Hector_LaMarque_-_Leadership_2_-_03_Financial_Keys_to_Running_a_Sound_Business

The speaker discusses the importance of financial management in running a successful business. They emphasize the need to understand and analyze numbers, lower expenses, increase profitability, and focus on the net profit. They mention the importance of training, closing sales, conducting financial needs analysis, and cross-selling to maximize income. The speaker also highlights the significance of underwriting quality business, managing costs, and being cautious with expenses. They emphasize the importance of saving money and making wise financial decisions. The next section is going to be on financial keys of running a sound business. It's kind of a short section. I just wanted to talk about this because I came from a business where I was in the jewelry business, where I used to meet every quarter with a company accountant. And what we would do is we would go over so carefully all the numbers, all the sales, all the expenses, and then what the net profit was, and how much we'd grown, everything. I would always have to sit down and spend a couple, two or three hours with the accountant going over those numbers to make sure I understood what we were doing, how to lower expenses, how to make sure we were more profitable, how to raise revenue, just really carefully running it like a business. In fact, I was really fortunate because in that business, the way that they operated is I managed the store and they kind of made it like we owned the store because we would get a percentage of the net profit, right? So I knew that I had to keep expenses down and really work on growing sales and do profitable types of sales in order to increase the profit margin so I could make more money. So I became very conscious of that and I learned how to do that. And so when I started running my own Primerica business, I was always very, very conscious of profit and of making money and of keeping costs low and of running it like a business. And I understood clearly that ultimately it's the net that matters in a business. It's not the gross sales, it's the net sales. A lot of times companies can grow gross sales and net sales actually, net profit actually goes down because they're doing a ton more business but it's not profitable business. And so in Primerica, there's a way to do profitable business and there are a lot of people who do business in Primerica who don't run very profitable business because they don't pay attention to this, what I'm talking about right now. They just think if I do a bunch of gross sales, somehow I'll make money and they don't take the time, they don't have the discipline to really manage the business and do the things that give them the potential to make the most money. For example, I run about a $30,000 base shop and I have a very profitable business. I pay attention to QBI, which is the quality of business we write. I make sure we do F&As on every appointment. I make sure that we cross sell and that people are well-trained and everything. And what happens as a result of that, for every $1,000 of life premium I do, I easily do $1,000 of cash flow. And so if I do $30,000, I make $30,000. But in Primerica, that's not normal. In Primerica, most of the people, if they do $30,000, they make $10,000 or $12,000 or $15,000. But the reason for that is because they don't pay attention to the bottom line. And they don't realize how important it is that you should do that. They think if I just go do a bunch of business, I'm going to make a lot of money. Well, there's some truth to that, but the real truth is you could do a lot better and make a lot more money if you pay attention to all the numbers. And that's one of the things I did when I started my business. And some of the keys are, you have to have very specific cash flow goals. You've got to have an intention to make $1,000 of income for every $1,000 of premium. And then you've got to be thinking about how can I make that happen? One of the things is your training and your appointments have to be results oriented. So you have to teach people how to close and how to get results. So they go on appointments, they get results. Not just one thing, not just life insurance, not just loans, or not just securities, but all of those things, right? That just means you've got to spend a lot more time training. A lot of people just, they're just lazy. They don't want to train people like that. But you're crazy not to because it costs you a fortune. You need to close business when appropriate for the client. You shouldn't close business just to close business. It's got to be the right thing for the client. And the client has to understand what they're buying. The reason is because if they don't and it's not appropriate, it's going to lapse. They're not going to take it. And then you're going to lose money. And now you have an unprofitable business. I think you always need to do a financial needs analysis. I know there's a lot of people in Prime America that don't do that. I think it's crazy not to do that, right? If you're going to cross sell and always do the right thing for your client, you've got to do an F&A. It's non-negotiable. See, this also leads to multiple income streams for your people. One of the things I'm really concerned about is I want my people to make a lot of money, right? Because I know the way that I can retain my agents is if they make money. If they don't make money, they're out of here. So if they're only doing life business, they're missing out on income on securities and loans, they're not going to make as much money and they're probably going to quit. I don't want them to quit. So you're going to have a lot better retention and a lot better persistency. It's just a fact that the more products that a client buys from you, the higher retention you're going to have. You just will. That's not even just in Prime America. That's in every business. You want people to buy multiple things from you. The more things they're buying from you, the greater the chance you're going to retain them as a client. You need to pay attention to writing quality business that stays on the books. If you always have the intention of doing the right thing for your client and you put them first, your business quality is going to be really great. We have this available as part of the system and you need to use this. Astrid, my secretary, is phenomenal at underwriting business. We've always had fabulous persistency. Our persistency usually runs around 80 percent. The reason it does is because we underwrite all the life business that comes in. We're very, very careful about what we actually send and whether we send it COD or not. If it has any doubt whatsoever whether that policy is going to get issued standard or not, we'll send it COD because we know that in the long run that's going to save us a lot of money. It's going to mean also for the agents that are writing the business, even though salespeople want to send everything in, in the long run they're going to have much, much fewer chargebacks, which means their attitudes are going to get a lot better. They're going to make more money and they're going to be happier, more excited agents than if we send everything in and they got a ton of chargebacks and they're working like crazy and not making any money. We don't want that to happen, right? We want to make sure it's sound. I think that when you are finding an office, you've got to be very careful about making sure when you go RVP that you have money saved and you have a little nest egg and that you have enough money to make sure that you can buy chairs and all the office equipment and all the things you need, furniture, et cetera, to make sure that you have a really nice office. So you've got to do that in a really smart way, right? You've got to save your money, you've got to plan that out. If you're planning on becoming an RVP anytime in the near future, you've got to start. Buy some computers, buy a copier, buy some of the things you're going to need, fax machines, et cetera, that you're going to need when you open an office, right? Start buying chairs, start buying office furniture, whatever, and you should try to look for that stuff. You know, so many companies go out of business all the time. It's easy to find that furniture, use furniture that's really great shape, that's really inexpensive. You don't need to go buy expensive stuff. You can buy it really inexpensively. You've got to look for every way to reduce your cost, to keep overhead low. Everywhere you can do that, right? Really pay attention to doing that. Biggest part, I think, of running a quality business, a profitable business, is just cross-selling and doing a great job training people and underwriting business correctly. If you do that, you're going to run a really profitable sound business and have an intention of how much you want to make, right? And then always be working to keep your overhead low until your income's really high. Be very, very slow to expand your overhead. Be very slow to do that, right? Be very careful about that. You should talk to people that are more experienced than you about anytime you're thinking about buying something, especially a big house or something like that. You've got to talk to them. Get a second opinion, right? Don't just go do it because somebody thinks you should do it, right? One of the things I found is I started making money in Prime America. Everybody wanted to spend my money. They'd always be telling me, Hector, why don't you buy a new house? Why don't you buy a new car? Why don't you do this? Why don't you do that? And I would just say, listen, buddy, I got in Prime America to get financially independent, not to buy a big house and a nice car and a fancy car. I got here to get financially independent. If you want to be impressed, you've got to look at my mutual fund statements because there's about $500, $600, $1 million of cash in there, and that's way better than having some nice house that doesn't appreciate in value or some car that depreciates in value, right? That's what you want to do, and that's what I did. So I want you to think about always saving money. One of the things you need to do is you need to map your income. We have an awesome program where you can map the money accumulation plan is what it stands for. And what you can do is you can put aside percentages of your income. If you're just starting out, I would be putting away at least a minimum of 50% of everything I made in Prime America. So then what you've got now is you've got a full-time fund, right? So if you make $2,000, $1,000 goes into savings area. If you make $3,000, $1,500. And then before you know it, you're going to have a big old cash fund right there. And now you've got a team going. You're ready to go full-time. You can do it. You have money to open an office. You have money in case you have a rough month or so, a little cushion, and it's an awesome way to go full-time, by the way. So you want to think about that. But really thinking about running a sound business is critical. Those are some of the keys. There are a lot more than that. We're going to expound on that as time goes on. But I look forward to you making a ton of money and keeping a ton of money.