A Service Business With 3% Annual Churn

0:01All right. So, context. I place trained content operators and editors with service businesses, coaches, and founders. >> Yeah. >> Our operators are based in Ukraine. We handle full content management including strategy, scripting, editing, short form, long form, and full volume now. Um we build a strategy, place the person, and then we manage them for you on a monthly basis. >> Yeah. >> Right now clients pay 6,500 up front and then 2,500 per month. >> Okay.

0:25>> Uh we're tracking towards 800k this year at 65 >> margin. >> time we talked you were at like 200-ish, right? >> Yes. >> Nice. There you go, a little 4x. >> Thank you. Thank you. But, still all referrals though. So. >> Yeah. >> We've been doing really well, but right now the biggest question is how do we build a system for client acquisition? I'll explain why we haven't built it yet because it's been kind of chicken and egg. You get more clients and then on the back end you're like trying to make sure everybody's working really well and we

0:56>> By the way, that's how service businesses work. >> Really? >> That's how it works. >> [laughter] >> But, it's just like yes, chicken and egg. And the stakes, I know I needed to mention stakes. They're personal. Um obviously my family from Ukraine, so there's a war back home. I support my parents right now. Pay for mortgage, you know, make sure that they're well. Um but yeah, that's where we are. If you had 90 days right now to grow the business to uh 1.5 this year and then uh get it to a million a month, uh what would you do? What the channel would you activate to actually get the leads? And also apologies for background noise.

1:32Somebody decided to do renos. Um >> I can't hear anything. You're fine. >> Okay. >> Um Well, how many customers can you handle on a per week basis? >> Well, now we can handle more. So, right now we have 45 people on MRR and then we can probably take uh 10 more people every week. So, finally I think we kind of fixed stuff on the back end. Um so, that's solved. >> Wow.

1:57>> And what's churn? >> 3% >> Monthly? >> Year. >> A year? >> Mhm. >> Yeah, great. Okay. So, I mean, your LTV is absurd, right? I mean, you're looking at, you know, 60, 100 plus, you know, virtually unlimited LTV for the purpose of the conversation. Let's just Let's pencil it at 12 months. So, it's like you're making at least 30, but your gross margins are a little lower. So, you have to pay the the editor and whatnot. So, what are the gross margins?

2:23>> The gross margin? >> Yeah. >> So, 60 65? >> Okay, 65%. So, they're they're a thousand bucks and you're and you and you make 1,500 extra to like run everything else. >> Yeah. >> Okay, got it. Um, that's fine. Okay. So, you do probably have a little bit of pricing sensitivity there. I won't like get into it, but you probably could get up to three, but we'll I'll I'll leave that alone for now.

2:52Um, just because again, when I see that you're at 3% annual, like you're fine. Like you you probably like no one's leaving, right? Cuz you're obviously doing a good job on the stuff. Um, so we just have to increase your demand. And so, I'm assuming are you running your your model? Like are you running your people to make you content? >> Now, yes. So, now yes. I have a lot of content ready to go, to be honest. Yeah, it's because I wasn't running it because I was afraid that everything's going to break on the back end and with AI now releasing stuff every day, we needed to make sure everybody's on board and know what's going on. So, I haven't been doing it, but now I have the team ready to go and we're implementing this week, so.

3:33>> Yeah, so if I were like if I were to take the business over, I would be going aggressively on the content, obviously. Um, you're that way you're eating your own dog food. You're you're demonstrating the stuff. And the majority of the content should be about what content to make and what formats are working well right now uh to and you're looking for business owners, right? Yeah, at two generate leads, right? So, it's like you want to show basically everything from basically the entire process up to the sale, how how the content machine works, so to speak.

4:04Um and just go really in detail. Like don't worry about the views, just worry about like making sure that the person that watches it is like, "Oh, this was good." Um and they just you want to demonstrate that someone sees that and is like, "I don't want to deal with that. I'll just have her do it for me." That's what you want someone to like think when they watch your stuff. Um But if I had to double the business, I would just run ads. >> [laughter] >> Right? Like I would make the content, why not? Because I would take that and then those become the ads anyway. So, you have to you have to make creative either way and so you might as well just make them as content and then find the good ones and then just run those as ads directly. Um but that's about it. Like you're you've got you've got a good business. You have absurd churn for the nature of what what your thing is. Expect your churn to go up when you're getting to colder audiences now that are not referrals.

4:46So, like up to this point you've only sold on referral. Uh which is wonderful and also terrible cuz it's like means you've never actually sold. Uh because you know, people are like they already know the price, they already know you, they already have an embedded testimonial who's a friend of theirs. So, they're just like, "Yeah, I'll just do that." Um I wonder If you really wanted to, you could probably This is a little bit of a riskier play, but kind of interesting is like you could say, "Hey, I'm going to be bumping the price to 2,500 to to 3,000 a month." Um but if you send me a referral, I'll keep your referral price.

5:21>> Okay. Um quick question on the ads. Um right now we do try running ads, but everybody who we attract, they're kind of less than 1 million a year right now. My ideal client million plus, they probably run ads, they tried hiring the notes sucks, they don't want to manage people and they just need somebody who is going to come in and just take over and do content for them. >> Just say that. That's the ad. >> Oh, okay. >> That's the ad.

5:48If you're a million dollar business owner and you run some ads right now and you probably tried constant but it sucks you don't want to manage the person. I have a whole team out of Ukraine. I have 3% in insurance so people actually think my stuff's good and that way you can just have it outsourced for less than you'd be able to do in the US. >> Okay. Okay, and and would you lock in people for longer because right now it's month to month so they pay up front and then they pay monthly? >> The up front the fact that you have an up front that's you know two or three months of of expenses is is fine for now. Um and the thing is is that there's contracts are not enforceable at least in the US not really. Um like you're not going to you're not going to put people to collections. Uh I doubt it. So like if you want it's only just for like the mental commitment around it. Um but no I would say right now I would like if I were to do one in your place it'd probably be three month. I wouldn't do 12. I'd do like three month minimum because listen if you think that you're going to get results in 30 days like this is not for you.

6:41>> Yeah, okay. And so would you partner ship group at all or just like ads and constant right now don't worry about partners. Um I had partner up with somebody and I was getting a lot of referrals from them. >> Yeah. >> Um really well. So would you just double down and find communities to partner up and just help? >> Yeah, I remember we talked about this a while ago. Yeah, uh more of that is probably a great first step. >> Okay. >> So >> kind >> ads we would just say like again I don't want you to do all three of those things it's too much. So you doing volume good idea. It's you eating your own dog food you got to hire one more person you're the customer. Fantastic that one's off the board just get that done. Uh I think you then doing outreach to businesses or or or forums or groups or whatever or school communities that have your specific type of avatar is a good is a good start.

7:26Cuz you only need a couple of those for like you need two or three of them and it's like great we just tripled the business. >> Perfect. And lastly for the ads what would you spend what would the KPIs that you would be looking for? >> I would just try to make I'd try to break even on the first on the first transaction. If you can do that you're good. >> Easy. Okay. And do you have a second for one more last last last last question? >> to be the lastest of the questions. >> Lastest. Okay, I promise you. Uh so, anything you would recommend on the back end to make sure the quality consistently stay high and nothing breaks? So, once we get extra 100 clients, like we can actually sustain the quality getting referrals and do not go down the stream.

8:06>> Um So, in in quality management, there's kind of two schools of thinking for QA. One is that everything gets reviewed. The second way is that it is a random uh a random number of things get reviewed from like a product line. And so, you can just pull one off of the rack and as long as they know that every so often random, you know, assets that they're making are getting pulled and making sure that they're following or hearing to a checklist, um that will allow you to at least enforce it with more scale.

8:42Um but I would imagine that a lot of it is just the checklist that you're having them follow, like make sure there's a hook, make sure there's and then just grading them against that that checklist. And what will happen is just that over time that checklist will improve. Is that you will have more things that they will need to adhere to in order to increase the overall quality of all of the the shorts. >> Okay. Okay, makes sense. Thank you. Next time we talk, I'll be at 1.5.

9:07>> Rock and roll, Irina. Congrats. >> Thank you. I am. >> A little quadruple, not bad. If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out. Again, absolutely free. And since you're a business owner, I appreciate you and uh enjoy.