Die Nische macht den Unterschied

0:00I've always been told to niche down, but I'm the person that couldn't focus. I uh I don't want to put all the eggs in one basket. So, I'm doing all all the different contrary to traditional advice. >> Yeah. You can't put all the eggs in one basket, then you drop all the baskets. >> Yeah. So, Dale Carnegie's advice is put all your eggs in one basket and then watch that basket. >> So, you I mean, you're in the swamp. You're 1 to three million. It's a very classic spot and you need to niche down.

0:26I actually covered this in the scaling road map. um you need to niche down because you're not getting any efficiencies. You're you're basically having to rederive solutions for every single person, right? >> Yeah. >> Especially with a >> and I'm gonna bet you right now that operationally, and this isn't me, I'm not throwing shade. All right? I just want to be clear. I get it. Things are kind of tough right now. Um I think you probably need more operational discipline. >> Yes. Yeah.

0:50>> Right. And so, like, I'll say this. Do you have do you have more demand than you can handle or do you have a lot of excess capacity right now? >> We probably have 30% more capacity. >> All right, that's not good. So that because like let's say we actually maxed you out, you're not going to get like your incremental margin is going to be tiny. Even if you got the extra 30%, you're still going to be running like 10% margins. It's going to be nothing,

1:19>> right? So we do have a little bit of a model and pricing issue. Number one, go ahead. I know you're >> Yeah. And I'm just curious like of the services rendered, what would you say take up the most amount of like what contribute to the most amount of revenue? Personal injury, estate planning. >> Sure. Right now it's family law that contributes to about 50% of our revenue. >> Okay. >> Build hourly. The personal injury side, we just built that out three months ago and have signed up 20 clients since then. So just a small investment because with personal injury the the runway is typically 6 to9 months before revenue.

1:54>> Yeah, [sighs] dude. I think you need to est like let me let me say it this way. If I'm going to go get surgery, right, I'm not going to go to a generalist. I'm going to go to a knee surgeon or I'm going to go to a nose surgeon or I'm going to go to a back surgeon. If I'm going to get legal help for my estate, I'm going to go to somebody who specialized in estate. If I'm going to go to a personal injury, if I have a personal injury, I'm going to go to a personal injury specialist.

2:23>> And and the people who will go to a generalist are not the people who want to pay a lot. >> Because they weren't smart enough to figure that out. >> Okay. So, which of these different services do you run the highest gross margins on? >> That's something that I'll need to work on. Part of it is like I need probably need to get a CFO on board or something.

2:48>> No, let's ask this. >> How many attorneys do you have that focus on family law? >> Four. >> And then how many and you have seven attorneys total? >> Yes. And then of your VAS that you have uh where what are they doing because you said you have 23 people. >> Yeah. So we have three on the sales team intaking people um and then some support staff uh assistant work parallegal.

3:15>> Okay. What would you say their split is about the same 50% focus on family law? >> Yeah, I was I'll say that. Yeah. >> Okay. So half of the firm essentially is family law. >> Just put the mic next to it so they they can hear it. >> Oh, okay. Um, so I'll say this, man. I I do think you're probably mispriced right off the bat. Like you need like if you're a service based business owner, which is exactly what you are, you need to know your gross margins like the back of your hand. And in the business that you're in, I'd be like I this might this will shock you, but I like to have at least 80% gross margins in any service business that I run. Wow.

3:54>> Yes. >> [snorts] >> figure out. Yeah, I need to figure this out. >> Now, part of Yeah. So, you have like you have a packaging issue as part of this. Now, one of the other issues is that you can choose to not bill hourly and you can just bill by solution. That is one way of doing things which aligns you with the customer and also allows you to drive down your cost as much as possible and aligns everyone's outcomes. And especially with AI in your firm, like I'm still surprised you have so many attorneys. Like if you're looking for the future man like AI is one of the like legal is one of the the biggest you know um businesses that's going that is actively getting disrupted.

4:34>> So >> we need to we need to niche down number one. Number two we need to pick the thing that has the highest potential for gross margins. Number three I'd want to package this in such a way that I'm decoupled from hourly rates so that my team isn't like well they're making this. It's just like it's independent. We're operating these things independently. And then I want to make sure hardcore that I am auditing the time of my uh you know the subordinates the people who are actually running the legal side so that I can make sure that my revenue per headcount is going up.

5:03Like that's probably your north star. >> I have one question. >> Yeah. >> I have one question for you. You said that you had to build the business to stay in the United States. Do you come from a law background or a business owner background or neither? >> Neither. I just graduated law school I think three years ago and um kind of had to start my own business with the with the visa to stay in the US. >> Got it. So, you didn't before that you didn't did you study specifically family law or personal injury or just general law?

5:30>> No, just just law school, just general law. And myself, I I practice immigration myself. Um, so that's the irony of we do do flat fees for immigration. Um, >> is it profitable? >> Yeah. Yeah, it's profitable. Um, and then we're trying to grow that out mostly doing Facebook ad strategy right now with immigration. Thank you. $100 million man. Let's go. Full attack mode. [snorts] >> I think >> we heard you.

5:56>> Like if we zoom out and we're like what created this problem? Um I think part of it is that when you got into it, you hadn't had a business before and you hadn't practiced that that specific law before, right? And so you don't know what's normal, what's not, how many attorneys can handle how much. So this is completely normal. I just want to like put that out there. Like when we had our first business, we overhired and overshot by a lot. And it was painful to fix that because essentially we didn't know. We're like, I don't know how many tickets can a support rep take? How many like how long does it take one staff accountant to do the books? How many calls can a sales rep take? Like I don't know. I've not built this before. And so I think that's really normal. And especially if you haven't done those things yourself, you don't have your personal experience to call upon. And so it makes sense that this occurred. Um and I think that for you in order to get out of the situation we have to solve the original problem which is understanding that we have to we kind of have to go backwards from that. Right.

6:52>> Right. Right. >> So I think just in general putting it out there it's normal. So for everyone watching like very normal for this to happen. We talked about this yesterday on the live stream as well which is like there's so many times in business where you start something and then you get into this situation and then it feels like I want to double down on this. So, it's like, no, I've already invested in having personal injury, in having the family law, and having the immigration.

7:16And so, the worst thing that you can do when you make a mistake or a misstep is to double down on it. We don't want to double down on mistakes or on sunk costs. We instead want to pull out of it. And so, I think this is one of those situations where the instinct is always going to be, I want to double down because you're like, crap, that sounds like a lot of work to undo it. But I think like you are 12 months away from a much more profitable, less of a headache business. And there's probably one or two attorneys that you could probably let go right now and I'll bet you the other ones if with a little bit of AI and a little bit of training could probably absorb that workload. I would also strongly question because you haven't quantified anything like you made an estimate that you could have an increase of 30% in utilization before you'd hit capacity. I would bet and this is not me you know doing this as a slight just because it's your first run you probably have two to three times the capacity with that existing team. You just don't know how to you don't know how to utilize it which is why the margins are what they are.

8:05>> Right. True. Yeah. So, I need to do more homework and I'm I'm glad uh yeah, I'll need to a lot a lot to do before I'm trying to trying to reach my ultimate goal. Thank you. >> No, you bet, man. Thank you, dude. And good luck. Ju just know this, man. It like this is the ignorance step, man. Like, this is like it's painful, but when you look back in 24 months, you're like, "Oh my god, I can't believe I didn't even know that. I didn't even quantify Yeah. I didn't even quantify utilization. We weren't even tracking their hours. like we didn't have them allocated and we didn't have all these services templatized so we could immediately two or 3x the the throughput per attorney like there's all these things right and you just aren't doing it yet and so I would encourage you to do this do not keep trying to grow your top line I would want you to focus entirely on growing your bottom line how do I increase the margin from seven to 40

8:51>> if you don't have enough profit you can't hire the best attorneys and if you can't hire the best attorneys you don't have the high paying clients if you don't have high paying clients you don't have good margins so it's just a round and around circle chicken vic vicious cycle or virtuous cycle. So, you just need to >> you need to stop the the buck stops now and then you need to flip how you're thinking through the business >> from unit economics up. >> Just looking. Yeah, you're right. I think I've been just been that was so great. I I've been just focused on the top line instead of like looking at the bottom line. >> It's kind of like vanity metrics, you know what I mean? People are like, "Oh, look at how many followers I have and but then their f followers won't buy anything that they have, right? It's the same with revenue. It's like vanity metrics. It's like instead if you were at the same revenue a year from now, but you had double the profit margin, would you be satisfied?

9:34Cool. Rock and roll, man. Appreciate you. >> Thank you. >> Thank you for donating books, man.