Helping A Failing Business Owner Fix His Business | Ep 870

0:00You're about to watch a conversation between me and Alexi Omar, who's a legal attorney for musicians. The problem is that he's losing money and lots of it. And he only has about six months of cash left before his dream is going to go under. My name is Alex Ramozi on acquisition.com. It's a portfolio of companies that last year did over$250 million in aggregate revenue. And we're going to take all of those findings and help him save his business. Enjoy. Let's do a quick, quick overview. So walk me through the businesses that currently stands right now. What's revenue? Our revenue for the last 12 months has been$300 ,000.

0:28Profit? Negative. So we're losing money. Okay. How much? we lost a hundred thousand okay minus hundred thousand yes you're like i could have done nothing and i would have just had zero at the end of the year instead of working all year and then being worse off heard all right what are the business units right now we have services okay we have education okay and who do you sell to i sell to artists and entrepreneurs in the latin music industry musicians who are latin american who speak spanish yeah okay and uh you sell service you saw education was the last one so far. What's the revenue breakdown between, did any of these make money?

1:07Yeah, the services. So this made money, was profitable. Yeah, that was profitable. Okay, what was the top line and bottom line here? So we made$131 ,000. Okay. And we made about$10 ,000 in the last 12 months. In profit. Yeah, in profit. Because you just didn't lose money on this one basically. Okay. And then education? $131 ,000 as well. Oh, how coincidental. All right, profit. but we lost their like most of the money we lost between the two okay so it's between the two because they're under one company got it and so this is 40k i'm just going to put this as for the software and then the money that you lost here was how much in total i guess 100 yeah 110 000 okay put a little negative smiley face there maybe a little tears there we go very sad okay more tears yeah more tears all right so how are you how are you getting customers right now before we talk about how we're going to fix this.

2:02How are you getting customers? So we create content on YouTube. We have about 90 ,000 subscribers. Is that where most like everybody's coming from? Yeah. Okay. So we got, we've got YouTube. All right. What else we got? Then they usually go to our Instagram page. From YouTube? Yeah. Okay. Is that the, that's like the call to action in the videos? No. The call to action is to go to our website, but a lot of people go to Instagram to just ask questions. Like, hey, I have this problem. Can you help me? Interesting. Okay, got it. So where do the sales come from then? The sales comes through DMs. So usually they go to Instagram and they'll ask a question.

2:44So the place that you don't intend people to go is where you make your money? Yeah, Instagram. And you don't tell people to go there? They just find you? No, yeah. They just find us. Okay. All right. We'll put a little star next to that. If all the money is coming in from Instagram, how many DMs do you get? So we don't have that number. We know that from the website, we generate about 7 ,000 visitors. Okay. And for example, in April, we made 150 leads this far. So 7 ,000 clicks. Got it. All right. And then that goes into 150. Okay. Got it. So you're converting 2%. Okay. Into opt-ins? Yeah. They're for free course.

3:26Okay. So they opt-in for free course. Yeah. Got it. Okay. And then from there? And then from there, usually we'll try to sell them the course, our main course. How do you try and sell them? Do you like reach out to them? With every video, we usually tell them, hey, and if you want to learn more about this, make sure to enroll in our community. The next step for that, they'll go through the course and receive some nurturing emails. And then from the emails is how they buy? And what are they buying from the emails? So right now we're selling about nine. Nine out of the 150? Our basic offer is$500 one-time fee.

4:06So they have access to all of our courses now and forever. Okay. And then we have an upsell of another 500. Is that on a funnel or something? Yeah, in the same cart. Okay. When they buy the 500, we'll upsell them to another 500 for monthly Q &A. Per month? No, just lifetime as well. Forever. Yeah. Nice. Okay. Oh, gosh. Okay. So there's so many. I mean, there's so many things. Before we tear this apart, the good news is I actually think that you'll be able to make significantly more money pretty quickly. So this is your education side? Yeah. All right. What's the services side? So on the same Instagram page, if they want a consultation instead of learning because they say, I'm not interested in learning.

4:54Sure. I just want you to do it. Yeah. I want you to do it. We'll then send them to our calendar link to schedule a consultation. And that's$250 for an hour. So you go DM to calendar. Okay. And then you charge before you have the call? Yeah. Man. Okay. Okay. $250. Dude, the good news is there's lots of room for improvement. Okay. That's great. So you have your calendar and then you charge$250 per hour. and they pay on the calendar to have access? Yes. Man, all right. And so that means that you sold somewhere in the neighborhood of 630, something like whatever the math is, 131 times 4, that's 420.

5:40So 524. So 524 hours is what you were able to sell in services last year? You could say that. To get your$131 ,000? Okay. Between the consultations, because usually when they go through the consultation, say for example the in the last three months we've averaged about nine to ten calls so then from there we'll either tell them do you need a deliverable service so for example registering your trademark or business formation those are three out of the ten you can say and then another three are ongoing legal services okay and what other business do you have let's talk about that so the other business is the software because you're like you know i'm not losing money so i should uh i am losing money excuse me so i'm gonna i'm gonna spread my attention even more yeah okay so we're like there's a story behind that i know i know it's a vc story so if you want a horror story um we'll get we'll get we'll get into it i'm sure all right so there's a software company okay so let's walk through that so the software is instagram yeah it's the same thing uh okay Usually they'll say, I don't have$250.

6:48I just want contracts. Okay. And we'll tell them, well, you can access, you know, all of our contract templates inside our software so you can pay for that. Okay. And that's what happens. Right now we're getting five. So via Instagram, you just send those people a, not a calendar link, and you don't send them to the site, you send them to? To our software website. Which is a different website. and then they just check out on that page. They start a free, we had a freemium. Now we're using free trial. Okay. And what's the membership price? Right now is a thousand per year. And that's what, so it goes straight to a thousand per year is what you were billing?

7:27Yes. We also have a monthly version. They were like, I can't afford$250. And you're like, yeah, so pay a thousand dollars a year. Before we have a$500 per year. Yeah. So it was easier. The problem is that the value proposition at first was, well pay us and we give you the contracts but learning that people were churning because once they have their contract they'll download it and just go away we have a couple of decisions that we have to make is there any reason that you just don't sell services and make money so well the reality is we started selling services in back in 2019 so in 2021 uh people we got a lot of demand i couldn't keep up i started selling courses so they could you know learn about how to do them themselves and then after that and also contract templates and then the education side just you know we started making them same amount of money and education this is going to be an important one for you yeah all right so actually you know what i'm going to show you it on my logo two most important concepts in business supply and demand and leverage so if supply is low and demand is high what happens to price and it goes up is that what happened yeah we started doing that Yes.

8:41But then you created this other thing that was much cheaper rather than just saying, I don't have enough supply. Pay me more. Right. All right. We wanted to help more people instead of just. Yeah. But the thing is, is that a long enough time horizon, you'll have no one if we don't make this business profitable. Right. Yes. So, OK. Tell me why we can't shut down the education and software so that we can just do services and then we can fix the service business to make it make money. Yeah. So the educational side, we already have over 800 people. They all bought like lifetime everything. Lifetime everything.

9:13Lifetime everything. The thing with the education is that it's part of we are giving back to the community and nobody else is doing this. All right. So every time, thanks to the education efforts, we are traveling the world and teaching other people in Guatemala, in the Dominican Republic, in Spain, how the music business works. Because in those places, our content is the university's content. So it's an impact project, right? So that is why the education, you know, it would be very difficult for us to shut down. And the education without the software is not losing money. It's the software that actually is losing money.

9:50Okay, so when we did this breakdown, you said the education loses money. So how much money does the education make if you don't have the software? In reality, the education would be a break-even. Okay. That whole money that we're losing... So this is just zero. Yeah. But you said this is$110 ,000 of losses. so that means the software costs you 150 000 a year and makes you 40 yes okay you could say that so why can't we be done with the software so the software right now there's not a specific reason we can't shut it down we we've seen traction on the b2b side of companies in the music industry that are interested in using our software because their clients, like big companies, now need a music contract software to manage their documents.

10:40So they play there for us. Sell what, the software? The software. But that is something that... How much did it cost you to develop the software? Right now, it's burning$7 ,000 a month because we cut every employee before. How likely is it, do you think, that you're going to sell the software? I'm not sure. And the other thing is the software actually right now, the way we are seeing it grow is by bundling services with software. Well, it's obvious that service is the thing that everyone needs. Yes. And then we just have like this other stuff that we did to be cute. Where do you want to grow from here?

11:16What do you want to have happen? The thing that we need is to be profitable. Okay. That we can solve very easily. That's the good news. Yeah. But it will just be painful. Yeah. But it's good pain. Growing pains. Yeah, call them growing pains. If you lose a negative, it's a positive. So, okay. So in a world, hypothetically, where you just ended the software tomorrow, and then you have the education and services, what is required for you to maintain the education work-wise per week? Right now, it's only one live stream with the community per month. Or per month. Yeah, that's the only thing. That's it.

11:55Okay, great. Can we just shut down the software? we can do that oh that was easy okay great i love this for us okay so we're gonna x this out let's use a red let's keep this you know keep this keep this on brand here so this is a red i'm gonna say that this isn't really a business i'm gonna say this is a charity you might even want to operate like a non-profit because it doesn't make any profit anyways and you're you're very you know kind of impact driven and whatnot so then what's the cost on the 131 000 in services the cost would be the associate who is delivering the services. Right now we have a ref share model.

12:33Okay. But we also have, because the services, for example, this year, we are already at$150K. Okay, great. Because now, thanks to the education, the next generation of artists are looking towards us to represent them in deal closing, closing deals, right? So from there, we take a commission from the deal. So for example, we've recently closed several deals that are above$500 ,000 for the artist. And we take 5 % from those. Okay. Do you guys act as an agent for that? No, they're lawyers, representatives. Those are legal fees that the label will also pay us. The music industry is heavily commission-based.

13:20So they get an advance. Yeah. And the label will sum 5%. So the services strike again in making money. Yeah. Wonderful. So what I want to do is reimagine the business in the simplest format possible that's organized to make you money both short and long term. Is that okay? Yes. All right. So I'm going to draw it across the top here. And we're going to draw it in green because this is the money path. All right? It's the money path. You keep your YouTube where it is. Now what I want you to do is I want you to have four different places that you're going to embed calls to action, right? So number one is at the 30 % mark of every video, I want you to make a quick 30 seconds.

13:58Like, hey, by the way, you know, if you want us to help you out with your music business right now, just DM me on Instagram and I'd love to help you out. This is my handle, okay? Number two is the description, all right? And you want to make sure that it's above the fold. So, you know, below this video right now, you'll probably see two links. One is for people who are trying to start business, which they go to school. And if you already have a business and you're trying to scale and you're like, you know, a million bucks a year or more, you know, 500 ,000 a year or more,$10 million a year or more, you can go to acquisition.com and, you know, schedule a call with our team and see if we can help you out, right?

14:28So we have a description. Now, on top of that, pinned comment so you can own that real estate. We also have your profile on YouTube, which gets traffic as well. And so those are four places that we can actually just put. And all of the CTAs here are DM me on Instagram. Why are we doing that? Because it already works. So I'm not trying to break it. All right. So now everything's going to Instagram. So instead of having the site, we don't even care about the site. Who cares? It doesn't matter. So we're going to DM me on Instagram. And then from there, what I want you to do is I want you to have them book a call without paying.

15:01And then what we're going to do is we're going to sell them. And what we're going to do is we're going to sell them a package. And we're going to sell it to the outcome. And you're going to say, hey, a lot of lawyers like to charge by the hour. The reason that we don't do that model is because it disincentivizes us. are basically our incentives are adverse to you. When we do it by the hour, we're incentivized to take as long as we possibly possible. So it means it costs you more and it takes longer. That sucks. So what we're going to do is we're just going to charge you for the outcome period.

15:29That's it. How's that sound? Yeah. So we have to qualify them before they can go to the landing page because, you know, there's 10 million artists on Spotify and only a thousand are professional, maybe 2 ,000 more professionals. So do you see that the landing page? Yeah. But they all eat, they all have cars, they all have cell phones, they all pay mortgages and rent. We're not, we don't, you sell to a lot of up-and-comers and newcomers. They're going to use, just like you have been spending your education money, that you make money on this dream that you have and losing money, we're going to have them do the same thing.

16:06They're going to take their job money and spend it on their dream. and hopefully they make it. But our goal isn't to try and figure out who's going to make it. Our job is to enable the opportunity. So the pre-qualification that I would have here is just income. Not like, and if you want, you can add their Spotify if you think that matters, you know, in the qualification. But fundamentally, yeah. Okay, that's what I figured. Yeah, because if you, I've worked with different artists that there's Spotify. For example, I have a Spotify. I'm a guitar player. And I have 15 ,000 monthly listeners. but you wouldn't take that to determine whether I can pay you or not.

16:44Of course. So income. But we are currently doing it that way. Yeah, you're right. Yeah, you're right. So what we're going to do is income, but we're going to do through budget authority need timing. That's the big four, right? So do you have the money? Is there somebody else who needs to be on the phone, your grandmother, your dog, your agent, whatever, need? So how important is this to you? And then timing. If we were to get you set up, how quickly would you want us to make this, get this trademark or get this thing filed, right? You want to take the people who have the money and want to do it now and are able to make the decision.

17:12That's the qualification. Now, the big question is what are we going to charge? So you're asking me? I'm going to give you a hint. It's more than$250. Hopefully the price is right with what you're going to charge. So the average ticket on the service size between the ongoing one time and the consultation is about$1 ,500. That's the average. Okay. And a lot of that is from people just getting hourly charged? It's no, it's basically the the ongoing right now is about the lower ticket is about a thousand per month. OK, because we are not charging them by the hour like a traditional lawyer. So and this is 750 usually.

17:54So you can see that if you combine the other. Yeah. They usually get to. So this is what I want you to do. I would love you to charge 5000. I feel like that's going to be a stretch for you emotionally. So how about we start at three? Yeah. Can you do five? We can do five. Can you emotionally do five? Yeah. We're selling right now three months for 4 ,000. Great. Well, then shoot. Then we might as well do six. Six is the same as five. You know what? I'll meet you in the middle. 5 ,800. Okay. All right. This is what we're going to sell. That's your retainer, right? So either we can sell. So, okay, this is a question for you.

18:30I would prefer to sell the outcome if it's just a clear outcome that they're going for. Or you can sell a retainer, right? and just say like it's 5 ,800 I'll draw from that whatever I prefer outcome personally because I don't want you to be tied to hourly if you can if you can afford not to you good with that yeah we can move towards the outcome if it's the type of deal that we want to work with like for example when I say outcome I mean like the contracts or the that kind of thing like when it's the commission-based stuff I want the 5 ,800 plus the percentage that's how we were doing it right now good we just need to raise the prices okay and we also need to organize the business so that we're optimizing for this outcome not three different outcomes and confusing everybody.

19:07Right. Okay. Now, if on the sales call, someone is unqualified. So this depends on your deal flow, but I'm assuming that you've got time to take calls. Yeah, because my time is spread around trying to understand this. We need to help you then. All right, this will work. When you have these people that are coming to call, what I want to add is before we have to sell the outcome. So this is kind of like on the call right here beforehand, we're going to add a VSL. Okay. So you're familiar with the VSL? Yeah. video sales letter do you have one right now um for the course yes okay so instead i just need you to make one seven minutes you know five to seven minutes doesn't need to be long just explaining how you do things in your process okay and the other people that you've worked with some of the successful outcomes reviews things like that and then also i would set expectations which is like on this call we're gonna have one of two outcomes um either you want more personalized attention and we'll give you the outcome that you want.

20:00Or if you're just starting out, we do have an education thing that if you can't afford our actual services, you can do it on your own. I've done so. Yeah. Now, the thing is that, you know what? I don't even know if I like that. I'm deleting. I'm deleting that. So the VSL is going to sell the services. That's it. When you get on the call, if the person lied about their income or lied about their qualifications, which does happen, then you can immediately triage them and say, so triage this and you split. and say, you know what, you can tell this isn't going to be a services sale for$6 ,000 plus a percentage.

20:35Instead, it's going to be a one-time education product sale, and then you can sell that. Now, right now you have this 500 and then 500. I'm going to wager that you don't need, like if you're getting people to buy this on a checkout page, typically you can triple the price with a phone call of the same thing. Okay. So you could probably sell for three grand. So if we're charging six here, I would say probably somewhere in the neighborhood of like two to three K is the right price point for the education down. So but the only purpose of that is just so that you can maximize your time on the call so that you can still kind of have something.

21:11And if you need to do a payment plan or whatever, you know what I mean? That's that's at that point. You're just trying to liquidate your time. But fundamentally, if we were to do this, let's walk through what it actually looks like now. You have your YouTube videos. Now, all of the calls to action. The way I see my YouTube is I have 2 ,000 videos, whatever, how many videos I have. And each of them are basically like little mini ads that are always running. And underneath of the video or the quality ad, I have my actual call to action. And I have this surface area across the whole internet that I can change and redirect all of that traffic from all of my videos to wherever I want.

21:46Then you can go back and on your biggest videos, go get pinned comments that have the same call to action. Some people just read the comments. change your profile, and then going forward in your videos, you'll put the CTA towards DMing on Instagram. We're going to completely ignore the site since that's where all of your sales are happening on DM. So let's just push everyone to DM. Now, how many followers per month are you getting? I'm getting about 800 new followers. Guess what? Okay, so this is thing one. Thing two is that for every new follower you get, I want you to DM them and say, are you here for free content or entertainment whatever entertainment or do you want help and then every person who says they want help is a lead so right now if you think about that you got 800 new leads a month that you can work realistically you close five percent of those i mean it's 40 more sales a month at 6k there's 240 that's just from not including your existing volume which we're now going to redirect everything to the most efficient monetization model what stops you from doing this nothing well well shit i think this will make you a lot and i think this will save your business and i think this will also make you very rich so we can help more people yeah because you can't help people if you're broke the thing is is that the education i think long term long long term you might end up just giving it away for free because people are coming from that group as well i'm assuming and then they buy your services and that's why i'm not trying to attack this because this is long-term lead nurture for you yeah so where is this hosted yeah kajabi kajabi well there's your first mistake um i knew it no but if you if you were to do it on school um there's a couple benefits the the biggest one is that we have more active users than any other group platform um and community platform so like you'll probably just get people coming into your community anyways.

23:44But you can also, every single person who gets into the group, you can offer a free onboarding call as a part, as a benefit of being in the community. And then you can use those as setting calls to either triage them to services or just refer them to free stuff. Right, like instead of coming from YouTube, they would come from the school and then... Think about it like this. This is actually a really good visual. So your old way, let's do this in red because Michael loves colors. That's the colors too, Michael. So old way was this. You had one source of eyeballs, right? And you were splitting it between three different places.

24:22The new way is you now have three different sources of eyeballs, and you're forcing all of them through the most efficient monetization vehicle. Because you've got your YouTube, you've got your Instagram, and then you've got your group. And all three of those are pushing to the one thing that we know makes you the most money that also people want. and we're pricing it in a way that actually makes you money. And the question would be, so we would create from the DM or the WhatsApp, we would create a calendar link. They'll go there. They'll get the initial consultation for free. Let's be clear, it's not a consultation.

25:00It's a sales call. Yeah, it's a sales call. then from there once they schedule the call they go to a VSL to prepare them before the call to prepare them and their expectations and everything then on the sales call we'll identify whether we can sell them our services or if not down sell them to our course so our core offer is the results the outcome, that's our core offer And that outcome, it's based on your specific need and our ability to fulfill that. But we're not saying when people are coming to us because we're lawyers in this specific niche, we don't have to talk about specific outcomes.

25:46No, not like you're getting signed with a record label. No, no. We're going to do the work to prepare you for that. You're still going to have to do that on your own. And then when that deal comes, we ask for 5%. And the reason we do that is because it makes it affordable for you at 5 ,800. If we didn't charge the percentage and if you're like, oh, I don't want to pay that percentage that you can pay us twenty five thousand. So we'll do twenty five thousand without the percentage or we'll do fifty eight hundred with the percentage. Got it. Got it. And then do you think that that also gives you a very nice price anchor?

26:12Yeah, it makes it makes sense because the percentage right now, the last two deals, the average has been like 40 something K. OK. And the lead magnet would be the sales call. yeah I want to just do this as the easiest like what is the easiest thing that I can do to immediately fix this business and make it profitable okay if we wanted to add something else we could but I just don't want to right now okay we're going from spraying the traffic all over place into places that lose money to pointing three different places to the one place that makes money and doing more of what already works and we're just going to add a little bit of qualification at a little VSL fix the pricing and then we're also going to route all the new followers that come there too.

26:53So you're going to have a, you will likely have a lot of opportunities. So you'll likely be taking five, you know, eight, 10, 12 sales calls a day. Okay. And which is a good thing. So it's great. And I have three people that can actually do that with me. So if everyone has their own calendar link, as you explain your book, then, okay. I have a book on the best-selling author in Spanish in this niche. Right. How do you, where do you see that fitting in? Maybe that's the lead magnet, like giving it out for free like you do, because they usually become super fans. Like, yeah, of course. Yeah. Um, or is that just another, so there's a couple of, so there's, I'd say like right off the top of my head, there's two places that we could, like, if you wanted to use it now, I would say that you could give it to people who are unqualified.

27:42If you don't think you could, like, if you look at somebody's profile and you don't think they're, they look like i mean you can probably tell somebody's not qualified um you could say hey um it doesn't look like you're ready for our level of services but because i want to you know invest in the relationship long term here's a copy of my book i think that would be a very elegant way to not overly complexify what already will work long term we could start using it as a um a way that we would drive traffic in the future and then you can have a call team call the people who bought the book and then see if they're you know they want more help and then you could basically bring it would just we all we would do is we add another circle but right now you have three more than sufficient traffic sources that you were just wildly under monetizing and we just need to fix that okay and the last question would be um on the software side yeah because the product roadmap is almost finished entirely with all of the features that the companies are looking for yeah if i'm not investing any energies on that i want to know I'll believe that when I see it.