve, right? So I'm on I'm on my phone, I'm on my command center app, you know, looking through copy that needs to be approved for the next week, looking through messages that need to get sent out to people, and I'm looking through meeting, follow-ups, and briefs, and I find maybe an error in the code or something that should be happening that's not. I can go into Slack, I can go into the project for my command center, which is traced to my specific local folder, and then the GitHub repo that's connected to it. And I can say, Hermes, go to the local claude code session, and and it I believe it opens up a headless session in the background, and go update this error that I just found. Here's the issue that I found, here's a screenshot, or however it ends up being. You know, if you don't have to do a screenshot if you don't want to, here's the error, here's what it should do, here's what I the actions I took in order to fix this error. Go fix it. And it will go all the way through. Now you can choose how you want, right? If you're if you're doing coding, you can like if you would understand, right? If you just want to leave it local, and then when I come back in, I can test it. Or for me, I say, you know, because it's these things are just things that I'm using myself, nobody else is using it in terms of a user. I say, just go ahead and push live so I can test it virtually, right? On where I'm at. And then if I if it doesn't work, I then go back and say, hey, this didn't work. And then it communicates directly to my code. So I'm now able to do all of my coding locally that I couldn't do before through cowork. Now, Claude, it has code on the app, obviously, but you have to do it through you know the cloud, not on the computer with things that I'm already working on. I can actually have it go and find the session that I was working on earlier and let's continue that session so that I don't lose the work, which if you're using code, you would have to, or you could remote control it, but sometimes I forget to do that. So that's one kind of process. It allows me to now connect to my my files, my desktop, and actually run the processes virtually. The second thing that has been really beneficial as well is we are able to create client channels. So now, you know, we I have WhatsApp connecting right to my team, but everything was again just one big thread. So now in Slack, I'm able to create a channel for each one of our clients. Hermes is connected within those channels. The team can talk to Hermes, which again then runs on my machine. They don't have to have Hermes on theirs, researches anything that they need to have research and then responds back. That's another benefit. Right. You can also run these things in terms of research, in terms of scheduled jobs. So all in all, Hermes is the next right layer of tech. And I think the lesson I learned here, and I want to share with people, and we've said it before, though, is you don't want to just rely on like one thing and just be like, okay, I'm only going to use Claude or I'm only going to use OpenAI or ChatGPT, whatever it ends up being. Because there are so many different benefits to all the different models, all the different platforms, that you're kind of doing yourself a disservice if you're only using one. And as the models, as the processes become more efficient, right? What I'm realizing, especially on my Claude, because you know I've talked about this before. I have two Claude, Max $200 a month bright plans operating on each one of my computers. My second one, because I'm not doing as much coding and anything like that anymore, and it's just the processes, I actually was able to reduce that to the to the $100 plan. We'll see how it works, right? It's a test. But again, looking at all of your, you know, always being mindful of where you're putting your money out and investing, realizing, okay, can I take that $100? And maybe maybe because of Hermes, I need to invest into the higher plan for ChatGPT. Or maybe I need to set aside those funds for open router API keys because we're going to be doing some a lot more things with like Kimmy or different things like that. So always being mindful of where you're at kind of plays into the first part of the conversation, the 80 20 rule. You know, 80% of your output from AI is going to come from 20% of your services, right? Or not your services, but your workflows and what you're doing and using AI with. Which leads me into what we'll talk about next week. And that is like where is your focus? Where is your priorities when it comes to AI and how you're utilizing it in your day-to-day? And is it actually benefiting your growth? Is it benefiting the priorities of the business, the goals of the business right now, or is it are you just using it

Keep AI Focused On Goals

Dave 48:06

just because you feel productive by doing it? Um, and it's an easy trap you can fall into. So we're gonna talk about that more in depth next week. Hopefully, you know, Dwarf should be back to talk through that. So that'll be a good conversation, I think, with him as well. But on this end, make sure you know you're not scared to try out maybe new things if you have the time to do it, or ask questions, like somebody like myself or somebody like Dwarne, who has a lot of time, you know, or not not we don't have a lot of time, right? We're investing time into these things to get better aware of how to service our clients, you know. Like for me, now we're able to service our clients better by being able to get information on numbers or get information on their activities more quickly. You know, I can be in a client meeting, and this is how we're integrating it with our command center. I can be in a client meeting with client A. Client B may actually send me an email, you know, requesting a question about a particular topic or something that's going on with their financials. My system that I built with the command center in Hermes will analyze the question, find and research the answer for me while I'm still in the meeting, right? My advisory session with client A, and then present me with a draft of the information, where all the information came from and the answer right to their question for me to then review and approve. So it really does make us more efficient. It it helps you service your clients better, right? In that in that particular case, it's research. Research doesn't necessarily need to be you actually going into the work and getting it done, right? What needs to happen is that you analyze what the research gave you and determine is that right or is it not? That's the benefit that you provide to your client, not how much time did you go into their QuickBooks account or their kick and spend working around in the numbers to get the answer to their question. That's not the benefit that you give to them. The benefit that you give to them is one, the knowledge, the support, the advice, right? And the the feeling of, hey, I have this person on my team. And now, and more and more and more, I say this all the time, right? We're not about, you know, our business isn't about saving money. Right? We are here because we save you time, anxiety, and stress.

unknown 50:46

Right?

Dave 50:46

If we're able to kind of, you know, obviously look at your numbers and overall, like save money in other places, that's a benefit. Our overall service, right? Because we're not telling

Saving Clients Time Stress And Sleep

Dave 50:56

you, we're not giving you advice here, we're not telling any strategies that you're not going to find anywhere else, right? I'm not telling you anything earth-shattering in terms of these strategies. The idea is that we are telling you and giving you the support to save you time, anxiety, and stress, so that you don't have to do it yourself. That's why you're here. That's why our clients work with us. We're helping save the stress. The number one number one feedback I can give, and we'll end on this, right? Is my longest client. I went to high school with him, but he's been with me since 2016, almost 10 years now. The best thing he has said to me, right, in this feels me, I guess trying to figure out how to say it, right? And I want to say, like, oh, it gives me all the tinglies, but you know, it's it's just a good sort of uh confirmation that I am doing what I should be doing. And and that statement he says all the time, he's like, Man, like I sleep at night because I know I have you to support me and answer my questions when it comes to finance or anything on that, on that operations-wise. Like that part, he sleeps at night. Like, if he had to worry about that, he would be stressed, right? It would be something, it would be overwhelming to him. But knowing that, right, he has me helps him sleep at night. And that is a benefit. Like that, that feels good to me, knowing that I can provide that sort of feeling in somebody else. And I think that's why we're all in business because we want to help, right? We want to support. You know, we like the freedom, we like the you know, the opportunity as well that business gives. But I think ultimately for me, especially, like that right there, servicing and being able to support him and giving him that peace of mind that he can sleep at night and know that if there's any questions, he can just reach out to me and we'll we'll help it. That's the part that is a benefit and is a true heart melter, I guess you could call it, right? For me, you know, in terms of a testimonial or feedback that he's given me. So with that in mind, I hope you guys have a wonderful and amazing rest of your week. Again, Lizzie, happy birthday, honey. I hope you enjoy your weekend. And for those of you, like again, we're doing this every single week. We're live at 8:30 Eastern every single week on LinkedIn, Facebook, YouTube, all the

Questions Feedback And Subscribe

Dave 53:26

you know, the typical places. And then we we do post the audio versions to our you know, the main audio podcasts. And for those of you I'm watching, like those views are going up. Like, I appreciate you guys that are listening to this on audio. If you're if you're here, we love you just as much as those that watch live. So if you have questions or if there's any feedback, anything you want us to talk about, maybe you have a situation or obstacle you're going through right now in your business and you're like, hey, can you guys talk about this next week? Drop it, put it in the comments, email us if you have our email, uh, reach out to us any particular way, you know, however you're you're listening or or watching, and we'll cover that topic. You know, and if it's something we're not, maybe I'll find an expert to bring them on to talk about that topic. That's the other thing. You know, we want to bring more other business owners, which we've had in the past. We have other business owners that come on the show, talk about a topic that you know they can help with or that they're a experience with to benefit you, the listener. So hope you guys have a wonderful one, do all the fun algorithm and stuff, like, subscribe, do all the fun stuff. And until then, I hope you guys enjoy your weekend, and we'll see you in the next one.