Die langweilige Nische ohne Konkurrenz

0:00Zack, we've got 5 minutes on Hermosi Hotline and I want to help you with the business. So, the timer has begun. >> taking my call. >> You bet, dude. >> [laughter] >> The timer has begun. Okay, so talk to me. What's Yeah, what are we looking at? >> Okay. So, I'm actually in a client meeting. I'm stepping out right now. >> It's only 5 minutes. You can tell them that. [laughter] >> Perfect. >> Okay. >> we own a local architecture firm in Minnesota. >> Got it.

0:25>> We niche down unintentionally, but it's worked to our favor. >> Fine. >> Um we only do assisted living facilities that are converting. So, it's people that are taking a single-family home with five or less bedrooms and converting it to an assisted living facility. They need to get licensed architecture plans from the state or for the state. >> Uh-huh. >> So, that's where we came in. >> Uh-huh. >> Our problem is >> Do you follow?

0:50>> everyone's really cheap. Well, we actually we do 80 of those just off of referrals every year. >> Okay. >> So, it's pretty solid where it just sustains itself by our service. >> Okay. >> Can I Can I >> make a guess on what you need to do? Cuz I pattern recognition. Like I promise you. Okay, so you're in a you're in a space that it's it's super price driven, right? Cuz you've got it's construction, they're looking at cost, blah blah blah, right? >> Yep. >> Okay, you have three vectors of winning. You have to pick one. Ideally, you can have more than one, but one is what I like to lead with. So, you either got speed, you've got risk, or you've got ease, right? And so, in your business, time is money. If you can do things faster, right? There's also a risk component of like what kind of cost are going to come down the road if you do it the wrong way or do it differently. And then, it's like is there a way that we can throw some sort of verbage or guarantees uh or some sort of like clawbacks that a customer can get where we say, "Listen, we'll put our skin in the game to make sure that we're you know, we'll be on time and on budget." Um so that you can build your thing faster so you can get faster returns on capital. Because I'm assuming these like you quote sell to an investor or you sell to a GC?

1:56>> So, they're all the they're individual business owners. That's the hard part is we're going to small business owners. It's likely their first business, right? So, they're cheap, too. >> Okay. I mean, who the best Who are the best business owners do you deal with? >> People that don't question the price, that understand the process. >> my favorite, right? >> Yeah, exactly. >> No, but it's not it's not the process. >> Okay. So, then what stops us from getting only those people or focusing almost exclusively like can we get deal flow that has higher percentage of those people so we can command the prices we want?

2:27>> Oh, I would love that. And part of it is I've tried to expand so that we give one faster speed like you mentioned. So, we get our plans back to you within a week. So, that's faster than most everyone. And then we on the back end, no one understands the process. So, I've learned it really well. So, that's where I come in and I can give them that guidance versus just someone that's giving them a commodity of just a single plan. >> Yeah. >> So, that's where we've been able to get our price up some, but I need to get it up higher. So,

2:52>> You need stats, dude. I'm telling you right now, you need stats. So, this is a logical sale, right? This is not an emotional, you know, thing for most of these guys, I would imagine. Right? This is a pure like dollars and cents thing. And so, you need to line up and come in with that frame, which is like, "Listen, let's be clear here. You and I both business people. You need to make this make sense, you know, make sense from a dollars and cents standpoint." They're going to say yes. It's like, "Cool. So, there's there's a concept called, you know, save a dollar a day, cost you four tomorrow, or pay two today and it saves you four tomorrow. Which one are you Like, would you rather pay two and save four, or pay one and have it cost you four?" And they're like, "Well, obviously the save one." It's like, "Right. I'd like to establish that cuz if someone says, 'No, I'd rather just save as little as possible,' then we all know that's not going to work for either of us, right? Okay, cool." So, then it's like, this is where the stats come in.

3:36Like, I'd look at Statista, I'd look at I'd ask, you know, GPT, I'd be like, "Hey, find me all the stats of average unforeseen costs that can occur." And so, then now we took the frame of the fact that it's just going to be a a logical sale. We're all dollars and cents here. But in the reality is now we go fear, uncertainty, and doubt, right? So now it's like well these are the top four things that occur. This occurs in 22% of circumstances, this occurs in 15, this occurs in 38, right? And these are all the different things that can go wrong, right? And so what we've done is that we try to minimize this thing which is going to cost you way more money than what I cost.

4:09>> Okay. >> And so now we're anchoring or anchoring around all these way more expensive things. And then basically that's how we can basically nudge our way into a completely different price cuz we're we've we've we've changed the context around the conversation. >> Okay. Would you think about any way to get recurring revenue or would you just double down on this and try to get as many people as possible? >> So the only way that I would see recurring revenue in your specific business is going to be people who do regular business. More so than like subscription anything like that. It's more like who are the nodes of referrals? Those are my quote reoccurring more than recurring business. Like Coca-Cola, super amazing business, not recurring but reoccurring.

4:49And so I put your hat on. So what you need to do is chunk up in terms of how you think through your business. I'll give you an example. So when I had Alan which is a software company, we had you know the first thing we did is we went to market for a small business owners, right? And that sucked because they'd be like oh this is great it works our leads but we don't have any leads. And I was like oh darn that I didn't think through that. And so then all of a sudden the people who did really well were the ones who already had agencies that were working with them generating leads and then our thing just did the lead flow. So then all of a sudden I was like okay well I'm going to go after agency owners and say hey we can improve the results of your your services and decrease churn and increase you know like basically make more money etc. using our software.

5:23And so all of a sudden what happened is instead of having you know trying to go onezie-twozie after business owners, we just went after agency owners and I knew that let's say a chiropractor agency comes in he only does chiropractors, he comes in and he pays you know he onboards his 50 clients at a time and I was like oh that was great, right? And for you it's like somebody might have a portfolio but he onboards 50 clients but then after that I could rely on the fact that 10 of his people would churn every month and then he would sign 10 more up every month.

5:48Right? And so he So our churn at the agency level was almost zero. Our churn at the SMB level was whatever the churn of the agency was, which is not really our issue. And so when we redefined our business as, "Oh, we're actually in the agency servicing business, not in the SMB servicing business." That's when it really started stacking. And so translating this back to you, you said you've got these referrals that are coming in, right? >> Yeah, we typically get three to four referrals every week that we'll then try to book.

6:16>> Amazing. And so then I'll bet you you have a list, or hopefully you do, of all the top referrers that refer you business, right? >> 100%. >> Right. And so then the whole the whole paradigm around this for me is, "How do I How do I partner with the referral partners so that they can frame the conversation with their introduction to me in the way that maximizes the likelihood of a close and the framing around pricing uh that I want?"

6:42>> Okay. >> That's how I approach this. And so your business, if I'm thinking through this, right? Like if I'm you, my business is I'm really in those centers of influence, right? Those affiliate partners, those referral partners that you have, those are the quote customers. And so I want to see like, "What's my sales guy for those guys to get them to consistently, you know, bring me more in? And how can I acquire more of them?" Because each one of them is a node that over the years, if I go from having a base of 20 guys who refer me business to 200, that becomes reoccurring by nature rather than recurring.

7:15But still stable. >> a suggestion on a referral bonus for those people? >> Are you allowed to do kickbacks legally? >> I think so. >> Okay, great. Well, if you're allowed to do >> I'll double-check. >> Yeah, yeah. If you're able to do kickbacks legally, um there's there's three different affiliate structures that I like like you'll immediately know I'll say all three of them then you'll you'll know which one's right for you. So version one is that you peel off some element of your particular service, a very small element, and then you allow them to sell it for whatever it whatever they want, they keep all the money, and then you deliver on that as step one of a multi-step process.

7:49That's V1. So, an example of that is, "Hey, uh new business owner gets an LLC set up. We'll do the LLC set up. You can charge whatever you want for that." Let's say they sell for $300. We do the LLC set up, but then we upsell uh tax and bookkeeping, right? From there. But, they keep 100% of the upfront. That's option one. Option two is that they just straight up sell your thing, right? Uh and then they get to keep whatever percentage, right? They can You give them 10% or 20% or whatever number makes sense for you. Um for them to actually just legit, you know, cradle to grave, they all they got to do is just acquire the business and then just send it to you, and then you deliver. That's the second, right? And then the third is more of a um more of a lead gen version of this, right? Which is kind of what you're doing right now, it sounds like. Um and then you can quote give them kickbacks later, and that's and then they basically factor it in uh to how much they're Every three referrals I send, I get, you know, one sale or whatever.

8:38>> A lot of ours come from consultants that are on the actual application. >> Dude, 100%. Then consult like you need to basically build out like Think of this like you need a customer journey for the consultants. >> Okay. >> Like and then that's Yes, exactly. And then they're the ones who are going to consistently be sending you business month over month over month. >> Okay. >> Got it? >> Yeah, thank you so much. >> Dude, you bet. I know you got you got your guy. I went over five five minutes, so I'm I'm so sorry. Uh but, hopefully you're going to love

9:04>> [laughter] >> Thank you so much. I appreciate it. >> Dude, you bet. Thanks for donating books. If you were a business owner, and you were 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 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. And so, we broke it in 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 the 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.

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