This is the Business English Podcast, Episode 445.
High Overhead, How to Talk Like a Business Owner.
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Hey there, Michelle.
How is everything? Everything is good.
Lindsay, how are you?
Excellent. Excellent.
What are we getting into today on business English?
Yeah. Oh my gosh. This is going to be interesting.
I mean, Lindsay, was it a hard adjustment for you to become a business owner?
Oh, Michelle, it was so long ago.
Yeah. You're a veteran now.
It really was. Honestly, I don't think so because I think that I was already sort of thinking in that way, kind of from an early age, somewhere around my late 20s.
I was already thinking as a business owner.
So it was kind of a natural adjustment for me.
Yeah. Yeah. Oh, that's good.
Yeah. And I will share.
Yeah, my family also now has a business with you and I have spent time talking about it.
It's really Dan's business, but I help him a lot.
So yeah, I know about that adjustment.
It can be very overwhelming.
There's so much to learn.
I mean, maybe you have the right spirit for it, but there's just a lot to learn, right?
There's a lot to learn.
And you're right, especially if you have spent half your career working for someone, making a paycheck, that kind of thing.
And then you go out on your own.
I could see that would be really a big adjustment, right?
Yeah, for sure. So guys, even if you don't own a business, don't turn this off because this is going to be really important.
Also, if you don't own a business, because this is really about finances, what we're talking about today, important terms with finances for business owners, But also for someone to be talking about what their boss with their colleagues all that important stuff So make sure that you know, don't shy away from this episode and say I'm not a business owner Don't worry, right?
Right? And I know there are we survey our listeners every year There's always a chunk of you all who are business owners who are entrepreneurs.
We love that But if you're not I can tell you as a business owner It's really nice when your team has these ideas in mind, right?
right? Maybe the vocabulary is not there necessarily, but it will be after this episode.
But the concept of there is overhead, there are expenses that happen every month and that's a significant thing.
That's really, really helpful to have an awareness of, right?
Yes, huge, huge. Yeah.
So we're going to go through this today, but guys, make sure that you hit follow wherever you listen to the Business English Podcast. We want to make it easier for you.
Let the episodes outs come to you and we don't want you to miss anything so make sure you hit follow yes love it hit that follow button now so again these are the key terms today that deal with focusing especially on money because money is what makes a business be able to continue every month yeah um yeah let's get into it michelle i already hinted at the first one what is it overhead so yeah this is the money that it takes to make the business to keep the business running every month um so how much you have to spend so like what is included and overhead ones yeah well things like payroll so your
staff your team your rent if you're renting a space or if maybe you have a mortgage on a space alone where you start you most most businesses that are physical spaces and have inventory need a loan to get started right yeah marketing expenses and other expenses whatever keeps you you going, right?
Yeah, exactly. And it can change from month to month.
There are some things that are set, right?
Like, you know, for Dan, you know, we have a high rent on the space and also spend, you know, so there's a large, there's a high overhead.
Some businesses don't have that much of an overhead.
So that's great. But there, you know, there are challenges in other ways.
So, So but yeah, so let's give an example.
Our overhead isn't that high yet because we are working remotely.
But once we get a space that will change.
Yeah, for sure. And yeah, there are good things about being a physical business because you're physically there.
People pass you every day.
There are risks too, right?
Because we do have that rent, usually that really high expense.
So yeah, overhead is a bit.
And then on the P &L, we talk about direct expenses, indirect expenses, if we want to go one level deeper, but overhead is a good broad term, right, Michelle, to get started here.
Yeah. Yeah. Sometimes, yeah, the P &L, what is P &L?
So a profit and loss statement, right?
So I think for Allers English, we didn't have this for the first like five years of the business.
We just didn't have a P &L.
I was like, there's money in the account.
That's it. That's all that matters.
But at some point, hopefully sooner than later, you're gonna want to have a P &L to know how much what is your what is your what is your profit at the end of the month right right right right and that takes us to this next one which is cash flow so this is the money going in and out right Lindsay yes so for example we need to check our cash flow because we've noticed we didn't profit as much this month and we need to figure out why yes Yes.
And sometimes you might hear the term cash flow positive, right?
A business is cash, it just means there, you know, there is cash flow, cash flowing in, the cash flow is good, is okay.
Yeah. And then budget.
So, you know, we use this in and out of business all the time.
I mean, so the noun is how much you can spend.
And the verb is to make those decisions or plan plan for how much money is spent.
Oops. So I'm going to move these.
I'm just going to here.
We have some examples here.
I'm going to put them up here.
So for example, we need to make sure to budget, right?
So for the noun, for the CE courses, for the staff.
Yeah. To, to budget, meaning for the verb, right?
We need to make sure to budget.
Yeah. Did I say noun?
Yeah. You said noun.
That's okay. I said noun and in my head I said verb.
That happens to me all the time.
I hate that. Yeah. Yeah, yeah.
Anyway, yes. And then here's the noun form.
What is our budget for the end of year party?
A lot of businesses like to put on some kind of a holiday party, right?
But at the end of the year, money might be tight because maybe people are cashing out on PTO or something, right?
So it can be tricky at the end of the year.
Yeah. Right, right, right, exactly.
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All right. Break even.
Yes, this is a good one.
So Michelle, what does it mean to break even?
Yeah. So sometimes you might hear break even or break even point.
So this is when you bring in money to cover your overhead, right?
So the money that you that you actually that the business brings in covers the overhead and if it goes above that that's when you can profit yes exactly so here's an example I can't believe we finally broke even yeah or we hit our break -even point in March but we still need to profit more so again yeah to break even or a break right so that we finally broke even so that's a verb but our break even point that's really a noun right yeah and on the mental side for an entrepreneur for a business owner it can be hard i mean just to think that you've just broken even right you've worked so hard but you
had so many expenses that you just broke even so you're not making money right and it's tough it's a real undertaking owning a business it really is mentally physically spiritually it's a big deal Yeah.
And you might start to break even for a few months and you're like, okay, things are okay.
Like now I'm just going to get used to breaking even and this is all.
And then something happens and you have a slow month and you're, you know, it's, it's hard. Everything feels so heavy.
If he doesn't, yeah.
When your life depends on it, really.
Yeah, and our listeners who are entrepreneurs totally get this.
I mean, on the digital business side, there can be scary, big, spontaneous expenses.
Like sometimes for our iOS, Android app, Apple or Android will say, you need to have this updated.
And it means a huge bill that I didn't expect.
And we just have to do it and we have no choice.
Otherwise we just have to shut down the app and we don't wanna do that.
So it's like all of a sudden multiple thousands of dollars that we didn't necessarily put into the budget.
Right. But it's just you got to pay it.
Right. Or like for Dan, for his job, it's like he has like dues he has to pay or certain like insurances that he has to get.
And all of a sudden it's like, oh, we were going to break even or we were going to whatever.
And then it's like, oh, actually, this is going to be a month where we have to pay a lot out.
Mm -hmm. That's demoralizing.
Yeah, it really is it's really hard So we got to focus on the long -term goals of the business.
What is the vision of the business?
What are you trying to create?
Right, that's where it comes back to the customers right like cost per customer.
Yeah Yeah, this is yeah what exactly how it sounds I mean the calculation for how much you pay to get each customer Right.
So you are paying for customers, right?
You have to and everything, what your staff does, marketing costs, marketing expenses, all of these things.
So and then you can make this calculation and kind of use that also to track your success.
And the hope is that it kind of goes down.
You don't have to spend less on customers.
So, for example, our cost per customer has been decreasing, which means word of mouth is starting to make a huge difference for us.
And that's the holy grail.
right? That every business owner's dream is word of mouth, by the way, guys, there's an episode about that.
I know. And we have to put in a plug, tell your friends about all ears, English and business English.
Of course, that's the best. I think that is actually one way that a lot of our listeners have found us.
Their friend told them about our shows and you know, for brick and mortar businesses, that's a thing too.
That's what we, we, what's what we want ultimately, right?
Yes, exactly. Exactly.
All right. So Michelle, what's another sample sentence here?
Okay. So here we go.
Have we figured out our cost per customer?
That would help us make decisions, right?
So maybe you realize, maybe you have like a marketing agency and it's not going that well and you realize you're spending too much per customer.
Maybe you want to look somewhere else.
There's all these statements and things you have to look at that have nothing to do with the original reason why you started the business, right?
Of course, things can be very, what's the word, circuitous, right?
You're in all these circles of spheres of places that you never thought you would be.
But yeah, I mean, I think my dad also used to own a similar business to yours, Michelle, an optometry business.
And I think the reason we're talking about these terms today, why they matter for connection is exactly that.
So I think my dad sometimes felt a little lonely in running that business because he was maybe the only one focused on the cost per customer, the overhead.
And that can be really lonely.
But there were occasionally certain employees that would say, what's our overhead like?
Or what's our cost per customer?
How can we lower that?
That's going the extra mile.
But it can make a big deal for your own position in the company as an employee, right?
Yeah. Yeah, absolutely.
So definitely so much to think about.
So let's do a role play with these um so here you and i own a small business and we are going over our quarterly numbers okay here we go all right okay so it looks like we did break even this quarter so that's good i just like to see some profit yeah i think it's tough because our overhead is so high yeah and i think we have to budget for seasonal changes as well true i looked over the cash flow statements and everything looks correct yeah i saw that thanks and has our cost per customer decreased yes that's a huge win for this quarter excellent yeah sometimes i walk past businesses like in new
york and manhattan and i wonder how the heck do they afford that rent me too this is incredible i don't even know you know they're selling it's just like a convenience store or a little like donut shop i mean how can they possibly make enough money to cover it yeah yeah Yeah, I know.
I definitely have had those thoughts as well.
All right. So here we use a lot of the key phrases here.
Right. So we said you said it looks like we did break even this quarter or you could say it looks like we broke even.
We could put that right into the past tense.
Right. Yeah. Mm hmm.
Yep. What else? And then you said, I think it's tough because our overhead is so high.
So the money that we like, maybe we have a space and we have a high rent or we have a high business loan and we need a lot of staff members.
right? For sure. Absolutely.
And then you said, I think we have to budget for seasonal changes as well.
And then you said, I looked over the cashflow statements and everything looks correct.
Yes. And then you said, I saw that.
Thanks. And has our cost per customer decreased?
Our CPC, our cost per customer.
Yes. Love it. This is a very businessy conversation here with two co -founders love it and again guys even if you don't own a business you know these are these are words that you should know you should realize that especially if you're working for a small business right that you know you might think about oh the overhead and the but you know all of these things we all want the business to succeed right yeah these are definitely important for connection for business owners but even for even if you don't own a business it's important Exactly, Michelle.
I can guarantee you from first -hand experience, and you'll probably agree with this, Michelle, if you work for a small business, your boss is obsessing about their business all the time.
Twenty -four hours a day, seven days a week in the shower, in bed.
They are on Sunday afternoons, they're obsessing about it.
If you can walk in a Monday morning and maybe open up the topic of overhead, just dropping it and showing an awareness of it.
That's huge. That's huge.
Showing care. Yeah, definitely.
All right, guys. Also check out Business English episode 444.
We did this was I think you and Aubrey.
How did you find this episode?
Love it. So good. All right.
Good stuff. And guys, go ahead and share Oller's English with a friend or Business English or both shows with a friend.
All right, Michelle, we'll see you very soon.
Have a good day. All right.
Bye. You too. Bye. Thank you for listening to Business English, a podcast just for you, the high achieving global professional.
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