How to Scale a Service Business — Alex Hormozi (1 Hour Compilation)

0:00I have a website business for detailers, but it's really low ticket niche. Should I switch to solar? If I do outreach, it'd be 10 times harder and it's already hard. Plus, it's hard to lead gen to it. So, just for everyone. No man's land is trying to sell SMBs a higher ticket thing and I'll explain what I mean by that. You will quickly make more revenue, but then churn will catch up with you quickly and you will create a churn machine and CAC will consistently rise, which will compress your margins. I'm telling you this is where the graveyard of 1 to 5 million dollar a year agency owners who sell lead gen services to SMB for between 1,500 and 3,500 dollars a month. That's where they all live. That's where they all die and it's miserable existence and you're welcome to go compete there if you want. My opinion is that you have two options for that business if that's what you really want to do. You either go low ticket, very low ticket. I'm talking like basically 150 to maybe 400 dollars a month. That's what I'm saying.

1:02Maybe 500 tops for SMBs and you have to have a truly scalable solution that costs you almost nothing to deliver. This is where like, you know, getting super high listed on maps or, you know, you know, first three for Google. This is where SEO type stuff works well. Um, maybe it's just like maintaining Google, Yelp, and whatever review stuff for a few hundred dollars a month that no one wants to churn out of. All of those are things that are super reasonable that you can sell to SMBs that they will not churn out of because the price point is appropriate. It's a nuisance thing. Whenever you start getting into heavy true lead gen, their businesses are so volatile that they will turn it off independent of how well you do, which is a very frustrating place to be.

1:42And for you to really make it make sense, you have to charge more and they don't have the money to do it and that's the catch-22 with that model. So, I said option one is low ticket, but high gross margin. Low ticket, but high gross margins. And very high revenue stick. The other angle is to go for um mid-market, so up market from there. So, instead of SMBs, you're talking, "Okay, it's got to be a business that's doing at least a million, at least 2 million dollars a year, 3 million dollars a year, something like that." Those business owners will be more stable, and then at that point you can start charging for uh you know, higher price point. So, it's like, "I don't really want to play in anything below $10,000 a month, and if you can't sell $10,000 a month to someone that that's not going to make or break their business because they already know their metrics, they already have a sales motion, they already have LTV figured out." If they don't know those metrics, those people are not good customers for marketing services.

2:33And you'll be like, "But that's everybody." It's like, "Yeah, and that's why most people compete there, and that's why most people never make money there." Good talk. >> How do you tell if there's a 10X? What do you look for? What sort of qualities do you see? >> So, it's actually just looking at the business like a pipeline. So, it's like, "Okay, you've got X X per like basically you have to understand everything from click to close to renewal." And so, every business more or less is like you have eyeballs that at some point get converted into leads, or they get converted into customers. So, if it's leads, then they have eventually have to get a scheduled appointment, they have to show, they have to close, and then on the back end once they are closed, they have to get a product delivered or a service delivered, and then they have to buy again and again, or get upsold into other things. Right? So, if we look at that, we can see breakages along that line because that would be something that we'd get into diligence just like, "Okay, what are the [clears throat] click-through rates on the ads? What are the CPMs on the ads? What are the conversion rates on the pages? What percentage are scheduling? What percentage are showing? What percentage are closing? What's the average offer rate? What percentage are we collecting in cash up front? What's the average close rate? On the back end, like how many dropouts do we have in the first 48 hours after that? What does it look like over the next 12 months or 24 months for those customers? What percentage are ascending to the next level of service?"

3:35And so, if we look at that and we have our benchmarks for what we think we can do with the processes that we have already tested, then we're like, "Okay, well, these guys are getting 30% of their appointments to show up, and we know that we can get that to 80." It's like, "Well, there's a 2 and 1/2 X." Okay, boom, there's one. We're like, "Okay, I think they're mispriced on this offer and I think we can at least double this. It's like, okay, well there's 5x. You got 2 and 1/2 and 2. You're like, okay, and right now they're not doing anything to reduce their turn. They're at 10%. I think we can get them to three. So, there's a triple. So, we're like, okay, so that's 15x.

4:06What's our confidence score in terms of like our likelihood that we'll be able to implement these changes? Is it like a super big overhaul or is it just like there's a handful of things that we can implement immediately see that? And the easier it is, the more likely we want to do it. And so, like I just bought um a chain of teeth whitening studios with 32 locations. We just bought um and I just got so excited because I saw their sales process and I was like, I'm going to murder this. >> interesting [snorts] business. >> Oh, very interesting. Um

4:32>> I've seen a lot of those just this direct to consumer products though that you see that you get on a subscription and they just send you >> Yep. >> Uh I actually have a whole bunch from Ollie, believe it or not, from I think that was an Alpha M product. >> Alpha M? >> Yeah. >> Yeah. Well, I saw their sales process and I was like, I can make this like we literally can just change a handful of things around here, switch it from one time to membership, make these packages based on these price points, have an intake questionnaire, you know, like do some of the things that we already know work over and over and over again, and we 5x the LTV of the customer. So, 5x how much people were worth to the business. And so, it's like, great. Well, there's a 5x and uh then all I have to do is just double the locations over the next 5 years. I got a 10x. Great.

5:14>> And then what do you do once you do that? Is it just collecting cash or is it to eventually then sell that business? >> Depends on the business. >> Move on to the next one. >> Depends on the business. Um I would say there definitely are like I used to give it probably like I always wanted to hold everything forever, but I think there are times where it does make where where businesses get to a point where the next like increment of growth um requires like an order of magnitude in terms of effort that it's not worth or we might determine, you know what, we're we're good cashing out on this one. Like we might not be the right partners or like we might not be the right owners to take it from here to there.

5:49Um it also just depends on what's on the horizon. If it's like, you know, interest rates are super low. I mean, I sold I sold literally everything I owned in 2021 cuz money was free. And so, I was like, I sold my house, I sold my cars, I sold all three of my companies, I sold everything. I was just completely cash. Um cuz it just it would just seem ridiculous what people were willing to pay. So, I was like, "Okay." And so, if like something like that comes along, then I would be considered. If someone wants to If someone wants to buy it more than I want to own it, then I'll always I always entertain offers. >> And in hindsight, it seems like you made a pretty good deal by selling everything somewhat at the peak of the market. I think you I think you cashed out. The market kept going up a little bit and then it started Yeah, amazing time. And then I think you were in contract to buy a house, weren't you?

6:24>> Yeah. And then you backed out of that. >> Yeah. >> And also, fantastic time. >> Yeah. So, things have worked out pretty okay um on on the timing of that. And I would not like claim it just So, it wasn't like, I think I'm timing the market. It was just more like, "This makes sense like this is a this is a deal that I will accept." And then on the flip side, when you're buying, you're like, "I don't know if this is a deal I want to do." And it's just more like that. Unless you have like an absolute need, which I would say on the flip side. Like, if you need a house, buy a house. You know what I mean? Like, if you you know, like, whatever. If you need a If you need an office for your company, like, buy an office cuz you're going to make more than trying to time the market perfectly, at least

6:55>> I run a marketing agency for uh martial arts schools. Um >> Oh. >> I offer lead generation. And yeah, I offer lead generation and appointment setting services. Um I currently am at 420k in revenue, 100k in profits. Um and yeah, I guess the problem right now is that I kind of started this just doing freelancing, kind of stumbled into martial arts on a whim >> Sure. >> after having success with the clients. Um I figured out like a repeatable system to get them results, get people showing up, get people coming for the first class, and that's kind of where I'm at today.

7:27Um I guess my problem right now is you know, I'm selling three-month contracts, and uh churn's pretty high still, and I kind of just didn't really fix the churn issue. I kind of just started selling a lot and getting clients and have a good relationship with all of them, but uh I've been kind of stuck at this range, this uh 35,000 per month for a while now, and uh clients have leave for a lot of reasons out of my control. Either A, I do a great job and they can't handle the volume coming in, or B, they don't have the patience to kind of keep going with it. And uh I think

7:57>> Do you want to take this one? I don't >> I don't uh run a martial arts school myself, so sometimes I have issues with sales and um I can't really run a martial arts school. So, I kind of just grew this agency on a whim. >> [laughter] >> What do you want to have happen before I answer the question? What do you want to have happen? >> your goal? >> Yeah. >> That's the the question I like to start with. >> Yeah, I think right now I'm trying to figure out if I should keep pushing on this or if I should pivot. I mean, like I didn't really set out to start an agency

8:27>> What do you want to have happen? What's the goal? It depends whether you should push or pivot depending on your goal. >> trying to make a certain amount of money? Are you trying to sell a business? Do you want a lifestyle business? Like, you know what I'm saying? Like, what do you want to end up? >> I think right now I think I want to learn how to make a lot of money and exit and >> Well, this business will not exit. That's for sure. >> Yeah. >> We we can tell you that. >> Yeah. >> That you will not exit. That's for sure.

8:52>> So, the question is, can you learn something from this business and make money at the same time, or is there a better opportunity? >> Yeah, I thought about potentially selling my book of business and then opening up and pivoting to some sort of brick and mortar kid education business. I mean, I've I've kind of fleshed out the scripts on how to get parents and getting them invested into a martial arts program and the whole nurture sequence behind it. So, I thought about investing the money cuz I've saved about $100,000 in this business and I was thinking of kind of leveraging that into maybe investing in an actual brick and mortar and learning how to scale that, but um I guess I'm just trying to figure out do I, you know, am I in a good spot? Should I push the agency, grow it, you know,

9:33>> what Leila's going to say. We'll probably have two different pieces. Like, we'll probably come at this from two different angles, so you'll get a double trouble on this one. Um >> Sure. >> But I'll say this. Congratulations on learning how to generate leads in a market and work them and get them in. You've You've learned acquisition. Super valuable and you've learned it for a specific avatar, right? >> Appreciate that.

9:58>> The next step that this business like I can tell you where this is going to go. You would have to You'd have to basically change this entire business in order to make it uh a bigger sellable business, which is essentially the same as starting over. Uh if And that's all based on your goal. Because the reason that you have the churn you have is because martial arts studios in general tend to have significant you know, they have high churn. They're typically not very good business owners. Uh not very good, but just they're small, right? They're very volatile. And so that volatility is reflected in your business and volatility in their business and your business therefore creates a business that is not valuable, right? And so that's going to be based on them. The only way that you can get those types of customers um who are volatile inherently to be sticky is to look at the things that those people already buy that they don't churn out of. So what are the things that they buy that they don't churn out of? If you were to stick with this, and I'm just using this as a mental construct, and then I'll get into more specific examples of what I think you should do next. But big picture, you could their their payment processor, they don't churn out of, right? Their CRM, they don't churn out of. Um

10:55>> Right. >> Their insurance, you know what I mean? Like there's like there's there's things that they don't churn out of. Marketing stuff, they will churn out of left and right and center, right? So I think that you have this whole kids education thing. If it were me, I would prefer you go and find an industry if you want to do brick and mortar, which is fine. If you want to go brick and mortar, I would find an industry that already has a product or service that people don't churn out of. Then I would apply your skill of learning acquisition to that business, and then you'll be able to like you can go and start acquiring businesses um and then filling them up because you know how to acquire and those businesses will already have the stick in place and so you'll have the full stack.

11:41>> Mhm. >> What was your experience prior to this business? >> Uh well, I worked for a marketing company and I learned lead generation there and then I kind of just um the company ended up getting sold, so I ended up, you know, trying to >> Do your own >> have a freelance thing and I learned Yeah, I did I I got my own clients and then after I did that for about 2 years and here I am with a bunch of clients and I don't really know what the next step is, so

12:07>> Okay, that's great to know that you came from a marketing background. >> Yeah. >> Yeah, so I I I thought about getting into the kids education space because, you know, I did martial arts because um I came from a sports background teaching kids like different sports, specifically frisbee, um which was cool. Um and I guess I thought about, you know, buying some sort of like tutoring business or kids education and taking my marketing skills there and growing that, um but uh just because if my goal is to learn how to sell and and and sell a company is I'm not sure if the agency space is there, too. That's where my head's at these days, so that's where my head's

12:42>> Just find something that has high revenue retention, high stick. >> As you say, you want to find something easy to market. Like >> Right. >> it's really impressive that you've done what you've done for martial arts studios because we've worked with thousands and it's tough. So, I mean, I can say that objectively. Uh it's like you have a you know, like a level eight skill that you're using on like a level three opportunity. And the opportunities that you're kind of presenting, they're not really that much better. [laughter] It's like maybe a level four.

13:11>> They're just different. Yeah. >> I'm like, can you get a level eight opportunity to match your level eight skill? >> Mhm. >> And what And what is that to you guys? >> It's something that has revenue retention. I'm just telling you right now. It's something with revenue retention. revenue >> Yeah, if you just solve for that cuz you have revenue retention, if you know how to acquire customers, you just grow a business. Every year just gets bigger. That's I mean, the hardest thing is revenue retention. >> I I just want to like open up your mind. You're looking at opportunities that are linear. I want you to look at opportunities that are exponentially different than what you're doing right now.

13:45And I think the reason you're thinking linearly is because, you know, without noticing, we have these beliefs, right? That we keep ourselves in these boxes thinking like this is what I'm good at. The fact that you're very good at marketing, you need to find a great product that retains customers easily to market. What that is, maybe it does scare you or makes you nervous and you're like, I know nothing about that. That's okay. You can figure it out. And the thing that I tell people a lot is it is just as hard to build a small business as it is to build a big business. Both of them are going to be painful. You're going to suffer. There's going to be late nights. It's also just as hard to build a uh I would say like a more advanced business as it is a small business. I can tell you that from personal experience. Like building a gym up to what it needs to be is as hard emotionally as building a large company like acquisition.com. And they are hard in different ways and they're also easy in different ways. So, you're going to have 50% [ __ ] and 50% good no matter what opportunity you pursue. I would love to see you pursue an opportunity that is at least worth the 50% [ __ ] you're going to go through. That's something me and Alex talk about a lot which is like pick an opportunity that's worth the pain.

14:48Because it's going to be pain no matter what. This goes for everybody on the call. It's going to be hard no matter what. So, pick one even if you're like, I don't believe that I can do it. You will figure out a way. And everybody does. Even when we started acquisition.com, you know, we didn't know anything about investing or buying companies or doing any of those things and we learned along the way. It's just that you have to have the belief in yourself to just start. Like you're not going to feel ready for any opportunity that's exponentially different than what you're doing right now. You get ready by starting.

15:18>> Got it. Just got to find a level eight opportunity. Now, >> literally you're familiar with >> I would literally go on ChatGPT and I'd be like, "Tell me what an opportunity is that has great revenue retention. Here's all the industries I've worked in. Here's all the skills. Where is something where I can get insane revenue retention that is five times more likely to sell and be worth something and make me, you know, maybe it's $50 million compared to these businesses I'm in right now." And just like look at the list and then think like, "Okay, well, like where do I have a 30 to 50% shot of success?"

15:53>> Mhm. >> I mean like I I don't know how to explain this. Like I have never felt ready before I tried something. I'm always like, "I have no [ __ ] idea if this is going to work. I could totally fail. This could totally be terrible." >> Yeah. >> And like that's going to happen no matter what. It's just like you're picking things that are small. And here's the thing that's even worse. You said you want to sell a business? Well, then that means you have to stay in the game, which means you have to be challenged. >> Right. >> If you pick something that you know you're going to win, this is like where high performers just die. And I can tell that you're a high performer, is that you pick something that's too easy.

16:24And then you get disengaged and then you're like, "I can already play this out. I know where this is going to end up and I don't want to go there." And then you don't even want to see it out to sell the thing because you already know where it's going to go. It's not interesting. >> [snorts] >> Mhm. >> Do you have anything you would add? >> No, you're right. Yeah. I watched and watched. Yeah, I watched. Yeah. No, last year I I remember I was at the 10K rate and I I watched a bunch of Alex's videos and he just said double ad spend and keep the course and here I am a year later, doubled ad kept the course and I'm now I guess just got to find a, you know, high leverage activity. So.

16:58>> Also, I would just say this, you're going to learn more trying something than you are going to learn thinking about it. We don't learn while we stay in our heads. We learn when we get out into the world and we do stuff. So like think about a way like how could I test these opportunities? Can I be an affiliate of a company like this? Can I be an affiliate to an insurance company? >> Right. >> Could I just come in and be a contractor to help build up this X company? Like you could literally just find one big client and be like, I will do your in-house marketing just so you can learn the business. >> Yep.

17:26>> Dang, I would love to do that. >> And use the cash that you have as your savings so that you can be aggressive with your learning. Right? As in like that's your nest egg so you don't have to worry about living. >> Yeah, I've been I've been doing the whole like Chipotle thing, frugal thing, and I've been I've saved up my first 100k. >> Good, man. >> 100k with you guys. So, I appreciate you guys. >> No, I appreciate you. >> Appreciate you, man. >> Awesome. Now, I'll I'll do the thing. >> All right, appreciate you, dude. >> Yeah, appreciate you, guys.

17:52>> See you later. >> How has your criteria changed for businesses over the last 2 years? >> Um it's just much bigger. It's just the businesses have to be a lot bigger. Um they have to be billion-dollar opportunities now. Um when I first started, I think honestly when I first started, the goal was like $50 million opportunities. And then it became like $250 million opportunities. It's it's almost like 5x'd actually like every every like 18 months or so. It's almost 5x'd.

18:19>> So, how does it work exactly? A company reaches out to you and they say, "Hey, we want to be >> acquisition.com on the site and then >> And what do they do? They submit their info that they want money or they want to sell or what what is what is it? >> we have we have um we basically have three kind of places that someone can go. So, for like seed capital SaaS, you know, software type startups, we have ACQ Ventures, which is our venture arm. And so, those are typically like small or checks that are between like 50 and a million dollars like check sizes. And so, we do, you know, a lot of those deals. We do probably like a couple deals, three, four deals a month sometimes. Um like December did four. I think we did four in January. Like we we do a decent amount of deal volume there.

18:59And those deals are much more like meet the founder, understand the idea, cool, we can we can just deploy. Um we have uh the private equity side, which is kind of like the the big big the big boy side. Um and those businesses like if we're going to do a deal, they're all bespoke based on, you know, the valuation of the business, where we think the business can go, what our value add is. Um, and typically in that side, it's like right now we're 40% SaaS, 40% um, uh, B2B services, and then 20% consumer services. And we're shifting over time towards just a blend of SaaS and professional services. That just tends to be where we just do really well.

19:36And so that's on the private equity side. And then, um, we have the advisory division which we started in January of last year, which is uh, companies that are like not really portfolio ready. And so that's kind of like that, you know, 1 million, 10 million, 30 million sometimes, uh, dollar per year business where uh, that's like they need to change a couple of things. And the reason that happened was for the 3 years prior to January of last year, um, we, you know, we'd look at a business, we'd do four, five, six, you know, due diligence calls, get to understand the business. And a lot of times, like 90 times out of 91, we'd be like, "Not a fit for us right now. Not a fit for us right now. Maybe change these two things, move this metric up, and when you do, like call us back." And what ended up happening is a lot of founders were like, "This was more valuable than anything I've ever had to go through, and thanks for doing it free." And for me, it was like it was actually super expensive cuz I'm doing that 90 times, times however many calls, lots of companies. And I was like, "I wonder if we could do this in a way that we could charge to the same basically assessment of a business and say, 'Here's all the things that we would do, here's how we'd change it.'" And so then we, you know, we we we wanted to see if people were interested in it. So January, I was like, "Hey, if anyone wants to come out to headquarters, you can meet my portfolio team. We'll kind of assess the business and be like, 'These are the blockages to either making it more valuable or scaling it.'" And so it's like you'll meet with my head of marketing, he'll be like, "Okay, change this on your webpage, change this on your ads, change this on whatever."

20:49Or meet my head of sales if sales is a constraint. These are the These are the things that we'd do. And, um, people have really, really, really liked it. So it's been exceptional. Um, and I think the reason that it works so well is that there's kind of what I was alluding to at the beginning is that there's just not a lot of help at that $1 to $100 million range. Um, and I think we can provide that. And so >> you make money from that? Are you taking distributions from the company or have you sold some of >> No, no, this is just we sell it as an advisory service. It's just a service, B2B service.

21:16>> for acquisition of the >> Oh, overall, well, no, we have distributions that come from the private equity side. >> Okay. >> Um the venture checks, obviously, I'm not going to see anything for that for 10 years. And then um services is just normal business. >> Why don't you have a website or a place where where people could see the companies that you've invested in? >> It's a good question. It's something that I've gone really back and forth on. The main reason is like when I sold Gym Launch, um I sold Prestige Labs, which was a sister company that did supplements and sold through the distribution base. And I remember in the diligence meetings uh for that, it was like a huge point of contention that I had a 10,000-person Instagram following at the time. And they were like, "Are all the sales coming from your Instagram?" And the business doing like 20 million a year, just the just the supplement side. And I was like, "No, it's not coming." They're like, "Well, this could be a this could be an issue for us if like we can't have complete control of the Instagram, and how do we know you're going to keep promoting it?" And I was like, "My Instagram is not driving like 10,000 people does not make a 20 million. Like I promise you."

22:12And uh seeing how sensitive they were to kind of like key man risk around, uh you know, an acquisition, I was like, "Okay, uh if I do deals and I grow my brand, uh I don't want people to know what the companies are because I'm going to have to go like I'm going to write a check, but then if I publicly associate with it, then I'm going to have to go with the deal later. So, like for example, School, that was purposely, you know, like a brand association plus money, obviously, that went into it. Um but I know that I'm in that I'm in that for the long haul. You know what I mean?

22:37Like I'm going to be with School for many, many years. And so my key man risk is something that I'm willing to basically deal with. Whereas if I buy a, you know, an HVAC business, I publicly associate with it, um a potential acquirer will want me to sign some other non-competes. I'll have to have some provisions around uh promotion, and I just didn't want to do that. I have gone back and forth on it, though, to be really honest. Like I've gone back and forth. >> It seems to me like there would be a net benefit on that. Reminds me of something >> I've gone back and forth. I have gone back and forth on it.

23:04>> like on Shark Tank business where it's like as seen on Shark Tank is pretty big. And you could argue that the business you bring to that drive up the valuation to a point where even without you it's still higher than if you were never involved. >> Agreed. So then the next thing that goes is if I have all of these different things that I'm like pseudo promoting, then it almost feels like I'm shilling a lot of things. >> No. >> And so that's been that's been where I've been stuck.

23:29>> I would just as a viewer of you, not that anyone like not that I would crash question your credibility, but I think that it would it would bring a lot more clarity where I'd actually >> I've gone back and forth on it. I mean I've gone back and forth on >> I think it would attract a lot more businesses where you could say, "Hey, when you started with acquisition.com you were valued at this much, your revenue was this much, and now look at you." >> Here's the other thing I think it would help you negotiate better terms saying that you're going to be on this website where it's even a hundred companies. And I think it's important you put them all in the same place so that it's not like you're promoting this or promoting that.

24:00You You should never talk about these businesses unless in a podcast setting where you're giving an example. >> the other yeah, I mean I've been very I've been torn on it. I was like you know I mean like I've been very like uh because of all the reasons I just said. But the other one is kind of like the um the compliance thing that I just said, right? Like if if a company could you imagine like a company does something stupid, and companies do stupid things. Even if I wrote a venture check to a business and then and the company does something, I'm an owner and any any you know reporter or you know clout seeking YouTuber would then be like, "Hormozi is saying doing this and it's just like

24:37>> How is it different from Y Combinator where they're very public? Well, a lot of these like even some of these private equity funds are just like >> That's their value prop though. Y C's value prop is Harvard's value prop is like the the main thing they get is >> Yeah, but there are plenty that go through Y Combinator that just turn out to be you know >> Yeah, maybe not the best. >> Yeah, but I think it's well Y Combinator is kind of unique in that like I mean to be fair if if a if a Harvard grad does me bad Harvard takes a hit.

25:04Um but it's a law of averages. >> It's going to work both ways. I think I think it's going to hurt you if a business does something that reflects on you and if you do something it reflects on all the businesses. I think it goes both ways. I think the net benefit is like a 51 to a 49. >> I I I I I mean like I have I have gone back and forth to the theory where I've been like I'm going to I'm going to make a stuff public. Um I think we are make I think the ACQ ventures if I'm not mistaken I think our ventures things are public.

25:32Um so it's really just a private. >> I don't even know where to start. It's >> Well just ask one question I'll try and answer that one. >> When you were in the process of pivoting with the model for Gym Launch and you were trying to just like get money together to even make it to the next thing. That's exactly what >> Sweet. >> [laughter]

25:56>> Fun. Like I have reread and watched and and researched like everything you've ever done regarding that cuz it's just I I feel it balls to the wall. Because I mean >> What do you need to do right now? >> I need to have people so that it is not solely me. >> What does our do by the way? What do you sell? >> Uh it's a paid advertising agency for cannabis.

26:23>> For cannabis? Okay. Got it. Okay. Tough. >> Yeah. But that on the flip side of it being tough that's why there's there's so much leverage with that. >> Cool. >> Uh I get it. There's a ton >> So what's the issue? What's the problem? >> Uh me. >> Well yeah, sure. It's always you. But like what's the what's the business problem? Like is it not make cuz you're like I need to make all this money but like are you not profitable? Are you like what's

26:50>> however it's just not well uh long enough for the profit to just exist in a lump sum enough to be able to like pay for people cuz I've been >> I actually don't know what that means. >> Well, I've been actively doing this for like 4 months. So, it's like I've brought money in. >> Okay. >> But >> Do you have >> I've never had payroll, never done any of that, I've never hired anybody. It's all those soft skills and just having and working through the anxiety of getting through that first hire.

27:19>> What's what's your revenue right now? >> Revenue's 600k. >> Okay. Okay, got it. Um >> However >> Okay. >> That is the literal metric, but I collect ad spend for that. So, actual profit would be like 90 900k year. >> Okay. Yeah. So, okay. So, this will So, you got to sit in this room um and have some different different conversations.

27:47I'm going to be super direct with you. You don't need to worry about anything you just said. >> Yeah. >> Like you have 90k a year that you have to work with. You have no room to hire people. You either need to fix your model uh because if I'm guessing you're working all the hours of the day to make the 90k. >> Yeah. >> Right, which means the model's broken. So, you can't hire more people because you basically you the most valuable employee in the business like the founder is always going to be the most valuable person in business, especially day one when there's no one else.

28:16So, you need to get to a point where you're like you should be able to make way more than what you need so that you have room to hire other people who can help you. And so, right now you don't have a people problem. You have a model problem. Which means the way that you're charging or billing the cannabis people, you're either offering too much for them. Well, it's really you're just like you're offering too much for too little. Fundamentally, that's what it is cuz either you need to be working way less to be making the money you are and be like, "Shoot, I could take 10 times the customers. I just need more customers."

28:45Or you should be charging way way more for where you're at and be like, "Okay, well I'm making 10 times more than I am right now and now I can go afford people." That's it. So, either you need to do you need to work on how you do your delivery to make it 10 times more efficient or make it so that how much you make you make 10 times more per customer. Cool, you're doing. It's by about a factor of 10. Like, I think if you came here and you're like, "We're doing about 900,000 a year and it's just me." I'd be like, "Okay, cool. Let's start hiring some people." That makes sense. Um hm?

29:17>> I I get it. It's just I I I didn't know that the question was >> dude. No, no, no. I'm No. >> And I was >> Dude, you're good. You're good. I'm trying to help you where you're at. >> Thank you. >> Do you Do you get what I'm saying though? Forget about that. Do you get what I'm saying? >> Yes. >> So, you just need to 10x the price that you're charging for what you're currently doing or make how you deliver what you're doing 10 times more efficient. >> Understood. >> That's it. Otherwise, the model is not going to work. So, trying to scale what you're currently doing is a bad idea. You need to fix what you're currently doing so that you can scale it.

29:44>> I own a pest control company. We're $50 million this year. >> Big body. >> I started I've I'm third generation. I'm the one that had the story about the Undercover Boss um when we acquired a company. And uh I want to know how uh how do I get it to a billion dollars and what's holding me back is manpower. Um we built a recruiting engine and we kill it, but honestly uh there's these cycles that you run through and now we've gotten to this cycle where our A players kill it. We hire an A player and they get off, then it's they're fine, but we've got constant churn at the lower levels of the company.

30:22>> It's door knocking, right? >> Yeah, well, no, we don't do we don't we only do about a million dollars a year in sales from door knocking. The rest of it's organic, acquisitions. >> Oh, so you're doing M&A? >> A little bit, yeah. >> Okay. >> So, I bought a $3.6 million company last year. I average around a million, maybe a half a million a year in acquisitions, so probably average. >> [snorts] >> So, it's mostly organic. I'm I'm growing about 20% 21% organic annually, and then the rest of it has been So,

30:49>> When you say organic annually, what do you mean? >> paid LSA organic Google search >> Okay, so paid ads. Okay, got it. >> All paid, but yes, absolutely. There's a little bit. SEO >> Okay. >> current customer upsell, referrals, all those types of Mostly a sales organization is what I would uh orient it as. But, not like I said, we do about a million door-to-door. >> Um out of 50? >> Uh yeah, out of 50.

31:14>> So, 2% of sales come from door-to-door? >> Yep. And I I mean, we do have a budget to scale it up to about 4 million next year. >> Okay. >> Um because we're trying to figure out, all right, how do we get to a billion dollars? I mean, the guys that are doing it are either massively funded and acquiring you know, hundreds of millions of dollars, or they are been around for 75 years, or they're door knocking. >> What's the EBITDA right now? >> Uh 20%, so we had eight eight million last year. >> Okay. So, you got eight in EBITDA, you want to get to a billion in sales or billion dollar valuation?

31:41>> Billion dollars in sales. >> Okay, so you need 20x. Um how many What does each market do, roughly? >> Uh the average branch? >> Yeah. >> Yeah, 2 million. >> Okay. >> [sighs] >> So, 950 to go. Uh >> Exactly. >> Yeah, yeah. Uh only only 475 locations to go. Okay. So, I mean, the like I mean, do you have a time frame, or you just would like to get there eventually?

32:10>> Well, in under 20 years. >> Okay, yeah. Um it's likely um do you have like some special sauce? >> Realistically, uh I would say that we have an excellent execution on sales. Our our supply is the issue, not the demand. >> Supply of sales people? >> Uh well, that is Yeah, absolutely. It's mostly It's not about the sales people, it's typically about the delivery of the product. >> Of like literally just the pest control services?

32:36>> Yeah, we get backed up, you know, like every year. That's our constraint. We always follow up >> you're saying the A-players from? That's where you're saying the constraint is? Is it for them? >> Uh no, no. I I think we're killing it in A-players. Our Our problem is we we we don't have uh we we're not retaining any average talent, if that makes any sense. And so our A-players are quickly rapidly rising through the ranks. We end up promoting them. They end up running a branch or whatever. And next thing you know, you you don't have any average average talent, if that makes any sense.

33:02>> not a bad thing. But um so manpower is the issue on the delivery side, right? >> Yeah. >> Okay. So what's the what is the recruiting methodology that you have for the deliverers? >> How are we recruiting now? It's mostly >> the the delivery team. >> LinkedIn, Indeed, and then we Indeed was the majority the vast majority. And then a lot of outreach, a lot of individual. Like we we treat it like a sales organization.

33:30>> Yeah, the recruiting. >> Yeah. So but that's still the constraint is what you're saying. >> It's Yeah, it's it's the retention of the employees. >> Oh, so you can get those deliverers, they don't stick. >> They don't stick. That's right. It's a hard job. >> Yeah. >> It's a lot It's a lot of work. >> Are do they have a career path? >> They do, but it's so quick that the A-players are like step into that and then >> So when you say so quick, how many steps are there? >> As far as getting identifying an A-player? >> Well, how many promotions are there in the career path?

33:57>> Oh. Let's see. Team lead, branch manager, regional manager. Um that's >> Three? >> So three. >> Okay. So I'll give you a little little little tactical Tuesday. Um So beyond what I would consider the soft cultural stuff, which is probably beyond the scope of an answer that would be reasonable and actually executable for right now. Um the way that I like to think about career ladders, and this applies to roles that are repeated within an organization. So this is sales, this is video editors, whatever, right? Is that you've got title and you've got pay.

34:39And so, I like to think of each one of the rungs that you just had there, there's three. I think that you could make this into nine or 18 rungs. And what ends up happening is that instead of it being like, "Oh, I'm in. I'm not an idiot, so I got promoted, and I'm better than not being an idiot, and I got promoted again. That's it, and now I'm going to leave because there's no other There's no career advancement for me." Right? That's probably one of the reasons The literally the reason they'll cite on the way out, right? >> Yeah. >> Okay. So, we just need to create [snorts] career advancement. So, So, I'll just use I'll use sales cuz everyone kind of understands that, but you can translate it over. So, if we have or delivery, it doesn't really matter. So, I have junior, normal, and then senior for each role.

35:22And so, we say, "The first thing you're going to do is you're going to go from junior to junior that's paid more. And then you're going to go to We're not going to call you junior anymore." And they're like, "Thank god." And that comes with a perk, which is that you don't have to work on Saturday nights. Great. Then from there, we're going to go to here with a little pay bump. >> [snorts] >> Then we're going to say, "Great. After you get your pay bump, you're now a senior pest deliverer."

35:51>> [laughter] >> Non- Non-pest Yeah, they're not delivering pests. They're like, "Here's some rats." Um And then here, we have our senior plus, right? But all of this could be the first title that you had. And then you repeat this at title two, you repeat it at title three. And so, what happens is they're always three to six months away from another promotion. >> Mhm. >> And so, it's like whenever you're about to leave, that way there's They're like There's always career advancement that exists. And so, and by alternating title {slash} perks, Yeah, well, cuz if you just do title, people I mean, to be fair, people will just take a title bump, and they'll still go out and have a steak dinner with their girlfriend. It works. But if you can have that and a great parking spot, or that and you don't have to work Saturday nights, or that and you can pick your calendar, or that you know, like there's always a couple of perks. You get a better truck, whatever it is, right?

36:38Um those things you can scatter around and on the first day of the orientation process, we like to say like you are here. This is where you're going to be if you do this. This is where you're going to be if you do this. And so we tie these to objective measures. And what I really like to do with these is that I like this with total volume. So, think about it like uh in the deliveries, it's like once you get your first you get your first uh you know, 20 five stars, you get to junior plus. And we get and we want that first one to be like right there, right? Cuz that's where some of the the biggest turn is right in that first, you know, 30 to 45 days, I'm guessing, right?

37:18>> Absolutely. >> So, it's like how do we get the how do we how do we make the first one a 6-in putt? Okay, great. So, we have this one, they get their first win. Hey, I think I like my job, great. And then here we're like, okay, now you got to get to 100. And so then we basically start expanding the reinforcement cycle for each of these roles, so that it's always just a little bit further, but there's always something to look forward to. And this is what there's a lot of there's a lot of solutions for your issue or there's a lot of elements to the solution. This is one that I can deliver to you in 6 minutes.

37:48>> Perfect. No, that's great. I uh I think our our our main constraint really has been we haven't been very creative >> Yeah. >> really. I mean, and that's what that's one thing I'm I'm really seeing. A lot of people quickly rose rose like they they came in, they performed really, really well, ended up moving up really fast, making a lot of money. But then you have people that are real slow and they bounce. >> Yeah. So, just give them more ways to win. >> Yeah, that's great.

38:13>> My name's Cody. I sell roofs to people. We did 140 million last year >> Sick. >> trying to do 250 million Uh, year. >> That after >> Trying to figure out how to follow the principle of giving away more and you know, guarantees and and bonuses when I have such high hard cost >> Yeah. >> and such a high ticket item. >> Yeah. Well, what are gross margins right now? >> Uh, 40% >> Gross. What's net? >> 10 to 15 >> Okay, got it. Um Do you want to sell it or do you just want to keep it forever or?

38:39>> Well, I actually just sold my roofing business and now we're part of a PE firm that that now I'm directing that that entire office. >> you the platform? >> Yes. >> Okay, so you're the platform and how many >> tokens have they done? >> Eight. >> Got it. How long has it been since they started? >> Uh, about three, four years. Um, I I just got acquired 30 days or we just closed 30 days ago and now they're trying to roll everything into my brand and I'm >> Chaos. >> spearhead, yeah. >> Yeah, got it. Okay, so sorry. Go back to the original question now I have like better context on this.

39:08>> So, how do I give a you know, follow the principle of of give away more value, make the you know, offer so good it's it's you got to feel dumb saying no when I have such high hard cost, I you know, I can't really do a money back guarantee, I can't really give away more than a you know, a roof. >> Well, the question is is that the constraint? >> Well, >> Like is that the thing that's limiting the growth of the business? >> In in my theory, yes, because if I create a good enough offer then um, I could roll that offer out to the other eight eight other brands and that would be the biggest amount of leverage I could deliver you know, in the shortest amount of time.

39:37>> And is everyone insurance based? >> Well, that's why they acquired us cuz we're retail. And so >> So, you're So, you're the only guy selling just new roofs, everyone else is doing storm chasing and damage repair and [ __ ] like that. >> Correct. And what they want us to do is bring the retail model to the other brands um, and add another layer is we sell everything 100% virtually. So, no in-home appointments, it's it's all you know, digital. And so, that's what they That's the vision is is taking that you know, nationwide. >> Centralized sales virtually. >> Correct.

40:02>> So, you want an irresistible roof offer. The greater the change, the greater the risk that the change doesn't yield the outcome that you want in the business. And so, fundamentally you're always making a bet that you're going to get a higher return off of incurring the cost of change than it cost you to do the change, right? And so, in this instance, he is now, you know, 30 days in or 60 days post acquisition of his roofing company getting bought with seven other roofing companies and for them to try and combine them. He's the one who's supposed to like lead the effort of combining all the stuff. And so, the idea of like, let's change the offer.

40:32The offer is one of the highest leverage things you can change, but it also affects every department. It changes how you bill, it changes how you sell, changes how you advertise, it changes everything, right? Which is why it can change a business overnight, but it can also destroy a business overnight. And so, when I see a business that in aggregate between those eight has $140 million in revenue and 30-ish million dollars in EBITDA, you're talking about a business that's got probably 300 to 400 million dollars enterprise value. I would be very hesitant to immediately change something that's obviously working. And so, there's lesser degrees of change that have higher likelihoods of working that could still materially impact the business in terms of increasing the likelihood that it exits, right? And fundamentally, I'm guessing that's what he wants to get a slice from. Centralizing the sales would allow them to decrease costs because they could not have guys on the road and it's just cheaper to do it. It's also easier to hire sales people who are remote. All of these kind of downstream cost savings. The other benefit is that when you hire remotely, you have access to a bigger pool, so you can get better sales people at lower prices who close more deals and they could cut down all the the real big cost for this business is sales people who are unproductive. All right, so people who are they're losing leads on people who can't close. And so, by reducing costs, increasing talent, and increasing sales utilization, all three of those things reduce costs and increase revenue, which could disproportionately drive EBITDA, which is what that company is being valued on.

41:51And so, when I look at that, I'm like, this is a change that you have to do in order to sell the company and will result in revenue and EBITDA growth. And so, let's do this massive change first before risking the biscuit, right? Because we might just found out that just from doing that, we get a 25% increase in EBITDA. And that might be enough. Just bringing everything together plus adding the 25%. You like you might be right as rain, and at that point, why risk it? I feel like if I were in your position, the first thing that I would do would be centralize everything first without trying to change. Basically, I wouldn't I would take the model that I already know works. Is what was your revenue before you did the before you were acquired?

42:28Okay, you're doing 20. So, I would like in terms of introducing levels of change. So, this is actually pretty good for everybody. Like I I would typically not try and change like five things at once. And so, you centralizing all sales is going to get cost efficiency improvements, and you're going to be able to have higher sales utilization. So, you probably cut off the bottom third of the sales force that's low performing. That alone might give you a 25% lift in general because the best sales guys will take more of the sales, and you'll have centralized all the costs like we have centralized all the costs, right? And so, you'll have an increase in revenue and a decrease in cost that's paired.

43:03That would probably be my first step >> That was part of the acquisition deal. That's the only way I did the acquisition is if they were going to give me full control and centralize >> Yeah. So, but like I wouldn't I mean I know the question is about roofing, but like that's what I would do first, and that will probably take you 6 months or more. Um realistically. Um in terms of in terms of the offer to roofs, um an offer that's worked really well in home services is instead of being a money back guarantee, um I position it as a profit guarantee.

43:33So, it's like listen, um you want your thing to be on time and on budget, probably. And so, I guarantee that I will deliver it on time and on budget, or I'll give you my profit. Which is 20%. Whatever. And that way it's like you're not underwater, and you still have 40% gross margin. So, you're not really losing on the deal. Um but then people are like, "Okay, so he's got skin in the game." And so, that's a way of closing significantly more deals cuz the two biggest um obstacles that Well, you would know this, but in most home services, it's on time, on budget. And probably for roofs, it's like in how much am I going to be displaced? How much is going to interrupt my life? And so, I would put my guarantee around those items and then just have a marginal amount that's back, but it's really just cuz all they don't So, the big thing that we just for everybody with guarantees is that people don't want their money back. They want the roof.

44:18And so, they just want to know that you care enough to make sure the roof gets delivered. And so, that's really the the solve for the guarantee is that just pays down risk of them not getting what they want. And so, as long as that gets accomplished, you don't have to do with money back. You can just do it with some money back that gets them to say yes. Does that help? >> It does. Thank you. >> Perfect. So, he wanted a better offer despite all of those improvements and I was like, "Okay, I think I can I can think of something for you." So, if you if you look inside of the Offers Book, page 125, I talk about guarantees. And so, this is the guarantee formula. And so, whenever you're thinking about adding a guarantee, like this is what I think through. So, if you don't X in Y time, we will Z. Like that is fundamentally what a guarantee is. And most people I would say a lot of times people just say, "I guarantee it." But that doesn't mean anything. You have to say what the terms of the guarantee are on a timeline. What do I get if you don't perform, right? And so, with this business and some people are just like, "Well, I can't give a money-back guarantee cuz I would just lose too much money." Understandable. Now, if you have hard costs like he does, then what we can do is we can just give something else. We can give them a lesser portion of money. We can give something else for free. And so, the guarantee is a consideration. It's what are we going to do to show you that we're just as invested as you in the outcome being positive, right? And so, we basically increase we shift some of the risk from the customer onto us. And this is this is all you're doing as a business when you do guarantees.

45:35They take some risk of buying and you're saying, "No, I'm going to take some of that risk." And so, sure, you could take 100% but in this in this situation, he'd be taking like 200% of the risk. Basically, he'd be losing money, right? And so, the idea is again, you can add stuff. So, hey, if you don't get what you want, I can add things, which is like, "Hey, if you don't hit your goal, I'll add more time." Which does work as a sales tool. Sometimes though, in the actual in the real world, if someone's not getting results, they're like, "I don't want any more from you. I hate you, right?" And so, it does still work as a sale, but it's one of those like mid, right? Now, alternatively, you can go the reverse direction, which is take away negative, which is a discount, right? So, hey, I can't give you all your money back, but I can give you back my gross profit, or I can give it back 20%, I'll give you back 10%, right?

46:17These are all things that you can choose to give back. And the thing is is it just shows that you have skin in the game, and all we have to think about, and this is the point of a guarantee, so I want to make sure I'm very clear. The point of a guarantee is not to have the craziest guarantee. The point of a guarantee is to maximize net conversions. All right, so we just need to increase sales more than we increase refunds. So, proportionally, we net more sales. And if you can just do 10% back, then that's enough to change behavior.

46:43And that's the point. Like, if there's no difference between giving 25% back and giving 100% back in terms of the actual performance of the sale, then give 25. And so, you can move what you're guaranteeing in order to find the sweet spot and figure out what's actually compelling to your to your customer. And most times, the the things that you want to guarantee around are their biggest fears. In home services stuff, it's usually been around time and around budget, right? Are they getting it done on time, are they getting it on budget? If it's other services, it might be different than that. And so, you'll know your services better, and but you want to you want to list out what their biggest fears are, and then crush those with the guarantee.

47:16>> So, if you've hit a revenue ceiling, or your entire business >> I sell real estate advisory services to C-suite execs and business owners. Um we do I do about 1.2 right now, and I'd like to be at 10. Uh >> You're running like 60% >> margins, right? Like 700 a year profit. >> As an example, the guy who wrapped you to buy this building, that's like what I do. So, my my hypothesis in Seattle I'm in Seattle, I'm in a suburb uh suburban market in Seattle doing 1.2. Hypothesis, I'm moving to Phoenix next year, so I'll be I'll open the office in Phoenix, much larger TAM.

47:51I want to hear your framework about how how to think about customer acquisition strategy for C-suite execs in a brand new market where you don't know anyone. >> Yeah. So, how many people do you have working under you in Seattle? >> I have one guy. Um so, he's he's he's setting meeting for meetings for me. >> What Okay, are you concerned that your revenue in Seattle is going to drop? >> I'm starting over. >> So, you're cool just you're like this is going to zero.

48:17>> more like lifestyle, too. >> Okay. Heard. Okay. >> Yeah, so >> Well, then what did you do to get the first one point? >> Brute force calling and emailing one-to-one. >> Yeah, well, that will do it. >> So, like Yeah, for sure. But, zero to one, but how do you think about from zero to 10 in a brand new market? Would you change that strategy up? >> Yeah, if you're going for high-level people, then it's going to it's going to be more outreach driven because most high-level people are going to get everything from referrals or from meeting people in specific, you know, arenas.

48:47>> Yeah, yeah. >> Yeah, I'm just being real. Um I'm not responding to a meta ad um for buying this building, right? >> sure. Yeah. >> And so, >> And you don't pay that you don't pay out of pocket. I mean, the landlord or the seller pays my fees. So, like the customer itself isn't paying for my services. >> But, you do you do renters? Is that what it is? >> Tenants. So, like >> Yeah, okay. So, renters. >> Yeah. >> Yeah, yeah. Um that is actually kind of interesting. I remember Yeah, now now it's coming back to me.

49:14Um yeah, unique model uh only focusing on tenants. >> Tenants and buyers. Yeah. >> Yeah. Oh, but and buyers. >> Yeah. >> Okay, and buyers. Okay, got it. What percentage is tenants Yeah, what percentage is tenants versus uh buyers? >> Oh. In this market with interest rates, it's like 80% or 90% tenants, 10% buyers. >> Interesting. Huh. >> And I do industrial and office buildings, so >> Yeah. >> Like yeah. >> I'll say this. If like that specialization is kind of unique, um at least I haven't and I feel like I get solicited constantly.

49:44>> For sure. >> Um and so, >> you're not going to be hit on by broke by a commercial real estate brokers, probably. I mean, >> Mm, not really. Um but the the the at running at so like all right, zooming all the way out. You go into a new market, right? It's like you got to either be face-to-face networking etc. Like conferences, meetups, like >> Right. >> pounding the pavement V1. V2 is outreach just digitally, right? Which if you have some organic following that can help or you have to go true cold outreach on LinkedIn, things like that. That can work for sure. Again, volume.

50:18Um, the ad strategy I think because of the the unique angle that you have, I actually am more okay with it given it's like if you just lean in on the tenant side, I actually think you might have a better shot because it just feels unique rather than like >> Hm. >> Uh, I have to buy these buildings, you know? Um, so that cuz if you're like I I am a specialist at negotiating leases for commercial buildings under these conditions, then it's like you're niching down and that messaging could pull someone who otherwise would like I have multiple brokers that I use.

50:49>> That's Yeah, Red Ocean. >> Today. But I currently don't have a I own all my [ __ ] But like if I didn't, then I would, you know, I would probably be responsive to a message like that. So I think um, I would probably just from a speed perspective cuz I'm guessing you have cash from right I mean your margins are good. So um, I would probably start with ads first. No and I would do the rest as though ads don't exist. But the ad strategy would be probably one of the primary things that I would want to crack in the new market because otherwise it's going to take you however long it took you to do it the other time and I would say

51:22>> 80/20? I mean from from cold outreach to ads, what's that disparity look like? >> Yeah, I don't normally recommend doing more than one thing. Um, my only Yeah, my only exception is for local >> Yeah. >> because local there's just it's a smaller you just have to just hammer a market. >> [snorts] >> Um, the thing is just that ads don't take a tremendous amount of time. >> Yeah. >> Um, so it's like in ter your I basically would want you to spend, call it $100 to $200 a day in local ads, and your primary priority is to work the [ __ ] out of those leads and get the sales motion in place.

51:58>> Yes. >> And in the meantime you do the normal playbook. >> Okay. >> So, it's like this is my guaranteed path. This is my fast path that I'm willing I'm spending this money >> Right. Right. >> to learn to get it to to to crack it. Um that would be my approach. Now, the good news is that there's plenty of realtors who are super successful running ads in local markets. >> Platform is LinkedIn, obviously, and >> Um no, I mean, I think like again, I like the super niche uh messaging. So, I would actually be more willing to I mean, I LinkedIn for sure, but I would I would I wouldn't be as opposed to uh a meta strategy given that unique angle.

52:35Just being generic realtor number six, >> No. No chance, yeah. >> Right. >> Okay. Um Real quick, and then decommoditizing my service, I guess. I already have that kind of specialty, so that probably helps. Um >> I would be showing before and afters. So, what I mean by that is like this is what, you know, this is what the tenant was originally offered. This is what we were able to negotiate. This was the difference. >> Right. >> Just I would be I'd be

53:01>> a guarantee, you know, landlord offers this. >> Mhm. >> If our if where we end up is 20% less than that or not, I'll rebate my fee kind of deal. The landlord paid fee back to you. >> Yeah. >> But it's like, yeah, tough to guarantee that when sometimes it's 8% savings, 10% savings. I mean, >> Mhm. I would probably go with dollar amounts, if you can. >> Okay. >> And then only take projects over X. >> Right. >> That way you could probably it'll it'll cuz it you want to anchor to the the biggest number you can.

53:27Um and that would probably be how I'd approach it, cuz percentages get eaten up real fast. And going from like I if it's less than five, it's like that's not impressive. But if it's like I'll save you 50, but it's like over a six-year term, it's like, okay, that I did save the money. It's just back-loaded, and that's fine. So, So rather anchor to the big number. Okay. Okay, [snorts] appreciate it. Thank you. 100% >> We help founders scale their high ticket offer online. We take over sales and marketing. Two thirds of the business, all they have to do is fulfill in the clients that we you know, we sell to.

53:56>> Do you find the influencers or they come to you? >> A lot of our clients are organic for the founders that we work with. They've come to us organically. But we we scale their offers. The biggest problem that we've noticed is fulfillment on their side. So we sell a lot, but they cannot fulfill sometimes on the amount of people that we're sending them. >> Mhm. >> And the other thing is that we want to scale past 5 million in revenue, which is what we're currently doing for for us.

54:21>> How many people do you have that you're doing this stuff for? >> Right now we have about six clients. >> Okay. >> Yeah. And we want to scale to like you know, 50 clients plus. We have a lot of closers on different sales teams for different offers. >> What's the what's the delivery? >> The delivery? So For our No, I know >> you sell [ __ ] but what do they do? >> What do they do? Yeah, so they're financial services, they could be in the e-commerce space, coaching space, real estate space.

54:53>> So coaches? >> Coaches and also people that do done for you services. Okay. >> And the done for you service like what's the split between those two? >> The split between us and >> No, coaches versus done for you services. >> Uh What split are you >> Revenue. You have six people. What percentage are done for you? >> Also, I would say 80% done for you.

55:18>> Okay. So you have one or two people who are coaches. >> Yeah. >> And the other four are >> In the done for you space. >> I don't really know what that means. So like >> So basically it's more like So if people want to grow a business and they don't want to do the business on their own, they have somebody that can build the business for them and they get a revenue share off of that. Uh off of the business that was built by the founder on their behalf. So, they buy in.

55:45So, for example, if they have a uh For example, uh if the offer is like let's say $50,000 to get started. >> So, this is biz op. When you say done for you. Tough. Super regulated, man. Um Dude, why don't you just sell franchises? They're legit. You'll make way more money.

56:12Like I'm guessing you have the skill of marketing and sales. That's what you acquired. You haven't really acquired the delivery skill set. That's okay. And I just like I'm cuz I'll just tell you where this is going to go. So, there's there's kind of like version one is let's say that your dreams come true and you have 50 customers. You don't want 50 customers. That sounds horrible. And you have 50 minutes. So, you're going to realize from 50 that you really only have four that are 70% of your revenue and then you're like, "Why am I even doing this when these four are the major people?" And you know what? I I've made these guys so much money. I should have equity in these businesses.

56:46Um but there's no value in the equity because they're biz op. >> [laughter] >> So, it's it's it's tough because the underlying businesses that you're selling for are sketchy. It's gray. Arguably illegal. Um just not enforced when it's >> So, when you're saying franchises, can you tell me a little bit more about that? >> you could like done for you totally is legal when it's under regulated stuff. Like franchises have regulations and that's it but it protects both sides. You know, you can sell a 10-year franchise and get 150,000 up front and the guy who does this franchise sale makes 150 of that.

57:23So, like super profitable businesses and a lot of times they do get 10, 20, 30% stakes in the franchise or sorry, the yeah the franchise or parent co. And those do have enterprise value. >> And what about the coaching space? Like uh >> Okay. I think it's a great place to learn skills. It's not What do you want to have happen? Do you want to sell this business? Do you just want to make more money? Like what do you want to happen?

57:50>> want to sell it. I want to grow it cuz I think that's a little bit you know we it's too >> want to make more money. >> Yeah. >> Okay. I mean You can grow this business. I think that you'll quickly find that you should just find better partners and that's how you'll grow it rather than taking on the people that you have. You said they come to you which means they probably need to have some function of getting them. Um >> Well, we already have like you know we do we help for ads and marketing and sales. So we already have our own funnels.

58:19>> Yeah, but you only have six customers. >> Yeah, I understand. But we want to we want to scale correctly. Like for example operation side, you know, we already know the constraints of >> trying to beat you up on this. I'm just saying like if the model's like Name me one big business that does this. >> Right. >> Cuz it sucks at scale. And you can't control too many of the things that you're liable for.

58:47Like it would be very easy for me to just like be like all right here's I mean like I can tell you the things to do to grow this business. I just don't think what it grows into is something you'll want. >> So you say franchiser franchiser >> switch what you're selling your high ticket stuff for. >> Yeah. >> I would go find the same people who are paying $50,000 for some e-commerce coach to say here's an Amazon store which for no way are they going to get the $50,000 back to selling a legitimate franchise that has earnings disclosures, it has actual you know typical returns um that someone can expect that has you know you know if it like the ideal space is find finding a franchisor who has a good business model, doesn't know how to promote and those are those are actually fairly common. Um so it's a very small percentage of franchisors gets even 100 locations. It's like 5%. It's a tiny amount. But a lot of people make being a franchisor their like dream. So, they go do the franchise thing. They spend 250, 500 grand to get all the legal [ __ ] done.

59:39They sell their friends and family. They have 10, 15 locations they can open and then the franchise stalls cuz they don't know how to attract customers, but they're not willing to pay franchise sales people an arm and a leg, which is what it cost. But if you get to be the arm and the leg, then that sounds lovely. So, like I've obviously come from a world that was very heavy in franchising. So, like I have multiple friends who like gave 30% of their business away that are selling for nine figures to franchise sales orgs.

1:00:09So, like I think you have a viable skillset and I think you are applying it to the wrong opportunity. And I think that the the coaches are going to fizzle and pop and the fact that you talk about things in terms of offers is hardcore direct response world. I think that world is also dying. I think CAC is going up. Trust is only going down. I don't think it's a sustainable long-term thing. So, I didn't mean to [ __ ] your [ __ ] up, but like I just think that that's like for real. I think that you're like, "Okay, but now what do I do when I go home?"

1:00:38Right? I mean, if I'm you, I'd I'd be thinking that. I'd be thinking like I'm going to reach out to franchises. And I'm going to do the same things, but I'm going to market compliantly. Cuz right now I'm sure if you had a Have you ever had a FTC attorney like audit all your funnels? >> Yeah, so we have our lawyers stuff that >> Well, lawyers just yeah, sure. >> No, but I understand what you're saying. But the thing is is that obviously, you know, we we are already like, you know, compliant on those things. So, it's just that we want I think what you brought up is something that I've already thought about already. So,

1:01:09>> Sell a better thing. >> Yeah. Cuz it doesn't matter what we can sell. It's just the thing. It's the fulfillment >> Yeah. Their [ __ ] sucks. Yes. >> [laughter] >> So, so >> Like you sell a dream. They do not fulfill that dream, that's sucks. >> No, I understand. I understand. >> you're using your powers for evil right now. Like use them for good. >> For real. Yeah, so we we were looking at It's funny you mention that cuz I actually was That was a one of the past So besides franchisors, do you have any other uh

1:01:39>> Oh, I mean do they If you If you know how to do turnkey sales, there's a ton of different businesses that you get that can that can benefit from that. You just need to use your powers for things that are legit. Thanks. >> No, but for sure. I I understand what you're saying. That's definitely what how we feel about it as well. So >> Well, well then great. So like that's what we should do. We should not be thinking how do we go from six to 50. >> but I was just saying abstract like just >> Yeah. >> I wasn't saying like

1:02:05>> So I would say like in the next 12 months we go from six to six except we replace the six we have with six legit ones. And if we do a really good job, what we'll find out is that we could just have one that can really [ __ ] scale and then we just do that. We become true partners and we just grow the thing. Cuz there's nothing that like it will be easier for you to grow one thing that's a really legit product or service to a hundred million a year than it will be for you to try and grow 20 to 50. >> that that's what I'm saying. It's always in the legit space that I was always speaking of. The only thing is that operations-wise, you know, as you scale like what would you say like for for us it's like more on our operations side.

1:02:42Like how would we uh scale with more clients let's say in the franchise space. How do we do it efficiently without having any bottlenecks on our operations side? Uh >> Well, you're running ads and you're selling. >> Yeah. >> What are the What are your operational bottlenecks? >> Well, I would say it's high turnover of sales people, you know, obviously not performing to quotas. >> Okay, but once you get people who stick, do they stick?

1:03:10>> Yeah. >> Okay. I mean it's a high turn It's It you have to think about it in cohorts. So if it's like you hire three and you keep one, but then that one stays for 3 years, then it's just like it's just cohort churn and then after that it sticks. But, sales is a is traditionally a higher churn area. My guess though, again, like you're saying it's not this, but everything you're saying is this. Is that you're selling high-ticket biz op [ __ ] and you have mercenaries on your team. And mercenaries just are they they jump town as soon as they get 1% more somewhere else.

1:03:42They're not loyal. And I think that if they were really passionate about the business and the people they were helping, they wouldn't care as much. >> Okay. Super. Thank you. >> [laughter] >> Thanks, man. I want you to win long-term. That's why I'm trying >> My name is Julian. I own High Ticket Solutions. We help founders scale their high-ticket offer online. We take over sales and marketing. Two-thirds of the business, all they have to do is fulfill the clients that we you know, we sell to.

1:04:10>> find the influencers or they come to you? >> Um a lot of our clients are organic. For the founders that we work with, they've come to us organically. But, we we scale their offers. The biggest problem that we've noticed is fulfillment on their side. So, we sell a lot, but they cannot fulfill sometimes on the amount of people that we're sending them. >> Mhm. >> Um and the other thing is that we want to scale uh past 5 million in revenue, which is what we're currently doing for for us.

1:04:35>> How many people do you have that you're doing the stuff for? >> Uh right now we have about six clients. >> Okay. >> Yeah. And we want to scale to like uh you know, 50 clients plus. We have a lot of uh closers on different sales teams for different offers. >> What's the what's the delivery? >> The delivery? So, um for our >> No, I know you sell [ __ ] but what do they do? >> What do they do? Yeah, so they're um financial services.

1:05:02Uh they could be in the e-commerce space, coaching space, uh real estate space. >> So, coaches. >> Coaches and also people that do done for you services for our customers. >> And the done for you service like what's the split between those two? >> Uh the split between us and >> No, coaches versus done for you services. >> Uh what split are you >> Revenue. You have six people. What percentage are done for

1:05:29>> Um also I would say 80% done for you. >> Okay. So you have one or two people who are coaches. >> Yeah. >> And the other four are >> Uh in the done for you space. >> I don't really know what that means. So like >> So basically it's more like um so if people want to grow a business and they don't want to do the business on their own, they have somebody that can build the business for them and they get a revenue share off of that.

1:05:53Uh off of the business that was built by the founder on their behalf. So they buy in. So for example if they have a uh For example uh if the offer is like let's say $50,000 to get started. >> This is biz op. When you say done for you. Tough. Super regulated, man. Um Dude, why don't you just sell franchises? They're legit.

1:06:23You'll make way more money. Like I'm guessing you have the skill of marketing and sales. That's what you acquired. You haven't really acquired the delivery skill set. That's okay. And I just like I'm cuz I'll just tell you where this is going to go. So there's there's kind of like version one is let's say that your dreams come true and you have 50 customers. You don't want 50 customers. That sounds horrible.

1:06:47And you have 50 minnows. So you're going to realize from 50 that you really only have four that are 70% of your revenue and then you're like, why am I even doing this when these four are the major people and you know what? I I've made these guys so much money I should have equity in these businesses. Um but there's no value in the equity because they're biz op. So it's it's it's tough because the underlying businesses that you're selling for are sketchy.

1:07:12It's gray. Uh arguably illegal. Um just not enforced when it's small. >> you say franchises, can you tell me a little bit more about that? >> you could like done for you totally is legal when it's under regulated stuff. Like franchises have regulations and that's it but it protects both sides. You know, you can sell a 10-year franchise and get 150,000 up front and the guy who does this franchise sale makes 150 of that.

1:07:37So, like super profitable businesses and a lot of times they do get 10, 20, 30% stakes in the franchise or sorry, the uh yeah, the franchise or uh parent co. And those do have enterprise value. >> And what about the coaching space? Like uh >> I think it's a great place to learn skills. It's not What do you want to have happen? Do you want to sell this business? Do you just want to make more money? Like what do you want to have happen?

1:08:04>> I don't want to sell it. I want to grow it cuz I think that's a little bit, you know, it's You just want to make more money. Yeah. >> Okay. I mean you can grow this business. I think that you'll quickly find that you should just find better partners and that's how you'll grow it rather than taking on the people that you have. You said they come to you, which means you probably need to have some function of getting them. Um >> Oh, we already have like, you know, we do we help for ads and marketing and sales. So, we already have our own funnels.

1:08:33>> Yeah, but you only have six customers. >> Yeah, I understand. But we want to we want to scale correctly. Like for example, operation side, you know, we already know the constraints on that. >> trying to beat you up on this. I'm just saying like if the model's like Name me one big business that does this. >> Right. >> Cuz it sucks at scale. And you can't control too many of the things that you are liable for.

1:09:01Like it'd be very easy for me to just like be all right, here's I mean like I can tell you the things to do to grow this business. I just don't think what it grows into is something you'll want. >> So you say franchisor franchise >> switch what you're selling your high ticket stuff for. >> Yeah. >> I would go find the same people who are paying $50,000 for some e-commerce coach to say here's an Amazon store, which for no way are they going to get the $50,000 back, to selling a legitimate franchise that has earnings disclosures, it has actual, you know, typical returns um that someone can expect that has, you know, you know, if if like the ideal space is find finding a a franchisor who has a good business model, doesn't know how to promote and those are those are actually fairly common. Um so it's a very small percentage of franchisors gets even 100 locations. It's like 5%. It's a tiny amount. But a lot of people make being a franchisor their like dream. So they go do the franchise thing, they spend 250, 500 grand to get all the legal [ __ ] done.

1:09:53They sell their friends and family, they have 10, 15 locations they get open and then the franchise stalls cuz they don't know how to attract customers, but they're not willing to pay franchise sales people an arm and a leg, which is what it cost, but if you get to be the arm and the leg, then that sounds lovely. Uh so like I've a obviously I've come from a world that was very heavy in franchising. So like I have multiple friends who like gave 30% of their business away that are selling for nine figures to franchise sales orgs.

1:10:23So like I think you have a viable skillset and I think you were applying it to the wrong opportunity. And I think that the the coaches are going to fizzle and pop and the fact that you talk about things in terms of offers is hardcore direct response world. I think that world is also dying. Um I think CAC is going up, trust is only going down. I don't think it's a sustainable long-term thing. So I didn't mean to [ __ ] your [ __ ] up, but like I just think that that's like for real, I think that you're like, okay, but now what do I do when I go home, right? I mean, if I'm you, I'd be thinking that.

1:10:55I'd be thinking like I'm going to reach out to franchises. Then I'm going to do the same things, but I'm going to market compliantly. Cuz right now I'm sure if you had a heavy FTC attorney like audit all your funnels, >> Yeah, so we have our lawyers and stuff that we have >> yeah, sure. Like >> No, but I understand what you're saying. But the thing is is that obviously, you know, uh we we are already like, you know, compliant on those things. So, it's just that we want I think what you brought up is something that I've already thought about already, so

1:11:23>> Sell a better thing. >> Yeah. Cuz it doesn't matter what we can sell. It's just a thing. It's the fulfillment >> Yeah. This [ __ ] sucks. >> Yeah, yeah. >> Yes. >> So, so >> Like you sell a dream. They do not fulfill that dream. That sucks. >> No, I understand. I understand what >> you're using your powers for evil right now. Like use them for good. For real. >> Yeah, so we we were looking at It's funny you mentioned that cuz I actually was that was a one of the past. So, besides franchisors, do you have any other uh

1:11:53>> Oh, I mean, dude, like if you if you know how to do Q sales, there's a ton of different businesses that you could that can that can benefit from that. You just need to use your powers for things that are legit. Thanks. >> No, but for sure. I understand what you're saying. That's definitely what how we feel about it as well. >> Well, well, then great. So, like that's what we should do. We should not be thinking how do we go from six to 50. >> but I was just saying abstract like just >> Yeah. >> I wasn't saying like

1:12:19>> So, I would say like in the next 12 months we go from six to six except we replace the six we have with six legit ones. And if we do a really good job, what we'll find out is that we could just have one that can really [ __ ] scale, and then we just do that. We become true partners, and we just grow the thing. Cuz there's nothing that like it will be easier for you to grow one thing that's a really legit product or service to 100 million a year than it will be for you to try and grow 20 to 50. >> No, but that that's what I'm saying.

1:12:43It's always in the legit space that I was always speaking of. The only thing is that operations-wise, you know, as you scale, like what would you say like for for us it's like more on our operations side. Like how would we uh scale with more clients let's say in the franchise space. How do we do it efficiently without having any bottlenecks on our operations side? >> Well, you're running ads and you're selling.

1:13:11>> Yeah. >> What are the What are your operational bottlenecks? >> Well, I would say it's high turnover of sales people, you know, obviously not performing to quotas. >> Okay, but once you get people who stick do they stick? >> Yeah. >> Okay. I mean it's a high turn It's It you have to think about it in cohorts. So, if it's like you hire three and you keep one, but then that one stays for 3 years, then it's just like it's just cohort turn and then after that it sticks.

1:13:37But sales is a is traditionally a higher turn area. My guess though, again, like you're saying it's not this, but everything you're saying is this, is that you're selling high ticket biz op [ __ ] and you have mercenaries in your team. And mercenaries just are they they jump town as soon as they get 1% more somewhere else. They're not loyal. And I think if they were really passionate about the business and the people they were helping, they wouldn't care as much.

1:14:05>> Okay. Super. Thank you. >> [laughter] >> Thanks, man. If you like this video and you're business owner who wants to break through your current revenue ceiling, I just spilled 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 business owner, I appreciate you and enjoy.