Episode 5 - Tina Marie talks with Business Coach and Consultant Jeff Newkirk
Tina Marie talks with Business Coach and Consultant Jeff Newkirk. The journey from corporate executive to business coach.
Jeff grew up in the south suburbs of Chicago and spent most of his adult life in Illinois. In 2019, he decided to pursue owning his own consulting firm, and did so in the Houston area in November of 2019. He now has a successful coaching and consulting firm, Understandable Solutions. He is married to his college sweetheart, Dian, and they have three grown kids, Payton, Emma and Mary. When Jeff isn't working on his next book, recording a podcast, or working with a client, he enjoys spending time with his family and working out.
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Jeff's book can be found on Amazon: Understandable Solutions, Confessions of a Forensic Financialist
Listen to Jeff's Podcast: The Forensic Financialist
So we've got to know what our cash balances, and we've got to know where to find it. How do we find it? It's in the balance sheet, we have to know what our operating margin is. Our operating margin is what's left over. After we pay for all those expenses associated with our product or service. It includes all the selling and administratives includes all the costs of goods. So that's the margin that we have to look at for our business specifically. It doesn't include all the non-operating stuff, but it includes all of those critical to your product or your service. So operating margin, right? And, and then finally we need to know in the end, what is the profitability of our business? So let's now look at what are the non-operating issues, because if are not operating issues, if they're carrying the business, meaning perhaps our operating margin is negative, or our profitability is positive. That means there's non-operating stuff going on that, you know, we need to be aware of, but it can't sustain your business. So we need to know what that is. So that's really the starting point. So we need, because when we go through the review, we have to know, well, what do we review? What do we look at? And so those are the key metrics that I start with. And then that's going to open up some more questions, which is the examination step. So now we're going to examine the detail.
Tina Marie (18:41):
Yeah. And so on that review part, whenever, you know, I'm, I'm, I'm listening in the mindset of our listeners that are saying, you know, I started a business because I have a passion in it. Or maybe I inherited a business because it was my family's business. Or I have a business degree. And I formed a partnership with one of my partners and we bought a business and now we're supposed to be operating it. So there's a part of the business owner and the business mindset that we know we're going to look at numbers. We know we need to understand our financials, but even looking at operating margin, I've seen where business owners throw so many things into what they believe is operational or the operation margin. And it has nothing to do with the production directly of cashflow. And so there's even confusion at the granular, granular level. What goes into that? And you help your clients with that, correct?
Jeff (19:40):
Oh, absolutely. I mean, it all starts with making sure that your books are accurate and in order to have accurate set of books you have to have all of your accounts lined up. You have to be able to properly record your transactions. And that all starts with the bookkeeping. So for example, I have a working with a client recently where we really just started at square one and that square one was getting the books lined up. So we set up the chart of accounts and properly allocated the revenue properly, allocated the expenses. So we could look at operating margin and know how that business was performing. If the books aren't accurate, then, I mean, that's, that's not going to give you the information that you need to know.
Tina Marie (20:30):
Exactly. And so the second part of the review method is the examine the examination phase. And what do you do in that with your clients?
Jeff (20:39):
Yeah, so let's say for example, just as I mentioned earlier, the knot or the operating margin is negative. Operating income is negative, but your profitability, your net income is positive. So that's a flag, right? I mean, so now we've reviewed it. We know that there's something else that we need to look at. Now let's examine, let's examine the detail of those statements. That's going to give us that information. So we need to know why is our operating margin negative? And we need to know why our profitability is positive.
Tina Marie (21:14):
I don't even know how those things add up.
Jeff (21:17):
Well, that means you have a, you have some non-operating income that's coming in that is basically compensating for your negative operating. Oh, I see. So, so you need, you need to know, well, what is that non-operating, is that something that's a sustainable? Probably not. And then if your operating margin is negative, why is that? You know, we need to look at what both sides of the equation, what do we need to do on the revenue side? What do we need to do on the expense side? So that's the examination and there's no real step one, step two in the examination, because that's going to be based on what you find out in the review.
Tina Marie (21:55):
And through that, do you also dive into sales and sales structures and compensation plans and things of that nature?
Jeff (22:02):
It depends on what you find out, but if, if for example, the operating margin is negative. Let's, let's look at that. So now, now you know that you are not operating your financial performance of your business is not where it needs to be. Right. Sustainability. Now let's go back. And why is that? Why is that? Are, are your sales down? Okay. If they are, then, then we need to look at that. Let's dive in and examine the sales aspect is your gross revenue. Exactly what you expected. Okay. Well maybe then it's, it's doing okay. But then the expense side is then not performing what you expected. So it, the examination step is going to take you a bunch of different ways. And certainly looking at sales more and more detail. Couldn't be one of those, no question. Yeah.
Tina Marie (22:57):
Entrepreneurs and business owners would say sell more, sell more, sell more, make more.
Jeff (23:00):
Absolutely. But
Tina Marie (23:03):
Going into a broken utilization of the funds.
Jeff (23:07):
Yeah. And another key metric that is so important is breakeven. You know, it's, if your breakeven is, is such that you're gonna, no matter how much product you sell, how many services you sell, you'll always lose because your neck, your break even is too late.
Tina Marie (23:27):
You're aiming at the wrong number. Yeah, exactly. The wrong number. And I've seen that too, where people think that their numbers should be one thing and it needs to be in anywhere from 10 to 20% higher than that. Otherwise they come at the end of the year and they talk to their accountant. Their accountant goes, you'd have a great year. You have no money. [inaudible] 25% over last year, you have no money.
Jeff (23:55):
So, you know, maybe your price is too low. You know, your variable costs are too high. So yes, there is always more to, to examine.
Tina Marie (24:05):
And then there's the age. So we're spelling out rear we've covered the R we've covered the Ian. So help us understand what is the,
Jeff (24:14):
Yeah. So that's the adjust step. So that's the, this is the step where you correct any of the areas that need to be changed based on what you've examined. So let's take a sales. Let's say that sales was, was not what you expected. And you discovered that your breakeven is too low. So you compared your sales price to the market and discovered, well, our prices are too low. And if we increased our prices, then our break even would be better. Or our operating margin would increase it. Wouldn't adversely affect sales volume because the market would expect a sales price that is higher. So we adjust, we adjust the price. So that's the adjust for that, for that one variable.
Tina Marie (25:02):
Yeah. The number one thing that I've seen in adjusting a sales price, isn't about the market's adoptability adaptability or adoption of that new sales price. It's the adoption in the sales person's mind of being able to speak that new price tag to its marketplace because we're conditioned. And we've been saying one thing one way, and our nervous system got adjusted to that. And like that it feel safe and secure. And then whenever we increase our prices, that nervous system response is like, Oh, they're going to be okay with that. Are people going to sell? Are they going to buy? It's like and so I was given some advice once and it was the sales price is never a problem for the customer. It's always a problem for the salesperson. I realize, you know, whenever we're adjusting our own pricing that we need to practice, that I learned about adjusting our pricing so that we can recondition our nervous system and get really okay with it.
Tina Marie (25:59):
And let's say that, let's say that, you know, you're, you're a service person and your billable rate is 300 an hour, right. Let's say 300 an hour and you're increased. You've increased it just 300 an hour. It was once 150 an hour. You find market conditions could allow you and your value to go double that. So now you're going to bill out at 300 an hour, but your nervous system still back in 50. Right. And so in order to redo that, it's, you would practice linear her practice with a friend. And so how much are your services? My services are 3000 an hour. And so in times it right, you 10 times that, and you get used to saying 3000 an hour, 3000 an hour. And then whenever you're really to say 300 an hour, it's so much easier.
Jeff (26:45):
Yeah. It's like, wow, it's not so bad. Right. But you know, the key word in what you said is value, right. It's value. And when you believe in the value that you're providing, whether you're selling a product or a service, or it's your billable hours, whatever the case is, if you truly believe that there's value there, it's not hard. Not at all hard because you believe in it.
Tina Marie (27:11):
Yeah. And you, you know, more than not, we've seen the results that our client drinks. Right. And so we're at our again.
Jeff (27:21):
All right. Yeah. So the revise. Yeah. So now we're, we're changing the future outcome, the expectations of our future outcomes. So taking that a sales price and carrying it through to the final step of revise that allows us to change what we expect in our future operating income. Our operating margin is going to change what we expect in our profitability. It's going to change what we expect in total revenue. So now we're carrying it all the way through so we can change our future expectations. And w what's important to, to keep in mind is that this is cyclical. You know, the rear view is not a one and done. It's something that you continue to do every, every week or every month, depending on the business. Certainly, you know, not every day, but that's way overkill, but it certainly, you should do it on a regular basis. Just needs to be routine knowing that it's never going to end. It's not a one and done. So when you revise the final step, you're going to have to go back and make sure you review, examine, adjust, and revise again. So,
Tina Marie (28:34):
And so it's, it's, it's staying fluid and, and staying aware as well. So that we spend that time, like I mentioned earlier, I, I purposefully have two 90 minute sessions in my week that are completely protected so that I can look at my numbers, look at my business and make those adjustments. I am in a practice. And, you know, it's to, to adjust things maybe once a month, because I need to give things a period of time to implement, you know, scripting. We'll probably adjust that once every couple months, maybe once every three months, if it's not working over, there's some things that we need to be more media about then and adjust more rapidly. So we don't create more pain for our company. Are there any markers that you've seen in working with your clients based on how fast we need to react to adjust or not?
Jeff (29:27):
Yeah, it really depends on the type of business. So let me give a couple of examples. So I spent a number of years in healthcare and in the healthcare setting, quite, quite honestly, things move at a much slower pace compared to like a retail setting. Doesn't mean that that anything is less important or less meaningful. It's just that the business model moves at a little bit of a slower pace. So, you know, addressing the re re review would be, you know, monthly certainly could be quarterly, but changes usually take place in a healthcare setting, quarterly based on some monthly reviews. Now that's different than if you were in a retail. If you, if I owned a a retail shop at a mall, for example, I'm going to want to look at my numbers every day. Now, am I going to do a, a, the full, what I would call the full, comprehensive rear view? Probably not every day, but I am going to do a quick rear view every day of some key metrics, whether that's daily sales on a certain product, I want to know how I'm doing every day. So I either move where the product is in the store, or, you know, put it on sale or something. So it depends on the type of business.
Tina Marie (30:54):
Yeah. Thank you so much. I love that. And you've got your family. I know you've got three kiddos and a wife, and so here you are a consultant and they're probably your biggest cheerleaders as well.
Jeff (31:07):
Well, you know, I, everything in our careers, they are, they're important. You know, what we do every day, it's important, but what really is more important for me is my family and my family is, is you know, that's, that's why I get up in the morning and do what I do because I have three awesome kids. And I have a wife of 32 years who is incredibly patient and tolerance tolerant with me. She's the better half for sure. So I'm very fortunate.
Tina Marie (31:38):
And so I want to highlight that you have an amazing bestselling book that people can pick up on Amazon and learn more about your method and understandable solutions.
Jeff (31:48):
Yes. Understandable solutions. Just like the name of my company, understandable solutions confessions of a forensic financial list. And
Tina Marie (31:57):
Yeah. And that was a question I have is like, what's forensic financials. It sounds so official. And maybe like, so whenever, if somebody's regarding, you know, bringing you into their team, a forensic financial lists, you know, how could they, you know, work with you and what would they expect?
Jeff (32:17):
Yeah. So a forensic financial assist is somebody that's going to come in and look at how your financial performance is going within your business. Not to be confused with a forensic accountant, a forensic accountant that is they're looking at, have you followed all of the rules and regulations with regard to the counting, whether it's generally accepted accounting principles, what a forensic financial list is doing is how are, how are we performing financially? Are there any elements of the business that can be performing better to improve your outcomes financially? And let's dissect what's happening within the statements? You know, we talked about the, looking at the P and L the profit and loss statement, a little bit more detail. Well, that's what a forensic financial is.
Tina Marie (33:05):
I love it. And that happens to be the name of your podcast.
Jeff (33:09):
Yeah. Yeah. So, and it's a lot of fun. I got to say, I'd never thought of podcasts would be something that I would do, but I, yeah, the forensic financial list is going well. And you know, we talk about more than numbers. So I said earlier, it's the people aspect that is so important. So we can talk about numbers all day long, but it's really understanding people and how we can better lead people, better become better and stronger leaders ourselves. That's going to make things so much better overall in each, in our business and our society in our country.
Tina Marie (33:51):
Yeah. And the truth is, you know, in all honesty, we look at numbers on a very frequent basis as leaders to make sure that things are healthy. If we have unhealthy numbers or the belief of unhealthy numbers, or that we can't trust our numbers, it's going to impact our leadership, but our way of being with others until we can regain that trust. Yeah.
Jeff (34:10):
Yeah. And it's how we handle it as leaders that we can move an organization or a group forward or not. And, you know, there's going to be, as I mentioned in my situation, there were tough, tough situations that come around. You have to make tough decisions, whether you're looking at cutting people or changing a service, whatever the case is, as strong leaders, it's how we deal with those tough situations that will help us to move forward. And I think John Maxwell says it best, and that is, we always have to be cognizant of adding value. We have to add value to others. We have to add value to the situation. We have to add value to the organization. And that has to be top of mind and everything that we do, if it's not, then we'll lose lose perspective. And then we'll be concentrating on more short-term gain and you know, more what's in it for me. But if you're always thinking of adding value in everything that you do, it really helps keep things in perspective. And part of that keeping in perspective is the people.
Tina Marie (35:22):
Yes. And you know, this is the biggest part of their life, right? No question. And so I always ask my team for some questions, we pass your bio around and say, you know, if you were here in the studio with me, what will you be asking our guests? And so we've got some questions and so great. Awesome. By the way. So what is a characteristic that you see in all entrepreneurs? Courage, courage.
Jeff (35:49):
Yeah, because entrepreneurs, they take on risk, right. In order to take on risk, you've got to have courage in order to get up every day and say, I'm going to make things happen. It takes courage. So yeah, I've always said, I'm going to wake up in the morning and I'm going to embrace the day. Well, I've sort of changed that. And maybe it's been COVID I get up every morning. I say, I'm going to attack the day, you know, embraces sort of that's okay. But I'm going to attack it and I'm going to make things happen. So I think courage. Correct.
Tina Marie (36:23):
Awesome. And so next question is what would you have done differently at your first company, also your first career, and now that you have a lifetime of the experiences that you have, anything that you would have told that younger version of yourself to do, man is a great group.
Jeff (36:43):
What would I have done differently? Yeah, there are, yes. So courage and in my, you know, a number of early positions in my career, I didn't have the courage to speak up and say this needs to be changed, or we didn't do address the situation. And one situation that I'm I'm, I am proud of that happened early in my career where I, I did show the courage. I was, it was in a consulting situation. I was in a management consulting role and I had to provide a business plan for a client. And the client was looking to do a real estate transaction. And it was my plan that was going to say, you know, par part of the plan was going to say how much to pay for their land or, or the business. And so I knew that the client was going to be happy, but the person that they were going to do business with was not going to be happy.
Jeff (37:43):
So it came because they wanted more money for their business. So they came back and said, don't like the plan client came back to me and said, Hey, Jeff, you know, great plan. I really like your work, but is there any room that you can you know, do something with the numbers in any wiggle room with those numbers? And I said, well, w well, you know, what do you mean wiggle room? I don't know. I don't understand what you're looking for, numbers of the numbers. Well, you know, we really want them to get this transaction see it through. And you know, we're just hoping that maybe the numbers will reflect a little bit more closely what what the seller wants. So this was a point where I, you know, I had an opportunity to continue my work with this client, or I could do what I thought was the right thing and say, no, the numbers are the numbers and relationship over. So I did, I stuck stuck with it. And I said, no, there's no wiggle room. I'm sorry to feel that way. And we ended our working relationship, but I needed to do more of that early in my career
Tina Marie (38:46):
Earlier. Yeah. To check in with yourself and find that integrity. Right. Absolutely. So the last question is if you had a challenge to give entrepreneurs and business owners that are listening right now, what would that challenge for them to take today? Be
Jeff (39:03):
The challenge would be to, to say, you're in business for yourself. You have a passion for what you do. Now, take that beyond your business. You know, you, you need to certainly have a sustainable business model, make sure your business is successful, et cetera. But what you do in your business should impact more than your business. You need to impact your community. You need to impact beyond the walls of your business. So I would challenge them to think in bigger terms, what can you do, not just for your business, but what can you do to add value to your community, your environment. That would be my channel.
Tina Marie (39:47):
I love that challenge accepted Jeff challenging stuff. And so you can find out more about Jeff Newkirk and everything he brings to you and your business and your future and your happiness and the contribution you're going to give to the world as well as find him on Facebook and understandable solutions business. And on Instagram at understandable solutions I'm hanging out on IgE. So I'll find you there definitely. And pick up his book on Amazon understandable solutions, confessions of a forensic financial list. And then you have your podcast, which is is that weekly? There's probably tons of places. They can find you.
Jeff (40:24):
Yeah, it's a weekly, it's weekly on. I attended some really cool people. Oh my gosh, I have this this past week and it's going to air. And I think just after Thanksgiving, Dorie Clark, I mean, Oh, it was, it was great conversation. And we, it was a, it was pretty lively. We had some passion going. Yeah. So we were talking about this perseverance, Whoa,
Tina Marie (40:49):
We need that. We need more of that too. And you've interviewed one of our mentors, Michael [inaudible]
Jeff (40:55):
Yes. Another great interview. He was so gracious. And that was I think within the first five episodes, I was pretty, not that I'm experienced now, but I was definitely a, you know, an early in the learning curve and it was a great conversation. He's a great guy
Tina Marie (41:10):
And you're going to bring so many more resources to everyone so that they can own their books, their numbers, and find their future, like you said, and you through the ticket that day. That's so good. And so you're right. Your podcast is the forensic financial. So find more about Jeff, add him to your favorites list, go hunt him down on Instagram and Facebook and stay in touch. So last parting words for your entrepreneurs, your business owners, your CEOs that are saying, I want to really, I have the courage now and I want to dive in, I need another partner in my corner to help me understand that what I'm creating, what I dream and what I'd love is actually going to be sustainable, viable, and get me to that profit that I'd love to have. And more than that, it's not just about profits. It's about us. It's about us feeling happy in what we're bringing to the world. It's what our businesses are. And then having that financial vitality and freedom so we can enjoy our lives, not just be strapped to a business. What, what advice would you have for them? As we say, Sianora to this, another edition of the podcast.
Jeff (42:13):
Yeah. I would say don't ever feel like you're alone. You know, you're not alone in making those decisions. There's always somebody for example, a business coach or a colleague that will be there to help you as a trusted advisor and partner moving forward. Okay.
Tina Marie (42:30):
Awesome. Great words. We're not in it alone, right? Not thank you so much. Love that we spend time together. Thank you for being who you are in our world.
Jeff (42:39):
Oh, thank you. It's been great. Appreciate it. Tina Marie.
