Overexpansion Just Means Undertalented

0:00Uh, for the love of God, if you've heard of anything I talk about, >> [laughter] >> um, is that typically you have more than one business. And so, um, you have your main business, and then you have the really new exciting opportunity that you're working on, um, and distracting from your main business, but you're like, "I'm not sure which one I should do." The reality is that you need to pick one. Either of them would work, but trying to pick both won't. Over-expansion, which typically just means under-talented. And so, a classic example of this is like, we wanted to go into a new market, or which could be both either, you know, like brick-and-mortar, you want to expand to a second location, or a new market could be like a new kind of avatar or vertical that you're trying to go into, but you didn't kind of shore up the castle.

0:37Like, you didn't protect the castle before you tried to invade, and so you left holes in your defenses, and then all of a sudden you realize that you took your best team, and you put them over here, and then all Now you have all your mediocre people, and then your main thing, the core business, is now suffering. And it's not that expanding is bad, is that if you expand with improper talent, that's what's bad. And then you're in this rock and hard place scenario where you're like, "Okay, well now I have two locations or two verticals that I'm pursuing, and I used to have profit, and now I have a little bit more revenue, and absolutely zero profit. And I have to keep doing both these things, but now I'm spread thin, and so what do I do now?" And so, typically you have to cut bait, and that's hard, cuz your egos hurt.

1:14Um, compensation. So, this is one I'm overpaying A A players A plus in terms of compensation, but sometimes there are structural problems with compensation. So, for example, if you're paying people on a percentage of revenue, uh, and that's kind of built into their pay, then it's like, you'll never get a economies of scale, you can't ever really change that. And so, the rock and hard place scenario there is just like, uh, pricing, which I'll get to in a second, which is, well, if I change my compensation, I'll lose my team.

1:39But if you don't change your compensation, you'll lose your business. Short-term pain, long-term pain. Uh, underpriced is kind of as it sounds. Uh, we're at full capacity. I can't handle more customers, and I'm not making money. Raise your prices. But if I raise my prices, then it means I might lose some of my customers, right? And if you don't, you won't make money. Uh and then single product is where somebody has, you know, they've really figured out how to acquire um a customer for a specific product or a specific level of service. And the issue that they're dealing with is that they used to be profitable when cost to acquire customers was cheaper, but then as CAC has expanded, their margin has compressed. And then they're like, "Well, now I'm basically at break even and I'm selling these customers, but I'm not making any money, so I want to change my business."

2:24When really, you need to sell something else. Sell a second thing. And so really, it's like you actually didn't build a business that was complete, you just built a product and you need to build an ecosystem. You need to build a second product. You need to build a back end so that you can actually make the math work. That make sense? Well, yeah, that's uh those are the seven the seven sins. Um and so uh with that being said, we'll let that be the the groundwork and uh let's rock and roll. So, you do business coaching for wedding uh yeah.

2:53Doing a million dollars run rate? >> Yep. >> Um and you want to get to 5 million in next 3 years. >> Yes. >> Okay. And you said what's holding you back is sales conversion? >> I say sales conversion, your sales team says differently, but um >> [laughter] >> Which has been helpful, super helpful. I came in thinking it's a sales conversion issue, maybe it's not. >> What's your close rate? >> Our close rate's 38%.

3:19It doesn't sound terrible to me because I, you know, we just brought on a sales team in February, so it feels like you know, we used to sell our all organic, now it's so much cold traffic, so apparently that may be not it is my issue. Um but I I think it's our team. >> I agree with my sales. >> Okay. >> [laughter] >> That's good. They're good. They're really >> not only did you go from warm traffic to cold traffic, which is an entirely different it's a whole it's an entirely different funnel. >> Yeah.

3:44>> And so some of you guys who are organic and wanting to get into paid, I think we were talking about this yesterday, you're like, "Oh, I have all these all these referrals that are coming into my my clinic." It's like it's a different game. Like selling to cold it's like we're only selling one out of 10 cold leads. It's like, yeah, no It's cold. >> [laughter] >> Yeah. >> They don't know who you are. But as long as the math makes sense, who cares? Cuz there's way more of them than there are warm. And so that's the trade. But anyways, if you keep going. >> Yeah. So, basically what I want to do, like my goal is to build Ramsey Solutions in the wedding industry.

4:12>> Okay. >> Every time you have him on the show, I'm like anxiously listening. Um also I would say that would be like also like building Jim Lunch for the wedding industry, right? So, the biggest thing that I have focused long-term is do I want it to just be me, so kind of like Jim Lunch would have been. Um or with Ramsey Solutions how they have, you know, Rachel Cruze does finances for couples and then they've got the doctor. And so, with my industry it's like having coaches for venues, having coaches for photographers, things like that. It feels like I want to build an educational platform

4:45>> Okay. >> versus just a coaching business for myself. And I honestly don't even know what the next steps for me are. >> it long-term or not? >> Sell, yeah. >> Mhm. Well, then if you do want to sell long-term then bringing in other kind of personalities, to your point, is pretty much the way that you're going to probably have to do it. >> Yeah. >> Um the really cool news that wasn't like available 12 months ago even is the AI avatars.

5:11And I think I would like really strongly consider just building out a team of AI avatars >> Oh, that's interesting. >> that Yeah. It's pretty nasty now. Like it's very good. >> Yeah. So, instead of having focused coaches in all these different areas, a podcast network, all >> know what they're supposed to do for each of those niches, right? >> Yes. Yeah, I currently coach on it. >> could build out the education for that and just feed it into the avatars. Now you have an entirely AI-driven business with avatars that won't cheat, won't sleep with each other, won't, you know,

5:39>> [laughter] >> you know, won't go work for a competitor. [clears throat] Like all of that is just done. >> Yeah. >> Um so, I actually really like that. And the really cool thing, if you want to, is that you can build it off of people that you know. You can train the avatars and just license their likeness, if you want to. Or you can just do it from complete scratch. Either way it works. >> Yeah, then I don't have to deal with so many people, though, which is great. Okay. >> Yeah. But no, I don't think your sales can train. >> [laughter]

6:03>> Yeah, okay. Thank you. >> Wait, what what AI avatar platform are you using? >> HeyGen is really good. HeyGen is right now the best one. And while while the next person comes up, it's h e y g e n. Um while the next person comes up, I just I probably didn't pre-frame this properly, but um as I'm talking to, you know, Barry, I'm not talking to Barry, I'm talking through Barry to everybody else here.

6:28And so, you'll notice that there are common themes and I'm probably, you know, I'm sure that um your 38% sales rate, uh you're not the only person who's dealing with that uh perceived constraint, when really that's not the constraint of the business. We just need to get more leads, probably. If you are a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it. And so, we broke it into these 10 stages and we made this little kind of quiz thing, where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information and if you want us to actually help you deconstraint the business and you're trying to scale, we'd love to help you out. On the thank you page, you can book a call with my team and we will look at the business, see if we can help and if we can, we'll invite you out to Vegas and we'll do this in person live.