Alex Hormozi's Best Advice on Hiring & Building a Team | 1 Hour Compilation

0:00Corey, what's up, man? You're on Hormosia Hotline. >> Hey. Hey, man. What's going on? >> I am uh I'm cruising and cruising. Cruising and bruising. >> Hell yeah. That's what I'm talking about. >> All right. Talk to me. What's the What's the business? What do you sell? How much you make? All that good stuff. >> Yeah. Uh so, we're an HVAC cleaning business. Um Okay. >> So, we're doing currently on track right now for this year for 1.8.

0:25>> All right. 1.8 top wine. Got it. What's uh what's bottom line? >> Bottom line right now is roughly 450 to 500. >> Nice. Solid. Good. Okay. Um what is you must have been consuming my stuff for a while. Okay. [laughter] >> Good amount of time [clears throat] inspiration. >> No, I love it. Okay. So, what's uh what's what's the thing holding you back? Is it not enough technicians or is it not enough leads?

0:54Uh it's now now it's uh it still leads a little bit. We're always looking for more because we are we are currently always hiring. >> Uh so we are now putting on a technician probably one every three to four months. >> Okay, got it. So what's the constraint of the business right now? >> What's holding you back from doing twice as much? >> Right. So right now is definitely leads.

1:18Uh so we just per our cash cow event that we had with you. The one thing that we really dissected was our third party marketing. Um, >> Corey, I didn't realize that this was uh this was that Corey. All right, rock and roll, Corey. Yeah. Yeah, I remember everything. I didn't know. I just I had Corey. It's all I had. And Corey and HVAC. No. No. But you're in duct cleaning, which is a little unique. All right. All right. All right. I remember. >> Yeah, that's right. >> Okay. So, uh All right. So, what's Yeah.

1:43So, what's holding it back? >> Yeah. So, right now, um we just got rid of our old marketing company. So, we went uh with a new third party. Now they're great. A lot of track record. It's kind of a higher echelon of what um you know is in our market. Um so we actually have our CMO that worked with them previously and her past company. She took them from 2 million a month to uh I'm sorry 2 million a year to 2 million a month. Great. Uh so now we reunited them. Uh so they are super excited to all work together again.

2:14>> Um but yeah, I mean super right now as we're trying to just lock in on leads again. Uh we are redoing the website. We're redoing a lot of our our ads and kind of reconfiguring things. Yeah. >> And just like we talked about in our cash cow is uh you know I mean I'll spend unlimited ad spend as long as it makes sense and makes money, right? >> Yeah. So what's holding you back? >> Or this stuff just needs to >> working on leads.

2:40>> Yeah. So we're working on leads right now and then finding the real constraint is finding enough technicians that um to to fit our uh our feed and what we do. So, a big part of what we do is education. Um, and all of our all of our employees right now, there's none of them that have a, you know, HVAC, you know, background at all. Um, so it's been really interesting to kind of train people up from the ground zero, which has also been great. >> Yeah. You get way better margins. They run it your way. So, there's advantages.

3:07Yeah. >> Right. Right. Exactly. >> Okay. So, do you need more leads or do you need more technicians? >> Uh, definitely more leads first. So, as we're good right now. Uh definitely more leads. >> Well, if you're already redesigning all your funnels and your offers and you're about to turn on a bunch of ads, >> out of like my the first thing I want to do is just say like let's stop all that. Like I think you you need to do that, right? >> And so I think you need to let the dust settle from that change. Like one of the one of the big things that Leila says a lot, which I really appreciate, is um you never want to solve the same problem twice.

3:39>> And so it's like sometimes it's like if we have a three-month solution to a problem, if we're one month in and the problem isn't solved, it makes sense though because we're still working on it's a three-month solution. It's like it's going to take us 90 days. And so sometimes we want to solve the same thing like multiple ways when really the first thing was the right thing. It's just going to take 90 days. >> Right. Exactly. >> So if these guys were able to scale the other business, you know, from 2 million a year to 2 million a month, it sounds like they already have, you know, whatever their playbook is on the lead side. So I'm going to just assume just for the sake of our conversation because it's going to get too granular that I can do over the phone without seeing what I like what I'd be looking at.

4:10>> Um like super tactical headlines and moving, you know, all that kind of stuff. um transitioning over to the supply side because assuming that works, you're going to be quickly supply constrained, right? >> Right. >> Okay. So, what is your lead genen funnel for the for the uh technicians? >> So, right now um we are currently going on Facebook groups and stuff of that nature and we're also kind of we're almost recruiting and like reaching out to other companies. Uh so when we see uh posts or things from other technicians or when my technicians are out in the field and they see other companies uh those those guys are coming out to us of like hey I've never heard you know I've never heard of you guys what do you guys do and they see what we're doing and they want to be involved. So uh they're just not happy where they are and they're looking for us. Uh but we have to be careful with that too.

5:00>> Yeah. Well, all right. So, we we have a couple like you need to incre like you're going to need to d you need to go from, you know, one what do you say? One every three or four months is what you said. >> Yeah. >> Right. So, if you're going to if you're going to 12x, you're going to have to go one every three or four months to like almost I mean it's 12 times that. So, if you did one a month, it would still be only, you know, three times that. So, it's going to be closer to one a week.

5:28>> Mhm. >> To sustain the volume. So we need to build that machine like soon. And so we have to think about a more scalable way of acquiring them. And so I think part of it is do you have the economics around how much a an HVAC technician makes you? >> Yes. So an average technician around us makes somewhere between 50 and 70. >> They make that much money. That's their pay. Is that what you're saying?

5:54>> Yeah. >> Okay. So their salary is I'm just say 60K. Okay, got it. How much gross profit does the technician bring in for you? Or I guess re like >> take out cost of like you know the materials, right? So take out material costs. How much does it make? And then I'll subtract out their salary >> about let's just call it let's see I mean 180 to 200.

6:20>> All right. to 200k. All right. Well, it's already 30%. Which is already kind of high because I was like, is there a way that we can >> Well, what what commission are you giving to uh to bring them in? >> How much are you willing to spend to acquire? >> No, no, no. How much are you willing to spend to acquire a tech tech?

6:45>> Uh, well, right now we've actually had to outsource for from different states. So, we're offering like relocation. Yeah. >> Um, you know, packages in order to get them here because we live in a lot of retirement communities and stuff like that. So, the >> the people that we're looking for is kind of hard sometimes. So, um, >> I mean, we offer, you know, up to $10,000 of relocation. Okay. >> Um, and then, like I said, we try to get them rocking and rolling. >> Yeah. So, I think we just have to be a little bit more violent. I think you have the right strategy. I think it's just a volume thing. Like, you know, you're reaching out like it's like how many recruiters do we have? How many we'd ask them for? Can we get them to get us more? Thing one. Thing two, like you're going in communities, but how many? How often? Um, like do are they on are they on like where's the where's the best pool? Because they all hang out somewhere, right? So, where do they hang out?

7:37>> That's a good question. I gota I gota I got to deep dive into that. >> Well, you solve that. You make like $50 million. >> They're all typically working. That's that's where it's like especially with us. >> No, but they hang out online, dude. Everybody hangs out online. Entrepreneurs are always working, okay? But they hang out online. So that like don't like there's a there's somewhere they hang out. >> Groups, forums, associations, discords, school communities, like they're somewhere.

8:04>> Gotcha. >> So I'd be looking at the trades like trades uh groups in general like look broader because you train these guys from scratch anyways, right? >> Right. Right. And do you like I mean you train them from scratch because like do you need them to be existing techs? Can you just get anyone to do it? >> I hire for personality more than anything. >> Well, dude, I mean then why I mean like you don't need to be looking crossstate.

8:30I mean like this this to me sounds like a an ad thing. So, I would be running like Indeed uh and like Facebook Marketplace or whatever ads and then I'd be running them to a group interview because that'll make it efficient for you. Just group interviews. Just do, you know, one group interview, two inter group interviews a week, >> 10 people on, assume only 30% are going to show. So, it's like get 30 people booked for each of the times. Um, so it's like 60, you know, 60-ish leads confirming, which will probably take you five times that or more. Uh, so 300 leads a week, uh, coming in off of Indeed as do a much, you know, do a 50 mile radius around your location.

9:14>> Okay? >> And I would be group group interviewing and then off the group interview, we're talking like one or two minute just them just you catch a vibe pretty quick, right? Um, and then you do a one-on-one with them after that and that'll allow you to triage through a shitload of applications. This is a low-skilled role. >> This is a low-skilled role. I wouldn't be recruited from out of state for this. >> Just lowskilled role. You just need you need to be spending like a ton of money on I mean a ton is relative, right? Like if you're willing to spend 10,000, which I think is the right right way to think about this,

9:42>> dude. If you spend 10,000 a month, you're going to get way more than one technician on ads. Way more. >> Right. Right. Right. Right. >> Right. So, I I don't even think you need to do much. Like I don't I mean it's good that you're doing that but I I think I would just you have to build the recruiting process for this business because if if the the girl and the reuniting with the you know the agency or whatever they worked together before they already know how the sales motion and the um and the acquisition works. So you're going to have to 12x your acquisition of talent. So this is another machine.

10:13>> Yeah. >> Cool. >> Yeah. Absolutely. Yeah. That's that's very helpful. I mean, like I said, it's it's the biggest thing that we're trying to do is is just kind of grow our team and like I said, just making sure that the right people on our team. Uh because especially with our industry as a whole. Yeah. Um it's very important that we do the right kind of work. >> No, you're good. And like you want to like you want to if you're catching for attitude, right, which is what you're looking for,

10:37>> like just just cast the net broad. Talk to as many people as you can. That's all we're doing here. Talk to as many people as you can. You catch a vibe real quick, move them in. >> Yeah. Yeah. No, absolutely. It's very helpful. >> All right. Rock and roll, Corey. Appreciate you. >> All right, brother. >> All right. Talk soon. >> All right. See you. >> All right. Bye. >> Hey, Alex. Hey. Hey. My name is Landon Dory. I sell brokerage and advisory services to owners of outdoor hospitality properties like RV parks, marinas, campgrounds, mobile home parks, etc. Um, last year we did 1.3 in revenue. And my problem is that in four years we went from just me to a team of four to starting the company and now we're a team of 12. So

11:20>> I used to stay plenty busy just servicing my clients and handling my pipeline. Now I'm dealing with managing tax, legal, and all this stuff I haven't had to jack with before while we're rolling out the consulting side of the business and I'm letting way too many things slip. So I'm trying to figure out >> what's the consulting side of the business? >> I'm sorry. What's the consulting side of the business? >> Uh helping it's it's really framed as helping somebody prepare their property for a more profitable exit.

11:47>> I've underwritten a ton of properties and probably 5% >> price that. >> So, we're still working on that. The idea is an upfront $10,000 which we would apply to the commission at close if they decided to work with us on the brokerage side. And that would allow us to do a full audit on their property, give them a full playbook on how they can go implement that. And then that would be our opportunity for an upsell to actually step in and offer advisory services to partner with them in that implementation. >> Yeah. Because you probably take just a bigger take on the on the commission side,

12:16>> which would be hugely advantageous to us because I own the company and normally like my competitors, they work for a brokerage. So they have a house split and I am the house. So >> yeah. >> So what stops you from doing that? >> I'm wearing too many hats. My plates that are spinning are dropping left and right and trying to figure out how to put these fires out. >> Word. So, uh, what's taking the majority of your time right now? >> Um, servicing my clients and then trying to manage my people and grow the business.

12:41>> When you're servicing your clients post, is it just people who are in process of sale or post sale you're continuing to? >> Correct. My clients are someone who they've hired me as exclusive agent to represent their sale on the property and I have to get them from that point to finding a buyer, going through the contract, close, diligence, and then getting them off into the next phase of their life. >> And so then what's your team doing? >> We have uh six agents. They're doing the exact same thing that I am. We've got my COO, she's here with me. And then we've got three VAS in the Philippines who are doing one's my executive assistant, one's my marketing person, and one is doing buyer engagement, basically screening uh unqualified buyer leads. If you had um an in-person assistant rather than a VA, do you think that that person basically you have your six agents. Is there anyone that you could take under your wing and say you're just going to be junior me for like a year or two and then that gives you way more leverage on your time

13:34>> potentially. And I've got one that's in an informal capacity like that right now. We've never really put a structure around it, but potentially. Yeah. >> What are margins? >> Um last year the net was just over 500. >> Okay. So you have enough cash if you needed to to buy some time back so that you can because fundamentally you doing the most valuable thing you can do is closing deals right and so I would just say like here's my stack of things that I can do promoting and closing top two anything that are not that how can I get somebody to handle all of this stuff and I think you need to have a little bit of a handoff of like hey you know uh I'm going to be taking care of you or this is Johnny and he's going to be handling coordination between now and then But believe me, where you like you don't want me in the details cuz I'll [ __ ] be terrible at it. But you will want me in the close because that's where I will make you the most money. And if I was dealing cuz then you have to frame it of like imagine if we're in the middle of the close and I'm getting texts from somebody else that I'm working with.

14:29That wouldn't be a good use of your time or mine. And so I let Johnny here handle this. He's Johnny on the spot. And and then you just close. But fundamentally, you're just dealing with an issue that every entrepreneur uh has to go through, which is that you have to buy your time back. And like this is the game and it literally never ends. And so I think it's more about being very clear about what things that are on your plate and knowing that when you buy your time back, you have to go buy it back. Meaning, if you get the time back, you now got to make more money than it cost you to buy it. And then that process really never ends. But what stops you from doing that right now?

15:01>> I mean, we're we're trying to do that. I I'm new to management and I've made a lot of management mistakes in the last 12 months. I'm making some right now. Yeah. >> So, it's just figuring out what I'm doing right, what I'm doing wrong, and I have to make I basically have to make three decisions to figure out which two are wrong, stick with the one that's right, and then make three more and >> the entrepreneurial journey. Um, >> I will say that the longer I've been in business, the more I index on intelligence as a general principle of who I hire.

15:27>> I just want really smart people. And if you have really smart people who are generalists, they can usually figure out things pretty quickly. Um, a lot of undue process gets created when you have people who are just lower intelligence. And there's nothing wrong with that. We love those people. Probably just not the best case for your business. And so, if you look at your team, the people who are coming in, you want to make sure they actually raise the bar. And there's probably some elements of the day-to-day right now that are draining your time. And there's probably one person on your team that's draining your time that you wish they just disappeared and your life would be better. You should get rid of them. um even if they perform it's still not worth it because the thing is is like you were the most valuable person in the business. You're the highest revenue never revenue generator. So imagine for example you had your number one producer by a long shot who has this other person on the team who makes significantly less but more than some of the other ones who's bothering them all the time and you know if your highest generator like just didn't have to worry about that they would be able to produce two or three more times. What would you do?

16:24get rid of all the problem children and that person >> and you would be ruthless about it but it's because you'll do it for somebody else you won't do it for you >> and so you just have to pretend like not pretend like you are that person and so you need to go take care of you so that you can take care of the whole company and so it's not being like a spoiled brat it's actually you putting the businesses first so that it can feed everyone >> that makes sense appreciate it >> you're not going to graduate through it >> I have a question about internal culture if you don't mind >> okay >> so um

16:48>> Leila is coming after me and she will give a better answer I mean I'll do my best. [laughter] >> Um well, I suppose it's a little bit about uh strategy, pricing, that kind of thing as well. >> Okay, just toss that in. All right. >> Yeah. So, one of our main takeaways um from this is that we need to have a couple of different products. >> Thank you. You just reminded me of the last one. >> It's mispriced or miscompensated.

17:18So it's like you have team members that you're paying too much or you're not charging your customers enough >> and you can't get out of it. Okay. >> So we but we work in an industry that is like so our team members are very motivated by kind of philanthropic helping helping owners with their animals. And one thing that we've really noticed is anytime we put the prices up we get team members that start coming to us looking for more money. they um start to feel very uncomfortable with the job they're doing for their clients because all of a sudden they're very aware of this extra pricing basically. So how do you deal with team members who maybe I suppose don't really understand the vision of of what you're trying to do and you're trying to you know grow the business and maybe they don't have as much commercial awareness um or maybe they feel demotivated by kind of commercial activity.

18:13I confront it. Like I want to have the really awkward conversation in front of me. And so like you're probably thinking, man, we just doubled our prices. So Alex is rich now. >> So let's walk through us actually achieving the vision that I promised you, which is do you think if we have no money, we'll be able to reach more people? Which one do you think we'll be able to help more people with? Money or no money? >> Money. Okay. Which one do you think we'll be able to reinvest in resources and talent so we can get better, smarter? Like you got you want to get trained, right?

18:42>> Yeah. >> Well, I want to pay for your training, >> but if I don't have money, I can't pay for it. But that's important to you, right? >> Yeah. >> Okay. And you just go down the line of all the things that you promised about this vision and about their career path. You say, "Tell me any of these that's better with no money." >> And a lot of this comes especially in the in the in the social sector around this demonization of money. And you have to make money neutral, which is money can build build hospitals or it can build bombs. Money is just power.

19:12>> It's just unused energy that you can go and build things with. And so I hope that you just trust that we are committed to this vision and that when we do have more money, we will allocate in the way that we can make the impact that we said we would. >> Amazing. That's perfect. Thanks so much. >> I saw guaranteed deadlines uh and showstopping trade show booths. uh >> guaranteed deadline. What was it? >> Like we have guaranteed deadlines on our because it's all event event based, right? So

19:40>> people areo hosting events like this. I I have a guaranteed deadline on when our properties have to be there. >> So >> you'll have a booth that you'll build for them. >> Yes. Yes. >> That'll be done by the time. >> Exactly. Okay. >> Including the shipping and all that setup, whatnot. Um so we do a a toz on that. Um our revenue is about 10 million right now. I'd like to be at 20 to 25 million in 18 to 24 months. The biggest problem we're having is keyman and manpower. And I mean it's kind of kind of same problem, right? Um I just need to hire more people to take over the responsibilities that we have now.

20:18>> So what stops you? >> The biggest thing is it's it's manpower in general, right? >> Okay. Do you have the money to afford the manpower? >> Yes. >> Okay. What are the margins again? about 30%. >> Okay. So, you're doing three-ish. >> Three-ish. Yeah. >> Okay. That's not bad. Okay. So, you have three million. And what roles are you missing that you are struggling to fill >> a lot a lot of um trade industries like we need welders, carpenters, stuff like that. And obviously, it's a big commodity right now. So everyone's paying top dollar from

20:48>> Mhm. >> and just to get incentive to come work for us, especially in the trade show industry. It's uh >> how much do you uh how much oops how much do you make per per tradesman roughly for the role that you're struggling to fill per year gross profit? >> Um it's hard to say. one part, one part department we just opened and that it's the welding part, fabrication of it, metal part. Um, we've brought in about

21:18>> probably $750,000. >> That's what one guy can do in terms of like what you can sell for his work. >> Yeah. And that that guy was me. I'm I'm the one laser welding and all that, >> right? [laughter] Okay. So 750 fine. Let's just say that they're not as fast as you as good as you and they can bring in 500. Does that sound fair? >> Yeah. >> Okay, great. So five. But what about gross profit though? What would So that's revenue and then is it just like what other costs are there besides labor?

21:43>> Very minimal. I mean the material I mean obviously the the materials to build it. Um >> is that like a hu like what percentage is that? >> 5%. >> Probably about 30% total is is the the material cost of that. >> Okay. So they bring in 500k. So there's 350k that would be left over. Does that sound right? And then you then you have to pay labor out of this. >> Yeah. >> Right. Okay. Cool. But this would be like whatever After labor, the rest would be bottom line.

22:09>> Yeah. Little bit of building rent and stuff, but Yeah. >> Yeah. Just for just for incremental. Okay. So, um and that's per year. Okay. Great. So, what how much how much are you how much does a welder normally get paid? Right now, >> it can go all the way up to $85 an hour depending on their There's certificates and we're not really >> So, like 180ish. It can go up to that. Is that what you're offering? >> Uh we're offering a non-certified welder. So those are

22:36>> So how much do those guys get paid? >> 45 to 65. >> Okay. Well, that's a big range, but um >> yeah. >> Okay. Uh so let's just say 50 bucks an hour for simple math. >> Perfect. >> All right. So 100 grand a year is what you're offering, right? >> Um what are you paying right now in order to like in ads to get those people? >> We we have I I don't know the exact number of ads we're paying for, but we have uh I have my project managers on LinkedIn paying for the ads to bring people in. Okay. So, let's assume, let's just get really aggressive here and say that you pay 180,000 for the like if you paid 180, do you think you'd be able to fill the slot?

23:13>> Yeah. >> Okay, great. Um, let's do 150 so I don't have to do this math. There we go. [snorts] So, $200,000 in gross profit is what's on the line, right? And if you paid this, you know, you'd be able to fill the role. So, why don't we do that? >> Real real question. Um, it's if I could find someone qualified, I would pay pay for that. But it's the part the hardest part is bringing someone in training training how to our processes and then maybe they're

23:42>> if you advertised this rate, you'd probably get more qualified guys. >> Okay. Okay. >> So, if you did that and you got a qualified guy, you'd happily pay him. >> True. Yeah. Problem solved. [laughter] And don't feel weird about it. I had a um a dentist here like two months ago. He was doing 20 million topline, 4.6 million um in take-home. And he was like, I have it's I he has a boutique dentistry, blah blah blah blah blah.

24:13Right. Um I only have unicorns, etc., etc. Um and so I said, "How much do you make in gross profit after you pay a dentist uh per year?" And he said, "$700,000 in gross profit is what he makes per dentist per year in his in his practice." And I was like, "Okay." Uh, and his issue is that was after him paying them, right? And so his problem was that he I was like, "Okay, well, what are you spending in advertising to go acquire these these dudes?" And he was like, "I'm spending $2,500 a month in advertising to get these dentists, and it's just not working." And wild.

24:46And so I said, "Why don't we just get a head hunter and pay him a hundred grand to go find the person? And would you be I think I said 150 because I was being aggressive. Um, 150 grand per person. Uh, and so this year your profit's going to go from 4.6 to four. And then next year you'll add 2.8 million in profit to the business. And if I give you a trade that imagine I have a stock a stock investment where I said, "Hey, you give me 600 grand a day and then for the rest of your life you're going to make 2.8 million in profit per year on this investment." Would you be like, "Fuck yeah, I would do that." Right? And for whatever reason, we don't do that with our businesses. And so this is why I still believe that to this day the best way to beat the market is to find a player talent and pay them well. You'll also retain them longer, all that stuff.

25:30And I'll just say this is like just a general thing for anybody who deals with the trades, which is about a quarter of you guys. Right now there's going to be I think there's going to be like a compression and then a huge drop off the floor. But for the next few years, you have to accept that the cost of acquiring and and paying good tradesmen is going to go up. It's a supply constrained market. And so in a supply constrained market, the supply has the has the has the uh the upper hand. And so that means that you're going to have to pay them more. Now the good news is that the vast and this is you know not a slight but there's a lot of people who are in the trades world who are not very good at business. Um and so they will not think this way. And so fundamentally we just have to do the math of is it is it worth the money? And so what I was what I was outlining here, I was about to do the other side of this is LTGP, lifetime gross profit per employee to CAT, which is cost of acquiring talent. So just like we did LTGP to CAC on the customer side, it's the exact same equation on the other side, which is how much am I willing to pay to acquire talent and how much do I make in talent per year? What's the lifetime value of this talent? And so when you look at, okay, if we were to keep spelling it out, it' be like the average person stays with you for six years. Like great. So all in, I'm going to pay a onetime recruiter 20 grand to go get this guy and I'm going to pay $150,000 per year over the next six years. So I'm going to pay 900k plus the 100. I pay a million bucks, but I'm going to get $200,000 per year for the six years and I make it back, right? Are you going to make

26:54>> uh problem for us is we can't hire and retain and train really talented people. Um, we we find that we can keep people for about a year and then they either >> want to go do something else or they want to go into a different trade that they view as like a higher a higher opportunity like HVAC, plumbing, electrical, >> um, >> stuff like that. So, we're trying to figure out a way to make it so that people want to stick around and see this as a career that it can be.

27:21>> Yeah. I'm gonna I'm gonna we're I'm going to guess right. What's your close rate right now when you meet with people? Our close rate when we meet with clients or with uh leads or >> well leads to you know to sell them. >> Yeah. Selling uh we're about 30%. >> 30%. Interesting. Okay. So this is me calling the shot. This is my guess here. Phil is that I'm going to bet we have to fix the sales motion. Number one. Once we fix the sales motion we can increase prices. Step two. Once we can increase the prices which will dramatically increase profit. we can then pay the guys more so they stick.

28:01>> Yeah, that would be my and currently they're >> Go ahead. >> Yeah, currently they're paid 25% of labor revenue. Um, so yeah, definitely increasing prices definitely is a way to do that. >> Um, and that's that's the thing. We're just our close ratio I feel like isn't high enough to warrant the price increase I know we need. >> Yeah. >> Right. Okay. So, it's like I I don't want it to go to 5% close ratio in order to get >> I mean, dude, for you to get to 5%, you would have to like 10x the prices. It would it wouldn't even be close.

28:30>> Yeah. >> Um, so we have to fix the sales motion. So, that's my So, like this is why like you got to pull the thread, right? So, it's like it starts with like my guys aren't staying long enough, but the reality is that like we're not charging enough, but we can't charge more because our sales process is is screwed. So, let's fix the sales process. All right. So, walk me through the sales process. sales process we have currently. Um they basically call our office. We we do a lot of inbound. We don't don't do as much advertising as we need to. Um so we we're pretty pretty well uh we show up pretty well on Google.

29:03>> Uh but we're only spending like five six00 bucks a month on actual Google outbound. Um >> well you mean Google ads. >> So >> I mean Google ads like Google local service. >> Got it. And so you're and 500 bucks a month is what you're you're you're putting into PBC. Okay. >> Yep. >> All right. Um, how many leads are coming through? >> Call our office. >> Any idea? >> Leads. Leads a week. Leads a week are about two to three. >> Okay. From that from that 500 that you spent, right?

29:29>> Yep. >> Okay. So, I'm going to say you're getting 12 12 a month. So, let's just say 10 for simple math. So, it cost you 50 bucks a lead right now. Right now, roughly. >> All right. Yep. And you convert what percentage of leads? >> Uh, convert about 30%. >> Okay, converting 30% of leads. You can get that to 50 on inbound. Um, just FYI, but you're at 30%. That's fine for for the purposes of our conversation. Okay.

29:59Um, so it costs you $150, right? >> Yes. >> To get a customer who's going to pay you $4,500 a year. Yep. >> Not bad. Not a bad day. So, let me ask you this. What percentage of your costs are variable versus fixed? >> Uh, it's I don't have an exact figure. >> Let me ask you this. What are gross margins?

30:27>> I would gross margins are about 50%. >> Okay. So, that >> cost of goods are about 25 >> and that includes labor. That includes labor, right? >> Yeah. >> Okay. Correct. So, you're gonna make So, it cost you $150 one time to make $2,250 per year in gross profit. >> Yep. >> Banger. Banger. Amazing. Okay. >> This is

30:54>> killer, dude. >> You put more into advertising. >> Hell yeah, [laughter] >> bro. Hey, I've got this amazing investment opportunity. If you give me $150, I'll give you 2250 back just at the end of the year. All right. All right. I'll give you I'll give you 2250 back. How much money you giving me? [snorts] >> I'm as many as many pennies as I can throw at you. >> Okay. Well, how much cash you have on hand?

31:18>> Uh, not a lot. Not a lot on hand. Um, we basically are That's the thing. Our >> our We have two owners in the business. So, we're taking out a good amount of our basically >> cost herd. So, what you need >> is a money model. So, what how much your money are you making the first 30 days on $150 customer? >> Uh, generally, so we we just transitioned to doing a different different type of initial visit model.

31:44Uh, that currently we're getting about 1,500 per client in the first 30 days. Uh, but it really depends. That's that's our average, >> bro. So, you don't even need the money >> because you're getting 10 to one up front. >> I I know. But then so our on that 1500 there's a good amount of that which is cost of goods sold. We're basically finding issues for repairing.

32:09>> Let's say you make 500 on on on 1500. Let's say you run 30% on the first one, right? Does that sound Does that sound reasonable? >> Y >> dude, you're still making 500. >> Mhm. >> On your 150. >> Yeah. >> So why not spend more >> the I don't know. I'm just scared, I guess. [laughter] with the put my money where my mouth is. That's it.

32:33>> Yeah. I mean, I'll say this. I don't know if you were on for the beginning of this, but like this is a super classic issue. This actually happened a ton in gyms. So, gyms have fixed costs like rent and equipment leases and things like that, right? And so, the guys would have a vehicle like this that they're getting 10 to one on, something really strong. >> But what they would do is they would only spend enough money to cover all their fixed costs, but never get into the black. They literally would just like spend enough to like they they play business on defense

33:03>> rather than offense. >> Yes. Yep. >> Right. Like you're playing right now to not be poor rather than to be rich. >> Yep. That sounds familiar. >> Yeah. And you're willing to make the money for your team. You're willing to make the money for the landlord. You're willing to make the money for the bank, but you're not willing to make the money for you. >> Yeah. >> Real, right? >> Yep. >> Okay. So, >> as much as I would like I'd love to like, you know, dive into a hundred other things, like this is I'll bet you right now this is the core issue is like I want you to go from $500 a month to $5,000 a month in spend

33:34>> because if you went from two to three leads a week to two three leads a day, >> would that materially change the business from a casual perspective? >> Yeah, definitely. But that that's the thing. It's our we could we could do that, but then we run into fulfillment issues of it takes us six weeks to train a guy. So, it's like chicken or the egg. Six weeks is not that long. Big picture, FYI. Right. And I'll bet you could do it in three if you really had to, >> right? >> Yeah. >> Okay. >> Yeah. >> So,

34:00>> so yeah, that's the thing. >> When you're in equilibrium, this is a rule of thumb for me and for everybody who's listening. >> If you're in equilibrium where you're like, I can maybe take a little bit more demand, but then I'm going to be supply constrained. Get the demand, get the cash, then you'll get the resources to take the next move. And if you have to pay some guys one and a half or one and a quarter, you know, overtime to to to fill the slot one, you're going to pay them more anyways, and that's good. Fine.

34:25>> And I'll bet you those guys would work more for more money. >> Yeah. >> So, you have flex. You have you have more capacity. You have capacity that's not stretched. >> So, if you could stretch it, most people like you'd be amazed at what people can do if you're like incentivized. >> Yeah. Yes. It's Yeah, definitely. We could. I mean, our team, our team's pretty pretty strapped right now. >> And are you are you closing? So, walk me through the sales process real quick.

34:50Lead comes in, you immediately call them within 60 seconds or what? >> No. Um, it's basically we have um online pricing. All of our prices are online. So, they hit our website, they basically sign up, >> and then once they sign up on the website, >> y >> we're contacting them automatically within five minutes. Um, and signing up. to uh we basically email um from the signup. Um we don't do any any calls right now. Not not nothing automated.

35:23>> So you could probably double you could double your conversion if you just called the leads immediately. >> Yeah. >> Yeah. >> So let's say let's say let me let me ask you a question. If I paid you another $1.2 $2 million to do one thing, which is to just call your leads in 60 seconds. I give you one $100,000 a month. Would you do it? >> I I suppose I would. Yeah.

35:49>> Well, that's what's sitting on the table right now because you're not contacting your leads fast enough. >> Yes. >> You have a double. You can get to 60% when it's PPC inbound. They already know the price. You could you could close 60%. And that's without changing anything about the pricing, the offer, anything just from contacting them fast. spend four. Yep. >> Okay. So, we have two changes that are going to be the biggest material changes. Number one is you're going to spend way more on ads. Number two is you're actually going to call your leads really fast. When you do those two things, you have enough gross profit in the first 30 days to cash flow this acquisition anyways. You're then going to be willing to pay some of the guys you have time and change to do more jobs. Some of those guys are hungry, want to make more money. That's why they're leaving, right? Give them the opportunity to make more money.

36:28>> Y >> and then part of that is you can also pay them a little bit more money to to train the guys faster because they're working longer hours. They'll train them faster. >> Yeah. So, incentivize the trainer to to get them get them on the road faster. >> Yeah. >> Yeah. So, we can >> I mean, I would say, hey, if you you can do it in six weeks, if you can do it in two, I'll give you a $500 bonus. >> Yeah. >> Right. >> Yeah, that's a great idea. >> There we go. >> Rock and roll.

36:53>> Yeah. Great. >> And I put the incentive is that if you have to go back and fix one of the spots that the new trainee went to, that that guy's got to do it for free if he takes the commission. Yeah. Yep. Yeah. We do we do call backs on then they're on >> but I would do it on the trainee. If I'm gonna if you were to take from six to two and you're going to sign off that this guy's good enough, I'll give you the bonus, but you got to basically certify that guy's work for the next month, >> right? Okay. So, the trainee makes a mistake. Yeah. If they're if they're rushing through it, the trainer goes and fixes.

37:22>> Yeah. Big Papa's got to come in. Mhm. >> I see what you're saying. Yeah. Yeah. >> Rock and roll. >> Rock and roll, man. Phil, thank you so much. >> Appreciate you, dude. Yeah. You bet. >> Yeah. Rock and roll. All right. >> We provide social media marketing and financial influencer management for publicly traded ETFs and stocks. This year we're on pace for 2.7 million, and we're going to keep about 700,000 of that. >> Okay. >> I see a multiffold problem, but I know you wanted to sum down to one. the biggest problem that I came in with I think Frank has largely helped me with which is I have incredible uh top-end talent really really amazing people in that operations management but in the secondary level it's a huge drop off

38:02>> and I think it's largely because I've never put out a traditional job application website posting anything everyone's pretty much reached out to me and come on in so we don't have that big application pool so I was curious just as we dive into that >> so you create social like so you create like an Instagram for >> I can give you a contest So right now this ETF industry is very complex because it's compliance focused, right? And they want to target retail because they see that for the first time ever, as of last month, there's more ETFs in the world than stocks. And there's more retail investors than ever that own these ETFs. So the industry I'm looking at and I think it's going to explode over the next three years.

38:35>> And speaking of which, uh, the revenue I like to be at is 20 million. >> Okay. >> Uh, per year. And I do think it's very reasonable within this industry, but it has to get an S player, which is part of what I'll tell. >> So what do they pay you? >> So my average client right now pays $20,000 a month. and I work them through uh I work them through the channels that their compliance department is willing to work with which is why it is so peace meal because different compliance departments are willing to do different things some of them will touch Instagram some won't some of them will touch Twitter some won't etc

39:03>> so uh the first part was on >> you post as them and just say like you know the weather is warm but the deals are hot you know like [snorts] >> uh pretty much I mean >> by Charles Schwabf [laughter] >> more so what it is is nobody knows that these tools exist they don't know how to use them they don't know what they're for and also I think they just want to build trust with someone like ourselves, right? We have a couple million of our own followers and then our influencers have tens of millions of followers and so they want to hear from somebody that they >> So you have an influencer network. >> Yes. About 100 influencers.

39:28>> Pumps ETFs. >> It's a strong word for it, but yes, we educate the public about the >> Of course, we educate the public. >> Yes. Education, entertainment, fine line, triple C, compliance, customers, you're good. >> Clients uh sorry >> content. Um so yes, I think for me right now I see a huge opportunity. I see a lot of people that want to come in, but I need incredibly high talent because they have to be adop from the top level to the lower level.

39:59And I'm curious how you work on those mid-level managers or people that really have to get the execution in the hiring side. And then I have the one other side of the company which is >> this is such a compliance laden area and it's such a legacy industry that I'm trying to get an S tier client. I need one Sierra client. I need a Vanguard, a black rock, somebody to come. But I am 27 years old. Yeah. Right. They are not looking to work with people like me. They're not used to it. They don't understand targeting retail. And I am running a giant education campaign to people that are 30 years older than me.

40:25>> Uhhuh. >> And I'm trying to figure out how to blast it through their brains that this is going to be their best ROI. >> Yeah. I The age thing I think you think about more than anyone else does. >> So I would just like erase it from your brain. It doesn't matter at all. Like it just doesn't matter. Um, like I was in the gym industry and the average person that was like buying from me was a gym owner like age 40 and I was like 26. So like I just don't I just don't think that's a thing. I think if you demonstrate competence, which it seems like you are the only person who believes that stuff is you. Um, so that's thing one. Um, I do think there's probably an element of you might you might be mispriced. You also might be underpriced. Um, like you have these $60 billion companies, $20,000 a month is like a not even a rounding error, right?

41:10So, it's the last two months I've basically tripled prices or at least doubled. I was selling at an 8 and a halfk a month package. I then went to 15k, but then people just kept hitting me up. So, I said, "Okay, it's 20. It's 25." And I feel like every meeting I go into, I just raise prices by 5K. >> Yeah. Yeah. I think we do that. You could also just skip to 100 if you want. But, um, >> if you're going to get there eventually, you might as well get there now. Um, well, it's like they might not take you seriously, you know? It's like how do I take it seriously? It just be like it's a million bucks a year.

41:38So the other piece within that and that's the question I have for you is metrics. It's a very complex industry when it comes to metrics because there's no perfect way to track that when we do marketing. Those are the dollars that are flowing into the ETF providing aumum. It could come from adviserss. It could come from other people talking about it. We can provide social media metrics. How many people tuned in? How many people listened? How many people clicked the link? But we cannot say the sale was done here. I'm curious how you think about that. >> I would just think about it in terms of revenue per earned media. Like I would be like for you to reach retail investor CPMs would be somewhere in the neighborhood of call it 30 bucks or 40 bucks. We reached three million you know people and if you were to pay for that just like I if you sold yourself more as cheaper impressions that are to the correct audience then you become more of a media company and less of a services business. And I think that would be the right way to price because they'll just see you as a channel.

42:31How did you how do you break through though to the S tier right now? The best advice that I've gotten was actually from somebody here who said basically poach somebody from one of these firms who has all the connections and go in >> that feels like that's going to be a you know a 300 $400,000 a year hire. Yeah. >> Um that's very different than where we work with right now. So I'm just curious about that. >> You might not charge enough so that you can make more money so that you can attract the talent that can come in and then bring those people with you.

43:00Yeah, I do think you're underpriced for who your avatar is. I think I would position it as you are a channel. That is enough because they're trying to get they want more exposure. And so it's like I will give you that exposure. And instead of saying like the reason I'm I'm saying this is that you're not I don't want to position like I'm doing services and getting paid $100,000 a month. I'm saying instead of paying Meta $100,000 a month for ads, you're going to pay me $100,000 a month and you're going to get trusted people who are going to talk about your product, which is way more valuable than just you saying you're great. It's like show some stats of like somebody saying you're great is way more val is five times more valuable than you saying you're great.

43:34Great. So every dollar that you're giving me you're g that hundred$1 to $100,000 comparison as long as this these audiences are correct which you'd say look they are all financial influencers whatever these are the correct retail audiences and so this is way higher uh value than this. So I want to compare myself to Meta not to a marketing agency or services. That's how I'd position this because you're getting them all this free exposure. Free, right? They're paying for it and they're just paying for it in bundles. And so like you're a media company, not necessarily a services business. And I would just reposition that way.

44:09>> It's a good way to think about it. Right now the deck's focused on showing, hey, we started campaign here, we ended it here, here was the UM movement. >> No, that's a marketing agency. I would say like, you want to reach this many people, we own these audiences, we will give you access to these audiences for this amount of money. >> Got it. That's how I would position it. And yeah, you can get the um you can go get talent from those top places like Fortune 100 and things like that. Um it is one of the better acquisition strategies. A good friend of mine owns a big marketing agency and that's how he does it.

44:36>> What about the mid-level talents? Because they're not going to come from >> that's just straight up ads. You just need to learn how to run ads. >> Fair. >> Like good oldfashioned in like if you guys are looking for mid-tier and and bottom tier. um it's going to be ads for both of those basically manager and and one level down obviously referrals would be ideal but if you don't have that then it's going to be those two um the top end of manager into director and you know VPs etc it's almost all through outreach and so that's how that's kind of how it splits like you could technically do it from an ad um ads for highle people can work if they're done in industry groups industry job postings. So like our general counsel exceptional, we posted on two general counsel specific uh posting sites and then uh you know Liz came in and so you can get the higher level talent, but it's not going to be on the mass mass because they're not looking there, right? So it's going to be head hunters or super specific for the high level which you don't need. Um but the mid-level and below you can just do you can just just run ads and you'll be fine. And if they're not, you're not getting bites, it's because it's the same as a marketing campaign. The offer isn't good, the funnel sucks, the headline isn't good, the copy needs to be improved. All of that stuff still applies. It's just the same marketing on the other side.

45:57>> Perfect. Thanks. >> I've recently caught one of our main employees stealing. What would you do in that scenario? >> I would not want a snake in my business, but there's $100 $1,000 they stole. >> That's wild. >> Question is, number one, why can't you do more? This is why we do this. This is why we do this. The good [ __ ] right?

46:23Hey, so um 8.7 million um trailing 12 months, 1.2 million profit. Uh we my brothers and I own a designer handbag resale company. >> Oo, interesting. Okay. >> And a pawn shop specializing in gold, silver, jewelry, and luxury watch. It's it's a tricky one to grow right now because an added caveat to this is we're in the we're in the process of selling and we're in the later process. So we've

46:49>> ly signed. >> Yes, sir. APA signed. LOI are both signed >> waiting for the lenders to get SBA approval. >> Okay. >> And then I have a hyper specific question. >> Okay. >> Um I recently caught one of our main employees kind of skimming off the top stealing. What would you do in that scenario? >> It's uh is it the guy or is it like what guy is? I mean, it's not really going to change my answer, but I'm just curious.

47:19>> It's It's someone who is replaceable, but it would be a huge hit. >> What is it? What is a hit? >> Like, we would have to >> Well, the the financials are worse because they're stealing. Correct. not sign. So it's it's it's like it's small. It's not >> Let me give you the TLDDR on this. Ruin the company. >> Let me give you the TLDDR on this. >> When you're 85 looking back, you're going to want to have been honest.

47:47Period. >> Also, you expose yourself to liability because as soon as you as soon as you know or it's demonstrated anyway that you knew about something, all of the reps and warranties that you're doing in the sale are going to be flipped. And so if you basically are knowingly giving somebody an organization that has some liability that you have not um came forth with um you take on that liability and they could basically take off basically take back not take back the money but you sue you it suck right

48:15>> the good news is this is I think that all of this is going to be how you frame it when you're going like when you're telling the the the buyer right um I would just say hey like you know the business you're getting into like we deal with some nefarious characters that being said it's a very profit profitable business and it's a good business. I've got good news and bad news. The good news is we're slightly more profitable than we've let you know and we're willing to honor the existing price. The bad news is I have to replace one of the people because I found out he was skimming. But fundamentally, you have to be upfront, state the facts and tell the truth. I don't think it's going to blow the sale up.

48:46>> Yeah. No, I agree. I agree. And truth be told, I already did talk to this person. I'm more interested in what you would do because I spoke to them, met a middle ground, didn't ask for any money back. We changed the >> Oh, I mean, I would kick them out >> moving forward, >> dude. They they they stole >> before the sale. >> Yeah, they stole, man. >> Oh, that's interesting.

49:11>> They stole >> Okay. Would you say that for if it was like $100 versus 10,000? >> Have you seen Ozark's the show? No. >> Okay, I'll give you the scene. I'll give you the scene. >> So, drug lord finds out the main character and his partner are skimming in some way, right? So, drug lord shows up. The guy the main character is an accountant. His partner is also an accountant. They have a legit accounting firm. They also do this drug cartel stuff on the side. Um, the main character doesn't know what's going on because he's not the one skimming.

49:48The drug lord tells a story about when he was growing up they ran a grocery store and uh he says his father called Lupita. Everybody loved Lupita. Lupita was amazing, right? And he caught her pocketing like a $5 bill on her way out the door. And so the drug lord then goes to uh you know the secretary of the of the accountant who's the main character and says, "What would you do?" And you know, the secretary says, "Yo, it's just $5. Not a huge deal." Um, and so then he kills her. And then he goes to the next one and says, "What would you do?" And he's like, "Well, I mean, hey, you know, there's we got to understand the situation, blah blah blah blah blah."

50:33And so finally he goes to Marty, who's the main character, and he says, "What would you do, Marty?" And he says, "Why'd get rid of her?" He says, "Why?" He said, "Because it's not the first time she stole, it's the first time you caught her. Gotcha. >> I would not want a snake in my business, whether it's $100, $1,000, they stole. >> Mhm. >> To be fair, that's how I do business. >> Yeah.

50:59>> It's just like, what kind of signal does that I mean, it's like what signal do I send to my team? What signal would I send to myself? It's just like there's no reason. Well, I can tell you I can tell you what happened is I got tremendous push back on a different person on the gold side >> because this was [clears throat] an inherited business, >> which is one of the reasons for selling. >> Yeah. >> And that was kind of the way things were.

51:26>> Yeah. >> That was the status quo >> that people skimmed >> and I can't I Yeah. It was like I I do this I make your company this much money. This is the way we do. [laughter] >> That's >> I know. I'm looking at you. I I did the same thing. I did the same ex I almost I [laughter] couldn't believe it. >> But we're selling the company and I don't know how much to push back to how much to and to be lenient on it. And so that's the scenario that

51:57>> I mean my I stand by 100% what I said originally which is like I think the game is long and reputation is something the only thing that you defend with your life and like when you do a deal in the future cuz hopefully you will they will call your last acquirer and say how was it? So I think state the facts tell the truth be upfront about it. I don't think it's going to blow the deal up. I think that you get it bas basically putting things on the right foot the right way like you will feel better about it.

52:27There is a short like this is I mean these are real these are real you know I mean there's many people who wouldn't do this. This is a judgment call. This is an ethics call not a business call but I will tell you 100% that is what we would do and it would pain me to be clear. I'm not saying I would be happy about it. I'd be pissed. I'd be like why did you have to do this? Right? Sometimes I'd be like why did I have to catch you? Why couldn't you have been better at stealing? Right? [laughter] But like when you know, you know, right?

52:53The best day to catch someone stealing was 20 years ago. The second best day is today. >> Copy. >> I do think that the people who you do business with will respect you for bringing it to them. And I would, again, when I have these hard conversations, I'm going to go longer on this because I think it's going to affect more than one person here. Um, is when I say state the facts and tell the truth, it's stating the whole facts and the whole truth. And that's what actually gets you through these things. It's the halftruths and the half facts that get you that get you [ __ ] So basically, it's like saying, "Listen, I had a big like I'm talking I'm talking to the buyer, right? Listen, I had a big internal debate about whether to even bring this up." All right, Paul, as you guys have met, he's one of the four leaders that we have here. I caught him pocketing 200 bucks.

53:37All right. I in with integrity, I do not want to I don't want to res represent something that isn't. Now, the good news is, you know, it wasn't a huge amount of money. Um, the bad news is I did let him go because of it because it's not something that I stand for. And so, that being said, I don't think it's going to affect the operations. I think there's a potential the profit goes up. You know, when you remove cancer, that's usually a good thing. Um, but I want to be upfront with you guys and at least at the very like at the very least, you will know that this is I'm the type of person that you're doing business with and that what I said the numbers are is what the numbers are.

54:12If somebody did that to me, I'd be like, "Fuck, I love this guy. I I wish I could do more business with this guy. Yeah, I figured there's always going to be skeletons. I know that. I'm a buyer. >> Yeah. No, I I hear you. >> It's tricky. >> No, I mean it is. It is. But like that's why there are ethical dilemmas. And it's it's way more a question of what type of business person, what type of reputation you want to have uh than it is >> like again this is a values question more than a business question.

54:41>> Copy. Yeah. I already I I saw the Q&A before was all psych based and this was something that happened literally a week ago. Yeah. >> And then you already answered my question earlier in the chat. So >> Oh, good. [laughter] >> That's all for me. Yeah. >> All right. Rock and roll, man. Appreciate you. Sorry that this had to happen, but I'll say this. You will always be proud of how you acted in this in this moment. And the real real is that the business seems like it's solid. You were able obviously to get a buyer.

55:08If this actually does fall through, you'll be able to get another one. and you'll have time to improve the business, get a higher multiple. >> Hope so. Appreciate it. >> Appreciate you, man. Thanks for calling in. >> All right. Thanks. All right. Byebye. >> Yo, was that wild, right? This is why we do this. This is why we do this. Zach Fine 5739.

55:34Do you think starting a lean remodeling company, owner operator, is better than hiring subcontractors out or vice versa? I honestly just think it's trade-offs. I mean, like if you're looking at any kind of business and you're looking at the model, it's like, okay, owner operator versus the subcontractors. It's just like pick your poison of what problems you're going to have. So when you have subcontractors, you have less control.

56:07You're going to have more times or more problems with people being loyal. You're going to have more problems with, you know, people being flaky. You don't have much control over them. If you have owner operator, you're going to have more control. You're also going to have more responsibility. You have more that you have to have oversight, more compliance. Um, but you're going to have more loyalty, more stability. So I think you have to understand what your goal is with the business and what your goal is personally. Um you know for example if somebody were to say hey should I owner operated you know scale my gyms or should I you know do a franchise it's like okay well what's the goal and how fast do you need to get to the goal and I don't assume that everyone has the same goals. So, it's like maybe you want to build a enormous business that can be the best in its niche or maybe you want to build something that you can sell quickly. Then I think like you kind of have to know what goal you're optimizing for which is why I'm really bad at answering questions like this.

57:07>> I sell professional book publishing services to entrepreneurs and executives. We do a million dollars in revenue. I'd like to be at 3.2 million in revenue. >> And I just turned 32. Yeah, [laughter] >> it's my favorite number. >> This is the best This is the best explanation for a revenue goal I've ever had. That's great. >> What's stopping me is I'm at the stage where I need to make more money before thinking about other things. And the challenge I'm facing is a lot of things have worked for us up to this point, but I need to know what to I need clarity around what to do more of.

57:37>> So what's the input? So what's the thing that drives the business? >> The the biggest thing that drives the business right now is referrals. >> Okay. Second biggest thing is related to organic in the form of speaking, social media and guest coaching. And then we have a split between cold email outbound and Facebook ads. >> You're doing all the acquisition channels. >> All of them. And we didn't even mean to do all of them. We just kind of tried them all and they all seem to work enough. >> What's the greatest percentage of your customers? What channel they come from?

58:04>> The greatest percentage of the customers be after referrals would be organic. >> Okay. Um, and that's now you you put that both in organic content but also like speaking and things like that. >> Okay. How many speaking things are you doing on like a monthly basis? >> It's about one per year last year. >> Okay. So, I have an idea. [laughter] Um, so I would I would ask the question like how like I think I might have told this in a short but a really close friend of mine um he took over uh real which is a publicly traded um real estate brokerage. their primary way of getting more agents is him speaking at real estate events. And so in Q4 he did 66 speeches and um in 24 months he took from 200 million to 1.2 billion in revenue. And so he's doing you know 270 plus events per year uh in person. We were having dinner and he was like no one gets it. He was like no one understands how much more we do than them. And I'm I'm I'm only telling the story not to make hopefully it comes across the right way. Um because I think you just you like if if and I'm guessing if that event generated business for you.

59:11>> Yeah. I mean every time I speak we make a significant amount. >> Well yeah. So I'd be like let's like how do we go from you know one a year to one a week >> and start there. >> Just like target 50 next year. And so he rightly identified that he simply needed to do more. The next natural question I was going to be asking is like what are all the ways to get customers which he obviously answered. And so then it was like, okay, the next follow-up question I'm thinking is where do we have the most leverage? So either that's going to be which thing is taking you the least amount of time that makes you most amount of money. Uh or which one is the thing that cost you the least amount of money that makes you most amount of money. So it's either time leverage or it's money leverage or both. Now the fact that he said I always make a bunch of money after I speak. I was like okay that's a positive indicator. And as soon as he said I only do one speaking event a year, I was like I don't need to know anymore. Like if you're get if if that's a significant amount of revenue and it's one day once a year like I see that and think okay well we could 50x the business if we just did 50 of those and so then the the constraint then becomes okay how do I get booked on these stages but then that's you follow the same core for you do the outreach you post cont and then you reach out to people to to find out and sometimes you have to pay to be on the stages sometimes you get a booth and then they'll give you a speaking slot there's always ways to get on if you need

1:00:17>> I do auto hail repair very niche hail storm damage on cars similar to roofing Uh I do 5.5 million. I want to be at 15 million next year. >> Cool. >> Uh my biggest constraint is being under 10 million is people leadership. >> Um so my question is if I'm hiring basically a leadership you know seuite bench COO CMO that type of thing what have you seen as the most effective way to design compensation and decision- making structure for a team like this so that performance scales without eroding owner control or margins. So I think first off you might be mistitling

1:00:54>> because at 5-ish million you're probably not truly looking for seuite like actual seuite. Um you're probably looking more for like a a VP or director >> um in terms of like titling. >> Sure. >> Um that might help with the comp stuff. >> Um so thing one titles thing two um which role you want what what roles are missing right now? I would say uh I need a a better operations person

1:01:20>> like a right hand like you are the visionary and you need somebody like >> okay >> uh so you need an operator >> is that the main one that you need to hire right now >> I would say right now that's probably the biggest constraint because everything seems to come back to me in terms of operations >> yeah so I look at somebody anybody who's done any kind of auto um even yeah anyone who's done any kind of auto repair stuff might be helpful um in terms So looking for my search, you'll probably do well.

1:01:50You there's a there's obviously a bunch of different sources you can do for getting getting talent. My bet would be the two most fruitful would be LinkedIn outreach. >> Okay. >> Um and as silly as this may sound, even like simple like indeed ads. Um you'll probably get lower quality candidates from the indie ads, you could still get lucky. Um right at the level that you're hiring for is kind of the transition between when you run ads and when you start doing targeted outreach uh for the level of person that you're looking for.

1:02:15Um, and so I think you'd be targeted outreach. I would look for people who are in auto size as what you're currently doing, who are in basically in that role and you say, "Hey, you want to do that thing that you did there over here?" And that's probably like honestly that's what's going to be. And so from an outreach effort perspective, it's like you'll probably want to reach out to 500 or so. Um, and if you're in struggling with your local area, you can offer a relocation package. um it's kind of like a signing bonus to encourage them to come there. Um and that would probably help you solve um the personnel issue. U in terms of what I'd be looking for, you want someone who is a leader, not someone who because oftentimes you'll have people who are they they will trick they'll trick us entrepreneurs and they'll be like it's all about processes and systems and it's like those people hate talking to people and that's not what you need relief from right now. You need probably more people to handle [ __ ] Um, which means that when something bad happens, they'd go to them, not you. And so you need someone who you think your team would admire and look up to their character. Um, because if you find leaders, then they can lead almost anything. And the auto is just like a bonus. But a really good operator can just come into just about any business and run it because they're usually two levels above. Like they're not fixing cars, they're fixing people.

1:03:33And that's the same. >> Sure. >> Appreciate that. And in terms of compensation for something like that, at level where I'm trying to go, >> it's going to be it's kind of like a reverse sale. So the offer that you're g giving is going to be proportional to the leverage you or they have over the role. Right? If you have someone who has less experience, they're younger, they're going to have less less leverage, and so you wouldn't have to give up as much. If someone's done this scaling process two other times before that and taken someone from 5 to 50 times, then they'll probably want more and it might be justified, right? And so I have hard I have a hard time saying like this is the hard and fast way that you should, you know, should do this.

1:04:11It's going to depend on the talent, but I would say like run-of-the-mill generic, you know, VP ops or director of ops, uh, role, maybe a GM, general manager, depends, like I'd have to know a little bit more about what the day-to-day is going to look like. Um, but for someone like that, having a small tie to the overall profitability of the business is not a bad idea. Um, so a good way of doing that is like you run a a profit pool of 10 to 20% that you distribute amongst the leaders and then as the business grows that 10 or 20% that percentage stays the same but the pie increases and so they think like owners like you do which is like well we're going to bring this other guy in who's also going to be a leader and they have to be willing to bring cut some of their pie up the same way you do because they think it'll expand the overall pie. So it gets them thinking more like an owner in that perspective. But I like 10ish 15 sometimes in terms of uh profit share pools. And if you want to tie them in to the overall value of the business, the way that I have this conversation, this will go for just about everyone here, um is that you have uh cash flow, you've got sale, you've got risk, and [snorts] then you've got control, right? And so these are the four things that come with equity. And most people say they want equity, but you're like, "You want risk?" And they're like, "No, no, I don't want risk." And you're like, "Okay, do you want control?" Because I'm not giving it to you. And they're like, "No, I don't want that." You're like, "Okay, cool." Um, so that's off the table. That's off the table, but you do want cash flow and you do want the potential for an exit. And they say, "Yeah." You're like, "Okay, cool." So we'll have a profit share pull here to help you with this. And then what we'll do is we'll, you know, you'll have a call it a 4% um profits interest in the business.

1:05:49you'll get 1% uh per year. I'm making numbers up. 1% per year. Um it's phantom though, which means if they leave, it comes back and then in the time that a sale occurs, they would get to recognize whatever percentage they have. Or you could accelerate the whole 4% if you wanted to um in the event of a sale. But it's only if they're there during the sale and they'd been there for at least 12 months or 24 months or something like that. And that gives them the best of both worlds. The only downside of that setup for an employee is that they have to pay regular income taxes on the sale bonus because it'll be structured like an option. If they didn't want to do that, they would actually have to pay taxes on the equity that they got and not get anything else, which most people don't want to do.

1:06:29>> Gotcha. And that that you're you're specifically talking about like a COO. That would be like managing multiple shops or upper ops under them type of thing. >> No, you want I mean, if you're going to do this, this is somebody who's going to drive, >> right? For sure. And then for the ops managers themselves, would you still do that? >> You could do that on a you could do it on a on a shop basis. Yeah. >> Okay. So that would be separate from >> Do you have any separate LLC's? >> I don't.

1:06:54>> Okay. Well, something to consider. Um you can still as if you run the P&L separately, which you probably do as long as the P&Ls are separate, you could still calculate it that way, but and they're I'm assuming they're brick and mortar, right? Um I have found So who hears brick and mortar? Can I get your hands raised real quick? Okay, [snorts] perfect. Yeah. So, this will apply to more than just two. Um, if you were if you were doing private expansion, which you are, right? You own all the shops. I have yet to see someone do like an exceptional job expanding without having the equivalent of a an operator boots on the ground in each store that has no tie to the bottom line. So, I would strongly encourage because that and that doesn't mean that you go to all the people you have now and say here's profit share.

1:07:37Um, it's more like what type of people do I need to what caliber of person do I need to actually have this run so that I don't need to have all this handholding happening and that type of person might require profit share which then allows you to truly decentralize these and actually have them run kind of more independently which will allow you to expand. >> Gotcha. And then when you talk about like a 10% to an ops manager so they have that is that of like revenue increase or the total amount. >> So there's two ways that I like structuring these. We're going to go as deep as you guys want. So there's two ways I like structuring these. Number one is if you have a which I don't think will be the right one for you because in a so for the people who have fast growth businesses that are not geographically constrained I like doing this which is that you can have a much higher percentage say I'm going to give you 30% of the growth that we had from last year and that becomes the watermark for next year and then you got to grow it again but I'll give you a fat percentage of whatever you grow it in a in a geographically trained business like a local business I don't I don't do that because they can't it's tough for them to actually grow then they get really uh discouraged And so I'd rather have them have a profit share percentage profit share of the profit not revenue um that they're going to get and I reverse engineer what I think OTE on target earnings should be. So if I think that the caliber of person who I would need to hire for this role should make $150,000 a year because I get questions like should I do 5% or 10% like I don't know what the profit is and you know how how much effort like there's a lot of variables.

1:09:04>> 10% would be a lot. >> Okay. So what's the what is the profit for 10% for one store? >> Um I mean margins are 40%. >> Okay. >> Well no like what's the >> Yeah. So well I have I have four locations but one of them is where 80% of the revenue is coming from right now because it's storm related. >> Yeah. >> Sense. So um monthly we're talking monthly dividing. >> I won't tell. [laughter]

1:09:30>> I'm just thinking in terms of that one store. >> We'll do the other three. Whatever. >> Okay. Over three. So, >> so close to 200 a month >> in profit. >> Yeah. >> For one store. >> Yeah. >> Okay. You said you're doing 5.5 million, right? >> Yeah.

1:09:54>> Huh? It's 5.5 million. Four stores. Each one's doing $200,000 a month in profit. >> No, I was just I was picking one. I said cumulative >> Oh, cumulative 200. Yeah, that's okay. Got it. So, let's say divided by four, you've got $50,000 a month in profit that's coming in per store. Okay? So, $50,000 a month in profit um per store. If they had 10%, they would get $5,000 extra a month. They get 60 grand extra.

1:10:18>> If they're making 100 and they can make 160 great >> two to 400 would be average next year. The only reason why I have the four is because they run without me and it's just there. >> Fundamentally, we just reverse engineer OT. It could be 5%. I like the percentage doesn't matter. I just want to reverse engineer how much money do I think this person should make. If they're bad, they'll get fired. If they're mediocre, they make on target. And if they crush it, I want them to make this much money.

1:10:44>> Sure. >> So, I just put those lines in the sand. Take that money and reverse in percentages. And then that's what I present. >> Okay. [snorts] If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling road map that I've used to go from 0 to 1, 0 to 10, and 0 to 100 plus. And so you can click here and you can check it out. Again, absolutely free. And since you're a business owner, appreciate you. And uh enjoy.