Start High. You Can Always Lower It Later.

0:00All right, Alex. >> Hi Alex. It's pleasure to meet you. >> Hard to lose with a name like that. >> It's great name. Um, I own a real estate transaction coordination business. So, we provide admin support to realtors. They only pay us when they actually have a closing. >> Okay. >> So, we did a million in revenue last year and then we had 250,000 gross profit. And I want to get to

0:24>> Gross profit? >> in before taxes. So, >> You mean net profit? >> Net profit. Thank you. I'm still learning. >> No, you're good. I said it's like before that No, that's that's net. All right, cool. All right. >> Yeah. Um, so 250 before taxes and everything. Um, I'd like to get to 4 million because I'd like to be at 1 million. >> Cool. >> Yep. The problem is, um, every sale in the business comes back to me. So, me going out to events, meeting realtors, everything. And so, I'm not sure how to continue to scale when there's just one of me. I don't think it makes sense to bring on like an SDR or anyone to actually replace me in sales for a while.

1:00Um, 70% of the business is because of me going out building relationships. About 20% of my new business comes from organic social and 10% is miscellaneous other sources. How do I scale? >> We need more of something. >> Yeah. >> And you're at the point where Are you local? You're local, right? >> Yes. >> Yeah.

1:26So, local's the only exception I have to the single channel concept that I have. Um, because there's only so many people that you are relative not not super constrained, but you're relatively constrained by the size of the market that you're in, right? Um, what area do you live in? >> I'm in the Twin Cities, but we also do Wisconsin. I'm open to expanding as well. >> Yeah, well, is is the service remote? >> Yeah, 100%. >> Hmm.

1:52Hmm. Well, that's interesting. Are there laws that are different between the different states in terms of the filings and whatnot? >> There are. So, but they're all pretty much the same, but there are some small differences. >> The thing is is I don't know if you heard earlier that what what I was mentioning about the local weight loss stuff. Um running local ads is like really easy. >> Okay. >> Um I don't think you'd have that much trouble running local ads or even just like statewide ads. When I say local, right? It's like Minnesota real estate agents, we centralize, we do all the like literally just state the offer.

2:26Because I I've never actually heard of that many people who do what you do. And like I see real estate companies like all the [ __ ] time. Um and obviously Sherrod's my partner is like I'm tangentially touching that world all the time. Um I think like if you wanted to get from one to four, you would you'd have to be significantly more violent on your basically you'd have to do nothing but go get business. >> Yeah. >> Um but what you're what you're lacking is a point of leverage.

2:53And so getting more for what he put in. And so we'd probably want So, we'd probably want your calendar just be filled with appointments and then all you do is close. And then if you did that, you'd probably get to four. Um what's churn on the real estate agents who work with you? >> 14% annually. >> Yeah. An interesting strategy you can do is just look at the MLS and then look at the top, you know, the top people by volume.

3:17Um and you probably have an idea of what volume customers like, you know, do best. Cuz over a certain size they have their own team and whatever. Um And then I would probably look at some sort of cold invite uh to them and maybe do like a a webinar uh to them. That would be like the cheapest thing you could do. And then all you have to do is just confirm them. Basically like you just blast them, right? So, it's like email, follow up call, text, follow up um to get them to a small group uh you know, call call it presentation.

3:47Um and then present the thing. Or you could do it one-on-one, but I I one-to-many would give you a little bit more leverage. But either way, we need leverage in this. We need leverage in your acquisition, right? So, it's like you're going to post content would be a way, but you can't serve the states outside of, you know, Minnesota and Wisconsin. So, it's like, all right, I don't know if I want to do content per se. We could, but like, let's maybe not that. So, we could do ads or we could do outbound as our two kind of higher leverage acquisition channels that we can pick from. If you feel better with ads, then we can do ads, but either one works. That's kind of my point.

4:15>> Yeah. So, it's just pick the one that you feel most comfortable with, roll forward with it, see the results. If that doesn't work, then pivot to the other one. >> ads aren't that tough. They're they're they're cuz the targeting is already taken care of, right? So, you have the geo-targeting, and then you put the call out in terms of who you're looking for, and it's like it's pretty straightforward. Minnesota realtors, like it it it's pretty pretty obvious. And so, if you wanted to, what would I do? I'd probably run it by city.

4:41So, I'd probably run called like instead of running the state, I'd probably run Twin Cities is number one. I would have I don't know the other cities in Minnesota are, >> [laughter] >> Just one. Just Minneapolis. >> Okay. Yeah, whatever Yeah, whatever the other cities are, I would run I'd run called 50-mi radius ads uh from there cuz then it'll appear hyper-local. And if you are there, then you might meet them in person if you need to close. Um what's your sales velocity right now in terms of number of uh new customers?

5:07>> So, I signed 73 new customers last year out of 50 appointments. >> Yeah. >> Got it. Okay. So, the close rate's fine. Um I mean, it is consistency-based, so that's that's nice. You just don't want people who aren't doing any volume cuz that's just pain in the ass. >> Exactly. >> Right. And so, I would just say like, realtors who sold over four homes last year. >> Okay. >> You know? >> Just things specific. >> Yeah. >> Um what would you recommend spend-wise? Um right now, I only spent like 8,000 last year for all of marketing and events. I've never spent a dollar in ads. Where would you start if you were me?

5:35>> Uh we have to look at LTV, right? So, what do you make per customer per year? >> Um there's a big big gap. So, our average is 1,600 a year, but like my top 24 clients was 22,000 on average. >> Yeah. So, what we have to do is make sure that the requirements are towards the top end. So, when you put the call outs, it's like you have to be clear, you know, uh have to be realtors, have to be, you know, doing at least four, or you could say the production volume, whatever. Either way. If you're doing over uh I mean, probably a million, I don't know, in production is probably what you need as as the true minimum.

6:15You can make it five. I mean, it's kind of up to you. Um >> Okay. >> I would start higher, and then if you don't lower it, rather than starting lower. >> Okay. >> Cuz you might be surprised. You might be surprised. So, maybe you start at 5 million or 10 million in production. Um and then the nice thing is that you're local, so like you could probably just run it straight to a video in a scheduler, and then just call them as soon as they book. And you can still follow up with all the other leads anyways.

6:42Uh in terms of spend, it's it's always directly related to uh left over profit. And so, you should, if they're doing call it over a million in production, that's probably like two or three houses. Uh so, that means that as soon as they get their first sale, you should be able to like I would target trying to get paid back within 6 months or less. It's just the nature of the business you're in. The only other consideration I have, what's the gross profit?

7:09>> So, we had 250,000 profit before taxes and expenses, and then I had 40,000 left. >> and expenses, what's that mean? >> So, um snowy day fund. So, seasonality here in Minnesota, you're going to love this. Um I have to stash away cash to pay my team in quarter one cuz they're all W-2 employees in order to get us to the busy season. >> Okay. >> Yeah. >> Got it.

7:31>> So, net was or like after saving up for the snowy day fund, it was 40,000 cash remaining. >> Yeah. You're thin right now. >> Mhm. I just raised prices. >> Yeah. I don't like Yeah. There's some risk, right? And so, outbound is cheaper.

7:59Outbound is cheaper. >> Okay. >> And so, that might be where I would start. >> Okay. >> I'd probably start with outbound. So, basically cold call, cold email, text uh those realtors. Um that's probably the angle that I would go with cuz I don't still want you to I don't want you to risk the nest egg that you have right now. I do think you should probably raise prices and I would look hard at costs cuz I'm I'm betting you're underpriced. Cuz if you're contingency based if you're contingency based and you're just running 25% margins, like you're taking a lot of risk on as a business owner as this.

8:29>> We we are. I'm the highest in the market right now. And I do intend on continuing to raise up. It's I'm looking at the offer. I'm coming out to one of the offers workshops. >> Yeah. >> Yeah, just to see how do we differentiate because right now it is it's a total red ocean. We all offer the same thing. It's commoditized and yet >> Yeah. >> Like I'm still getting people. My My finding rate's still great. >> just I would go outbound. I would probably start with outbound because it's you me it'll be cheaper for you.

8:54You'll have more more reps of iteration before like when I just spend on ads cuz you will lose that money 100% for a minute before you figure it out. All right. >> you. >> Big socks. Appreciate you. If you like this video and you're business owner who wants to break through your current revenue ceiling, I just spilled 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 zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out. Again, absolutely free. And since you're business owner, I appreciate you and enjoy.