The Fastest Way to Grow Is Simpler Than You Think | Ep 887

0:02Everything that you spend your time on that is not interviewing to get this setter and get them trained up are things that are not going to double the business.

0:16let's do a's and q's hello hey my name is joe reed i own genesis family health care i have been in primary care for the last 20 years 16 in my own business and the last two years i've changed to a direct primary care model which is basically a a membership model much like a gym membership model so my revenue was two million dollars last year 15 profits i do kind of live through my business too. So that kind of helps out. So the, the thing that I would really like to know is what is the marketing strategy or the marketing model that you would advise me to grow my business? You want to double because I overheard you earlier.

0:55Uh, what, what sales velocity right now? How many customers are you selling per week, per month? I have around 2000 per year, per year. Okay. So, so 40 a week, roughly. Okay. So 40 new patients a week are coming in. What's the way that you're getting customers right now? I'm sorry. No, it's, it's, it's not the new patients that are coming in. I have 2 ,000 patients, 3 ,300 patients. What's sales velocity? So what's new? Sales velocity is probably around seven to eight a month. Seven to eight a month. Okay. Got it. So you have really good patient stick, obviously, if you're at 2 ,000 and you can, that's great.

1:30Okay. So the seven to eight a month that are coming in, is that just word of mouth? So we did a pretty good marketing turn in the fall, spent a lot of money on some things. I think we put the cart before the horse a little bit as far as just going online and really marketing Google ads. What did you do? So it was PVC? Yes. And then Facebook and Instagram. Did you hire an agency? We did. Okay. How did that work? Got a lot of people at the top of the funnel and we did not close. Okay. So we know what our issue was at that time. So what was the issue? I think follow up as much as anything. Yeah. Because most people in our town kind of knows our, they know our brand.

2:12Yeah. So, or they know who I am. Sure. So, so yeah, I think it's close as much as anything. Yeah. So what stops you from doing that again and now working the leads this time? People. Okay. Getting the right people. Okay. You know, a lot of answers, a lot of questions have been answered since being here. No, you're good. I mean, that's the hope. Exactly. Yeah. So it really is, I think, the people and the script and the execution of those things. So in all likelihood, you running ads in a local market to get more patients feels pretty sound to me. The offer that you were running, what offer were you running to get people in the dark?

2:55As far as just direct program? You ran your ads. It's a monthly membership. No, no, no. But like the ad wouldn't be like want to buy a direct monthly membership. Right. No. Right. So what was the offer that people saw that caused them to take action? The Genesis difference was, was a big part because we're, we're more of a difference in, we're, we're more of a functional type medicine. And, you know, I hate to use functional, holistic and all those things. Yeah. So I'm more of a Relo path. So I'm realistic. I'm a Relo path myself. Yeah. Yeah. So, and we did shut a gym down during COVID, sir. And I told certain things about this.

3:33I was a rebel during COVID. I got you. A lot of things that, that has really been a flagship with me. Okay. Because I was, I was, well, we, as a practice, we've got six providers at my practice and we all kind of stuck at things to the establishment. So what we need to do is basically have an offer that we can run on the front end. It would typically be some sort of, I'd say$19 to$99 offer. and I want to be clear, I'm not trying to undervalue your services. It's going to be a front-end thing. So you get them to opt-in, thank you page, they can buy it. Some of them will, some of them won't. It doesn't really matter.

4:05So the ones that do buy and self-schedule, those will be easy because you won't have to work them. They'll probably just show up because they paid. For all the rest of the leads, you call them up, you collect the card or the phone and then you obviously build them the$19 or$99 thing for whatever the, call it a functional movement screening or like some sort of pain assessment or if that's, basically you want to figure out what the most common pain that your ideal avatar is suffering from, and then make the offer related to that. And it would probably be some sort of screen slash assessment slash, you know, x-ray or whatever that then reveals the problem.

4:39And then you do a prescriptive close in the solution. And so this is a very tried and true method. And it sounds like the biggest issue that physicians offices typically deal with is that secretaries don't know how to work leads. Right. Right. And so you really need a sales role. And so it feels uncomfortable sales medicine, but it's also reality. And so that's pretty much it, which is that's the offer. And then you would hook it up to a scheduler and then you would call the leads. That's it. I mean, that's, that's really it. And so it means you just need one person to call the leads and you can do this thing.

5:12Okay. So then everything that prevents you, so I'm going to say it super directly, everything that you spend your time on that is not interviewing to get this setter and get them trained up are things that are not going to double the business. Thank you. Yeah, 100%. Thank you. That help? Okay, good. My name is Frank. I sell luxury watches to other watch dealers oh b2b b2b yes our revenue last year was 88 million and our margin is three percent so i would like to it's it's a it's jewelry i get it it's the type of the business so i would like to double our revenue and obviously you just need to sell double the inventories double the watches and right now we are capped because i'm actually i'm actually the person who get good leads because in order to make money, you need to buy cheap and sell either high or regular.

6:14Okay. So I'm not able to give up my proprietary deal flow because somebody can just take it and do it themselves. Because in this industry, price is most of the competitive advantage. Branding is not that much. Well, the watches are the ones that are carrying the price, but your specific price. Right, right. So I'm able to get good price, sell reasonably. But right now my time is pretty capped. And we are trying to double it. I'm trying to figure out what's the best way to do it. So I think, is there a way that we can chop it into pieces? Yeah. Meaning you have your proprietary lead flow, right?

6:57Right. You cannot share where the leads are coming from and then share the leads with someone and have someone else work the leads. That's what I've been trying to do. Okay. My time will be kept of these proprietary leads because I want to double my proprietary leads. So you want to double your lead flow. Right. Right. Right. And I'm guessing this has to be some sort of outbound method that you're doing. Yeah. Okay. So I would probably look at like VAs in like offshore that don't know anything about the space. So if you look at the keys to the kingdom, it's like what you don't want to have is somebody who understands how to get the deals, gets the cash to buy it, and then finds sellers.

7:33Right? You have all three of those, which is why you have a money flow. Right. And so if we got, let's say, somebody who is a VA who could work some of the outbound stuff and do more of that work for you, they don't know any of the buyers and they probably don't have the cash to buy something like that. And so I think you could pretty easily get someone to duplicate the effort that you're doing on the outbound lead generation side doing that and just keep it controlled there. Yeah. Does that make sense? Yeah. Another business model we've been doing, we've been trying for the last year is we partner with other people who get leads, but they don't have money.

8:01And we just partner on deals. These are doing pretty well, but the caveat is that they will over-declare their cost or they will under-declare their price. So they will under-cut you. They will give you a fair cut, but they won't review everything. Is this just a feature or it's a bug? It's a feature. It's a feature. So I'll say something that Layla taught me this one early on in our relationship. Yeah. She said, never count the other guy's money. if the deal works for you the deal works for you okay the deal doesn't work for you doesn't work for you if the other guy makes more money he'll do more deals with you got it so right now i have two options right one is partnership one is va there's if i have to prioritize one what would i do is which one do you like better which one scales faster given your skill set partnership then do partners i don't think there's any issue with that got it build a big i mean if you think about from the value of a business perspective i i personally do like the partnership thing if you have a reliable way of getting them kind of in.

9:03I would say the only problem with that particular angle is that if they make enough money doing the deals with you, they eventually just stop doing it. Yeah, it's a short-term relationship. Right. Keep them poor. Yeah, shoot. Sell them a watch. So, or tell them to move to the U.S., get texted. Anyways, boy, Bing. I think long-term, the VA thing is nice because of the issue that we were just talking about. Because if you only get eight deals done with somebody before they make enough money to buy their own, And, you know, I was trying to think of an AP. There you go. I can show you my luxury watch collection.

9:37Then I just don't think the VA thing is going to be that hard for you to do. Can you elaborate more? Can you? So you document, demonstrate, duplicate. So what do you do? What's your process? You find somebody like a VA is going to have a very hard time making the amount of money to do one deal. You're going to pay them$5 to$10 an hour. It's not going to be a lot. And so it's going to take a lot of hours for them to buy an$80 ,000 or$240 ,000 watch. Right. So they are basically just talking to other wholesalers and bring me deals? Yeah. They're just going to do what you do. Okay. But then I'm still the person who is evaluating the deals, right?

10:08At the end of the day, my time will... Realistically, you just have a rubric. Like, you know all the brands of all the watches. I know that you probably in your head have an idea of what's hot right now and what prices you're willing to buy at. So you just have a decision tree that's in your head that you run every time. You just need to document it so that you can say, hey, if you find anything that's like this or they have any of these products, let me know. okay the tricky part is that the price fluctuates day by day and somebody has to be in the business to understand what's the what's the reasonable price to buy yeah so feature feature you're i mean you're you're in the commodities business price is the game so you having real-time metrics on pricing is what allows you to scale and go from being a one-man shop to somebody who can get more to build the building of this fundamentally you build a business around buying and selling so price is the winner is the exchange and so that's probably just going to every morning you update the pricing sheet and then they can go out and hunt i see that makes sense yeah that makes sense yeah thank you yeah 100 thank you thank you yeah there we go there we go hey alex hyder here from canada i bought the boring fire and safety company but i've changed on my instead of say boring but i love it i i i sell fire and safety and commercial cleaning to mainly like restaurant owners when you bought it, 200 plus.

11:27Yeah. But property managers, you have three in their whales. Yeah. I got you. Thank you. I told my wife about that. She's like, why do you need Alex? Just watch his videos. Yeah. Anyway, that's a different. I like your wife on Friday. Yeah. She's German. So she's very methodical. I would like to get at least double the revenue, but because of your workshop, I want to get to 10 million one day, but I don't, I think let's double it first. What's stopping me is that when we introduced the fire suppression for the restaurant avatar, and we discussed this yesterday, a big key piece we were missing was, for example, you have this tag here.

12:01It's a national fire protection code, basically. Good to know. Then the one that's 96 needs to clean the hood cleaning in restaurants. So we tried to introduce that. But we had zero sales process for over two decades. The husband and wife team that sold it to me didn't believe in that. the phone rings we pick up in two rings that's literally the process uh we went down to 20 sorry it's a complex yeah let's get it yeah yeah exactly we went we went down 20 the first time because we tried to launch that division last summer i'm in that boat right now and i have gone down another 20 again because i tried to launch it again the matsubo uh so that's what's stopping me okay the second thing is zero sales as we talked about yeah the third thing is i had did some fancy roles in finance that I was telling you about and some government, you know, I'm on some boards and so on and so forth.

12:50I haven't posted on LinkedIn. I've got 15 ,000 followers on LinkedIn. People have been asking me, hey, man, what are you up to? And I'm a little bit shy to tell them that I'm in fire safety. I've tested it out with a few folks here. I say to them, hey, I went from finance to fire safety. The first question is like, why the hell did you do that? You know, it's like a shocker. So crazy. So yeah. So just wanted to know what you do. A few thumbs up. Yeah, exactly. Yeah. Thanks. so so so you have a pretty classic issue and so this will affect more than one person more than just you so i'll fill in some of what he was explaining so he's got restaurants as an avatar right which and he also has property managers right and they've got like 100 units at a time right so think of this as these are your whales and you've got your minnows over here and the issue is that he only has three of these and these came super you know sporadically there's process around it.

13:43The restaurants also come sporadically, but there's more of them, right? And the main hook that he has now is that he also didn't tell you that he bought a cleaning business. That's right. We had a roll-up place too. Right. So he bought a cleaning business and then he uses the cleaning as a way to get into the restaurant, right? That's right. Okay. So do you remember what I told you last night? Yes. Okay. So what did I say? You said focus on the property management persona to build on the fire and safety stuff. And then after one year of me doing the sales, you said I need to be in the business because I'm trying to fire myself and I talked to you.

14:20You said no. I'm going to be out of the business in three months. And I was like, well, that's not going to. That's right. That's right. Yeah. So I bought this business and I want to be out of the business. And so I quit my other stuff. Exactly. I've quit teaching. I've quit everything else. And property management firms nail the fire and safety first. And then after a year, then slowly nudge them into cleaning. So the key here is that, so I'll put a nuance into what I said so that you can, because I said it's a lot to take in when we were talking. So there's, I did say that. But the other part that what we're solving for is it's not that that's the solution.

14:48It's that I want to solve for the greatest discrepitude between LTV to CAC on customers that are used to acquire. Right. Yeah. And so what I want to figure out is, is it easier and more profitable to get restaurants? Because even if these guys are minnows, there's tons of businesses that can make a killing with minnows. There's nothing wrong with minnows. We just have to look at LTV to CAC. And so like maybe it costs you, you know,$100 to get a restaurant and a restaurant's worth, you know,$2 ,000 over the next five years. 20 to one, good business, right? Now these guys might be worth, you know, that's supposed to be a dollar sign backwards.

15:22There we go. Let's say these guys are worth, you know,$20 ,000 a year. I know they're not, but whatever. Let's just say they're worth$20 ,000 a year and it costs you$4 ,000 to acquire them. Now in your mind, you're like, man, this is so much more money, but the LTV to CAC ratio is actually much smaller, right and so what i want to just figure out is what the ltv to cac is between these two things and i do think that you owning it is an intelligent decision if you have an inkling as to which one of these is more profitable in terms of what it costs versus how much you make then i would start there but i would focus only on one of them because you just have to get your hands dirty and learn the actual sales process now i'll bet because you have this cleaning thing if that gets the door open for these restaurants as a pretty easy like foot in the door quite literally it does okay well then it's great well then this one's like property managers gonna be harder to get right and so if you're like cash looking trained which i'm guessing you are given the stress i can feel right i would probably go leaning because you can get your foot in the door and get your reps much faster yeah and i think you'll learn the sales motion that might also apply to the property managers later so it's not like you're excluding that but for right now and this is what I hope to have happen is that you figure out the sales motion for restaurants with this offer.

16:33And you might just be like, we're making a lot of money. Let's just keep doing this. And then you can just transfer that because I'll also bet kind of like the selling, you know, flipping watches, selling property managers is going to be harder than selling restaurants. And so if you do eventually want to get out of the business, it'll be easier to get out of the business if you make that the customer. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Leila and I spent probably an entire quarter putting together our Scaling Roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

17:11So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. We show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you enter the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

17:40And so if that's at all interesting, you can go to acquisition.com forward slash roadmap. R-O-A-D map. Roadmap. Got it. One last question to follow up on that is we also sell like a third department that does safety compliance. That's like only two or three people that do that. So for example, that fire sign that you have the exit sign. So that needs to be there. Otherwise, the fire department can shut you down. Sure. I haven't even touched that department because the feedback I get from the team is don't sell more stuff because you can't keep up with the current customers. So don't bring more.

18:12Any insights on that one? Is it profitable? That one is a subscription model. So yeah. Super profitable. Yeah, it is. Yeah. It's 20K a month in revenue, for example. Okay. And 20 clients that pay well. Okay. Okay. All in ghetto companies and things like that. So, all right. We have this, you said department, it's$20 ,000 a month. So department's one person? Yes. Well, it was one person. It was a previous owner. But she, we hired three more people. So it's, yeah. But it was the owner and now you have three people there. Correct. Because that was like the key person risk. Sure. So all the information was in our head.

18:53Remember, there's no processes here, right? the phone just rings uh-huh yeah bro so i i okay we have to take these one thing that's all so first things first we're going to ignore this cool we're ignoring over that yeah second thing is you're going to get the sales cycle for doing this offer on the front end because that seems to be working for you so i would just get you better at closing these deals and doing right and that's a 20-year history as well great so that's good in terms of the cross sell which is basically what that is, I would say table it for now. Not, I mean, I do think the reasoning of we're too busy, but we're also not making as much as we want is tough.

19:28But the steps of what we're going to do here is this is going to be number one. And then the second thing that you're going to tack on is the cross sell. Actually, it'll be 1.5 is fix compliance department.

19:48So that they can actually handle the customers. And then, so it's restaurants is number one, fix the compliance department, and then you'll start cross-selling the compliance services. But this will probably take six to nine months to get to here, just to be clear. It'll probably take six months to learn this, maybe three months to turn the department and figure out like you hired three people to replace one. I'll bet you two of them aren't doing anything, especially if they're like, we're too busy. It's one person who's doing this. There's three of you. Now you're saying you're too busy. Something So right now your business need has four fires.

20:19You just have to take one fire at a time. And this is the most important fire, which is getting new business. So let's solve that one first. Okay. Thanks so much, Al. You got to say that. Yeah, 100%.

20:30So my name is Michaela. We have a sales agency that sells photographic art and albums to consumers on behalf of photographers. Right this past year, we did just under$2 million. And I need to be at$5 million at the end of this year. You must be. I must. or else or else and what's stopping me is definitely just advertising and marketing we haven't done anything up until this point our business evolved from selling courses so selling courses and then people didn't want to implement or do the sales appointments themselves so i built an agency to do it for them yesterday you mentioned the plumber situation right so my question is right now we so i have my course that basically teaches photographers how to run a print driven business business and do what we do but it was also like a really great final strategy for this business so i'm not sure whether to use that as a down sell for if they don't qualify for our partnership program to put them in the course first or to pull it from behind the paywall and turn it into just free content to be top of funnel.

21:37What percentage of the revenue is coming from the education? Like less than 10 ,000 a year. It's not something that... Well then yeah, make it free for sure. No question. Yeah. And I would make it free in a couple of ways. So one is I'd put it out as content, put it on a YouTube channel, let it be stream free. You can still have people opt in for it if you're running ads and just give them all the links to the YouTube videos. And so that would both get you leads from the platforms and also from you running ads to them. And it basically functions as like a great and like just put an easy call to action up front and then also follow up with the leads like you have a sales team so follow up with the leads who opt in and just put a thank you page scheduler that's okay by the way if you want us to implement this stuff because you don't want to do it we're happy to show you how we execute this stuff and just put a sorting question on the opt-in form so you can see what revenue level there's at and so if they're let's say minnows or not big enough to do what you want to do then don't have it thank you page over to the scheduler and then only have the pixel on the thank you page that has qualified leads.

22:35And then that way the algorithm will target more qualified leads on a continuous basis. Does that make sense? Yes. Thank you. Great. This was good.

22:48Hi, Alex. My name is Raja Mukherjee and I run a cybersecurity company. We sell cybersecurity analytics, specifically we catch hackers in large organizations. Primarily sell to the Fortune 1000 Global 2000, specific focus on financial services, nation states, and retail. Last year we did a$304 million of top line. Awesome. And our gross margins are about, gee, about 88%. Our net operating margins are lower, primarily because we have significant costs in terms of sales and marketing and what have you. There's a lot of infrastructure on the back end there. Even though the delivery costs are low, the sales and marketing efficiency is not there.

23:28We'd like to get to about $500 million of revenue in about a year and a half from where we are, and that's recurring. What's stopping us is that we're sort of addicted to those large deals. Take a look at our average deal size. We're talking about about 536K for average deal size today. And what that really causes is it causes a significant amount of lumpiness in the business. Moreover, there's a lot of platformization in terms of what we have in terms of technology. And what I mean by that is we tried to do a land and expand sales model. We sold smaller amounts, if you will. We tried to transact those and try to upsell.

24:01But ultimately, we have elephant hunters on our enterprise sales team who just go and sell the entire fleet of products in one shot, nine months. It's nine months or bust. Really what's happened over here, though, is that this is a fundamental risk to the business. It's very, very lumpy. And sometimes a quarter will be, we'll either make the quarter or lose the quarter based on a particular, on one deal. And this is particularly frustrating right now because we are PE owned. We've sold the company twice. We sold it from VC to PE and then from another PE to another PE. And now we're looking at the third exit in the next year and a half, which is why we have the$500 million ARR target.

24:36Any suggestions as to how to take an established model where we have various covenants and add a minnow or basically a land expand motion without disrupting the existing enterprise sales motion? Did you find the business? Yes. Congratulations. Thank you. How long has it been? 18 years. Feels like 18. Yeah.

25:03That might be my quote of the day. Okay. So I think that, so I mean margins have to be razor thin if a$500 ,000 deal is going to make or break the quarter. So what part am I misunderstanding there? It's not so much. So basically we reinvest a significant amount in growth. So for example, we have 204 salespeople in the company today. And what we generally have been trying to do is rather than optimize on the operating margin, we've been reinvesting into the business so we have sales capacity for the next year. Do you trade on EBITDA? We have now, we've recently moved from covenant, basically our leverage covenant moved from ARR to EBITDA as it's actually, it's moving next, end of this year.