58 Mins of Advice That Will Blow Up Your Business

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58 Mins of Advice That Will Blow Up Your Business

Summary

  • I love the concept of businesses with low cancellation rates like a dog poop scooping company. Aim to structure acquisitions to avoid wasting money and maximize value.
  • Offer big incentives for operators of acquired companies to ensure successful integration.
  • Use detailed Standard Operating Procedures (SOPs) for each part of the business to streamline the process.
  • For better email marketing, ensure your lead magnet is valuable and consistently split test subject lines to improve open rates.
  • Accept that churn is part of working with very small businesses, but aim to minimize it by improving your product.
  • Increase customer retention by simplifying your product and focusing resources on activation points that lead to long-term engagement.
  • Selling data and analysis over narratives appeals more to high-level executives.
  • Track and demand data to prove the effectiveness of your solutions, and integrate follow-up services that maintain the value you've delivered.
  • Adjust your business model to thrive in both peak and off-seasons by emphasizing the benefits relevant to each period.
  • To instill a "let's get things done" attitude in your team, hire only those who share this mindset and move on quickly from those who don’t.
  • If your most popular services aren't profitable, focus your marketing on attracting clients with upsell potential.
  • Solve indecision by math—test different marketing and upselling strategies to find the highest conversion rates.
  • Keyman risk is reduced by breaking down complex roles into simpler tasks that can be delegated.
  • Avoid drastic changes that dilute the value of your product; test price hikes before altering your successful offers.
  • When considering selling your business, gauge the risk of continued growth versus guaranteed life-changing offers.
  • Focus on learning marketing internally if you’re starting small and understand agencies’ strategies to get results.
  • Bootstrap businesses grow slower but are fundamentally sound; invest earnings back into the company strategically.
  • Plan for your next move before selling to avoid loss of purpose.
  • Establishing referral partnerships and investing in effective agencies can provide sustainable growth for lead-intensive businesses.
  • Protect your mental health by keeping perspective on success and failure; no one cares as much as you think.
  • Offer maintenance plans to extend customer value in businesses with one-time transactions.
  • Consider scaling by balancing current financial abilities with hiring plans carefully. Divide complex roles to manage growth efficiently.
  • For specialized industries, adjust strategies and offers specifically to match your target customer, maintaining profitability.

Video

How To Take Action

A good way to start is focusing on low-cost, high-value actions that can be quickly implemented for maximum impact. Here are some strategies:

Minimize Churn

  • Improve Your Product: Simplify it. Remove features that aren't being used or introduce them gradually. Focus on critical activation points that lead to long-term engagement.

Email Marketing

  • Value Lead Magnet: Make sure your lead magnet offers real value.
  • Split Testing: Regularly split test subject lines to find what resonates most. Google “split test headlines for email subjects” and adapt the best ideas for your niche.

Customer Acquisition

  • Incentivize Operators: When acquiring other companies, offer big incentives for operators post-integration to ensure they are motivated and the transition is smooth.
  • Referral Partnerships: Build partnerships with businesses that have similar customer bases. Offer competitive referral fees to attract their clients.

Standard Operating Procedures (SOPs)

  • Detailed SOPs: Break down each business component into detailed SOPs. This ensures consistency and improves efficiency over time.

Testing Offers and Pricing

  • Test Incrementally: Start with low-cost tests. For example, test new marketing headlines or slightly different price points to gauge the market’s response. Save high-cost tests for bigger changes once smaller changes show promise.

Content and Brand Building

  • Creative Outlet: Use content creation as an outlet for new ideas. This allows the team to process more substantial changes slowly without disrupting the workflow.

Customer Retention and Maintenance

  • Offer Maintenance Plans: Introduce maintenance or follow-up services to prolong customer relationships and boost lifetime value.

Seasonal Business Adjustments

  • Targeted Messaging: During off-peak seasons, emphasize unique benefits like convenience or comfort to maintain customer interest and drive utilization.

Mental Health and Perspective

  • Stay Grounded: Keep a perspective on success and failure. Remember that most people will not care about your failures and successes as much as you do. It's essential to maintain your mental health to continue making sound business decisions.

Team Attitude

  • Hire and Fire Accordingly: Build a culture of efficiency by hiring people who share your 'get it done' attitude and moving on quickly from those who don't.

Putting these strategies into action should help streamline operations, improve customer retention, effectively utilize marketing, and maintain a healthy work environment—all without significant expenditure.

Quotes by Alex Hormozi> #### "Test pricing, we just try it out and we see"

– Alex Hormozi

"Finding routes, I mean, I would study everything about that business"

– Alex Hormozi

"You have to do all the work to figure out what it really is"

– Alex Hormozi

"I make sure that the test we have the highest return"

– Alex Hormozi

"Talk to 10 of them before you buy"

– Alex Hormozi

Full Transcript

an audience of business owners ask me questions for four hours here are the best moments uh I own a company that uh basically Scoops up dog sweet uh I love these typ of business no one cancels yeah we got we're doing about 2 million a year and I want to get to 10 million a year as fast as possible uh poo poo The Profit sorry go ahead's uh and our business it's it's somewhat seasonal as far as the acquisition goes we basically double every first quarter of the year when all the St is melting off and everything uh but through the rest of the year I want to uh start looking at acquiring other dog companies basically uh uh so my question is when you're going to acquire other companies how do you integrate it with your company to uh basically not let your money on fire and to maximize the Enterprise value for an investor so obviously the the is going to be a huge and how you structure the de um are you keeping the operators on afterwards or no uh probably depend on the uh on the business and the deal I would have some sort of big incentive for them to have bonus basically post integration and so that way they're going to be highly incentivized to you know you put hey like we're in this together if this doesn't work then you're not going to get paid um and I think that that's that fair I think it's pretty fair um for especially a small bus um because I'm assuming the be somewhere in there what were we saying poo poo platter um profit yes so making making the deal structure um I would try and separate the business out into what what the components are right so it's like you have the routes that they do for you know poop poop pickups or whatever right so you have you've got the customer list then you've got the the people who do the poop scooping um and then you probably have some sort of administrative stuff I don't know if they if sales are marketing I'm guessing you're pretty good at sales and marketing so you don't need their sales and marketing you're trying to buy the book of business yeah so um it's just I think it's you'll probably just end up having an sop for each of the core components and there's a really good book um for you no one else needs to read this uh it's called Uh how to make a few billion dollars um the guy just did three rollups over his whole career and each rollup he sold for like 10 billion um and so it's really just understanding that all the business have components and you basically just have a massive checklist that you do when you integrate a business it's like that's literally it it's just the world's longest checklist and every single integration you do you get a little bit better and you add things to the checklist until eventually like you've covered every single thing and you can go faster and faster and if have you studied Waste Management yeah yeah I mean because literally I mean yeah you should uh I mean that was literally how they grow so finding routes I mean I would study everything about that business um but it's really just breaking down the components and having Sops that are associate with them uh do you need to Rebrand the businesses you buy under the same brand to make it more attract acve to investors do that not really matter as much um I would probably Rebrand it if you really want to do the big play you'll get a premium for it yeah thank you yeah you bet hi hello so my question is regarding emails email marketing and the thing is that we currently have a quite good leak magnet okay which is free and which is good but the problem is that as soon as they opt in and start to get emails from us it's only that can about an open rate from 20 to 25% something how can I push that up um so two things one is how good the lead magnet is so I know to People Want it but the question is how good is it once they get it fundamentally the value deliver always reinforces them consuming more value and so like you grow an audience by delivering more to them than it costs them to consume it and so they make a good trade on their time compared to other trades on their time from other people they could be consuming information from I mean fundamentally that's how I built my brand right and so if you think about the lead mag as a microcosm of that then that's that the other obvious one is just that you need to split test uh subject heads are you split testing subject heads on a regular basis for the email flop I'm not exactly sure because I'm not in charge for the email marketing I'll bet you you're not so yeah I mean it's just it's so like a lot of this stuff just for for everyone is like I I get asked sometimes a lot of questions that can be that can be solved with a test and not like I can tell you the answer and so when we want to figure out pricing we test pricing you guys saw a [ __ ] up yesterday from it right so like we test pricing um and that's how we that's how we do things like we just try it out and we see and so we do the same thing we just like see if this headline works better and then we see like we run tests constantly and I would say that's probably one of the things that has worked really well for us and what I would warn you against is like you're on the like if there's a pendulum of testing right there's like we test everything all the time and there's like we haven't tested things what's a test um like there's kind of a sweet spot because whenever you do test there's a cost of testing which is guaranteed you have a cost of change like you have mess ups that happen right um and so those are guaranteed but the upside of the test isn't guaranteed and so you want to make sure that the tests that you're doing are worth it and so for you the cost of the test doing a split you know split test on a subject ad is probably not that much if you want to test a change in your offer it costs more you got to retrain the team you got to retrain the Fulfillment there's more things that have to happen so there's kind of like low cost tests and high cost tests and not all high cost tests are going to have high output and sometimes low cost tests have massive output and so you want to kind of order these from like okay what is the lowest likelihood test that could have the most output and you just literally order them you're like all right well let's grab one off of here and we do them in that orderes that make sense yeah so we literally have a big list it's like Alex ideas where do I find for my stuff right and so we so I because so this is to your add question that you had earlier like I highly recommend doing this it took me a long time to learn for like for Lea and I to figure out this Dynamic was that I had about one new idea for our business per day and Lea's like we can do like one a quarter and so I was like what do I do with all these extras and so I would just bottle them up and just go nuts right so instead I did two things one is that I started making content to get ideas out get my creative juices out so it's kind of an outlet so you guys are like the product of a creative outlet for me and the other thing is having my big list of ideas and it's literally called Alex's big list of ideas and I just have this Mass because you're lose it so you write it down and then next week like you know actually wasn't that good of an idea but I was about to change the whole company and now I I I actually think it's F right and so um by having that list it kind of gives you a little bit of space between them because you're always emotionally invested in it when it's your idea it's fresh and so giving it some time to to settle it allows me to look at these and be like no even with like a month of sleep this is a good idea we should test this one and it's worth the worth the cost and so that's how I that's how I get some of that Creative Juice out and I make sure that the test we have the highest return so in regards to email marketing you just think of a nice fancy title and then you just write it down and sleep some dayses about so um honestly like the first thing I would do is just Google like split test headlines for subjects okay yeah and then you'd have probably you could probably find like 500 and be like okay which of these apply to my Niche all right perfect thank you that box yes sir hey man yes hello I have a SAS company it's an e-commerce fulfillment platform that specializes in Drop Shipping fulfillment cool we have super super high churn 33% because a month a month yeah because 99% of our traffic is a new business that they're trying to start an e-commerce business we've done surveying market research like I'm going to make your day but keep going okay the the their their issue is they need to find which products they want to sell and drive profitable traffic which just can't figure out how to operationalize that yeah so you have something called structural turn um which is something to not lose sleepover okay thank you like Shopify has more turn than you do yeah so it's just it's the nature of getting into the vsnb space so vsnb is very small business owner SB and know mid-market then you go up to Enterprise um but you're just you're in the vsnb space which is almost the same as consumer just the game yeah but the good news is there's a gazillion of them and so that's the trade it's an infinite Market almost yeah yeah and so like if you think about what shopify's business model is it's like I mean it's in your space right is that they have a very small fee for people to start and then they get their upside from payments for the people who self self- select as the you know highest and best users and so they make money on people who make no money and then once those people make a lot of money they make more money with them and so it's kind of like a dual-sided uh monetization structure and so that might be something that I would explore yeah we're looking into payments but I'm trying to figure like I thought that was the constraint my business but churn yeah um it's I mean 3% a month for vmb is not bad 33% oh 33 yeah yeah that's that's worse than three yeah um super high it's 11 times worse than three um I was like dude you're doing fine I love I was like I'm make your day I love three doing great um yeah got it yeah so I I'll bet you can get that probably closer down to 10 yeah um I would look at with shop I think they're like at 10 but like it's it's high yeah um and so everything so my recommendation because obviously we have school and so I'm I'm in the vsnb world um is you want to think about improving the product through elimination rather than addition so it's how can I eliminate things from the product that people aren't using what are the thing like the number one reason people cancel is overwhelming you get distracted overwhelmed there too many things they don't know what to do and so it's really trying to pull this this goes for service too by the way um trying to pull as many things out and like you can introduce things later that they don't necessarily need yet so it's really just thinking what is the one thing I need them to do right now and then until they do that I'm not going to show them something else and then once they have done that I will show them the next thing to do it's just trying to keep as little friction assumingly possible and that like the 100 golden BBS it's no there's no Silver Bullet it's it's just looking at right now like you probably have a DAT a guy hopefully on the team that can run like a regression analysis on on the cohorts yeah and so if you do you know what your activation points are yeah we know the golden path okay yeah well then just I mean literally all resources go towards that thing like if that is the constraint of the business then I don't care about getting new members I don't I mean like I care about them in so far as we need to test the cohort out to make sure that it's working but I'm not doing any growth initiatives I'm not doing any new features everything that we're focused on is how do we get more people to that activation point and I don't care about anything else that's it and so if the activation point is right then will go down if the activation point that you have is wrong then you have to find what it really is yeah good day Alex how you doing hello hello my name is Josh I own a business in Australia and we help universities Australia Australia and we help universities or Unis in Australia keep their students and keep them happy so they don't drop out so your college video was really applicable to us I think the Australian government was listening to you because they introduced a policy this year I know I came to tell that new in person I know uh they introduced policy where Australian Unis to receive funding have to dramatically increase the amount of low socioeconomic students the one that benefits most from uni which is cool and then they released a policy that said four essentially $60 million of student funding has to go to clubs societies fraternities to support those students so eight years ago I started a business on the premise that uni should really invest in supporting students because it keeps their customers there and that's good for UNIS and good for students so I have a woman in a $60 million red dress okay and my question is normally I'm selling to a student engagement professional it's their first professional job now I'm selling to their boss's boss okay so I have a a value equation basically for student retention that we've created this instrument which shows them why students drop out where their Dropout rates are benchmarks it exactly what to do sounds good and then our training Solutions are the answer to that right but I've spent eight years selling training Solutions not data and Analysis I'm not used to selling to the CEO I'm used to selling to their employees say again they just want the data they just want the data the higher up you go just for everybody for Enterprise sales the the more money the person makes the more they don't care about the narrative yeah that's just been my experience now of course stories sell and there's like sure you want to have a you know a meta narrative if you want but like until you show them the math behind it which is like what is your return on this and that's what they want so my problem was my churn I'd lose maybe 20% per year the ones who'd hire me for training the students go it's the best training been to it's amazing but they wouldn't be able to tell their boss or their boss's boss the data to prove that it was good for retention well you have to track the data you have to track it yeah but they would never give me that data so I couldn't ultimately prove you have to make a contingent like you have to do it you have to do it you have to do it right in order to work with us like we have a proprietary technology and it feeds off of data and in order for us to make your product or solution better we have to get this data so we can Implement in real time and so right now we're start with the vanilla version yeah but in two years this is going to be the Super tailored version to your University so we know that you know all universities benefit from these five things but there's usually five to 10 other things that are we will learn from this data so you have to do it so these are the three things that we'll do to make it easier for you to actually get this data back to us so we can help you make more money yeah can I ask you one quick followup on that the tool that we do that now is a $30,000 product per year on subscription that uh universities have started to buy before that our LTV of training was $34,000 okay so the tool that justifies the $34,000 training is worth $30,000 sure so that's what I'm wondering do I focus more on selling that and then sell s for 60 if you want and just say it comes with these two things it comes with the training sure and pivot towards that yeah I mean fundamentally like those are components I don't even see them as that important like the only thing that matters to them is the likelihood that they get their customers to stay and pay longer and renew year after year after year Y and so how we get there matters just really little and you know this from the sales side I think you're just into weeds right now because you're you know you have your entrepreneur head on and you're here but like yeah if you're a customer I don't care if we're going to be doing keto or cutting my calories like I just want to be able to fit in my high school jeans yeah so just tell me how there that's it cool man appreciate you he bet I a brick and mortar franchise owner um I own five indoor golf simulator locations across the country cool I've got um fdds in place to scale out to 12 are you franchise or or franchise franchisees okay got it so so um one of the constraints that I experience every year is um was predominantly a seasonal business so when they started in the Midwest and when it's cold and people can't get out to the golf courses they come indoors and play but the constraint is in the summer time my utilization just drops right off the table and I'm trying to push forward based on some some information I got from customers about what they really like about the place it's like you know time in time to play a game is much shorter indoors the weather's always consistent a lot of things like that and I'm trying to push my branding in that direction so I can address some of that low utilization in the offseason do you have any ideas that you could offer on that yeah I mean obviously I'm here in Vegas and I'd be like want to do 18 in under 30 minutes and it be air conditioned with a drink in hand like I I mean you could sell me right yeah I just like air conditioning in general but um but yeah I mean I think I think that's the because I was thinking was like all right because a lot like long care guys have the same issue right it's like when it's the winter for them it's the opposite issues like so then they have to get into snowplowing they call it the on season and offseason Terrible by the way if you're in a seasonal business don't call it the offseason because then everyone's gonna treat it like the offseason um you just lose money the whole time um but I think that I think that that perspective um makes sense like the the benefits of indoor now I would bet that the places where it's hottest in the summer um might benefit the most from that it's like get out of the summer heat and like because you have a time component and you have a comfort component which I actually think are pretty strong um and so I would just be leading with those because everyone faster and everyone wants things to be easier and so you do both so just focus my branding and and sales in that direction yeah thank you sir yeah and I was instead of branding I just say this the messaging yeah just from a delineation yeah um I'm Millie I run a math tutoring company with my partner Christian a what a what training company math tutoring math tutoring math very sexy um so right now we're really really small our offer is good our sales process is good we know that we just need to do more of it which is fine um and we're hiring people to help us with the sales and the Fulfillment what I want to know is you've built a brand where all of your employees seem to have that same let's get [ __ ] done attitude as you do how do you instill that within your team so that they know like let's get this done you get rid of people who don't have that okay and then the only people who are left are people who are that and then when you bring someone else who's new and they're like I don't think they have it you're like I think you're right we let them go simple yeah it's the hard thing it's like that girl that's back home that you know that isn't that good you need to let her go and then you have to do more interviews and then pick somebody and probably be wrong and do it again until eventually build the culture based on those values and you just want to get through that as fast as you can because fundamentally if you're scaling service you're scaling culture and training if you're SC scaling a service business yeah so it's going to be those values and how how good you are at giving someone base skills and so if you think about um really in any kind of role how vague you can be with your directives is directly proportional to how skilled someone is in a given domain and so if you have people that you're like I literally have to tell her to turn on the computer then this person has such low based skills I think that you can teach anyone anything I do fundamentally believe that the question is just as a business owner is it worth it and so it's like I do think I could change you from being inconsistent to consistent it's just how long will that take me and are there other people who I can get better Returns on my time with and so fundamentally just think about it like that is how much training will I have to introduce to this person now if you have a service business that's a small as a brick and mortar uh no it's online well regardless you your business is going to be also like the training components that like you you have culture anding the culture is what you choose to tolerate internally but the training is going be how good like you're good at teaching math you have to think about how good you are at teaching people to teach math and teaching people to do every other skill that's associated with teaching math because I'll bet you there's plenty of people who are decent at math who suck at teaching math and even worse at talking to people yes right so sometimes you might have to like do a little bit of Dale Carnegie which is like okay so when someone walks in you greet them with a smile here's how you greet people I'm dead serious like this is like there's a reason Chick-fil-A if you're here in the states is what it is it's like they teach people how to people yeah awesome thank you bet that's going to be the differentiator that's what's going to take you to the next level uh I want to Medical Spa with my wife yeah and uh so love Med Spas we offer a ton of services anti-aging Services the most popular ones are the least profitable ones um so trying to determine strategy should we Market the ones that are most popular try to get people in more and then look to upsell because the higher margin ones I mean you're talking like a 10 to 15x difference in Revenue so I'm just trying to determine do we Market more General come on in we'll give you a year plan or just Market the Baseline one come in and then just try to upsell after that this is a great question and it probably affects a lot of people here it is a math question so you can solve this and actually know what the right answer is and so I'll just give you an example so let's say um Botox is what people come in for for example all right so what how much botox cost what's your gross profit on Botox uh so after we factor in all of our Mak cost like $58 per Tre okay so you make 58 bucks okay per Botox so what does it cost to get somebody in the door uh right now our CAC is 202 okay so 202 great now what percentage of these people can you sell into ice you know the cool sculpting or whatever else uh we're about like 40% okay so 40% of those people and what's the average ticket of the thing they buy or gross profit of the thing they buy afterwards uh like $1,300 okay so whatever this is that's uh 400 520 so 520 plus 58 so it's this times this right is 578 okay so this is path one now if you mark it straight for this thing what's C uh just overall I don't know ual per surface line over okay so if you basically so to answer the question you just promote this up front see what CAC is and so here if you've got 202 to uh 578 you you're like just under 3 to one right and so you're you're feeling it right now I'm guessing you're like I just need this to be bigger right and so um I think this upsell efficiency is pretty good to be honest with you um now this you might be able to work on because is I would bet that this can get expanded to like 5 or 6,000 and then that would probably make all the difference in the world and so in terms of Med Spa that I that we like because we i l lik MedSpa stuff and so I was like all right let's just buy a chain and then you can get stuff for free to save me money anyways so um uh but I I think I think this is actually probably where the deficiency is I actually don't know if it's like 200 bucks is fine um especially like that's what it cost to get somebody for a gym membership and like you know right like and that's a way lower LTV than this so This actually feels like the this actually feels like the problem to me is that and the conversion is okay I think you might just need to see if you can sell bigger bundles and you might want to consider do you have financing yes so you have third party third party or in-house third party huh okay then you might I think you just need to I think the I think you probably need to so you probably have a sales process you in terms of how you're offering the main thing and so I would consider wait till the next book comes out you're going to love it um uh doing something called like a menu close and so you sell the vacation and say like okay if you were to look like a goddess these are all the things you need and then everything they cross off they just look uglier and older and so they're like it's like okay just look a little bit ugli a little older we can cross that off though no worries right hahaa okay and so and so you can start there though and it's just like okay because I'd rather start at ideal and then just try and figure out a way to make it work with their budget than try and just get a sale if that makes sense so I'm going to bet that this is the problem if you want you could try and Market this directly and then then you'd have I guess 100% of people that would go into this because like if you go to acquire customers let's say let's say you you cire these people for $300 then it would make more sense to Market that as the front end my guess though is that you just need to boost this guy because this is fine okay thank yeah you bet I mean I've heard of some men spots paying 200 bucks a lead so so using your delivery Cube as an example in LTV the T ratio when you're thinking about uh modifying components of your offer that are maybe fairely fulfillment intensive uh where you have maybe a unicorn or keyman risk how are you uh massaging that how are you thinking about this problem knowing that okay I can't have the unir keyman risk I want to increase LTV for my customers but my customers really like this thing so I think like oneone support gym launch you have to so whenever you get into keyman risk in general just for everybody you it's what makes things rare is combinations what makes them commoditized is breaking into chunks and so if someone's an exceptional painter it's because they can combine color and movement and whatever you know like I don't know painting but I'm sure there's other components of painting and so and so within the support component there's probably three or four things that this person does very well and so you just chunk it down right it's kind of like the example I gave yesterday is like how do you replace Alex in this business for delivery like I was keyman well I wasn't going to expect somebody to be better at being Alex than me so I was like but I can find somebody who's really good at phone sales who's really good at phone sales and they're just as good as I am now they're not going to be also as good at retention and strategy and ads but they can be just as good at that and then I find somebody else who's really good at ads I'm like he's just as good as me at ads he's just not good at all the other stuff and so fundamentally like when you scale in a company that is how you replace keyman risk it's chopping the unicorns hornof and saying okay I can find a rhinoceros and you're like okay now I just need a horse and I need some you know fireflies to get the glitter and there we go it took three people to you know replace my unicorn with things that are more readily available and so you just chunk down what the skills that this one person has into component parts and then you can teach those component parts much more easily so it takes the mysticism out of it does that make sense yeah I was thinking in terms of the so let's say you have like Zoom Community Learning Management System and the community is becoming the Intensive part I'm not doing the Fulfillment of a director of Education who still could out the UN but we need to eventually for scalability purposes one thing I talked about Neil is maybe moving people on like more of a we already do zooms but doing more zooms instead of one to one Community interaction or something this so more Su you need to change the offer from 101 to semi-private it is semi-private already but there tends to be a time intensive concurent of like reviewing specific case studies that that Mak sense so either so here's okay so I'm gonna I will tell you a story to answer hopefully answer your question so I had so my first ever gym model um I tweaked a couple times and then I got it right and I had this setup where people would do six weeks of weight loss and kind of like more high-intensity training there's a point to this and six weeks of like weights to tone so it's like burn and tone I this is commercialized for Mass market for those of you who are in the fitness space just breathe all right and so what ended up happening is that my sessions got so full that I was like shoot I should change how I'm doing delivery because I can't fit any more people in my gym which was the wrong solution I had found something that everyone actually [ __ ] liked and so what I should have done was just more of that and so you're in a situation where you're like how do I scale delivery more I don't think you're delivery is unscalable you just need more people to do that thing that people like and so either do you have margin to support it I could probably swing that in terms of just reallocating some of our expens well if the answer is not really then it's a you're mispriced not necessarily need to change what you're like so basically either I can either charge more to increase LTV and continue the service or adjust the service yes I will say it's harder to find something that everyone really likes then it is to just change the price so if you have something that everyone really loves then you probably can support a price change and so I want to make sure you're solving the right problem like sure you can go from semi-private to group but that might lose all of the value and then if you charge the same thing now you have your price to value discrepencies out of whack so what I did this was the mistake is I took my sessions and I shortened them so I could fit more sessions in and by doing that I destroyed the thing that worked so don't do that product Market fit is much harder to find than pricing next one that hopefully applied to somebody else here so you've G over a lot of your successes and failures what was that and failures go ahead yeah and and so my question is more about your kind of protecting your mental health and your ability with these extreme emotions because I've gone through both exits and acquisition the last two years yeah and I've just never been more miserable main reason I'm here okay is just either getting resources or connections I'm just wondering how you've handled when you had those major losses when you've lost everything or when you've kind of had that failures face you in the face and also if you ever view an acquisition as a loss of community sure how do you protect yourself so I will not spend a long time on this um because it gets into a very he chunked up version of reality which is just like I believe that when I die within 6 months no one will give a [ __ ] and so the fact that no one will care 6 months after I'm dead for the most significant life event that I have which is that I am no longer alive it makes a lot of the other stuff not matter that much and so I also know that when I was poor and I had nothing I was about as happy as I am now and so if I was just as happy then as I am now then I could go all the way back there and basically being in the same thing and I think in some ways when I really play it out I get just as excited about the idea of having the comeback story now I'm going to try to not do that but if I did it I would get into the state that I think that I'd be like this is going to be my thing and so like a lot of times the fears we have are catastrophized and so I like I want to have this like of the many list of books I have this big document of like Alex's list of books that he will someday write um but one of them is play it out and so a thing that I say a lot on quarterly and strategics is like let's play it out like what happens next what happens next what happens next and so like what actually happens next is not that bad it's just the idea of it that seems very bad I mean has this quote that's the fear is a mile wide an inch deep it's like you take a step onto it and you're like oh this isn't that big of a deal like the worst case is I moved back with my well actually you know I kind of like my parents and you know homecook meal is not so bad you know I'm only going to see them for 10 more years before they're just old as [ __ ] anyways so you know it could be a blessing in disguise and like there's a lot of research that's been done on like people who become paralyzed and within like 3 to 6 months they return to the exact same Baseline of subjective well-being as they were when they had all their Limbs and so as much as that's a terrible thing that could occur losing money is probably a lot less bad than losing Limbs and if it happened to them and they're just about as happy now as they were 6 months earlier I just genuine like Leela and I are sit on opposite polls like I struggle to care she cares so much and that's how we Yin and yangang in business is that she'll get stressed and I'll be like we can die no one will care and like when you zoom out you're like oh there's the world and like I'm a monkey on a little thing again this is a worldview thing some people don't agree with this and I had I've had people get really upset about it so that's how I deal with it and so for me I just don't have really big Stakes because I just don't think anyone cares that's all like the idea that everyone is watching just isn't I run Dental CL and our USB is single visit full mouth weh have okay so like veneers and all that yeah got it cool but it's a single transaction and that my LTV is over so I don't have redention okay I understood what I have to do since yesterday and the r table this morning but I have to understand from you if you can advise me on do I have to do a big upell after no no so think about it this way so um one of the first jobs I had was at a fur coat dealer and so you're selling fur coats so once now mind you he can sell more than one coat you can't sell more than one mouth but um you probably can't every 10 years but let's not get into that so um what he realized because he was fourth generation so they had to like figure out the business model over you know more than a hundred years was that he invented summer storage and so the idea was okay how do we get these people who bought these $5,000 jackets to like come back because you know big $5,000 coat for the average consumer that was buying it it's actually an aspirational purchase so a lot of people think luxury is only for rich people but 90% of buyers are actually poor people who want to look rich fun fact um and so what they found out was well if we get people to come back regularly for other stuff they're more likely to buy more frequently right and so what you need is insurance so when you when someone buys something very expensive what you do is you charge 5 to 10% of the total purchase price for insurance now I say insurance with quotes here but like it's hey you spent 20 grand on your mouth spend a th000 bucks a year to keep it right keep yeah to keep it looking nice because I can double how long these teeth are going to last if you go into our maintenance program and then you have this long-term care literally probably be called long-term care um for your mouth and then that way you can extend the ROI on the investment that you made do you think it's better if I do it after the the single sale or between the after after so sell the 20 then they have the mirror in front of them and they're like oh my God and you're like right you don't want this to go away because this could go away and only for 5% of the thing you just like, bucks a year will keep it looking nice and they just spent 20 they're not going to give a [ __ ] it's like whatever thank you very much first thanks for everything you man we in the position where we have a couple offers on the table to exit a couple of Lois um it's lifechanging money but we believe if we stuck around for two to three more years it could be like extra lifechanging money sure so how would you look at this decision and decide when's the right time to one of the hardest decisions in business it's a very personal question and it comes down and the nice thing is that you have have you have all of the information to make the decision so on one hand you have your personal goals which is like this is the amount of money that I said I would be willing to part you know part ways with this this is what I started whatever um on the other hand you also understand how reliable your businesses if you feel like the business has a good leadership team in place you have plenty of room to expand in the market the infrastructure is you know secure the revenue that you keep you have high Revenue do you have what's your Revenue retention annually so our uh revenue is about 6.1 this year and our evida is around 2 three what's Revenue retention what percentage of that Revenue came from the year before it's all for one time sales so we don't have re Curr or one of the things we add yeah so you're in you're in like the devil's gamid right now um and so like you're getting an offer uh which is great on something that could also be gone tomorrow with an ad account shut down or whatever right I don't know how you get customers but I'm just assuming is it ads okay and so like there so it this is a purely risk this is a risk assessment is if you were like for sure we're going to be able to grow then don't sell if you're like I don't know if we're going to be able if we're going to grow from here then sell and so like only you can know that and I'd say the second like question one b and this is a really big one that I think is underrated is what are you going to do after and so I have friends who've exited and there's basically like two camps there's exit and don't have a plan and exit and know exactly what you're going to do and these guys huge massive crisis of meaning these guys they just get right back to work and um having looked at both of those like the day after I sold gym launch I started acquisition and that like literally the next day um and I'm very happy that I did that um I think having a lot of time and a lot of money and nothing to do bad combo for entrepreneurs personal personal opinion so if you are going to sell have a very clear idea what you're going to do next then no that's I mean this is real this is like a real life decision and so um I don't know what the what the life-changing money that they're offering is if someone's offering you know 10 times botom line for something that has onetime transactions and it's all cash like terms of the deal matter it's all cash you can walk away then yeah maybe not a bad deal if it's you know seller finance you consult back for you know a year or two years um and they're buying you know 51% um but you're expected to work for the next however many years then you basically have a job either way in which case you're like th okay this is the frame you can think of how will my daily Behavior change if what you do every day doesn't change then why sell it which is why for me the terms of my sale were like I will stop working the day I get this check and if you can't do that then I will not sign the deal yeah ours is like we're we're out out uh once we sign okay's options of majority of the money up front a little bit of seller financing a little bit than now we're out well yeah so I mean this is a purely personal decision I won't take too much more time on it but like it's a risk decision which risk is purely personal it's like do you want to put it all on bitcoin you could it's just purely personal can you just tell us to sell [Laughter] it you know sometimes it's like you flip the coin and then you uh when it's in the air you decide what you want to do I think it's a terrible way to make decisions but it works for some people um but no I I deliberate about this actually on my YouTube channel I have a 46 minute video that has like seven views on it because it's the entire decision- making process around why I sold and it's like two years ago maybe three years ago it's a really long video like we watch that and that's how we backed out of our first off well good I'm glad it it served you but now I mean now you got a much better offer so it just comes down to how risky is it that because the thing is is businesses and this is one you can write down businesses will always go up in value until the day they don't and then they're worth nothing so a business that grows will always be worth more even a business that maintains is worth more the track record they've been consistent but the day the business goes down no one touches it so that's the that's the knife's edge longer you keep it the more valuable it is my name's Rick I'm owner looking to scale my La sure and I've identifi value today identifi to constraints one is the marketing is all outside agencies and I don't really know a lot about it so I want to bring that in and also I think I need to start hiring higher level talent to start basically unicorn parts of what I do y and we are I guess another con would be we are a cash flow intense is um contrain yeah so at what point I guess do you put it all together what do you think is the better route to go if you have to do one or the other is it the one that attorney train attorne I think both are six-month Endeavors if I'm just guessing recruit and train top talent or build an in-house marketing team one brings it in one money if I one the other first so um I would because you have a small team you have six people right six or seven people right so um I think that the best from what I see the law firms that make the most money are exceptional promoters especially in the transactional space which you're in um and so I would hire an exceptional agency that has a proven track record and I would study everything they do have you read the agency's chapter in leads book I read that chapter so it literally does like this is how I do this is how I learn marketing so I go to agencies and I say hey um and I like agencies uh most times more than the coaching world because agencies have to produce result or they get fired um and so I go to agencies ideally ones that have I get from referrals and then I tell them I want to steal everything that you have but I will do it over a longer period of time because it'll take me time to learn and I will compensate you for the difference so your normal people probably turn out at you know month three or four it'll probably take me longer than that so you'll pay more I'll pay more there and then after I do kind of absorb what you're doing um I'll pay you a Consulting period after that to make sure I can troubles [ __ ] so you'll make more LTV than than a normal customer but I'll do that in exchange that I want you to show me what you're doing this is how I've learned every platform I just pay someone more okay because the agency I have right now is there's no transparency they money and they give right and that's why at the onset read the chapter I literally have a script in there what you say to the person uh and if they say no then you go to another agency and you read the script again okay that's what I do the answer is agency if I were in your position and I had six employees I would rather learn it because in order for you to succeed at the level I think you want to succeed at you've got to know the stuff hey so first I just want to say thank you you're welcome my last business was an early childhood education shared services startup I built it from concept to fully funded $32 million awesome and then scaled from just to 133 staff people in 18 months awesome so thank you and I left it because I made a community decision to incubate it at another nonprofit but I was not the owner okay so I built it for them weird now I help career women I made them a shitload of money it made them a so happy so now I help career women prod themselves so that they can become sols or ear startup Founders Co my question here is around your Calculus for Speed because for me I had nine months to take very disal stakeholders pull them together make concept 18 mons of diligence now I building a do like the person so my around speed exactly you shared earlier the temperature that entrepreneurs are comfortable with has been hard for me to calibrate especially because we do you feel like you're going too fast or too slow I think I'm going too slow and my brain you know what's weird is that I I have I have yet to meet an entrepreneur who says that they're going too slow you're the only one every other entrepreneur is like I'm going way too fast um things are just happening so fast around me um I'm joking um no entrepreneur says that everyone's like this should have been done seven years ago like why is this taking so long like I can do this in 5 seconds why does it take you five years um so so I think first off it's normal um but let's chunk down a level what specifically do you feel like is not happening fast enough so think about it from inputs and outputs outputs I don't care about outputs outputs occur Revenue occurs profit occurs as a result of inputs and so what inputs are not happening fast enough so to me it's the equation of cash flow and closing my learning Gap so for example I have been like oh I am the sales and and all these things which have required me to close my learning Gap I would prefer to hire someone to like build out the sales team but you don't have cash flow yet yeah so when you start so this okay so was was the other thing funded that you did yes okay so this is really cool for everybody this is a great meta concept so every single business on planet Earth incurs debt from the day it starts it's just that the nature of the debt is different so if you're bootstrap you start with leadership debt management debt technical debt you incur all these different types of debt if you're venture-backed for example you incur financial debt but you you can spend the money to get the CRM day one you can spend the money to get the executive team day one and so you incur less financial debt less technical debt less of all these things but then you got to pay back the financial debt or you just slice down the pi so you have a much smaller slice and so um whenever you trade like you have there's there's trade-offs between the types of debt that you choose to incur and so bootstrap businesses in general take longer to grow because you have the issue that you have right now just that you have to keep stockpiling and you usually have to work double time because you have to do today's job and tomorrow's job in order to generate basically you do two or three jobs to generate the cash flow from the savings of not paying someone else to do that job to be able to afford to pay the person to do the job that then levels you up to the next job that you can take over that pays even better and so that's fundamentally the cycle of a bootstrapped entrepreneur and so I don't think that you're going too slow it feels slow because you were used to jetpacks that were artificial no just being real like if you're like I've got 10 million bucks let's go it's a very different starting block right like businesses that I can grow now I'll just I can just fund them to start and that's where you get real leverage because you get the best of both because then you have the capital you can start like your Venture backed but you're the venture-backed company and so you can start with all the leadership in place get all the consultants in so that you can get the Tex you know Tech stack and all that stuff and you can pay for the Enterprise savings for a year ahead of time and you can do all that stuff and not dilute down but then the company owes me money but I own the company so whatever right and I know I'm going to get a good returnal capital and so fundamentally does that help everybody in terms of thinking about this from a speed perspective like venture-backed companies go faster because they cheat from like the nature of business is like they start with a ton of money and they can spend it for money they didn't make bootstrap you have to make every dollar that you spend but I think that long-term bootstrap businesses are the most fundamentally sound um I won't even get too much into that cuz I'll just stop there all tldr is you're going slow because you comparing it to a venture back company I will say that was a public private partnership that was grunding so we also didn't have the pressure of like we had social outcomes too yeah you didn't even have like you didn't even have like revenue or profit goals you had even hit so you had like outside money you didn't you weren't accountable for any Financial metrics and you could just hire people like yeah that's like literally the opposite of a bootstrap business and so like it's unsurprising that it feels different next H will be someone in the content space and then sales how much in cash reserves do you think I should have before I bring on somebody who's make so this will be good for everybody the rate at which you hire is actually a risk question kind of like we were talking about earlier and so this is where I made a tweet the other day was like your lifestyle is your competitor's opportunity which is the amount that you require to live on in distributions is what you can't reinvest in the business but there's no perfect answer for that if you have a family with kids like we were talking about earlier then I don't see that as bad it's just that if somebody else you're competing against doesn't have a family and kids and reinvests all that money then they're going to beat you but you might not care CU you might not be in a business where there's a network effect that like it's a Ras to the top very few businesses are that way like if you're trying to build Facebook then yeah you probably want to reinvest everything if you're trying to build a dry cleaning store probably doesn't matter and So within the context of your business I doubt that there are network effects that are going to like kick in at any time reasonable and if you did you need Venture backing to get there in time anyway so let's just not get into that um and so the time that you choose to hire that person is basically based on the risk that you're comfortable with dealing knowing like if you know that the business is going to continue to grow then you're just you're just dragging the growth forward but you're sacrificing your paycheck so you can pay somebody else so they can drag that growth forward and so it's a like the entrepreneurs dilemma is consumption verse investment as when do I start getting payday and it really just depends on you all right so we're we're kind of new in that process and I'm trying to trust the process based off a lot of your content videos to try to make it short I feel like I'm I'm at a casino three black tables first agency sucked I go the next dealer they sucked I go to the next dealer but I have faith um so we're a company that that's driven most of our business most Blind Faith yeah most of our most of our business based off of uh just organic networking in person cool um just trying to figure out like a formula or how to determine a budget what do you sell ads what do you sell uh Roofing and windows okay got it helpful um yeah I mean you most guys who succeeded that are either doing outbound one they have referral Partners so they have other businesses that are tangential to Windows and Roofing that go into customers homes this is other Home Services businesses and they set up good Kickbacks for those sales reps and those people at those businesses or it's usually PPC driven or or social driven so those are kind of like the four most common besides word of mouth right um that people Ed to grow those businesses because we have home services that come through all the time so very familiar with the the model um so the issue that you're having just so I'm can restate the problem is that you've tried three agencies and they have not produced results so when you say they haven't produced results did they not produce leads or the leads sucked uh both difference both uh yeah okay now so of the ones that produce leads what was the problem with the leads not relevant said that uh they they didn't fill out the forms or they they don't know why we contracted them some oh a home uhhuh okay a home yeah so um the the crappy part with the agency Gambit especially if you don't know what you're doing is that like you end up getting burned but it's one of those things where like you're not going to quit right and so it's kind of like agencies didn't work for us it's like well there's obviously agencies that are in home services that do great and so um like path one is you just keep find you keep going until you find an agency and when you talk to them you're like hey if I don't see results in 30 days I'm out but if I do I'll keep paying you for a very long time and also ask them for their best practices because if an agency does not give you best practices they suck so just give you as a warning so the best agencies will be like okay this is the funnel that the leads are coming in on this is the offer they're seeing the people who see the most success call leads within 5 minutes this is the script they use this is how they maximiz show UPS blah blah blah blah blah so they're going to give you their kind of like best system and some of them will also just work the leads for you because business owners in general suck at working leads and so like if you're not getting an agency that's even talking that lingo then I would say that that would be a that would be a red flag so just use that as like at least filter number one um but in terms of like how I would probably approach that business it would be going to tangential so it's like carpet cleaning and Landscaping and other Home Services where people are in those on a regular basis and they see the you know they see the the roof and the windows on a regular it's like hey I'll give you a thousand bucks or whatever you know whatever your referral fee could be and so what's your cost you require customer right now that's another constraint our numbers okay well how much do you make from a customer on average uh 8,000 Okay cool so you could pay a grand for a customer and be happy with it is that margin 8,000 or Revenue okay great yeah so then yeah if you give landscapers a th000 bucks a referr referral they will beg borrow and steal to get you referrals and so obviously that's a very different strategy for acquisition if I were in your shoes fastest easiest path is look for an agency that follows those check marks and I don't know how your buying process went but I would recommend also reading the agency chapter in case you read it um but like talk to 10 of them before you buy like actually talk to 10 sounds crazy I think that's been a problem is just dating two people and choosing one yeah yeah like date more than one it's like I got a crazy chick and a fat chick you're like ah you know you know so like whatever so like just you know like open the pool of who you can pick from right so that's that's kind of where I would where I would go with that does that make sense so just open the selection up and then I will promise you this by the time this is when you know you can pick so I'll give you the limus test is when you stop learning things on the call so you talk to the first guy and you're like okay that's a lot of new information thanks for that we'll be back to you talk to the second guy he mentions more new stuff for me it takes me about 15 calls with experts to really wrap my head around a space and so that's like kind of like my litmus test so once I start like being able to say like but what about this and what about this consideration and they're like oh he's a more knowledgeable consumer and like I can start talking their lingo um that's how I know I can make an informed decision so you've been making uninformed decisions and because of that been getting bad results which is not surprising I me no insult to the the women in the room just just a hypothetical in a business like mine I feel like I've watched your content and I've tried to implement on the things but I feel like it's hard to put it into the things you say because it's a little bit different I do a business loans and it's very cash heavy up front um and right now I've realized that constraint is uh getting new clients and finding a method that works so I can kind of scale that okay how do you get clients now so it's referrals from previous clients great and so you've done a good job what's the average loan sorry average loan Aver loan uh right now probably be around 7,000 say okay so this is like credit card stuff sorry is like credit card stuff or is this uh like loan loans loan loans interesting low ticket okay not there's definitely higher ones but usually to start off we like to start small and people build up their credit yeah yeah um and so you need more customers need more customers and need a way to figure out how to scale that we've plateaued and um the good thing about it is we've kind of like built up some money in the bank where we can allow ourselves to maybe do advertising or you know I've heard people said toach so for that business I would prob especially the ticket price you're at I would probably go um ads or referral Partners so those would be the those would be the two channels that I would see as like the most likely to succeed with that yeah sneeze of the sneeze of the of the event uh I just want to sneeze like that and just like see what people do um anyways so uh ads or I would do the referral Partners um and so referral Partners would be like okay well who else is dealing with these particular types of customers so it might be the credit repair companies and saying like I'm sure they have almost all those guys referr out business and so making your referral mechanism more valuable than other people's um that would be a big one because if you can the way that you can win there is if you convert a higher percentage of their customers than other people do then you'll be able to pay them more because a lot of people waste leads and there's plenty of companies that just like send the leads don't even ask for anything back and so you can be more aggressive on the acquisition to them you're like hey I can extend your LTV if you just like once you finish like repairing credit I can get them a bigger loan and I can pay you and so getting a handful of those referral Partners could be Mass massive for the business that's like you rely on some other people but it could scale pretty quickly and it's cheap or at least it's low risk how do you go about that's where you do Outreach so you do Outreach to get Affiliates and then the Affiliates send you business then you can be more targeted do that make sense because if you do Outreach then it's like what's the cost to acquire a customer the metrics there might be pretty tight for you if you're doing $7,000 loans I don't know what you make on a $7,000 loan so we're trying to get uh higher what do you make on a loan with $7,000 um generally 1,500 2,000 okay it just depends like yeah understood so with like $1,500 $2,000 of gross profit it's tight it's very tight for outbound and so like you it's you'd want more margin if you could and so that's why you're like okay well I'll go to an affiliate and maybe it cost me 10 grand to acquire an affiliate but then affiliate is going to send me 20 customers a month and so it cost me 10 to make 4 ,000 a month and then the metrics make amazing sense sorry just last and if we're so I have a few clients where I have been able to get to like the higher amount where I'm loaning maybe 50,000 100,000 like stuff like that and so we have like maybe three or four of those how would I be able to maybe reach those like bigger ones so I can you know not have to worry about ads in referral partners that would be and if you have referral Partners you tell them who you're looking for we specialize in people with 50 ,000 RS are higher if that's I mean like you just tell them what you want and then you can pay them even fatter slices so they might be interested in that

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