Answering Your Top Business Questions for 1 Hour | Ep 851

0:00I'm Alex Trimosey and I'm an investor and I own acquisition.com. It's a big portfolio companies makes me more money than I'll ever need the rest of my life. I had 100 business owners who flew out to our headquarters to scale their companies. And so they asked me questions for an hour. I try to do my very best to make the solutions as tactical as humanly possible so that you can, watching from home, immediately use them in your business. First off, I have to say thank you for taking me out for dinner last time. That conversation that we had literally changed my life and changed my business. So yeah, I appreciate that.

0:29Can I tell the story of what happened? For sure. We had an event that was scheduled, had to get moved. The memo got passed down and everyone found out except for one sales guy. And he sold six people into an event that didn't exist. On like a random Monday, we had six people showing up, came from Israel. And he was like, hey, I'm here for the workshop. And I was like, this looks awesome for us. I'm really happy. I'm really happy that we're in this situation. We've always tried to come from the perspective of like when you have something that gets messed up, like you can't just like refund somebody because they're still net negative.

1:03right like he still flew from Israel if I said hey my bad here's the money back he's someone like screw this guy right and so we had the team spend the day with the the six and then we took them out to dinner and I bring that up just because it was a great like example of like something that took me too long to learn was that like you can't just make it right you have to make it more than right in order to actually make it right you know that was obviously a super unfortunate situation and you know every business if you have humans you make mistakes right and so that was a mistake that we had made.

1:35I remember hearing the stat from Disney which is that it takes 37 magical moments to overcome one tragic moment and so the moral of that statistic is not let's do 37 magic moments it's avoid the tragic moments if at all possible but if you do find yourself in a tragic situation here's an interesting thing that Layla taught me which is that believe it or not the people that you wrong and then super compensate to make it super right become your biggest ambassadors. He flew back out and he gave such a heartfelt story that it took somebody who was negative and I think from at least what it sounded like he was super positive towards us.

2:15And I think that that's in some ways as terrible as it is when you do have one of those tragic moments just see it as an opportunity to flip someone from a hater into an ambassador rather than being like, oh, we've got to give these people refunds. It's like, no, like we actually get to build a reputation and decide what kind of company we want to be. Where we're stuck at right now. So we're selling the back end offer$1.95 a month for semi-private. Okay. Or four months for$5.95. Our churn for both of those is 50%. So weighted, it's 30 % churn. And the reason why we've got such terrible churn is nobody shows up.

2:52Like 7 % of our student body actually shows up to the calls and actually gets the value from the thing they purchased. What's the onboarding look like? So we have the closer get them to see the calendar of we have eight sessions a week that they can join. So they show them the calendar. They say, OK, which one of these do you think you can come to? And then they get them to say, OK, this one. And then the closer says, OK, I'm going to tell Jenny, who's the coach on that call, she's going to be expecting you. There's two kind of like different angles to attack this. One is the kind of like logistics side, which I'm going to cover first because it's easy and just process stuff.

3:29And the other is kind of like the bigger, more amorphous stuff, which is like how do I make our thing easier and more enjoyable for people to kind of experience. On the logistics side, I'm sure that you're on my email list. If we had dinner, you better be on my email list. By the way, anyone here read the Mosey Minute? Anyone? I think it's the best, like I think it's some of the best stuff to put out. Anyways, it's really good. I think it's really good. I spend like my Sundays on it. Anyways, so BAMFAM is a way of life. So book a meeting from a meeting, right? And so the sales guy should obviously book to the onboarding call, right?

4:01Or the whatever. I do think that you probably need to add one onboarding call that's specific to the person, not just have them drop in. How much do you want this to work? Really bad. Okay. So this is what I would recommend doing. You'll probably want to do something in the neighborhood of four to six sessions that are one-on-one. I'm just being like, now if you need to adjust price in order to do it, fine, but it's four to six sessions of one-on-one before they kind of like qualify to go into the kind of the group setting. And so it's like you will personally onboard them so that they have this way better buy-in, like they don't feel like they're just like in no man's land and just getting tossed in the middle of a conversation, but you kind of like on-ramp them.

4:38After you have the onboarding, which should be, and you can cut, I mean at the very beginning just do two, you know what I mean, just to start and then you can kind of see how it goes. from there you basically want to keep bam faming per session so all the people are showing up the last five minutes I would say okay everybody let's pull up the calendars when are you guys showing up again great and I book it with everybody so that I'm keeping people forward and you have to back that up with probably the reminder sequence that they're going to get because it's actually a scheduled session so they should get automated reminders and they should probably get a manual reach out from the person who's running the session of the people who are supposed to attend, at the very least do the automated one.

5:15And that would probably get a huge amount of, like that will probably do a lot. And so this is actually, believe it or not, this is an onboarding process for a gym. So if you have large group training, if you take people and just toss them into the group, it's much harder than having kind of a more dedicated onboarding experience. The ideal is you do like six one-on-one sessions with someone. They feel more comfortable in the gym. They understand people. They understand how the vibe, the culture is. And then they kind of graduate into the group sessions. And so what happens also is that the group sessions are now on a pedestal.

5:41it's like you're not ready for that yet. It's like you've got to earn that. And all of a sudden it becomes the prize that they earned and now they got on board. Can you see how that would work? For sure. Yeah. So this would probably be the... Would you set that up as like a big head long tail sort of pricing system? And the question that you'd ask if you want to give an A-B close for this is you would say, would you rather train, start your thing in a group or one-on-one with me? That's if you're selling. If it's somebody else or one-on-one with John. And a lot of times they're going to be like, I'd rather do it with John." And you're like, great, so this is the price for that.

6:15And then you just go for that sale. If it's not, it's like, no worries, we can just start you here, not a big deal. And then if you want, if normally you sell six, you can say, you know what, I'm still going to give you one if you do that, because it's going to be way better of an experience for you. So then it feels like a gift, and doesn't feel like they're like, well now I don't want the group thing. So just give them one or two, if you sell the six, for example. Does that make sense? So he presented, obviously, with a low consumption issue, which then probably translated into low renewal and probably high churn.

6:46And so the issue that typically precedes that is low consumption, right? And so in order to first get consumption figured out, I like to get attribution in place. And so I don't know what kind of tracking he had, but I think he said like 7 % or something like that. And so he had some level of tracking which allowed him to even take action on the problem. But most times when I ask more questions, I'd say nine times out of 10, and the entrepreneur has a problem, but doesn't collect any data that precedes the problem. And so then the first step is to just go collect the data. And once you have the data, typically the solutions become obvious.

7:20And so a lot of time is wasted in this space of like trying to ideate and figure out this hypothetical solution without any data. And you're like, I don't know, is it this or this or this that we could do? It's like, well, you have no data, so you have no idea. And so you just keep circling. And so when you don't know what to do, get data first and then it makes the path easy. I sell career coaching services to corporate executives. So basically we help these people find their next role. So we did 7.2 million in revenue last year. Congrats. About 2 million in profit. Amazing. And we know how to grow B2C.

7:50We know that we can do that. But we're really wanting to get B2B going. Okay. So these enterprise level deals are a little bit more, they're a different ballgame, right? Okay. So we're struggling to get our first B2B deal because they have to be big enough to have the budget. Why do you want to do B2B? So this entrepreneur is obviously doing well. You know, he's doing multiple millions of dollars a year and he's got something that says decent margins. And he said in order to scale, he should do B2B. But he was in a consumer-based market and consumer markets are huge. There's way more consumers than there are businesses.

8:18So he had a proven product with a proven acquisition channel and was profitable and was growing. And he was spending, you know,$3 ,000 or$5 ,000 a day. I was like, this is nothing in terms of the amount of scale that's available for the product that he had. And so when he said he wanted to do this other new thing, I had an inkling that it was for no actual reason besides he probably encountered some sort of difficulty that he assumed the new path wouldn't have. And so this is just a classic woman in the red dress. Why can't you just do more of what you're currently doing? We can. I mean, we hit like 90 in October, and that was a big, like a million a month.

8:53That was the milestone where it's like, okay, let's start doing different stuff. I'll tell you what my initial reaction is, which you're already probably guessing, which is like I will exhaust more before I look at anything new. And so someone would have to make a very strong argument for me why I can't do more of what I'm already doing. So if I were to like buy your company tomorrow, I'd be like, yeah, don't worry about that. Just what are you currently doing to get customers? It's Facebook ads. Okay. So what are you spending a day? Anywhere from 3 ,000 to 5 ,000 a day. Right. I'd be like, okay, so how do we get to 100 ,000 a day and spend?

9:22A day. Yeah. Wow. Like what stops us from getting to 100 ,000 a day? Okay. And the answer to that question is the constraint. So what stops you from getting, so let's say 10 ,000 a day, so it's a triple. So like what stops you from doing that? We were there in October, right around 10 ,000 a day. And then we had like sales efficiency issues and stuff like that. Obviously Q4 is not like the best time to have that type of service. And so really just like making sure that our back end or our front end like sales call to close rate, all that good stuff is like able to be profitable. And we have a lot of like services, like one-on-ones that we pay our coaches really well.

9:54We have a writing team in-house that we pay. So there's costs. So what would, but those costs are fixed because you'd have that cost of the B2B. Right. Okay. So what stops us? The problems that exist in the B2C scenario also exist in the B2B scenario. And so he's like, hey, I've got, I've encountered this problem I don't know how to solve. And so my way of solving it is to not solve it and start something else that will create even more problems in my business. And so when you say it like that, it sounds ridiculous. But this is a decision-making process that, or rather a mistake-making process that a lot of people follow.

10:24Fundamentally, you want to ask, why can't we do more? And the answer to that question is the constraint. And the only, in my opinion, proper constraint for deciding to go after a new avatar is that you run out of the existing avatar. So think about this. Have you ever done B2B, like enterprise? Okay, so the thing is that they are higher leverage, but you're also going to have like 10, 15 touch points. And so the number of deals per guy is going to go down a lot. There's also going to be multiple stakeholders that you have to get involved on their side and multiple stakeholders that you're going to introduce on your side.

10:55So just in general for B2B like enterprise level sales, you increase conversion rate and stick of a customer by increasing the number of people that are involved in the transaction on both sides. So basically you want to show, you want to have as many of these ties as you can to do enterprise sales. The lowest risk adjusted return move in any business is to do more of what's already working. answer the question why why can't we do more and so if you have a sales efficiency issue then like solve the sales efficiency issue because it's holding you back from tripling the things that you brought up are all fixed problems as in their their problems on both paths so to forego the path you're currently on for a new path that's completely unproven with with the same problems that you know already exist is a much higher risk move than just saying yeah why don't we just get to 30 million okay so just focus on maxing out B to C, B to B until we're fully competent B to C.

11:50Yes. We're doing everything. Well, not even that you're doing everything, that you have exhausted the market of C's. OK. OK. Right? So if you want diversity, then I would still, I would rather you go diversity of channel rather than changing customers. The riskiest thing you can do is a new business, basically. You have to have a new offering, a new acquisition, everything's new. And so I would rather, if you have the itch for new, just get a second channel. But I don't think you're even close to that. You're at$3 ,000 or$5 ,000 a day. I think you can totally spend$50 ,000,$100 ,000 a day for sure just on that.

12:22What will likely be the next thing that gets in your way is that your ROAS is going to drop. And so typically that's going to be you're going to need to have option one, better lead magnet. Option two, better creative. Option three, superior CRO conversion rate optimization just on the pages. Option four, improved sales efficiency. Option five, all four. and then that allows you to scale. And like fundamentally, the difference between companies that can spend 100 ,000 a day and 5 ,000 a day profitably is how good they are. It's literally just making all of those pieces better. And that takes time because you're gonna only change one of those at a time and this is why business takes time to grow.

12:58I sell bleacher rentals to festivals and fairs. So we do around four and a half million in revenue and about a million in profit. Awesome. Congrats. What's stopping me is having my leadership team delegate fully some of their responsibilities. And I think it has to do with creating processes that are followed by all. If we need to hire key people and we don't have the processes, then we can't delegate properly. So how do you train leaders? So this is a good question that I'm going to chunk up one level because I think it'll be valuable in general, which is that fundamentally when we're hiring anyone, we look for the smallest skill deficiency possible.

13:41Fundamentally, you've got traits, as people call them. and then you've got skills. Now, based on Alex's world view, this is not a thing. It's just that. A trait is just a series of skills. And so when you hire a CFO, for example, you're going to try and hire for the smallest skill deficiency. And so if the CFO is a dick, for example, but they're exceptional at all these other things, then you're like, maybe I can teach them to be kind in these ways. Now that would be a big, it's a lot of skills to just have some like go from not kind to kind, right? A lot of sub-skills underneath of that. And so if it's two days to train sales and two months to train kindness, take this person who is kind and then train them on sales.

14:26Later on sometimes you have people who you are like, okay this person is a little different than our vibe, they are not going to be oil and water, but they have this massive skill set that we can use and this tiny deficiency that is around this stuff that we can be transparent with them up front that they need to fix. I've seen this happen again and again and again where a manager or a leader talks to somebody else and says, hey, and then uses amorphous terminology that's very hard to pin down to basically say, change your behavior. And they're like, but how? And they're like, change it. And you're like, okay, I don't know what that means.

14:57And so the reason I'm so obsessive about operationalizing terms, like what is patience, what is courage, what is humility, what do these terms actually mean in terms of behaviors? Like patience is figuring out something to do in the meantime. Like if you do figure out something to do the meantime you're by default being patient right? And so it's telling someone what they actually have to do not who they have to be. Stop being lazy is Very hard for someone to solve. It's like I keep telling her to not be lazy And she keeps being lazy But you have to break the term down into what behaviors you describe as lazy because when you talk to you know Your partner you talk to somebody else you say hey Sarah's kind of lazy Have you noticed that there are things that she did that you observe that you ascribe the label lazy to and so you have to think more deeply like what did they do to deserve the title and it might be like they don't respond quickly to slack messages these are things that if you said hey susan instead of insulting her and saying hey you're lazy instead we'd say hey you don't respond to slack messages quickly enough you aren't responding you know after hours and our hours keep going till 9 p.m and you're not responding until after you know after five and so for this week i want you to focus just on responding to slack messages so let's turn on notifications let's turn it on both of your phones and turn it on your computer so that you can see it.

16:09Is there anything else that's going to get in the way of you responding quickly? Now, when we ask that question, we might find out that Sarah's overwhelmed because she's doing somebody else's job who we laid off and we haven't backfilled. It's like, okay, well now we have context. But until we get to there, we can't appropriately measure Sarah's inherent value or traits, rather behaviors, to give her a label. So to your question, how do you train leaders? I think that attracting good leaders, so one of it is recruiting, right, so Chick-fil-A's head of people said this, she said a lot of people are trying to fix process when they really lost the championship in the draft.

16:48And so a lot of people are trying to figure out what playbook they should be using with a team that is never going to win. So the big framework that we use for training in general is document, demonstrate, duplicate.

17:01And so first you figure out exactly what the checklist is. And I like checklists more than quote SOPs. That's a personal preference. And it's just like, and you want to be able to break it down into behaviors. And I think this is where a lot of training goes wrong. I think most companies aren't very good at training. They're just, they basically hire a bunch of people, see who's got the skill and then fire the rest. But if you do get good at training, it's like, how do you train kindness? Well, you say, okay, well people who are kind, when they come on a phone, they smile, right? And they nod their head when people are listening.

17:28and they repeat back what someone says and they raise their voice when they walk into a room. And so if you boil it down to some of the behaviors, then the onus is on us as leaders to be more specific with what we tell our subordinates to do. And I think a lot of times if you're struggling to train some of these key traits with leaders, it's because you're not being specific enough about what you want them to change. And so it's like you're just not getting it. It's like, well, no one can do anything with that. And so it's like you have to, and this is where the work comes in from the top down.

17:58We're like okay, when you do this, and so the easiest way to bucket this,

18:10that's a P, there you go, is Sarah, I need you to stop doing this, I need you to start doing this, and I need you to keep doing this. And so just being more granular about what behavior you want them to stop or what behavior they're not doing that they need to begin or a combination. And so giving someone the feedback of I need you to do this instead of this has been some of the most effective way that I've been able to change people's behavior and it's around the specificity. And so if your leaders aren't doing what you want them to do, document, demonstrate, duplicate, this is the step process, let me show you how I do it, now you do it in front of me, and this is what we're going to have you stop doing, you're going to now do this instead and keep doing the other stuff that's good.

18:49I sell professional book publishing services to entrepreneurs and executives. We do a million dollars in revenue. I'd like to be at 3.2 million in revenue. Very precise. And I just turned 32. Yeah. It's my favorite number. This is the best explanation for a revenue goal I've ever had. Yeah. That's great. What's stopping me is I'm at the stage where I need to make more money before thinking about other things. And the challenge I'm facing is a lot of things have worked for us up to this point, but I need to know what to do. I need clarity around what to do more of. So what's the input? So what's the thing that drives the business?

19:22The biggest thing that drives the business right now is referrals. The second biggest thing is related to organic in the form of speaking, social media, and guest coaching. And then we have a split between cold email outbound and Facebook ads. You're doing all the acquisition channels? All of them. And we didn't even mean to do all of them. We tried them all and they all seemed to work enough. What's the greatest percentage of your customers? What channel they come from? The greatest percentage of the customers after referrals would be organic. Okay. OK. And that's, now you put that both in organic content, but also like speaking and things like that.

19:56OK. How many speaking things are you doing on like a monthly basis? It's about one per year last year. OK. So I have an idea. So I would ask the question like, I think I might have told this in a short, but a really close friend of mine, he took over Real, which is a publicly traded real estate brokerage. their primary way of getting more agents is him speaking at real estate events. And so in Q4, he did 66 speeches. And in 24 months, he took from$200 million to$1.2 billion in revenue. And so he's doing 270 plus events per year in person. We were having dinner and he was like, no one gets it. He was like, no one understands how much more we do than them.

20:42And I'm only telling the story not to make, hopefully it comes across the right way. Because I think you just, like, if, and I'm guessing if that event generated business for you? Yeah, I mean, every time I speak, we make a significant amount. Well, yeah, so I'd be like, let's, like, how do we go from, you know, one a year to one a week? And start there. Just, like, target 50 next year. And so he rightly identified that he simply needed to do more. The next natural question I was going to be asking is, like, what are all the ways to your customers? Which he obviously answered. And so then it was like, okay, the next follow-up question I'm thinking is, where do we have the most leverage?

21:15So either that's going to be which thing is taking you the least amount of time that makes you the most amount of money Or which one's the thing that costs you least amount of money that makes you most money So you'd say the time leverage or it's money leverage or both now the fact that he said I always make a bunch of money after I speak I was like, okay That's a positive indicator and as soon as he said I only do one speaking of it a year I was like I don't need to know anymore Like if you're getting if that's a significant amount of revenue and it's one day once a year Like I see that and think okay Well, we could 50x the business if we just did 50 of those and so then the the constraint then becomes, okay, how do I get booked on these stages?

21:48But then that's, you follow the same core four, you do the outreach, you post content, and then you reach out to people to find out. And sometimes you have to pay to be on the stages. Sometimes you get a booth and then they'll give you a speaking slot. There's always ways to get on if you need to. We acquired companies in the UK and Dubai. Current revenue across the portfolio is about 35 million. The metric isn't so much want to get to a revenue metric. I want to try and create a minimum of around 50 million enterprise value. Do you own all of them outright? No. So it's varied. I think the problem is, do we focus on building out the double down on the companies we already have, grow the EBITDA that way, or do we keep acquiring and build the EBITDA through acquisition?

22:28How many do you have? 14. 14? Are they similar? No, that's the thing. So if we used to grow through acquisition, we'd have to try and create synergy down the line. Yeah. So you are in a very classic kind of PE no man's land. So you have more companies than most funds would ever have. And you didn't pursue a synergistic strategy in order to accommodate volume. And so on one extreme you have like Constellation, which you are probably familiar with in Canada. It's like they only buy vertically integrated SaaS and they go sub three million and they just do 100 deals a year, right? And they just know their playbook.