Put a QR Code on Every Package

0:00Uh, my name is Tyler. Uh, and I own a healthy energy drink mix called Wake Up Water. So, think like Liquid I.V. but for energy. Uh, we do a little over $100,000 a month, but it's primarily on Amazon. Seems a little more transactional. It doesn't seem like there's a lot of brand being built there because I'm putting dollars in, I'm getting some dollars back. I want to transition more to building that brand, selling more on our website, but we're not a high-ticket offer. We don't sell things for thousands of dollars. How do we fund, you know, Facebook ads, Instagram ads, produce content at scale and distribute it at scale while we're not recouping that money as quickly as possible, if that makes sense?

0:37>> Yeah, I'll do two things. So, one is uh, with every uh, purchase, I'd put a big ass QR code that links to a school group or community that you can then kind of have cuz like it's transactional, so to build it into a, you know, a relationship, try to put some sort of big incentive for people to join that community cuz then you're going to get re-purchases from there and you'll also be able to get real contacts that are not, you know, faceless Amazon people, right? That's thing one. Any e-commerce, by the way, can do that.

1:02Uh, number two is you have to establish your own channel, probably via Shopify or whatever, you know, commerce platform you want to use. Um, and the thing with businesses that are low-ticket like yours, usually the way that those end up really scaling is through brick and mortar distribution. And so, that's doing the deal with Whole Foods, that's the doing the deal with, you know, however many, you know, vitamin shops or whatever uh, to get your SKU in there. And that's where the packaging, believe it or not, is going to be super important. And so, I would test the living hell out of the packaging uh, with whatever people you know, like running little polls. Like, I would almost spend my advertising dollars on testing packaging more than even trying to get the advertising dollars back. And then that way when you do place them in stores, you can make sure that they move and then they reorder. But, that's I mean, for for low-ticket stuff, um, that tends to be how it works. Or, you just have to sell huge amounts of bulk. So, especially if you're direct-to-consumer running ads, then your your funnel's is to be like, cool, one box, great, Uh, five, six month supply, like, you know, and you know that the average person buys three months, and then you can at least liquidate CAC on the front end, and then all of your effort at that point is to get the repurchase after that. And so, fundamentally, the difficulty with e-commerce businesses, or especially low ticket businesses, is everything's about breaking even on CAC. The problem that you have is that you have two things you have to reinvest in. One is you have to buy more inventory, and then you also have to make sure that you re-engage those customers so that they buy again, and then that's where the gross profit continues to expand. And so, everything that I look at, if I'm looking at kind of like a physical products business, I don't get into that very much for a number of reasons, but one of them is I want to look at repurchase rate.

2:35That would be like we talked about the compounding thing earlier, that is what my obsession would be on. Because that repurchase rate is the single most important metric for the business, and otherwise nothing will matter. Because even if you do get brick and mortar distribution, you'll get people to buy through it because you have great packaging, they'll try the product, then they won't buy it again. And then over time, all the people in that store that would have bought stop buying it, and then they eventually fade you out. And so, that is the one kind of biggest point of leverage and is the product.

3:02Once you have the product right, the marketing kind of is super solvable. That all work? >> Yeah, absolutely. Thank you. >> Sure. >> Hey, I'm Henry. Thanks for you, everybody in the room, team. It's been awesome. So, you started off kind of one-to-one, lots of individual people, and I'm just wondering what's your perspective on the optimal balance between scaling through systems, but then maintaining that high touch value to your customers. >> So, it depends entirely on your goal.

3:28So, if you're like, I want to make $3 million a year, you can absolutely just be you and just continue to increase prices and have, you know, a handful of people just kind of helping you out. If you want to build It's It's It's really difference between like, do I want to make money or do I want to build an asset? If you want to build an asset, then yeah, you need to basically put those systems in place, and kind of like we were talking about here, this is actually going to be This will be super valuable for a lot of you. So, we talked about this when it comes to talent that you're hiring, but this also applies to you. And so a lot of people are like, oh, you've got this XYZ magic. But the reality is that you just do a series of behaviors that you have documented or you haven't documented that other people that looks like magic to other people. But really there's like 17 things that you do. And when you document what those 17 things are, then this word magic all of a sudden becomes these 17 things. And then when you get someone else to do those 17 things, they think, wow, I feel like like he's this guy's even better than the original guy, right? And so that's what allows you to scale service overall and then build an asset. And fundamentally if you scale service, you're scaling recruiting, hiring, training.

4:31That's what it is. Like you want to scale service business, it means the business you're really in is recruiting, hiring, training, which you can wrap under the big thing of culture. >> Awesome. >> Cool. Thank you. Appreciate it. Yes, sir. >> Yeah, so um >> [clears throat] >> I'm looking to acquire uh larger companies, uh but I've come across an issue where uh banks don't want to fund any business any business. >> Yeah, yeah. Well, well the debt to income ratio on businesses that you acquire for more than a 4X multiple um it's just not a two to one, so most banks don't want to lend. So I understand that you need to come with the larger cash down payment, uh but then your return on capital invested gets lower. So then I'm trying to figure out how you just get to that level cuz so far anything 4X and below I understand the model, but you know, 5, 10, 20X I just don't see the returns.

5:17>> You have to build in growth. >> Okay. >> Well, I mean like that's that's that's how the economics work. So if a company's growing at call it 20%, then the company doubles. And so then all of the increment that happens with the arbitrage of the multiple that would hopefully be baked in at the second sale, you usually will like this is the traditional private equity model, which I think I covered in a video like four or five videos ago like how the 1% make their money. Um basically the company's entire cash flow will go to debt service, and you'll probably get an interest-only loan for that five-ish year period. And then at the end, when you do the transaction, because hopefully the company has doubled in that period of time, you'll then repay the remainder of the loan, and then basically all of the increment on the enterprise value is what you keep.

6:01And then related related back to whatever the the 30% down that you had to put on the businesses, that's where you get your your 5x. >> Got it. Thanks. >> If you're a business owner and you're 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 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 deconstruct 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.