Diagnose Before You Scale. Q&A | Ep 943

0:02If you want to have a consistent, world-class sales team, the process has to always go above the player. No one is above the process. And I do think that 95, maybe 98 % of sales teams have no idea how sales training, how sales culture, how any of this stuff works. They just hire a bunch of people, see who closes deals, fire the rest, and so then you just have a bunch of mercenaries who work for you. but there is no culture there is no team and it's every man for himself and that is what creates this volatility in sales and some guy says something and he closes a deal and the other guy's like i'm gonna try that now and there's no consistency across the board and that also gets you in trouble long term because they start promising things and making deals that you can't cash hey alex what's up my name is francis aguillo i am a real estate wholesaler okay um they're currently averaging about $450 ,000 a month in revenue.

1:01I would like to be at a mean. That's your spread? That's what you're making? Or that's like house volume? That's gross. So what's your spread on that? What's your take on that? So we're at 40%. So right around$250 ,000,$240 ,000. Interesting. Weird. That's high. What are you wholesaling? all right so here's the um he's like he's heard of brothels so imagine a brothel but now it's all midgets okay keep going you're good okay but here's the challenge uh we run into so we're currently at 450 average yeah we've had 700k months this year already the challenge is every time we get to those numbers and i try to hey you know what it's time to ramp up uh for some reason would tend to tank to, you know, 200, 250.

1:57Okay. I'm sick. I have cause to believe it's the sales team. And just, okay. You know, they have those power months where everyone, you know, takes home 20, 30 grand. Uh-huh. And then the month after it's like. Are they pure commission or is it split? So there is a base salary. Okay. What's the split between commission and base? So they're at 42 base. Okay. per annum and then 10 % of the assignment fees you have an ops issue which is sales ops and so it's good like this is gonna be much more weedy in terms of like tactics to answer this question um but it's like there's probably like 20 things that you need to be doing and you're probably doing like 13 of them and the other seven are gonna be the thing that make the difference uh in creating the consistency of the team that's at the service level at the at the at the deep root of this is who's the leader of the sales team i do have a sales manager okay so he or she is the problem because like sales at the end of the day is a culture game well everything's a culture game but like sales you can feel it so quickly when things are good or not good because the performance the feedback clips are so fast um but for whatever reason you do not have a culture of consistency within your team.

3:17I would wager that script adherence is low because you have such variability in close rates, unless there's a change in lead quality, which would be something else. But are the leads the same like this month as last month? Yes, the leads are the same. Yeah. So it's a sales discipline issue, which then comes down to the training cadence, the scripting, how people are being managed on a daily basis and weekly basis in terms of their career goals, how like you're doing morning meet like it's it's this is all sales ops i could like just start talking about sales but like this is a pure sales ops issue and so at the like there's there's a two-step like i would approach this in two steps step one is we should do all the stuff that we are not currently doing that we should be doing everyone should be reading the same script if they're not reading the script why are you on this team right uh we need to have training that's every day to make sure that they are saying things the right way.

4:12We need to make sure that everyone memorized the script. Some of you guys might have seen the YouTube video I put out like two days ago about this, but like they have to breed the script. If they were not saying the script word for word, you cannot be on this team. You cannot take these calls. I'm getting these leads and not for you to go cowboy and make shit up. And that then if we cannot solve that problem, because for whatever reason you keep trying it and they don't adhere and they go off script because they just want to close the deals. It means you have a cultural issue, which is a leader problem because it means the leader is reinforcing behaviors that get people to go off script and there's no consequences for doing it.

4:45And so if you want to have a consistent world-class sales team, the process has to always go above the player. No one is above the process. And I do think that 95, maybe 98 % of sales teams have no idea how sales training, how sales culture, how any of this stuff works. they just hire a bunch of people see who closes deals fire the rest and so then you just have a bunch of mercenaries who work for you but there is no culture there is no team and it's every man for himself and that is what creates this volatility in sales and some guy says something and he closes a deal and the other guy's like i'm gonna try that now and there's no consistency across the board and that also gets you in trouble long term because they start promising things and making deals that you can't cash.

5:33That makes a lot of sense. Up until now, I mean, we have scripts, but they're more of suggestions. I've done a lot of sales. This is a straight out of the book checklist problem. We have to do all of these things. If we do this entire checklist, we will get this outcome. If we can't do this checklist, the leader is the problem because they don't know how to reinforce culture, which then means that they're not able to get the right people on and wrong people out, which sometimes means we might have to fire half the team to get the right people in so that we can build the culture we need to get to where we want to go.

6:07Because you are in, like, I showed the shapes of businesses. You are in a sales and marketing business. There's functionally no delivery. Like you're just basically like, are you guys doing outbound or like smiling and dialing or do you buy leads from setting teams? Inbound, yes. Google ads. Google ads? Yeah. Okay. So you have inbound leads that are coming in and then you close. Like that's the business. like you buy media you sell shit and so like this has to be a core like you have to be world-class at this if you want to be world-class at wholesale gotcha but that's the constraint in the events that i have to you know let go of half the team because they're just not good enough yeah where do you suggest i look for um it's not about where it's about how so it's not like i'm gonna find like the better you get at training sales and creating consistent sales processes the less skill someone can have and create a consistent outcome within your team, which becomes the arbitrage of your business.

7:02Just like I said, the cleaning thing before, if the whole constraint of that business is going to be finding, you know, basically taking a human being and then turning them to a great cleaner that actually shows up on time, you have to take the raw input of somebody who has no skill and just has work ethic, just has energy. And in 14 days, you can get them closing deals on wholesaling. That box is the value that your company, that is your IP. That is the trade secret. That's how your company is valuable. And so when I say who versus how, like, where do I find these people? You could run Indeed ads and find like for this caliber of salesperson, they're everywhere.

7:35Uh, the issue is then what is the process and what are the expectations we're setting for those people as they walk in? And so typically when you're doing high volume sales, like you are, how many guys you have on the team? Um, currently 17. Okay. So when you have that, I mean, you know, midsize, someone comes in, usually you get constrained because the amount of churn you have and people quitting leaving is about equal to what you have to hire. And that's what keeps you stuck. Right. And so it's a process issue kind of on the demand gen side for talent. And so usually we look at that and say, okay, what part of this can we screen ahead of time?

8:09So it's like, let's send them the script before they even show up. So people apply, we send them the script and then send us a 60 second video of you saying the script. And then from the 60 second videos, we're going to invite people to a group call, not one-on-one because we don't have time for that. And we're going to go quick drill, say the script, give a piece of feedback, see how they do it again. If they can take the feedback well, and they were prepared, great. It means they're coachable. They have work ethic. Awesome. Now we can take you to a job offer call. Somebody has attitude on the coaching, they're out.

8:37If someone doesn't show prepared, they're out. Very easy screening. And so you take 10, you pick two, pick three, they go to the next one, you make job offers. And that's the flow. But like the entire sales process of selling them on selling for you sets the frame for how the company operates. Like how disciplined you are and how militant you are in terms of how you set the frame for this is how we fucking do things here. Either get in or get out. I do not care, but we win. If you can set that frame, you will attract winners. And winning is not for everybody. And so that means that on the team, there's probably some losers and it's not for everybody.

9:16So that's the decision you make and that's from top down. So there's the tactics and then there's the root issue. I would try this first. If this doesn't work, you have to probably gut things. Thank you.

9:33I know he's the only person struggling with sales here. I saw like more notes like, okay, group interview. Yeah. Go ahead. Okay, so my name is Sasha. I sold designer bags and sunglasses. Cool. And we do about$6 million a month. No, sorry, a year. Sorry,$6 million a year. Oh, cool. And I would like to do$38 million. Precise. Yeah,$38 million. Okay. And what's stopping me is... Why$38? Just because I figured, you know,$100 ,000 a day, something like that, round up, down, something like that. Okay. We've got the roundabout. And, I mean, obviously more. Yeah, okay. But I was thinking 38 would be fair.

10:20Yeah, that works. And it is just recruiting. Oh, recruiting is the bottom line, because you're saying? Yeah. Okay, got it. My house cleaner was my first employee. And because I consumed yours and Layla's content so much that I was like, I'm going to be these two people in one. That's me. I'm going to be these two people. So, as a result, I have a great team, a really great team. And it's just a matter of being militant in the recruiting process. We do sell on whatnot quite a bit. So, who do you have with stopping you? So, you make money,$6 million a year selling handbags. And sunglasses. And sunglasses.

11:04For you to sell more handbags and sunglasses, you need more people to do that? yes because we um we only go live for about five hours a day because we get tired which is me okay well me and um i have three sales people but um it's just we get tired we could if we were live more often we could create more you're going live on like your instagram page or your what on whatnot okay got it and do you have like a big following there 110 000 and And so you're just selling to that same base. And if you just sold for longer, you would make more. A lot more. I could do a hundred grand in the show. Okay.

11:41So you just need like two more salespeople who are going to camera? But yeah. And then the recruiting as well. Recruiting for what? Packing. Because we do a lot of. You do your own 3PL or not third party, but like you do your logistics. Hmm. Why? I didn't know you could have other people do it. boy oh boy yeah step inside uh yes so so functionally like because of the nature of the business that you're in um we have to think like because we have to we have to consolidate resources i'm not normally somebody who's like uh let's let's cut you know parts of the business out but unless your shipping is some key differentiator that you have uh like amazon shipping became a competitive advantage.

12:30Right. Um, but unless that's like some differentiator, then shipping for the most part is pretty commoditized. And there are people who all day long, they think about like saving 15 cents on cardboard boxes and tape and packing peanuts and all that shit. Um, and I think that that you having to like, think about that and run a functionally a warehouse at the same time as running a marketing and sales and talent business slash media, that's not where the value is the values in the distribution and the sales and so i would say like can we outsource this the logistics part so that you can just go all it because all we had to do is you get two more sales people and you get to 100 000 a day we should do that we have to physically show the product like well i'm not saying you don't have like some product on hand you just don't need a warehouse no we do need it because it's like go go go go okay feed we run probably about so you're like we sold this item to this person is how you do it yes okay um got it it's kind of like a warehouse it's yeah okay that's fine um all right so you just need to hire more people so what's stopping you from hiring more people the talent um the talent to hire more people well i'm i'm learning now that's why i'm here no no you're good you're good um so i'm saying like you have two sets of roles you've got warehouse folks and you've got people who can get on camera right so what are you currently doing to get each of those people well we had ads on indeed okay but i didn't realize how militant i had to be until i came here it's it makes a lot of sense right i know that there's that many interviews that are required um and that's more for the warehouse side correct both because sales is i think that you'd be able to find sales people like i would probably look at amazon affiliates how much would you pay them percentage well that's the thing now it's so okay so it takes skill to do what we do yeah it takes skill like agreed Like, for example, my girl is better than me.

14:40Great. She's better than me. And it's like, not only is it motor skills, it's presentation and entertainment. I get it. I understand. I did a live for three days. I got it. So finding and training that, that's definitely a process and takes time. Yeah. the question is whether you want to buy or build do you want to buy the town or build the town building the town is cheaper takes longer harder buying the town is faster more expensive which one do you which one feels right for you we're not always so we're profitable per show yes okay profitable per show but sometimes when ends up happening is like let's just say it's a a wednesday are you on cash based accounting or accrual probably cash yeah so you might like if basically if you run a physical products business which you do here you're like okay we made money now let's take all of that profit gross profit that we had and go buy more shit so we can sell more shit right right so this is where like you probably have what's your like what's your financial the financial side of the business the financial ops look like my accountant handles it your who my accountant oh your accountant does it okay you will need to have soon a relatively strong finance person who can give you better forecasting so that you can, it's not just like how much cash we have in the bank account, let's go buy more shit.

16:08It's like we can only afford to buy this much given this growth rate that we want to have. Otherwise, you will get into these probably cash crunches that you're feeling right now. It's not that the business isn't profitable because I'm guessing the headcount's not super buy. So our shows will make anywhere from like five to 7 ,000 profit depending on like the volume that we did that day. So we know the profit like per show. However, that's where the skill comes into play. Like if a show is not going well, we need to have that person trained to be able to do the thing. And so that's why not knowing how much to pay them is the...

16:42Well, I mean, I think doing a percentage would make sense. Percentage of profit. Yeah. Like a salesperson. Okay. And so you can buy or build that, right? So you buy it as I would just go to mini micro influencers who are already on Amazon hawking stuff and be like, well, they already do live streams and they already do sell shit. And I bet I could teach them to do this for me. That is a buy version because you already know it's already proven. You're just saying, hey, do it under my umbrella. The build version is that you have to kiss a lot more toads and try and look for who has already built in a bunch of soft skills.

17:17And then you can hire for the small skill deficiency that you know how to train. Okay, so Amazon affiliates. Well, you could do either. But like, yeah, I mean, obviously this can be a lower risk thing. And then you'd have to have some agreement that they're going to only sell for you for X period of time. Like a contract. Like a contract. Thank you. Yes. But big picture, because I want to make sure that you're good. The Indeed warehouse stuff, that's just like commoditized. I mean, you have a warehouse. Maybe you have to have it for your business. But like, I don't see that as like, that's not a core differentiator.

17:49You're not different because you have a warehouse behind you. That's not special. so the roles that you have there it's like they need to be like have a pulse have a good leader there let them just deal with it your your star factor is going to be your ability to train people to sell and so that's like where is your what is like what is the true pinpoint of where the most value gets created for you as the founder the entrepreneur is that you need to be able to take somebody and teach them to sell and you have to break it down in in terms of the most concrete language you possibly can't. And so think of everything purely in terms of behavior and do not use any amorphous words.

18:27So it's like, I need you to have higher energy. That means nothing. I need you to raise your voice. I need you to talk faster. I need you to have your shoulders back. You have to describe things that people can see. And then other people will describe them as having high energy, having charisma, having confidence. And so if you want to teach someone to present, you have to tell them what to do with their body and their voice. And that will be far faster for you. And what you'll find is the training glass, the reason it takes so long for people to train where they can't train salespeople or presentation people is because they literally do not use words that other people understand.

19:01Like this is the problem. This is why most companies cannot teach people to do shit because they say, have more charisma. And then the person listens and is like, I'll translate that into what I think charisma means, which who fucking knows what they think it means. Right. And then we're just playing this telephone game where no one agreed on what are the behaviors I want you to do that will compress the amount of time that will take you to get some one up to speed and two long-term if you can develop the sales training then you can have a stable of stallions that are on 24 7 for you working in your in your barn so that I don't know why it's animals now but let's go with it so that that's actually that brings up the point so I I I have um so my girl like I said she's my house cleaner shows up at my my door one day she's she's like hey I want to be you yeah and she's like I'm a copy and paste of you and she became me yeah now there's a little bit like a little bit of a how can I because obviously I had to learn to care apart like from Layla um so I learned to care apart um and um now I have it but then I've seen her I mean I've seen situations kind of like not go the way they should because she's a copy and paste of me from yesterday.

20:16So I'm starting to see those kind of human people. What's the problem? We'll just put her in front of the camera, have her sell, and get her out of the building. If she can sell. So let her sell. Don't have her manage people. Have her sell. Got it. Understood. Thank you. This is a good talk. Yeah. Hi,

20:40Alex. My name is Sebastian. Four years learning. Thanks for everything. Yeah. Thanks for coming out from Australia. Melbourne. Yep. Melbourne. Melbourne. That's sick. Blue Sense Digital. We sell a paid ads and growth advisory to eight and nine figure econ brands. Sweet. We do three and a half. Okay. We'd like to be at 10 and 20. Okay. Feel super clear on our top priority against our supply constraint. Oh, talent. Yeah. Okay. Talent acquisition and first getting LTGP on talent. Something that's unclear is we've just established this past 12 months our leadership team. So we have two team leaders, a head of growth and a head of strategy.

21:25They're all just on salary at the moment. But putting together or building an incentive, a great incentive plan for them as a group to carry us as we 2 and 3x headcount. um i would just go profit share pool 10 to 20 and then they get slices of that slice so it caps so basically it's like if you say like simple math 100 a year profit 20 is always going to be allocated or 20 is always going to be allocated to all leaders um and so they get slices of that pool but then you always have 80 and then they think like you do which is like if we're going to bring this leader and we got to give up some of this pie but they should be able to grow the pie which is the exact same math that all of us do when we bring someone in.

22:09And so it gets them thinking more like owners. That's the simplest way I could break it down. Are you planning on trying to sell the business anytime soon? Potentially, yeah. Okay. If you want, you can include a profit's interest in the sale, which you can have be proportional to their interest. Yeah. And then if they leave, it comes back to you. How would you apportion that percentage split against those different roles? so first off you're going to want to leave probably two-thirds for future talent if you want to go big and so do not be like okay i'm going to blow my whole like slice of pie on these people because the best talent is in the future it's not right now but i'll give you the the pitch or the walkthrough that i have with um with somebody who's in this in this position is that and this will probably apply to half of you um who here has somebody that they were considering tying into your business.

23:01Okay. So I'll give you quick, quick, big picture advice. Um, if you never want to sell the business, don't give shares away. The only thing that is guaranteed 10 years from now is that you will still be in the business. That's it. Everything else is not guaranteed. So I would not encourage you to give real shares away. Thing one. Thing two, there are four things that equity provides. One is cashflow. the second is sale bonus, sale dollars. The third is risk. And the fourth is control. And so when I have a conversation like this, I'd be like, okay, cool. So do you want any risk? And they're like, no, I don't want any risk.

23:42And you're like, okay, cool. So we don't want that. I'm not going to give you control. So that's off the table. So all we have left are cashflow and the chance that we sell. And that's what we're going to do. And so I'm sure in Melbourne, I know of the legal situation, but like there's a version of we'll give you a profit share, which comes off bottom line. And, uh, in the event of a sale, you'll get a sale bonus. Now the issue with that is it's going to be taxed as income. At least it is in the U S if they have a sale bonus, um, rather than capital gains, but there is no real other alternative because either they have to take on risk and not get control and pay taxes, um, on you gifting to them, or they have to buy it and give you money.

24:21Most people don't want to do either of those things and you have to agree on a valuation. It's a whole fucking mess. And so it's easier to just say, I'll give you some money today. And if we sell, you get money tomorrow. And if you leave, you get neither. And then that sale, you know, I've just said that the sale number is like predetermined. There's a zillion ways to slice this, but the simple way is like, if you have a 10 % profit share, like for the whole company, right. And somebody, let's say gets 10 % of that. So they 1 % of the profit. You could say, when we sell, you will get a proportional amount relative to the total for that 1%.

24:56So they get 1 % of the sale. Sure. Yeah. And when you write that, make sure that it's the percentage of cash, not calculated on the total value of the sale. Yeah. The head of growth is pretty much the sole sales guy, or our first sales guy, not the founder lead he'd be at this table commission on clipper sales plus this percentage of profit share or it's one of the other is he a founder no it just sounds like he's your sales guy correct yeah i don't new role for us yeah well he gets commission yeah he's at the leadership table uh-huh the other guys at the leadership does he do marketing he started to yeah he's developing and he's backfilling that head of growth role.

25:40Giving equity to a sales guy is kind of like one of those day one mistakes that I'd prefer you avoid. So if that guy's really ambitious and really hungry and smart and you think that he's going to be there long term, I would say, I want you at the leadership table. I don't think you're ready there yet. This is what I would need to say and just make it quantifiable. You need to get like, you needed master demand gen, which creates five deals a week, five deals a month, whatever that number is that you'd like. If he actually did this, you'd be like, you earned it. So whatever that is, sweet thank you yeah you bet

26:16my name's trenton we sell roofing in the metro detroit market sweet um we're going to do about three million this year we'd like to be at 10 million okay um quick context we were primarily a storm contractor yeah storms have uh kind of vanished in our market which was hell right yeah Global warming back here, you know, climate change, whatever. Actually the best thing that ever happened because it allowed me to step into retail. Okay. So over this last year, I've really had to like rebuild my business. Cause right before that we had hit to 5 million, two years in a row. Okay. And now we're seeing this drop off.

26:55So my biggest constraint or what's stopping me is that, um, for the last, you know, eight years, all of our lead gen has been from. Weather. From doors. Okay. So it's been 100 % door-to-door lead gen. And now when we're trying to knock for retail, it seems to be like heavier of a weight on the team. When you say retail, what do you mean? So like just people on market that need a roof. So like residential? Residential. Okay, got it. Residential, yeah. And when you were doing door knocking before, you were knocking on? Residential doors. Okay. But we were getting funding from the insurance company.

27:28Got it. Word. Okay. Yeah. Okay. So keep going. So now, with me being a door-to-door guy, purchasing leads and all that was sacrilegious to me. So there's some limiting beliefs there that I started to explore last October. We bought leads. I just want you to be lead curious. That's all I'm asking. Yeah. I'm very lead curious now. But I basically got slaughtered learning the smart acquisitionary binary. You know what I mean? Like be non-binary with your leads. Like as many as you want. Yes. No, that's what I'm trying to do here. And when we did purchase leads and the unedited version, by the way, go ahead.

28:09And when we started to, you know, stack the guys' calendars, there was a big culture shift where we actually saw like more buy-in from the guys, but then like the door knocking just went. Yeah, because it was easier. It was way easier. But like our CAC and all that was absolutely horrid, right? So I'll spend like$7 ,500 just to acquire one customer over the summer. Okay. And it wasn't sustainable. What did you make from a customer? On average,$6 ,500. So that does not work. No, it doesn't work. Yeah. And it was just like a lot of the marketing agencies that we worked with were like younger people.

28:45They were like using AI tools, go high level. Yeah, sure. So we decided that we were going to build it in-house. Okay. So with that being said, now it comes into, you know, a leadership issue. because I need somebody that like knows how to, you know, market better than I do so that I can focus on training and. Can I pause you real quick? Yes. Okay, cool. So you're at three, you want to get to 10, you rebuilt it from storm chasing to just straight up door knocking whenever. Fine. I think it was a good idea. Um, you had a door knocking team, you took the same sales guys, brought them on leads that you got them.

29:21They got lazy, fat, and don't want to do door knocking anymore. So great rule number one, outbound and inbound are separate teams. Yes. Inbound is what you graduate to. And so if you're an absolute savage, like you just take children's souls and just rip them out every day because you're a terrible person. But you're just unbelievable at sales. Then and only then do you get the opportunity for me to feed you leads. Because these are the most expensive leads that we have to work very, very hard for to make sure. And like, we cannot waste them on anybody who cannot close everything. And so thank you.