Practical Ways To Grow Your Business | Ep 821

0:00If we can't clearly state our goal, we certainly won't hit it. Right. You're not going to hit it by accident, for sure. So I'm wondering, like, you know, yesterday when we looked at the van, like, can the business model itself be a detractor? Like if I'm trying to think of how big can we grow this in the current model before we have to look at SaaS or products or people become, you know, obviously a big, big issue in this type of business. So how big can this go in this type of model? Yeah, I think it can. I mean, it can't. It's very unlikely it becomes a billion dollar a year sales business. The biggest problem with it.

0:38So the two big problems of that business are revenue retention, number one. And number two, depending on the model, if you have like coaches, because coaching doesn't scale. I mean, you can get to whatever, 20, 30 million a year, but it kind of like it becomes very difficult typically after that, because getting somebody to be as good as you, this is actually what I made my whole podcast on this one. So if we scale, let's just say a one-on-one business is a most rudimentary version of this. You can then go down to one-on-four, one-on-eight, one-on, you know, one to infinity, right? So you scale that way, basically more and more fractionalized access to you or your knowledge, whatever.

1:20This way we have other people. other people, right? More other people. Where you still have one-on-one, but it's other people who are doing this. And so here you templatize fractional, like break apart the pieces into constituent parts, and then you train people on the smaller pieces that they can replicate in theory. In practice, I think what ends up happening is that, let's say I have a glass of milk. If I say, hey, we're going to go to one-on-four, one-on-eight, I pour that glass of milk into a shot glass and I say, do you still want it? Now, if the milk's amazing, they're still going to take the shot glass.

1:54The alternative here is where I have that glass of milk and I have an equalized equal size glass of milk, but I pour a little bit of milk in there and then I just pour a lot of water in. And I said, you want this really diluted glass of milk, but it's the same amount as what you had before. And so I found that I think more businesses do a better shot going this way than going this way. Now, the third path is what I think is the best version of this. And so if you think about knowledge businesses, there's tons of massive knowledge businesses. So, Ertz & Young, McKinsey, Bain, all started by people who put their name on the building, right?

2:27Accounting firms, law firms, consulting, all of those fundamentally have the same thing. There was a guy who was really smart and really good at some stuff and was able to get people to give him money. The difference is that these models are predicated on basically a career path. So they are supply constrained. And so the problem with most coaching businesses is that like, hey, you have a pulse and in seven days I'm going to get you to, you know, give you a roster of clients so I can keep selling them. But the problem is that if you can teach somebody in seven days how to teach somebody else, either you didn't teach them fully what you do or what you do is so simple that it's not valuable.

3:08more often than not it's the first thing which is like i taught you 10 of what i know but i'm still going to charge more or less the same price either way and then that's what creates this churn factory and so the reason all of those companies have our supply constraint is that finding really intelligent people um and then they have a career path where it will take them 10 years to get to a partner or whatever managing direct you know status and they start as analysts and then become senior analysts, then become VPs, then become principals, and they work up the ladder, but they have huge earning potential.

3:40So somebody who is intelligent and hardworking and could actually do a job as good or better than you doesn't want to work as a coach. So there are people like, Neil's not here for this one, like there are people who are very, like you guys on my team, they're very intelligent people, but they don't want to be, they're not coaches, right? And they're very siloed experts for these particular things. And so this is actually many to one. So instead of one on one, it's many people who are experts for one customer. And so I see these as the three kind of delivery models that evolve over time, pros and cons.

4:17This one just scales quickly, but then it stops because churn becomes too big. This one is much slower because it's supply constrained. But if you get really smart people, you can build a really big firm, which is evidenced by all the massive firms. this one you have models like tony robbins who tony robbins even if you're honest you know there's 10 000 other people watching it's still valuable to to zoom back into to to your question um i would probably be thinking of a is the goal to sell the goal is for the company to be around after i die okay but i don't want to sell it well the wait but you do want to sell it i mean i don't have the immediate desire to sell it.

4:58You want to be enduring. I got it. So then the only thing that I'm solving for is revenue retention. That's really it. It's just revenue retention. And so obviously the hair solution we're talking about earlier, like if there were products that became the core business, then that becomes a very interesting model. The problem with that for gym launch specifically is that people were able, like gyms who use our process sell their services for so much more than they make on product. And so that was the issue. And so it was just like always a bolt on. And so if they got distracted, they would just keep selling services, which I didn't make anything on.

5:33With the hair business, they make so much more on hair than they do on their cut and color, whatever, like small services, that they immediately just start switching to selling hair. And so it becomes the core economic engine of the business. And that's what creates the revenue retention for them, but not as much for supplements, for example. And so for your business, it's either figuring out is there hair that they can sell that they won't stop selling, which means it has to be the core business, which I feel like is tough because almost all your people are practitioners given what you just said.

6:03Or I have to give some sort of tool that they all have to use on a regular basis, which would be SaaS or some sort of hardware that helps them make better assessments that then they can charge more or whatever the hell. So it almost becomes like build the Kindle but get them on Prime. Oh, that's 100 % the model. Yeah. Yeah. And so like gymowners.com is what gym launch is going to become or is in the process of transitioning into. And that's, in my opinion, the only way to transition those things into one. Like it's not, we don't do it to build enterprise value. We do it to retain customers, which then creates enterprise value.

6:36Cool. That's fine. Yeah. And it's also really hard. Yeah. So I have a, I've got a motorcycle YouTube channel. Cool. 2.3 million subscribers. Top line is 3.7. Sweet. Most of my money comes from ad revenue. Interesting. And we sell a couple hundred thousand dollars comes from products. I'm just wanting to know. I feel like I'm leaving something on the table, something big. Are you doing a lot of sponsorships in addition to ad revenue? Like, it's not just YouTube ad revenue. It's most of it's YouTube ad revenue. Is it really? We just started ramping up sponsorships. That's amazing. That's crazy. What are your RPMs?

7:1430. Interesting. Then you get a ton. You just get a crazy amount of views. How many views do you get a month? 10 to 15 million long form. Something doesn't add up there. The automotive gets pretty good RPMs. Well, yeah, but I'm just doing the math there. So if it's like 10 million views a month times, so that's mil, so that's 10 ,000 times 30. I guess no, that's right. It's long form. Long form. Oh, got it. Okay, that makes sense. Got it, got it, got it. Okay, cool. So super cool. That's great. So that's the main ad revenue. What are the people on your channel selling? What are the advertisers who advertise on your channel sell to your customers?

7:57I don't know. Okay, so literally today, in five seconds, make a community post and say, hey, what are the ads that you see on my channel? Comment below. And you will get, because fundamentally, the people who are advertising on your channel are the ones who are getting the highest return. They're the ones who are paying you$3.5 million a year, not YouTube. And so it's like, if it's worth$3.5 million to them, then it's got to be probably, sorry, if they're willing to pay me$3.5, they're probably making at least$10, probably$20 off of that. Now, you would be able to get even more than that because they trust you rather than just some random slice.

8:33And so then I would look at the product mix of what things are being sold. And I look at which of these ones is one that either you could go directly to them and say, hey, I know you're advertising on my channel. Why don't we figure a little deal out here? So you've got, you can have products that you own. You can have sponsorships, or you can just run an affiliate, which is similar to these, but just kind of different in terms of the characteristics. So, oh, shoot, and then partnerships. So if somebody has like a really expensive thing that's very hard to do, like let's say somebody's, you know, got they figured out how to build mini motorcycles or something whatever it's like i might say like how can how can we partner on this so that i can push you traffic and promote and endorse and whatever and then you have some element of cash flow but a huge you know a huge chunk of equity of that business basically you would pitch them this is how i position it i would say and you've got some cash too so i would the the magic here is putting money and brand behind something so it's like you have three people in your in your marketing department I am the marketing department of a business that's 20 times bigger than yours.

9:40And so I'm going to bring my entire marketing department. It's like a reverse acqui-hire. I'm like letting you acqui-hire me, but I'll put some cash in the deal too. And let's split this or whatever. And we can go to whatever this next level is. So that would be like, this would be maybe the most complex, but the biggest bet for you that you could get like crazy, crazy returns. These things are all, I would say, smaller bets. like if you're not smelling sponsorships you probably should just from a media company so it's like do you want to optimize for how much profit you make because you could just become if you're just motorcycle media then you just sell ad space so not only do you get ad revenue you just also sell ad space and i'm guessing you could probably do probably double the revenue that you have right now maybe more uh just by selling ad space and now just all drop to the bottom line that would be it and but the first step of still getting who are all the people advertising is a great first, like that's my leads list of hitting those people up.

10:33And the nice thing is it's like really warm reach outs. You're like, you already advertise on my channel. So let's make this official, right? The affiliates is like, if they're not willing to trust you, you can get a percentage of the revenue that you send. I'm not as big of a fan. I'd rather you do sponsorships, but if you need to like prove it out early or something, you can do that. And then this last category is just like, if you were to develop a product, what would you sell? if that's not your space then I would rather you just find what's the thing that makes the most money on my channel and then how do I make a deal with them that makes sense that's probably what I would do because like I don't want to go build school I was like I'll just bring a bunch of money and then buy it like it just that made more sense but I'm not going to start another software company that's a huge distraction for me but I have all these people who want to start a business and I should put them somewhere how you doing eric sir um so i just i just want to go through my main funnel just using the theory of constraints so i do organic traffic and i have my cta which captures 46 000 people this is for this last quarter 46 000 people engage with that cta and it kicks them into an ai conversation this is physical therapy right yeah this is chronic pain head neck injury Yeah, just for everybody else.

11:51And it's a membership course,$99 a month. Okay. Okay. So the 46 ,000 people, they do the CTA. They go into that automation. 50 % of them engage with the automation and 50 % do nothing. All right. Of that 50%, 3 % make it to the bottom of the conversation. Okay. And of that 3%, 17 % sign up. Okay. And of that 17%, about 40 % of them cancel during the free trial. So 60 % of them pay. Sure. Seven-day free trial. And this is all automated, right? I pay someone like very much. It's not you. Yeah. How many sales is that translating into per day? Per day? Per week, whatever. It's about 25 a week. 25 a week?

12:3925 a week, yeah. Yeah. You just immediately make so much more money if you just got on the phone and sold them something for three grand for a year. Yeah. I told you that yesterday, too. So, okay. If keeping that membership... I made a whole podcast about that this morning. Right. Just increase the value. Just about you. Yeah, which is like you're trying to make something scalable rather than trying to make it valuable. Make it valuable first. And the thing is, is like when you make something really valuable, the premium price that you can attach with it gives you the resources to then make it scalable.

13:14When you try to make something scalable before you make it valuable, you just keep running into these issues where no one wants to buy my thing but i got it all automated it's like yeah no one cares you know what i mean i'm not saying you but i'm saying in general yeah i think i'm just saying like you would be able to probably 5x your business if you just get on the like once people do that three percent level i'll just have to book a call talk to one of our experts if you do that you'll make more money that's the that's the thing i have a dnd publishing business making dungeons and dragons book and i've spent a ton of time doing the theory of constraints to the product development sure where i have a background in like IT DevOps so I've been optimizing that and I've been realizing that I've been neglecting the rest of the funnel for like all businesses do you sell an Amazon you sell Shopify what do you sell primarily do it right now through like Kickstarters so a bunch of crowdfunding campaign people give you a bunch of money to build this product you then build that product so you have a publishing business basically yes okay got it yes and so do you have a pen name so I do a pen name uh no it's all under mine okay but so it's but like so you're an author yes okay cool yeah so I've made two books I'm working on my third I got a handful of like other supplements and stuff okay and so I've done I don't know maybe like 30 ,000 in Facebook ads miscellaneous other advertising methods but that's not my skill set and not what I'm good at so I'm trying to think like like as going through the exercises revenue is definitely my biggest constraint at this point.

14:38It's like, I've done all the other stuff too much. I've been focused on that. So I can make a better product faster, but I have need a better way to sell it. Like I need a better way to bring in customers. And so a bunch of the people have had great ideas on things to try, dipping my toes into Tik TOK, doing miscellaneous things on my email list. Yeah. Tik TOK shop is kind of interesting. Yeah. That's, that's what Caleb recommended. So if I, if, if you were in my shoes and you took like a step back to look at the business as a whole, where would you look at trying to apply your resources to really like build up that revenue as efficiently as possible do you have um but all is all of your revenue comes from kickstarter or they go to amazon afterwards and then it becomes i would say 90 of it's coming through kickstarter and then on a regular basis uh there's a project that launches every year well the first project took about 14 months to get to the second one but you only have two books yes so i have a third project that i've already done so you have a launch business right now right now yeah okay so there's like basically no revenue between launches.

15:36Yeah, people can go buy the stuff in between launches on Shopify that I've got set up. And I've been thinking about setting up Amazon. You should set up Amazon. Yeah. We sell 50 times more books on Amazon than Shopify. Okay, so would the next play to increase? I do a million a month in books. Okay. Oh, it's just as silly to me. Silly. Ridiculous. The books are free. So setting up Amazon. I'm like, they're free. You don't have to buy them. They're like, I'll buy them or whatever. So setting up Amazon would be like the best revenue boost, ignoring doing any marketing pieces? Tomorrow, yeah, for sure.

16:10All right. Because here's what's really interesting is that, did you watch my traffic ranking video? I put it out like three videos ago. It's very recent. Anyways, I'll just tell you. I don't think so. So what's really interesting is that people don't think about Amazon as a traffic, like a social media or a traffic source. But I think like 13 % of customers that, well, let's just test this. watch my theory just look flop on this. Did anyone buy my book first? One, two, look at this. Cool. Okay, that's cool for me. Anyways, okay. So people will buy the book and then they'll find me later somewhere and they'll be like, oh, that's the guy that wrote the book that I like.

16:48And so Amazon actually gets me customers. There's this whole misnomer that like you will have to have an audience in order. You have to have an audience have a big launch, but if you have a good product, which it sounds like you do, then when you have 10 ,000 five stars, I buy books if there's any business book that's 10 ,000 five stars I'll just buy it and so number one is I would do Amazon for sure like for sure it's where 90 % of people buy books it's like you're not on the biggest platform that people buy and sell books from now you can still do your launches I still launch through Shopify so I can still own the own the customer base and all that stuff but between by all means like kick it up there and do it in multiple formats in multiple languages like right now I think we have like 30 or 40 skews from two books.

17:34So it's like we have all four formats and we have two books and then we have them in five languages and we have them on 13 platforms. So we have it on Kobo Digital or Kobo. We have Draft2Digital. We have like, it's kind of funny about publishing because it's fresh on my mind. Ingram, if you've heard of that, Spark. If you Google it, it'll come up. and so all that to say I think you just need to like the first thing I would do this quarter is maximize all distribution of the books on all platforms that people buy books on the first thing the second thing I would do was try and expand my audience like right now let's just use all of the distribution that already exists let's do that first and then you can do TikTok strategy or whatever you want to do to basically market any other product that this works now long term once you get your third book out it actually unlocks a bunch of stuff because you will be able to be profitable with ads because you'll be able to sell bundles.

18:31And you can sell three books at a time. And you can sell really three, but it's like six books because you're going to do audio. And audio, digital, and hardback times three is nine books. And so you can get away with basically a$99 or$125 or$149 in terms of price tag, and you'll be able to arbitrage the traffic that way. Okay. Yeah, you would never buy one of these as like an audio book because it would be, I mean, essentially you're using this as like Oh, God, I understand. build your character and stuff like that. But I think the platform could still make sense then for doing it. I'll say this.

19:02Yeah. You would be surprised. I would be very surprised. Yeah. No, but like, you'd be surprised. My workbooks are audio, but they're workbooks. So people buy them on audio. I don't know if I've ever seen anyone try that, but that doesn't mean it couldn't be done. People listen, like, listening is a very different experience. And a lot of times people are like, okay, just having the background. Because what's interesting, like I get a lot of people who tell me like, oh yeah, I've listened to your book six times. Right. And it's just because like listening, your comprehension is significantly lower than visual because it's a second attention stream.

19:36You're doing other stuff too. And so it's like every time they listen to it, they get something else. It's the same book. And so it might, dude, it'll take you a half day to narrate it. Like throw it up. If people hate it, you can take it down. Yeah. All right. Thanks. Appreciate it. Yeah, you bet. And 50 % of, it's increased. It used to be 25 and it's slowly increased. I think, not 50. I think it's like maybe like 40 % of our sales or audio. I have a hair extension business. We educate stylists how to make more money and salon owners with hair extensions with the product. I want to know how gym launch was structured because I know that that's how we need to structure our offer.

20:10So can you tell me a little bit about that? Yeah, I mean, I think I've talked to like three different businesses that do what you do recently. So it's very top of mind. Yeah. So big picture, the model that seems to work the best is, and it is similar to Jim Launcher Prestige Labs, which is the, we will show you how to do the thing, right? And then you can also sell our thing once I've taught you how to do the thing. And so the recurring revenue comes from reoccurring revenue in that they continue to buy the hair extensions. And then on the front end, it really comes down to like what makes that business very valuable is proving out what percentage of customers who buy the education become permanent hair sellers yeah 80 80 so that and when i say that so the year over year they continue to sell right and so the the smart cookie move is to what are you pricing the front end up the education um where we're kind of making a new offer, but for under six-figure stylist, it'll be$500 a month.

21:15Six-figure to salon owner, it'll be$2 ,000 a month. Salon owner,$4K a month. All right. The reason I ask is that if you have a back end where you probably run, what, 50 % margins on the hair or something like that? Is that about right? 65. Great. Great. I wouldn't even care about the education. The majority of the enterprise value will come from, is the hair side bigger than the info side? It's 90 % of our business. Oh, is it? Okay, yeah. Well, then I, in some ways, would almost like lower the barrier. Because if that's the monetization, then the question to solve for is, how do we get the absolute most amount of people to sell hair?

21:57And so you could think about it as offset CAC for the hair business more than its own business in its own right. And don't get me wrong, like I'm all for it. If I had to make money or not make money, I'd rather make money, right? But when we're talking about penetration of market share, because you're trying to flip people into selling your stuff, then if I could prove that for$300, I could get somebody activated and they actually would sell hair, and I would sell 20 times more people, and I make all my money on the hair anyways, then I would, basically, it's almost like creating artificial friction.

22:33yeah I'm saying I'm not saying go to 300 because they might say yes at 300 a thousand two thousand like go to the highest that sells the most without getting into that next like tier of um losing buyers that you otherwise would have had should they pay for education or just their product spend so this is an exchange of value it's a good way of doing it like we did that with prestige labs we would have them buy it's a little bit different because it's consumable but uh we would have a salon for example or a gym, buy supplements, a stack for each of their trainers. I'm a little high if they can turn this down a little bit.

23:09And so all the trainers at the gym would all go, do a 30 day challenge or whatever, they'd use the products and then they would be, they would have conviction that it actually worked. And so then it made the sales on the back end so much easier like hey I just did it, look at my before and after pictures, like this stuff's really good. And so in order to activate them we had them buy something like$5 ,000, Ed would probably know, I think around$5 ,000 worth of product, and then he gave them basically the education for free. So you still have that buy-in, yeah, you still have that buy-in. And you know what's crazy is that you'll probably, you'll be amazed, you'll be able to sell way more product, well you probably already know this, it's way easier to sell product than it is to sell info.

23:49Way easier. Because you don't have to, they get it. Everybody here who sells info, when you start, if you ever sell physical stuff, you're like, oh my god because we're so used to selling like an empty box of air being like this is very valuable but when you actually have something in your hands it's like oh my god this is so much easier like you can see it and look put on your hair it's ah you know so anyways that help yeah it does thank you so much yeah don't like break your business tomorrow but like i would experiment with just what what allows me to spend the absolute most amount of money to get the most people selling hair.

24:21That's the problem to solve. Hi, Alex. Yes, ma 'am. My name's Julia. Hello, Julia. And I'm an online fitness coach for women over 50. Cool. Because I do my job so well. Yeah. Okay. Yeah. I would have thought over 30, but okay. That's fine. Anyway, because women have so much success in my program after 12 months, 18 months, they're gone. I don't know what to offer them after that, but I also have a huge opportunity to tap a high net worth individual community where instead of paying$1 ,000 a month for six months or 12 months, 24K to 100K a year. And one of the reasons I came this weekend was to figure out what direction I should go.

25:06And I got a whole lot of other valuable content that I wasn't expecting, so thank you. But where should I focus my energy? because really when my clients reach their goal, they're gone. I wouldn't worry about the revenue retention piece for your business. So this is a really good exercise for anybody. I try and think of what are the biggest people in the space do? What do those businesses look like? And so Weight Watchers, Jenny, I'm not saying you're the same thing, but just in the space of weight loss, which is the space you're in, almost none of them have revenue retention. And so Tinder, for example, I don't know if it was them, but one of them was like, the point of this app is to get deleted.

25:45Not all businesses have to have revenue retention. But this is where because people get single again and then they come back. Or they get fat again and come back. So it becomes more reoccurring than recurring in terms of revenue. But I think all of this comes down to or bubbles up to what your goal is. To have an impact and make lots of money. Well, you already have the impact when you're already making lots of money. So it has to be different than that. That's not enough, but anyway. Me neither. Yeah. I guess my goal is to reach as many people as I can. Well, then make it free. Say again? Then just make it all free.

26:23I can't, no. Okay, so then what's the goal? To make money. Okay, fine. So do you want to make money by selling it, or do you want to make money by growing the revenue of the business? Growing the revenue, but in a model that I love doing. Well, I was pushing back on the impact whatever thing, because I also talk to business owners all day. I'm like, I hear that shit all the time. Because if that were true, then you wouldn't be like, okay, I want to sell even fewer people at a higher price, right? I don't care, to be clear. Make money. I'm all for it. I just, I want the, if we can't clearly state our goal, we certainly won't hit it, right?

26:56You're not going to hit it by accident, for sure. So if you just said, hey, Alex, I want to triple the profit of this business, I'd be like, cool. Well, now we can actually like pull this apart and actually, and take this. Now you might have your own things around that, but like it's just much easier for me. So what's revenue right now? What's bottom line? The top line revenue in the last two years is like 700K. Okay. What's bottom? You know, when we did all that stuff, I was like... You're good. Can I just say it's not super high? I don't know my numbers. I'll just admit it right now. You're good.

27:28That's fine. So you have something that's working, right? So people are, they're paying you$1 ,000 a month. Okay, so the issue that you have, I'm guessing, is marketing. market no more advertising you're not like not enough people know you exist yeah that's definitely a constraint right so I certainly would not advise you to do anything new right now I think you need to sell more can you handle more customers yeah okay then I would I would be trying to sell more and sell more at what's making money now or to focus all do you have decent margins on what what you sell now absolutely I have zero ad spend I don't have any employee I do have consultants that I pay.