Coach And Thought Leader Rocky Lalvani On How To Thrive And Prosper In Your Business (#235)

[00:00:00] Jeffrey Feldberg: Welcome to the Deep Wealth Podcast where you learn how to extract your business and personal Deep Wealth. 

I'm your host Jeffrey Feldberg. 

This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience. 

When it comes to your business deep wealth, your exit or liquidity event is the most important financial decision of your life. 

But unfortunately, up to 90% of liquidity events fail. Think about all that time and your hard earned money wasted. 

Of the quote unquote "successful" liquidity events, most business owners leave 50% to over 100% of the deal value in the buyer's pocket and don't even know it. 

I should know. I said "no" to a seven-figure offer. And "yes" to mastering the art and the science of a liquidity event. [00:01:00] Two years later, I said "yes" to a different buyer with a nine figure deal. 

Are you thinking about an exit or liquidity event? 

Don't become a statistic and make the fatal mistake of believing the skills that built your business are the same ones to sell it. 

After all, how can you master something you've never done before? 

Let the 90-day Deep Wealth Experience and the 9-step roadmap of preparation help you capture the best deal instead of any deal. 

At the end of this episode, take a moment and hear from business owners like you, who went through the Deep Wealth Experience. 

Rocky Lalvani serves as Chief Profitability Advisor for business owners. He teaches them how to ensure they get paid and make profit a priority. Rocky started with nothing when his parents immigrated to the United States when he was two years old. And his parents were in their forties. It was his parents' second time starting over in life as they moved to the US to experience the American dream.[00:02:00]

In spite of a lot of struggles and his mother passing away when Rocky was seven, he's been able to achieve financial and life success. Rocky loves to share his journey and inspire others to achieve their dreams even faster. 

Welcome to the Deep Wealth Podcast, and you heard the official introduction, but let me ask you this. It's a rhetorical question. All your business owners, founders, entrepreneurs, do you like profits? And I'm sure you're saying, well, yeah, Jeffrey, not only do I like profits, I love profits. Do you want more profits?

Do you want proven strategies and a system? Okay, enough with the rhetorical questions, I'm gonna stop there because our guest is gonna be talking all about that and more. So, Rocky, welcome to the default podcast. Absolute delight to have you with us. And Rocky, there is always a story behind the story.

So, what's your story Rocky, what got you to where you are today?

[00:02:51] Rocky Lalvani: Jeffrey, thank you so much for having me here. You know it's funny when you look at a story. Looking forward, it's hard to connect the [00:03:00] dots. Looking backwards, it's like, oh wow. All these dots connect to get me here today, and it, it's only lately in life. So, It took me a long time to connect my dots and be where I truly should be.

[00:03:13] Jeffrey Feldberg: Sure.

[00:03:14] Rocky Lalvani: One of the starting points is I'm an immigrant to the United States. So, my parents came here with very little money, started over in life.

 And one of the things that was unique, I guess to us, and I never realized it growing up, but everyone would talk about money, like they and their friends would talk about how much they were making, how much they were spending, how they were investing, how much things cost. I didn't realize people didn't talk about money.

Right? Because in American culture you don't necessarily do that because I got to see that money was just a natural conversation in our household. It was things that we talked about. And from whatever reason, from a young age, I had seen different levels of Wealth.

Like I had seen where we [00:04:00] were, I had seen people prosper. I had seen people at the high end of the curve and I'm like, yeah, I wanna be a millionaire. So, I did not understand scaling.

But I understood how to systematically over time create a gap between what comes in and what goes out. Learn the power of compounding and small differences in how they build.

[00:04:21] Jeffrey Feldberg: Sure.

[00:04:22] Rocky Lalvani: The other thing I learned, I was a tech kid, I still a tech person, So, I love learning the latest, greatest. When I was a kid, the Apple two computer came out.

[00:04:31] Jeffrey Feldberg: Oh my goodness. Memory Lane.

[00:04:33] Rocky Lalvani: Memory lane and so as a kid I was always entrepreneurial. I was making a buck. I walked into the computer store with $2,000 in cash. Back in the early eighties, and I plopped it down and got myself one of those latest greatest gadgets.

[00:04:47] Jeffrey Feldberg: Yeah.

[00:04:48] Rocky Lalvani: And one of the first programs that was really interesting on there was called Visi Calc.

[00:04:53] Jeffrey Feldberg: Sure.

[00:04:54] Rocky Lalvani: Which is the precursor to Excel, 16 generations [00:05:00] later or whatever. I love looking at numbers. I love looking at spreadsheets and they tell me a story. So, here I am 16, 17 people found out that I knew how to do this stuff.

They're taking me into companies telling me to teach the accountants how to go from paper ledger to electronic spreadsheets. Like, this is how you change, this is how you do stuff.

[00:05:21] Jeffrey Feldberg: Sure.

[00:05:22] Rocky Lalvani: Like my original business idea of getting outta college was I would build spreadsheets for people. 

But here's the problem, it's this point, the late eighties. I don't know how to start a business. I don't know how to market. There's no internet. And how the hell do you tell people, I'll build you a spreadsheet. What's the value in that?

Cause I didn't understand and so, I kind of went off and did my thing in life. And then I came to realize, Oh My God.

Even companies that are using big software applications are taking all their numbers, throwing it into Excel and then analyzing it. Well, that's the [00:06:00] skill I have. I look at businesses, and to me, every business is a math equation. From the beginning to the end. It is a math equation and you can see it laid out well on a spreadsheet.

And if you can figure out your numbers and figure out your levers, you can start playing. What if games and saying, okay, if I do this, how does it affect profitability? If I do that, how does it affect this? And that's kind of the game that I learned so that's what brought me to where I am today. I work with small business owners.

I look at their tax returns, I look at their financials, and I find the story, and then we start talking about the story. The second part though, of what I learned is I couldn't understand why there weren't more millionaires in the United States. I'm like, we live in a country of great abundance. I was just back home to India.

They're coming along phenomenally. You just see the disparity, like labor is not a problem in India. In India, we go to breakfast. There's five people serving me, [00:07:00] right? Because labor is cheap. Here we've got so, much and yet so many people struggle to keep any of it. And part of that I learned was money mindset. So, there's a whole psychological thing to the business side and there's not a lot of people talking about the emotional part of money in business, so, when we talk to business owners, that's literally our first question on our onboarding call. Tell me about how you grew up and how you learned about money. Tell me why this business?

We want to understand their why and what makes them tick because we find if business owners don't have confidence in their value where they think money is bad, they're never gonna have that.

[00:07:42] Jeffrey Feldberg: Absolutely. We're now in the art side of business, and I know here at Deep Wealth with our nine step roadmap, it's all about the art of business, the art of growing your business, a liquidity event. Now, Rocky, we're gonna go into a whole number of areas, but before we do offline, you and I were having a conversation and [00:08:00] we both are on the same playbook page here because you said something interesting in business. It's not about the top line. That's really irrelevant. It's not important. And our listeners may be saying, Jeffrey, what are you talking about? The top line is everything so, rocky, in your own words. And for our listeners to hear from you, you do this all day long.

Why is the top line really irrelevant? Where are we focusing on? Why is that important? And to that, where are the more common mistakes that you're seeing most business owners make when it comes to the philosophy that you're about to share with?

[00:08:34] Rocky Lalvani: So, first off, we have a simple saying. Top line is vanity. Bottom line is sanity and cash flow is reality. Okay? so, you can be profitable and have no cash, in which case you're in real trouble cuz your door is closed. I think people think, okay, I'm gonna grow my top line. I'm gonna grow faster and faster.

One of the biggest reasons companies go bankrupt is growth.

[00:08:59] Jeffrey Feldberg: [00:09:00] Sure.

[00:09:00] Rocky Lalvani: Because they grow so, fast. They don't have the cash flow to cover the growth they get ahead of themselves. The banks look at their margins and they get freaked out and they pull their loans and now everything blows up and it happens all the time.

So, I think the top line's nice, but let me ask you a question and this is the reality of what we see. You got a hundred million dollar business. You're making 300 grand a year.

You've got a 10 million dollar business and you're making 800 grand a year. Now think about it, if you've got a 10 million dollar business, you're probably not working as hard in that same industry.

You got less headaches and you got more cash. Why do I wanna grow to make less? And that happens more often than not, but nobody talks about this.

[00:09:49] Jeffrey Feldberg: Absolutely. And Rocky, I'm gonna throw a third scenario out there. You have a hundred million dollar business and the listeners are saying, wow, a nine figure business, that's amazing. There's always a but. [00:10:00] But when it comes to your profitability, You're 5 million in the hole. So, You know, you could be a billion dollars in business if the profits aren't there.

What's it all about? And to your point earlier, Rocky, and we talked a lot about this at Deep Wealth and in our systems, Up to 90% of liquidity events fail. But when you kind of roll that back, some interesting numbers there, when you look at the statistics, you can be in business 12 years and there's still a 70% chance that you're gonna go outta business.

And when you go behind those numbers, well, why is that? The root cause is lack of cash flow to your point. Exactly. Maybe you're growing too fast. The other root cause is you can't sell the business, which. Really, we're all about with that focus. So, let's not have the listeners as statistics. Let's have them as the winning statistics, not the losing statistics.

So, rocky, where are the most common errors? What? What are the common mistakes that you're seeing that are holding most business owners back when it comes to profitability?[00:11:00]

[00:11:00] Rocky Lalvani: So, we have a saying, you don't need more resources. You need to be more resourceful. I think too often business owners throw money at every single problem.

They don't actually take the time to say, Hey, how can I do this without spending so, much? How can I be me more resourceful in this particular area?

How can I systematize? and do less to achieve those results. And I think that's a big part of it. A well sellable business is a business where the business owner has the least amount of involvement. 

[00:11:38] Jeffrey Feldberg: Our favorite question, Rocky, does your business run without you? You know, Yes or no? I don't want maybe or, but, well, if yes or no, does it run without you? You're a spot on.

[00:11:47] Rocky Lalvani: So, that means how do we get the business owner out of it? How do you learn to let go? How you systematize and how do you make sure that everything works like a well-oiled machine without you? I mean, Look at a [00:12:00] McDonald's franchise. They're hiring entry level workers. No matter where in the world they are, they deliver a product. They've created systems and processes to make sure everything works. They've got simple, easy to look at metrics that they are constantly looking at. Within an hour a week, you should have a dashboard that says, Hey, we're hitting our targets in each of the areas. What are the most important metrics and are we doing well with them?

And this is where we get into problems. Business owners set metrics that they think are important that have unintended consequences.

So, let's just say we have a forecast for this month's goal for what we're going to sell. Pick a number outta the air. We're gonna sell a million dollars this month.

[00:12:45] Jeffrey Feldberg: Sounds like a plan.

[00:12:47] Rocky Lalvani: It's the end of the month. We're at 900,000, right? We incentivized everyone to get to a million. Do they care about profitability or do they care about getting that last a hundred thousand in business to hit goal? so, [00:13:00] maybe they're going to sell $200,000 of work for a hundred thousand cuz they're gonna discount it cuz they hit their goal and they got paid.

But that work was unprofitable. You sent a bad message out to the market and you lost money because we didn't have the right things. To look at. The other thing is if you look at the average employee, are they taught to save money or spend money? We all heard the phrase, no one got fired for buying I B M.

[00:13:29] Jeffrey Feldberg: Exactly.

[00:13:30] Rocky Lalvani: Right? but what did that mean? They all spent the most money because you rewarded bad behavior. How do you change the metrics to reward good, profitable behavior? I don't think most employees understand how small the profit margins are.

[00:13:50] Jeffrey Feldberg: And let me ask you something, because what you're saying, there's gold in there and let me go in this direction. There's some listeners who are saying, okay, you know what, [00:14:00] Rocky, I hear you. Two things though. Key performance indicators. Yeah, I've heard that term. Maybe I use them, but I'm not quite sure that I do.

What key performance indicators should I be using? and then we can circle back to the second part of that because Rocky, when I'm speaking with business owners and they are using KPIs, one of the things that they share with me is, Jeffrey, our business is not open to the employees in terms of profits with what we make.

They're not seeing the bottom line, but how do I incentivize 'em in the right way? How can I have KPIs that doesn't show the bottom line, but can contribute to them making the right decisions to get to the bottom line? so, kind of a twofold question there for you, Rocky how would you answer that?

[00:14:41] Rocky Lalvani: So, I think certain KPIs can be made public I'll give you an example. Recently we were dealing with a client. Client has service people that go out into the field and do work, and what we're noticing is their billable hours are about [00:15:00] five, maybe six out of eight

[00:15:02] Jeffrey Feldberg: Okay.

[00:15:03] Rocky Lalvani: So, the first thing we can do is set a goal for billable hours and say the goal for billable hours for a field tech should be seven hours.

And then we create a dashboard that says, okay, here's our 10 field techs. This one's at four hours, this one's at 6.2. This one's at seven point one.

This one's at three or eight. So, all of a sudden, everyone sees how they are doing compared to everybody else and compared to a standard, we haven't told them what our profit margin is.

But we have told them, hey, we expect you to have this level of billable hours. Now there is the downside of that. Making sure that they're appropriately billing, not overcharging you. You gotta have the system. Everything needs a balance to the other side. So, you have to make sure that we're not throwing out a measurement that forces people to hit it. And do something that's [00:16:00] not right for the company. So, you've gotta create that, which comes back to hiring to values, right? If you don't have good values and you don't exemplify them, and you hire people just cause they have skills, more often than not they'll cause problems in your business. And so you've gotta know that at the beginning point.

[00:16:21] Jeffrey Feldberg: And to that point, Rocky, to your example earlier, which was so, spot on, and I'm just going to embellish it somewhat. And this was, you know, we wanna get that last a hundred thousand dollars or pick a number, $300,000 of business. And let's use a hundred thousand. It is just easier math so we get the a hundred thousand dollars of business, but it costs us $130,000 to actually get the business We're actually $30,000. You know, Losing, we're behind the ball on that. How can we encourage either through KPIs or through other kinds of strategies of, hey, it's not just enough to get the revenue booked. We've gotta be mindful of, you know, [00:17:00] stop thinking like employees, let's start thinking like owners, where everything that we're doing, it's about the bottom line.

How? How do we encourage that for people that are just getting the paycheck, they don't own the company. There's nothing in it for them long term wise, other than a steady job and hopefully some kind of future with a career. What can we do with that?

[00:17:17] Rocky Lalvani: So, couple things and we'll talk about this two ways. The first is you can show them a gross profit margin or you can just say to them, Hey, you are only allowed to discount up to 12% and if you, for every point you discount, You get paid a little bit less, so you tie their pocketbook to the discount.

The less you discount, the more you get paid, the more you discount, the less you get paid. So, we both now have skin in the game 

[00:17:44] Jeffrey Feldberg: Love it. 

[00:17:44] Rocky Lalvani: Creating a metric for that, but here's really where the gold is, and this is what business owners won't do. If you're run, let's just say you're running a manufacturing facility.

[00:17:54] Jeffrey Feldberg: Okay.

[00:17:56] Rocky Lalvani: You've got a guy on the floor, he's making 50 grand a year doing something [00:18:00] on the floor. He comes to you with an idea that could save you a hundred thousand dollars. Operationally, what are you gonna do for him? Are you creating a culture that you go to everybody and say, Hey, John, on the floor just showed us a way that we can change our manufacturing output process things through here faster. That's actually gonna make a hundred thousand dollars difference to our bottom line. And John, here's a check for 20 grand.

[00:18:32] Jeffrey Feldberg: Fantastic. Yeah. Fantastic.

[00:18:34] Rocky Lalvani: What is everyone else in the company going to start thinking? How do I save the company a hundred grand so I can get $20,000?

[00:18:44] Jeffrey Feldberg: Rocky, a quick story for you and for our listeners saying, yeah, Rocky sounds nice, but come on. Yeah, it's never gonna work. So, before selling my e-learning company, that's one of the initiatives that we did company-wide. It was embedded in the culture. Bring us an idea. If it saves us money, we [00:19:00] will cut you in for a percentage of the savings for the first 12 months.

And Rocky, the ideas that were coming in we never would've thought of, but there were some obvious ones to ones that are so far out there. Top of mind has been a while, but you know, top of mind, some of the things as well. Do we need to have the offices cleaned every day? or what if we staggered it, that we pay less in cleaning services to where are we getting our supplies to how we were running with our hours.

It was just unbelievable when you brought that out there. And each year at the company, we'd have an annual company holiday dinner. We would highlight those people, bring them up, give the check in front of everyone to them. And I've gotta tell you, for the culture, it. Number one, we had a better culture for people were excited, but it set the precedent for the new people coming in and even for the existing ones. Okay. You know what? Next year I'm gonna be up there. I'm also gonna be getting a check. So, there you go. There's some fuel for the fire as you're sharing that strategy.

[00:19:55] Rocky Lalvani: I think a lot of business owners are afraid to do that. They're afraid to hand [00:20:00] out that big. check. 

But at the end of the day, if you are making, cuz again it's one year savings, but if you can save $10,000 for one year, that's a hundred thousand dollars in 10 years. Those are the numbers that really multiply.

And the reality is the guy on the front line can make or break your business. And I think this is where businesses get it wrong. They don't take care of their frontline people that. Truly can make or break the business. And you can do this in any kind of business. I mean, It's as simple as if you run in the trades. You've got these trucks full of all this equipment, all these parts, create a contest. Hey, the guy who can run out to his truck and bring me these three parts the fastest this morning, or these three tools the fastest this morning, I'll give you a hundred bucks cash. 

Everyone's gonna start organizing their trucks.

An average truck in a company like that, you might have $50,000 worth of a chunk, I'll call it, [00:21:00] because it's not inventoried, right? It's a mess. It got thrown aside. Nobody cared.

mean, There's so much profit just lost within that operation. And until you teach these people to care and make it worthwhile for them, they're not gonna improve their own processes.

[00:21:19] Jeffrey Feldberg: And for our listeners, I hope you picked up on that. And Rocky, we talk a lot about this at Deep Wealth, we call it the world's favorite radio station. Rocky, you've probably heard of it Wiifm. The What's in it for me radio station. And you're sharing, Hey, make it worth their while. Get them interested.

Not for all people, but for most people, their currency is money. And what a wonderful thing that is because it makes it easy to do that. Now, Rocky, let me ask you this. I know some of our listeners are saying, okay, Rocky sounds terrific, but I gotta tell you, I'm so, busy when I'm at the office from when I get there to when I leave, I just don't have time to think outside the box for these kinds of things.

So, Rocky, walk us through your system. When you are brought on board, you're now an. [00:22:00] for a business owner, what does it look like with your system in terms of how long does it take to start getting someone up to speed? What kinds of things are you doing? Walk us through that whole system of yours.

[00:22:11] Rocky Lalvani: First of all, this is not an overnight success story. We're not gonna change things today. It takes time to bring about. Because these changes take time. Putting the right people in the right seats, bringing about processes and all of that, the first thing we do is we change the equation. Your accountant told you sales minus expenses equals profit, which means profit is a leftover.

It's an afterthought. We tell everyone it's sales minus profit equals expense. We take our profit first and literally what we do is we set up a system that all the money that comes into the company, the first thing we do is we sweep profit.

Off the top. We take profit in cash, we put it in a separate bank account, we call it profit. The second thing we do is make sure that the owner is paid, because if the [00:23:00] owner's home life sucks, their work, life's gonna suck. Right? So, we make sure that the owner is paid and paid appropriately. So, as the revenue comes in, the first thing we do is we set money aside for the owner.

And then there's the dreaded tax man. So, the next thing we do is we set money aside to pay taxes. So, that when tax time comes, you're ready to strike a check. And I'll tell you a story about Mike. Mike was in a service business one year. His business exploded, like sales went through the roof.

So, of course, he doesn't talk to his CPA a all year, and the CPA A doesn't call him all year. Here are my estimates. You pay em. Tax time comes CPA doesn't call 'em for three weeks. You know why? Here's the dirty little secret. Your tax preparer doesn't care if you're profitable. As a matter of fact, they hate when you're profitable because when you're profitable, you have to pay taxes and you yell at them.

So, the tax preparer's gonna be like, go buy a new truck and you'll save on taxes. They don't care about your tax loan profitability. [00:24:00] Tax preparer calls him out and says, I've been dreading this call.

You owe a lot of taxes. He goes, I know it's been a good year. How much do I owe? He's like, it's almost six figures.

He goes, no problem. I'll drop off checks tomorrow. She's like, in the 20 years I've done this, nobody said that to me. This is the wildest thing that I've learned. With implementing the systems, we do as much as we all hate paying taxes, my business owners actually look forward to tax time because they have the confidence to write a check to the I R S because they know if they have more in their tax account than what they need to write. The IRS, they get a bonus and they keep the excess.

[00:24:38] Jeffrey Feldberg: Love that mindset. And again, for our listeners, you're hearing it from Rocky and again, Rocky so many things that you're doing, we're doing here at Deep Wealth as well. But I love how you reveal the dirty little secret that profits, whether it be your accountants or whoever's preparing your taxes, they don't want you paying profits and openly Rocky. It never made sense to me when it's the accountant or whoever's [00:25:00] preparing the taxes, Hey Jeffrey, you know what? I'm looking at the books. You're gonna have some profits this year. You know, Is there something you want to buy for yourself or for the business? Did you wanna redecorate your offices? Go spend the money, and I'm why on Earth would you do that? When you can reinvest that money and do other kinds of things, who cares? To your point, if you're paying taxes, it's a good thing. You had a terrific year. Welcome it. That's really what it's all about.

[00:25:22] Rocky Lalvani: Here's the real secret though. If the business is highly profitable and they didn't spend it on redecorating the office and buying all these silly things, how much more is the Exit value? It's a multiple right?

[00:25:35] Jeffrey Feldberg: Absolutely. And speaking of Exit values, Rocky, you said something that a lot of business tend to overlook, and from the ownership perspective, pay yourself a salary. Because to your point, you know, if you're not having fun, if you're not living well, it's gonna reflect in the business. But when it comes time to sell the business, you're not paying yourself a salary.

We call it add backs or EBITDA adjustments. And your future [00:26:00] buyer is gonna say, Hey Jeffrey, there's no salary here for you, So, I'm going to arbitrarily put a salary in there because I've gotta normalize what this business is really doing and what that buyer is gonna put in there. You're not gonna it'll be to their advantage as opposed to paying yourself market value.

It's hard to argue with that. So, brilliant insight there, Rocky.

[00:26:19] Rocky Lalvani: And so at the end of the day. Then whatever's left over from all of that becomes our expenses. We tell you, and I said this before, you don't need more resources. You need to be more resourceful. This is based on Parkinson's law. Parkinson's law basically states a business will use up all the time and money given to it.

So, you've got a project, what happens? The sales guy walks in. His first question is, what's your budget and what's your timeline? Oh, My budget's a hundred thousand In six months, it'll be a hundred thousand in six months, probably 110 and seven. But you know, That's another story.

[00:26:50] Jeffrey Feldberg: Sure.

[00:26:50] Rocky Lalvani: But If you say to them, Hey, I've got 20,000 to spend and I need this done in four weeks, someone's gonna find you a [00:27:00] solution.

[00:27:00] Jeffrey Feldberg: Sure.

[00:27:01] Rocky Lalvani: And you're going to get it done. Now people say, well, how do we go from 20 to a hundred thousand? You've all heard of the 80 20 rule. 20% of what you do produces 80% of the results, which if you multiply, if I can get 20% and get 80, if I can do five times 20 and five times 80, Now I've really exploded my business.

Now I've made myself so much more profitable because I'm getting rid of all the waste and all the silliness and all the bad customers and all the things that take up so much time. It provides so, little value to the company. If you think this is true of small businesses, is true of big businesses.

There's a book by Jonathan Burns, it's called Islands of Prophet and a Sea of Red. And he's an M I T professor. He studied large corporations. When he looked at their profitability, he said 20 to 30% of what they do produces probably a hundred plus percent of the profit, 30 to 40% of what they do loses money [00:28:00] and the other percentage breaks even.

Nobody Knows where. What is, and no CEO has the guts to go to Wall Street and go, Hey, we're gonna cut sales by 50% and quadruple profits because he's gonna get fired. And again, these dirty little secrets of bad incentives and that's the bottom line.

[00:28:24] Jeffrey Feldberg: And so, Rocky, let me ask you this. Let's circle back to something that you said earlier because for a lot of the listeners, the concept will be a foreign one to them. You said, when money comes in, the first thing we're gonna do is allocate or take a certain percentage of that and put it into a bank account that's strictly for profits, and the listeners may be saying, okay, Rocky, here you are on that, but why?

Why am I doing that? What's the power in doing that?

[00:28:48] Rocky Lalvani: Why are we in business to be profit? 

Why don't we, I mean, this is a age old concept of pay yourself first. If you go back 50, [00:29:00] 7500 years ago, right? Your grandparents or great grandparents would get their check, and what would they do? They'd take their cash and they put money aside for rent. They'd put money aside for groceries.

They put money aside for the different things. And when that bucket ran out, you stopped spending.

What we're doing is we're constraining your operating expenses by pulling the profit you said you were going to make and is real and putting it aside. It's all about constraining you because if we've got money, we look at our bank account, this is what most business owners do.

They don't open up the accounting software. They look at their bank account. I got money, I can. No wait time out. You still have payroll, you have taxes, you have that bill of the insurance due next month. We need to constrain you it. It's counter-cultural. Here's the other thing. Let me ask you this. If someone comes to buy my business and you lay out these bank [00:30:00] statements for 12 months and go.

I said I have a 10% profit margin and look, every month I'm taking 10% off the top and I'm putting it in that bank account. You see every month there's 10% going there. I said, I'm paying myself. Look at what I'm putting in my pay account Every month. You can see I'm getting paid. You can see that we're doing all of this clearest day in paper.

Does that make me more trustworthy? Bankable is not the right word, but if I were trying to get a loan bank, it would make me more bankable. Cause they can see my cash flow. They can see it for real. And here's the other thing we do for owners pay.

We call it Yaya, which is what you were talking about. Your accountant says, Hey, why don't you buy something right to lower your taxes?

What we do is we take all of the owner's expenses that are for their benefit, and we take it out of the owner's pay account, so that when we go to sell our business, it's clear all these expenses were for the benefit of the owner. [00:31:00] they're actually real dollars that I got for the things I chose to do to lower my tax bill.

[00:31:08] Jeffrey Feldberg: And it's something in our nine step roadmap. Rocky. Step number three, your future buyer. One of the things that you wanna do, exactly what you're saying when you show up to your liquidity event, we say Don't tell and show. So, your narrative is, Hey, Mr. And Ms. Buyer here are the adjustments. I'm just making this up.

You know, we go on these exotic company retreats. Doesn't really have to be that way, but that's just a personal thing. But here, you know, is how we run it. We didn't put that through the business, or we decorated the office, didn't put that through the business. Or we have a personal preference of, sports teams or whatever the case may be.

You're actually showing that, and you have years and years of that lined up, stacked. You can't argue against that. And so, when the bottom line is the bottom. There you go. It. It's not gonna waiver because I'm [00:32:00] not showing up saying. Well, this is what would normally happen. You know what we have over inventory, but if you took that out, this is what the business would be.

Buyer's not gonna do that. They wanna see it and you can say, you know what? This is my preference, but we really ran it like this. So, there's really nothing to talk about. So, Rocky, let me ask you this as we start to wrap things up here. You have the profits first, and then you have to pay or your expenses.

Every business is going to be different. Generally speaking though, what would be some percentages or some allocations for each of those different accounts? So, again, we want profit to be as high as it possibly could, but generally speaking, what should those percentage allocations be?

[00:32:39] Rocky Lalvani: A lot of what I talk about comes out of the book Profit First. I'm one of the Profit First Professionals by Mike Michalowicz. There's actually a chart in the book, and the book shows you based on your webinar, New size, how much you should have for owners pay, how much you should have for profits, and what those different percentages look like.

The one thing that's [00:33:00] kind of consistent across the board is tax, which is at 15%. I will say. For some businesses, they actually need more for taxes. But it's a variable based on the size of the business. So, the bigger the business, the smaller the percentage for owners pay because it's off of a bigger number and then profits tend to go up the bigger the business.

As a percentage, so everything's done on ,a percentage basis. So, it varies across the size of the business. But I think it ranges somewhere between about five to 17%.

[00:33:35] Jeffrey Feldberg: Got it. Okay. And so, working with you when you're going through the business, you get into the nuances and it sounds like you'll say, okay. It's X percentage for this, Y percentage for that Z percentage for this, and you're walking someone exactly what they should be doing. Would that be correct?

[00:33:52] Rocky Lalvani: Well, so there are targets. What we do though, is we start with people where they are today.

[00:33:57] Jeffrey Feldberg: Okay.

[00:33:59] Rocky Lalvani: and then we [00:34:00] start to make small differences because people don't realize small differences in gross profit and small differences in overhead add up to massive differences in profit over time.

[00:34:14] Jeffrey Feldberg: Okay.

[00:34:15] Rocky Lalvani: But they take time to bring about, right? You can't make a change. You might be stuck in contracts. You might have to change the way you do business. I tell people. and even Mike tells people it might be two to three years. To get from where you are today to where you'd like to be. This is a slow, steady process. You cannot, if you go fast, you blow up your business, you screw up your cash flow, like you can't raise your prices overnight.

But we can raise them slowly. We can build operational efficiency slowly. We can, empower employees to find cost savings slowly. We can do expense audits. Slowly and little by little [00:35:00] we start to change the numbers, and over time you become a much more efficient business.

[00:35:08] Jeffrey Feldberg: So, play the long game. Invest in yourself. Invest in your business. Take someone like yourself, Rocky, who does this all day long, every day, and have really have your insights, your wisdom, your experience. infuse that into the business. And over time, not tomorrow, maybe not even next week, but over time, the results start to come in.

[00:35:28] Rocky Lalvani: And that's correct. Sometimes we'll find things right up front and we'll realize, oh, there's the big stranglehold in this particular business, and we can very quickly start to make changes to it. So, if you've made a lot of big mistakes, we can fix those quickly. Maybe

I, if you're a well run business, or if you're like most businesses that run tight, that you've gotta unravel a lot of decisions, then it's just gonna take a little bit longer.

[00:35:55] Jeffrey Feldberg: Fair enough. Well, there's an old saying, good things come to those who wait. So, there you [00:36:00] go. So, Rocky, let me ask you this. We're gonna start to wrap up this episode, and I have both the privilege and the honor to ask this question of you as I do every guest on the Deep Wealth Podcast, and we'll have some fun with this.

I'd like you to remember the movie Back to the Future, and in the movie you have that magical DeLorean car that can take you to any point in time. So, now, Rocky, here's the fun part. It's tomorrow morning. You look outside your window and there it is. Not only is the DeLorean car there, but the door is open and is waiting for you to hop on in. So you hop in and you're now gonna go to any point in your life, Rocky, as a child, a young adult, whatever point in time it would be. What are you telling your younger self in terms of, Hey, Rocky, here's some life wisdom, some life lessons, or do this but don't do that. What would that sound?

[00:36:51] Rocky Lalvani: I think, one of the biggest issues I had was I had all these skills and I didn't use them appropriately for a good part of my life, right? I think for a lot of us, we [00:37:00] don't understand the value we bring and so, it's taking the time to figure out what am I good at? Not looking around at everybody else and saying, oh, they're so, good. I wanna be like them. It's what am I truly good at? What do I love doing? That I would do regardless of getting paid, and that's what I do today. I do this regardless of the money because it's fun. So, I think it's, figuring that out for yourself

And then having the confidence to take the first step.

[00:37:30] Jeffrey Feldberg: Terrific advice. Terrific advice. And what I really like about that, and for our listeners, Rocky used the F word. Fun. He's having fun. He's passionate about what he does, and he's found a way. Rocky, in my own words, what you said earlier when we first started was, hey, I was kind of, this numbers geek, but I loved it and I just saw things that other people didn't see.

And so, you took your superpower. You found a way to have some fun with that and really make a difference for people. Speaking of making a difference, Rocky, all of this will be in the show notes, [00:38:00] so, our listeners. They can go, it can be a point and click doesn't get any easier. If someone wants to reach you online, have you as their Advisor, or have some questions for you, where's the best place that they can find you?

[00:38:10] Rocky Lalvani: So, before they find me. I'm just gonna ask them to do me a favor. If you like Jeffrey show, if it brings you value, would you just hit a like on there? Would you share it with another business owner? It, the world of podcasting is a little lonely. That's the secret. We don't hear from you. Show him a little love and say thank you for all the wisdom he's bringing with all these different episodes.

So, number one to do that. Number two, if you've got time after that, I have a podcast. It's called Profit Answer Man. We teach all of this stuff that we do. You can find me at profitcomesfirst.com. That's where all my stuff is. Just go listen to the podcast, see if it makes sense. Get to know who I am as a person.

Cause if you're not gonna love me, then we're not gonna work [00:39:00] together.

[00:39:02] Jeffrey Feldberg: And no offense taken either way, right Rocky?

[00:39:04] Rocky Lalvani: No, not at all. There's somebody for everybody. Find the person that will help you.

[00:39:09] Jeffrey Feldberg: Exactly. And for our listeners, again, the podcast to the site, to all your social media, Rocky, all that's in the show notes. Point and click. Off you go. Well, Rocky, it's official. This is a wrap, a heartfelt thank you for your time, your insights, your wisdom, and as we like to say here at Deep Wealth, please continue to say healthy and safe. 

[00:39:30] Sharon S.: The Deep Wealth Experience was definitely a game-changer for me. 

[00:39:33] Lyn M.: This course is one of the best investments you will ever make because you will get an ROI of a hundred times that. Anybody who doesn't go through it will lose millions. 

[00:39:43] Kam H.: If you don't have time for this program, you'll never have time for a successful liquidity 

[00:39:48] Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

[00:39:54] Lyn M.: Compared to when we first began, today I feel better prepared, but in some [00:40:00] respects, may be less prepared, not because of the course, but because the course brought to light so many things that I thought we were on top of that we need to fix. 

[00:40:10] Kam H.: I 100% believe there's never a great time for a business owner to allocate extra hours into his or her week or day. So it's an investment that will yield results today. I thought I will reap the benefit of this program in three to five years down the road. But as soon as I stepped forward into the program, my mind changed immediately. 

[00:40:32] Sharon S.: There was so much value in the experience that the time I invested paid back so much for the energy that was expended. 

[00:40:43] Lyn M.: The Deep Wealth Experience compared to other programs is the top. What we learned is very practical. Sometimes you learn stuff that it's great to learn, but you never use it. The stuff we learned from Deep Wealth Experience, I believe it's going to benefit us a boatload.

[00:40:56] Kam H.: I've done an executive MBA. I've worked for billion-dollar companies [00:41:00] before. I've worked for smaller companies before I started my business. I've been running my business successfully now for getting close to a decade. We're on a growth trajectory. Reflecting back on the Deep Wealth, I knew less than 10% what I know now, maybe close to 1% even. 

[00:41:14] Sharon S.: Hands down the best program in which I've ever participated. And we've done a lot of different things over the years. We've been in other mastermind groups, gone to many seminars, workshops, conferences, retreats, read books. This was so different. I haven't had an experience that's anything close to this in all the years that we've been at this.

It's five-star, A-plus.

[00:41:41] Kam H.: I would highly recommend it to any super busy business owner out there.

Deep Wealth is an accurate name for it. This program leads to deeper wealth and happier wealth, not just deeper wealth. I don't think there's a dollar value that could be associated with such an experience and knowledge that could be applied today and forever.[00:42:00]

[00:42:00] Jeffrey Feldberg: Are you leaving millions on the table? 

Please visit www.deepwealth.com/success to learn more.

 If you're not on my email list, you'll want to be. Sign up at www.deepwealth.com/podcast. And if you enjoyed this episode, if it added value, if you walked away with some new insights and strategies, please leave a review on your favorite podcast channel. Reviews help us reach new listeners, grow the show. And continue to create content that you'll enjoy and as we wrap up this episode as always please stay healthy and safe.