Die Falle beim Produktisieren eines Dienstleistungsgeschäfts

0:00Unternehmer/Gast I sell tech and operations consulting to law firms. Mhm. Uh we started about 6 months ago and um >> We want enterprise clients and we have other ones that are 36 to 80k and then you have the 300 to 600k packages and we need to figure out which one has the highest LTV to CAC ratio and which one you can convert most easily. So, what is the issue? That's correct. Um essentially, well, first of all, I have no idea what I'm doing. Um started about 6 months ago. That's the first step.

0:26>> [laughter] >> Thank you. Um second thing, I think we just have a a fulfillment issue and so my question is at what point do we consider productizing the service? Um from what I understand, it's kind of what you've done with Gym Launch. Yeah. Um at what point would it be worth doing doing that if at all? You said you wanted to sell this eventually, right? Yeah. Yeah, I wouldn't do that.

0:58Okay. Yeah. So, you have the same issue um that Justice has, which is like, I have this hard thing in front of me, can you tell me there's an easy way? I think >> way will create a business that's significantly harder to sell. And so, then you'll be at that point and be like, how can I sell this business? I'll be like, you can go back in time and not do this. Right. So, like, basically, you're in a high you're in a high skill service business. It's a professional services business. Most professional services businesses are supply constrained. It is easy to sell high end professional services if you are good at what you do.

1:35It is hard to find other people who are good. This is the trade. But, if you build a firm like that, you build a very viable company. And and another just on a side note, um >> Yeah. again, I I don't know what I'm doing. Um I got I got um 500k in in investment coming in soon. >> Why? Um it's been my my boss just wanted to invest.

2:00Alex >> taking investment? Um, I don't So, we haven't finalized this yet, but I'm considering whether to do it or not with that. No. You don't see any point in >> Why do you need money? You have You don't run a capital expensive business. Like, what are you going to use the money for? I guess to hire great people. But, the business model should be able to hire great people. Like, you're not a tech like There it's it's it's very rare that you need to bring on outside capital. Far rarer than most people expect. If you want to build a platform, you want to build school, yeah, you got to do that because you need to get in zillions and zillions of users and you have to build this exceptional product before you monetize. So, yeah, someone's going to front the money on the bet that it's going to be worth a lot more later.

2:42Your business makes money today on work it does today. And if anything, you can sell the work before you even have the person. And so, like you you you have a negative cash flow cycle. You have no You don't have to like front inventory for months ahead of time. You don't have to do any of that. So, you have a service business. So, you just need to make the business make money. You're already profitable, I'm assuming. Right. So, you don't need the 500 grand. You have deals that are worth 500 grand. Right? Yep. >> From what you told Yeah, so why would you like why would I give him a chunk of the way the company to have somebody who's permanently going to be involved in my business for the cost of one deal?

3:12It's like just sell another deal. Got you. Work a little extra on your own time and then not Don't take that guy's money and just have the money. Okay. >> what I mean? And and you you absolutely think then it shouldn't be you know, cuz I feel like I'm creating extra problem that I otherwise wouldn't have to have being the the whole high skill talent thing if I just went down the productized route. You think it's really >> say productized, are you talking about the 36 to 80K price point we're talking >> Yes. That's fine. I'm okay with that. But, again, it's going to go back to what I originally said, which is we just have to look at the LTV to CAC between both of the different avatars. If the LTV to CAC is literally the example I was just saying, if you have a $100,000 thing that cost me 30 and I make 70 or something that cost $10,000 that cost 100, I'd rather just sell six more of the 10K things provided I have the ability to sell that. So, it's like I want to find something that has really good revenue retention, really good gross margins. If I have that, then I can just sell the out of it. And then I'd rather just sell five times more of that than try to come up with the uh you know, high touch one that's going to like is a more immediate ticket today, but it's going to quickly uh I'm going to quickly get constrained.

4:14So, I'm basically pushing out my constraint based on what problem I'd rather solve today. So, the question back to you is, do you think you can So, what are the gross margins on let's say the average on the 36 to 80K is uh 50,000? That sounds fine. Okay. So, let's say 50K is the average price. What's the gross margin on that? Not too sure. We Yeah, we're quite early on, so >> Okay. Yes.

4:40Half of that. Okay. And then with the 200K thing that you do, what's the gross margin on that? 50%. That's gross margin? So, you're running thin net margins cuz that means you're starting at 50 and then you got to pay everything else. Yeah, I mean at the moment um we we are getting this fulfilled by really expensive um highly certified guy that's been in the

5:10>> Outside of the business. You're basically white label selling his stuff. Um we do what we can on the inside, but we we accepted quite a few projects, so Okay. Um so, then the follow-up question is, can you more easily sell four times as many of the low touch as the high touch? Yes. Then do that one. If your gross margin's the same and you can sell more than four times as many on that one, then do that one. Basically, we're just looking at number of units sold times gross margin.

5:41The one that makes the most money. Got you. So, I think it always just comes back to the point of the the LTV calculation. Okay, thank you so much. >> Yeah, you bet. So, if you've hit a revenue ceiling or your entire business relies on you to grow, then I'd love to invite you out to our headquarters here in Vegas to learn how we scale. It's a my team spends two days with you to identify the thing that's holding your business back. And so, if that sounds interesting, click, book a call, and if you're a fit, we'd love to potentially see you out here in Vegas.