03 Aug 176 | Ending Entrepreneurial Poverty with Racheal Cook
Welcome to episode 176 of Profit Boss® Radio! In this episode, we’re on a mission to end entrepreneurial poverty for women. We’re talking about what it means for female entrepreneurs to design predictably profitable businesses—without the hassle and burnout—so that you can do less and earn more!
So many women struggle to turn a profit as they build businesses. In fact, even though women own 44% of small businesses, they only make up 4% of the small business revenue in the United States!?
How did this happen? Well, one big part of this is the fact that the MBA programs that so many women go through only train people to run large corporations. Unfortunately, they don’t equip you with the unique skills you need to build a thriving small business.
That’s why I’m so excited to have Racheal Cook with me today. Racheal is an award-winning business strategist, best-selling author, and host of the Promote Yourself to CEO podcast.
In today’s conversation, we talk about the fourth and fifth steps from my 7 Steps to Wealth Framework: ask and earn. You’ll learn how to make money (and earn it) in your own business, as well as in your personal financial life. Racheal and I go in-depth on what it means to design a business on your terms and get out of entrepreneurial poverty as a woman–once and for all!
Here’s what you’ll find out in this week’s episode of Profit Boss® Radio
- How Racheal burned out on corporate consulting and found herself working uniquely with small businesses.
- Why so many small business owners work so hard for so little—and why it takes so long for them to realize this.
- The key to making your business run with ease—and the major mistakes so many women make that hurt their businesses (and themselves).
- Three things women need to be doing to run more resilient businesses.
- What you can do to get peace of mind if you’re suffering from burnout.
- How a bad CPA cost Racheal $15,000 in taxes that she didn’t need to pay.
Resources and Related Profit Boss® Content
- Racheal Cook on Instagram
- Promote Yourself to CEO Podcast
- The CEO Collective Coaching Program
- Burnout: The Secret to Unlocking the Stress Cycle by Emily & Amelia Nagoski
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Hilary Hendershott: Hello, profit boss. Today, I am pleased to present to you a conversation with business strategist Racheal Cook. I have to tell you, this conversation just really blew me away. This woman is incredibly both articulate and very smart about how business should run. I think that it’s unfortunate that the MBA program, the master’s in business program that most people go through really trains you how to run a large corporation. So, where’s the small business MBA? And I think that Racheal wouldn’t be surprised to hear me say that that’s what it seems like she’s giving people. Let me tell you a little bit about her. She’s an award-winning business strategist, host of the Promote Yourself to CEO Podcast, and a best-selling author. Racheal Cook is on a mission to end entrepreneurial poverty for women. And you will hear her and I talk in-depth about that mission of hers. Over the last 12 years, she’s helped thousands of female entrepreneurs design predictably profitable businesses. Imagine if you had predictable profits, that would be awesome, without the hassle and burnout that doing all the things inevitably accomplishes. Imagine, do less, earn more.
In fact, Racheal is a sought-after speaker on entrepreneurship, marketing, and productivity. She’s been featured by the U.S. Chamber of Commerce, Forbes Coaching Council, Female Entrepreneur Association, and more. Today, profit boss, we’re talking about the fourth and fifth steps to wealth from my 7 Steps to Wealth Framework. That’s ask and earn. And you’ll hear Racheal talk specifically about how she thinks about and plans to ask to make money in her business and we’ll talk about earning as well. You’ll hear a little bit of us talking about plan. That’s the third step to wealth and specifically with Racheal, she’s talking about planning in your business. You also need to plan in your personal financial life. So, those are the steps to wealth that we’re talking about today. I hope you enjoy this very strategic and insightful conversation with Racheal Cook.
Hilary Hendershott: Racheal Cook, welcome to Profit Boss® Radio.
Racheal Cook: Thanks for having me, Hilary. I’m excited to be here.
Hilary Hendershott: Yeah. So, tell us how you ended up doing what you’re doing today. Tell us a little bit about your entrepreneurial journey.
Racheal Cook: My entrepreneurial journey, like many, is like a long and winding road. I came out of business school. I got both my undergrad and my MBA on entrepreneurship and small business management and I was recruited straight into corporate consulting specifically to work with small businesses. But if anyone could see this, I’m doing small businesses in bunny quotes because…
Hilary Hendershott: Yes, the air quotes.
Racheal Cook: Yeah. It was those small businesses where it was like under 200 employees and they were actually multimillion-dollar businesses but they weren’t like Fortune 100. And I was going out there and doing consulting for them, doing strategic planning and growth consulting but I burned out of corporate really hard, mainly because I was seeing clients between Washington, D.C. and Atlanta, Georgia. I was on the road six days a week. And so, I found myself taking a medical leave of absence, short-term disability because I had just literally run myself into the ground. So, I found myself on a yoga mat, as we do, and I realized I needed to change things around because I was severely burned out. And I had this period where I was like, “Well, I can really get to the root of what I need and decide what path I need to go on or I can just take a handful of medication every single day for the rest of my life and grind it out like climb that corporate ladder.” And that was kind of when serendipity happened because my yoga teacher, who became a really good friend, said, “Rach, I know you don’t want to go back to corporate consulting but my small business is struggling. Do you think you could help me out?” And so, I ended up running a yoga studio.
And within a few months, we turned it around. She was literally thinking she was going to have to close it down and we turned it around and suddenly all of the people that she knew that she had been in yoga teacher trainings with or that she had known in her journey as a yoga teacher, they were like, “What is going on? How are you doing this?” And she’s like, “Oh, Racheal’s been helping me.” So, it was like one of those things where it was totally a kismet thing where I ended up in that position and I realized that owner-operated small businesses, especially women-owned owner-operated small businesses, didn’t really have access to consultants like me who had the background I had, who had the strategic part and the financial part, who understood marketing and sales and operations for them to get a consultant like I was. It was just not possible like they couldn’t afford it. Those were not out there. The most they had was going down to their local Chamber of Commerce or SBA and hoping they’ll get some support. But it was a total like light bulb moment that, “Oh, I can help these businesses I really care about that matter to me because they were changing my life.”
So, that was 2008. I literally turned in my resignation. I did not return to corporate. I started working with yoga businesses, which turned into, over the years, more and more women coming up to me who are like, “I’m not a yoga teacher. I’m a life coach. I’m a health coach. I’m a parenting coach, a divorce coach.” And then the creatives came. “I’m a photographer. I’m a copywriter. I’m a designer. Can you help me? I’m listening to your content. It makes sense.” And so, I really focused on working with women entrepreneurs who are running service-based businesses, who are selling their experience, their expertise, their education to help transform people’s lives. And, yeah, that is in a nutshell how I got here all these years later.
Hilary Hendershott: I’m super curious. What did you do for this yoga business that turned it around so quickly and effectively?
Racheal Cook: Well, one is I looked at the numbers. The first thing I said is, “What’s your P&L?” She’s like, “What is that?”
Hilary Hendershott: What is that? Why would you want to know that?
Racheal Cook: Yeah. I was like, “What is your breakeven per class?” “What?” “How many people do you need in each class in order just to break even for the class? What is your overhead for this?” We started looking at like her lease agreement and realized that she totally had been taken advantage of because she didn’t know what she was signing. And it was those things that I think a lot of people who start businesses not because they want to necessarily be a business owner but because they’re so passionate about what they do that had a real disadvantage when it comes to understanding the business stuff and they just kind of stumble through entrepreneurship. So, for me, it was really getting clear on the numbers and then building a strategy around what will make this profitable and then where do you really want to go with this.
Hilary Hendershott: So, kind of like the small business MBA.
Racheal Cook: I mean, yeah, in a lot of ways.
Hilary Hendershott: Let’s get technical about this. Yeah. And from the P&L and knowing the numbers, I mean, running an effective business really is about producing profit and then that profit becomes the business owner’s income, take-home pay. And I see so many, you know, you tune into any entrepreneurial podcast and you hear the excitement about entrepreneurship and owning a business and they talk about their success in closing clients, et cetera, et cetera but then nobody talks about the money, right? It’s like, the context of all of this excitement and inspiration about business but then so many business owners are just making a mess of the dollars and cents.
Racheal Cook: Absolutely. And what breaks my heart even more is they’re working so hard for so little. And sometimes they’re scared to crunch the numbers because they realize, they’re like, “I’m working 60, 80 hours a week and if I were to actually figure out my hourly rate of what I’m bringing in, I’m probably going to make more working at Starbucks.” Right?
Hilary Hendershott: Yes.
Racheal Cook: And no one wants to face that, but we can do it differently.
Hilary Hendershott: And that’s why I tell the folks that I coach, I just want to give them something to shoot for at target, sort of a minimum bar. And I don’t mean this to be literal, but I tell people in my coaching program, “If you can’t pay yourself $250,000 a year, eventually after your startup phase, I mean, not from year one or maybe only by year five or whatever, but if you can’t pay yourself, you’re working full time and you can’t pay yourself $250,000 a year, you could just go get a job and have less stress, right? Now, there are lifestyle businesses where you start a business and maybe you’re not making $200,000 a year, but you’re able to work 20 hours a week when you want.
Racheal Cook: Totally.
Hilary Hendershott: And that’s a trade-off, too. That’s a great opportunity. But the point is if so many people get into business and their sort of question that they’re trying to answer is, can I just sell something? Can I get clients? Can I make this work? Versus can I pay myself a CEO salary? You know, and I think really hitting the money conversation head-on provides so much clarity for people. And that’s what it sounds like you’re doing.
Racheal Cook: Yes, definitely.
Hilary Hendershott: So, you say you hit burnout and rebuilt your business to run with ease. Let’s talk about the key features of a business that runs with ease.
Racheal Cook: Oh, my gosh. So, for me, like I said, I hit burnout. I discovered I have some chronic health problems and I’m not alone in that. A lot of women struggle with chronic health problems. Then I had my twins. I got pregnant with twins six months after I officially like launched my business. Don’t necessarily recommend all of that. So, I realized I had very clear constraints I was working with very early on. I knew I could really only work about 25, 30 hours a week because more than that was going to take away from me taking care of my health and me taking care of my kids. And I also knew coming from consulting, I was like, “Okay. I’m walking away from a six-figure salary. I need to replace that really quickly.” Because at the time my husband was a public school teacher so he was not bringing home the bacon. I was bringing home the bacon. I needed to be able to duplicate that in my business. So, the first thing I did was I crunched the numbers and figured out, “Okay. How and who do I need to work with in order to make sure that I can hit the revenue goals that I have without overloading myself?”
And I think this is another interesting conversation. I realized that for me, I really could only see clients about two days a week if I was going to do all the other things I needed to do in my business, if I was going to do my marketing and have sales calls and run my team and do anything else, build more leveraged programs down the road. So, I made sure that if I only had two days a week to work with clients or work on their strategy, then I had to make sure that all the prices made sense to hit my revenue goals. And I think that capacity thing is something a lot of people skip over. They just think, “Oh, I just need to make 40 sales or 100 sales in order to make this revenue level and they don’t think about what does it actually take to deliver those and will you have the bandwidth? So, that’s one huge thing that I did. The next thing is I hired support right away. Even when I didn’t think I could do it, I hired support. And I think this is something that, in fact, I’ve read a couple of studies that have said women generally hire too late. They hire slower in their businesses than male-owned businesses, which is fascinating to me but we tend to take stuff on and feel like we should do it all ourselves. Like, that Superwoman syndrome is so strong and we tend to think that when we’re hiring, “Well, I can’t afford it yet.” And we don’t think about, “Well, if I can figure out how to pay for this assistant or that bookkeeper,” or whatever it is that you need, if you can just figure out like what it’ll take to pay for them, you will get back so much time freedom.
So, I hired as many people as I could to support me as soon as I was able. I’ve had a virtual assistant immediately because I knew I needed that support. I started hiring marketing support as soon as I could because I knew that I needed it. And as I have grown, now my team’s at about – I’d have to check. We’ve changed a little bit. We just brought someone new on. So, we’re at about 12 people and they’re in different capacities. The things that have been the hardest for me to hire for is delivery of our offer because I am a perfectionist and I’ve wanted to do it all myself for a long time. And then I realized I can’t do that. If I am the sole person who’s showing up for calls for my clients or creating the materials and the content, I was like, “That is going to slow us down and really reduce our impact.” So, this year we’ve been hiring people to create content for us. We’ve been hiring mentors for my clients who I then mentor, and that has been huge as far as unlocking the potential for our business internally. I’ve also been hiring more people on the marketing side, which is another thing that I really had a hard time with. I love doing the marketing. I’m a marketing nerd. I love marketing and sales. But I realized that so much of my bandwidth was being taken up doing things that were more repetitive that I could streamline it and stop being the bottleneck.
So, things like hiring a podcast team to do everything for my podcast. So, all I have to do is like sit down in the seat and hit record and the rest of it happens. Hiring a copywriter to do our emails like I love doing the emails. I’ll do the emails all day long but I could hire someone who can do them just as good as I can, and then it frees me up to do higher-value activities like this, like having conversations like this and going out there and being interviewed or being able to speak or what have you. So, those are some of the big areas we’ve been hiring recently has been on the marketing side and the delivery side. The operation side has always been easy for me to hire for because I’m not super techie. I don’t know how things work anymore. And I don’t want to be responsible for like connecting all the softwares or the websites. I know that is not my gifting. My gifting is in the marketing, in the customer delivery but I knew that if I was going to make an impact and really grow even more in the business, I would have to start pulling myself out of some of these roles so that I can continue to grow. So, that’s a huge thing I think is getting that support team.
That is what allows me, one, to work 25 hours a week. Like, there’s no way I could grow at the pace we’ve been growing if I didn’t hire support but it also allows me like we were worried this week about an ice storm, right? So, my team already knew. They already had a backup plan. Like, “If Racheal is not able to be online, here’s our plan for who’s going to run the calls for her, who’s going to handle anything on her calendar, how is this all…” Like, anything could happen to me and my business would keep running, which is amazing. That’s the best part.
Hilary Hendershott: So, what I’m hearing is you designed your business to run the way you want it to run from the start. You designed it with the end in mind. And so, let’s talk about I think of these as when the rubber meets the road moments. So, let’s say there’s a podcast I want to be on. In your case, there’s a podcast you want to be on but that podcaster will only record at a time when you’ve said you’re not working. So, the option is, do I stay the course? And do I do what I said I would do the way I designed it? Or do I take this opportunity because maybe it won’t come again? Tell me how you think through that kind of choice as a business owner.
Racheal Cook: Yeah. This is a really good question. And anyone who’s a client of mine knows that I manage my calendar ruthlessly. Like, I have a calendar SOP for everything, and how we handle every single scenario. So, it’s very rare that I…
Hilary Hendershott: Really?
Racheal Cook: Yeah. It’s very, very detailed and it’s very rare that I’ll go outside of my calendar. And the only reason I will go outside of my calendar SOP is if it is a strategic priority for the business right now. So, for example, the last nine months I hired somebody just to pitch me for podcasts. I knew that a big strategic priority for us would be me being interviewed on other people’s podcasts like right now. So, I hired an incredible team. We put together an SOP and about 80% of the time they can fit those interviews and everything within the guidelines that I’ve set. But if they can’t, then we have a process they follow and they message me, and they’ll say, “Hey, the days we normally do it aren’t available. Would you be able to do this, this, or that?” and they give me some options. But I still give them guidelines about when I will and when I won’t do that. So, we have a decision-making process around that. And right now, because this is such a strategic priority for me, I’ll say yes. Most of the time we’ll figure it out and I’ll jump on a call on a Friday afternoon when normally I wouldn’t because it makes sense for our strategic priorities. Now, if something else came up that I knew was not in our plan right now that’s not documented in our strategic plan, then it would be a, “This is not a fit. This is a no right now.” So, for me, that strategic plan is what makes or breaks like how I make decisions on what I will or won’t say yes to.
Hilary Hendershott: I’m impressed to hear you have a calendar SOP but of course you would. Just from what you’ve said about, it sounds like you’re really big on the framework of business. You really, really get the foundations right.
Racheal Cook: Well, and I realized that if my team is coming to me to ask questions all the time, I think this is one of the big problems often we have when we start hiring team members is we think it’s going to free up time but it starts to feel like it’s not because they’re constantly coming to you to make decisions. They’re constantly coming to you to ask questions or to get feedback or to figure out how you would do it. So, we document everything like crazy because I want them to be able to make most of the decisions without involving me. And our goal is once we bring someone on the team and train them in their role, that I never have to come in and make decisions for them. They know exactly what our strategic plan is. We have a documented 90-day plan. We follow a 90-day planning system. So, they can go in there and make decisions and all I have to do is do like a final review of stuff. I shouldn’t have to be involved in like tons of decision-making. That’s not my highest and best use of my time and energy as a CEO. My highest and best use of my time and energy as a CEO is holding the vision and attracting new clients into the business and then directing the team, figuring out how are we going to continue growing, and developing this team to achieve that vision. If it’s not within that scope, then I shouldn’t be doing it.
Hilary Hendershott: I see why people hire you as a coach. What you have and what you bring is pretty rare in the entrepreneurial landscape. Let’s talk about ending entrepreneurial poverty. This is something I’ve heard you, I’ve read that you published about. Talk about how you discuss, how do you talk about money with your clients. Talk about your efforts to end entrepreneurial poverty.
Racheal Cook: So, not long ago, I was invited to speak at the U.S. Chamber of Commerce in Washington, D.C., and I was speaking on this panel of other entrepreneurial women who had just built these amazing businesses. I was just amazed in this whole room. You have to imagine this is in one of those beautiful old buildings in Washington, D.C. with the amazing architecture and there’s like 200 people in the audience watching us talking and asking questions about how we run our businesses and how we grow. And at the end of it, I had so many women asking me like how are you working 25 hours a week and pulling in a six-figure salary from your business and having all this? Like, how is that even possible? Like, to them, it didn’t compute. And so, I started asking. I was like, “Okay. What is happening here?” And I dug into the research. And the research showed that even though women own 44% of small businesses, they make 4% of small business revenue in the United States.
Hilary Hendershott: Oh, wow.
Racheal Cook: What? Like, isn’t that mind-blowing?
Hilary Hendershott: We’re chronic underearners. I know. It’s my mission in life.
Racheal Cook: We are chronic underearners. And then when you dig into more stats, only 12% of women entrepreneurs break six figures in total revenue. And so, I’m like, “Okay. What is happening right now?” So, I realized this is a real problem like the sustainability of women-owned businesses is at risk and we’ve seen it last year. We saw last year in 2020 because of the pandemic, at least 20% of women-owned businesses closed because of the pandemic, because they could not weather it.
Hilary Hendershott: Is that right?
Racheal Cook: Yeah. And that to me just showed women aren’t learning how we can make more resilient businesses that can stand the test of time. And so, how can we turn that around? Well, when we’re looking at entrepreneurial poverty for women, it really for me comes into three things. That comes into the financial side of things like we need to just have more honest, candid conversations about money and get into it and let go of the story that we can’t make as much or that asking for more money makes you bad or wrong or greedy or any of those stories that we hear. It also comes into play that when we think about entrepreneurial poverty, it comes into play with especially the women that I work with, with their time, they’re working way too hard for way too little, and they don’t have the bandwidth to turn things around. And then their energy. They’re hitting burnout so bad. Burnout is the big epidemic that is hitting women-owned businesses right now. And it’s so bad that they’re like it shuts down your ability to make decisions. It’s really causing this whole cascade of other problems. And it’s hard when you’re in that situation, when you’re working way too hard for way too little, when you’re hitting the verge of burnout. It’s like you can’t figure out how to get out of the mess you created.
And so, how do we end entrepreneurial poverty for women? We’ve got to start asking for help and getting in community together and learning about strategy, learning about the foundations of business, not just marketing and sales. And I know that’s what everybody wants to talk about in the world is like the latest online marketing thing or how to run a launch.
Hilary Hendershott: Exactly. Or not what to do with the money once you have it.
Racheal Cook: Exactly. And it’s like, what good is a seven-figure launch if you barely bring anything home by the time you pay out 50% to affiliates and then your team costs you $100,000 to do that launch. Oh, and then you’ve got this massive tax bill. Like what if we actually broke that all down and figured out if the end result is 100K in my pocket for the year, how do we do this in the simplest, most effective way that won’t burn you out, that won’t run your team ragged, that won’t have you going from launch-to-launch as if you’re living paycheck-to-paycheck? Because that’s the reality for most women-owned businesses. We saw, especially at the beginning of the pandemic, they are really only four weeks away from not having cash flow to keep the doors open. And if your business is just four weeks away from having to maybe put your business on pause or close it down, then it’s not a resilient business. It’s not going to make it long-term.
Hilary Hendershott: That statistic you quoted actually shocked me. I didn’t realize that the businesses that were really decimated by the pandemic were so much more of the women-owned businesses. That kind of makes me sad.
Racheal Cook: There’s been a lot more research I think right now about women leaving the workforce in general. And we saw in December, especially all of the jobs lost in December 2020 were women leaving the workforce. So, it makes sense to me watching all the statistics about women losing employment also correlates to women-owned businesses. I project, though, and this is my total hot take on what I foresee coming and I’d love to hear what you think, Hillary. I think that just like in 2008 when we saw a huge surge in women-owned businesses, I think right now we’re going to see a new surge in women-owned businesses because there’s not going to be traditional employment like it has been. We’ve already been seeing that jobs were changing rapidly, that the rise of freelancing and gig economy was starting to really take over. And all of those jobs that left, I really doubt that we will get a lot of them back. I think we’re going to see more people starting businesses than ever before and women are going to start businesses faster than ever before because not only do they need the money, but they need the flexibility because education’s never going to go back to normal. Our world is not going to go back to normal. We’re going to have to find creative ways to move forward. So, I do foresee a huge increase in women-owned businesses.
Hilary Hendershott: You know, and being on this side of entrepreneurship, and I do remember a time when I was petrified to have a life where my compensation was a function of me having to sell something, I thought, “Who would buy from me?” I didn’t have any confidence about that and that’s completely transformed now. But now that I am a business owner, I couldn’t imagine working for someone else. You know, I’m having a conversation with a couple of girlfriends who are going to come visit me in Puerto Rico later this year and they say, “Can you take Wednesday through Friday off?” And I can say yes and I don’t have to ask anybody and I don’t have to worry about my PTO time that I’ve banked or anything like that. It’s my company. And I can say I’m not working those three days. And that’s a freedom I’m never going to give up and you probably won’t either but it’s exactly what you’re talking about, self-determination. But the ability to raise a family or be engaged in some other activity that takes your time that did have a life that you design, and that’s what entrepreneurship affords. And I wanted to circle back to something you said about burnout and the inability to be strategic. So, having gone through burnout, if there’s someone listening, just something you said really intrigued me about how many people are suffering from burnout, what would you say to someone who thinks, ” I’m just really burnt out right now?” What is the solution? How do you get out of that? Let’s say it’s not the wrong business that they’re in. They’ve just worked themselves too hard. What are the ways people can resurrect their peace of mind?
Racheal Cook: There are a lot of pieces of the puzzle here because burnout isn’t just I need a day off, right? Burnout happens when your entire world is set up for you to fail, when you are not able to have good rest, when you’re not able to take care of your health, when you’re not able to take care of your core needs. And really what it comes down to when I’ve dug into the research about this and there’s a great book called Burnout by Amelia and what is her sister’s name? It’s a set of twins and they did a whole podcast interview on Brené Brown’s podcast as well, but they dug into…
Hilary Hendershott: We’ll look up the book and we’ll put it in the show notes.
Racheal Cook: Yeah. It’s Amelia Nagoski and her sister. I can’t remember her name right now, but they dug into the research around why are women facing burnout. And it’s just because we are under so much unrealistic pressure and stress and it’s just unrelenting. So, this is where we have to stop living and running our businesses by default. And I know that sounds so cliche because so many people say that but it is true. Like, you have to get ruthless with how you want to run your business and live your life. You have to set clear intentions for how you want it to be and then you have to create very, very clear boundaries around your time and around your energy. So, like I mentioned my calendar SOP, and to some people, they might be thinking, “Wow. You are like to the next level of controlling things.” Yes, because I’ve hit burnout and if I don’t actually document what I need and have a whole support team helping me stick to that, then I will default back to it so fast because I love what I do and I am wired to be a workaholic. I’m a type 3 enneagram. I love doing what I do. I can get focused in on a project and not look up for six hours like I’m the type of person who will do that.
So, I have to intentionally structure everything from how my morning looks, to how I run my day and my week and my business, to how I communicate with my team, to how I work with my clients. All of that is structured really to put boundaries in place, which is something a lot of women really, really struggle with. We tend to bend over backwards. And especially business owners, they’re like, “Oh, this person asked me for this thing.” Heaven forbid we say no or say, “Nope, that’s not how I work or that doesn’t work for me.” Instead, they’ll just keep killing themselves trying to accommodate for everybody. So, the boundaries are a really, really huge part of it. And having clarity just about exactly how you want to run your life in your business so that you can have time for the things that will help you prevent the burnout.
Hilary Hendershott: Perfect. Can you tell us a little bit about your own financial journey? Tell us a little bit about your relationship to money and any mistakes that you made along the way.
Racheal Cook: Yeah. So, I should say I was raised by two entrepreneurs. And so, for me, I’ve always had like a behind-the-scenes look at what small business looks like because both my parents ran their own small businesses. And even now like I just had a conversation with my dad about like what’s going on in his business. So, I’ve had a lot of really interesting lessons along the way about money, just watching and knowing so many small business owners my entire life. So, my journey with money has been an interesting one because I’ve always been the type to work and to have a job and to make my own money. I’ve always been super independent with my own money.
Hilary Hendershott: When did you start earning money?
Racheal Cook: Pretty early on. I always was babysitting and I worked for my dad and this was in the early 90s. I remember my dad has an insurance agency and he got a computer and this was right when they were making transition to like digital files. It was a big deal. They had computers when it was DOS. Do you remember the black screen with the flashing green cursor? So, my first job was like in middle school inputting all the data. I would take all the paper files and input it into his computer system. So, that was my first big job but I always worked because I was really into music. And the rule in my house was if you have an activity you want to do, you have to pay for it yourself. So, I paid for private French horn lessons. I paid for piano lessons. I was in orchestras. I paid for those. I paid for my own French horn, which is a very expensive instrument. And I did all of that through college too and in college, I started my first business. It was in the school of music and I thought I was going to be a professional French horn player because I didn’t think I was going to go into business for myself. I didn’t really know where I was going to go but all my friends were having their senior recitals, which is like the final exam basically if you’re a music performance major and they all had their friends and family coming from all over and they would host a reception afterwards. And so, I started catering my friends’ receptions. I was like, “I can do this. I can make hors d’oeuvres and like cater a reception.” How did I get this confidence at like that age? I don’t know. But I could make really good money…
Hilary Hendershott: Probably connected to what I’m going to ask you about next. Your confidence is so awesome.
Racheal Cook: I was just like, “I can do that like no big deal. Give me a crockpot and some meatballs like let’s go.” And I also started tutoring. I found out that the athletic department would pay $15 an hour to tutor. And at that time, I was taking accounting, I was taking econ, I was taking finance. And so, they didn’t have a limit to how many athletes I could tutor at a time. So, I would put together groups of like ten guys on the baseball and swimming teams who all needed to pass econ this semester. And I would get paid $150 an hour to tutor all the student-athletes. So, I’ve always been like, how can I make the money I need to make and figure it out? I’ve just always had that ability to go out there and make what I need to make. So, in a lot of ways, my money journey has just been this very strange confidence, I’ll blame my dad for that one, that I can make money when I need it.
Hilary Hendershott: That’s perfect. You know, I trademarked this phrase called The Money Operating System. It’s basically that core belief that you have about money. You hear people say things like, “Money doesn’t grow on trees or you have to work hard for money.” Mine was, “There’s never enough money,” so I was an overspender. But if your core money belief is, “I can always make the money I need,” that’s awesome. That’s super-empowered.
Racheal Cook: And even in times when I’ve, you know, because when you’re an entrepreneur and especially in my position, I’m the sole breadwinner. My husband left teaching seven years ago and there had been times in our journey where my business wasn’t making what I wanted it to me like I had twins within a year of starting my business. That was a slow year. And then I had my third child. And there have been periods, especially in the beginning, where it was like, “Oh, God, this is going to be kind of a slow month this month,” but I’ve always just been able to get out there and make it. So, one of the things I’ve always challenged myself and this is actually something my dad taught me. He’s like whenever he got in that situation where he knew he was going to have a lean month and he still needed to make payroll and he still needed to pay for everything, he’d be like, “I sit down and make a list of 10 to 25 people I could reach out to, to see if they needed something I had.” And so, I do that to this day. If I’m like, “Okay. It’s going to be a lean month,” I can look at my financials and say, “I need to make some more money.” How can I do that? I’ll sit down and list out like who are 10 to 25 people who I’ve been connecting with, who I’ve been emailing with, who haven’t pulled the trigger on working with us, how can I get those people in the door? And sometimes just that activity and getting out of your own way and not being afraid of picking up the phone or sending that email or voice messaging someone on Instagram, that can be the difference between a month where you’re like, “Oh, crap, how am I going to pay my team?” and “Oh, we’re good. I could put an extra 5K in my savings account.”
Hilary Hendershott: Right. And that’s the hustle. And it’s because money responds to action, whether the action is a verbal request or an email. But you don’t bring money in by thinking about it, right?
Racheal Cook: Absolutely. And even when you have every system in the world and you’re like, at this point, my business is doing so incredibly well. I’m still kind of shocked. My dad is shocked now because I make more money than he ever had.
Hilary Hendershott: Congratulations.
Racheal Cook: And he’s like, “How did you do that?” He just got last year when the pandemic hit, he’s 70 now, he’s like, “I finally understand what you do. I didn’t understand that people could work online but now I get it.” I’m like, “You’re so cute.” But even if you have all the systems in place, there will still be times where like you have little cash flow dips or a promotion didn’t get as many people as you want or you decide, which is usually what happens to me, you decide you want to do something new, you want to invest in something, or you want to buy something for your family. And then you’ve just got to use that muscle, right, to go out there and be like, like this summer I was like, “I want to make some extra money because I want to buy my husband a truck.” We had been a one-car family for a long time just by choice. We didn’t see the need in having two cars and paying two-car insurances and all that stuff. But he’s been getting into stuff, carpentry, and stuff. So, I was like, “I’m going to buy him a truck so that he can go have as much fun as he wants at Lowe’s and never have to worry about messing up the car.” So, I was just, “Okay. How can I pay for a truck?” I sat down, made a little plan, put it out there. We paid for a brand new truck. And having that ability to just be like, “I can make money whenever I want it,” it’s really out there. All I have to do is just make the plan and put it out there. That’s a game-changer. I wish more women would like I feel…
Hilary Hendershott: It is a game-changer.
Racheal Cook: It’s a game-changer and I know a lot of people talk about manifesting and that makes me crazy because I’m like, “Look, putting that on a vision board or listening to an affirmation is not the same as messaging somebody and saying, ‘Hey, we’re accepting five new people into this program. Are you interested?’”
Hilary Hendershott: Yeah. I mean, so much of what you’re saying resonates with almost everything I teach and I just want to circle back to what you actually did when you wanted to get your husband the truck, which was you went and created the money to buy the truck versus taking that desire out on the car lot and borrowing the money or leasing the car, which is essentially paying someone else compound interest so that you don’t have to suffer delayed gratification, and you end up paying so much more. So, I just want to point out the success of that strategy and tactic. So, kudos to you.
Racheal Cook: I’m a huge fan of that and I’m somebody who I’ve never thought to myself, “Well, I don’t have the money to get something I want,” whether it’s like when we bought the house we’re living in. I literally was like, “Okay. Let’s crunch the numbers. How much do I have to have for a down payment? And then what do I need to sell in order to make that down payment?” And within three months, I have the down payment for the house and we were good to go. And that’s kind of how I’ve always been. Like, I keep increasing my own personal take-home pay, and that’s kind of a slow, steady thing because I am conservative about like what my own salary is. I don’t want to put my business at risk by like just pulling money out of my business. I want to pay myself a nice salary and bonus myself a couple of times a year. But when there are those things that you have in mind, whether it’s a house or a car or a vacation like you could just sit down and make a plan and then make it happen on top of what you’re already doing.
Hilary Hendershott: Right. I love it. Thanks for bringing us in on your inner process there. That was great. I’m glad my listeners get to hear that. Have you made any financial mistakes that you’re willing to share that my audience can learn from?
Racheal Cook: Hiring a bad CPA.
Hilary Hendershott: What made them bad?
Racheal Cook: Well, I will say this. If you are a CPA or a lawyer, which are probably the two professionals everyone should have in their pocket, there’s a ton of CPAs and a ton of lawyers, they are not all the same, though. And I have definitely had CPAs who were kind of phoning it in and I was probably too inexperienced to realize that until I finally got frustrated because I was like, “I should be able to do something different here and they’re not being strategic.” They were just waiting until the end of the year and not really helping me plan or make decisions. And so, then I hired a new CPA and I went back through and they’re like, “Oh, my gosh, this person missed so much stuff for you. You could have saved like $15,000 in taxes last year.” Can you imagine like just finding out you overpaid that much? And that’s frustrating like I don’t mind paying taxes. I’m happy to pay taxes. I like roads, I like public school, all those things are great.
Hilary Hendershott: Yes. So, we all want to pay the least we can legally.
Racheal Cook: Yeah. Like, I’ve got three kids here like that $15,000 could have gone to something else. So, that’s a huge one for me is not having the right financial team in place. I’m also, I’ll be honest, like I am not the most detail-oriented person in the world. So, I rely on systems because I can miss things. I know that if my bookkeeping isn’t set up to be automated, then I’m in trouble because what will happen is I will ignore it until suddenly I have to spend like a day sitting down with a bookkeeper and going through everything and I’m like, “I don’t even remember what that was. I have no idea.” But if it’s automated and I know they’re being proactive with it, it’s a game-changer. So, for me, that was probably the biggest thing is not having a CPA and a bookkeeping system in place, but also just not having somebody who is strategic and who reached out to me and had conversations with me. Like, right now, the CPA I’m using right now, when the pandemic started, he was sending out videos to all of his clients, “Hey, I’m reading the stuff and here’s what you need to know about this.” “Hey, this is coming up soon. Here’s what you need to file for.” “Hey, I’m doing this for you guys. I want to make sure that you’re on the loop.” Like, he was so clear and communicative and I was just like, “This was amazing,” because so many people didn’t do that. They just hid from their clients. So, it doesn’t take much to stand out in that industry like just be helpful and be strategic.
Hilary Hendershott: I just want to point out that I did not ask for the secret shout-out. Thank you for pointing out the value of having a good financial team.
Racheal Cook: It is key. I mean, it really is because as you grow in your income, I was actually just having a message back and forth with one of my clients who’s the CFO for small business owners. And we were talking about like how many small business owner, again coming back to like women small business owners not really understanding like the foundational things, there are people making great money who are still making money as a DBA and they haven’t ever even filed an LLC or they haven’t actually heard about the things that they can put in place. And I’m just like, “Why would you not get these people on your team?” Like, I’m not a financial expert. I’m also not a legal expert. I need someone who’s got my back on that. And I think as you grow your business, there are just certain professionals you can’t skimp on. And if you skimp on these…
Hilary Hendershott: Unfortunately, there are some mistakes you can’t unmake. Yes.
Racheal Cook: That’s the thing. Like, I’m thinking about like your legal team, what we saw last year. And if you’re in the coaching industry or the online industry, we saw a ton of people who had to face refunds and chargebacks and most banks will just issue it. They won’t really ask for the business owners’ input on that. So, if you don’t have like good terms and conditions or contracts, you have no recourse. You can have a client that you delivered all the services to and they could go in and do a chargeback on you and you might not have any protection, but if you have the right legal stuff in place, you protect yourself. And I think that’s so important. I had clients last year who lost all their events. They were hosting different events and retreats and things, and they had to issue out tens of thousands of dollars in refunds. But that was actually less than they would have if they didn’t have the agreements in place that allowed them to reschedule the event or put an alternative event in place. I’m just a big believer in protecting yourself.
Hilary Hendershott: Yes, exactly. Exactly. And so, if someone’s listening to this conversation and they’re hearing, you know, you speak and they’re hearing you bring distinction to business that they know is missing in their own business, give folks a sense of your process made perhaps by telling a story of your favorite client that you worked with. How do you work and where do you go to work in someone’s business? How does it look if someone engages with you?
Racheal Cook: So, currently, the primary way that we work with all of our clients is through the CEO collective. And this is a year-long implementation program. We focus on helping women implement their strategic plan. So, we focus on this because a few years ago, again, everything I do is a collaboration with my clients. They’re the ones that told me how much they needed this. A few years ago, I hosted this event. I was like, “Let’s do a one-day strategic planning event. I think this might be helpful for people.” And it was just like an experiment because at the time most of my business was online courses, teaching, marketing and sales, and things like that. So, I hosted the strategic planning event to teach people how to build a 90-day plan. And that unlocked everything for the direction that I have shifted to because what I realized is we are in an age of information overload. And the difference between entrepreneurs who succeed and entrepreneurs who just hoard courses in their Dropbox folder is implementation. It’s the ability to synthesize all of the information they’re getting and say, “Okay. Here’s my strategic focus and here’s what I’m going to implement and here’s how I’m sticking to it so I don’t get pulled off-course.” So, we started basically teaching what we call our 90-day CEO system and this is where we create your strategic plan, we break it down into 90-day chunks, and then we help you stay accountable, as in my team checks in with people every single week.
We actually have their 90-day plans in our coaching system. We’re checking in with them, asking, “Hey, how did you get this done, this done, this done?” Because accountability is hard. Staying accountable to yourself is hard. And once we get people through that, we see amazing things start to happen. So, some examples that I love, one of my clients actually owns an incredible company. She owns a company that makes hair bows for children like hair bows like a cute little barrette.
Hilary Hendershott: I probably owned a few.
Racheal Cook: And when she came to me, she was so stressed out because she’s a mom of seven. She homeschools. I’m just like, “What?” And she had accidentally started this…
Hilary Hendershott: Did you say seven?
Racheal Cook: Seven. And she accidentally started this hairbow company because she got in a financial pickle and was like, “How can I make money to support my family? I can make hair bows. This is something I know how to do.” Well, it had grown really well. She was making tens of thousands of dollars a month, but she was working all the time. She was stressed all the time. She was so burnt out. So, once we got her into this 90-day planning system and we were able to look at her business, we realized you don’t need to do all the things. Here are three things you need to do. You need to look at your prices and your profit margins. So, we looked at her prices and her profit margins. We needed to get her plan in place so that she wasn’t like winging it each and every month, trying to figure out what she was selling. And we needed to put systems in place in her business because she was literally running around like a chicken with her head cut off, trying every single week to sell hair bows. And fast forward a year, who would have known that hair bows would have been such a hit through the pandemic? But she grew a business 162% last year.
Hilary Hendershott: Yeah. Nice!
Racheal Cook: And she did that going from like 60-hour workweeks to 30-hour workweeks.
Hilary Hendershott: She’s probably so grateful for you.
Racheal Cook: She’s amazing. She is just absolutely amazing. And to me, that’s the beauty of strategy is it’s not about doing all the things. It’s about really being able to look at the whole picture and then kind of laser focus in on what are the one or two or three levers we can pull that are going to make the biggest impact. And that changes the game for people so quickly.
Hilary Hendershott: That’s amazing. Okay. Is there anything we did not discuss today that we should definitely get in for the Profit Boss® Radio audience?
Racheal Cook: Well, if you are loving this and you’re a podcast listener, come follow me on my podcast, Promote Yourself to CEO, where we talk about how you can start and scale service-based businesses without the hustle and burnout. I publish an episode pretty much every single week. And if you liked what we talked about today, then you got a taste of it. It is all very practical and very profitable. You will not hear any hype or any tips or tricks. You’ll hear very strategic insights in how to sustainably grow your business.
Hilary Hendershott: And I think that’s really clear just from how you speak is that what you teach is very real and it’s the fundamentals that really set people free. By the way, I used to have a module in a business owner course that I used to teach called Promote Yourself to CEO. So, I’m a big fan.
Racheal Cook: I love that.
Hilary Hendershott: Well, we resonate. Okay. Thanks for joining us today, Racheal.
Racheal Cook: Thanks so much for having me, Hilary.
Hendershott Wealth Management, LLC and Profit Boss® Radio do not make specific investment recommendations on Profit Boss® Radio or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.