Business Scaling Workshop Live Q&A | Ep 827

0:00Hey, Axel. Hello. My name is Rick and I sell financial planning services to young big tech employees, W2 employees. We do about half a million in revenue. I'd love to be at five million within the next three years or so. What's currently stopping me is just a time resource management issue where I'm currently doing the fulfillment of meeting with our clients and I hired a new full-time associate planner to start to take over those relationships. I think my current constraint is figuring out how to replicate teams as I continue to grow the business. We're doing relatively, we're just doing organic marketing content mostly on LinkedIn and write a daily blog which I post to the website and an email list, a small email list.

0:52How many sales a month did you do? About two. Two sales a month. And is the model like 1 % assets under management? No, and that was another question that I wanted to get your thoughts on was, one of the big swings that I took about four or five years ago is to change the traditional financial planning model. So instead of charging the 1 % AUM fee, we charge a 25 basis point AUM fee, and then a monthly subscription, which is 275. So it nets out to be about 5 ,000 per client per year on an annual basis. And then obviously bigger clients pay more on the AUM. Interesting. Okay, got it. Okay, so typically with your type of business, they're usually demand constrained, not supply constrained.

1:37Like managing lots of people and lots of money usually doesn't actually take too many resources relative to how much they make you. And so I think that the big issue is probably just acquisition. So getting two sales a month is probably the big bottleneck. And so I would, so what's the big incentive for someone to get on the phone with you? You mean what's in it for them? Like why do they contact us? Initiatives to get their financial house in order. we do a lot around getting people's financial independence, like at my age 50. Retire for a million dollars. Yeah, fire movement, you know, sort of hard, real well, yeah.

2:14So, you know, as much as you may hate what I'm about to say, there's a reason that all the big dogs do the same exact playbook, which is they run to either virtual or they run to in-person workshops. Because in one or two days, or even a half day, you can gain a lot more trust than a very long time online. and I would probably use that as my lead magnet because that sometimes, like for a lot of you guys, like one of the biggest levers you can have on like, when we unlock like an easy 5X, it's usually something at the very front where it's just like, we just swap the lead magnet from like, hey, book a call to, hey, get this thing.

2:50And then a call just happens to be part of it or a workshop happens to be the vehicle for delivering that outcome. And when we do that, like that's when all of a sudden your lead flow goes from making two sales a month to eight or 10. And I think that for me, that would be the biggest issue. now you managing customers it's like I think I think you just need more cash flow which more customers will help you with and then you can get an account manager who can kind of like run those relationships but most relationship guys can handle many many many customers because people don't I mean also the higher up you go they tend to in my experience actually need less yeah we do people on a monthly basis so we're is that required it is it's sort of like our our sort of bread and butter so where we do a lot of accountability a lot of like coaching a lot of like is that for them to like save more money and stuff save more money save on taxes tax projections and manage their I think you're I think you're under under charging and over not over delivering but doing too much yeah like meeting every month that's almost like personal finance coaching more than like wealth management yeah because I feel like those are two different offers so it's like there's a there's the Dave Ramsey of like hey stop spending money silly pants and then there's like once I have money what do I do with it and I feel like you're kind of blending those, but you're not, but you're, but you're doing both services and pricing like one, but like lower.

4:05So I think basically you're not making enough money per customer to do the work you're doing. Okay. Okay. Like 12 meetings a year is a lot. Most of the wealth management firms that like come through here, one, maybe quarterly at most. Right. And so like you're doing 12 times the work and billing less. So unless you had a tech enabled way of making that the model, I would change the pricing. Okay. Because fundamentally, you're either the volume player and you have tech built in since day one and the entire model is around cost efficiency or you're premium. There's really not a lot of room in between.

4:47Best for least, it's a hard time for people to perceive that value. So I just think you're doing way too much. One of the reasons why I designed it that way so that we could fish further upstream than most financial planning firms. So we start to work with people in their early 30s, right? When they're making a few hundred grand a year. And then a lot of those relationships that blossom into people doing big things at Meta and making five million a year, right? Do you think that's a smart player? Is that too much? I don't think it's dumb. I think you have two elements. You have a personal finance thing and you have an investing thing.

5:22And you're getting the people who are younger with the personal finance thing. And they don't have enough assets to make their AUM really worth it. Right. And so I would probably have a more traditional private wealth management model. And if you just find out that you can acquire customers really easily on personal finance much more easily than you can here, but then the Ascension is much higher, then that's a great model. I think that's a really interesting play. But I think trying to combine both of them in terms of both the delivery and the pricing, I think that's where it feels off to me.

5:53Okay. All right. Interesting. All right. Appreciate it. So I just blew your shit up. So I apologize. We have a whole year, so you're good. Go for it. How you doing? My name is Luke Devins. I sell pressure washing and gutter cleaning to homeowners. I did 810 ,000 last year. This coming year, I want to do one five, then the following three. So we're kind of, throughout this, we switched to the subscription model. That's what everyone's been suggesting. so how do now I get into neighborhoods or allocate resources because a lot of people are saying just do one channel but then we do a lot of like door hangers yard signs and I feel like that all kind of like goes into one with like ads like how would you kind of rush neighborhoods and home service so can you can you can you restate the question yeah like how would how would you spend your marketing money if you want to get as many on this yearly subscription.

6:54Currently, how are you acquiring customers? Just old school yard signs, door hangers, referrals, stuff like that. What stops you from doing 10 times more of that? Probably just people. Okay. I do a lot of it myself. Okay, got it. So what's the return? Do you know what your LTV to CAC is on? It's right at 10. 10 and that's with your time being free yeah okay so if you paid someone full time to do that do you know how much that would impact your ROAS um someone would probably be about 50 60 grand like a sales guy okay so wait are you you're knocking on doors and getting the business yeah got it and then you and then the truck follows you and then like does the work whatever got it you'll have So I think in the beginning you'll have to keep stacking the subscriptions so that you can generate the cash flow because then you'll have the basically the for sure business.

7:53And then once that starts stacking, then you'll have the cash flow to hire the other sales guy who's going to be able to take over your role. Thing is most door to door guys need to make like decent money because it's terrible. Yeah. And so like you'll probably need to be like they'll probably need to make like, I mean, a decent. I mean, how many sales a day can you make? Anywhere from like eight to ten. Okay, okay, yeah. So I think, I mean, one of those guys could, if you can pay them, shoot, 50, 100 bucks a sale, they can make 1 ,000 bucks a day. I think you'd be able to get somebody to be able to do that for you.

8:27Would you like sprinkle in some type of like Facebook or Instagram or Google? I just don't want to add complexity because like right now you have limited resources inside, right? You just like do more of that thing rather than be like, oh, on top of that, now I have to start calling leads and have to like create a whole like, like the online world and then working those leads is a whole different monster versus like you're right here, you say yes, I call truck, we clean shit, I get money. Like, it's good business, right? Just keep it easy. Yeah, I would rather you keep it easy. Long term, like, if you were like, hey, I've got, you know, 15 trucks for the city or whatever, and I've got 15 teams that are out doing it, then I'd be like, yeah, I think having a canvassed, you know, top of funnel kind of awareness, stuff that generates leads in a centralized phone team that can then also proactively send trucks out to people that you already sold over the phone, I think that makes sense.

9:15but given the fact you already know the script, you already know the process, I'd rather you just stack some of the recurring so you have the cash or bring the new guy in. That being said, if you get a little bit more generous on the commissions, you could probably get someone to pay work commission only, so then you wouldn't have to take the risk on. Okay. So I revised my original answer. Do that. Thank you. Yeah, you bet. Yes, sir. How you doing? Carter Cofield, we sell tax and financial services to high income entrepreneurs. We do about$9 million in revenue. I do like to be at$25 million by this year.

9:48What's stopping us? So I know the constraint is people who need more advisors to service our clients. We need a faster onboarding process to do more five-day virtual events. We've got that. I don't think it takes the whole company to fix that constraint. I think it's HR, CSMs, operations. Is it okay to have the rest of the company focus on a different constraint? or with that like keel team morale or how do you balance constraints across basic constraints across departments that's a really good question um

10:21i've gone back and forth on this so maybe there isn't a right answer but i would say that in the season that i'm currently in i believe that there is one constraint and if we solve that constraint the business will grow and so i want everybody to know that this is what we're working on and what ends up happening is that you see the other fires that are burning and then that actually creates more urgency to fix the first one. When you try and fix them in parallel, it ends up taking longer to do both than to do one and then the other because the whole team knows. It's like, but there's this other fire burning.

10:48You're like, right, then fix the fucking first one. And so then it just orients the whole team. Right, and then also that means that if something has to happen, the whole team is greasing the tracks to make sure that this objective gets pushed forward. Because there's so many supporting and ancillary things to get some big thing done that if they're like, well, we have our priority, it's like, I think that's what gets in the way. That's what we see. He's like, well, sales has this priority, but this is not a priority for us right now. So we call it the silent sixth, which is basically like every business has their priorities for the year or whatever.

11:20The silent sixth one is that we have to keep selling, we have to keep doing business, right? So those things always have to continue. But like, what is the one thing that matters most? I think it's Jack Sklootman. He has a good book on this. But I'll give you the tail of the hour of the book. is that he was a big believer or is a big believer at not having three objectives or five objectives, but just one. He said, basically, if you can't get clear that one thing is more important than everything, then that's your fault as an entrepreneur. And so I see like, if we're the chief allocators of resources, then it means we have to be able to prioritize.

11:52And if we can't do it, how can we expect our teams to? Which means we have to be able to say, this is more important than that. And yes, they are both important, but this one is more important. And I think that that kind of betting perspective has served me really well. Being very violent with like, this is the most important. And I've just noticed that things get done way faster because then it's like, hey, when we do this, then we can do this next thing. And then everybody wants to do the next thing too. And then when we do the next thing, all we move, we part the Cs to get that done. I like that.

12:19Thank you. Yeah. It also, in service of what I was talking about earlier, when you have that perspective, it also minimizes all the other changes that you're making across the company too. Because you're like, that's not a priority. Could we improve this thing? Probably. Do we need to right now? No. It's not the constraint. Yes, ma 'am. Hi. Hello. I'm Ashley Stahl. My agency is Wise Whisper. Wise Whisperer. Wise Whisperer. Okay. We write and we book TED Talks for people, specifically entrepreneurs. We talked yesterday. We did 1.3 last year, and we actually think and want to do 10 next year just because of ads and the infrastructure we've built.

12:56Okay. And it seems actually quite feasible just based on it. But I was talking a lot to Jacob about closing and getting good closers that's stopping me. But beneath that, I started thinking about the contract. And everybody wants to feel like we're guaranteeing them their TED Talk. And we have 100 % success. But because we existed during COVID and our average time to book went from 10 months to 20 months to get somebody their talk, I feel scared to offer a guarantee when I'm not TED. And so I just want to show my track record. Are they TED or TEDx? TEDx. Okay, got it. Yeah. So any insight on guarantees?

13:33Yeah, this is a math problem. Yeah. So I'll tell you a story that applied to a home services business not that long ago. So he was really scared to raise prices, but he wasn't making any money, and he was closing 80%. So I was like, hey, man, please raise prices. And so he decided to raise prices. But to get him to raise prices, I said, so here's the deal. I said, what are the biggest concerns of a customer? He said, well, it's on time and on budget. I was like, all right, how many times are you on time and on budget? He said, eight out of ten. I said, what happens the other two times? He said, one time they'll change what their requirements are.

14:06They'll say they actually want their kitchen to be twice as big or whatever. I said, okay. He said, the other time I will get materials in time. And I can't control that. I said, all right. So what if we write the guarantee? So it's, you're going to raise your price by 20%, which is what we did. I said, and if you don't deliver on time, you're going to give the client the entirety of your profit. Right? Which right now is you make no money anyway. So like, we can say that. So it's like, if I don't deliver on time and on budget, I will give you all my profit, which is 20 % of this deal off. So that's why, so that's the guarantee.

14:38And by switching to that, he closed way more people and made way more money. And so the fear around guarantee, I think, is justified. But if you just look at the math and you're like, oh, I can close twice as many people and I have to give one out of 10 back, you made way more money. So I think just do the math on it. Yeah, I think it's just fear, like fear of being on the hook. if there's like another pandemic and I have like 400 Ted talks. Yeah. Breathing. Yeah. Well, you already went through a pandemic. Yeah, exactly. So you already know what you do. Yeah. And with your gym numbers, I have no excuse.

15:05Yeah. Okay. Thank you so much. You bet. You're good. Hello, Alex. Yeah. My name is Nick Page. So I own a fitness studio. Cool. We just surpassed a million in revenue. Congrats. And thank you. Personal training or semis or group? Lodge group. Lodge group. Okay. So if I'm being honest, I would like to be at 50 million. Okay. So honestly, what I think stopped me is looking at my business just like - You need 49 more gyms. Yeah. Exactly. So, and I honestly don't, this is like something that, I don't know if it's a belief, right? Yeah. Looking at my business as an investor. Sure. My LTV to CAC is, I mean, two to one.

15:47I mean, we can get it to three to one. looking at the market and realizing that the fitness studio space is becoming a red market it's very tough i don't know if i personally think it's a smart investment in my time to try to continue to grow my gym we're profitable i have a great team and i'm like maybe i'll just sell it in one to two years um and then i'm like so like i just read the book uh how to how to how of make a couple billion by Brad Jacobs. And he talks about getting ahead of the trend, which I think you've done a great job of. So when I read that, think like an investor, and then I look at my business, I'm just like.

16:31This ain't it? Yeah, I'm kind of at this point where I'm like, and people are like, this is great, why don't you scale? I'm like, you don't fucking understand it. So I guess like. He's like, this sucks. Yeah, it's like, everything's great, but it's like, do you even stop now? So I mean what do you think I should do like if you were me like if you want to make 50 million dollars The likely that you get it there from a large group studio is very low So if that's the goal then you probably want to have a different vehicle And so you can I would say that if I'm using her in your position You have one of two paths there's like a really close adjacent path Which would be like I do believe that the best fitness model right now is a small Small group hmm.

17:11I think it's the best model that's on the market right now And so you could change your existing model to that, and that one gets exceptional returns on capital and is a very operationally easy model to run. And so that would be like, the reason I kind of like that for you is because it already borrows from a huge amount of your existing skill set and knowledge base. And that is a good vehicle. So that's option one. Option two is you just try something brand new, which I have very little insight into into like what of the unlimited opportunities could you pursue, all of them or one of them, but transforming what you have into, I mean, I fundamentally think that's why you're here, or at least I would be if I were you, is like how do I make this, how do I turn the thing that I have into the thing that I want?

17:57And I think that you can do it with a lot fewer steps than you expect. You'll probably have six months where there's a little bit of turbulence of like people being upset because you changed the rules of the game on them, but unless the facility that you have right now like precludes you in some way from you know delivering that other model yeah I would say that that's probably a very look the lowest risk highest likelihood path yeah okay yeah cuz my head just goes everywhere like yeah another let me let me give you something this is the first year in my entire life where I haven't had FOMO I haven't had it it's really weird and I noticed I noticed that I didn't have it only at the end of the year.

18:39And I was like, oh wow, that's weird. And I think it's because I finally realized how fucking hard it is to do anything. And when I see someone who's like crushing it, like a friend of mine made 50 million in crypto this year and it's not his main business, it's his side hustle. And I was just like, okay, noted. And so then I thought to myself, I was just like, good for him. I was like, I'm not gonna get into it. Like that's not my game, you know what I mean? But he's like, dude, the school deal's fucking monster. And I was like, I know it's awesome, but that's the game I know. You know what I mean?

19:09And so it's not even the comparisons to the Thief of Joy thing. I think it's just that learning to play a game really well takes a really long time. And accepting that, like, one of the saddest things about life for me has been that, like, I'm only going to have, like, maybe three or four more entrepreneurial seasons in me. And that's really sad because it means I only have three or four more big swings. And it's like, shoot, I have all of these things that I want to do in my life, but I only get to pick three or four more. Maybe. Maybe. Maybe. Right? And so I think that just getting comfortable with the idea like there will always be people who make more and Even if you are Paul Getty and become the richest man in the world everyone will forget anyways And so like just context right?

19:48Yeah that There's nothing wrong with taking having six months where you you know Re reconfigure what you're doing to then say this is what I'm gonna do for the next five or ten and then you start for life And then you can do whatever you want Thanks How you doing, Alex? Good. Name is Josh Hadley. We sell on Amazon e-commerce. We talked last night. Primarily stationary products, so calendars, planners, educational posters. We did$12.5 million last year. Like to be at$50 million and even get to$100 million. That's kind of the trajectory. I look at your preamble earlier, right? Go to the increase your number of customers.

20:31do more of what's been working for you. And I have a podcast in the e-commerce space. Ideally, I want to be like you when I grow up, but in the e-commerce space. I want to be like you, so we're all good. But with that being said, our number one priority for growth has always been find more products, opportunities on Amazon, launch those products, right? That's been our biggest growth lever. How many SKUs do you have? 1 ,600. So we've got a lot. It's all stationary. My wife designs it all, right? All stationary. All stationary. I'm sure I bought something from you. Probably. Totally own that whole category.

21:05Okay, yeah, keep going. So we've looked at, you know, and Amazon's a cruel mistress in terms of decreasing profit margins. Right? They're increasing fees. And I see, like, over the next decade, you look at Amazon, you're going to be happy with single-digit profit margins. It just becomes so competitive. So with that being said, we've got on to TikTok shop, right? We've had some success there. Took 10 % of our sales this year already. We've then taken the viral video, the videos that go viral on TikTok. We run meta ads on them. And we finally cracked Shopify for the first time. All right. We've got a five row ads on that, right?

21:40So we're doing that. I also look at wholesale. We briefly mentioned distribution in our conversation yesterday. So as I look at like our number one priority for growth has always been do more of what's worked, which has been launch products to serve whatever crap people are looking for on Amazon. But I also have these things that are boiling up that I'm like, man, I think this can really help things. TikTok actually is supporting all of our Amazon. Increasing organic rankings just because people will search and buy it, right? So how do I communicate that to the team? Because it's like, we still got to keep doing research.

22:12Yeah, so that's the silent sixth. That's the silent sixth, right? So like we're going to continue to make the sausage. We're going to continue to do the proven winning strategy. And that's kind of that's the core. That's the base. We're not going to threaten the base to try and pursue the new thing. but if you do see one of those writing on the walls type situations where you're like I my margins are gonna compress etc etc then it makes sense to make your one big bet of the year let's say it's tick-tock and I mean to be fair it's not that much more work to just take the same ads and then run them on Shopify and then that becomes the objective of the year which I would probably just put into owned you know owned customer list is probably how I just categorize that for the team.

22:52I feel like that's it. So what was the actual question? Yeah, I mean, so you talked about that being like, hey, this is the one thing we're doing, right? Because we've got 25 team members already. They're all serving that one thing, which is finding and launching new products. It can be you and a small other team. Yeah. My follow-up question to this has been, because I was talking earlier about, about go hire a director of marketing that can go run this whole TikTok side, all of the Shopify stuff that we want to do. I've been doing a lot of it myself and almost my reluctance to go hire somebody is like, well, then what else do I do in the business?

23:32You know what I mean? So I'll make you a promise and I don't make promises often. I promise that if you replace what you were doing, you will find something else to do. Well, I know that. Well, then I will double down on that because I've got this other e-commerce thing. Ideally, a decade from now, I've got to win and I can go do this exact same thing you're doing but in the e-commerce space, right? Yeah. To me, I'm always like, oh, go do more speaking on stages. Go start building my own personal brand. It's kind of what I gravitate towards. That wouldn't be my priority. I think get the win. Yeah.

24:06Because, say it differently, take it to the natural logical extreme. So you do lots of stage stuff and then the main business suffers and then you don't get the W. Then you're just an airbag, right? If you, on the flip side, you don't do any speaking and you get the win, all those doors open tenfold. And so what matters more? The win. So get the win. Easy enough? I do think that with your audience that you have, you'd be able to very easily headhunt a really savage director of marketing who's already done e-commerce for TikTok Shop or Shopify. And I'd probably do it on your podcast. I'd be like, hey, I'm looking for a savage.

24:45Like read Ernest Shackleton's ad, like looking for men, low chance of survival. Just like this is a dangerous place to work and I think you will attract the right people. Awesome. Yeah, and don't be afraid to pay them a lot. Okay, thank you. Yes, ma 'am. Hey, I'm Bree. I'm from Tennessee. My sister's over there. You hear me all right? Hi, Bree sister. We saw residential construction to middle-aged women who like to spend their husband's money. Love it.

25:18Got to know your avatar. Yeah. We've done$100K in revenue in one year. We would like to get to$3 million, ideally in two years. I think it's pretty realistic and easy in construction. And I think what's stopping us is scaling and potentially niching down. So after these workshops, that's what we feel like is the right thing. And we wanted to get your feedback on potentially niching down to bathrooms. It's a two-week turnaround. Yeah. And it's a pretty standard. I can already tell you I like it. You do. You like it. So it's high margin? Yeah, 42%. Yeah. And it's fast. Two weeks. It's easy to sell.