The Only Two Ways to Scale a Service Business

0:00Unternehmer/Gast I have a website business for detailers, but it's really low ticket niche. Should I switch to solar? If I do outreach, it'd be 10 times harder. Um, and it's already hard. Plus, it's hard to lead gen uh to it. So, just for everyone, no man's land is trying to sell SMBs a higher ticket thing. And I'll explain what I mean by that. You will quickly make more revenue, but then churn will catch up with you quickly and you will create a churn machine and CAC will consistently rise, which will compress your margins. I'm telling you, this is where the graveyard of 1 to5 million a year agency owners who sell lead genen services to SMB for between $1,500 and $3,500 a month. That's where they all live. That's where they all die. And it's miserable existence. And you're welcome to go compete there if you want.

0:50My opinion is that you have two options for that business if that's what you really want to do. You either go low ticket, very low ticket. I'm talking like basically $150 to maybe $400 a month. That's what I'm saying. Maybe 500 tops for SMBs. And you have to have a truly scalable solution that cost you almost nothing to deliver. This is where like, you know, getting super high listed on uh maps or, you know, you know, first three for Google. This where SEO type stuff works well. Um maybe it's just like maintaining Google, Yelp, and whatever review stuff for a few hundred a month that no one wants to turn out of. All of those are things that are super reasonable uh that you can sell to SMBs that they will not turn out of because the price point is appropriate.

1:32It's a nuisance uh thing. Whenever you start getting into heavy true lead genen, their businesses are so volatile that they will turn it off independent of how well you do, which is a very frustrating place to be. And for you to really make it make sense, you have to charge more and they don't have the money to do it. And that's the catch 22 with that model. So I said option one is low ticket but high gross margin. Low ticket but high gross margins. and very high revenue stick. The other angle is to go for um mid-market, so up market from there. So instead of SMBs, you're talking, okay, it's got to be a business that's doing at least a million, at least $2 million a year, $3 million a year, something like that. Those business owners will be more stable. And then at that point, you can start charging for uh you know, higher price points. So it's like, I don't really want to play in anything below $10,000 a month. And if you can't sell $10,000 a month to someone, that that's not going to make or break their business because they already know their metrics. They already have a sales motion. They already have LTV figured out. If they don't know those metrics, those people are not good customers for marketing services. And you'll be like, "But that's everybody." It's like, "Yeah, and that's why most people compete there, and that's why most people never make money there."

2:39Good …