Pick Your Number
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Thanks for tuning in to Driving Success Podcast. Today is a good one. This topic called pick your number comes right out of my book, “You Need More Money.”
And I think it’s vital for any business owner to start to understand you’ve got to pick your number and become relentless. There are three. In the podcast, I give you eight steps to follow to pick your number and be relentless, but I’ll break it to primary benefits. Today’s episode are really three things.
- Number one, I’m going to teach you how to pick your number.
- Number two, I’m going to teach you how to do what I call the reduction of the ridiculous. It’s basically working the number backwards to the daily activities that will be required in daily rev gen that’ll be required to get you to that number.
- And number three, all of this is packed into eight simple steps.
I hope you enjoy today’s episode. I hope you’ve been enjoying all the episodes. Like it, share it, comment on it, tell us what you think about the podcast and other suggestions for future episodes.
The whole purpose of the podcast is to help transportation-related companies, trucking companies, towing companies, construction companies, delivery companies, learn how to be more than just great trucking or towers or construction guys or delivery people.
We want you to be great business people. This podcast is built around sound business principles that we know work.
In the first few episodes, we were talking about the importance of culture, core values and installing that in your organization, what it does for the organization. But today’s episode, I’m going to get a little bit more personal.
You can take this from a personal income standpoint or you can take it from a company revenue standpoint and the concept comes right out of my book called You Need More Money. That book is available on Amazon, if you want to go pick it up. The concept is called ‘pick your number.’ Now everyone asks me, because I wrote, You Need More Money, well, how do I get more money?
What’s the process? What’s the secret sauce? And I always tell everybody the same answer. It starts with you picking your number. Now if you want to look at it from a company standpoint, you to pick the annual revenue number of your company. How much revenue do you want this organization to do? If you want to break it down a little bit further, which I will in just a minute in what I call the reduction of the ridiculous exercise. But if you want to break it down from a sales standpoint, how many sales calls do your salespeople need to make? How many doors do they need to knock on? How many cold calls do they need to make?
What about if you did it just from a client standpoint, how many new clients do you need? You need to start picking numbers, numbers like how much revenue do we want to generate and therefore what’s our profit margin going to be, which translates to a dollar amount of profit. You might even take it from a personal standpoint and say, what is the net worth that you want? What number of net worth will you pick? What about your annual income number? After all this thing is said and done and we worked our butts off and we did all this stuff, we hauled freight all over the country and we towed cars and we dug holes and we delivered refrigerators and packages to homes, how much money do I want to make?
You’ve got to pick that number. Now, let me give you a specific example in the transportation world of what I call the reduction of the ridiculous and how it can help you start to pick this number. So I’m going to do this literally while we’re talking here. And I’m going to try to do it even without my calculator here. So if you want, you can pull over and you can do this reduction of the ridiculous as well as an extra episode. But here’s the bottom line. I’m going to pick and say you want a $1 million a year transportation company.
And I’m going to use the example of a trucking company that wants to do $1 million a year. The owner, you says this trucking company needs to do $1 million a year. Great, you started to pick your number, but now we’ve got to back into it with a reduction of the ridiculous exercise and figure out how do we get it. So let’s say that the average load that you haul produces $3,000 worth of income. So you haul the freight and the average run produces three grand. So I simply take 3,000 and I divided into the million dollars worth of revenue and that tells me that I need to do 333 runs a year at $3,000 a run to produce $1 million of revenue.
So if you look at this, I picked three numbers now. I picked a million, I picked 3,000 is my average run, and I picked that that means I have to do 333 runs a year. We just got you closer to figuring out how do you get to $1 million a year company, but I’m not done with the reduction of the ridiculous. Let’s go further. If I’ve solved and I know that I have 333 runs a year that I’ve got a hall, if I divide that by 12 months, that drives to 27 runs per month. If I break that down by weeks and I divide that by four weeks, it takes me to 6.9 runs per week.
I’m going to make my math easy and I’m going to round it up to seven and I’m going to divide that by seven days a week, and that takes me to one run a day. One run a day at $3,000 gets me to $1 million in revenue. But I’m not done yet because you can’t run one run a day to generate $3,000 at rates that are currently being offered in the marketplace. So here’s where it starts to get complicated. Here’s why this podcast is so damn helpful to you. Let’s just say that you were able to average a buck 60 a mile. Now you might say, oh my god, Manero, that’s so low.
I wouldn’t pull freight for less than 2.20. Good for you. I love it. You just picked a number. Your number was 2.20 a mile. Love it. You might say, I won’t do something for less than $3 a mile. Love you even more, man. Now we’re getting really strict on picking our numbers, but let’s just say that it’s a buck 60, cheap driving. If I take a $1.60 a mile and I divide that into the $3,000 that I need per run, it drives to 1,875 miles. The problem is I can’t run 1,875 miles in a day to meet the requirement of my one run per day at $3,000, which drives me to a million bucks in revenue.
You see my problem? I got to work now on the 1,875. Because if we talk about the hours of operation and we figure out, well, how many hours can I literally run? Let’s just say that you can run 600 miles a day. Well, 600 miles into 1,875 miles means one truck ain’t going to do it. It means two trucks isn’t going to do it. It means it’s going to take three trucks full out every day to get me to $1 million in revenue. Now we’re starting to pick these numbers. We’re starting to build out a real business. We’re starting to get you to see your business differently because everybody can say, yeah, I want to do $1 million in revenue this year, but do you really know how to do the reduction of the ridiculous to get there?
Because unless you have three trucks, you won’t get there. Now, there are some variables here and I hope somebody say, Manero, you missed this whole thing. What if I haul instead of a buck 60 mile, what if I haul for $3.20 cents a mile? Bingo. You’re right. You just cut the workload in half, my brother. I like where you’re going with this one. Do you know how to get $3.20 cents a mile? Pretty tough to find right now. Last year, maybe. Maybe, it wasn’t that difficult on DAT load boards to pull $3.20 cents a mile. But this year it is.
My point is when you do this reduction of the ridiculous because you picked your number of a million bucks, you begin to build out the mindset of a real business owner, and that’s what we’re trying to get you to think like not just somebody who’s driving a truck or towing cars. Just because your name is the the owner on the corporation papers and you are the best tower in the company, it doesn’t mean you know how to run a business. And that’s the purpose of the podcast. So the first few steps, and I am going to give a plug here, you know what the first step is?
Buy the darn book, You Need More Money. The second step is pick your number. The third step is start to work it backwards. Do the reduction of the ridiculous and take the time to just do the exercise that I literally walked you through. What did that exercise take us six, seven minutes? I just showed you that you need three trucks at a buck 60 a mile to do $1 million worth of revenue. Now you got to figure out what your profit margin is on that buck 60 mile, it’s going to be low. It’s going to be less than 10%. so on that million bucks at a 10% profit margin, you’re going to be making under a hundred grand.
You need to work that as well. Those are other things. Now let’s go to step number four of the concept of picking your number. You have to be relentless to this number. And I would say that this is probably been the area that I have struggled the most with is not being relentless, but being too relentless, which turned me into a major asshole. If it’s on the paper and we agreed to it, all I know is this is what we’re going to get. And I really don’t care how we got to burn the ships or who gets run over along it. And that was a challenge for me for most of my career was I was relentless to the achievement of the number and I didn’t understand the shrapnel that it was causing.
And there is a better way, and that’s what we’ll continue to talk about in the podcast, how you actually do that as well. But number four is you got to be relentless to it. Number five is you can’t stop. Because what often happens is someone picks a million bucks a year and they’re doing $100,000 a year in revenue and they pick a million dollars a year in revenue and they get to 500,000 in revenue and they’re like, boy, it sure feels five times better than a million bucks. Now I can coast. No, you picked a million. I just told you in step four to be relentless about it and you stop being relentless.
So step number five is don’t stop. Step number six is when you get there, you have to reevaluate do you want to do what it takes to be there and stay there. That’s what happens. I’ve had this happen in my office. I’d never seen it, ever. Never even dawned on me that it would happen, but I saw it. We had a salesperson, this is three, four years ago. We had a sales person in this office who worked her butt off and at the end of the first year, she came to us making like 50 grand a year. At the end of the first year, she made $88,000 and was poised to probably make 125 the next year and probably 200 the year after that, but she quit.
And we said, why did you quit? And she said, it’s just not the level of work I want to do. It’s too damn hard. I said, no, wait a minute. You went from 50 to 88 and you’re on track to maybe even do 125, maybe even double that and then get north of 200 in another year after that. Don’t you like the sound? She’s like, no, it’s just too damn hard. You got to reevaluate do you want to grind at the level required to keep that rev gen, that number that you want. I can promise you as you move up the food chain in corporate revenue and you move up the food chain in personal income, lots of things change.
Your mindset changes, your effort changes, your workload, your pressure. Mark Cuban has one of the greatest quotes where he says, when he became a billionaire, he thought he’d be able to sit back and coast and he’s never been busier now that he’s a billionaire. I can tell you that happens a lot. The more you move up the food chain, the more you have to reevaluate do you want to be there because lots of things change. Number seven, you’ve got to start to model someone. So you got the trucking company to a million dollars a year, now how do you get it to two million or three million or four million or 10 million?
You’ve got to start modeling someone. Who is doing it and how do you learn from them? Follow their lead. And number eight, raise the damn number. A million ain’t enough. I just told you if you’re operating at a 10% profit margin on a million, it’s $100,000. Listen, you need to reevaluate that. Either the margin has to go up or the revenue has to go up. Trucking is a relatively low margin business, so the way you compensate to make more money when you pick a higher number because you’ve raised your number is you got to grow revs. Raise the numbers, push it, go to the next level is my challenge.
So that’s the message on today’s podcast, the Driving Success Podcast, it’s pick your number. I’ll see you all down the road.