Warum das Angebot und nicht der Vertrieb das Problem ist

0:00Unternehmer/Gast Currently, we're about an 18-19% net profit margin, which is pretty chill. Uh had to fight really hard to get there. Trailing Trailing 12 months is 2.2. >> Okay. >> Um hoping to do three by the end of the year. >> Okay. >> And the big problem, and I actually talked to you about this in April when I came down to one of you guys' workshops I came from VAs. >> Sweet. >> Um the big problem that I thought I had was a sales close rate issue, and you told me that you didn't think that was the problem just from our brief interaction.

0:28>> And it's something further upstream. >> Okay. >> Thanks to uh hopping in the school community, totally awesome, by the way. >> Thank you. >> A few people have pointed out that it sounds like I have a kind of four-pronged problem that has to do with not being super clear on my ideal customer persona, which the funny thing is I thought I was, but clearly I'm not. Um I have a weak to no offer, cuz everything's super bespoke and every venue's different in colors and all that stuff.

0:54>> Uh we'll talk about that. Okay. >> Okay. Our positioning is not super solid, and I think our messaging is probably not quite >> All right, dude. >> But by the way, without any of that, you're making >> Yeah. >> 3 million bucks. >> bucks a year, it's great. Okay. Yeah, yeah. No, it's great. Okay, so you got you've got a avatar issue, offer issue, positioning and messaging. Those are all your problems. >> Seems so.

1:18>> Okay, great. So, how are you selling right now? How do you get customers? >> So, um we sell balloon arches, and we're in 28 states right now. So, we're set up kind of a general contractor, subcontractor model, where my team does all the client relationships and sales and marketing and business and all that. And then >> Cool. >> we have an artist who's, you know, third party. >> Yeah. That you find locally and all that. Yeah, yeah. >> Yeah, exactly. Yeah, exactly. And so, most of our our uh clients come from We have about 3-4% of our revenue is recurring. Uh or sorry, reoccurring.

1:49>> Okay. 34? >> Yeah, between 30 to 34, depending on the month. >> Okay, so 30 business. Okay, good. Okay. Google Ads. >> Google SEO. Okay, so SEO, ads. So, is it 1/3, 1/3, 1/3? >> Um, I'd have to look at the actual exact attribution. I don't have that memorized. >> Okay, that's fine. So, 1/3 is is is reoccurring, is from past customers, and then the other 2/3 is from SEO and ads.

2:14>> Correct. Our best client segment is by far corporate. And where we really shine are corporate clients that do nationwide events because it's like, "Hey, you can either call 50 different vendors across the country and do all the stuff that's associated with that, or you can call my team and it's the same every time." And like we have clients that they'll just send us a text, "Hey, I need you this address, same package, go for it, send me the invoice, I'm good to go." And like we close the deal right there. All the BS is done on on our end, you know?

2:39>> Yeah. Okay. So, I mean >> So, before before I have one idea I'm going to share about pricing. By the way, we should have if you when you get a chance just reach out to just ping us on ping me on social Shaan Trivedi. We actually invested in a uh EC Ventures invested in a nationwide events company and they are looking for nationwide events delivery systems like yours. So, this is like a freaking this is like a no-brainer. We can just plug you into that. But anyway, all corporate nationwide nationwide events.

3:08But go ahead. >> Okay, so what's the offer right now? You said it sucks. >> Um, so we have a design brochure and it has about 70 pages, basically catalog. And so what we try to do is our team will map our clients' venue to what we think would fit it best. A lot of times they have like inspiration images and stuff as well. >> Uh-huh. Uh-huh. Okay. >> So, is every offer custom? >> You said it is, but I'm going to bet that there's that we if we sharpen our pencils we'd be able to figure out that there's really Yeah.

3:37>> Like are there like if you had to say there's three things that if I had three kind of setups and that covers 80% of of venues, would that be accurate? >> Probably. >> Okay. So, I think >> Specifically for corporate. Yeah, so then dude, I think you just need to do that. >> So, just productize everything then? >> Yes, map map them to your product suite rather than wrapping your product suite to them.

4:04>> Okay. >> So, let me I'll give you a I'll just give you obviously a a weight loss example cuz it always comes first thing to my mind. But, like you could I could every single person who walks in the door say, "You know what? Okay, you want some some level of nutrition. What level of nutrition do you want? Oh, you want some sort of fitness? Okay, what kind of fitness do you want? And then I say, "Oh, what kind of accountability do you want?" Great. So, then I have all these different vectors of all these things. But, when we productize this, we just say, "Listen, people need to move more, eat less, right? Period. If we just get them to do that, we've already got we're already 80 90% of the way there." And so, then it was like, "All right. So, we would just map the three pillars of this, fitness, nutrition, accountability." Then we'd say, "Here, this is the product that you need. Done." Right? So, you we still ask the same questions, but then we just lead them to the answer, which is the productized solution for them. And then by doing that, you can get like The thing that I don't like about the business is that you said you fought really hard to get to 20% margins. And in a business like yours, I honestly think you should have super high margins cuz you're not even the one who's really even doing the delivery.

5:00So, when you get override businesses like yours, you should like you're in one of these businesses that can be running like 60 80% margins. Um and I want to kind of like set that or you know, break that belief for you. Um and so, how are you choosing the pricing? >> Um so, we have a couple different ways we do it. Um one of them is just a flat markup on our subcontractor's fee or the higher of what our advertised price is. So, we make sure that our margin's protected through the markup on the subcontractor fee. And then um Yeah, like one thing I can tell you, we're about 2x more expensive than every other balloon decor company. And so, I don't know about raising my prices. Um today we actually just lost a multi-location client who said, "Hey, like every time I bid your projects out, like I get some cheaper." It's like, "Yeah, that's our value proposition."

5:48And we lost them, and that really sucks. We've worked with them for over a year. >> Yeah. So, I'll I'm going to say something that I want to I want you to take the way I mean, which is if you are the most expensive player, you are not for everyone. >> Yeah. >> And everyone's not for you. And part of what you quote pay for being the most expensive player is that you don't sell to everybody. But, when you do sell, you make three, four, five times the money. And there's always going to be somebody who's willing to do it cheaper. So, the fact that you lost somebody on price just means that we need to have a better sales process in general. Um and to be fair, you know, you you quote lost that client, but how many other clients are going to are you going to get that have way more margin?

6:27Alex >> For sure. >> Right? So, I just don't want you to like let this one thing cuz, you know, we we always have recency bias of like, "Oh, I lost this one person, so I definitely can't raise prices." It's like it just happened yesterday. Right? But, like, at the same time, you're like killing yourself to get 20% margins in a business that should have significantly more override. Now, that being said, I like if I were to like look at if I were to like look under the hood, I'd be like, "Oh, you there's some cost in here that I don't know where it's going." Um but, I would say in general and for anybody who's listening, cost plus is almost always the worst model for pricing.

6:56>> Yeah. >> Yeah. So, cuz it has not cuz like you want value-based pricing, not cost-plus pricing. >> That makes sense. >> Value-based pricing is willingness to pay. What are they willing to pay? That's what we charge. >> That makes sense. Um one of the things that we did try is we actually raised the price of all of our all of our cart items significantly, and then we created some bundles, and then discounted those pretty steeply, um to try to push people into the bundles. And we we mapped everything mathematically, so it led to an overall pretty significant increase in net profit. Um we had a little bit of hesitancy on that. People were talking about it as too complicated. So, we might just need to refine our our messaging on that to get it clear.

7:36>> Bundle one to three, I mean. >> Yeah, I mean, I I like, you know, chicken, fish, steak, small, medium, large, whatever you want you want it. I I love three option you know, three card monte. >> Mhm. >> Um but at the end of the day like we just need to lead customers to you know, the option that ideally is the most profitable. Um and especially if you have corporate clients cuz I think part of this is also like what percentage corporate versus uh not corporate? >> It's about 60% corporate. >> Dude, I think you just need to lean more into the corporate.

8:04Alex >> Yeah. >> Cuz you said like they're they're they're reoccurring, number one. The other ones aren't. Um I'm guessing do you have more pricing power with the corporate versus uh the one off? >> Yeah, dude. Like >> Yeah, so like one of the issues that happens and this is like you're literally in like have you gone through the scaling road map? One to three million, you need to double down on the avatar. You're you're at this It's like this is patterns, dude. >> Productize. >> Yeah, dude. 100% you need to Like Like you were in the exact position that a zillion other entrepreneurs are at between one to three million. You need to productize and you can only productize cuz you got to pick the avatar that has the highest LTV CAC ratio, which obviously the commercial one does. If you are going to get again, I don't know if you were listening to earlier you're on in this live stream.

8:41Like when you deal with commercial clients, a little bit more savvy of a customer, but the way that you approach them is um you have to like take a holistic view, right? So rather than getting >> That makes sense. >> They're going to try and cut you down into a commodity. Do you know what I mean? And get then get you to compete on price. They're going to try and set the frame. You have to reset the frame of saying no, no, we have to look at it this global perspective because when you look at global then you have way more levers that you can influence, which is like you want to just get the best return on your money and that's what I'm going to get you.

9:09Because also it's like you have these other guys, but how much effort and headache does it cost you? And this is where you can feed their egos and be like, "Listen, Mr. you know, producer or buyer or whatever you know, your name is." Like you make $150,000 a year, right? So you're you're getting paid $75 an hour right now and each of these other guys is costing you that plus switching costs of like getting headaches and getting reminded and all this other right?

9:33And so it's in a real way costing the company more money to have you deal with all this BS. And for me, I have the infrastructure to be able to deal with this BS on a regular basis cuz I built it to do it at scale. So, I can pass on that efficiency to you. So, you get you get to reclaim all of this extra time and waste, which when we look at the net of the business is way more profitable. >> That makes sense. I love that. Thank you. >> Yeah. So, we just have Again, this is a framing issue. So, you said you had four problems. Avatar, I think we just decided that is that we need to continue like I'd be spending How do we spend more? How do we change our messaging?

10:06How do we change our positioning towards more commercial clients? Number one. Number two, the offer needs to get templated 1 2 3 chickens uh chicken fish steak. Um the positioning is going to be global rather than local, meaning we have to look at the whole business and every cost and every gain that the business gets from the services we provide, not just how much does it cost to set up balloons, right? And then we then we use the messaging to communicate those three things. >> That makes sense. >> Okay.

10:30>> Awesome, man. I'm actually coming out to meet with you guys for L3 next or next month. >> Oh, Super Bowl. >> I'm diving into this stuff more. It's going to be awesome. >> Talk to the AI, too, so it has uh ideas so when when we talk. >> [laughter] >> Solid. I love it, man. Hey, thanks, guys. I appreciate you both. >> No, I appreciate you, man. Thanks so much. Congratulations on the business. If you're a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 scaling roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly where they got stuck and how they got past it. And so, we broke it into these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisitions.com/roadmap, plug in your business information, and if you want us to actually help you de-constrain the business and you're trying to scale, we'd love to help you out on the thank you page you can book a call with my team and we will look at the business, see if we can help, and if we can we'll invite you out to Vegas and we'll do this in person live.