Brutally Honest Business Advice | Ep 878

Let's do Q&As. so you sell people to people you do human trafficking you're not you have no you have no revenue and You want to get $2 million a month. So what's the issue? Yeah, no, I'm restarting. I'm restarting that company. And so there's a long story in that. But my question is a personal question. We should do the little thingy jingy. Right. So. I'm a father, single father. I got two boys here. And my name is DJ Christofferson. There we go.

I sell people to people. I'm restarting my virtual staffing company and we're currently at zero revenue. It's just a matter of getting started. And so we're really confident in that. My question is on a more of a personal one. So I'm a single father in a serious relationship. And she's not a business person at all. Very sweet and supporting. But what would you say would be some things to prepare her for?

When it comes to- So your spouse or not spouse, your partner is that? My partner. I mean, she doesn't live at the house yet. It's long distance, but it's coming together, but it's getting really serious. Okay. Preparing her for- being married to a type A. I think you should give her a try before you buy.

Yeah. Seriously. How do you mean? So fly out, spend two weeks with me. I'm not going to cater to you. I'm going to live my life. If the way that I live my life, the way this works, this is how it's going to be. If you like that, let's rock and roll. If you don't. I don't want to change. Yeah. That's true. That's perfect. No? I love it. That's great. Thank you.

Hey Alex, thanks. Yeah, you bet. So my name is Zach Levine. We sell pain management services to New Yorkers. Okay. Integrative pain, so chiropractic PT. but like old people young people women men it we have a bunch of avatars right now which is potentially a product um brick and mortar Brick and mortar. We're out of network endurance. We actually said dying, which we'll get to. Sure. We do 4.2 in revenue. Okay.

So you're mostly insurance or you're mostly cash? Mostly insurance. Oh, mostly insurance out of network. Got it. Yeah. No, I'm investing in a rehab facility, so I'm familiar. Okay, cool. Yeah. Yeah, 4.2 wants to get to 20. Okay, got it. We have three offices. Don't know exactly how to transition out of the dying business model. Obviously, our industry is growing. So what business model are you thinking about switching to? Cash.

I have a bunch of friends who are in-network and murdering it. In-network, yeah. Why don't you get in-network? We've just heard it's a grind, you know, it's commoditized. It is commoditized. Race of Nevada. I mean, basically, you have three different ways to run into it. So why, let me ask the question, why do you feel like the one that you have right now is dying from out of network?

Because reimbursements from payers are declining this year, whereas inflation costs are going up. And because the amount of people who have out-of-network benefits is dwindling as well, it's mostly just corporate. And that's even declining. Yeah, they're just getting smarter and they want to push everyone in network. So we're getting squeezed. Administrative burdens through the roof. Prior off.

So you basically see it as like I could either go in network and then make your entire business model around operational efficiency. Which is, I mean, I've got somebody to murder it doing that. So I don't think there's anything wrong with that. Or alternatively, you just go premium, be the best and be private, right? Be cash pay. So the question is, how do you transition it?

Yeah. Yeah. I think we've decided as a team collectively, we just don't want to be in that work because of the lifestyle. No, I guess. And who you deal with. Yeah. Yeah. A pain. Literally for you. Or really, I guess for them. So.

I think, so fundamentally, I think you just have to think about this as basically starting a business over, but with resources already. So it's like, you don't have to think about, you don't really have to think about the service. You probably have to think about the packaging itself. So like, what's the, what's the grants I'm offer for this? And you'll have a number of, like, you're just going to become a normal business.

Which is just like you will run advertisements and you will make offers to people and they will come in and then they will take their credit card out and they will buy stuff. And so it's probably more that it conceptually feels complex more than it actually is. And so it's probably a ripping the bandaid off thing.

which is that I would just out like, so one is what channel of acquisition are you going to use? I'm guessing right now, is it mostly word of mouth? Yeah, it's referrals for a long time. Yeah. So one is you can start. So upselling existing customers. So like, obviously they have what's covered in from insurance, but then, um, you know, upselling other packages that'll get your team a little bit used to be like, it's okay to pay us.

That's from like a really tactical level. But from an acquisition perspective, you've got content, you've got outreach, and then you've got paid ads, right? And alternatively, you could have affiliates. So we have to pick. So of those four things, which ones do you feel like you are better suited? So from affiliates, it's like go to.

shoot injury attorneys or like you want to find the the person that they're going to see prior to hitting you tried a bunch of that and the issue there is that they want to send in network or if you're injury attorneys to workers cop cases which they'll pay

Very well. So you don't want to go from that perspective. So you don't want to do affiliates. Content probably, in my opinion, probably isn't the best way. So then you have outreach and you've got paid ads. I'm going to bet paid ads is going to be your better bet since it's local. It's pretty straightforward. operationally, it's not complex. Like running paid ads in a local area is like... Pretty easy. You drop a pin.

You say we need more like so obviously we have a bunch of different types of avatars. So like really now, like how would you say going about? You're probably going to end up finding that you have one to three offers that actually convert. And then the remainder of your business will be upselling and cross selling. when they walk in the door. So instead of thinking about your businesses having like

you know, we have 15 services, we advertise all 15, you're going to have one to three that convert really profitably on the front end. And then the remainder of your business is cross selling and upselling. So it's like, you're going to have the most efficient door into your business. And then you'll end up just.

cross-selling you know selling people and retaining people from from there and so like in terms of next steps it's You need to record an actual ad for an offer and then put it on meta and then drop a pin on the map and do a 10 mile radius. Hopefully all three are close together. And you'll run the ad. That'll then go to either a CRM or if you're low tech, you can just go to a Google Sheet.

And then you can have your front desk, call them within 60 seconds. And then if they don't pick up, call them again and get them booked. Because your time is valuable, you'll probably want to consider running. some sort of highly discounted assessment on the front end. So that'd be like a $200 x-ray or something like that, that they can get for 19 or 20. You don't care about that. You just want a credit card on file so that when they walk in the door, you have two things. One is that.

When they walk in the door, well, one, you want them to walk in the door because they paid. Two, you can charge a no-show fee if you want to. But typically, if you're getting even a low ticket amount, you'll be in the 70% to 80% show rate. you won't waste practitioner time.

Actually putting out their credit card. Yeah. And just for the discount offer, now when they come in the door, you'll do the assessment. And then after the assessment, you don't treat them. You'll do the sale appointment then. You sell at point of greatest need, not point of greatest.

So at that point is when you'll make the offer. And then you'll be like, hey, awesome. You want to use the card we have on file because you already have it on file because you got it earlier. It makes it much smoother.

But that's what you have to do. Like you have to learn how to acquire customers that are cash based. And so that means that you have to run ads and you have to sell shit. What would you do? Like if you were saying from a strategy standpoint, like we have the current business that's doing 4.2 million in revenue. You're going to keep that business. So all of your discretionary resources are going to go towards this if you want to build a bridge to tomorrow.

Should we do any of the more on the things that are still working within Out of Network? Like, it's really just that, you know, we have limited resources. How much should we spend on each? Let's build a new. Is that profit? We're basically at zero. Oh, shit. We waited, yeah, we waited longer than, yeah. Yeah, I understand. Well, you can't control, so unfortunately, because you can't control how you're reimbursed.

No, but we can remove the lowest reimbursing patients, which is like remove Medicare. Then we can lower our cost structure. We can go that route. I think that would probably be the first thing that I would do. Because you want to free up cash flow. So yeah, you use this resources in terms of time and money to build a bridge. Does that make sense? Yeah. Thanks a lot, Alex. Yeah, you bet. My name's Cody. I sell roofs to people. We did $140 million last year, trying to do $250 million this year.

Trying to figure out how to follow the principle of giving away more guarantees and bonuses when I have such high hard cost and such a high ticket item. Yeah. What are gross margins right now? 40%. Gross. What's that? 10 to 15. Okay, got it. Do you want to sell it or do you just want to keep it forever?

I actually just sold my roofing business and now we're part of a PE firm that, that now I'm directing that, that entire. So are you the platform? Yes. Okay. So you're the platform. How many tuckens have they done? Eight. Got it. How long has it been since they started? About.

three four years um i i just got acquired 30 or we just closed 30 days ago and now they're trying to roll everything into my brand and i'm chaos yeah got it okay so sorry go back to the original question so i have like better context on this okay So how do I follow the principle of give away more value, make the offer so good? You got to feel dumb saying no. When I have such high hard costs, I can't really do a money back guarantee. I can't really.

give away more than a roof. Well, the question is, is that the constraint? Is that the thing that's limiting the growth of the business? In my theory, yes, because if I create a good enough offer, then I could roll that offer out to the other eight other brands, and that would be the biggest amount of leverage I could deliver in the shortest amount of time. And is everyone insurance-based?

That's why they acquired us because we're retail. So you're the only guy selling just new roofs. Everyone else is doing storm chasing and damage repair and shit like that. Correct. And what they want us to do is bring the retail model. to the other brands and to add another layer is we sell everything 100% virtually. So no in-home appointments. It's all, you know, digital. And so that's what they, that's the vision is taking that, you know, nationwide. Centralized sales.

So you want an irresistible roof off. I'm going to blow the roof off. I feel like if I were in your position, the first thing that I would do would be centralize everything first without trying to change. Basically, I would take the model that I already know works. What was your revenue before you were acquired? Okay, you're doing 20. I would like, in terms of introducing levels of change, so this is actually pretty good for everybody.

I will typically not try and change like five things at once. And so you centralizing all sales is going to get cost efficiency improvements and you're going to be able to have higher sales utilization. So you probably. cut off the bottom third of the sales force that's low performing. That alone might give you a 25% lift in general because The best sales guys will take more of the sales and you'll have centralized all the costs.

We'll have centralized all the costs, right? And so you'll have an increase in revenue and a decrease in cost that's paired. That would probably be my first step. That was part of the acquisition deal. That's the only way I did the acquisition is if they were going to give me full control and centralize my sales. So, but like, I wouldn't, I mean... I know the question was about roofing, but like, that's what I would do first. And that will probably take you six months or more realistically.

In terms of the offer to roofs, an offer that's worked really well in home services is instead of being a money back guarantee, I position it as a profit guarantee. So it's like, listen, you want your thing to be on time and on budget, probably. And so I guarantee that I will deliver it on time and on budget, or I'll give you my profit, which is 20%.

And that way it's like you're not underwater and you still have 40% gross margin. So you're not really losing on the deal. But then people are like, okay, so he's got skin in the game. And so that's a way of closing significantly more deals because the two biggest... obstacles that, well, you would know this, but in most home services, it's on time, on budget. And probably for roofs, it's like, and how much am I going to be displaced? How much is it going to interrupt my life?

And so I would put my guarantee around those items and then just have a marginal amount that's back. But it's really just because all they don't. So the big thing just with guarantees is that people don't want their money back. They want the roof.

And so they just want to know that you care enough to make sure the roof gets delivered. And so that's really the solve for the guarantee is it just pays down risk of them not getting what they want. And so as long as that gets accomplished, you don't have to do it with money back. You can just do it with some money back that gets them to say, yeah. Hi, Alex. Hello. You can call me Alex Rodriguez.

From Puerto Rico. From Puerto Rico. So I'm a music attorney. Abogado. Abogado, correcto. En la música y el entretenimiento. Yeah. So what we do is we have more constraints focus. Okay. I have. Yeah. So we have three businesses. So basically it's three businesses. But today, thanks to Ed and Sammy, we got... much more clear on what we should do. But I would like to know how would you think about this? Because the law firm side, it's growing 20% year over year without me actually doing anything.

redirecting people that come to me through my lawyer. And right now it's about 100K. And then we have the educational. site and that is making 200k and it's been stopped like that in the last two years. Sure. And you get customers from organic? Yeah, both are organic. Okay. So if you don't have money to pay us as a lawyer, you go to the educational platform.

and we are developing a contract automation software for big companies like major labels or publishing companies uh so right now the the product our software our goal with the software is to sell we are seeing that other that big music companies are buying tech yeah so specific for them so they're doing everything manually we want to sell that but we have a cash flow problem because we're selling to you know people without a lot of money and the service size does make money so

Our problem is where she would focus. Yeah, but what's monthly churn right now? On the software. We got 100 people and we only have 40 active right now. And how long have you been doing it in the first year? So you've retained 40%. Are they actually active though? So they're paying. The people that are active are paying $3,000 per year and are only like four.

Four that are paying $3,000. And then what are the other 36 paying? They're paying $600 per year. Okay, got it. Okay, so I think we chatted about this last night. You have a, there is no right answer, but there is a path that you have to pick. And so either you're going to be enterprise company and you're going to build only for that.

probably will just transact on the education side in order to fund this. I, in general, don't like this plan, but you could do this because you'll be split attention. And this is fundamentally why people raise money in software so they can just focus on one customer the whole time, build the product, and then actually get it to work. Okay, that's that. Because you said that you're retaining 40% in basically a prosumer-ish market, which is where you're at.

I would be inclined to say that you probably are pretty close to a decent product. So you probably have nailed something there. Because keeping 40% of people one year later on... whatever it is for musicians that you guys have for contracts and whatnot, you could absolutely go all in on that and get that to like 50 or 60%. And then you just need to have a different acquisition system. So you probably just need to...

go spend money acquiring customers. And that already cash flows because of the education side. And are the people who are still paying you on the software also education customers or no? They usually come from the education or from my legal services as well. So I have some clients that be 80% of the job. Here's the million dollar question. The million dollar question is, if they stop the education, do they keep paying for the software?

yes because it's a one-time well then that's what what you mean the software's one-time no the education oh so then sometimes they just pay and they're gonna use the software as long as they so the only thing that we're solving for is revenue retention on the software And so like enterprise in and of itself is not more valuable than lower market. It's just, it tends to be stickier, which is what makes it more valuable. But if you can get a.

larger marketplace, easier to require customer to stick as well as a large enterprise customer. You've got a goldmine if that's true. And so if you want to go spend money, acquire customers with the education or media as your liquidation and then get, you know, 100%. But the goal that you guys should have is like, we don't care at all about the education.

all of your focus, all the profit goes into just fixing one number, which is that you need to look at M12, so month 12 retention, and just say like, okay, we're at 40. How do we get to 60? And then how do we get to 70? And that's all you're solving for. Because if you solve that, then the thing will just keep growing. And that's the beauty. I mean, that's fundamentally the beauty of software once you get it right is that it just keeps growing. Thank you. Yeah. Hello, my name is Zion.

We do 1.1 to 1.2 million in revenue a year. Which one is it? 1.1 cool um i would like to be at 10 million in revenue i make one to 100 million a year in there This is what's stopping me, I believe. Focus, skill deficiency and belief. Okay. I have two avatars, which is working professionals and local government. And I believe I need to choose between the two avatars. What do you sell again? So support and accommodation.

So basically, children who come from challenging backgrounds who have been in care come to us. We basically help them build their semi-independent living skills. So we help them build their independent skills. So when they reach a certain age, they can then move on to their own accommodation and live independently. So these are kids in the system, right? So like cooking skills, balancing a budget, things like that? Yeah, personal development. Yeah, yeah, yeah. Cool. Now...

The issue I have is... How do you make money? Huh? So we make money from our support services and our accommodation. So basically, we rent properties from landlords who have real estate. And then we... sublet the rooms and then we charged the government a support package for supporting the young people. And then obviously there's a risk premium because these are challenged kids. And then, yeah, we just make the spread basically. Okay. So the government is your customer. Yeah. Okay.

okay so the issue is focus and avatar why is that a problem um okay so basically because we so we have so we have two avatars so obviously the asset the asset we have control of is obviously the property. we can use that for different services. So we can either rent out to professionals who need rooms on a short-term basis, which we do, or we can rent out rooms to kids in care who need support and accommodation. My issue is...

Okay, say the two people that you're running it out to is the differential. Okay, so working professionals is one. Okay. The second is kids in care. The kids. Yeah. What's the revenue split now? So the whole kids thing doesn't exist right now? Not at the moment, no. But wait, but wait, but I'll tell you why. I'll tell you why. I'll tell you why. So we were doing it. We were doing it. Like this guy's doing the Lord's work.

So I actually scaled it from one to six, right? And my business partner had an inappropriate relationship with one of the kids in care, and it completely fucked me. Technically, she fucked her. Yeah. Well, we don't know if he fucked her but it was inappropriate. It was in the process of the highest Q&A I've had today. Pretty sure. All right, keep going. and it's like uh it really ruined the brand and we were doing really really well

And it's like, obviously due to safeguarding and risk, we kind of started losing all our contracts and they took all their kids out. I've got empty properties. So I just went to the professionals just to keep obviously paying my bills. Got it. Okay. That helps a lot more context wise.

thought you'd sneak that by me no so you can fill up all your properties using the professionals yeah we've been seven days okay so is it just that your heart's not in it with the professionals and you yeah okay cool well First off, kudos. How difficult is it? How quickly can you fill it up with kids?

Okay, so longer. Yeah, longer, three to six months. Yeah, I'm guessing you have a cash flow issue in the meantime. Yeah, yeah. So obviously the professionals need to generate the cash flow to... Yeah, I think you got to bridge the gap to where you want to go. Okay. So like basically...

sometimes you got to do what you don't want to do to get to what you do want to do. You know, like as much as I could be like, you should only serve the one person. Like, I think that you have the properties you already have leases on. You have the commitments that you have to stick with.

Fill up the properties with the working professionals so that you can create cash flow. I would consider just rebranding the old one, given your partner, and then just kind of relaunching, if you can, bandwidth-wise in parallel, but just knowing that this is going to be basically an asset that you're going to sunset. Is there a huge amount of like operational resources after it gets filled up that you have to deploy to like manage it or no?

the kids and kids professional professional no easy okay yeah i will say this is a side note notice how easy it is to like make money in this other thing versus the hard thing in general if you weren't like i really want to help the kids i'd be like dude just do the really easy one no you're like it takes nothing i could fill it up in a day cash flows whatever like like do more of that um if the goal was money yeah if the goal like okay well the goal the goal is money okay i mean

But I can fill for professionals. We can fill houses within seven days. And what I put out, my build out, I get it back within seven days. And the constraint is obviously finding the leases, right? So my plan was to build it out, do as many as we can, use the cash flow to then obviously open up the kids' home, and then maybe convert... That's just because you want to do that. Yeah, because...

All right. So you're conflicting priorities. Okay. That's the issue. So it's like, it's a sequence thing, right? Like you have a thing that you're good at making money on and then you have a thing that you want to give back on. I would imagine the professionals one makes you more money than the kids one does. It doesn't. No. Man, this thing. Kids is like free time. Kids.

So kids is like three times, maybe four times. So I would make, so let's say, for example, what I make from five properties, I can make from one kid home. Okay, so I stand by my original thing. bridge this for the cash flow and then switch to the kids professionals fill up your existing ones so that you don't you're not going into debt and you're not going negative and then basically the rest of your priorities going forward you sunset that it's like that was the our legacy model now we do

When you mean sunset, please elaborate what you're talking about. What do you mean? Don't keep growing this out of the business. the professionals right fill up the ones you have because you have all these vacancies because you had to get the kids out fill that up really quickly get the cash flow back up and then if you can make more money with the kids thing and that's what you you want to do it and you make more money do that but you got to get to there yeah that's my

Can I throw in one more? One more? Okay. In terms of like your top five meta skills. What would you like left field? Okay, got it. So what are your top five meta skills you would learn that give the highest projected output in terms of increasing business value? I know leadership is one of them. Yeah. I mean, I really think prioritization is the most important skill. So. Thank you, sir. Everyone here is limited. Yeah. So it's what you do with the limit.

My name is Don. I sell Christmas light installation to home and business owners. Love it. Last year, we did 450K. Sweet. And this year, I'd like to be at 2 million. Awesome. What's stopping me is that I still have prices when I started the business two years ago for some businesses or for some clients.

So I'd like to know how can I increase the perceived value so that I could increase my prices while still doing the same thing? Can you just say a higher number when you get to the asking for money part? So, for example, if I've been charging a house $1,000 for install and takedown. No, I understand. I understand. I'm saying, like, what stops you from just changing nothing and just... saying a higher price like this year it'll be 2000 yeah

I guess nothing. But the perceived value. That feels like the easiest thing to do. Yeah. So I wanted to know like if there's a script or anything, how. Okay. So a couple of things. So one is that it feels like you need to be sold more than anything. which, like, great, but are you good at it? Good at sales? No, Christmas tree lights. Oh, yeah. Okay, good. The best. So, great. So then you can charge whatever you want. In terms of, has the business all come from referrals?

from Google leads and referrals. Okay, got it. So you want to get to 2 million. You raising your prices, what percentage do you want to raise them? probably 50 okay got it so the thing is is like if you want to raise them 50 i'll bet you got so much more room than that because you seem not as convicted so i'll bet you there's like a ton of room okay um

So you're charging, okay, let's start with 50 and then bump it again another 50 if basically you have no change in close rates. And I would like you to keep bumping it by 50% until you see that you're making less money. Got it. That sound okay? It's not simple. Okay. That sounds great. I love this. Is that as good for you as it was for me? I'm kidding. That's what your partner said.

Okay, so I'll give you a little script for the people who are old that are going to come back because I know some of them are going to recur. is that I would give them a heads up ahead of time and say, hey, just so you know, we're raising prices on all these new crazy people who are trying to give us money. But since you're an old OG, If you want to reward you for being a previous customer, I'll honor your old price as long as you buy now for Christmas. Otherwise, you'll get the new price.

So it's like, I'm giving you the love now because I'm like, hey, I'm letting you in, but then you can front forward, you can pull cash flow forward. Does that make sense? Perfect. And then everybody else just raise the price and you'll feel okay about it because you'll have a full bank account. Right. Okay. Thank you. Hey, Alex. My name is Alex. What's up? We sell residential window replacements to homeowners. Okay. We did $84 million in revenue last year. Residential? Windows.

To homeowners. To homeowners. Okay. Got it. 84. Okay. Yep. Today, we have had a Google Sheets empire. A what empire? A Google Sheets empire. And we're starting to build out a HubSpot. We spent the last few months building out the frameworks of our HubSpot. Are you involved in it?

biggest mistakes so uh that's what i wanted to ask you about because i know you just moved all your portfolio companies to hubspot who said that uh you when on one of your podcasts jesus it's like every it's like i say it on one pocket it's like four years ago it's like everyone there's like the best hubspot endorsement ever anyways yeah the question i have so we're gonna roll this out across 16 offices hopefully a hard launch march 1st

I don't want to pay the ignorance tax if I don't have to. So what advice would you have? Basically, you're CEO of IT for basically this whole course. It's the easiest way to say it. And so I would have really rapid feedback loops with each of the department heads. If you have functional heads at the holding company, and then you'd want to have basically separate lines of communication for all the location heads.

So I think about, do you use Slack or something like that? Just Boxer, yeah. Really? Yeah. Yeah, so I'd want to have basically different threads by function. So one is the actual function. So people who are handling sales, people handling marketing, and I'd have the leaders there. And then I still want like, you basically want the different slices, basically lines of communication to the different slices of the org.

so that you can get as much transparency top down into how it's working for them and making their life easier. And then that way you can triage basically which, because you have limited resources in terms of which of these bugs are you going to fix, you know, which process flow sucks. Right. And then you can basically stack order which of these things has the highest driver for revenue.

But you can't really do it appropriately unless you basically can drink in all that, all that information. And as, are you CEO? No, I'm okay. Yeah. But you're in charge of it. So you're CEO of this. So, um, that, that's, that's basically, basically it's just like, you need to eat, breathe, breathe and sleep this stuff. Yeah. No, that's helpful. Thank you. Yeah. Just like.

It's okay that it is unscalable. Got it. But you have to do that in order to make it scalable. Yeah, thank you. Yeah, you bet. So first of all, thank you. You and your team for the things that you are doing. No, you bet. Yeah, my name is Paulus. This is what I'm doing, that you are said already. And for the, I guess, three or four years, it seems like I just kind of lost something. Like, why?

Two and a half, maybe already three years ago, we plan to go from what I have right now, because it's a one-man company, just a few team members. Now it's 460 in revenue the last year. And the goal was 2.3 mil. Maybe this is the why I lost this on the way. So I just wanted to know what's your why, why you are doing what you are doing. I like working.

I'm dead. Like I spent a year thinking about that question when I had enough money to do whatever I wanted and just like could just live on treasury bills for the rest of my life. When I looked back on the days that I enjoyed most. They had three things in common. I worked out, I ate with people that I liked, and I worked hard and had something to show for it.

and had nothing left in the tank. And so once I realized that those were the days that I enjoyed the most, that I made it my goal to live as many of those days in a row as I could. And the way that I live my life bothers a lot of people. And that's okay. And so I think, I mean, I got that advice when I was 22 years old from I'll just whatever from a person in my path.

Um, and I'd had a good weekend and I started work and, uh, she said, you're in a good mood. And I was like, yeah, it just, you know, had a good weekend. She was like, I'm pretty sure the secret to happiness is living as many days in a row like that.

And that was like the closest to operationalizing kind of joy that I'd ever heard. And so I have just stuck with that. And I think that the things that bring you joy will change over time. But I think that structure of just trying to find what that perfect day is and living it as many days in a row as you can is kind of the way to do it. That's how I do it. You can do whatever you want. Yeah. As a side note, for those of you who feel like you have lost your passion for your prospect.

And I'll give you a simple example. Like I used to sell weight loss. two women between the age of 25 and 55. And at a certain point, I just really stopped caring. They were like, oh my God, my life changed forever. And I was like, I know you had a calorie deficit and you moved. Like, yes, that's how that works. And I would have to kind of like fake myself into feeling excited about it.

It really bothered me because I was like, I quit my job to do something that I loved and I don't really care about this. I ended up loving business more than I loved weight loss and then I fell into that. Um, but I had a friend who was a personal trainer who quit being a personal trainer and started a cookie business, brick and mortar, big cookie store, like did it right. Um, and I remember being like.

are you passionate about cookies? And he was like, not really. And I was like, but he crushed it. He did a really good job. Everything was like really tight. And what I realized was that he was passionate about doing things well. rather than the cookie business. And once I realized that I was like, oh, I don't have to be passionate about weight loss, but I can be passionate about being good.

And just saying like, when I do things, I will do them well. And I think that has been something that has helped me stay motivated in times when I feel less.

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... 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've got customer success you've got it you've got recruiting you've got hr you've got finance

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 part 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. My name is Heather. I own a consulting firm called Channel Maven. We help large IT companies sell better through and with their partners. Revenue was $3.6 million. I sold it in 2021.

Thanks. Ran marketing for the company that acquired us. They called it an aqua hire. And convinced the board six months ago that I was done and they should give me the name back. So got the name, got the IP. I get to start over, not make the mistakes I made before. The market has shrunk. So that channel role is being pushed out. And when I started it, there were five.

consulting companies i competed with now there are probably 200 okay um do i focus more like channel marketing is probably what i'm best known for Do I focus more on that in this industry or do I go just B2B and like help? Kitchen and bath companies sell through dealers or automobiles. Let me just say channel. Explain, dial into the channel sales that you're talking about. Yeah. So a large IT company sells direct, but they also sell through...

Hundreds of thousands of mom and pop channel partners or Accenture or now Marketplace. So like affiliates. Yeah. Got it. Okay. So you're an affiliate expert for big IT companies and you have a network of people that can do basically sell their services for them with a markup. Yeah. I mean, I basically made an announcement on LinkedIn that I was back and did 360K.

four months. That's awesome. Yeah. Thanks. So the question is, well, I mean, it sounds like you did okay with your announcement. Why do you feel like you can't outcompete the other people? I just feel like my champions, the 14,000 people that follow me on LinkedIn, are starting to phase out a bit.

And it's just gotten super crowded. And this is the channel part. So the crowded part doesn't bother me at all. Yeah. Because that just means that there's lots of demand. My clients are the tech companies. So HP, Google. Yeah. So the 14,000 people, you have a lot of high up people in those companies you follow. I mean, you could do either path, but I mean, it's a good question. I think it's more the statements that would initially jar me of like...

It's saturated. I think it's going away. Things like that. Because... You know, my big questions are always logic, evidence, utility. So... uh what does that mean like define that for me how do you know that and so what logic evidence utility So when I asked, you know, channel partners, like, please define that for me. It's like, okay, that's affiliates. How do you know that they are going down?

Like, how do you know that? They're all calling me asking if I know of jobs and I'm tracking how long they're on the market. And on average, it's about 11 months. Who's on the market for? They call it a channel chief. So it's like chief partner office. Okay. And this, we were looking for jobs. Yeah, because they're all, they're all getting let go. So then the VP of channel sales reports to the CSO, the VP of channel marketing reports to the CMO, like that level is just getting.

And when you say a lot of people reach out to you, like how many is that? In the last year, because I was still in the channel when the company acquired us, I'd say probably 40 people. Okay. The big conflicting data point I have is that you like made a post and made 360 grand. So just shut up and fuck it.

yeah no i mean it's real though but i think like i'll tell you what i like if i'm in your shoes i get excited by this stuff maybe because i'm broken on the inside who knows but like i am you i work i have little kids 50 of the time i work non-stop Yeah. And like, I see everyone bleeding and I'm like, let's, let's finish them off. You know what I mean? Like they didn't deserve to be in business to begin with. And I will make sure that everyone.

And so if you have this in and you're better and you're seen as a market leader, if things are consolidating, for example, then it means that. Like as long as if the industry isn't going away, but it's consolidating, then it means a winner take all. So it just means the stakes got higher. Yeah. Which if you're better, that's a good thing.

Hey Alex, my name is Chris and I have a question about a business I'm starting soon. So I have no numbers right now. For my background, I'm a physiotherapist and chiropractor. I have an academy where I teach medical professionals in my own concept called Crack and Move. And I'm doing social media. And I invented a tool where you can crack yourself, your back. Self-crack, if you will. Self-crack, yeah. More like a black roll faster roll.

really intense and good and you can use it as a customer for your own for your better posture and pain relief but also the professional for especially some Small women have some techniques problems. You're a big guy, so when I want to crack you, I'm a small guy, so sometimes it's really hard. I would like to know, would you focus on one group for selling B2C? For example, just the customer for the problem-solve of cracking themselves with the posture program and everything, or just the medical?

And I have the medicals, also my academy with affiliate or both. So you are a chiropractor? Yeah. And you no longer have your practice. I can if I want. I have a waiting list. But you have a practice. Yeah, I have. And then you also have an academy where you train other chiropractors. Yes, in my concept. Yeah. And you also want to start a physical products business. Yeah, because of scaling time. You don't want to leave money on the table. What's revenue right now?

With my academy, I started one year ago and we have 500k. So you just started it a year ago? Yeah. Why are you starting another business? Because it solves some problems. And I found out because I have a... Why not sell newspapers? You know what I mean? Like, sell orange juice. People are thirsty. I could. Right.

Because of maybe your social media, I have an audience, I have customers who have a waiting list. I have the problem that many people want the treatment, I can't give them. So I built some specialists in them. Yeah. And you have a third business. And it's a physical product. It's a totally different business. Yeah, I have some partners in it. So I just have to do the marketing and the development of the tool itself. And we already did it. So it's ready to launch.

Yeah, it's maybe, you know, sometimes it's boring just to do one thing at once. But in business-wise, maybe it's better. what's your goal good question of course i want to make money um but of course uh i want to do very nice products who have a nice impact of the yeah but what do you want to have happen from I think the focus. So that's the problem. You want focus? You want to do that by doing more things? Yeah, and the problem is that's so combined to my brand. So, I have the problem.

I have so many customers, I can't offer them anything. So I have limited time with my own treatments. So I need time to develop some... Well, you have the academy. Sorry? You have the academy, though. Yeah, but it's very... to teach them my concept because it takes half a year so they can implement it in their own office.

so i try to reduce it as a hybrid model with online and everything but it takes time because of the brand protection quality because i send them my customers and when my customers go to them i want that a high treatment higher treatment And the problem is that the onboarding takes so long that the customers want the treatment and I have no time. The people I'm teaching need time to learn it and get expert in it. You're saying it takes time to build a big business. Yeah. Yeah.

i believe you uh yeah but the problem is the social media makes the the other um cast on the followers just yeah let me let me let me help for a second You're good, man. You're also like probably, you know, everyone's laughing, but like you're probably one out of four, one out of three of you here is in this exact same boat. So hope so. Here's the thing.

The opportunity will only get bigger, not smaller. So the rush that you have is a rush to do a smaller version of what you want. Because if you get bigger on social media, you will have more customers who want to buy it. right yeah the problem is that the customers are now a little bit sad because they i have no offer for oh no i have no i had nothing to sell anyone for years okay so point being

Thing is, I don't actually think I'm going to convince you. I think you're going to do it. No, I'm serious. So I don't even know if there's a point. You want to sell your thing. You want to sell your widget. Yeah. So what am I going to do? More like the advice of focusing on just the professional. Do you want me to tell you how to focus?

You're doing several things at once, right? What? You're also doing fiveacquisition.com. Yeah, you just have all the... I own one business. Yeah. You want to be CEO of multiple... There's a difference between ownership. I also own stocks in zillions of companies. Are there different businesses at all? What? Okay, product. So your book is also different.

No. So, no, this is important. This is good. Yeah, it's just for money. So, for everybody. There's a difference between owning something and being CEO and operator. You can only really operate one thing. That's it. If I buy a stock in Apple, I'm an owner. I don't do anything, but I'm an owner.

Does that make, you get the difference here? Yeah. You're like, well, I'm going to be more, so like the, where you would get me if you wanted to was school on the face of. But when I did that deal, I said, I will change nothing about what I do. So my regular day must remain the same in order for me to do this deal. I'm going to continue to make content. I'm going to continue to record stuff. And then all I'm going to do is point in a different direction. That's it.

So the pointing is a copy paste on a link. Everything else remains the same. So I boil this down to what does this change about what I do? And so the reason that this is very difficult is that you're going to start another business and it's going to change what you do. Okay, so outsourcing the things I'm not doing in my daily business.

when I'm starting a different business. For example, the product, I'm just doing my marketing, the development I'm doing also. I did it. And everything else, so like targeting the group and strategies, I don't have any clue. oh i should not so i'm here just i'm taking the uh All right. I don't know what your question is anymore. It's more like what you focus on in this part. I would take your 500 medical people and be like, how do I go from 500,000 in my first year to 5 million?

That's what I would do. You already have something that works. You already have a following of people who have this thing. If you want, you can sell through them as an affiliate base and you have one business. Okay. That's a good answer. Great. Thank you a lot. My name is Gabriel. Sell solar. Also have a personal brand that helps Christian men be better. I have no plan to monetize this at this point. Just simply help people find Jesus. And the goal is to gain a following at this time.

Question is on organic content. We are putting out 350 to 400 pieces of content a month. For Solar? Also for Solar. This is about the personal brand. For Solar with paid ads, it's easy. We just run the 10 hooks. Did you do this framework? Yeah. So the question is, how do you split test organic content for different platforms?

How do you split test organic content? Yeah, like you would for the ads where you do the 10 hooks, three bodies, different CTAs, let the algorithm tell you what's up when you spend money behind it. How do you implement that into organic? You don't. You just make 10 pieces of content. And if you think something was really good and it bombed, you can re-edit it with a new hook. But it would be weird if, imagine if you had a page and you saw...

10 hooks for the same piece of content, it would be kind of odd. And so obviously... you not youtube instagram has the trial reels and whatnot which is an interesting new function but every person up to this point in human history of social media has not had that function And so it's usually just a gross and disgusting amount of volume for an unending period.

I'm being super real. I assume that is the answer. Yeah, that is the answer. And that disgusting amount of volume, the learning process is this. We make, call it 100 pieces of content. And then we look back at which ones did well, and we try and point out what was different about those compared to the ones that didn't. Then the next hundred, we say, let's add two points to our checklist and do these extra two points for the next hundred videos.

And fundamentally, that is how we've continued to make content. So like our long form YouTube videos have massive checklists of just like, okay, we have to do this, like... whenever alex is about to enter a story this is what we have to do visually uh you know big this like obviously the intro is super super important for long form but

I, just like we're saying better and more, that accordion, I would say is a consistent theme across all content creators that I've met, which is like in the beginning, you just do a ton. And then you're like, okay, this.

if I just like this video got a hundred thousand and the other 10 videos got like 500 views. Yeah. You're like, Okay, if I just spent a little bit more time... instead of making 10 made three i'll bet you i could get like 10 000 views per and then you start doing that and you get good at that and you're like i could probably go from three to ten

And then as you do 10, you're like, you know what, man, these ones popped off. I'll bet you if I spend a little bit more time, right? So you just keep going back and forth between better and more. And it's a very normal cadence. I will give you one final thing because I know that you're not the only content creator here. There's a lot of mythology around content and volume, which is like Instagram can only take two posts a day or TikTok maxes out at four or at two o'clock and six, like.

Don't worry. Don't worry about it. One of the biggest Instagram accounts right now is a Bollywood account. They post a hundred times a day. They get 9 billion views a month. A hundred posts a day.

You were just not doing it. And so now I used to like be sore, like, okay, let's make sure they're, you know, 12 hours spaced out. Like I'll post one and 30 minutes later off something else. I'll post it again. I, it doesn't matter. Thing is, is 1% of your audience is seeing it anyways. So they'll just push it to somebody else.

The content is incentivized to distribute your content. So the platform is incentivized to distribute the content to people who find it valuable. So just give them more steps to distribute. Just go crazy on the input. Yeah. Hey Alex, my name is Isaac Hamlin. I'm the founder and CEO of BetterBlend, which is a chain of 13 smoothie shops that focuses on macronutrients like high protein, low calorie, low sugar.

um we sell it healthy we sell to people who are looking to eat healthier easier and relate to just anybody yeah um our revenues are right around seven eight million um i'd like all of our locations to be at one million and the thing that's stopping that was Wait, why? Why? Why million for each? Yeah. Because we have this, we have this top line revenue thing where once we get past a certain amount.

the we don't need more employees on staff so the margin just explodes right so we need to get to a million and then everybody's just like printing so that's the goal to a million or past a million past Okay. The thing that's stopping us is because we're such a unique and different brand. When we go into new markets that are miles or hundreds of miles away from like our mothership in Cincinnati.

People either don't think it's healthy and it tastes good or they don't think it tastes good and it's healthy. So we have a hard time with the trust aspect to get them in the door like a cat. Yeah. Okay. So are you franchised? So I own five and then we franchise the rest. I know you don't like franchising. It's not that I don't like franchise. It's just that when you do the math on the amount of franchise support that is required. Now, I do think that I'm more okay with it in food businesses.

typically less with low-skilled labor businesses. like a gym, for example, because it's easier to actually standardize a product in food more than, that's why if you think about how many successful franchises there are in food, there's tons of them. How many successful franchises are there in service-based gyms? There's none. F45's out of business. Orange Theory's out of business. CrossFit's whatever.

And the thing is, is that they actually don't have a model. They're a licensing business. And so that's why they've been able to stay around. So anyways, back to your point about franchising. Uh, the business. Um, I'm not gonna, I'm not gonna tear into that right now. Okay. So let's just, you just, you have a CAC issue. Okay. Well, what's the, so once a story gets going, do you have to have any advertising in the market or just, it just kind of like slowly.

grows its way off a word of mouth we recommend a two percent spend it's usually through meta that we're just like an agency throughout the throughout everybody but everyone's running the same ads so like there's this runway to get to where it is but it's a painful runway

yeah so we're just trying to shorten it you need a great opening strategy yeah so every every brick and mortar expansion this is for everybody um you have to have a killer grand opening like i can't tell you like i don't know of a single successful chain brick and mortar that doesn't have like a super dialed. This is exactly how we get to profitable within 30 days, 60 days, 90 days. These are the promotions we run. This is the 90 days we do, you know, leading up prior, like by the day.

It's just the level of detail that has to occur. Like think about how Chick-fil-A opens up, right? Like that first day they have a line, you know, down the block, right? It's like this, you know. I was going to say Jesus coming to town, that would be tongue in cheek, but it's a big deal, right? And so... One is you need some amazing giveaway.

that you can bring people in the door. Two is I like to limit it to like the first 500 customers, get something that's basically ancillary. So like Wendy's does a great one of these, which is like the first 100 people or first 500 people get a little golden keychain. that they get free Frosties, right? For wife, I think.

And so very incentivizing for people to like tell their friends and line up. But where the second order effects that come from that are that the only people really gonna stand in line there are people who live close by. Like, why would you care about getting that thing for that one local area when...

You live far away, right? But on top of that, what are you going to do now that you have this one free dessert, for example, that you can take whenever? You're going to bring friends with you. And you're not always just going to get dessert. You're going to get a burger. You're going to get fries. You're going to get everything else. And so that becomes kind of like the ambassador base of the business.

And so having one killer giveaway promotion on the front end and like lifetime deals on some sort of mini or some sort of, I'm sure you have some sort of little upsells or desserts or whatever that are healthy that you can give away that are high margin. That would be thing one. And it's probably like you need to start marketing 60 days at least.

prior to kind of like pepper the market let everyone know that it's coming i would just like build the list up of people who are getting excited for this giveaway and then you basically run a launch play with creepy shout um into the the launch itself Uh, in terms of the offers for a decrease in CAC, it's going to be some version of either BOGOs. So, you know, buy one, get one, uh, or, um, you know, kids cups are half offer and you just have to have one, one or two line transaction upsell.

that you have to teach the staff so that when people come in with this coupon, they ask one question back. That's it. And then that question then leads them to the upsell that can help you recoup CAC. And the thing that's going to be most important about this entire thing is what percentage of customers come back.

are you asking or i'm just telling you that is the most important metric that that you that you need what percentage i mean if you have it what percentage come back after first visit it's really tough to calculate ltv with a brick and mortar which that's part of the thing that's super doable Super doable for brick and mortar. What's the frame? Is it a year?

I mean, 30 days. I mean, I would imagine if somebody's going to be getting a smoothie, if they don't come back for a month and like they weren't thrilled. 30 day mocha also punch cards running start you probably know some of those things already um when i say running start it's like instead of having if you have 10 on the card you want to punch three two or three up front when you give it to them uh psychologically they're like three times more likely to finish it Thank you. Hello, sir.

My name is Chris. I sell a data engineering bootcamp to current tech professionals. We do a million a month. Would love to be a 10 million a month. What's stopping me is it's hard for me to know if it's a marketing sales or sales process issue as I try to reduce my cash.

my LTV to CAC is 3.2 ish. Um, I think I know how to increase my LTV. We were talking a little bit last night and, um, I think Tim was also very, very helpful in helping me realize things I can do, but I think it's, are you meta ads or YouTube ads? 70% meta, 20% YouTube, 10% TikTok. How much creator were you putting out?

per week. At this point, five or six, I think Tim blew my mind or someone blew my mind when they were like, you got to do five or six per 10 grand. So I'm like, okay, got to do 10x that. So like 500,000 a day is usually 50 pieces a day. Yeah. for context yeah it's been 100 a day 100 000 a day It's closer to... It's less than that. Yeah, we spend $2.50 a month. Yeah. I think that you should, at least right now, be at $25 a week minimum. Got it. And would you hire actors? Would you just...

I would rather you just get it going. You can kind of like think about removing yourself. Are you like still the face of the business? I very much am still shooting. Yeah, that's fine. Yeah, I don't think that's the issue right now. If you want to get to 10, it's like you got tons of time before that's going to happen. Cool.

Yeah, it's a ton more volume than you're currently doing. And it's actually the same answer that we're talking about earlier from the concept perspective, just on the ads. The nice thing with ads, though, is that because the nature of testing that can occur with ads is that if you record, call it 25. Here, I'll just walk you through this. This will apply to everybody. So you make 50 hooks.

So it's just like, hey, quick question. Hey, have you ever wondered about data engineering? Hey, look at this crazy AI thing. You know who makes this? Data engineers. Like, what's that? Like, you just go through 50 hooks, right? Then you have your three to five meet. which is like, this is actually the fastest growing industry in America right now. And believe it or not,

You know, Goldman Sachs said that there's 23% in Kager. And if you're like, what's Kager? It just means every year by 23%. That means it's going to double in four years. So think about how many people you know who are data engineers. Right? None. Well, there's going to be even more. And this is the starting salary. This is just according to this, you know, reputable source. And here's the craziest part.

You only need 16 weeks in order to get certified to get these types of jobs. And so if you've ever been kind of tech oriented or you're good at math, like this is something that's worth considering. I just have a free class that'll walk you through step-by-step, blah, blah, blah. Right? So that's the meat.

And then you have call to actions. I don't do a ton of tests on this. So usually, typically with call to actions, once you know what the call to action that works best is, I tend to just... as what I say at the end of the ad, which is if it's... Like, are you running to a VSL or something? Video sales letter. Opt-in VSL setters. Okay. Yeah. So it's like, you might try web class. You might try masterclass. You might try.

Um, you can even just try video sales letter. Uh, like I've got a video training. I've got to train it. Like basically it sounds small, but when you're running tons of traffic, those little, little incremental bits. matter. But once you nail with the CTAs on the backside, just use that. But fundamentally 50 even times three is going to get you 150 ads. And so once

If you do that, it's like you only have to think of three to five actual like media angles. And the rest is just hooks that you'll take from the best performing ads. And I would strongly encourage you if you're running one, look at obviously people in the marketplace that are, you know, kind of around you or adjacent.

But the cool thing with hooks is that they work across everything. And so I've used one of the same hooks in four different businesses that are completely different, B2B, B2C, tech, and service, and it still works. Right. And so like you can reuse hooks. And so this is by the way, why I don't.

uh pay for any subscriptions for ad free service is i i'm always just paying attention to hooks like what hooks are coming in my in my ads and if i see an ad that's been running a lot i'm like it's probably a good hook Yeah. I just write it down. Yeah. I was looking at the sales transcripts and trying to get hooks that way, but that's really helpful. Yeah. Oh no, for sure. Just, just watch ads. Cool. Thank you. Appreciate it. It was awful.

Yes. Okay. My name is Joris Smit. I sell car loans to entrepreneurs. We do six million revenue. Cool. We'd like to be at 30 million revenue in 2027. Okay. But what's stopping me is that the CPA is getting higher and higher. When we started out, it was like 400, 500 euros. Now it's almost 900 euros, sometimes even 1000 euros. And I think we're overcompensating the sales rep. Okay. Like 30% of revenue is for wages for sales reps. What's LTV to CAC? So what do you make on a loan? Like 2.5?

So you make $2,500 and it's costing you, it was costing you $600, now it's costing you $900 for the same deal. Is that correct? Yeah. Okay. Something like that. Okay. I actually just wrote an email about this today, which will go out in like... Six weeks. So fundamentally, if ad costs are going up, and so you feel like there's some sort of ceiling, like you want to spend more, but you can't spend more because the cost goes up, there's basically one of three potential problems for solutions.

So problem number one is that the LTV needs to get fixed. And this is just a fact of life. As you go to colder and colder audiences, you get out of your kind of honeymoon phase of the easiest targeting, which the absolute highest interest, you know, most. You know what I'm saying? That. Very small amount of people who are perfect fits, and then it just continues to go wider and broader, right? And so the way to fix that is that we have to increase LTV so that you can spend more.

The second reason that this would be limited is based on the quality of the creative. And so I think a month ago we had, you guys seen the... old spice ad the the you know the the guy that hold his famous ad um so the guy who made the ad actually came here uh kind of cool uh so i we get to chat about that but what's interesting about that ad is that that ad was so good that they could show it to everyone. And they went from like 20% of the market to 70%.

And so to me, that is like the perfect example of what like complete S tier creative, like the maxed out creative of just amazing advertising is. And so a lot of businesses will get stuck at $1,000 a day, for example, and say like... I think we've capped our market. When in reality, it's you've capped your creative. And so in order to break through that, the quality of the creative needs to go up and the volume also needs to go up by consequence.

And so in the companies that we spend like 100,000 a day in, in terms of our ad spend, we create, you know, 50, 100 pieces a week that are going out in terms of ads. And then... We do that at first, and then we follow kind of Google's 70-20-10 kind of rule, which is 70% of the creative that goes on from that point going forward is the highest performing hook. From Historic, 20% is kind of adjacent to that. So just kind of like remixes, remakes.

slightly different versions of the originals. And then 10% is the wild ideas that you've been saving. But since it's only 10%, you're going to only pick the ones you're like, I think this one's going to work. Because you have 20 crazy ideas because you're an entrepreneur and you think that'll be awesome. But you just got to pick the one or two. Um, and so that's problem two that could, um, be the reason that, that, that you are capped. So, um, either you are not.

Your LTV is too low. And there was a third one, which I forgot. But there were three in the email. And so the question that I would have for you is, which one of those do you think is the issue? I think the LTV is too low. LTV too keg. So we have to make the LTV higher. But also we have to get more creative, better hooks. I think that's the key to better scaling. The backend becomes the arms race of every business that spends money to acquire customers, which is many businesses.

If you look between industries, the benchmarks for plumbing businesses in North Dakota, the cost to acquire a customer is going to be more or less the same between businesses. So as much as we like to think that we have some like very special sauce about like our sales team somehow magically sells different, even though we recruit from the exact same pool and compensate the exact same way.

Like we think it's somehow different, but in reality, like we run similar ads, we're in similar promotions. We have similar sales teams, similarly compensated pool from the same talent pool. And so, so CAC is typically very similar between businesses. But where you get the outsized returns are that some businesses can have 10 times the LTV. And that's how they ultimately work.

So I think you're right. So when I buy a business, I typically fix it back to front. And then I look at the creative and think, okay, how do we just do a ton more volume here? typically because we just don't even have enough data to figure out what the best ones are so like let's do way more then look at the top 10 then do more of that and that process just never ends Hey, my name is Kevin. I sell plumbing services to commercial.

Residential. Sorry, public services to who? To residential and commercial. people okay uh we knew about five million in revenue half of that's construction half of it's service work okay i would like to do about 10 million dollars in service revenue and what's stopping me is really the construction side is a huge focus and a drain so i'm just kind of wondering if i should

kill that side or refocus it so I can pay more attention to the service side. What do you think I'll say? What do I think you'll say? Yeah. I mean, not as a slight, I mean it genuinely. I don't know. That's what I was asking. Okay. Yeah. Okay. No, that's fair. I mean, fundamentally, is the construction thing just like a separate business?

Yeah, they're essentially ran two separate ways. Yeah, just under one income statement. I bought the business a year and a half ago. You bought the construction business? I bought both together a year and a half ago. Interesting. Yeah. From an entrepreneur who was retiring? Yeah. Got it. Okay. What's the EBITDA contribution of each?

It's about 50-50, but the pay, the accounts receivable collection on the construction and the capital, Oregon capital requirements is much longer. And the capital sucks. Right, exactly. Yeah. Is there one of those two businesses that you like better? Yes, sir. Yeah, I would be willing to let it go. it's sunk cost it's like it's already in your head even if you even if you bought it and paid for it

It's that decision's done. And the only decision you have now is like, well, if I were to start this today, would I do it this way? Probably not. And so if you're looking at also from an acquisition perspective, like if you want to get acquired in the future, which is I'm guessing because you bought it here, it's cleaner.

it's like what's because they're going to probably want to carve out because they're like well we only want this piece and this is different than that and especially if it's putting your attention you'll be amazed at how much faster the other one will grow by getting rid of the headache it's just really painful in the short term because you have all these like i made this mistake i should have

And I will refer back to the nine failed businesses I have and losing all of my money twice. And so like, I think the game's long and I think your gut was right. I think you kind of know. Okay. Thank you. My name is John and I run a cold email agency and I sell to other agencies. We are making 1 million per year and we would like to go to 10 million. And what's stopping me is high churn rate. And I think it's because, I mean, the core issue is...

When we deliver the leads to the agencies, they cannot close them. Or if they close them, they're on full capacity. Yeah. Yeah. My guess is that you're serving customers that are too small. So, um, this is probably gonna be really good for like a third of you in here or like rather it'll be really relevant for like a third of you. So there are some business models that small business. owners look at from large businesses and say, I'll do that same thing for the bottom end of the market.

The problem is that that strategy typically only works with a fully fledged business. And so if you look at a small business, these agencies that you're selling. they're volatile. Like they have good ones, they have bad ones, they have good ones, they have bad ones, and their volatility now reflects onto your volatility. And so let's say you make them some money here, then they make more money here. And then all of a sudden they make less and then they make.

Right. And so these things are called structural churn, which is that kind of things that are inherent to the industry. And so I'll tell you a story that might make this relevant. So I was talking to a friend of mine who owns a CRM in the gym space. And I was asking him, I was like, what's your turn? I would imagine it's like zero. He said, ah, it's about 3% a month. And I was like, 3% a month for CRM? He's like, yeah. He's like, about a third of the gyms got a business.

And so like there's nothing they could do to improve the product anymore. just a third of the businesses go out of business every year and there's nothing you can do to the product. And so it's kind of similar here, which is like, if you look at, and this is a great exercise, if you look at the ultimate version of your business, because there is a...

a much bigger version of your business, which is you look at Ogilvy, you look at NP Digital, you look at Vayner, right? They're big agencies that exist. Who do they serve? Fortune 100. And so The reason that those work that way is because those businesses can pay on time. They have salespeople that know what they're doing. They have a process in place. They have margins. Their check's clear.

And when they sign contracts, they keep them, right? And that's because they're good businesses. And so it's very likely that you're not in the wrong business. You might just be serving the wrong customer. And so if you were to look at your spread of customers right now, I would bet that there are some that have been with you for a little bit.

right and then all the new ones just turn out it's just like they're the ones right and so those ones that have been with you for a little bit probably look a little bit different than some of the ones who are coming in we did an analyze yeah like you can't really always see this from from the outside because they can just sell so this is hard to say like from the outside if they can sell so they want it stable fast

They can sell and they can close the leads. Were they at a certain size already? Yes, but the same size like other people were churning. Sure. And so if there are intangibles that someone has to have, you can test for that or you can just go up market. So think about it this way. If somebody does a $5 million agency, they have to sell.

That there's no way they'd get to 5 million without being able to know how to sell. Right. And so you can just put like, you can try to test for it or you can just make a requirement that would make it impossible that the person didn't know how to do that. Does that make sense?

and so i try like if i can get something that's really small and testy that like allows me to go a little bit lower market that's okay otherwise i'll just put a bar and say it's got to be dead but likely, and so many of you, I think are in the same boat though, is that you serve, you have a business model that is better served to a bigger company.

and you charge too little and then they turn and then you keep trying to like think about what new thing do i need to add my offering like what new guarantee what new onboarding process like you keep adding things and it doesn't matter because they are volatile And that volatility will not change. Does that make sense? Thank you.

Oh, by the way, the equal opposite of that is that if you were in that position, if you do want to serve that market, then you have to make the entire business model around being the low cost leader. And so you can serve that market if you have like a very tech-enabled service or software where you could charge those people $300 a month, which is always going to be below their volatility level of cash flow.

And so the idea of like, I will, you know, $1,500 a month for lead generation or whatever it is, like, which is kind of like the standard, like that model doesn't work because it just won't scale. And just always be like looking on the hunt for the next leaf. Yes, we're at it. Yes, sir. Hey, Alex. My name is Jordan. We own a gym. We sell a number.

Memberships and SUPS. We do gym launch. Okay. We just acquired the company about three months ago. Is it a big box or is it a micro gym? It's micro. Okay. Women's only kickboxing. Okay. Yeah. Talk to Ed. Yeah. We bought it from him. Yeah, okay, yeah. Your opinion. So we have about 560,000 revenue. So you're trying to get it to 1.2 and then we're going to sell it and buy our next bigger business. Cool. Yeah.

What's stopping us? Well, I was really concentrated on acquisition and really just getting as many customers as possible. And so kind of inherited a lot of... you know, customers that won't necessarily gain their full value. And so our turn is at 25% on average. We really got to lower that and that's going to really, really help us because we have no problem getting new customers. Yeah. Really.

although we do need to work on more referrals. But my question to you is how quickly and how would you go about lowering that 25% churn going into 2025? Can I have that book real quick? Thank you. So did you go through the four horsemen, five horsemen retention? Yes. So those are the things that we have done consistently to cut churn. Are you doing all of them? Well, I would do them consistently. And I'm not saying that as a, like...

The interesting thing about the horseman retention is that they... When you realize how much work it is, you're like, holy shit, this is a lot of work. But that's also why people stay. And so the point of the five-fourths of retention is to approximate what having a small tribe feels like in a disorganized manner, doing it on purpose. And so some of you guys are familiar with Dunbar's number.

which is basically like people can maintain whatever 125 to 150 basically acquaintances in their mind. And that's, I think, the reason that the vast majority of gyms tend to cap around. 100 to 150 because that's about as many as the owner can manage in their mind without it becoming too big. And then beyond that, new people come in, they never really get assimilated and they turn back out.

And so it's like, what are we doing with the original 150 people that we're not doing with these other ones? And so that's where the touch base is. on a regular cadence, um, are super helpful. Um, so Mike Ferreira has his, uh, retention system where they, he updated the five forcemen. Sorry, I'm getting really tactical about gyms. So, but basically alternating between an internal referral play.

uh they've got fast cash fridays which is how they get you know how they generate the referrals uh they have a weekly theme that that gives you the thing to talk to them about because it's like how do i approximate a relationship it's like i check in on people and i let them know the thing that's new that's cool And so the tweak from the system that I have here is that I used to check in about people's results.

And we realized that people didn't care and just wanted to work out and have fun. And so us reminding them about the fact that they were still overweight didn't actually help. Real talk. And so we were like, okay, so that's probably the big major shift between what is in here and what is kind of now the most up to date. And every other month is when you run the internal play. So internal plays are like when you hit your list up and say, hey, we're doing...

Um, it's the last chapter of the offers book is whatever our internal seasonal promotion is. So it's, you know, Valentine's day, you know, get fit to fudge with your, you know, with your loved one, whatever, you know. um accountability buddy you know uh lean by halloween you know whatever uh and so um

The churn, though, is still going to be the quality of the sessions. I mean, the fundamentals are still going to be there. The sessions have to be good. The music has to be good. The trainers have to be solid. You want to reach out on a once every... other week basis you want to check in around the promotion that you're running or the bring a friend component that you're uh that you're doing

And, um, obviously the sales stuff, I'm getting the prepays and stuff Ed's already given you. Um, so that's the big stuff. Um, but the, the, the main thing that drives down churn is consumption. And so all of the objective has to be around how do we get them to use the membership? No one cancels a membership they use.

And so people will cancel $10 in memberships if they don't use them. Like nothing is worth it if you don't use them. And so that's the TLDR. Any questions on that? Because I want to make sure that you feel okay. No, thank you. Alex. Thank you for all you do. I appreciate you. My name is Renz. I sell structural engineering services, so I design large-scale commercial real estate buildings for commercial real estate developers and architects.

do 5.2 million in revenue. Trailing 12 months closed revenue predicts next year is about 8 million. I'm going to do 20 million in 2027. Uh, learned a lot from the team and most of which is my data isn't organized properly for me to understand my appropriate CAC and LTV. Yeah. But in our business, high reoccurring, right? They do a lot, but it's cyclical. The funding's interesting. I feel like a certain amount of my marketing...

It's just necessary to nurture my existing clients and has all these other. So when I go into like CAC to LTV to figure out my slot machine on where to allocate cattle, that's where I get confusing. Just curious if you've had experience. Well, you would just lose all of that, all that nurture into CAC. And then what about LTV for new customers? You just call that, you look at that as your CAC versus your new LTV. So CAC's CAC. Yeah.

So every month you spend X amount of money in general. So forget about the fact that like some of this is nurture for customers who've been here before. You pay this amount of money every single month that goes into advertising and sales. And if you have more lumpy revenue, which I'm guessing you do, you just expand the time horizon. So you look at trailing six or trailing 12 and say, okay, we spent...

Just simple math. We spent a million dollars on marketing and sales this year, whatever, between commissions and advertising. Okay. Over that year, we acquired, call it 50 customers. Okay. So our CAC is $20,000. So the longer the time horizon is also, by the way, the more accurate it tends to be.

So if you just zoom it out, cause like if I just says like, what's your CAC today? It's, you know, it's kind of like that, this volatility thing. It's like our CAC today is terrible. And then tomorrow it's amazing. Right. And so the, the, the further out you. blend it the more accurate it will be um but in terms of uh less than gross profit or lcd um that one

there's a lot of different ways to calculate it. I tend to calculate it in the ways that are underestimated so that I, like I want to overestimate CAC and I want to underestimate LTV. If I do that and I still have my good metrics, then I'm kind of like in safety zone on both.

So like I'll do fully loaded CAC, which is like including commissions and the software and the media spend and the nurturer and all that fully loaded. And then LTV, I'll say, okay, if I want to have the lowest LTV, I would just look at. Same thing, all customers, what do they spend historically? So even if you look at all the way from, it's been five years, whatever, even in business, what was revenue? How many customers do I have?

And you just do total revenue for five years divided by total number of customers acquired. And then you're like, wait, but some of these customers are only six months old. It's going to underestimate it. But then you still have a, that will be the most. it will be the ugliest version of that number. But if that's baseline, then you can only go up from there. Does that make sense? It does. Okay.

Was that helpful? Absolutely. Okay. That's your wish. My name is Tyler. I sell roofs to residential homeowners or commercial building owners. Sweet. We're about 10 months old, did $1.8 million in revenue this year. Yeah, somewhat. A lot of the guys, like I've been in the industry for a while, so I had a lot of return customers. Cool. Did about 1.1 from return. Right. And then my four sales guys brought the rest of the business.

Short-term goal would be $8 million. And then long-term would be around $70 and exit. The problem is we don't know what model to choose or how to do it. Was it franchising? Are you going to do a storm chase or are you going to do private cash pay? We haven't done any storm chasing. So it's all new roof? And repair? So it's, the market that we live in is, we get storms every year. So, yeah. It's insurance.

95% is insurance. Okay. It's insurance. Got it. Okay. Yeah. So I guess my question is like, how would you scale or what model would you choose? And then how would you go about building that? Well, you already have 95% insurance. So I would probably keep doing it. So what stops you from doing that?

Well, we're going to stay with insurance. Well, insurance is changing a little bit. Deductibles are growing up. Homeowners don't want to get their roofs done as often. But would you scale to multiple locations, like different cities, or would you do like a franchise model? Do you feel like you've nailed the model? No. So right now, what I wouldn't want to do is try and make a decision with incomplete information when it could be knowable.

And so I think once you nail the model, then the path will become really clear. And so if you nail the model and then the returns on capital are really interesting and you can be more patient, then owning them all privately becomes more interesting. If it costs a ton of capital to open up and let's say it requires a lot of like oversight, then sometimes a franchise model can be good. But fundamentally, I kind of see franchises as like being impatient, just being honest.

Because basically it's the most expensive form of ca- is you say hey uh we're gonna partner and you're gonna say you're gonna put all the money in and i'm only i'm gonna become a you know Maybe you get 8% of top line. So maybe figuratively, it's like 25% partner or 30% part of the location, which is okay. Like nothing wrong with that. But I have seen such a graveyard of...

you know, 20 location franchises that make no money. And the amount of work that it takes to maintain 20 is about the same amount of work as it takes to maintain 20 re-own them all. It just happens fast. So I have a habit of flipping franchises back into let's own them all, like the teeth widening chain that we bought. When we bought it, we had 14 corporate stores. We had 18 open franchisees.

And so then over the last 12 months, we bought out all 18 franchisees. And so now we own all 32. But then like all of the administrative headache has just basically disappeared because we just run the way we want to run them. But yeah, I think you need to nail it. And then the scaling it path will become clearer. I know it's not the sexiest answer, but that's probably the truth. No, thank you.