Mark Bouris on Cutting Costs Before Revenue Falls

Mark Bouris0:00
And you can just send it. Recording in progress.

Kirsten Scott0:05
Still hot. Really warm.

Mark Bouris0:15
I like— passion is pain.

Kirsten Scott0:19
That's right. Let's, um, let us speak.

Daniel Hakim1:08
Yeah, Laura, that podcast yesterday, yeah, is any edits that you need to remember?

Audience member1:14
Edits?

Kirsten Scott1:15
You read the episode? Yeah.

Audience member1:16
No, cool.

Kirsten Scott1:17
Like, then it went straight into the topic and they just would discuss the same topic for the entire episode. There was no like, who is he, what does he do? It was a bit like, I actually couldn't pay attention because it was so dry. But again, it's also like, it's a little— who was it? Huh? Who was it? Greg Goodier. Oh yeah, he was a guy. Yeah. Um, he was nervous almost. He wasn't very like— he wasn't as confident, confident as I imagine.

Mark Bouris1:46
Um, do you think I should play a game with—

Kirsten Scott1:55
yeah, absolutely you should. Great. I think so. Yeah, I was going to just—

Mark Bouris2:03
I'll tell him first and see what his reaction is.

Audience member2:11
Um, what's the conversation today, Kirsten?

Kirsten Scott2:31
Um, what Australian small business owners should be preparing going into 2026. Like, I feel like you would have been like 12 or 11 minutes.

Daniel Hakim3:39
The beginning of it is in Shaoxing.

Kirsten Scott3:41
Let's get it. I think that's where I—

Audience member3:43
And then I should say I catch up with my friend and cabinet member, Guiyi.

Daniel Hakim3:49
Guiyi.

Kirsten Scott3:51
Guiyi Tai. Good year. You know what I also noticed? It's like me intro for Anita, founder of Euro Packaging and CEO of—

Mark Bouris4:12
You probably can, right?

Daniel Hakim4:17
I'm just working the studio now.

Audience member4:23
I'll call you back when I'm walking back to the office. All right, thank you. Yeah, Boris, you got any bike?

Kirsten Scott4:37
Yeah, did he ask or did he say?

Audience member4:40
I think he asked, say which one it was.

Kirsten Scott4:43
I think he asked.

Mark Bouris4:44
I said bike.

Kirsten Scott4:45
Get ready for piss.

Mark Bouris5:02
Piss.

Kirsten Scott5:04
Mr. Piss Fox.

Daniel Hakim5:36
And so it was not—

Audience member5:37
if someone is just freshly qualified, that's fine. Which one do you feel like works best with them? I think the— it's knowing what people are going to buy.

Daniel Hakim5:52
Yeah, I know.

Kirsten Scott5:56
Good response to that.

Mark Bouris5:57
Our little guy, I didn't realise how many of our people worked with him.

Daniel Hakim6:01
He got his mates to come on and work with me last fucking 19.

Mark Bouris6:18
Kind of so proud now, coming to the city, like flying over from Bali or Melbourne or Brisbane, whichever, um, to do any events.

Kirsten Scott6:26
I could make it like a kennel event and have just other experts Yeah, that's awesome.

Audience member6:35
I thought this car was pretty cool. You went to VPN19?

Mark Bouris6:41
Super, that worked in that areas, like, yeah.

Daniel Hakim6:55
Go on ahead. Well, I went through some of the ones we've done. A lot of mistakes.

Mark Bouris7:07
Really?

Audience member7:07
In what terms? What? Just fine, that this cut one doesn't even have an interim or an outroad, and then the one pulled up.

Daniel Hakim7:18
Yeah, I think—

Audience member7:19
I don't think that was totally not loaded.

Daniel Hakim7:20
I just don't think I've saved that up at school.

Audience member7:23
Because I know that is the one that's—

Mark Bouris7:25
so I wanted to put time, but I'm going to encourage me to—

Kirsten Scott7:31
if you get any questions, like 3 or 4, which would be one of my questions, but I'm like, yeah, because I think that will guide me until I can start Q&A soon.

Audience member7:42
I think if I tend to actually start again, come through, so I'm sure it's good. I've got 12 of you. Yeah, so you tell me now, how did you know? Interviewing Mark is a lot easier than anyone else you've ever interviewed.

Daniel Hakim8:06
Yeah, he's just—

Audience member8:07
but he's the difference between interviewing a professional to interviewing an amateur. Mark is a professional.

Kirsten Scott8:14
He's—

Audience member8:15
he, he never has— he never stops talking awkwardly. He will always overshare and give more information. Yeah, it gives you heaps of time to look at what you want to ask next or to ask a follow-up question. Yeah, um, he carries the conversation, so interviewing Mark is going to be a lot easier. Yeah, than anyone else you've ever interviewed.

Mark Bouris8:40
I have a feeling he'll answer things as I go, so I'm just going to bounce off the back and swap some of them if I need to.

Daniel Hakim8:46
Yeah, he does.

Audience member8:47
Yeah. And, and, and, um, yeah, sometimes like he'll, he'll answer your next question before you've asked it. So it's just about being aware of that, either having a follow-up that he's curious about or just moving then to the next topic. Yeah. Every topic you ask, he will have plenty to, uh, I would just say, yeah, what, what, what's, what's the topic?

Kirsten Scott9:11
So trying to prepare your business going into 2023.

Audience member9:13
6, which is preparing for 23 stuff.

Kirsten Scott9:16
But we're going to things in the market.

Mark Bouris9:18
I might ask people to send me questions and the one AI do that in.

Audience member9:22
Yeah, did you get sent many questions?

Mark Bouris9:24
Yeah, oh, I suppose like 3 or 4.

Audience member9:26
Okay.

Kirsten Scott9:26
Um, how did you ask this?

Mark Bouris9:29
We put it in the event email to reply.

Kirsten Scott9:31
I did a post from Barra and I did a post.

Audience member9:34
How many hours of these?

Kirsten Scott9:35
161. Um, yeah, but I think so, I'm just going to encourage you from the start, like, guys, we really want to get to your questions, so make sure you put in the needs when we start it.

Mark Bouris9:45
Um, the team will send them through to me, and then I'll just— I think by the time I get to 10:00, I'll probably move to Q&A.

Kirsten Scott9:50
So people start—

Audience member9:52
it's locked.

Kirsten Scott9:53
Yeah, yeah, yeah.

Audience member9:54
That's the other thing, like, make your part short, high value, limit their input. Yeah. And then let them— because that's, that's the really valuable thing. So I think that's the opportunity.

Kirsten Scott10:09
Yeah.

Audience member10:10
You're not going to say it until—

Mark Bouris10:12
a few questions.

Audience member10:16
They got to 4 those first conditions that travel sales got me.

Kirsten Scott10:20
That's it.

Audience member10:28
I didn't get 4 in a row. Every day you must be saying, I can't manage to live, I'm not cutting my hair, I'm not going to the pub, getting the road. Every day it gets bigger, huge.

Daniel Hakim10:41
This morning is actually day 1, 4 in a row, really just want to get my hair cut.

Audience member10:45
As a big livestream sponsor, other things that happened a long, long time No, it's— he's fucking too funny, bro. Oh, 26. So after you gave it to us, we moved on. She's scared. I'll scale down.

Kirsten Scott13:52
Um, okay, should I— Michael?

Audience member13:58
Yeah, you can get all set up so when you walk in, quickly put the mic in, you jump straight in.

Kirsten Scott14:05
Yeah, I'm going to start recording. Uh, do you want to set the camera up 100% so we're like this way, just where you are?

Mark Bouris14:11
Do you want some water?

Audience member14:12
Good.

Kirsten Scott14:12
No, I'm all good. You don't want to have it just in case, in case you've got a sore throat or something. Okay. Yeah, you always want to have, like, you know, you always want to have prepared. Definitely. Imagine you're like having like a cough and then you can't.

Mark Bouris14:27
You're like, 'Ma, gimme your bottle.' I remember at Jessie Marshall's advisory and I was like, had an upper level up on the rooftop and we were all stuck in there.

Kirsten Scott14:36
I was like, and I couldn't cough. Oh, a while ago. So close. Okay, um, you got your mic on? No. Okay, I'm closing this. Yeah, because you don't need to see that.

Audience member14:59
They were going to come the first week of May. I was hoping for that week. Can you tell me the exact dates, by the way? Just let's get that table.

Kirsten Scott15:13
So feel free, you can take some photos with the actual personal camera as well. That would be amazing.

Audience member15:19
That's what we got that picture last time on the wall. There you go, great shot.

Kirsten Scott15:24
Because I'm assuming there's so many people coming in the entire time and everyone get up and the question's coming through and stuff, I don't want to get out too many Is he seeing the picture? You speaking Spanish?

Audience member16:00
Yes, the last time.

Kirsten Scott16:31
Oh, Laura, I just put that there because it had the big image and I want to have it like somewhat open on my phone. Yeah, do you want to put a big blank in there? Uh, yeah, that'd be a good option. Thank you. Oh, actually, that's fine because you've just got— huh? Can also just leave that for you, Sh.

Daniel Hakim17:01
Could you speak for me, please?

Mark Bouris17:02
Testing, 1, 2, 1, 2.

Kirsten Scott17:06
All right, go away.

Audience member17:07
2 minutes, bro.

Kirsten Scott17:10
Sorry.

Audience member17:12
Careful, your hair's stuck in that.

Daniel Hakim17:18
Thanks, Laura.

Audience member17:19
Can you speak again for me, please?

Kirsten Scott17:20
Hello, hello.

Audience member17:22
One more. Again.

Daniel Hakim17:27
Very good.

Mark Bouris17:28
Hey guys, welcome to this morning's digital advisory.

Kirsten Scott17:31
Yeah, thank you. Thank you.

Audience member17:42
We just need the name soon. Yeah, just put one on. Be ready to start as soon as you want.

Kirsten Scott17:47
Yeah, you want Going the long way.

Audience member18:10
Thank you so much.

Mark Bouris18:11
Sorry.

Audience member18:12
No, no, no problem.

Kirsten Scott18:13
Nice to meet you.

Audience member18:14
Thanks. Bye.

Kirsten Scott18:20
Yeah, that'll be all right. Exciting.

Audience member18:57
Cheers. Hey, Mark. Yeah, no, all good.

Daniel Hakim19:11
We will, we will be fine.

Audience member19:13
Now, where are we from? I think there's normally— Tom, what's the street that you— the spots are normally at? I don't know what spot I called. Just look on this. That's right. Yeah, I can imagine it's always easy. Cathedral Street. What, what is it, Tom?

Daniel Hakim19:35
Cathedral Street.

Audience member19:36
Tom said there's a bridge on the homeless Cathedral Street where the, where the bridge is, which is the one— it's the one like that intersects the street. Yeah, but that's all fine. We'll, we'll, we'll notify that it's just like—

Daniel Hakim19:51
Cool. Yeah, I'm sorry.

Audience member19:59
Can you use that for a moment?

Daniel Hakim20:01
Yeah, we're— Yeah, yeah, you can get on now, do normal stuff.

Kirsten Scott20:07
And then—

Audience member20:08
Oh, thanks very much. See you. See you, folks.

Mark Bouris20:11
Well, I don't— I was going to do a quick fire round with Mark. Why don't you come sit next to me? I do it with you. They mic Mark up once he gets here, and we just say, you know, guys, Mark will be joining us shortly. I'm going to kick things off with a quick fire round of this or that.

Audience member20:23
I'm just— I would just, uh, come on now.

Kirsten Scott20:26
Yeah.

Audience member20:27
And just say, uh, guys, uh, Mark's just struggling to find a parking spot.

Kirsten Scott20:32
Yeah.

Audience member20:32
He's gonna be 5 minutes. Yeah.

Mark Bouris20:34
Um, come do this with me, it'll be fun, trust me. It's just like tea or coffee, calling or texting, and you just say the first thing that comes to your mind.

Audience member20:43
They won't— why would that be interesting for them? Why don't we talk about Bower and what we've got happening this year? Or why don't we talk about the web version? Yeah, okay, something like that.

Kirsten Scott20:54
You want to let people in? Yeah, right, cool.

Audience member20:58
I'm not miked, is that— um, do you want me to mic me?

Kirsten Scott21:01
No, when he walks just back in a second and then you maybe put your camera up.

Mark Bouris21:06
Yeah, can you turn my camera off? Because it'll be a bit weird if I'm—

Audience member21:09
So what are we doing?

Kirsten Scott21:11
Uh, yes, okay, you have to turn the back on yourself.

Audience member21:15
Test, test, test. Okay, yeah, yeah, that's fine. Just talk. Test, test, test.

Daniel Hakim21:21
I mean, do you want me mic up or—

Audience member21:23
No, because I'm only going to be in the start.

Mark Bouris21:27
All right, good morning guys. If you can pop your cameras on, we'd love to see your faces. Now we're just waiting for Mark. He shouldn't be too long, but I've brought my co-founder Mr. Daniel Hakim on with me for the moment.

Audience member21:46
I'm just filling in because Mark couldn't find a parking spot. Currently Boris is, he's actually just found one, he texted me, but currently he's parking. So we are going to start the official event probably 5 minutes from now, but Kirsten and I thought we'd take this opportunity to just share how excited we are to finally launch a web version, um, of BOA, uh, and like a website version, whatever you call that. So you don't have to use it on your, uh, app and on your phone. You'll now be able to, um, explore the whole platform. And to be honest, it's actually going to be, I think, a lot better. I probably shouldn't say that, but I think it's going to be a lot better, um, on the website. So accessible via laptop, and it's something Kirsten has been working on, um, uh, tirelessly for, for a very long time. So we're excited for you guys to see. But when do you want to tell us when it launches and what's going on?

Mark Bouris22:34
Yeah, so guys, it should be around the 26th of February. Um, you'll start getting some more communication around that. Um, just letting you know as it's coming in, we have some really awesome features on there. It's going to enable us the opportunity to get international guests and just so much more. So lots to be excited about. Um, but yeah, we will keep you in the loop, and that day is fast approaching. But it is so great to see so many familiar faces on here.

Audience member22:59
Can I ask, have people been— who's been attending? Can you put in the chat, like, who's been attending the chapter meetings? Because the chapter meetings have been going exceptionally well. They've essentially become like local support, business support communities across the country. And it's an area, obviously, I'm sure Kirsten has told everyone, it's an area that that we're going to focus on a lot this year too. So I'd love to hear, I guess, how your chapter experience is, and also throw in the chat where you're located and your business, because Kirsten and Mark are going to look at it as well while we start talking. And since we have the opportunity, Kirsten's going to interview Mark. It's not going to be me, it's going to be Kirsten. It's her first time interviewing Mark, He's walking in the door right now. It's her first time interviewing Mark, so she was telling me, "I'm a bit nervous." I said, "Don't worry, Mark's an expert. He's the easiest person in the world to interview. It'll be the easiest interview ever." So a big round of applause for Kirsten too, because Mark can be an intimidating person and it's no short feat.

Mark Bouris24:05
And just on that, really get your questions in early because we do want to move to them quite quickly. So that will help me guide the conversation and allow you guys to ask Mark directly yourself.

Audience member24:14
Yeah, and so questions, if you've got questions for Mark about your business, you want them, you will have the opportunity to ask them. You can pop them in the chat now even because Kirsten can also ask them for you, but you will have the opportunity to ask Boris personalised questions about your own business, which is so rare. It's, it's, it's something like, where else can we get that type of access to the many amazing business owners we have?

Mark Bouris24:37
But, but to Mark now, sorry guys, I think we—

Audience member24:40
I'm going to switch for an older, less good-looking version. Of entrepreneur, but Mark Bouris is coming in right now.

Mark Bouris24:46
We'll see you in 1 minute. Thanks, guys.

Audience member24:49
Um, can we mic me up as well?

Mark Bouris25:27
Uh, Laura, you actually have to stop my video. Okay guys, we are back, um, and I'm joined with the mentor himself, Mr. Mark Boris, and the biggest supporter of Australian small business. Now Mark, we are going to dive straight in. So if you had to give small business owners a blunt assessment, are we heading into a tougher period or a window of opportunity?

Daniel Hakim25:57
Depends which industry you're in. So industries do respond differently to either down periods or up periods. So, but I definitely think we're going into a down period in relation to things like retail sales because of the obvious— anything that's retail, because the obvious thing is that money is now going to be withdrawn from the system. The way you reduce money supply or the supply of money from the system is you put interest rates up. You either do that or government just stops spending. It's unlikely our government's going to stop spending. So the other way you do it is you get the Reserve Bank to put interest rates up. As interest rates increase, less people can qualify for borrowing money. Less people can, and people have less money in their pocket at the end of the month, so they spend less money, that puts us into a down cycle.

Kirsten Scott26:38
Yeah, absolutely.

Mark Bouris26:40
Okay, so what's the most intelligent move a small business could make in the next 6 to 12 months that doesn't require spending money?

Daniel Hakim26:46
Well, I think what's really important at the moment is if you can make the assumption that your revenues are not going to go up and they may be going to remain flat, then the first thing you got to do is reduce your costs. So right now is the time to be looking at your cost structure. And you know, like, a cost refreshment every couple of years is a bloody good idea because you'd be surprised, uh, what you can save. Or probably another way of putting it is how, how you are spending where you don't need to spend. Um, and, you know, I've been through this period. I remember when the beginning of COVID in 2020, right at the very beginning, March, um, 2020, um, I reduced, uh, my overheads by 30%. Then this is the Albury Grow business. Then the because our revenues were down. And then our revenues kicked up because, you know, lending became a big deal. And I was supporting nearly double the amount of lending with the reduced cost base. So I realised that I had— I was spending money on, unfortunately, people, but that I didn't need to spend money on. I also reduced my rent. So I had 2 floors in the Chifley Tower. So I reduced one. I went down to one floor because no one's coming to work. And we all thought at that time, by the way, for for the rest of our lives, no one's gonna come to work. And when did you think the pandemic was ever gonna stop? So I only rented one floor instead of two floors. I saved a million bucks a year. And I still only have one floor, but I'm doing nearly 3 times the amount of volume. Like for the month of January, we did $3.5 billion for the month.

Kirsten Scott28:17
Yeah.

Daniel Hakim28:18
With one floor. Whereas I was doing about $1.8 billion before COVID hit with 2 floors and 30% more staff. So right now, when you think revenue is going to get challenged, then really you've got to start looking at your cost line. The second thing that we've got to do really importantly is that these things don't last forever. So interest rate increases over time will basically flatten the economy out, in which case then we'll get brain damage because the Reserve Bank will come back and say, "I've now got to put rates down." So in which case that'll sort of stimulate the economy again. And when that happens, that's when opportunity arises. So you've got to get ready for opportunity. You've got to get ready, get your business ready for increases in revenue. And that might mean more innovation, more AI into your business, might mean building up inventories, that might mean having more efficient delivery systems. Whatever it is, get ready for the— I'm not going to call it a boom, but get ready for the change in revenues upwards. But right now make sure you control your costs.

Mark Bouris29:21
Yeah, it's kind of whichever direction it might go, just make sure you're ready.

Daniel Hakim29:25
You're right, it's just be direction ready.

Mark Bouris29:27
Yeah, I love that. Okay, so you touched on AI there. Do you think that small businesses should be doubling down on automation or pivot to a more human-centered offering of products and services?

Daniel Hakim29:38
Well, you know, if you can do human-centered business, I think that can create some sort of uniqueness and difference because I'm not sure how people really receive dealing with artificial means.

Mark Bouris29:54
Personally don't like it.

Daniel Hakim29:55
Yeah, and I'm maybe a bit too old school for that, but it doesn't matter. But at the same time, innovation is the thing that gets rid of costs. Innovation is incredibly important, and there's a lot of richness in innovation, especially around data. And if you can somehow get an AI system or have artificial intelligence in your business that or reduce more physical labor-intensive sort of cost base.

Mark Bouris30:21
The things that don't require human touch.

Daniel Hakim30:23
Yeah, correct. And you should do it. But equally, if you're able to build a proposition where there is more human touch in relation to your business, and it could be human experiences, you know, you get more, you get a better experience when you deal with this particular company because there's human involved, then you should look at that too. It's all about balance.

Audience member30:45
Definitely.

Daniel Hakim30:46
You've got to get your balance right.

Kirsten Scott30:47
I agree.

Mark Bouris30:48
And I guess know your customer as well.

Daniel Hakim30:50
Know what your customer wants.

Kirsten Scott30:52
Yeah.

Mark Bouris30:52
Okay, so before a small business pushes for growth right now, what operational or structural foundations absolutely need to be in place?

Daniel Hakim31:00
You know, one of the things I always talk about is, and I'm actually releasing a book soon, so probably maybe I'm self-publishing my book, but it's the, like, you know, what I call my, let's call it my playbook. But it's now book, book in book form. I've written it already. It's, it's the final draught's out. And one of the things I always talk about is, is my chapter 2. And chapter 2 is about getting your systems right. You know, the intellectual property that we put into a business, like, I'll give you a good example. Daniel has been working on both Bower and Carbon for 10 years, a little over 10 years now, but every single day over a 10-year period, he has refined from where he first started, he's come to where he is today. And that refinement is intellectual property. Now, that's not something he can copyright, it's not something he can patent, it's, I'm not talking about protected intellectual property, property rights. But at the same time, it is how he runs his business. And That is, to me, should be systemized. Those things are quite valuable property. Otherwise, everything, the intellectual property remains in his brain. And if something happens to him, God forbid, then the place won't operate as well. So I say to people who run businesses, Chapter 2 is make sure you play defensive. Defense wins games in every, every sport. And business is just a sport.

Kirsten Scott32:28
It's a game. Okay.

Daniel Hakim32:29
And you've got to make sure you gamify your game. And one of the things that's really important is to systemize what you've learned that works best and what, say, you've learned and what your senior staff have learned and get it all into a manual. I don't mean a physical book, but put it down writing, reduce it to writing.

Mark Bouris32:49
A centralised place that everyone can—

Daniel Hakim32:50
A place of truth where the truth of your business exists and everybody can access it and it's actually in a— has an architecture around it. So I think that's probably one of the most important things you need to do before you can actually expand. People, like, I know so many people get into business and they get really excited and, you know, business is going great and, you know, the revenue's up and this is up, that's it. Um, and then, um, but they're forgetting about the, the value proposition. That those things about revenue, those things about profit, those things about cash flow, important. But the value proposition of your business, because you're also building a value, sits in the foundations and how solid the foundations are. And the foundations all must be manualized and systemized. I don't care if it's on a computer, you write in a notebook, I couldn't get us where it is. And then you can run it through AI and you can ask AI to have a look at it. If you trust AI, you can ask it to have a look at it because there might be something secret and you don't want it to share with anybody else. But nonetheless, you can run it through AI and say, well, would you suggest any efficiencies here? Are there things that I, I can improve on?

Mark Bouris33:52
It's a great way to use AI.

Daniel Hakim33:53
Great way to use AI. But I would tend to, in something like that, I would probably not use one of the protocols that everyone uses. I would actually get somebody to help me build my own AI agent. Using open source systems to make sure that this is just my AI agent looking at my stuff and it's not sitting out there in the whole— I'm not gonna mention any of the names— worlds where other people might be able to somehow access that. I don't mean they're gonna access it and find out about Karl, find out about Boa. I don't mean that.

Kirsten Scott34:27
But even just the process that you're using.

Daniel Hakim34:29
Well, AI now know, will now know it goes back into its system. So if someone else comes to ask a question, they might be, AI borrow that, feed it to them. So, uh, I would actually have my own, own AI agent in that regard.

Kirsten Scott34:42
Yeah, I love that.

Mark Bouris34:43
Okay, so you touched on cash flow. What are some of the big warning signs small business owners tend to ignore that can quietly put them in a dangerous position?

Daniel Hakim34:50
Well, that's one of them. Um, cash flow is a big issue. And also, um, you know, borrowing— if your revenues are down and you don't adjust your costs, like I said earlier, it has this habit of catching up to you very, very fast. So, you know, one of the things that Kerry Packey used to always make me do every month when I met him was show him our bank reconciliation. And it sounds really commonplace, but you know, what money's been presented against you and the revenues you've received, the bank the bank account has been reconciled. That's one. What are your debtors? In other words, who owes you money and what is the ageing of those debtors? So, you know, if anyone's over 30, 60 days, for example, potentially a problem, get them on a program. Because it doesn't take long if 3 big customers— generally speaking, the rule of thumb is you should not have any one customer that represents more than 15% of your revenues. That's generally the rule. All you need is one of those customers to start to go into their own financial difficulty. They don't pay you 30 days, they don't pay you 60 days, you don't put them on a program.

Mark Bouris36:02
Communication's not there.

Daniel Hakim36:03
They don't talk to you. So generally speaking, you don't want to be the last person to put a 60-day debtor on a programme because everyone else has gone and got it in ahead of you. They come to you and say, 'Look, I can't because I've got obligations to Telstra, I've got obligations to the tax office, I've got obligations to so-and-so. Can I budgion?' they put you on the back burner. You gotta be watching this stuff and put them on a programme first so that you can now control your cash flow relative to your expenses. And right now, you know, this year, 2026, given interest rates gone up, if there was a couple more rate rises, it's gonna be one of those years where someone could let you down, not your fault, but someone else lets you down who owes you money. And you then get in, you get then put on the back foot. Then you start to miss out, miss payments, etc. So cash flow is incredibly important, and the way you manage that is knowing your bank reconciliations are right, that there is— and you know what your debtors are, you know what the ageing your debtors are. So many people are just interested in cash, or how much coming in that bank account. It seems like it's okay.

Mark Bouris37:06
And that's not really the bottom line though, is it?

Audience member37:07
No.

Daniel Hakim37:07
Well, this is what happened to OneTel. I mean, OneTel was a great business, killing it, like, you know, getting market share, blah blah blah blah. They kept saying the value of the business has gone up to billions because you know, every customer's worth $1,000 or whatever it used to be. But they weren't looking at their cash flow and their cash flow because people weren't paying bills. So people were transferring from one telco to OneTel, but then they weren't making— they're making one or two payments as monthly deal, and then people just stopped paying. And then no, because no one was chasing them up, they had no debtor system. OneTel was running out of money. And then obviously they went broke in the end. So there's a great lesson. And that was a business run by Packer and Murdoch and others. You know, you would think, you know, quite a sophisticated business.

Kirsten Scott37:51
Totally. Yeah.

Daniel Hakim37:52
And they did not have a basic thing about managing their debtors, people who owed their money. And the other thing is you've got to make sure you know your, you've got to know in your business what your creditors are and you've got to age your creditors. So, you know, Gary used to make me give him the debtors ageing every month and the creditors ageing every month. To make sure that, you know, the two were getting— more was owed to us than we owed, one, and two, that there wasn't something in there that had been owed for 3 months or 4 months that the accounts payable division had missed out on that I wasn't aware of, and if it was large, and equally on the debtors. So it's old school basic stuff.

Audience member38:28
Yeah.

Daniel Hakim38:28
Critical.

Audience member38:29
Yeah.

Mark Bouris38:29
And the thing is, like, we have a lot of startups in our community, and I think even if you don't have that mentor that you can go to, start that process yourself. Go to your accountant, whoever it is, like make sure you have that point of contact to run that same process.

Audience member38:42
100%.

Daniel Hakim38:42
You got— and this is the boring stuff in business, but the boring stuff is sometimes the most important stuff, you know, especially when you're getting challenged. Like if this is a challenging year, '26 could be, get the boring stuff right.

Mark Bouris38:57
100%. Now guys, don't forget, if you have questions for Mark, put them in the chat because we want to give you as much opportunity as we can to ask him directly. Now I want to talk about pricing. So with rising costs everywhere, how should small businesses think about pricing without losing customers?

Daniel Hakim39:14
That's a good question. Actually, again, I've done a whole chapter on product and pricing. So your product, first and foremost, your product must be the same as your competitors or better. Can't be worse. So just understanding the features of your product. And I'm in the lending business, so, you know, like, we, we have to make sure that all the features of our loans are as good as everybody else's or better. And that is a constant search, you know, constant research on what are the features, like redraw, you know, fixed, part fixed, part variable, blah, blah, blah. There's a whole list of things, okay? But then about pricing, generally speaking, if you're new to your industry and you've got maybe a better product or you're trying to grow market share against everybody else, you've got to price below the, what I call, the mean. So you've got to do your research. What is the mean of all the people I'm competing against? If I'm new to the, if I'm a new entry into the game, I've got to price less. It's a bit tricky because you've got to make sure you've got enough cash flow or cash reserves or borrowings or capital, patient capital, to get you through the process to build market share. So a good example again is OneTel. OneTel actually came in lower than all the big telcos and they built market share. As I said, the problem was they didn't collect their debtors, but it doesn't matter. They came in cheaper. The typical disruptor always, and I'm not suggesting people are going to be disruptors, but the new entrants typical is that they need to build market share. And usually that means coming cheaper than everybody else. But to do that, sometimes, you know, the cost base is the same as everybody else. In fact, it could be higher because you're not selling as much volume, so you're not buying at a cheaper price. Therefore, you've got to make sure you've got enough patient capital to get you through that process. Once you get to market share, the question always carries— always asks me, for example, Wizard, is that, Mark, when are we gonna increase our interest rate? Because our interest rate was cheaper than everybody else. We, we did a sensitivity analysis for people to leave a bank to come to Wizard. What is the discount we had to offer to everybody? And we did this through surveys. We worked out that a 25 basis points or a, a quarter of a percent which was one rate reduction back in the 2000 period. One rate reduction is what we needed to bake into our pricing. So if the interest rate of the banks was 6%, we had to come in at 5.75%. If we came in at 5.75%, that was enough to coerce people or to seduce people into swapping from a bank to us. And that's about research sensitivity analysis. We did that and we didn't make it 26 basis points. We didn't make it 28. We didn't make it 24. It was 25. Using 25 basis points as the discount for our pricing, we waited until we got to a point where we were at what you call critical mass. Now, I had enough capital because that's the deal I did with Packers to get me through that process. When we got to the critical mass point, And that was Kerry's point— question every month, where are we at critical mass? What is critical mass? Then we were going to— then you start to slowly but surely increase your pricing. A good example is John Symons, Aussie Home Loans. Everybody thought that John's pricing was cheaper than the banks. At the time we entered in the market, he'd already been in the market for 3 years. John's pricing, everyone thought it was a discount, was cheaper, but it was actually the same as the banks. So, but he was able to build branding up and perception up over a period of time that he was cheaper, but he slowly but surely crept his price up to just below the banking price, a couple of basis points.

Mark Bouris43:13
But at that point, he's got his customers.

Daniel Hakim43:15
He's got his customers.

Audience member43:15
Yeah.

Daniel Hakim43:16
And he's got his reputation as being good value.

Kirsten Scott43:18
Yeah.

Daniel Hakim43:19
And the value was in the service, not in the pricing.

Kirsten Scott43:22
Yeah.

Daniel Hakim43:23
So yeah, he's great value because he would come and see you in those days. In those days you had to go see the bank. These days you do it online, but like those days you had to get, he would come and see you and make it, he gave you convenience and a better experience. So pricing is tricky. You've got to build your market share at a certain point. You go say, okay, I've got enough. We're not going to grow at the same rate. And now we're going to start to change our price to reflect profitability per customer for us. It's, it's a mathematical game.

Kirsten Scott43:56
Definitely.

Daniel Hakim43:56
It needs to be titrated.

Mark Bouris43:59
Yeah, I couldn't agree more. Okay, so what mental or emotional decision-making traps do you see founders fall into when financial pressure builds?

Daniel Hakim44:09
Well, the biggest trap is, is, is, um, health trap, is a health trap.

Kirsten Scott44:14
So definitely.

Daniel Hakim44:15
So they, they stop sleeping properly, they lose, they stop exercising properly, they basically, basically shit themselves. You know, everything falls apart.

Mark Bouris44:25
Yeah, the burnout, they panic.

Audience member44:27
Yeah.

Daniel Hakim44:27
And, and you will get burnout as well. So, and this is a really important point for entrepreneurs. An entrepreneur should not be just thinking about business and I've got to get up at 2, you know, I've got to get up at 4 o'clock, I've got to, you know, Boris gets up at 4 o'clock and he's, you know, blah blah. You know, they get all a bit carried away with this sort of stuff. What they are going to understand is that I always exercised. There are some non-negotiables. Sleep wasn't— sleep today is non-negotiable for me, but then it probably wasn't. It was sort of— I could sort of impinge on my sleep, but I always exercised and I always ate well, and I didn't abuse myself with drink and stuff like that. So I think entrepreneurs you know, like to avoid this emotional and mental burnout and bad decision-making, you gotta understand how your brain works. And I don't mean just understand, I mean really get into it and really have a good understanding of how your brain is different. My brain is different to his brain and their brain. So how does your brain work and what are the things, components of your brain that work well and what are the things that don't work well? So I'll just give you a good example. And it's getting a little bit deep into things. Hopefully this doesn't bore everyone, but, um, I would ask the audience, I'd even ask you, um, when you, when did you have your last blood test?

Mark Bouris45:50
2 weeks ago.

Audience member45:51
Okay.

Daniel Hakim45:51
When you went to, great, great. But when you went to, and no doubt you got the results, um, when you, uh, your doctor, your referring doctor wrote out your referral to go to get your blood tested, Did your doctor ask the blood pathology company to do a blood test on what they call apolipoprotein E?

Mark Bouris46:19
Absolutely not.

Audience member46:20
Okay.

Daniel Hakim46:21
Now the importance of this, this is really important.

Audience member46:23
Yeah.

Daniel Hakim46:23
So ApoE, very, it's very rare to, doctors, in fact a lot of doctors don't even know what it is. And we've gotta get a, get clear in our heads, or I'm not having a crack at doctors or GPs, but doctors are clinicians, they're not scientists. There's a difference, massive difference between the two.

Kirsten Scott46:38
Okay?

Daniel Hakim46:39
They're clinicians and clinicians get told by the pathology company what, what you get tested for. So they just write it all out and they get free and you go along, you get your blood taken and it's all done and they send it back and they say, oh, great, great. But ApoE, and I'm getting a little bit into the weeds, but this is really important. ApoE is what Chris Hemsworth's got. Now, Chris Hemsworth on, uh, the show called Limitless. Gets diagnosed, not diagnosed, gets a blood count done and they come back and say, you've got this thing called APOE. Now APOE is an ancient protein carrier. It's a protein that carries other proteins. It carries lipids and fats around your body, which your brain needs. The problem with APOE is it has a misfolding in it. It folds badly. And it doesn't, it also gives people who are like Chris, that gives them excitability. And what that means is that they tend to have dysregulated sleep. They have more orexin in their brain, which is the thing that keeps you aware, sort of semi-awake. It means you don't have deep sleep, slow-wave sleep, which allows you to clear all the debris out of your brain that you collect during the day from exhaustion. And as a result of that, you become much more vulnerable the next day, particularly in stress environments. To making bad decisions. Now, not everyone has ApoE. The more common ApoE— sorry, ApoE4— most people have ApoE3 or E2. But if you have ApoE4, there's a problem. So there are things you need to do when you have ApoE4. So, um, an ApoE4, for example, they need to be able to meditate, they need to be able to do deep breathing exercises when they wake up in the middle of the night, they need to go to bed early, they need to eat early. Because the food can, can over exaggerate the excitability in your brain. And, uh, and there's a lot more. I can go through a whole lot of complex stuff about it, but, but they need to get up early, they need to exercise heavily, they need to do lots of meditation. Now that's something he didn't know about until he had this test done. And I would say to everybody, ask your doctor, get me an APOE test.

Mark Bouris48:44
And now if you're gonna have to go back now, yeah, well, if you—

Daniel Hakim48:46
but if you've got APOE2 and you get one from each parent. So you get APOE from one mum, from mum, and one APOE from dad. So you'll either be APOE 2,2 or APOE 2,3 or 3,3 or 3,4 or 4,4. The reason I know about this is because I got APOE 4. Now I am a very excitable person mentally, like my brain excites quickly, and all that is is because my APOE 4, unlike other people who have 3 and 2, My OPO4 goes into my brain, released from my liver, goes to my brain and releases a whole lot of calcium. And for your electrical system in your neuronal system to work properly, you need calcium. But I over-release, so my brain gets overactive. It means I don't sleep properly and I tend to think too fast.

Audience member49:37
It's an ancient—

Daniel Hakim49:38
it's actually an ancient genetic genotype that helped people when, like, you know, 10,000 years ago to survive better because you could think faster, you can move quicker. But in today's age, you don't need to be like that. And as a result of it, it actually exhausts your neuronal system. And over time, it's currently the greatest cause, you know, um, um, in terms of statistics, of course, is the greatest correlated statistical genetic code for people who die from dementia.

Kirsten Scott50:16
Yeah, that's scary.

Daniel Hakim50:18
Now, Chris's parents, grandfather, grandmother, grandfather, father, and grandfather both have dementia. So, and they're, and he's, they're only like 70s or something. So he's only a young guy. But so what I'm saying to you here is that you need, in order, if you're gonna be an entrepreneur and you wanna put yourself through all this shit, then understand your body, particularly understand your brain, and get the basic stuff done that you need to get done. And follow somebody out there in the world who can tell you about this sort of stuff, because it's up— only person who look after your brain is you.

Mark Bouris50:47
100%. And everyone's so different, so you have to know—

Daniel Hakim50:50
all of us are different.

Kirsten Scott50:50
Yeah.

Daniel Hakim50:51
And, uh, we all react a different way. But once you know what your deal is, then you can put in place some techniques that will allow you to get— the most important thing is a good night's sleep.

Mark Bouris51:02
Yes, I agree. Yeah, it's the first thing that we get rid of, but it's the thing we need the most.

Daniel Hakim51:07
And I didn't know this when I was in my 40s, but now I obviously now know it, and only because I've, you know, done a bit of work on it. But it's made a big difference to my ability, you know, like, uh, 70 this year.

Kirsten Scott51:19
Yeah.

Daniel Hakim51:19
And, uh, I reckon I'm sharper now than I was when I was 40.

Audience member51:23
100%.

Daniel Hakim51:24
Yeah, because of— because the things I've been putting in place over the last 2 years.

Kirsten Scott51:27
Yeah, definitely.

Mark Bouris51:28
Now, Mark, I do want to get to the Q&A. We've got a couple that have come through, but just quickly. So if every founder on this call could only focus on one thing this year to strengthen their business, what would they need to prioritize?

Kirsten Scott51:39
Yourself. Love that.

Daniel Hakim51:41
Yeah, that's like, you know, when you get on the plane, they say, now, if the, when the thing drops down, make sure you put on your face first before you look after each other. Yeah, it's the same with business. If you're running a business, look after yourself first. I mean, it's not a selfish thing. It's about survival. And if you want to survive, if your business wants to survive and all the people who rely on you and your business, they want you to survive, then look after yourself first. I'm talking about physically, emotionally, mentally, community-wise. Get that shit sorted now.

Mark Bouris52:13
That's great advice. I love that. Now, guys, we've got a couple of questions that have come through. So, Theo, if you're on the call, Hello. Now you're welcome to ask Mark. Maybe just mention what your business is and then ask Mark your question.

Audience member52:29
Hi Mark, thanks for taking the time. So I'm a CFO-led consulting business. I jump into other businesses and partner with them to help them grow. I just wanted to know, like, I'm at that point of starting to scale and the like. What's the one mistake you see experienced founders make when trying to scale? And how would you— what would your advice be like to avoid that, like from day one?

Daniel Hakim52:58
Are you trying to scale yourself as a consultant CFO?

Audience member53:03
Yeah. So basically I'm able to contract out my services to people that I have a breadth and depth of CFOs that work with me. And then I scale— sorry, I contract them out to other businesses to help those businesses grow. The way we differentiate, it's no different to, you know, I hate the term fractional CFO, but it's, it's, um, that's essentially what it is. Um, our differentiating point is that, um, we utilise the skill sets and knowledge of those CFOs. So even though you've got a CFO on an engagement they come back to the pool and we share the problems or the engagement and utilise the knowledge within the house, if you like. So that you're engaged with them.

Daniel Hakim53:55
Yeah, I get it. I get it. That's okay. And I get it, my son does, one of my sons does the same thing. So the biggest mistake I see is trying to recruit somebody because you need people. I mean, I, by the way, I would ask you, I would suggest you start to look at how a CFO, um, AI agent could work for you. Um, which you need yourself. I mean, we're doing this right now in mortgage broking. So we are building mortgage broking AI agents who, where we have What we are doing is we are taking all the stuff that our physical brokers have reduced to writing in terms of questions about how to do a loan, for example, for someone who might be out of the country or someone who lives in Wollongong or wherever it is. And we are learning, our agents are learning off that database. So we can build one agency, broker agency, I should say, that has the, gross knowledge of every single one of our 2,000 brokers around the country. So every one of our brokers has got a little bit extra knowledge about something, how to deal with a customer, what, you know, how it works in Perth or Brisbane, or what's working in relation to, you know, what, what banks lending, what, why, what our agent we have built is learning all that stuff right now. We haven't released it yet, but it's learning that stuff right now. And I would, I would ask you, I would suggest to you, maybe you want to consider building one of those and we use a young kid called Nick Mahalu to build that for us. And as we haven't finalised yet, but we are nearly finished with our final draught now and it looks like it's pretty good and it's an ongoing learning process. I mean, like if you could get every single doctor in Australia, GP in Australia, who every time they consult with a patient and they put it up on a computer and they say, look, she came with this and I suggest that and I test that, blah, blah, blah. And if you somehow could merge all that information into one AI agent, you'd have the best doctor in Australia. This doctor would know every single symptom and everything. And I was just wondering whether you could do that with CFOs. That's the first thing. But the second thing, the biggest mistake I see, that's a thing you could do and that's going to take time. But the biggest mistake is that people try to recruit CFOs, in your case, in your own image. And A, that's impossible. Because everyone's different, every CFO is different, every consulting CFO is different. But also, I'm not suggesting you are, but most of us are limited in our experiences and the way we express our experiences to our customer, our patient, or our client in your case. And therefore, I think that's a mistake is when you're recruiting people in your image, I think it is a big mistake. So I would be trying to make sure that I had a broad church of style of CFOs, both in knowledge base, style, experiences, age, sex, everything, gender I should have said, and build that out as broad as they can. To some extent, your business is limited in terms of scalability because it does rely on people. And you're going to get people coming and going. You're going to start spending money on people and investing in them. And then as soon as they see what sort of good business you've got, they're gonna think they can do it themselves and then they will leave. In terms of recruitment, I have a view, I don't like to recruit superstars. Think of it like this, it's like, you know, business like yours and mine is like a comet. At the front of the comet, everything's very bright and then you've got a tail on the comet off the top and from the comet, you always got things exiting. So Warren Buffett had this view, he once owned, he still owns businesses like this where are very good at selling and he had a vacuum business. That was not, you couldn't buy in a store, but it was being, it was online now, but it was being sold all around the world. And it was called Kirby Vacuums, biggest vacuum cleaning business in the world. And he used to say that when you recruit people into this business, you want people in the middle of the comet. At the front of the comet, they look like superstars, they're doing brilliant. And you think, oh, this guy's or girl's earning me all the revenue, blah, blah, blah. But they'll split off at some stage and they go and do it on their own. You want the common in the middle and you also want the tail because the front part attracts the tail. Sometimes parts of the tail end up in the front and you get this really good, nice, rounded, above-average style of person who never leaves you and just keeps delivering business to you. That's your typical relationship person. I don't want to call them salesperson, just relationship person. They have a skill, in your case it's CFOing,, but they're still relationship people. And, you know, because your client, you want your client to like that individual and have a good experience. So maybe there are two mistakes, and there's one mistake and there's one thing you might be able to do, think about having an AI agent. It's a long answer though.

Kirsten Scott58:50
Sorry.

Mark Bouris58:51
I like that. And it kind of comes back to the hyper-experience potential.

Audience member58:54
Yeah, great. Yeah.

Mark Bouris58:56
Now, Nina, if you're still there, there you go.

Audience member59:00
Hello.

Kirsten Scott59:00
Hi, Mark.

Audience member59:02
Um, I'm a solicitor, I have my own practice, it's just me at this stage, but obviously I'm looking at growing. Um, so my question was, at what point and how do you decide, you know, to increase pricing? Um, and is there any specific— specific amount or formula to it? Um, or is it really just, uh, basically based on what— who your clients in general are and what you feel they can afford.

Daniel Hakim59:32
Yeah, well, I do recall— it's Nina, isn't it?

Mark Bouris59:35
Nina, yeah.

Daniel Hakim59:37
Then I do recall in professional services, we used to bill— we charge someone out at 2.5 times their cost. That was usually the rule of thumb because you got to cover your overheads and your rents and all the other stuff, not just the wages that the person— like, let's say you're paying someone $100,000, let's say they're costing you just their bare cost, their direct cost. Let's say they're costing you $50 an hour. We would charge— we would, on top of that $50 an hour, we would charge— we would multiply that by 2.5 times to cover all my other overheads, okay? Everything else, because you're going to get admin people in your organization, you've got someone doing billing, etc., etc. You've got to pay for systems, and these days it's a bit different, but you've got all sorts of software systems that you're probably and the insurance and whatnot. And yes, insurance, especially the rents, etc. So 2.5 times was the rule of thumb. But if you're trying to compete with the law firm down the road, who's a conveyancing firm and not necessarily a law firm, may not have the same levels of costs, and part of your business is conveyancing, you want to be able to make sure your pricing is sensitive to their pricing. So you always taking that rule of thumb, the 2.5 times per person, you're taking that and then you're saying, okay, but this person's in the conveyancing part of my business and I'm not going to get any conveyancing business if I'm charging them at that rate. So you have to actually reduce that cost. So you've got to be sensitive to the pricing in your environment, whatever your environment is. In terms of putting prices up, well, that's really what the client will bear. And you know as well as anybody, which clients will bear and which one won't. You know, you're going to have some clients who right now especially are quite sensitive to price increases. And unfortunately today, people are mobile. So, and everybody knows another solicitor and knows another mortgage broker, knows another insurance agent, knows another something or other. And people go, well, shit, like things are tough at the moment. I've got to reduce my costs. I told you that everyone's going to reduce their costs. One of the ones we're going to try and reduce our costs are is rent and legal fees if we pay legal fees. You know, a lot of people have big legal bills. I'm one of them. And, you know, we end up bringing people in-house. We don't get as good a quality person, but we bring people in-house only because it saves my costs. But I'm always looking to reduce costs when things are getting a bit flat revenue-wise. So just be aware of that. And, you know, probably 2026 might not be the year to increase prices. Unless you have to. Because at the same time, I don't suggest that if you're giving really good service and everyone's really happy with it, then you should be doing it at a discount either. The market determines the pricing. You don't, unless you're trying to go in under the market.

Audience member1:02:21
Yep.

Daniel Hakim1:02:22
That's when you determine the price under the market. But if you determine the price above the market, and unless you're the, you know, the senior partner who's just left the bench and come back to working in the senior partner of, uh, Mallesons or whatever they call themselves these days, and you have a specialty in some sort of area that no one else in the country can do, you can charge whatever you want. Unless you're that person, then you better just look at what the market price is, and hopefully it's, you know, at least 2.5 times what it's costing you to run the business.

Kirsten Scott1:02:51
Great, thank you.

Mark Bouris1:02:53
Thank you so much, Mark. This morning has been incredible. Now guys, if you do want to rewatch this morning's chat, you can catch it on the video content library. But until then, we will see you next time.

Kirsten Scott1:03:04
Thank you.

Mark Bouris1:03:05
Bye, guys.