Jaimie: Well my guest today is the founder of flossy creative Justine McLean and Justine is a business money mentor on a mission to help women in business improve their financial literacy, a registered bass agent and host of the secrets of successful business podcast. Justin was named one of the coach Foundation's top female business coaches in 2022. Justin understands the business numbers and empowers female entrepreneurs and business owners to take the actions necessary to create profitable and sustainable businesses that fit into their unique definition of success. With close to 30 years of experience in small business, ecommerce publishing and insolvency, Justine is sought after for her practical, tailored and proactive approach to business and Justin is available for one to one coaching and offers a range of courses to help accelerate Small Business doors are opening to Flossie creatives, new signature course the business money formula on the 26th of April 2023. Here to tell us more, please welcome Justin McLean. Well, round of applause.
Justine: Hi, Jamie, thank you so much for having me on the podcast. It's an amazing opportunity to talk to you
Jaimie: Well, thanks for being here. I need to get a round of applause button. I think actually so many things I want to ask you about selfishly because in my own business and managing my own finances and all that sort of thing. And when I asked you to send me through a list of speaking topics, the list was really really attractive. I wanted to do them all but yes, I'm going, I really wanted that stood out for me is the pricing formula, and how to get the prices right and importantly make money in your business. What's the answer? Tell me.
Justine: Well, that's the million dollar question, isn't it? I think? I think look, there are there are many different ways to price your products and products and services. There is no question about that. You know, you'll hear some business coaches talk promise you that you can make, you know, seven figures or six figures a month just by having a mindset shift. There are other people who sort of want to start with this either bill, sort of amount that you want to earn every year or that you want to turn over over a year and then work backwards. There's the profit first model that you can use to sort of, you know, come up with your prices, and they're all great options, but I think as I've said to you before, for me, they're kind of a bit like diets, they work while they work and then when they don't you fail spectacularly. And I think the reason for that is because in a lot of those cases, we're being told to compare ourselves to other business owners, or set a target for our business that might not be realistic, or to you know, sit in the woowoo and say how a particular price feels for us. And to me, it's just not practical I've worked with intimately with business owners who have turned over millions of dollars and business owners who have panned out a couple of $100,000 over, you know, a long time now and I think, you know, the bottom line is it all comes down to what does it cost you to run your business but most importantly, why are you in the business game in the first place? You know, what does success really mean to you as a business owner, and that could be, you know, a good better best goal could be this amazing stretch goal that you have in mind. Or, or it could be $1 figure, it could be that you want to make a million dollars a year or put just be that you want to have every afternoon off put your kids when they come home from school, or the bit you want to work four days a week or that you want to take this amazing, creative endeavor that you've got and you want to be able to give that out to people because you know that it's going to transform their lives and really help them kind of have a better beautiful business or life as a result. And so I think it's really important to understand that as the tipping off points for pricing, which kind of sounds a bit strange.
Jaimie: I love that and so is it simply based on what you're saying there? Is it simply a matter of saying okay, I want to earn a million dollars this year, so therefore divide that by the amount of hours. This is what I need to charge per client because it's that simple?
Justine: No, it isn't. So it starts with working out what your unique success definition is. And when you know that I'm sure it might be five was all a big eight it may be but quite often it shouldn't be because here's the thing about earning a million dollars to earn a million dollars. It's really hard. It takes a big team takes a lot of advertising. It takes probably more work than you're anticipating. It sounds really good. But I've actually done this exercise, this exact exercise that I'm going to run through today with a client of mine who wanted to earn that million dollar mark and you know, she would have sell her products at such an unbelievable amount of money normally at the bottom.
So really what it is it's about starting with that success definition in mind, but what does it mean to you? And then once you know what that means, once you understand why you're doing what you're doing in the first place, then you have to start think about okay, if my success definition tied to $1 bigger is that dollars in the bank, or is it just the hours that I want to work? Is it just delivering that thing that I really like and when you know that and you understand that you can then start to think about okay, well, in an ideal world, how many hours? Do I want to work every single week? You know, in my business do I want to work a full week do I want to work five days and eight hours a day? Do I want to work? You know, five, five hours a day because I just want to work during school time and I want to work four days a week. How many holidays do I want to have every year? So because you know obviously when you're working in corporate when you're working for someone else, you're turning up price and you getting paid regardless of whether you are working for the whole 37 and a half hours that you're there or whether you're actually sort of guiding us and talking about I don't know math at the watercooler. It's like you're getting paid. You get your four weeks annual leave every year to speak and have a sick day. But when you have your own business, you kind of don't get any of that. And so I think when you're building this definition, you really have to think about all of those sorts of things. So I always say to people should write the dollar figure down the dollar pizza that you've got in mind. So let's say your turnover or maybe it's the salary that you want to earn. But most importantly write down how many weeks the year you want to work. So how many holidays you want to give yourself and how many hours you want to work. Every week. And when you know that then you have to think about okay, not all my hours is going to be created equal because you know, Jamie, I mean you are the content queen. You must spend a lot of time creating content and as you're creating that content for example, not actually you know, paying you unnecessarily for that on you're getting paid when you're one on one coaching or whether you're when you're standing on a stage and talking to you know, to an audience or when you're doing some of your coaching or inside your PR club. But when you're doing your content, you're not actually getting paid but about understanding the difference in our business between those hours where we are getting paid those billable hours, and then those non billable hours. So let's say we're all working a 37 and a half hour week, but actually, our billable hours are only 15. That's the number we want to start to work with. And so what we're looking to do is we're looking to take what we perceive as our billable hour number and then extrapolate that over a full year saying okay, how many how many weeks that this year am I actually going to work, 48. I want to have four weeks off, doing the math on that and then coming up with what I like to call our ideal hours. So the ideal billable hours that we're going to work in any year. And when you've got that in place, then the next step is about really honing in and understanding what does it cost you to run your business. And so a good way of doing that is heading over to your profit and loss statement and having a look at that if you've got one of those if you don't have a profit and loss statements that you can pull out of that accounting software then you know, go and look at your bank account and try and work out what it is. You know it costs you to run your business or have a look at last year's tax return. But we're talking about all the costs. We're talking about the wage that you want to earn, but it's not the wage that you are earning. It's the way that you want to earn. We're talking about the superannuation on top of that wage. We're talking about adding in an expense line for tax saving for what you know you're gonna have to pay out for your JSP if you're registered for JSP or for that annual you know, sort of tax return once you know sort of the end of financial year hits, and then we're adding in very importantly a profit number.
So I usually worked out as a percentage of 35% profit or 10% profit. And when you've got all of those expenses and you know what they are, then basically what you're doing is you're dividing that number by the number of billable hours that you can work in a year. And what that's going to give you is what I like to call your ideal hourly rate. So let's say you go ahead and you do that maths, and you discover that it costs you $200 an hour to run your business. Well if you're doing one to one coaching, and you're charging $147 an hour for your services, that very cheap coaching rate I know but you're missing the mark, you're actually losing $53 Every time you turn up for work. And so that ideal hourly rate is going to be your jumping off point for all of your pricing. And it's going to be the way you sit down at price not only your products and services but if you've got a course the way you price your course and you know obviously there's more to it depending on what your offers are. But in a nutshell, that's how I look at pricing.
Jaimie: So interesting, so many things there. And I think as an online entrepreneur, the opportunities I feel are endless as far as the profit and you know, you don't have to pay a lot of overheads. That a store a retail based business may have to as well. But you can certainly waste a lot of money as well. So the old saying is not how much you earn, it's how much you keep as well and really keeping a close ear and eye to the ground on your profit and loss statement and not burying your head in the sand about your expenses.
Justine: Yeah, absolutely. Because, you know, one of the most asked questions that I get from the people I work with is, you know, I've got this great turnover. I make all this money but I'm looking at my bank account, where's all the money gone? Where's it gone? And so, you know, it's been a matter of kind of having a look through and determining where that money has actually disappeared. And it hasn't disappeared because it's gone in packs that they didn't account for it's gone in a whole bunch of subscriptions that maybe they don't need anymore, or it's gone in overpriced insurance fees or bank fees that they don't need to be paid because they could have a fee free account. There's lots of different places that the money just sort of disappears. And so I think for me, I always encourage business owners that I would have a really close eye on the numbers, even if they outsource, even if they have a bookkeeper or BAS agent or an accountant that they work with on a regular basis. And so they're not diving in their numbers weekly. Make sure you sit down and look at your numbers at least once a month and really deep dive into those expenses and see where the money is going out. But more importantly, where it's not coming in. So you might have an offer that's no longer working for you. Or it might be that you really need to review your pricing because you've got this great turnover but your business expenses have increased. So doing that, having a regular visibility on your numbers. It's going to be the center check that you need so you know when to pull those levers.
Jaimie: It’s so interesting talking about the billable hours because I've recently well in the last 12 months made the shift to digital entrepreneur. It's what I call myself because I am one and it's funny because traditionally I would think a cab but a three hour window here. I want to get with billable hours, I can get three coaching clients one hour each on Zoom, and that's great. But I've now learned from a scalable point of view. If I can block out those three hours for content creation, I'm able to in the long run make a lot more money because it's going to get more people into my business to join my core sorting membership. So psychologically it's a weed shift, because I think I'm missing I'm turning away and blocking is out in my calendar. I could be getting coaching clients or putting a workshop on or doing some PR work for a client and now I'm going to be getting money. But you have to kind of think no, I'm going to sacrifice the billable hours to be able to reach more people in the long run. Do you think that's a we have to try and get to grips with as a as an online business owner?
Justine: Yeah. 100% And you know, it's interesting you say that because I'm actually going through that exact experience now because back in February, I sold off part of my business. So my business was sort of one part we did. I did best work so bad compliance and bookkeeping, for a whole big client. And then on the other side it was all about financial education and one to one coaching and you know, I was sort of dabbling in courses you know, the bookkeeping side of things just wasn't lighting me up. I mean, how many times can you look at a whole bunch of lines and go well as tea on this or or not? You know, it's more that strategy that I knew that was really sort of filling my cup and, and I knew I could make more of a difference if I work with people one on one or in a course setting. And it helped them improve their financial literacy. So I made this big decision to sell and then I literally woke up the day after and I thought wow, well I've got no deadlines, because I've had daily deadlines before. I've got nothing that I really have to do. I know I've got this course that I'm watching at the end of April. So there's a whole lot of stuff I have to do in that launch runway. And I've and I've got a few coaching clients that I've still got on the go, but they're just getting inherent there. And so it was very much this, oh gosh, you know, I would turn up for work every day and kind of feel guilty because just a week before I was making all of this money every day. And my staff were helping me do that. And now I was making nothing. But you're exactly right. It has to be this this mindset shift that alright, I'm doing this now, because I know that in a few months time when I launch the core is going to be a big payday, which will in essence, if I've got my pricing right and I get the the uptake on the course cover off all this, you know, downtime that I've got right now not downtime, but non billable time that I've got right now. And for me anyway, it's something I have to remind myself about constantly because otherwise I'm feeling dread, about where the money is coming from.
Jaimie: Yeah, absolutely. One of the things I just want to ask you about finally is Do you think it's a perception thing and I'm all about teaching people how to charge their worth and people always want to charge business owners club do that. And speakers do that we always speak for free we should be charging away charging way less. And I learned that the hard way when I over quoted a client and they accepted the perception thing. So for example, as a coach, if you're charging, I hear this all the time and even I've had this experience myself, if you charge $299 An hour you're getting no one because people think okay, but the minute price is up and I'm $899 and our offer a coaching call. People see you as Oh, I must be worth it. Even though it's the same service do you find there's a perception issue. When people put their prices up? They tend to often fall in many cases do well or better because they think oh, they're more expensive, they've premium that they must they must be worth it?
Justine: Yes exactly and I call this the Mosman mentality and I apologise to anyone in Mosman that is listening and who may take offense to this
Jaimie: But we have lots of listeners from Mosman.
Justine: But back in 1996, and this is really going to age me here back in 1996. I'm going to say I was down at the local shopping mall with my two children. And we were sitting there having a lovely morning tea and this little old lady came over and had asked her to sit in the Fed chair because she was particularly enamored with my children's very blond hair. And so we got to talking and she told me the story about his son, who was a prominent obstetrician in Mosman and he had a lot of children. I'm not going to say how many because it might give it away, but he had a lot of children that had also just had a heart attack. And so he was told by his specialists that he needed workload, he was told that he was working way too many hours and that the best thing he could do was cut them down. And he went home and spoke to his wife and said, well, we can't afford that because we have all these kids and they're all going to private school and we live in this beautiful house. And so they decided probably he decided at the time that he was just going to double his prices. He was going to work half the hours and doubled his prices and he thought that would be fine. That would work that was a great business model. What happened in actuality was that he doubled his prices. And he ended up with double the customers because everybody thought he must be better, because he's double the price of everybody else. And so he very quickly went back to working a full time job. Fortunately, he kind of got his health in check and didn't have another heart attack as far as I know. But they go that living proof that it happens.
Jaimie: Yeah, I love that. And I'm just gonna ask you this final question to leave you on and because you asked me this on your podcast, and I love it as a final question. What if you had a billboard? What would the slogan be for Justine McLean.
Justine: So it would be “nothing is ever wasted.” Because you never know, with what you're learning right now or the experience that you're going through when that is going to come back at some point in your life and be the thing that you need to get you through the process or to get you through a particular problem that's happening or to help you achieve what it is that you want to achieve. And I've found that so many times in my life, so yeah, nothing is ever wasted.
Jaimie: I love that so great, especially gave me lessons I learned. I totally relate to that. That's why I feel like I can deliver such value as a public speaking coach because I've made so many mistakes myself, and nothing has been wasted because I can pass that on to others. Here's what not to do. So I love that.
Justine: Exactly, exactly.
Jaimie: Thank you so much Justine McLean for coming on to perfect public speaking. It's been really eye opening and I'm hoping that so many people who've listened to this and are thinking about their pricing strategy, maybe charging more and reworking how they actually have their pricing incorporated into their business. Thank you so much.
Justine: It's my absolute pleasure. And thank you for having me on the podcast.