Bootstrapped to Millions Without Loans or Investors | Ep 906

You're having a tough time right now. I think that if we get this right, the locations that you have will continue to grow even better. This is Ani. She runs a chain of eyelash salons doing $2.3 million per year. But she's dealing with challenges with her business partners and she's spread way too thin. And if she doesn't fix this fast, this business won't just stall. It'll start falling apart. Hi, I'm Ani. I own Amy Lash and Beauty.

We are in the business of empowering women with eyelash extension service with a revenue of $2.3 million, $644,000 and a 28% net margin. We have seven locations, been in business for over 10 years, and helped over 20,000 clients. Amazing. What's the problem that you're dealing with right now?

I have three problems. First is lead generation because we always need more clients. Second is making the service better. Manager training is inconsistent because the managers are spending most of their time doing lashes. New employees aren't getting trained as quickly. Third is partner problems. Some partners have dropped responsibilities since the initial equity agreement, and I don't take a salary for doing most of the work on marketing and scaling. What happens if you don't get these solved?

The company is not going to grow. I'm doing unpaid work, so I feel unfair. I don't know how to have hard conversations with the partners because they're also my friends. All right. Tell me more about the partnership situation. I have three partners.

Right now, they are just not aligning with my new goals and mission to grow the company. They kind of have their own thing. One partner has her full-time career. Yeah, and a new baby. Anyway, they don't manage the lash artists. They don't train them. So the customer service and the fulfillment are not as good. Yeah, that's probably why those locations don't have as many customers.

Word of mouth. Yeah. We kind of have to fix these, you know, call it seven locations first. And I think if we nail the model, you'll sleep better at night. Okay. And so that 600-ish thousand that you have in profit, is that before you split it between all the owners? Yes. Okay. Got it. Yeah, you're having a tough time right now. It's a lot of people to manage.

I'm feeling a little bit stuck because I'm having a disagreement on how to grow the business. I have a bigger vision where I want to take the company, but my partners, they don't share the same vision. Who do you help? So I help 99% women, mostly in their 20s to 50s.

Women who just value time saving or want to look good without needing a lot of makeup. Is there an income level that they associate with or does it work in any market? The people who come back to continue the service would need a higher income. But for someone who just went out for an event, it could be anyone. How do you help them? So for a new client, our lash eyes go through consultations, make recommendations, and apply their first set of lashes.

If a client decides they want to continue with the service, they come back every two to four weeks for refills. I want to double click there for a second. If they decide they want to come back, how does that work? They just come back in. Basically when they want to come back. Yes. Oh.

Noted. So this is a massive untapped opportunity that so many businesses miss out on. And so there's two versions of this that you can do. Number one is something we call BAMFAN, which I talk about all the time, which I got from Sharad Savatso, which is book a meeting from a meeting. BAMFAN, that's what it stands for. So if you ever have the opportunity where... someone comes in and they're going to have to come in again.

book it then just get it done rather than trying to rely on them coming back by chance or remembering you or just even just creating the administrative burden of later having to schedule it when they're not right in front of you the other way is just creating some sort of membership now those are a little bit harder to sell because people don't like having

recurring billing. That's why BAMFAM is one of the easiest ways you can implement just about any business. But the recurring membership component, if we can structure the membership well with a really compelling offer, it might be something that's going to drive more and more people into it, which will stabilize the business. Okay, so how do you make money?

depending on the style of lashes. Between 170 to 300, we do have an intro promotion for 99. When they come back between two to four weeks, it's 70 to 270. The longer they go in between fills, the more it costs. So let's say that someone comes in for $200 worth of lashes. What does it cost you in labor and what does it cost you in lashes? We pay our lash out at 50%. Really?

Wow. Do they cover the cost of the lashes as well? Well, we pay the cost of everything. Wow. Wow. Generous. So they get 50% of top line and then you deal with... The cost of goods, marketing, rent, cleaning, everything else. Yep. Wow, it's impressive that you're running 28% margins with that. That means you're running everything else on 22%.

All of your overhead. Our supply is cheap. That's why. Yeah. No, but I mean, still 22%. That's really impressive for literally giving 50% of the top line away. Okay. So how do you get customers?

50% of clients come from Google. It's unclear whether this is organic SEO or pay ads, although I do spend $1,000 a month on Google ads. Per location? No. total come by yes it's a thousand dollars per month you're saying you spend between five locations yes so you're spending two hundred dollars a month per location so annie's spending a thousand bucks a month between six locations so that's like $180, whatever the math is, per month that she's spending. That's not a lot.

Think about this. She's spending $12,000 on a $2.3 million business. So if she spent 1% of her revenue, it'd be $23,000. So she's spending 0.5% on marketing, which to me is either like... This marketing isn't working or she's not spending nearly enough. And I think she's actually in the camp of not spending nearly enough. If she tells me anecdotally that half the people coming in say they heard of her from Google.

i'm gonna bet it's doing more than nothing i'm of the camp of like man she's probably on a gold mine right now her probably cost to get a customer is almost nothing and she should spend way more to get more people in the door how many customers do you sell them up On an average month, our total appointment is 1,700. Total guest count is 1,100. 30% new clients, 70 recalling clients. 50% of clients stay longer than three months.

Do you have the same prices during the weekend and during like search times? Yes, same pricing for weekdays and weekends. When is it busiest? Usually Friday, Thursday, Friday, and Saturday. Is there a time of day or is it just those days all the way through? Just those days.

so the oldest law in business is supply and demand and the cross point is where you have price and if there is more demand and less supply like for certain times certain days then price typically can and should go up And so she's running a business right now where she has some supply constraints that are temporal, meaning either time of day or day of week where she has.

constraints only on those days and so on those days it would behoove us or behoove ani to bump the prices up to reflect that shift in the supply demand of the business now if you're like oh but

wouldn't it piss off our customers? Of course, everything is about how you frame things. Now, wouldn't it be nicer if we said these are the prices on Thursday, Friday, Saturday, and the rest of the week you get a discount, right? And that'll also drive more people to come the other days, which will then...

smooth out her demand curve, and ultimately keep her staff better utilized during the week. And then by doing that, increase her availability on weekends, which would then drive more people to those times that she can fill back up, but again at a higher price.

Genius. Brilliant. Let me ask you a big question. Would you say that you have more of a limitation on doing the work or getting customers? Getting new customers. Interesting. So you could handle a lot more volume. So it's a more demand issue. All right. Beyond that, why the rush? There's no rush. It's just that...

I don't see an improvement. Can I tell you why I ask? Yes. You have two or three different partners? Mm-hmm. Why'd you take the partners on? I did not have the manpower to manage. Didn't have the money. to hire like a manager. Then I'll ask the question, why the rush of opening before you had the money and before you had the manpower? I just thought that we would make more money with another location.

I agree with you. You probably already noticed, though, that the next location is significantly harder than the first one. And the profit, I'll bet you a big part of the profit is probably from your first, the ones that you have the most direct control over. So I thought when I opened more locations, I would... would make more money. But then I realized the manager aren't training the new employee as well. The fulfillment of the service are not as good. Some locations aren't doing as well.

So I have a lot of empathy for Ani because I made the same mistake. And so I had six locations almost to the same thing. I had multiple partners. I did this. I did this. And the reality is that if I had just continued to cash flow the first location that I had.

Rather than getting really aggressive with my expansion, I would have expanded better, more profitably. And I probably would have had a stronger brand going into new markets. And so sometimes we have to go against our desire to do things fast, make them easy, just make quick.

big bets on new people that are unvetted or untested. Whereas if she had been able to maintain control and maybe have three locations by the same time period and she owns them all outright, she would be consistently stomping out these new locations because here's the really...

fun fact the fastest way to five locations isn't the fastest way to 50 locations you might go slower for your first one two three four But by doing it that way, you set up the infrastructure, the foundation to be able to then aggressively go from four to 10 and then from 10 to 50.

But you can't do that if you have all these hodgepodge deals on the side. Because let's think about this all the way at the natural extreme. Do we think the future version of the business is her with a hundred different partners? Probably not. And if that's not the future version of the business, why start doing that today? And the answer to that question is one word, rush. This is the Prolocation Numbers. You own number one and number four outright.

Number one makes the most profit, I'm guessing. Does that one run 28 or is it higher margins there? It's around the same margin. Okay, so it's like 20. Okay, cool. So that one makes like 250,000 a year or something like that? Yeah. Okay, and then all of them kind of maintain the same margins? Or are any of them not profitable? Are they all profitable? Very similar margin. Really? Yes. That's interesting. That's not common. That's a good thing.

That's a kudos to you. Talk to me about the membership process. So we just started a membership. We're still working on it. Not rolling out yet. So you've never really tried to have some sort of upsell offer. We do have an upsell. When a client come in for that $99 set, I usually upsell them to $170, which is like a better set of lashes. Okay. What percentage do you upsell? I can upsell 90% of the time.

What about the team? Probably do less than 50. They don't even ask. They don't even ask. I mean, I guess they're good. You know, if they have 50, it's not bad. 50's not terrible. Also, in terms of close rates, you have like 99% close rate for people who walk in the door. I probably wouldn't...

I don't even know if I would track. I mean, it's worth tracking to see if it falls off. But what I'd be more interested in seeing is the close rate on upsells. Because the $99 thing is not where you make your money.

So she's got a really big opportunity here where she's saying that they close 100%, but it's basically pre-closed people who already checked out on a page. And so when someone walks in already having spent the money or knowing that they're going to spend this money, they already know the price, they have the card down.

Those are like, in my opinion, just absolutely assumed closes. Like you're not going to mess those up. The real opportunity though, is that these are essentially lead magnets. They're front end promotional offers that are not.

designed to make money. The offer that's designed to make money, the profit maximization component of it is the upsells. If she's not getting a huge percentage of people to take the upsells, those are all the missed opportunities because think about like this let's say she breaks even functionally in terms of costs after payroll and taxes and materials and and rent and labor and all that stuff on these these promotional offers because if she only did promotional offers she wouldn't

have any profit in the business. So the real business is the upsell and that's what we have to be focusing all of our attention on so that we can maximize that step one to step two take rate. What's the incentive for the girls to stay? The last artist. Because I'm assuming that you could lose them pretty easily. I'd offer training and to, you know, advance their techniques. Which the other people aren't delivering on. Money. Yeah.

So do you lose them to other competitors or do you lose them more to them just going out on their own? Going out on their own. That's one huge problem that I have is I don't know how to prevent them from taking our clients either.

I have ideas. Ready to dive in? Yeah. Okay, let's do it. Come on over. So here's how we're going to do it. Number one, we're going to talk about pricing. I think you have a little bit of an opportunity there that I'll walk through in terms of surge pricing. Number two, membership.

that you're trying to put together. I have a lot of ideas on what we can do to make that better. Three is going to be the upsell process. Next one is going to be career path for your team so that you can try and keep more of them. Ads. Plus attribution. How do we know we're getting what we're spending for? This is gonna be a big one. Partnership. Man, it's hard for me to even talk about the other five without...

going into this because I think that this is like this is the one that feels the heaviest to me right now because fundamentally if we don't nail a partnership then none of the execution is going to happen. That's what happened after I went. back from the event like hey this is all the things we i want to do but they're not really on board yeah

Okay. Check this out real quick. So this is the $100 million scaling roadmap. Layla and I spent 200-ish hours going over all the companies that we've owned, invested, scaled, and tried to break down where were the points that we got stuck, and then what do we do to break through?

And we broke it in these 10 stages and Ani is at stage six, optimize. So let's look at some of the problems that she's dealing with. She has to run more ads than she currently is. So to graduate here, she's got to implement the ad assembly process to increase volume. If you're like, what's that?

i have a whole video on it if you're at stage six she has to install a product improvement process for both products because the second product here is the membership product right and so we need to put a process in place so that we can continue to improve it so we can decrease churn and get more people to

take that upsell which also goes hand in hand with installing sales training systems and individual coaching and a team cadence to make sure that they're maximizing that upsell at step two when they come in for that promo offer we need to get more people to take that upsell both in terms of just the immediate upsell but also the membership upsell

the only way we're going to do that is through training and i think ani says this she's like you know the team's not as trained trained as well as they should be and if we're thinking about like what layers is she's got two layers of management she's a full team of managers every one of these locations has a manager so these are the problems that she's dealing with right now and for her

long-term, right? She almost shortcut the idea of getting good managers by just partnering. But what she really needed here, like what was the constraint was that the number and type of role she needed exceeded her current network right and the thing is is that she just used her current network to just pull people in and that has become an issue and so these are all problems that happen

all the time at stage six. And so if you're like, man, I would love to know what stage of business I'm at so that I can know what the constraints are and what I need to graduate. And so this is 100% free. You got acquisition.com forward slash roadmap. You type in your business information and it'll...

It'll figure out what stage you're at and give you the potential solutions that might help you get through that stage with your business. And if you'd like my team to actually work with you in person to make sure that this is stage you're at and these are the things that can help de-bottleneck your growth.

Then on the thank you page, you can schedule a call with our team. And we'd love to potentially see you out here in Vegas. Well, then I don't normally do this, but let's talk about the partnership first. Let's resolve that. And then we could talk about all the downstream stuff.

you have three sets of partners you have two that work full-time and then one that you've done multiple partnerships with which one you want to tackle first okay yes yeah the reason i wanted to talk about her partnership structure is because All of these things that I'm going to go over are wonderful ideas, and they're great things that she could do to potentially grow the business. But if she's using up...

80% of her mental bandwidth on these partnerships, then she's never going to be able to execute any of this. I want to maximize the likelihood she succeeds. And part of that is deconstructing the biggest time drain she has, which is these partnerships that she hasn't visited yet. Which is why one of my favorite quotes is, everything you want in life.

is on the other side of a few hard conversations. You know, my heart goes out to her with the partnership situation. And I know that firsthand having nine failed partnerships. All the big jumps in my career happened after I had tough partnership conversations. If she doesn't deal with this thing, it's just going to get bigger.

and nastier and so you might as well deal with it now and so this is me also talking to ani and her potential partners please try and resolve whatever concerns you have and set up clear expectations don't leave it in the gray don't leave something there because you

don't want to confront the issue like whatever you say to your husband or you say to the people behind one another's back just say it to each other get it out there be clear about what you want and then ultimately i think it's going to be better for all parties

I think that your initial inclination is right, which is that you have option one is that there is a role that doesn't exist within the business. which is to do this level of work. And so I'll tell you a story. So when I had my first partnership ever, or second partnership ever, I had two people come into the business. And so they were all one third partners, but I was the one who ran the gym, but I didn't get paid any more than the other two partners who never stopped.

Not really, didn't step from the gym comparatively to the amount of hours I did. The big issue that I had was that I never asked for basically what I should have probably been paid, which would have been what a manager would have been paid. And so the actual business has artificially high profit margins because there's a role that I'm doing as owner, but I'm also doing the role.

of somebody who would be working the business because long-term in order for it to really scale, you can't work in it. So you're basically running as manager probably for multiple locations right now.

you're basically doing as an unpaid manager which is not uncommon in the very beginning but over time so i guess cash flow is there you really want to have that role so that later you can say i'm going to hire someone and we're going to pay them the same amount that we paid me to take this role and so it should be the rate that somebody else would be able to do the same work for.

It's super important for Ani or anybody who has a model that they intend to scale to pay what would be market rate for the role that they're fulfilling within the business. And the reason that's important is because if you want to open up more locations, you're going to have to leave.

that location which means you're going to have to backfill your skill set there there's a couple components to this one is if you're doing like four different things at 25 then that means there's something wrong with the model we need to better organize the team and the roles so that all that work gets covered

somebody else is going to come in and do those you know four 25 roles fine but we need to make sure that that's factored into our return on capital in terms of how much it costs to open up a location versus how much we're going to make from it and so let's say that we've got a location that's making three hundred thousand dollars in profit and it costs

$50,000 open, we'd be like, oh my God, let's open a ton of these. But we then find out that it costs us $200,000, for example, to pay somebody who's good enough to be able to execute the business model there. All of a sudden now, we're making only $100,000 in profit per location of $50,000.

Now, mind you, that might still be a good return, but we still have to factor all of those pieces in is, is this the real return or is this artificially inflated because people are acting as owners and just getting a profit share of it? And it's not really built into the overall economics of the model.

And this is why we say nail it, then scale it. That's option one. The other option is if you decide that you don't think the partnership's going to work out long-term, that I do think it makes sense for you to split the partnership. Now, there's two paths there. So path one is that she buys you. The other path is you buy her.

Right now, I think the fairest way to approach it is to do something called a shotgun offer, which is like, I will buy you out for this, but I will also accept that for you to buy me out. And so you can basically make the price and the term. So it's like pay me over two years, pay me over three years, don't have to pay it up front. But when that happens, you're going to be running this business and I'm going to be running my locations. I think that if we get this right.

I think the locations that you have will continue to grow even better. It's just a problem is, what if they say no to the buying out part? Well, the thing is, is that you have leverage. Which is if you're the working partner, you can say, well, then I'm not going to work anymore. Okay. So there's leverage. Yeah. And to be fair, they have the equal opposite leverage. But if they already are not working, then there's less leverage.

Being the person who works and brings it in always gives you leverage in a relationship. The idea here, though, is that I think the fairest offer is, I will buy you out of this, but I'll also accept that.

But either way, I don't think this is going to work long term because we have different goals. And also because you have multiple locations together, you might be able to do just a straight equity swap, which is like you're 50-50 here and 50-50 here. Let me just take this one. You take that one. and we just go our separate ways and that's super smooth because then you really it's a it's an in-kind transaction there's no taxes

And you basically just swap equity for equity. I've actually done a deal like that. That might be the cleanest thing for you to do because it's a clean break. And now all of her focus is like, I just have to make this one profitable. And then you just get the other full one. And if you want to be really generous about it, you can say, I'll let you pick which one.

Okay. If you want to be really generous with it. Yeah. How do you think she'll take that? I think it's a pretty reasonable offer. Yeah. Yeah. Well, they'll give you three different paths. I think the salary thing is going to be hard given what you said. It sounds like a clean break is the way to go. So either...

buy me out or let's just trade so we have path a you do an increased profit share path b which is shotgun offer path c is we just consolidate i take the other half of this one you take the other half of that one Which one do you think you'll offer? Offer the first one first. Really? And then they say no. Because I still want to have the relationships. I still want to run this business together if they're on board. How many years have you done this with them? Five.

But it has been working. So before, we just kind of... We were friends. We would just let it be. Yeah. There's not a lot of growing the business. Right. It's just more like hiring and... You have different goals. Yes. Now it's like... I want to make each customer be happier with the service. I want to improve our employee. You have higher goals than what she wants to do, which there's nothing wrong with that. She's a family. She has another career, whatever.

Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages.

and across all eight functions of the business so you've got marketing you've got sales you've got product you got customer success you've got it you've got recruiting you've got hr you've got finance and we show the problems that emerge at every level of scale and how to graduate to the next level it's all free and

you can get it personalized to you so it's about 30-ish pages for each of the stages once you answer the questions it will tell you exactly where you're at and what you need to do to grow it's about 14 hours of stuff but it's narrowed down so that you only have to watch the that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap. Can I give you my two cents?

I think you should do the equity swap. Thing is, is that I think you'll be able to keep the relationship longer term. basically because if you have an ugly end of the partnership which you know the profit share percentage then there's like well now i feel like i'm getting paid even less and you're really just doing what you were already doing you're just being greedy you know there's the shotgun offer which then you know one of you is writing a check to the other person for the next two years

And that kind of stings every month. Yeah. The equity swap is a very clean, clean way to end it. And it's just unique to the situation that you have because you're both on multiple locations together. And so I think consolidating that is very clean. And then at that point.

You can be 100% friends and you can share all the secrets that are working, you know, with one another. But she can choose to do whatever she wants. With her location. Right. And that way you can still talk business. You can still talk all the things you normally do except the stakes are less. And if she doesn't want to do so much, she's definitely not.

Yeah. That's my advice. Because I think that you want to run faster than someone else does, and that's very hard to keep long-term. Yeah. That's what I would do for partnership. How does it work if, let's say, she picked the one that's the second location. It wouldn't be the same at the equity of the less revenue ones. Yeah, it depends how bad you want to get out. I'm serious. I gave my best location to a partner so that I could split.

You said earlier that you have about the same level of margin between the two locations. You've got two and three. It's like if you got three and she got two, that would be an unfair deal for you. Okay. It would be. But then you're not going to be restrained anymore and you can go do all the things and you'll be at 550 or 600 or 700 in the next 12 months because you want to do more things. Yeah. So then fine. Okay.

This is a small business. You can very quickly change the numbers. That'll be the easy part. Okay. This is the hard part. Yeah. The rest of this is straightforward. Yeah. Do you feel right with that so far? Yes. Okay. Let's talk pricing. I think that you should probably consider a plus 20%.

price raise on weekends and that's because that's when demand is the highest right if somebody wants off hours then they get off hour prices if they want peak hours then they get peak prices and so that'll smooth out the demand within the facility so that you can actually just get more utilization out of it

And over time, what will happen is that you'll smooth out the weekdays, but then you'll have even more people on the weekends. You'll just end up making more. And I think that'll have a big difference on your profitability. And so this is where I would experiment with having a weekend search price. you're having people just come back whenever. At the end of every single appointment, we needed to have a BAMFAM, which is book a meeting from a meeting.

So when they finish with the lashes, they walk them to the front and they say, cool, your lashes are going to be done in two weeks or three weeks. Let's just get that on the calendar now because I'm getting booked up pretty quick. Is there any reason you can't do that? We do have clients who book.

They'll pull them away away. But not all of them. Not all. Right. But if we had all of them do it, we would make more for sure. Because even at basic level, if they're coming back every four weeks or every five weeks and we just get them always to come back every three weeks, you double the amount of times they come back in the year.

Yeah. It's a lot. Mm-hmm. So do you think your team can do that? Do we give them, like, incentive to book, rebook? You can, or you can make it the job. So we do ask them, and we do... ask the client every time yes every time okay um just some of them you know they like oh

I'll book later. I'm busy. Yeah. We would do basic sales training around this because it is fundamentally a sale. And so if someone's like, hey, I'm not sure. It's like, well, totally. If you want, I'm here and you're here. Let's just pull up our calendars. And that way we can just get it sorted right now. So don't have to worry about it later. So it's just.

like a couple lines that you can overcome with somebody that i mean if you just train them on like two things to say if someone says can i can't do it right now and maybe like i don't have my card on me you're like don't worry we have the card on file and if you want here let me just pull it up does next saturday work

Does the Saturday after that work? Now, you might find that you have a better time booking the next appointment before you do the lashes. Okay. Because I'm sure when they have their lashes done, they want to get out the door, right? Yeah. But if you book it while they're doing it or before, it's like they're just sitting there. Yeah. So you've got how long does it take to do your lashes?

Like an hour? Right. So if they're like, I don't have time to figure this out now, it's like, we have 60 minutes to just get one thing done, which is like, let's just book the next time you're in. Okay. Do you feel like that's more reasonable? We can try before they get the lashes done. Yeah. That's a good idea. I prefer to sell before because...

Once someone has gotten the value, they want to leave. And so I want to do it before they've gotten the value because they're like, oh man, I want to get this done. And you're like, great. These are going to run out in three weeks. Let's get the next one on the calendar. Okay. So Banfan will just say before. before slash during.

Getting a customer to come back and buy again is absolutely a sales conversation, though it walks and talks like an administrative conversation, a scheduling conversation. But a lot of sales conversations look, walk, and talk like that, but they're not.

So we need to treat this conversation and outcome of getting them booked back in with the proper respect it deserves for the business. Because if all of a sudden we got 80 or 90% to rebook, it would dramatically change the outcome of the business.

If that's the case, then we should put a lot of attention to this. And the nice thing is, is this doesn't even seem that hard, which are my favorite types of implementations. Not that hard, hugely impactful. Now, I do want to talk about the career path. Does everyone come in and start at 50%?

No, so they start at 40. Not everyone depends on their experience. The way that I like organizing something like this is, here, I'll draw it out for you. Let's say somebody could make eventually, you know, 55%. Okay, so say like we've got 55%, and then we've got 50%, and then we've got 45%, and then we've got 40%, 35%, and then 30%.

All right. Let's just say that that's hypothetically our little path here. All right. So they might start here and they're going to be junior lash, you know, technician, whatever. Now. we can intermediately give them a bump. And I like to have this basically every three months. So this gives you almost a two year time horizon of improvements where you say, cool, I'm going to give you go from junior to lash tech. And then you get the raise and then you go.

senior flash tech tech and then you get the raise and then you get what's another word for technician lash artist Perfect. So it's like technician is the first three. So you go junior, normal, senior, and then you go same thing, junior artist, and then you go artist, and then you go senior artist.

So that gives you six title changes and... six different compensation changes and you just do it every three months and then when they hit their their three month or six month or nine month what you can do is that with the increase of pay you also unlock um training

as you unlock these new things, we're going to give you another skill, which you can charge even more money for. So it just unlocks the earning, because not only do they get higher income, so basically when you give them the title, they're still at their old pay, but you give them another skill they can charge more for.

Yeah. Does that make sense? Yeah. And so that way they're making more money at every level. One is they just literally get better economics. The other is that they learn another skill that... How different tile. Yeah, that they can... Exactly. Okay. Do you feel like you could break it into like six pieces? The training? Cool. And then that gives you a career path that they can work into.

So what we're talking about here is deconstraining a supply-based constraint, which is how is she going to get more good technicians in each of her locations? And this is a super common constraint. And so if you're a business owner and you're being limited either by demand or by your ability to deliver on the demand...

aka Supply. We run workshops here at our headquarters here in Vegas. And if you'd like my team to just directly take a look at your business, then you can just schedule a call with my team. And as long as we understand the business and we think we could help you out, we'll invite you out.

so if that's interesting you can click the link below this video otherwise enjoy what happened after two years good question i like the the idea that you had where you have the one girl who's 33 i think you just gave too much and i think that you gave ownership rather than a profit share

And so the way that I explain this is, and you can draw this for them or you can have them watch this, right? Is that there's four things that you get with ownership. You've got risk, which I don't know if they want that. There's control, which right now you're not giving up.

you've got profit, and then you've got a sale, like if you sold the whole business. Those are the four components of equity. Now, they don't probably want this. They're not going to get that. And so what you can do is just give them the profit.

from the facility but not ownership per se so it's like i'm just going to give you this profit share in the form of a bonus and you can bonus them out every month okay and so if we want to say like what's the what's the end goal what do you think would be enough for them to to be like this is cool like this is it a hundred thousand a year like what's the amount of money that they'd be like that's a lot

I think so. Okay. So what we do is I always back into what my on-target earnings, it's called OTE, but I want my on-target earnings to be. So if they're going to be a true owner, then are they going to be doing lashes or no? Yes. Okay. I'll tell you where I'm going with this, is that I want to create a path where they can get 20% of the profit of the facility. And so what you can do is say, cool, you're going to have the opportunity once you pass 24 months, once you pass two years.

When I have my next locations that I'm opening up, I'll be able to place you in one of those new locations and you can have one of your own. Offer all the money, you'll work, and you're going to get 10% year one and 20% year two. So that's four years. But you have to do this extra work that's associated with that. Now, the cool thing here is that it's not equity per se, so that if they're not doing a good job, you could say, you know what? Maybe you should just be a full-time tech.

this much money has to go to getting somebody to run this thing and it's either going to be you or it's going to be somebody else so i'd rather give it to you because i trust you and i know you but this gives you a very long-term career path for that okay so it's like

Put your two years in. You're going to continue to make more. You'll be fully trained up so that eventually you can train other people, which then you can open the new locations. And hopefully by two years of every location, you'll have enough cash flow to open another one. Okay. For this, I'd start them at 40, though. Okay. Should I start? I can't start up less. 40%. Yes. Well, you can't start the new ones. Okay. The new ones, you can start lower. Mm-hmm.

And when you're saying stretching out the time, you mean like... Instead of three months, can I do every six months? You could. I like having more frequent bumps. I'd rather you go 40, 42 and a half, 45, 47 and a half, 50 if you need to break up the increments. Okay.

that it's i actually like the cadence a lot i like three months because it's always it's it's right there yeah six months sometimes it's too far away okay yes so yeah if you have to with the existing ones you can go 40 to 50 and just break it into that's four chunks plus the four title changes that's eight chunks

Okay. Does that work okay? And you could do it every four months and that still gets to your team? Yes. I sense. Doable? Yes. Do you like this? Yes. Okay, good. And to be clear, you're saying, I'm not going to give you a facility when you get here. I'm going to see you qualify.

Yeah. But you're going to compete against all the other girls who are at two years. So you got to be the best one. Yeah. Because I'm going to give it to the best person. Yeah. That way there's some competitiveness. Cool? Yeah. Okay. Great. Let's talk about the membership.

what ideas you currently have for the membership that you want to sell on the back end right now we have a monthly membership a six months and 12 months okay are they paying up front yes they pay up front for the whole six months Guess what? No, I love it. No, I love it. It's great. So for the monthly one, they not. What do they pay for six and what do they pay for 12? Depends on the type of fills that are getting now and would multiply it by.

Six months. Okay. What's the discount? Six months is 10% and 12 months is 15%. Okay. And then 15%. Got it. Do a lot of people do this? I haven't. Okay. So you haven't done it yet. Okay. So let me give you some ideas on this. So first off, I would rather you give away free stuff than discount if you can, because one, it'll be cheaper for you because your costs are so low. If we can make the value of whatever it is.

more than 10% off, which you can do for less than the 10% of the cost, because I'll get you, I'll bet that the actual cost of stuff is, I don't know, nothing almost for the lashes, I'm guessing. Yeah. Right. So what kind of free thing could you add in that would be like, you know, valuable for them? Well, I already add in the free facials. Okay.

Okay, so they have facials. For the monthly one, the price don't change, but I do have a lot of benefits. So you give them facials for free when they come in. Okay, what else do you give them? just discount products okay product discounts okay we also increase our referral from ten dollars to fifty if they are a member okay okay i like all that and then just um

Anniversary gifts and birthday gifts. Really good. Did you look at our stuff? This is good. Yeah, I learned. Yeah. No, it's good. Anniversary and then birthday. More value, but don't... You don't have to change the price. Yeah. No, I love it. So I want to understand what makes this membership that she wants to roll out compelling. Because sometimes people just roll out memberships that are just discount-based memberships and like...

Not my favorite way to roll out a membership. I want to add some significant benefits. So it's like you want to take away bad stuff, which would be money and add good stuff, which would be value. I want to make it a dare I say, dare I say an offer so good people would feel stupid saying no. And so what I'm going over here is what are the bonuses? And so if you're like, huh, I would love to know how to structure bonuses.

The good news is I have an entire chapter on how to structure bonuses inside my offers book on page 117. So how do you splinter stack what you have, pull out the different components, order them in such a way that they're the most compelling as possible to each? avatar. And I will say this, I think people kind of sit on this continuum of like, they have no bonuses or they offer like a hundred bonuses. I think the magic is actually in the middle.

is you want to have each bonus in and of itself be worth the same value as the overall price. And so that someone could just say, I would do it only for this. I would do it only for the free facials, right? Now, would they do it only for the bump and referral bonus?

Probably not. Would they do it only for the discount? Maybe. But to me, up to this point, the most compelling thing she brought up was that they would get facials every time they come in, which I think is not a bad thing. Let's see if there's something else that we can put up.

So one other thing that you could consider doing, and I think this makes it kind of fun, it's up to you, is you could have a little sweepstake where every month they're entered into kind of a giveaway where they get something cool. And then that way, when you select the winner...

you can then advertise it kind of all over the place and also if the person who if they were referred by somebody the person who referred them wins too so that'll give them a really strong incentive to refer as many people as possible because those get as many chances as possible to win

And so I think you'd just be like, see, I'm thinking like something like 200 to $500 of, it has to be enough that they should be excited about it. So just like one last thing, like maybe, but like, I think if it was like $500 with like the, whatever the full suite, you know.

deal is you give it to one person a month i think that's very exciting from marketing perspective it's not a huge cost of the business yeah does that work yes okay so how are we going to sell it so someone comes online they put their car down they show up in person for you know the 99 promo right

While they're there, we're going to try and book their next appointment before they even start or during the appointment. We're going to get them booked for the next one. Okay. Where are we going to do the upsell? For the service or the membership? Membership.

Now I'm starting with the clients who are already coming. Okay. So the recurring clients. Yes. Okay. And I say, why don't you try the memberships? You're paying the same amount you're paying now every two weeks. Except you get all this stuff. Yeah. But then now you get all this stuff. And then you also get a free facial. Yeah. To sign up today. Yeah. I only asked like a handful of clients. Okay. And how many people said yes? Two.

out of out of like five okay it's not bad the one thing that i would do is is the so the facials right now if they say yes okay that's good immediate bonus is strong i mean 40 is not bad i would like it to be like 70 though

i wonder how many more reps you just need yeah i think just offer more yeah because it's because basically you have to i think you have to get into the conversation and kind of learn the flow of it but i would imagine if you say hey um do did you want to get like some of these free things

And they'll probably say, yes. And it's like, cool, it doesn't cost you any more. And then be like, oh, great. How do I do that? It's like, just sign off the membership. And the way that I'd start it is say, you've been here.

especially if you're upselling existing customers, you know, six times in the last, you know, whatever, six months. It doesn't really matter. So just look up the CRM. How many times have you been here? So like, hey, Charlie, you've been here, you know, six times in the last six months.

i realized that you haven't been getting any of this free stuff did you know that you were supposed to get that and they're like i didn't know it's like yeah all you have to do is just sign up as a one of the members you pay nothing more than you're currently paying

But you just get all of these things that you should already be getting because you've already. Because like if we can frame it on the fact that they should have already been getting it, it's kind of like a default close rather than trying to get them to opt into something. I want the positioning to be like, you've already been paying for it and opted in for it.

Now we just need to formalize it. I remember reading a study in a book called, I think it was like 50 Scientific Ways to Get to Yes. And one of the things they talked about in the book was that one country was able to get like... 80% of people to opt in to be a organ donor, whereas other countries average like 10%. And the one thing that that country did is they had people opt out of being an organ donor rather than opt into it. And so to me that...

almost permanently changed how I saw upselling, which is how do I make the thing that I want someone to do appear like the default option as in they have to opt out of it. And so the way that I'm trying to frame this upsell for Ani is that, hey, you've...

already opted into this membership. You just haven't been getting the bonuses. So let's just like formalize you getting what you already should have been getting rather than do you want to do this new thing? So upsells in a true new sale scenario, you might be at 30-ish.

percent, 20 to 40, whatever. And that's the numbers that she's getting, which is fairly typical. But if we can structure it so that it feels like a default close or an assumed close based on past behavior, we might overnight be at those 80, 90% close rates, which is why

I want it to be. The more you can get it to be like, oh, you should already have this. And the less pressure it is, the more likely they're like, yeah, okay, sign me up. How are you actually facilitating the transaction? You have their card on file, right? Yes. So do you say, hey. We can just use the cards you have on file. Do you say that? No, because I haven't asked that many. Okay. Well, I would have that as my actual final CTA. Is that way you can say, hey.

um if yes i'll give you the facial right now and we'll get you booked for the next time you're out here you'll also get a facial then too and you get some of these other things and we come to the front cardinal file work great and then that way when they check out boom it's done

They're on recurring and they just sign the thing and then they're in. Yeah. Seamless. What if they don't rebook? They don't rebook. To be fair, the rebook is an easier sale than the membership. We have to first be able to get close people on rebooking.

If someone's not going to come back again, they're definitely not buying a membership. Yeah. So we put in the door, like get the small win and then offer free stuff and then go for the membership. Okay. So it's a three step. Okay. Does that make sense though? Yes. Okay.

Okay, so that's how I would pitch it for the existing people. Do I bother to sell the six and 12 months at all or I'll leave people ask? So that's a different sale. So I'll tell you, so the way it actually would work is that after they say yes to the membership, you then say, would you want to save some money? Okay. And then you say, cool, if you want to save some money, you can prepay it today.

Would you prefer 12 or 6? Like you're getting into a sales business. Like this is how it works. The reason prepayment for memberships is so valuable is one, people who prepay churn at a significantly lower percentage.

Number two, it pulls cash forward for the business, which allows you to grow more rapidly if you want to, pay people more aggressively. And fundamentally, cash today is always worth more than cash in the future. And I would say third, and maybe most importantly, if they're prepaying for the year,

it's unlikely they're going to go somewhere else. So you basically lock in the customer for all of the future business rather than maybe they're only going to come four more times this year and they're going to mix and match between you and two other places. I'm going to draw this out because I think it's worthwhile.

First, we bam-fam the appointment. We have to get the next booking. Then we have our free offer. That's kind of the B, right? We have our free offer. They say, yes, I want the free eyebrows. And we say, cool. So we already know when you're coming back. So you might as well just sign up for the membership.

yes so now we have our membership yes if they say if we're already in on the membership just from one tip this happens separately from when they check out so this is at the at the station when they go up to check out then we say i want to save some money save whatever, $150. Now they're going to be looking at their bill and it's almost the whole bill. So they're like, yeah, I want to save $150. It's like, awesome. Pre-pay.

the next 12th. And if they're like, oh, I don't want to do that. You're like, oh, if you want, we could just prepay to six. You want to do six? That way you can save the money. But to make it really sexy is you say, oh, do you want today to be free?

Because they're at the checkout. They're right there. The card's on file. They're about to leave. Like, do you want today to be free? Oh, cool. Just sign up for the next 12. We already have the next time you're here. So you're good to go. Just check the box. Now, that, to be clear, is going to be off what you're going to save over the next year.

But we'll apply the first discount today. Feel right with that? Or is that too complicated? No, I get it. Okay, but it's just bamfam? It's just the wording. Yeah, for sure. This is training. This is how you train staff to do this. I need the recording. Yeah. So I can...

Learn it and then train other people. Yes. The training other people is hard part. Why don't we just cover the training right now? So if you're in a service business, you're in the recruiting, hiring and training business for the most part, because selling lashes to me is not super hard. Like beauty in general, it's not be.

difficult to sell because people just like go in and they look better so it's a very easy sale compared to like hey work out for a year and wake up early and stop eating the foods you love much harder sale the real thing that will scale this brand is her ability to scale training to new people

come in the door. And the arbitrage of the business is being able to get someone in who has low skill, train them up on your system, and then be able to charge a higher rate for what that skill commands in the marketplace. And so basically the arbitrage of, I can train someone in a week and take them and... and pay them what I got them to say yes to on the way in.

And then with the added training that I'm paying for, I can now make this spread on what the market now values this new skill out. And fundamentally, that arbitrage is what exists in service businesses and how service businesses make money. so she's got to be able to teach other people how to do this the way that you have to train this is that you have to basically have them come in 30 minutes early or whatever you know whatever the gaps are during the day and honestly like

This is going to sound crazy, but like every day for 30 minutes, they role play with each other. So if you have four girls there, it's two and two, and one person's in the chair and they do the first part. Hey, so what time do you want to come in? And then you have to, well, I'm not sure. And then it's like, well.

let's pull up your calendar like i'll tell you what days i have open yeah uh if you want to do it with me then they should be incentivized to do that because they want to get the money they only have to train the front desk one girl one little thing that's fine that's even easier so you just have to role play with her don't just say here say these words it's not going to work it's just

repetition over and over and over again as soon as they mess up say cool say it like this try it again say like this try it again you did great do it five more times okay right and we'll chart from the top again it's just a ton of repetition yeah and then when somebody comes in they'll probably say it the right way

Okay. Okay. All right. So the last piece is really just the ads and attribution. So this is actually very integrated into the brick and mortar. Okay. So when someone walks in, so this is during, right? This is after. which is these ones. That's after. And then I know this looks weird, but this is before. So when someone walks in the door, what we want is we want to immediately get their ID. So, hey, do you have your ID on you?

As soon as they walk in, that confirms the appointment. Then you say, great, do you have the card that you want to put down today to pay for the thing? So they already have that card file when they book. Good. So we're just confirming it. Yeah. Now, the next piece is great, sign in. And on the sign in, we want to have the dropdown of where they came from. That way we can have our attribution for the marketing and the referral code if someone's getting.

some sort of referral benefit the longer you stay in business the more you are compensated by the quality of your decisions not how hard or how long you work as you increase leverage in your career you want to make better and better decisions and one of the easiest ways to make better decisions is have good clean data and so

you can always just do post-it notes and duct tape in the beginning and that's how a lot of people start there's nothing wrong with that but at some point you have to make bigger and bigger bets on where you're going to invest where you're going to grow how you're going to expand and in order to make these irreversible bets

We need to collect the data so we don't bet the farm on something that's a loser. So that way, when every single person walks in, it's like, great, you have an ID in you. Awesome. Cool. Is this the card you want to use for today? Just confirming because sometimes people want to change their card out. You're like, awesome. Can you sign in right here? Where'd you hear about us? Great. Did anyone send you? Cool.

Let me know who. If not, then there you go. So then you got your referrals tracked, you got your ad attribution tracked, you got the right cards on file, and you have confirmation that it's the person. The reason I asked for ID first is because it's less intimidating.

This is just like it's a checklist and they just follow it with every single person who walks in the door. Yeah. Like the fact that you have this waiting area is the biggest advantage for most service businesses that are underutilized.

is because you can check off all things. You can get your reviews. You can get your next deployment done. You can get the card on file. You can find out where they came from. You get all of this stuff done before they walk in to get their service. That's the big stuff. But I think we have to do the partnership thing.

I think that's the big deal. Yes. That's what's holding me back. No, it is. Okay. So let's recap all this for you. Let's go easiest and fastest. So I use ice as my little... moniker so impact confidence ease so how likely is it this is going to work how easy is it and how big of an impact is it going to make so something that's really easy really fast and high impact you do this first and some things are high impact like the partnerships but it's going to be not easy right okay

So ICE is a really common investor framework and it also maps pretty closely to the value equation, which is like, what are the four elements of value? You have... The dream outcome, which ICE is the I of impact. You have the perceived length of achievement, which is the confidence score. How likely is this to occur? And ICE just says ease, but I split that into how fast and how much effort is there. So there's four variables in mind.

If you want to use ICE, you can use three, whatever. But the point is, is that we have to make these appraisals based on what expected return do we have for the resources we plan to allocate into the business? What bets are we going to make? And so zooming all the way out.

I define strategy as prioritization of resources. There's a lot of things we could do to Ani's business, but the idea is that we want to allocate our resources to the fewest things that are going to get us the highest probability of high returns. And so this is how we reorder these.

these things that we went over so that she can get the most out of it number one is i do think weekend pricing is just like easy profit that will make a huge difference for the business all you have to do is just have two sets of, you know, pamphlets or whatever that you have on the counter. And when it goes Thursday, then you have Thursday through Friday pricing or Thursday through Saturday pricing. Would the regular clients get annoyed? Well, if you want to...

I can grandfather you in. If you have a membership. Also great too. Another great way. Right? And actually, that's amazing. Hold on. That is probably the biggest benefit that we can put in this thing for the membership is... you have same pricing yeah non-surge pricing there we go now it's meaty so one of the beautiful things is that you can create a problem then solve it so we're going to raise the price

But if you sign up for membership, you're not going to have a price raise. It's only for weekends. So if you want to come on peak hours and not pay peak prices, just join the membership. I like that. That sounds good. That feels sellable. Okay. So weekend pricing, which will then pair. with the membership offer. And then I think we have our before process. Number five, we have our during. process. For five, we have our after process. Six, we have career path.

And then seven, finally, we have our partnership issues. Okay. So weekend pricing, I think for you is going to probably... I think it's going to be a huge difference because it's going to flow people right into membership. So I think you'll probably be able to see a 10%-ish increase in revenue without really doing anything else because 50% of the time you get a 20% bump. Do you think 20% is too high for a...

Do you want to do 10%? I think we can start with 10. You have to be sold on it. If you're not sold on it, it's not going to work. So if you feel good with 10, I'm good with 10. All right. So we'll bump it by 10, which means you'll probably have something like a 5% increase in revenue.

But that 5% increase in revenue, given your 28% margins, goes from 28 to 32. Sorry, 28 to 33. And so it's closer to 20% profit increase for you. So even though it might sound small. Right, yeah. It's a whole nother location. Right, not bad. Membership armor. So the thing here is that you said a lot of customers stay past three months, right? Yeah. What percentage do? About 50, yeah. Right, so if we can get that to something like 70% plus.

That will probably be one of the largest changes in the business because you don't have to pay to acquire those customers and they just basically are always profitable going forward. And so that's probably some of the neighborhood of like a 20 to 30% lift in the business. So now the before process.

This is just going to allow you to increase your ads because you're going to finally be able to attribute where are these people coming from, right? So we're going to have that. Plus, we're going to get more people to come back because we're already booking their next appointment from...

right as they walk in right then here's where we have our upsell to uh membership is at the chair because that's when they have to do the eyebrows unless we can stuff it before that's up to you i feel like it'll work better in the chair I think it's, well, not in the chair because then they won't be talking. They need to keep the eyes closed and get the service done. So you think it should do before? Yeah. Okay. I think after, booking the appointment and then. Well, then let's do this.

Do the membership. Good thing is we can just cross this out. So you're just going to have a before and after. So before they walk in, you're going to get your ads. You're going to get their comeback. You're going to give them the upsell offer and you'll get your reviews because I don't want you to stop doing them. Yeah. Okay.

So that's all loaded before. Afterwards is basically second shot and prepayment. So they've already agreed, remember earlier, that they were going to sign up for the membership. On the way out, we say, hey, you want to have today free.

because the today free is basically what they would get off if they sign up for a year but remember you're not actually giving them today free you're just going to say like that's what you're going to save in discounts yeah okay cool so that's where you're going to go and that'll pull up cash which I think will be another probably 20% that you can get from the business. The career pathing, this is just going to decrease the churn.

right for your for your staff and ultimately the thing is is if you keep the staff then you won't have to keep retraining people and so the profit margin of the business will just naturally improve because the girls get better they get more return customers they have more repeats yeah and then finally the partnerships

So you're going to have to have basically three conversations. Well, really just two, because one you're fine with, we just need to increase the ad spend, which we can do once we actually have tracking. The hard conversation, I think you should do the equities well.

Even if it means you're getting the smaller one, because you're going to be able to go all in on it. And just, I'm sure that you'll be able, if you're fully focused, you'll be able to turn it around in two seconds. Okay. And then the one girl who has her foot out the door.

I'll just give her some sort of buyout so that she has some sort of stability over the next 12 or 18 months. Okay. And then it's like, hey, just do one favor in exchange for this. Just help me replace you. Yeah. That's it. How does this feel? Good.

Feels like work. Yes. I like it. Let me add a little bonus one, 2.5, is follow up with leads. So you could probably pay someone $40,000 a year to do one thing, which is just call the leads. that come in. Do nothing else. You have to do anything else. You can stay at home, call the leads within one minute. So what we're going to do is we're going to make that number one. So, oh, by the way, maybe make that zero. This one is a two to three X for the business.

That solves your lead gen issue. So you're going to hire somebody who's going to call the leads. We're going to roll out the membership offer with the weekend pricing.

We're going to train the team on the new pricing. The reason it's going to make sense is because they're going to have this career path. And then you're going to have this conversation with a partnership because now you're going to have a more trained staff. They're going to pay better. Okay. So when do we call the lease? We say? Immediately. Hey.

We saw that you were trying to book an appointment. It didn't go through. I'll just say, hey, saw that you booked our $99 promo. What time do you want to come in? Okay. And then, great. What card do you want to use? And they're going to say... sure here's my card and if they don't say it's like why do you need my card you say it's how we've always done it that's how we always do it that's how you say it all right awesome job honey

Thank you. Yeah, you bet. If you liked this Cash Guys episode, which we keep making because you guys keep asking for them, we have another one of a female stylist who is a little bit smaller in the business, about $300,000 a year. And I think you'll love it. So go check that one out. Enjoy.