00:00:00"I've been in business for 14 years.
00:00:01"I've scaled six brick and mortar gyms.
00:00:03"I did 30 plus gym turnarounds across the country
00:00:05"and built service companies to over $30 million a year.
00:00:08"Today, our portfolio at acquisition.com
00:00:09"is over 250 million annually.
00:00:11"And so in this video, I'm answering your questions
00:00:12"about how to scale your service business.
00:00:14"And for all these questions,
00:00:15"I try to make my answers as tactical as humanly possible
00:00:19"so that you watching from home can immediately use them.
00:00:21"Enjoy."
00:00:21- I am a chiropractor.
00:00:23We do right around 2.4.
00:00:26I've been stuck there for five years.
00:00:28I'd like to get to 3.6.
00:00:29I'd like to get out of the swamp.
00:00:30- Stuck or growing over five years?
00:00:32- We've been at 2.4 for five years.
00:00:34Yep.
00:00:35And so I don't know what's stopping us.
00:00:37I'd like to get out of the swamp.
00:00:38- Heard.
00:00:40And then profit margins, you're at 30%, right?
00:00:43- Yes, sir.
00:00:44- Yeah, okay.
00:00:45And we're seeing 600,000 as a profit number.
00:00:47I don't know if that's still accurate.
00:00:48Okay.
00:00:50Okay, so you have 600,000 in profit
00:00:52and you have, you and a partner, you're 100%?
00:00:55- 100%.
00:00:56- Okay.
00:00:57Well, what do you wanna,
00:00:59you just wanna, like, what do you wanna have happen?
00:01:01Do you wanna, like, what do you wanna do?
00:01:02Do you wanna go to many locations?
00:01:04- No, I wanna, I wanna grow a main big location
00:01:10and, you know, create a space for family to eventually,
00:01:15I mean, grow in there.
00:01:16If they don't wanna do that,
00:01:17then that would probably change my goal
00:01:19to be in an exit from the standpoint.
00:01:21- What's your square footage?
00:01:23- Right now we have 7,700 square feet.
00:01:25- Okay, so decently large.
00:01:26- Yeah, we occupy about 4,700 of it.
00:01:29- Okay, got it.
00:01:30And so are you at capacity within the space right now?
00:01:34- No, we used to have a supply issue
00:01:36till about two weeks ago.
00:01:37- Oh, great.
00:01:38- And then we hired another doctor.
00:01:40So now it's become a demand issue.
00:01:42And that's where we're at now.
00:01:43- So how do you get customers now?
00:01:46- We, our highest is referral.
00:01:49Then we get about,
00:01:50the next has to be paid ads through Facebook.
00:01:54- What percentage are ads?
00:01:57- We do probably about 20% from ads.
00:02:02About half is from referrals.
00:02:05Another 20% is from Google.
00:02:09- Okay, so you separate med ads from Google ads
00:02:11when you talk about ads?
00:02:12- Yep.
00:02:13- Okay, got it.
00:02:14- We don't actually currently do Google ads,
00:02:16but that's where they said they came from.
00:02:18- Heard.
00:02:19Got it.
00:02:21Which I would probably see as word of mouth.
00:02:22Like I Googled you or I Googled somebody here.
00:02:23It's probably SEO or something like that.
00:02:25But, okay.
00:02:27So two and a half million,
00:02:31like what stops you from just spending more money
00:02:32on med ads?
00:02:33- Trust that we're doing it right.
00:02:37- Are you making more money than you put in?
00:02:39- Yeah.
00:02:41- Well, so you might have one of these guys,
00:02:45which is that we need attribution tracking
00:02:49so that you can know if you're putting a dollar in
00:02:51and getting $5 or $10 or $20 back out, we have no clue.
00:02:54But as soon as we have the attribution tracking,
00:02:56'cause fundamentally what you lack right now
00:02:57is an input output equation for the business to grow.
00:03:00And so every business needs to know
00:03:01what are the core actions that I do
00:03:02that increase how much money I make?
00:03:04And if you can't define that for the business,
00:03:06then for sure as shit, your employees don't know what it is,
00:03:09if you don't know what it is, right?
00:03:10And so for you, if you are not supply constrained
00:03:12and you're demand constrained,
00:03:13that means lead generation is the issue.
00:03:14If lead generation is the issue, what's the activity?
00:03:16The activity is gonna either be,
00:03:17I'm gonna be making content.
00:03:18I'm gonna be getting affiliates
00:03:19that are gonna be promoting my shit for me.
00:03:21I'm gonna be running paid ads, right?
00:03:23Those are gonna be kind of like the bigger buckets
00:03:25that you're gonna be going into.
00:03:26And then you got people who do those things on your behalf.
00:03:28And so right now, do you make content?
00:03:31- Yes, sir.
00:03:32- Okay, what percentage comes from that?
00:03:34- We just started it about two months ago.
00:03:38- How much do you do?
00:03:40I'm not gonna tell you to do more.
00:03:41I'm just curious.
00:03:42- We do four videos that gets created
00:03:44into short and long.
00:03:45- Per week?
00:03:47- Four videos for the month.
00:03:48And that gets created. - Heard, okay, got it.
00:03:50Don't, yeah. - Chopped up.
00:03:52- Okay, got it.
00:03:53Okay, so you've got four longs
00:03:54and you chop this into little shorts and things like that.
00:03:56Okay, got it.
00:03:57All right, so short term, long term.
00:04:03Short term, we gotta get the data tracking in place.
00:04:05Second step is gonna be putting the ads funnel in place
00:04:07and kind of like what the sales motion is behind that.
00:04:10For local, the good news is that it's easy to do.
00:04:15Because there's already so much trust locally
00:04:18that you don't need to have nearly the complexity
00:04:20of kind of like the funnels and indoctrination
00:04:22and education prior to someone making a purchasing decision.
00:04:24You can pretty much just like one call closed,
00:04:26two conversation closed anybody,
00:04:30even at very high ticket numbers,
00:04:31which is one of the benefits of local.
00:04:32The downside of local is that you've got a market
00:04:34that's this big.
00:04:35- Correct. - That's the downside, right?
00:04:37So if you don't want to expand markets,
00:04:38then you need to dominate the market you're in.
00:04:40And so it's gonna be a multi-prong approach.
00:04:42And it's kind of like I was saying earlier,
00:04:43like we're gonna start with ads
00:04:45because that'll just get you more in.
00:04:47'Cause I'm guessing right now,
00:04:48if you have a good reputation and good brand,
00:04:50then the ads will actually help you more
00:04:51than they would help somebody
00:04:52who doesn't have that footprint.
00:04:54But then we're gonna start probably layering in the content
00:04:57as the second kind of the well
00:04:59that needs to continue to get dug.
00:05:00Again, this is gonna be long-term
00:05:02and so you're gonna want to be a thought leader.
00:05:03And then what happens is that if you can succeed
00:05:06at building the brand long-term,
00:05:07and it sounds like you're more a long-term guy,
00:05:08so I'll speak in these terms.
00:05:11What happens is your radius actually continues to expand.
00:05:13And so if you take it to the natural extreme,
00:05:15you can go to the Amen Clinic in New York
00:05:17or whatever, I think it's in New York,
00:05:19because they have a national reputation,
00:05:21but people fly there.
00:05:22And so that's what it looks like
00:05:24as you continue to expand the brand.
00:05:26Because people just be more willing to travel to you
00:05:29and pay premium prices.
00:05:31Which I'm sure if we looked under the hood,
00:05:32the prices probably get tweaked too.
00:05:33But like, those are some things.
00:05:35And if you're in the swamp,
00:05:36cashflow is actually the biggest thing that you need.
00:05:38And so again, the pricing and packaging is probably like,
00:05:41again, if I was your order of operations,
00:05:43pricing and packaging will probably be number one.
00:05:45So we could free up cashflow.
00:05:46The freed up cashflow would then funnel into the ad
00:05:48so that we could get data attribution.
00:05:50Then we'd put the ads in place,
00:05:52start putting flow through there.
00:05:54And then the baseline that happens after that
00:05:57is we're just gonna increase the cadence on the content
00:05:59that demonstrates thought leadership.
00:06:01That's the path.
00:06:02- That makes sense.
00:06:03Thank you.
00:06:05How do you,
00:06:06we're having trouble also hiring
00:06:10good high quality doctors in Wyoming.
00:06:13- It's actually ladders up to the first problem, cashflow.
00:06:18We need to fix the pricing
00:06:19so that we can generate more cashflow,
00:06:21so that we can pay doctors,
00:06:22so that we can actually get the business
00:06:23to not rely on you as much.
00:06:25- Real quick, if you are a business owner
00:06:28and you are not growing as fast as you'd like,
00:06:30I'd like to give you a free gift.
00:06:31My team and I put together the $100 million scaling roadmap,
00:06:35which is basically 200 hours of us looking over
00:06:37all the portfolio companies we've had
00:06:38and where they got stuck and how they got past it.
00:06:40And so we broke it in these 10 stages
00:06:42and we made this little kind of quiz thing
00:06:44where if you put in your business information,
00:06:45it'll tell you where you're at.
00:06:47No matter what you're struggling with,
00:06:48someone else has already struggled with it and solved it.
00:06:51And so I'd like to give you this thing absolutely free.
00:06:53You can go to acquisition.com/roadmap,
00:06:55plug in your business information.
00:06:56And if you want us to actually help you
00:06:59de-contrain the business and you're trying to scale,
00:07:01we'd love to help you out.
00:07:02On the thank you page, you can just book a call with my team
00:07:04and we will look into business, see if we can help.
00:07:08And if we can, we'll invite you out to Vegas
00:07:09and we'll do this in person live.
00:07:11- I sell basically complete digital marketing services
00:07:14to service-based businesses in Australia.
00:07:16I moved like cleaning companies, stuff like that.
00:07:19Cleaning and yard work.
00:07:20- Average revenue for them?
00:07:22- Average revenue per company is anywhere
00:07:23between half a million to 2.5.
00:07:25- Tough, yeah.
00:07:26- They're the ones that sell.
00:07:27I pivoted, the company's gone from zero to 500K
00:07:31in the last four months.
00:07:32- Amazing.
00:07:33- I pivoted from fitness, it just happened,
00:07:35so it worked out well.
00:07:36So they're all being wound down,
00:07:38getting other people to operate.
00:07:39I'd like to ideally get to eight figures.
00:07:43In terms of what's stopping me,
00:07:44I spent the whole 28 hours here going through
00:07:47every framework I could to figure out what was wrong.
00:07:49I just want to figure out--
00:07:50- Can I tell you what it is?
00:07:52- Good.
00:07:53I also want to figure out where would be,
00:07:55besides getting operations and moving out to other people
00:07:57and making sure I'm not involved in delivery,
00:07:59where would be the best use of my time?
00:08:00- You'll get to three, 10 will suck.
00:08:02- Yep.
00:08:04- Yeah, that's what's gonna happen.
00:08:06So you're four months in, so it's brand new.
00:08:09- It's very new.
00:08:10- And you haven't seen all the shit that's about to happen.
00:08:11So what's gonna happen is because you're servicing SMBs,
00:08:16their volatility will translate over to your volatility.
00:08:19And independent of how well you do, they will start churning.
00:08:23And you have probably mastered the sales function,
00:08:25which is why you're growing quickly.
00:08:27But you also will have,
00:08:30CAC will never be cheaper than it is today.
00:08:32- Yeah, CAC.
00:08:33- So CAC will always go up,
00:08:34and churn is gonna start eating into the business
00:08:37because SMBs suck.
00:08:38And so what's going to happen is that your margins
00:08:41will continue to compress and compress and compress,
00:08:43and you'll have to spend more and more, CAC will go up.
00:08:45You'll have to hire more people because of churn,
00:08:46that's what you're gonna think you're gonna have to do
00:08:47in order to fix the churn, but it's not,
00:08:48but whatever, let's go to it.
00:08:49And so you're gonna keep going, keep going, keep going.
00:08:51And so revenue keep going up,
00:08:52but the margin gets smaller and smaller until eventually,
00:08:54you're just like, I feel like I'm running a nonprofit,
00:08:55and I have to just keep selling stuff,
00:08:57and I don't even feel confident about it
00:08:59'cause I got all these people complaining,
00:09:00but it's really 'cause they're the business owners who suck.
00:09:02And then you think,
00:09:03maybe I should take more responsibility
00:09:04for the business owners.
00:09:05I'm gonna start maybe doing some sort of sales motion,
00:09:11and I'm gonna do this
00:09:12'cause I wanna take responsibility this,
00:09:14and all of that is just wrong.
00:09:15- Yeah.
00:09:16- And so, if you wanna get to 3 million bucks a year,
00:09:19you can just do what you're currently doing.
00:09:20- Yeah.
00:09:21- You'll just sell more, and LTV will probably be,
00:09:24what's your price point?
00:09:25- 450 dollars a week.
00:09:26- A week, okay, so you're 2K a month-ish.
00:09:28- Yeah.
00:09:29- So you're right in the sweet spot of churn.
00:09:30Like that, like if you, like 1,500 to 3K a month for an SMB,
00:09:35average stick is gonna be four to six months.
00:09:40And so you can back nap, back of napkin.
00:09:42How many you sell in a month right now?
00:09:44- I'm selling about 10 a month at the moment.
00:09:46- Cool.
00:09:47So, if you're selling 10 per month, right?
00:09:51And you said 2K was your price point, right?
00:09:55So let's say that we have five turns on that on average,
00:09:5810K, right?
00:10:00And it's 10 per month, right?
00:10:02So you're gonna get to 100K-ish per month,
00:10:05and then you will stall.
00:10:10And so at that point, you'll either have to increase
00:10:13units sold or increase LTV, and then you'll keep thinking,
00:10:16man, if I could just get this to go up,
00:10:17it would be amazing, but you won't be able to.
00:10:19- Yes, that's nice.
00:10:20- And so the only way to really make SMB work
00:10:22is to go the opposite end, is to go super, super cheap.
00:10:25- Yeah.
00:10:26- And then build something that costs you nothing.
00:10:27- So it's nothing to deliver.
00:10:29- Yeah, so it's like $400 a month or less for an SMB,
00:10:33if it's a nuisance style.
00:10:36So I'll give you some examples.
00:10:37If you were like, I can get you ranked on first three
00:10:40of maps in your local area, and I charge 400, $500 a month,
00:10:45they'll do it 'cause they can see it,
00:10:48and they'll pay for that.
00:10:49Review management and SEO stuff,
00:10:53they will pay 300 to $400 a month,
00:10:56and they will stick on that.
00:10:57You'll get like 30 to 40 months stick rates on that,
00:11:01but you'll close way more sales velocity.
00:11:03So LTV is actually similar to this,
00:11:05but CAC stays super low as a result.
00:11:08But I know you just got out of fitness,
00:11:10which you probably got out 'cause it was terrible and hard.
00:11:12You might need to just go and get to there,
00:11:17and then you'll feel good about things.
00:11:19Like you might need to walk this path
00:11:22rather than believe me,
00:11:23but that's what's going to happen.
00:11:24So what do you want to have happen?
00:11:27- Not walk, to not have to walk the path in the first place.
00:11:29- Okay. (laughs)
00:11:31- Get the lesson out.
00:11:32- This is me just being real, like marketing,
00:11:36I mean obviously a lot of marketers follow my stuff,
00:11:37and so I get a disproportionate amount of marketing agencies,
00:11:39and I've seen every model under the sun.
00:11:42SMBs suck as customers.
00:11:44And so you have to do this, one or the other.
00:11:49You have to go outmarket, you have to go downmarket.
00:11:51And you guys are really cheap,
00:11:52and it's something that's super automated.
00:11:54Or you do truly do more of these high-touch services,
00:11:57but you do it with a business
00:11:57that actually knows their metrics,
00:11:59actually has a sales process, already has a proven model,
00:12:02rather than all of them
00:12:02just wanting to change their stuff all the time,
00:12:05not knowing what they're doing to begin with,
00:12:07'cause they're expecting you to figure out something
00:12:09that they haven't figured out themselves.
00:12:11And so your price either goes up,
00:12:13and you serve a higher-level avatar,
00:12:16or it goes down, and you serve the one you are now,
00:12:18but you make sure that your delivery is almost nothing.
00:12:20And then it becomes a CAC issue,
00:12:21because you have to offset CAC,
00:12:22and so then it becomes big head, long tail,
00:12:24one-time setup into very small,
00:12:26recurring monthly high-growth margin.
00:12:28Those are the two models that work for what you want to do.
00:12:30So drop low, go high.
00:12:32And in the middle, it's just a dead zone.
00:12:33- Where everyone dies.
00:12:35- Cool, makes sense, thank you.
00:12:37- We do, we're a WaaS,
00:12:39so a website-as-a-service-based company.
00:12:42So we build websites, do digital marketing services,
00:12:44that kind of stuff.
00:12:45We cater to small, medium businesses, small businesses.
00:12:48Average revenue per customer is 450 bucks a month.
00:12:53Subscription-based company.
00:12:54And we're at 20 million bucks in revenue.
00:12:59Notice, example, right price.
00:13:01Really small, you price it super low, and it works.
00:13:04Go ahead, go ahead.
00:13:05- And we want to get to 80 million bucks of revenue
00:13:08in about three years.
00:13:09- Okay.
00:13:10- So the question we're asking ourselves is,
00:13:12we're in an industry where AI is very disruptive.
00:13:15Every day that goes by,
00:13:17it's constantly degrading and decaying our product.
00:13:20And at the same time,
00:13:22we have kind of this one-channel risk that we're living with.
00:13:27All of our sales, 100% of our growth,
00:13:30has been done through outbound cold calling.
00:13:32- Love it.
00:13:33- Yeah, it's great.
00:13:34But again, cold calling is becoming harder and harder,
00:13:37and the industry is decaying.
00:13:37So we're constantly, we're trying to figure out--
00:13:39- You say the industry is decaying.
00:13:41- Yeah.
00:13:42- What do you mean by that?
00:13:42Churn is going up?
00:13:43- Churn is slightly ticking up,
00:13:45but at the end of the day, AI is making it easier and easier
00:13:50for our customers to be able to build their own websites.
00:13:53Oh, yeah, I know.
00:13:55We're the type of customer we deal with.
00:13:56We're not usually super sophisticated.
00:13:58- Yeah.
00:13:59- We do have time.
00:14:00- They just found out about Chat Jibbuda.
00:14:01So--
00:14:02- There you go.
00:14:03(audience laughing)
00:14:04Yeah, exactly.
00:14:04So we have time, but--
00:14:06- Some of you guys still fax, so I think you got time.
00:14:08- Yeah, but this is the question, right?
00:14:10So do we double down on marketing
00:14:12and create an inbound channel
00:14:14and really invest hard into that?
00:14:16Or do we try to innovate on the product
00:14:20and figure out what else they need
00:14:21and build a revenue engine?
00:14:23Right now, we're trying to do both,
00:14:26but it's obviously limiting.
00:14:27- So this is really, really good.
00:14:29I love that you asked this.
00:14:30So I wanted this long rant the other day
00:14:33about this particular topic,
00:14:35which is solving problems that don't exist.
00:14:37- Okay.
00:14:38- So unless, 'cause you have a narrative,
00:14:41you have a story around AI is decaying the business,
00:14:45but all I hear is that you have customers
00:14:47and your job just got way easier.
00:14:50- That's fine.
00:14:51(audience laughing)
00:14:52- So you know what I mean?
00:14:54If you were like, our churn is escalating by 10% per month,
00:14:57I'd be like, we have a problem, we need to change something.
00:14:59But if it's not really showing up in any meaningful way
00:15:02in terms of the business itself,
00:15:05I think there's plenty of people
00:15:07who will just be super laggards on this
00:15:08and are not gonna be replant vibe coding.
00:15:10They never bought your shit to begin with.
00:15:12- Yeah.
00:15:13- Like the person who is super into AI right now
00:15:16wasn't hiring WaaS anyways.
00:15:18They built their own website.
00:15:20Before AI made it quote easy, right?
00:15:22'Cause I mean, to be fair, website building software,
00:15:24not that complicated, right?
00:15:26So you said there's two paths.
00:15:29So one is, change the product around.
00:15:32My opinion, that's probably wouldn't be where I'm focused
00:15:36unless I had some business metric that was way off
00:15:39that I'm not seeing.
00:15:41I would be doubling down on the acquisition side.
00:15:43What's your number of months, average sec?
00:15:45- So it's 29 months.
00:15:48- Yeah, yeah.
00:15:49That's the game.
00:15:50It's usually, yeah, it's 30 to 40.
00:15:52That's the highest I've seen was 38
00:15:56for this type of business.
00:15:57So you're right.
00:15:58You're right in the sweet spot there.
00:16:00You're a little higher priced.
00:16:01I think they were 299.
00:16:03It all works out in the same time.
00:16:06So yeah, I think you just double down on inbound.
00:16:10So paid ads.
00:16:11- Paid ads, yeah.
00:16:12- Yeah, and I would just see if you'd get them
00:16:13to prepay for the quarter so you can offset CAC.
00:16:16- Okay.
00:16:18On that subject, if you don't mind,
00:16:20in terms of prepaying for the quarter,
00:16:22again, our customers are pretty price sensitive.
00:16:25There's people that are cheaper than us,
00:16:26obviously, if you've seen before.
00:16:28My fear is the amount of churn that will generate some,
00:16:32we bill 90% of our customers on credit cards
00:16:35and we hold on to 10% that pay us through like pad
00:16:37and through checks and that kind of shit.
00:16:39It's awful, but we're going to experience churn
00:16:42if we're like, hey, you need to prepay us up front.
00:16:45You'd still--
00:16:46- We would churn, just close fewer, right?
00:16:49- Close fewer, absolutely.
00:16:50And I think customers that are with us would leave us.
00:16:53- Why would the people who are with you leave you
00:16:55for how you treat new customers?
00:16:57- Sorry?
00:16:58People that are with us would leave us.
00:17:00- I don't think you change your billing process
00:17:02for existing customers.
00:17:03- Gotcha.
00:17:04- I'm saying if you're doubling down on inbound,
00:17:06what will go up is CAC because you'll have media spend
00:17:08in addition to the sales commission.
00:17:10And so to offset that from a cash flow,
00:17:12how cash flow positive are you right now?
00:17:14- So we did 3.6 in EBITDA last year.
00:17:18Generated both. - Interesting.
00:17:20That's lowish.
00:17:21- It's lowish.
00:17:22- Yeah, I'm curious what-- - We're heavy on people.
00:17:24We're heavy on people.
00:17:25- Dude, AI.
00:17:26- I know, I know.
00:17:28- Big thing.
00:17:29- I know.
00:17:30- It's like, you're worried about them doing it,
00:17:32you're not even doing it.
00:17:33- Correct.
00:17:34- Right?
00:17:34(audience laughing)
00:17:37So like, okay, so this is what I would actually do.
00:17:40I would probably spend the next six months reorganizing
00:17:43the workflow, probably reduce headcount by 50%
00:17:46using AI workflows in order to actually do the same thing.
00:17:50Increase the margin from 3.6 to like seven or more
00:17:54with the added cash flow.
00:17:56You wouldn't have to change the price on the front end.
00:17:58You'd be willing to go negative for a quarter
00:18:00in the acquisition knowing you're gonna get 29 on the back.
00:18:03That's how I'd actually fix it.
00:18:07- Okay, makes sense.
00:18:09- Chill, right?
00:18:09- Cool.
00:18:10- Yeah, easy.
00:18:11- I sell CFO advisory.
00:18:13We will do probably about 2.9 this year.
00:18:16- Amazing.
00:18:17- I would love to be at like 20 million.
00:18:20- Okay.
00:18:21- But what's stopping me?
00:18:23I have, we've made all this stuff.
00:18:27I have two books.
00:18:28I fire my CPA, I have tax free millionaire.
00:18:30I've made all these courses.
00:18:32I don't know what to do with them.
00:18:33I don't know how to market.
00:18:34I don't know how to advertise.
00:18:35I've never done any of this.
00:18:37- We're doing three million a year.
00:18:38- All organic.
00:18:39- Yeah, I mean, you're obviously not marketing shitty.
00:18:43So you've got all this stuff, right?
00:18:45You got these books, you got these courses.
00:18:48You make content?
00:18:49- Yes.
00:18:50- Okay, so you are marketing.
00:18:52- Well, I've never put them out there.
00:18:53Like, I don't know what to do with it.
00:18:56- Wait, huh?
00:18:56Okay, hold on.
00:18:57So you've got all this stuff in your back pocket.
00:18:59So you've got tax free millionaire book and or course.
00:19:03You've got fire CPA book and or course.
00:19:06And you make content about tax accounting shit.
00:19:10- Yep.
00:19:11- And so people come in and buy your tax accounting shit.
00:19:14Right?
00:19:14And you're trying to get to 20?
00:19:16- Yeah.
00:19:17- Do people turn out?
00:19:18- Well, I've never tried to sell anybody
00:19:21on this stuff that I've made.
00:19:22- Well, but we don't need, but like forget.
00:19:24Let's erase those for a moment.
00:19:26Those are not real things for the purpose of our conversation.
00:19:29If you didn't have those things,
00:19:32what would you do to grow the business?
00:19:34- People call our office and they come in
00:19:38and I sell them for monthly service
00:19:40and I get referrals for tax plans.
00:19:41- In person?
00:19:42- In person or virtual, yeah.
00:19:43- Okay, but you're a local?
00:19:45- I'm local.
00:19:46We have a bricks and mortar.
00:19:47I have a billboard, but most, I do, yeah.
00:19:49But most of our clients are not in Texas.
00:19:52- Okay, her.
00:19:53Okay, so they're coming from the content.
00:19:54They call up, you guys sell them.
00:19:55- Referrals, yeah.
00:19:56- Okay, got it. - Absolutely.
00:19:58- And what are you growing out annually?
00:20:00- What am I what?
00:20:01- Growing out annually?
00:20:02- Last year I was 2.2.
00:20:04- Okay, that's great.
00:20:06Yeah, super good.
00:20:07Whatever, 30, 35% annual growth.
00:20:09That's awesome.
00:20:10Okay, so what's the...
00:20:12So you want to get to 20
00:20:14and I'm guessing you just don't want to wait like seven years
00:20:16to get to 20 at that compound rate.
00:20:18- Yeah. - Right?
00:20:19So as long as you're keeping customers
00:20:21when I said do they churn, that's what I meant.
00:20:23Like are they, do people stay with you?
00:20:26- The people that are on monthly stay a lot more
00:20:29than the people that come in just for a one-time tax plan.
00:20:31- What's the, this will be fun for you.
00:20:34- Okay.
00:20:35- So what's the, I'll give you like some business accounting.
00:20:37What's sales velocity right now?
00:20:40- I don't know what sales--
00:20:41- How many units a month do you sell?
00:20:43- On the monthly reoccurring?
00:20:44- Yeah.
00:20:45- There's probably about 190 clients.
00:20:47- No, how many do you sell every month?
00:20:49- New ones, we've closed down for new sales
00:20:52'cause I'm trying to figure everything out.
00:20:54So nothing right now, nothing.
00:20:56- Well that will not grow the business.
00:20:57That for sure.
00:20:58(audience laughing)
00:21:00There's my, yeah, I'll be here all day guys.
00:21:03Okay, so you have a goose egg there, okay.
00:21:09But okay, you have this other stuff.
00:21:11Why do we care?
00:21:12- Well, that's what I wanna do.
00:21:15Like I like the products.
00:21:17I like to educate.
00:21:17I like to be in front of the camera.
00:21:19Like I wanna do all that.
00:21:20- Okay.
00:21:21Well, what's wrong with the business
00:21:23that you decided to stop selling stuff for?
00:21:25- It's fucking hard, that's why.
00:21:27It's, no, like to fulfill on it and it's hard.
00:21:31- You can always just start a business
00:21:32where you sell everybody else's stuff.
00:21:34You didn't even get my joke, you missed it.
00:21:36Okay.
00:21:36- And what I'm trying to get to now, like AI,
00:21:38what you were saying is gonna completely obliterate
00:21:40our industry, which I'm really excited about.
00:21:43Because I wanna dive into it.
00:21:44I wanna leverage AI tools and even overseas partners
00:21:48doing low level stuff.
00:21:49Because people in our industry are really slow and outdated.
00:21:54- Okay.
00:21:55- Yeah.
00:21:56- But all of these are not things
00:21:57that you would solve with marketing.
00:21:59You're supply constrained and so you're like,
00:22:01how do I market more?
00:22:02I'm like, you can't even take people.
00:22:04- Well, I wanna market like for courses
00:22:07and to buy my books and things like that.
00:22:09- You have a valuable business right now.
00:22:11- No, I do, yeah.
00:22:13- I know, why would we start another business
00:22:15that's not that valuable?
00:22:16- That's what Ed told me, but I wanna do that too.
00:22:18(audience laughing)
00:22:21- Yeah, I mean like, I make the content,
00:22:22I continue to repeat and I get my memes made of me
00:22:25of like, Alex just gonna say shit's hard
00:22:27and hard things are hard and hard, hard, hard.
00:22:30And it's because it just never stops being hard.
00:22:33It just always sucks.
00:22:34(audience laughing)
00:22:37Like the course thing will suck too,
00:22:41you just don't know it yet.
00:22:43Ask the course people, they'll tell you it sucks.
00:22:45- That's great advice.
00:22:46- Right, they're like, it sucks, yeah.
00:22:49Customers aren't sticky,
00:22:50they'll expect you to do everything.
00:22:51They're like, I'm not a tax free millionaire already
00:22:54and I bought your $17 course, like fuck you.
00:22:56You know, like, like that's, you know,
00:22:58that's what's gonna happen.
00:23:00But you have a service that people aren't turning out of,
00:23:02I'm guessing--
00:23:03- No, they're not.
00:23:04I mean-- - Some,
00:23:05but they're pretty sticky.
00:23:06- Yeah, no one who has bad churn stops selling,
00:23:09I'll say that. (laughs)
00:23:11So like, the fact that you're comfortable enough
00:23:13that you're like, oh, we don't need
00:23:13to take customers for a while,
00:23:14like, I'm sure your stuff is better than you think.
00:23:18But I think that we have to think,
00:23:21basically, you're a supply constraint.
00:23:23And so we just need to fix
00:23:25the supply constraint of your business.
00:23:27Because if I said, hey, we found a way,
00:23:30what are your margins right now?
00:23:31- About 20, 25%.
00:23:33- Okay, so if we said, okay,
00:23:35let's see if we can find offshore talent
00:23:39that can give your existing team two or three X leverage.
00:23:43So you don't have to increase internal headcount,
00:23:45you can increase external headcount.
00:23:46And then when AI comes in,
00:23:47you can basically wipe those guys off the map
00:23:49and then fine, right?
00:23:51So it's like, yeah, they don't have jobs or families.
00:23:53(audience laughs)
00:23:56They're overseas, they're not real.
00:23:58I'm kidding.
00:24:00So, I know half you guys are overseas, that was a joke.
00:24:04But yeah, so I think that we need
00:24:05to create operating leverage.
00:24:06So we have to look at basically
00:24:07how the servers are being delivered
00:24:08so that we can figure out how to get each person
00:24:09two or three more X in terms of their ability
00:24:12to deal with customers.
00:24:13Probably there's a little bit of tech that's missing
00:24:17because this is for everybody.
00:24:19Everybody, every entrepreneur I talk to is like,
00:24:20I wanna be AI first, right?
00:24:22And then you're like using Jeff GP for emails.
00:24:24That's not how you're AI first.
00:24:25The first thing that you have to do
00:24:28in order to have an AI first company
00:24:29is you have to be a data first company.
00:24:32Because AI works with data.
00:24:34If you don't have data, then there's no fucking AI.
00:24:36So you have to have complete data first from your approach
00:24:40and have an architecture in place
00:24:41so that you know all the elements of the business from data
00:24:44and then we can put the AI layer on top
00:24:46to put reinforcement training in place
00:24:47in order to actually train it to do stuff.
00:24:49So, if that's where you wanna go,
00:24:51which does have tremendous operating leverage,
00:24:54and just for everybody,
00:24:55this is the once in a generation move right now.
00:24:58So 25 years ago, cloud computing came out
00:25:00and then software went from CDs to cloud
00:25:02and then all of the software companies
00:25:04and all that boom was the last 25 years
00:25:06and all the billionaires were made.
00:25:07The next boom is this, right?
00:25:09And so we're early and so the hard of this is like,
00:25:12well, the pieces don't all fit together perfectly yet
00:25:14and it's like, well, that's the figure out
00:25:16that we make lots of money from, right?
00:25:18So I don't think the solution is you selling the course
00:25:20'cause you just happened to have recorded it.
00:25:22I think that we need to fix the supply constraint first
00:25:25and you'll use all those things as marketing assets
00:25:28to increase demand when the time comes.
00:25:30So save those in your back pocket.
00:25:31There's nothing wrong with them.
00:25:33But I wanna look at the model, increase operating leverage
00:25:36that'll probably also increase margin.
00:25:38Start making this number more than zero,
00:25:41which I promise you can take this to the bank.
00:25:43If you make that not zero, you will grow faster.
00:25:45You'll make more money if you sell people.
00:25:49And then I think from there, so it's like,
00:25:51increase operating leverage through offshoring.
00:25:55Add in data layer.
00:25:56Once the data layer's there,
00:25:57then we can add in the AI component
00:26:00that further increases operating leverage.
00:26:02Once you put the remote team in,
00:26:04you'll then be able to sell again.
00:26:06If you get to the point where you're like,
00:26:08I've now reached my new two or three X capacity
00:26:10without even marketing, then great.
00:26:12If you do need to market more,
00:26:14then use the assets that are in your back pocket
00:26:16to go do more delete gen.
00:26:17I was like four or five steps,
00:26:20but that's how I think through it.
00:26:21- Thank you.
00:26:22- I sell roofing and exterior remodeling.
00:26:24- Sweet.
00:26:25- We do close to 6 million this year.
00:26:28- Amazing.
00:26:29I would like to be at 100 million.
00:26:31So what's stopping me, and I'll be a little bit vulnerable,
00:26:35I would say it's comfort, distractions, and fear.
00:26:40- And food?
00:26:41- Fear.
00:26:41- Oh, sorry, I was like.
00:26:42(audience laughing)
00:26:44All right, good to know.
00:26:45- That's not food, no.
00:26:47- Sometimes I feel that way too.
00:26:49- So the comfort is I have built the business.
00:26:52I've replaced myself in every aspect.
00:26:54I can work two to three hours a week, and it run fine.
00:26:59Fear, I would say the fear of losing family time,
00:27:04the work-life balance, and the distractions are,
00:27:08my other, I've got another business,
00:27:11drunk removal business.
00:27:12I've got real estate.
00:27:14I've got just all kinds of little things that I have.
00:27:18- What do you think you should do that you're not doing
00:27:20that you want me to tell you to do?
00:27:21(audience laughing)
00:27:23- So I know I need to go all in again,
00:27:26and I did that the first five years that I had my business,
00:27:29and it worked out great.
00:27:31Went through COVID, I kept the business going really well,
00:27:36and I worked myself out of a job, got comfortable.
00:27:39- Okay.
00:27:40- So I don't know what I'm looking for you to tell me to do.
00:27:45- Well, I'll say this differently.
00:27:47I think regrets come when we imagine the upside
00:27:56that we don't have without taking into account
00:27:58the cost that we didn't suffer.
00:27:59And so, sure.
00:28:05I think we regret when we imagine the upside
00:28:11that we didn't get without also considering
00:28:14the downside that we didn't suffer to get it.
00:28:17And so I think that's where a lot of regret comes from,
00:28:20'cause it's not real.
00:28:21So it's like, maybe there's some girl that got away,
00:28:23or some business opportunity that got away,
00:28:25and we just imagine this amazing thing,
00:28:27but not the trade-off that we would have to do
00:28:29in order to get it.
00:28:30We just imagine the upside without the downside.
00:28:32And so I would say a couple things.
00:28:34So one is, I think that there are trade-offs
00:28:38that we always have to make,
00:28:41and I don't think they're right or wrong.
00:28:43I think they're just their preference.
00:28:44There's no right answer to how much work-life balance
00:28:46you want to have.
00:28:47It's right for you.
00:28:49And so, said differently, if I like cookies,
00:28:53and I'm good with that, and I also want a six-pack,
00:28:56I just prefer cookies to a six-pack.
00:28:59It's just that's the trade.
00:29:00And I think the dissatisfaction comes from wanting both.
00:29:03- Right. - Right.
00:29:04And so either want less or trade more.
00:29:09And I think that's really what it comes down to,
00:29:13in terms of like, is there a path where I can work
00:29:15no more than I currently am to go from six to 100?
00:29:19There probably is.
00:29:20It depends on how much you're willing to pay other people.
00:29:22And so you might have to take a short-term hit
00:29:24in terms of profitability to bring in the level of talent
00:29:27that you want to expand the business on your behalf
00:29:29to where you want it to go.
00:29:31And so, as long as you are the type of person
00:29:34character-wise that they would want to follow
00:29:36and believe in your vision,
00:29:37and you can make your vision big enough
00:29:38that they think that their aspirations can fit within it,
00:29:40you can get that type of person.
00:29:42But it's 100%, like you're graduating right now
00:29:46into the Who game, but there's levels of Whos.
00:29:49I remember the first time I hired a $50,000-a-year employee,
00:29:53I was like, this is the shit, this is what I'm talking about.
00:29:56I went from minimum wage labor to $50,000.
00:29:58I was like, this, they can read, they can write, let's go.
00:30:03You know what I mean?
00:30:04And then I hired my first six-figure employee,
00:30:06and I was like, what was I talking about?
00:30:08This is what's going on.
00:30:09And then I hired my first 250, first 500, first million,
00:30:12first multimillion dollar per year employee.
00:30:14It's just levels.
00:30:16And so Sharron, who's our president,
00:30:18said this to me years ago, but I always remembered.
00:30:20He said, "The best talent's always in the future."
00:30:22So whatever we have today, the best people
00:30:24are always ahead of you, not behind you.
00:30:26And so I think for you, if you really do want
00:30:30to accomplish it without making the trade,
00:30:33you will make a trade, 'cause if you change nothing,
00:30:34nothing will change, right?
00:30:35So we have to change some component of your life.
00:30:38And so the question is, which thing do you value the least?
00:30:42Do you value having more profit or more time
00:30:44with your family in the short term?
00:30:46In the long term, you can make it up.
00:30:47You won't make up family time in the long term.
00:30:49You can't make the profit up in the long term.
00:30:52So if you're willing to give up short term profit,
00:30:53you can bring in high level talent,
00:30:55and then they can lead the growth.
00:30:57In terms of the fear stuff, I mean, I would just say,
00:31:00just hold the line.
00:31:02If you don't, you're like, I'm afraid of losing time
00:31:04with the family, it's like, just don't.
00:31:06Like I, you know, and then in terms of the real estate thing,
00:31:09I see real estate, 'cause I know a bunch of entrepreneurs,
00:31:11I have a ton of real estate.
00:31:12I don't, as long as you're not actively running it,
00:31:18like that's why I'm a fan of like REITs and funds,
00:31:22because you have, if you have, you know,
00:31:23good partners and that stuff, they can just run it,
00:31:26you can make better than the market, and then.
00:31:29But it's not, it doesn't change anything about what I do.
00:31:31Like me putting in the S&P or me buying another big building
00:31:33changes nothing about my life.
00:31:34And so it's not a distraction, unless you're like,
00:31:37you know, if we could add a gazebo,
00:31:39and what if we added a different roof, 'cause I'm a roofer,
00:31:42and what if I combined what I'm really,
00:31:44and you're like, dude, stop.
00:31:44Just like, let the real estate be the real estate,
00:31:46let the business be the business,
00:31:47and just keep them apart, as long as you're good there,
00:31:49'cause I think it's a distraction.
00:31:51Actually, let me double check in that real quick,
00:31:54which is when you said you're the distraction thing
00:31:56that you're afraid of, why are you afraid of that?
00:31:59- I'm not afraid of it.
00:32:00- Okay.
00:32:01- I'm just, I've got ADHD, and I collect gold and silver,
00:32:05I buy houses, I buy buildings, I mean, it's just.
00:32:09- Yeah.
00:32:09- A little bit of the red dress.
00:32:11- Well, as long as it doesn't change anything
00:32:12about what you do, I don't care.
00:32:15But if it's like, now I check this stuff all the time,
00:32:17and it eats up my days, then yeah,
00:32:18I would say that it's a problem.
00:32:20And it's only a problem if you decide it's a problem.
00:32:26Like, you might just like that stuff.
00:32:27It's just like, I sacrifice my goals
00:32:29'cause I enjoy this ADD.
00:32:30You know what I mean?
00:32:33Like, the cost of the big thing is the new stuff
00:32:35that you have to give up to keep it going.
00:32:37- Yeah.
00:32:38- Thank you.
00:32:39I feel like I'm getting some amens.
00:32:40This is great.
00:32:41(audience laughing)
00:32:41Like, good meal, right?
00:32:42Yeah, I appreciate it.
00:32:46But yeah, the cost of the big thing
00:32:47is all the new stuff you have to give up
00:32:49that you don't get to pursue.
00:32:50All the exciting things that you will no longer participate in
00:32:52because you wanna do one thing big.
00:32:54- Okay.
00:32:55- And I think, for me personally,
00:32:57I had this moment, I think a while ago,
00:33:00but like, I had this realization of how long it takes
00:33:02to get good at anything, and then I thought about,
00:33:04oh, I only have like 30 or 40 more productive years at most.
00:33:09And so I'm like, I've got like,
00:33:11four or five big seasons in me left.
00:33:14- Yeah.
00:33:15- And I'm like, well, that's it.
00:33:18And so I don't have like, unlimited shots on goal.
00:33:21I've got four or five big runs in me.
00:33:23And so I think, like, realizing that,
00:33:26it's kinda like Warren Buffet talks about,
00:33:28if every person just had a punch card with 20 punches on it,
00:33:30and that's the only thing you could invest in,
00:33:31you could never sell it,
00:33:32you'd make way better investments.
00:33:35I see entrepreneurs the same way
00:33:36in terms of what business opportunities we pursue.
00:33:38Because if we take the hypothetical extreme
00:33:40that if we wanna build something really big,
00:33:42it's gonna take a long time,
00:33:43then it means we can't do that many things.
00:33:45So, hope that helps.
00:33:48- I appreciate that answer,
00:33:49'cause I thought you were gonna say sell everything and--
00:33:53- I mean, there are investments.
00:33:54I mean, I'm not gonna tell you to sell your investments.
00:33:55I would say keep passive stuff passive, don't make it active.
00:33:59That's like incurring cost.
00:34:01'Cause if you're gonna make it active,
00:34:01then make active money.
00:34:03If you're like, I wanna take my passive money
00:34:05and then make it cost me more time
00:34:08to get 5% better returns.
00:34:09It's like, you're gonna get way better returns
00:34:11in your active income than your passive.
00:34:13And I would just keep active, active, keep passive, passive.
00:34:16- Thank you. - Appreciate you.
00:34:17Real quick, I'm gonna show you the exact 10 stage roadmap
00:34:20from zero to a hundred million plus
00:34:23that less than 1% of companies finish.
00:34:25I've now done multiple times.
00:34:26And so I can say with a lot of confidence
00:34:27that these are the stages as headcount increases
00:34:30that you need to get through.
00:34:32And I broke each of these down
00:34:33by eight different functions of the business,
00:34:35what the constraint feels like,
00:34:37like what are the symptoms of it when you're going through it?
00:34:39And then what steps we actually took to graduate.
00:34:41And we've done this across software, physical products,
00:34:44service businesses, brick and mortar, all of this,
00:34:47and it works.
00:34:48And it's my gift to you, it's absolutely free.
00:34:50And so the link's in the description,
00:34:51but you just go acquisition.com/roadmap,
00:34:53just enter your info
00:34:54and it'll spit it right back to you, all free.
00:34:55- My family owns a residential fence company.
00:34:57So we sell fences to homeowners.
00:35:00Our current revenue is roughly about 20 million.
00:35:04I think a good goal for us would be 50.
00:35:07I think what is stopping us is leadership and A players
00:35:11within our sales and management,
00:35:13and also standardization of our processes and SOP creation.
00:35:16- Okay.
00:35:17I believe you.
00:35:20- Okay.
00:35:20(laughing)
00:35:23- So right now, do you need more customers?
00:35:25- Not necessarily.
00:35:27- Well, do you need more?
00:35:28You have to figure out right off the bat,
00:35:29do you need more customers
00:35:30or can you not handle the stuff you got?
00:35:33- We can't handle the stuff we have.
00:35:34- You can, so you need more customers.
00:35:37- We need more lead people.
00:35:39People to answer the leads and people to close the deals.
00:35:42- Okay, so you have leads, you have a sales constraint.
00:35:44- Yes.
00:35:45- Got it, okay.
00:35:46So how many salespeople do you need?
00:35:48It sounds like a similar,
00:35:49how many salespeople do you need
00:35:50in order to deal with the leads issue?
00:35:53- We currently have five.
00:35:57I would say we at least need to double that.
00:36:00- Okay, so what stops you from doubling it?
00:36:04- I think it's part the nerves that the market
00:36:08might not last and need or require that many people.
00:36:12So kind of putting all--
00:36:13- Would it then be a demand issue again?
00:36:15- Yeah, well, I mean, it's not like,
00:36:16we don't have a current demand issue.
00:36:17We have plenty of leads coming in.
00:36:19We've got a whole separate staff that are--
00:36:20- So what's the fear from?
00:36:21What are your margins?
00:36:22- See, this is where it's hard for me
00:36:26because I'm not the CEO.
00:36:28I'm the right-hand woman to kind of the founders.
00:36:31So I don't know specifically--
00:36:33- You don't know the margins as the right hand?
00:36:36- No, 'cause I feel like it's also
00:36:37kind of a data problem that we have
00:36:38of not being able to collect the proper data
00:36:41and know that it's actually correct or accurate as well.
00:36:44- Well, I'll say, it's one of two.
00:36:46So you said we're afraid to hire these people.
00:36:49I would say why?
00:36:50If it's like, it's just between my ears
00:36:51and I have irrational fears for things,
00:36:53I'd be like, all right, let's get over it.
00:36:54If it's because we have no cash flow,
00:36:56then it's like, look, we have cash flow issues
00:36:57and we have to go down that kind of decision tree.
00:36:59Assuming you don't, I mean,
00:37:01have you ever heard of the CEO saying
00:37:03that they have cash flow issues?
00:37:04- Not necessarily.
00:37:05- Okay, well then, I would be like,
00:37:07why don't we hire five more sales guys?
00:37:09- We're in the process of doing that.
00:37:12- Okay, there we go.
00:37:13Okay, great, got it.
00:37:15No, you're good, yeah.
00:37:17- 26% with our--
00:37:18- Okay, great.
00:37:19- You know, we're there.
00:37:21You know, we've fine-tuned the backend.
00:37:25Now it's upgrading the sales app.
00:37:27- Okay.
00:37:29- And we have plenty of leads coming in.
00:37:32- Yep.
00:37:32- To stop our process of how we used to do it and launching.
00:37:36- Okay.
00:37:37- And like I said, it's doubling up.
00:37:40We're in a market where it slows down a little bit
00:37:43'cause it's winter.
00:37:44That's saying Minnesota, cold.
00:37:46We're still cold winter.
00:37:48- Cold. (laughs)
00:37:50- We're still in a culture with current health
00:37:51and so everybody knows.
00:37:53And yeah, we're on that throwaway
00:37:57to find the right, you know, not knowing the right path
00:38:02of how to bring in the right sales manager
00:38:07and all that stuff is kind of where--
00:38:09- Basically, you need to build a recruiting machine for sales
00:38:11'cause you're getting to the point,
00:38:12you have five sales guys now?
00:38:13Yeah, and do you do any self-gen or is it all--
00:38:17- All paid ads.
00:38:18- It's all paid, okay, yeah.
00:38:19So the people who do home services at a certain scale,
00:38:24which is right where you're at right now,
00:38:26you start needing to develop basically like a sales academy
00:38:29that's internal.
00:38:30And so just like you have your lead gen,
00:38:35you've got nurture, you've got sales,
00:38:46you've got, you know, onboarding of some sort
00:38:49and then you've got, you know, retention and ascension
00:38:51for a customer, right?
00:38:53You're gonna have app gen, app nurture,
00:38:58interviewing works the same way, onboarding
00:39:04and then retention and ascension of the sales people.
00:39:06It's just that we have to build a parallel structure
00:39:07within the business always so that we can,
00:39:11just like we spend money reliably in our demand gen side,
00:39:14we need to be able to spend money reliable
00:39:17on the supply gen side.
00:39:19And so those just have to be parallel functions
00:39:20that exist within the business.
00:39:22And so just like you probably know,
00:39:23I'll bet you know like what your CTRs are,
00:39:25what your opt-in rates are, what your, you know,
00:39:27what percentage of leads you close,
00:39:28what percentage show, all that kind of stuff, right?
00:39:30On this side.
00:39:30- I've been getting that data.
00:39:31- Yeah.
00:39:32- That's a nice thing that was built in that last talk.
00:39:34- Well, it's good.
00:39:35Well, just like, you know, those stats here,
00:39:37you just need to know those stats here.
00:39:40Are you guys doing L2 with us?
00:39:42- We're good on it.
00:39:43- Oh, cool.
00:39:44Yeah, I was like, 'cause we build these things out
00:39:44of like all the time.
00:39:46Yeah, but that's what you need to do.
00:39:47We just have to build out the, basically the entire sales,
00:39:49the pipeline, the funnel flow of,
00:39:53and so I was, I'll complete the thought in a second.
00:39:57So when I was talking to you yesterday,
00:39:59two seconds ago about this,
00:40:02how much does a sales guy make you right now?
00:40:05Gross profit.
00:40:07- Probably each guy is seven to 800K maybe.
00:40:12- So 100K just for simple math.
00:40:14And that's in gross profit?
00:40:16- Yeah.
00:40:17- Okay, and then how much--
00:40:17- What'd you put down there?
00:40:18- That's hard.
00:40:19- So what did you say?
00:40:20How much gross profit did they make?
00:40:22- So it's a little different,
00:40:23'cause we have five in-alls, five out-alls.
00:40:24Let's think of a, it's really like a 10,
00:40:26you have your measures outside, you have inside sales.
00:40:29That's kind of a problem.
00:40:30- Yeah, okay.
00:40:30- 20 million, so you're, each guy's, you know.
00:40:35- We divide by 10, two million bucks.
00:40:37Just, we'll keep it simple.
00:40:39And then what do you pay them?
00:40:40- Upwards max of about 200.
00:40:42- Okay, 200 for the best guys.
00:40:43Okay, fine.
00:40:44And then gross profit on this?
00:40:46- Probably, right now.
00:40:49- 50?
00:40:50- About two million.
00:40:51- Like, what's your gross profit?
00:40:52Not net, gross profit.
00:40:54What's cost of goods?
00:40:55Okay, yeah.
00:40:57So one million.
00:40:58So for me, I see this, and I see a five to one.
00:41:01Which, by the way, like some of the best returns
00:41:02you get in the business are just your cost to acquire talent
00:41:04versus lifetime gross profit per employee.
00:41:06And so if I know that we can generate
00:41:09one million dollars in gross profit,
00:41:10if I said, hey, you could put 200 grand to the S&P,
00:41:13or, we can put 200 grand into this machine.
00:41:16Yeah.
00:41:20You get a million in gross profit,
00:41:21and then you have your enterprise value
00:41:22probably also eight X for your business.
00:41:25It's like, great, eight million tax free for 200K.
00:41:27Sounds like a deal.
00:41:28- And there was a little add-on, you know,
00:41:31I'll be honest, at the beginning of your,
00:41:33it came out, sorry for your loss.
00:41:35- Oh, there you go.
00:41:36- Same kind of tension that the doctor and I--
00:41:39- Yeah.
00:41:40- You know, so, trying to fix that here and there.
00:41:45- Are you guys related?
00:41:46- Use my dad.
00:41:47- Oh, there we go, that makes it easier.
00:41:47Okay, I know you're good.
00:41:51I mean, I have no words of advice there.
00:41:55But this is what we need to do to the business.
00:41:58(audience laughing)
00:42:00Yeah, I live in my scope.
00:42:01(laughing)
00:42:02- No, I just met with the scale.
00:42:04- Oh, yeah, yeah, yeah.
00:42:05- That's how I met, it was kind of a full-time hit for--
00:42:08- Oh, good.
00:42:09Okay, cool.
00:42:10- In a different way.
00:42:11- No, I appreciate that.
00:42:11Oh, yeah, I mean, the whole point wasn't like,
00:42:12hope everybody here didn't have somebody die yesterday.
00:42:14You know what I mean?
00:42:15But we all have shit that happens, right?
00:42:17And so, like, if I look at this thing for me,
00:42:20and the reason this is kind of important,
00:42:21'cause I was gonna go in one of two directions.
00:42:23I was gonna either do that or just,
00:42:24I was gonna let the spirit move me.
00:42:26But,
00:42:28what is limiting most of y'all's businesses,
00:42:35which is the stuff that no one actually wants to talk about,
00:42:37is the fact that you aren't good enough as entrepreneurs.
00:42:40So you haven't achieved enough yet,
00:42:42you haven't sustained the success you have long enough,
00:42:44and people don't wanna work for you
00:42:45'cause they don't believe in the vision you have.
00:42:47That's the real thing.
00:42:48Because business at the highest level
00:42:50can really be boiled down to,
00:42:52find world-class people and get out of their way.
00:42:55You've heard Branson talk about it,
00:42:56you've heard Steve Jobs talk about it, and it's true.
00:42:59The problem is they don't wanna work for you.
00:43:02Real.
00:43:03Because Steve Jobs is like,
00:43:04we're gonna add another hundred billion to Apple.
00:43:06And people are like, wow, that sounds amazing.
00:43:08And when you meet world-class talent like that,
00:43:10those guys are making $20 million bonuses per year, right?
00:43:14Different levels to the game.
00:43:15And so I bring this up to say that
00:43:17if you were a small business,
00:43:19which is the vast majority of people here,
00:43:21then you have to win on character.
00:43:24They have to wanna work for you.
00:43:26And I think learning how to master these elements
00:43:28of not being a hothead,
00:43:30not being somebody who turns on a dime,
00:43:33if you have a bad day, no one knows about it.
00:43:35I think those are the things that allow you to get weight,
00:43:37basically punch above your weight class,
00:43:39because you basically always have to punch above
00:43:41to get that talent,
00:43:42and then that talent pulls the business up.
00:43:45And so I'll tell you the story,
00:43:46and then I'll switch to the next person,
00:43:47which is when we sold gym launch,
00:43:50some of you guys may have heard this,
00:43:51but when we sold gym launch,
00:43:52there was this long table, like the boardroom in there,
00:43:54and we had my team on this side,
00:43:56and we had the private equity team on this side.
00:43:58And they'd raised $1.2 billion in funds to do their stuff.
00:44:02And I was doing my back-and-napping.
00:44:03I was like, this guy's gonna make
00:44:04$400 million in the next five years.
00:44:06I was like, that's chill, taking no risk. (laughs)
00:44:10And I did the math on what he was gonna make on gym launch,
00:44:12and I was like, he's gonna make more money
00:44:14on my company than I did.
00:44:16And what was interesting to me, though,
00:44:18is that I saw his entire team, and I saw my team,
00:44:21and every single person on his team
00:44:23was better than every single person on my team.
00:44:25And it was this very visual stark contrast
00:44:27between his team and my team.
00:44:28And I was like, got it.
00:44:31And so I just vowed that whatever
00:44:32the next business I was gonna do,
00:44:33I needed to have a vision that was significantly bigger
00:44:35so I could attract a different level of talent
00:44:37so they could make something bigger happen.
00:44:39So that's a slightly softer answer.
00:44:42But I need to build the talent funnel,
00:44:44put that in place, and then not be mean.
00:44:47- Thank you. - Yeah.