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0:00I'm so happy to be here and I've consumed a lot of your your content. Um my daughter's [clears throat] name is Layla. Oh, that's cool. Super happy. Um anyway >> her after Layla? That's awesome. Alex, I've I've consumed a lot of your content, read all your books. And my question is throughout your content, you talk about niching in or niching down, rather. Mhm.

0:26And um we provide payroll services. We compete with the likes of ADP and Paychex. Mhm. And in that space, it's really hard to niche down when you're just getting started, but we haven't just started. We've been in business for 12 years now. >> Right. Um What's the count? I'm sorry? >> Head count? How many people? Employees or employees? We have four employees. Four. Yes. >> Okay.

0:51Uh but we have over 300 clients. Most of them are small, but we have three three three whales. Now, um we've been thinking about niching down, but we are afraid of alienating a lot of our sources. Mhm. Um and most of our sources actually are accountants and CPAs. We don't advertise and we haven't really done any marketing, but we are now starting to do that because I feel like I have more time to dedicate to the business. I usually I'm usually done by 2:00. Okay.

1:20So, I can dedicate time to my family, but now my kids are a little bit, you know, a little older. We have more time I have more time. >> Yeah. Now, thinking of niching down to the cannabis industry. Mhm. Got this, you know, better margins and all that. Mhm. Um what what risks am I facing and what should I avoid when I'm [ __ ] niching down, sorry. Niching down and yet alienating or just leaving out all the other sources of business for me.

1:45And in addition to that um we are contracted by the by the government by the federal government and that kind of boils down to us all government agencies, state, federal, and all that. So, we don't want to put cannabis on our main website because Mhm. obviously cannabis is illegal on the federal side. Mhm. Um so What problem are you solving?

2:11Um Because you don't want to niche for the sake of niching. Like there's there there there should be like it's Basically, you have a way of getting customers all over the place. If you were to niche to cannabis, it wouldn't work cuz you can't put it on the site unless you truly niche to cannabis, in which case you get rid of you know, you'd sacrifice the government contracts. Um you know, as a result of doing that. And so, if you make more revenue per customer on cannabis, then a a big point of that is that you can make more specific messaging and you can have higher LTV to CAC ratios. And so, that should in theory allow you to expand.

2:44Um basically, you can sell more customers in a smaller It's like fundamentally, you want to make the most money. Um and so, right now you've been, you know, you have 300 300 customers that have come in. How many How many units do you sell a month right now? How many units per >> How many people do you How many logos? How many companies do you sell a month right now? At least 200 out of those. Oh, you mean like new clients? Yeah. Oh, new clients.

3:09Probably three or four. Three or four >> per month. Yeah. Um You I honestly feel like you you should just like advertise more. I don't think you like I think you just need to advertise more right now unless there's some sort of operational constraint that like if the delivery is very different between different types of businesses, then it would make sense to do the niching because then you can productize a little bit more. Like you can make it more templates, you can get more streamlined in the back end. But it sounds like if you is the is are you trying to grow? Is that the goal? Yeah, I think you just need to advertise more.

3:39So, it's I mean fundamentally, now if you can't differentiate, basically no one's responding to the advertisement, then that's where the niching down becomes like that's now that would then be the problem that we'd solve. It's like, okay, of the customer base that we have, which ones are the most profitable? Fine, then we're going to make our messaging to tailor the you know, the offer the lead magnet's going to be similar to whatever would resonate with that with that avatar. And the whole point of it is just so that you have advertising that's going to convert uh and be scalable. Like that's the that's the problem that niching solves because it increases your lifetime gross profit per customer and with well-targeted advertising, it also decreases CAC.

4:16Does that make sense? >> Yeah. And so, fundamentally, it's it's a it's a it's a it's an efficiency problem that we're solving by niching down. At the at the absolute extreme almost all companies do go broader. But if you already have 300 customers, then I feel like you should just advertise more unless there's some problem that's occurring with your existing advertising process. Yeah. Well, we don't advertise. So, it's something that I'll >> Right. And so, you have No, understood. And so, it's like you have these CPAs that do the work that refer you business, right?

4:44>> Yes. So, then if that's the node, then it's like, okay, then I need to start doing outbound to CPA firms using the list of CPA firms that I have as references to say, "Hey, we do a really good job for these people." and basically build the affiliate network. So, if your call yesterday, I talked about you can only have two ways of having a company business. This one is that people never stop buying, which you already have, which is pretty cool. The other is that you have people never stop selling for you, which you also already have. So, you have a really wonderful business. You probably run really good margins.

5:12Yeah. Right. >> [laughter] >> Four people, 300 like 300 customers, I would imagine they probably spend 500 bucks a month, something like that on average or higher. Is that about right? Yeah. Okay. Yeah. And so, yeah, you've got a great business. I think it's just, okay, we need to get the outbound. And the nice thing is that for accounting firms, it's probably very easy to get in contact with them. >> Sure. Right. And so, like that's the advertising. I wouldn't necessarily even try to go direct to businesses. I would go straight to CPAs and then CPAs become the and then there's probably CPAs that will sub sub-specialize. They'll know what types of CPAs refer better. And the the process that I would think through is, this goes for everybody, is is what's the irresistible offer to the affiliate? Cuz that's what they are, right? And so, almost everybody here when I talk to you, it's like, yeah, I have a referral thing. I give 20% to anybody, you know, who refers me business and no one refers you business and you're surprised because if you were to go to every other person here and say, "Hey, I'll give you 20% if you refer me business." you probably be like, "Eh, I'm good."

6:08And so, it has to be an irresistible offer in order to get to be really to for it to really work. And so, I've seen basically two ways of doing this. One is that they can include your service or a parsed out version of your service in their services at no added cost. That's what you guys do now. >> Yeah. Yeah, dude. You just need to advertise it. Like you need like that's what you need to advertise. Advertise that to the CPAs and then build that network and then they become the consistent uh referral gen basically every single month and you can rely on that network of CPAs to send you five this month, 10 next month, 15 the month after that. Um and so, it's like you probably have 20 CPA firms that refer you business.

6:46About 30. 30. Great. Feeling my guesses are pretty on point here. Um >> [laughter] >> so, if you have 30, it's like, okay, what does it look like to get to 300? And then think about that. So, it's like, okay, these 30 get us four referrals. I'll bet you could probably increase activation on those cuz they're certainly selling more than four people a month between the 30. Yeah. Right. So, it's like I would probably re like step one would be, how do I re-engage with them? How do I integrate into their existing customer journey? Because if if they have to just rem- remember me, then it's like one out of 10 of those CPAs is remembering you once a month. Like that's not enough, right? So, it's like I need them to I need them to be incorporating it into every single thing so that every customer they sell has something from me. So, I immediately get the opportunity to upsell all customers from all 30 of the CPAs.

7:30Does that make sense? Yeah. Does that include collateral to the CPAs, too? Yeah. As I The irresistible like what would be the most amazing thing I could possibly do? Where it's like, you can sell my service at 100% margin. That's tough for me unless you already have another back end service you can sell on top of that, right? But like there's a friend of mine who has a a very big um uh CPA firm, actually. And what he does is he he goes to people who start small who help small business owners get started, so some of you guys in this room. And he does a deal where he says, "I'll set up the LLC and like the first bank account for every customer." which is normally like a $300 service and he does it for free because he knows that he upsells them bookkeeping on the back end for 2,000 a year. And so, he just gets hundreds of appointments every single day from these people that they bundle his, "Hey, by the way, also when you buy my thing, we'll help you set up your LLC and get your first bank account started, blah blah blah." and they he just is included in the bundle of what they sell. And then they set up a call with him to do that portion of the delivery. Does that make sense? Yeah.

8:29That's the piece Like right now, if you did nothing else, if you just do that, you're probably like you would be able to significantly increase the business. Okay. Cool. >> Nice. Thank you. Yeah. All right. If you're 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 scaling road map, 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.

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