Jack Thursday – My Concept of Revenue Justification (LA 1796)
Jack Thursday – My Concept of Revenue Justification (LA 1796)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Hello.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I’m Jill DeWitt, broadcasting from the Valley of the Sun.
Steven Jack Butala:
Today’s Jack Thursday. And I’m going to talk about my concept of revenue justification.
Jill K DeWit:
Huh?
Steven Jack Butala:
Exactly.
Jill K DeWit:
I have my own concept of revenue justification.
Steven Jack Butala:
If you make a billion dollars top line revenue and your profit margin’s 3%, would you rather have a billion dollar company that makes 3% or a $10 million company that throws off 40%? That’s what this show about.
Jill K DeWit:
I know what I’d like.
Steven Jack Butala:
And there’s different… Me too.
Jill K DeWit:
Yeah.
Steven Jack Butala:
And there’s different reasons why one might be better for you. And one might be better for us.
Jill K DeWit:
Sounds like an airline versus us.
Steven Jack Butala:
You said it.
Jill K DeWit:
Thank you.
Steven Jack Butala:
There’s a huge pros and cons of both, but really this, you know what the show’s about? Running your personal life with revenue justification.
Jill K DeWit:
Okay.
Steven Jack Butala:
Some people don’t grasp it. Some people that I’m sitting with don’t really fully understand in their personal life revenue justification.
Jill K DeWit:
Oh, I understand it. Maybe I abuse it in my personal life.
Steven Jack Butala:
Yes.
Jill K DeWit:
That’s the real topic. Jill gets it. She just doesn’t do it. You know?
Steven Jack Butala:
It’s pound wise and penny foolish. That’s what revenue justification is.
Before we get into it, let’s take a question posted by one of our land investors on our online community at landinvestors.com. It’s free. Please don’t forget to subscribe on the Land Academy YouTube channel. Comment on the shows you like.
Jill K DeWit:
Evan B wrote, “Okay. I’ve sent out 10,000 units. And I think my mailer’s a dud.” This is hilarious. So Erin wrote back already. “Hey, at Evan B, I’ll tell you that I also sent out 5,000 units all at once. And I thought I would at least have $200,000 in my bank of mine now. The first two weeks are just people wasting their time saying don’t mail me. I got my first deal under contract in like six weeks after the mailer. Then like two weeks after that, I got assigned off in the mail and now and then I still get a call.”
So from all the interviews I’ve watched so far, many listen in the car or the gym ,before bed, etcetera. Seems like there comes a point of terminal velocity from sending out five to 10,000 offers per month for six months or more.
At that point, you’ll have something like 50, 60, maybe soon to be a 100,000 offers out there, out on the street, as I say, and that at some point, all the random calls that come eight weeks after your mail drops start to come in waves. And they’re big enough and frequent enough that you can really get great deals instead of trying to make a lot of okay-ish deals work.
This is so sweet. So Evan B wrote back. “Yeah, I understand. I think I’m goofing up somewhere. This is my fourth mailer and I’ve struck out each time.” So Erin said, this is a whole conversation. “Well, start doing a diagnostic check of everything then. Number one, did you make sure that your properties passed the red, yellow, green test.”
Steven Jack Butala:
Ding, ding.
Jill K DeWit:
Yeah.
Steven Jack Butala:
That’s what Jill said earlier this week.
Jill K DeWit:
Exactly. Number two, did you offer two over percentage based on the hotness of the market? Three, are your phone number and email on your mailer correct? That has happened too, by the way. And then I’m going to add number four. Are you flipping answering the phone and building a relationship with these people in 30 seconds, finding out whether or not they want to sell and what their number is? That’s it.
Steven Jack Butala:
Every single time that Jill and I have answered this question in front of a camera or off a camera, it’s just with a over the phone, my mailer didn’t work. The first thing Jill says is…
Jill K DeWit:
Who’s answering the phone?
Steven Jack Butala:
Who is answering the phone? And have you talked to any sellers so far? Oh yeah. Somebody’s answering the phone over here. And there are three people that are interested in selling their land. Okay. Well, the mailer wasn’t a dud.
Jill K DeWit:
Yeah.
Steven Jack Butala:
They’re interested in selling. So what have you done about it? They haven’t called me back yet. It’s stuff like that.
Jill K DeWit:
Yeah. Ding, ding.
Steven Jack Butala:
Today’s Jack Thursday. And I’m going to talk about my concept of revenue justification. This is why you’re listening.
Jill K DeWit:
I will be waiting patiently over here, taking notes.
Steven Jack Butala:
If you have a billion dollar company, a billion dollars in revenue, you’ve got all kinds of expenses going on. Tons of expenses, cost of good sold, labor. Those are the two, usually two biggest ones. If you’re in manufacturing, you’ve got a huge real estate rent expense and a plant maintenance expense and on and on and on. In fact, you’re probably spending $950 million of expenses to get to that, to generate that billion dollars of revenue. That’s not the world that most of us live in. The world that most of us live in, and I can tell you from personal experience, we generate between $500,000 to $600,000 a month in top line revenue, between $500,000 and $600,000, we generate between about $500,000 or $600,000 to about $1.2 million in top line revenue for all of our companies every month. Some of them are crazy profitable, mostly the land, the land business, and some of them are what I call non-profit effort, which Land Academy is included in that.
So, but it allows us to have expenses. And there are a lot of, because of the diversification of the types of things that we’re involved in, education, all the stuff that Jill does, like Land Academy Ladies and on and on, allows us to incur variable type of expenses.
And so it’s very easy when you have that kind of top line revenue and you’ve got some profitability, like we all do with land, to start having revenue justification when you make spending decisions, like, yeah, I generated $200,000 on a $700,000 last month. I think I can afford a plumber.
Jill K DeWit:
What…
Steven Jack Butala:
This will kill. Hold on. Let me make one point here.
Jill K DeWit:
I have a question. Okay.
Steven Jack Butala:
I see a lot of DIY self do it people that do things themselves, especially with like a technical, from a technical background, me included, like accounting or mechanical engineers where they waste so much time doing stuff themselves. It’s ridiculous, in their personal lives.
One of the things that you should not be doing if you’re making any kind of a money, is your own mailer. You should get Concierge Data to do your mailer. You should get a transaction coordinator. This concept of, well, but that’s, if I get a transaction coordinator full time, that’s $60,000 or $80,000 out of my… I’m taking away from myself.
And so I’ve never had that thought. I’m always the first one to run and hire another employee so I don’t have to do other stuff. So I can turn my top line revenue from $900,000 to a $1,500,000, because now I’m doing the stuff that I’m supposed to be doing, which is not transactions. It’s sending out more mail.
Jill K DeWit:
This may or may not be the show for this, but isn’t there a point where you need to be sending money because hiring an employee and writing off that expense does two things. One, top line revenue clearly, because I’m going to do three times the deal I was doing before because I have somebody helping me. That’s a no brainer. And then two, what am I going to do? Just pay taxes on that salary. No, it doesn’t make any sense. I’d rather pay taxes on that salary and wherever the expenses are to hire that person. Because again, I’m doing three times more of the deals.
Steven Jack Butala:
Yeah, Jill’s right. I mean, there’s a lot of cliches in business. Most of them are pretty silly. One of them is you got to spend money to make money. I don’t believe in that.
Jill K DeWit:
Right.
Steven Jack Butala:
I think that you need to be working at this, 10 to 12 hours a day for the first year that you’re involved and doing every single thing, realizing what you hate, realizing what you love. And then at a certain point, according to some plan you’ve devised for yourself, you need to start subbing out the stuff you don’t like to do. In my case, I don’t like answering the phone. Jill does it. I could have, and before Jill, I had people that were answering the phone and doing deals and it was much more financially beneficial for me. But I chose, in the end, to split everything 50/50 because our revenue is so much higher now and it’s all kind of going to the same household anyway.
So my point is, learn this. Spend a ton of time really working at it, if you’re into it. But please, at the correct point that works for you, start to sub out a lot of what goes on here because you will see a dramatic increase, a huge hockey step type increase in your revenue. It’s revenue justification.
Jill K DeWit:
Before we end this show, I would like to know what you think about, what your comments were about my personal revenue justification.
Steven Jack Butala:
Jill, sometimes… Not so much.
Jill K DeWit:
Without invoking you sleeping in another bed tonight. Let me add that in there, so just to make it clear. So please tread lightly.
Steven Jack Butala:
We’ve all heard a honey do list and Jill’s pretty good about it, not asking me to do stuff around the house, but I say pretty good. There’s stuff still that needs to get done. And I just don’t think, I would rather put a system in place. This is what chasing zero’s all about. I rather put a system in place where somebody comes over every other Wednesday and we spend $100 so they can do all the crap that Jill wants.
Jill K DeWit:
Oh yeah. That’s what I do. Well, you know what?
Steven Jack Butala:
That’s what revenue justification is.
Jill K DeWit:
I’m going to argue there’s a fine line. Sometimes I’m like, I’m going to hire somebody. You’re like, no, I’ll do it. I’m like, yeah, I could have hired somebody. There’s stuff that you like to do though.
Steven Jack Butala:
Yeah, I’m fine. If I like to do it, then it’s a hobby. It’s not work. You can extend this to all kinds of things. A great example is full blown legitimate and a legitimate ordinary and necessary business expense is your computer.
Jill K DeWit:
True.
Steven Jack Butala:
And so we’ve done consulting calls with people or interviews with people that I know have been in our group for years and are very, very successful and are having all kinds of computer problems during the interview because their computers from 1978 or the internet connection that they have is for a two year old. And so just spend $50 or $80 more a month on your computer connection and get a really good computer and make your life easier.
Jill K DeWit:
Thank you.
Steven Jack Butala:
Revenue justification.
Jill K DeWit:
Well, here’s what I’m going to do tomorrow towards revenue justification. I’m getting a massage. By the way…
Steven Jack Butala:
I think that’s a perfect example.
Jill K DeWit:
Thank you. And I’m happy you could join us today. Five days a week. You can find us here on the Land Academy Show.
Steven Jack Butala:
Thank God tomorrow’s Jill Friday.
Jill K DeWit:
Yep.
Steven Jack Butala:
She’s going to talk about what she wishes everyone knew about getting deals done.
Jill K DeWit:
Yep.
Steven Jack Butala:
You are not alone in your real estate ambition.
Jill K DeWit:
Yep.
Steven Jack Butala:
You can take it too far.
Jill K DeWit:
Which part? Revenue justification.
Steven Jack Butala:
Yeah. You can take it way too far. Like…
Jill K DeWit:
I bought my own.
Steven Jack Butala:
Like I needed a new diamond necklace.
Jill K DeWit:
Well, no, no. Here’s what I was going to say. You can take it too far. I got the new Shelby Ford Raptor and then I wrapped my company logo around it.
Steven Jack Butala:
Yeah.
Jill K DeWit:
My Land company logo around it and I got this, this and this. So I am riding out to look at my properties in style.
Steven Jack Butala:
That and well, depending on your level of revenue and that might be just like a reward for you.
Jill K DeWit:
Yeah.
Steven Jack Butala:
I think that’s heading toward revenue justification.
Jill K DeWit:
Oh, you think that’s okay?
Steven Jack Butala:
Yeah.
Jill K DeWit:
All right.
Steven Jack Butala:
I think to get a new Ferrari 458 to go look at land, that’s way over the top. That’s, well, it’s not ordinary necessary.
Jill K DeWit:
But if I’m looking at land in Santa Barbara, I might be able to argue that point. Just kidding. Hey, thank you for tuning in. We hope you find our content valuable. We really appreciate your support. If you haven’t already, please check in our YouTube channel and hit the subscribe button. And do not forget, if you are a Land Academy member, you got to get on the discord if you’re confused about this and a note to support at landacademy.com.
Steven Jack Butala:
We’re Jack and Jill.
Information.
Jill K DeWit:
And inspiration
Steven Jack Butala:
About undervalued property.
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