$120K in Pre-Sales in 6 Months With No List (Greatest Hits)

0:00Here's an oldie but a goodie from the archives from the Side Hustle Show Greatest Hits Collection. Six figures in pre-sales in six months with no list. Welcome to the Side Hustle Show, where aspiring part-time entrepreneurs learn how to turn their side hustle dreams into reality. Because your 9 to 5 may make you a living, but your 5 to 9 makes you alive. And now, your host, Nick Loper. Hey everybody, Nick Loper here. Welcome to the Side Hustle Show where it's all about ideas, action, and results. A little bit of all of the above today. This is episode 126, six figures in pre-sales in six months without even having a list.

0:45How about that for results? And what I mean by pre-sales in this case is selling something and collecting money for it before it even exists. That's the ultimate product validation, right? You've got almost no risk. You don't have to build the thing yet. Now, of course, you've still got to deliver and we'll get into that as well, but a very, very eye-opening episode for me. So I was introduced to my guest by Andy Drish over at the foundation. He said, Nick, you got to talk to this guy. Side Hustle Nation is going to love him. He broke all our sales records at the foundation and even broke some of our rules along the way.

1:19I'm excited to welcome John Logar from businessunleashed.com to the show. He's a professional consultant, entrepreneur, and perhaps most importantly, one of the most natural born salesmen you'll ever hear. Now, John talks pretty quick. So I compiled all my notes and highlights and questions and scripts that he offers up into a free PDF download that you can grab at sidehustlenation.com slash 126 or through the link in the episode description of your podcast player. Ready? Let's do it. We're talking about building software businesses, building software applications and specifically pre-selling them.

2:02So one question that I had right out of the gate is how are you selecting the businesses or the industries that you're targeting for these different pre-sale efforts? I guess to give you some context or some understanding. I'm a big believer in always going to a market that spends money. I don't like going to markets that don't have money to spend. So for me, businesses have to be of a certain size. A niche market has to be competitive because if you've got competitive businesses, there are pressures in that market. So business is going to be turning over at least 2 million plus, have between 10, 50 employees plus.

2:37They've got to be spending money on marketing in a lot of ways because companies that spend money on marketing are investing in growth. They've got to have physical assets. So it means that there's pressures in terms of investment. So physical assets like offices, buildings, equipment, showrooms, that sort of stuff, right? So those criterias, if I can formulate a target market that fits that criteria, it's very easy to build a list of targeted industries to go after. I also look for growth industries as well. So industries that are on the incline, those industries will tend to face pressure. If the business is facing pressure, It needs to systemize.

3:11Automation is the name of the game. And I believe with all my research and understanding over the last few years, everything is about automation and it is really about speed of distribution and connection with the market. So for me, those selection criteria, 2 million plus, 3 million plus, employees, assets, investing in growth, are all big indicators of who I would target. And that could be any niche market. My first niche that I attempted software with. By the way, I've never built a website in my entire life. I've never programmed anything. I'm not a graphic designer. So the skill sets to develop software, like user interface and all that sort of stuff, no idea.

3:47Okay. There are people out there who are far better than I am. What I'm great at is finding those people and saying, hey, I need something that does this. Can you help me out? And what's the investment or what is it going to cost me to do that? And how can I put that in the market and make a profit on it? So for me in finding an ideal market, my initial attempt at this was to go after a high value market. So, I went actually into the solar industry was the first niche and also in environmental, so environmental engineering. So, I was doing green bill construction at a commercial level, which is a fairly small market on a global level.

4:19I mean, I'm based in Australia, but I was talking to companies in Europe and the United States and a lot of these companies are kind of at the innovation, at the growth phase. Everybody's talking about climate change and we need to be looking at sustainable energy solutions in buildings. So there's a lot of new technology. And when there's new things happening in an industry, there tends to be a lot of pressure. That was my hallucination at the time. We can call it a hallucination. So let's slow it down. I wanted to ask if there was any tools that you liked on just the selection criteria. So are you looking on LinkedIn?

4:48Are you looking on Manta? How are you finding these businesses? I was looking at industry reports. So I was looking top 100 players in engineering, top 100 players in... I was going to industry associations and looking for award-winning companies in their industry. So, to me, it was very easy to find them. Go to an association website, pick a niche. Every major business niche in the world is attached to a governing body or an association that arbitrates or gives credentials to those members that are part of that association. So, there's a fantastic association in the United States called the Association of Association Executives.

5:22There's an association for associations, yeah? It has 10 ,000 members worldwide. Wow. It's big. That's 10 ,000 niches. So there's no shortage of niches to go after. Yeah, not at all. And in those niches, there will be several players that actually fit that selection criteria that I've shared with you. So finding them not so hard. Yes, you can go to Manta and do all that sort of stuff. One of my favorite lists, and I'm happy to share some insight here, but there's two lists. There's the Inc. 5 ,000 fastest growing companies list. And this is Inc. Magazine. and it is the Inc. 5 ,000 fastest growing European companies list.

5:56The beauty of that particular list, which comes out every year, is that it gives you the growth percentages of the industries and niches that are growing fast. So, this year, security, insurance, communication, those sorts of niches were the fastest growing niches. In Europe, it was all about construction, energy, health, all those sorts of niches were growing very fast. So, within those categories, there are obviously sub-niches. So health is a massive, health industry is huge. If you look at the health industry, there's probably about 500 sub-niches within the health industry, right? So throw a dart, take your pick and start because at every level, there is a commercial entity that's attached to each of those niches.

6:36That's called looking at the Inc. 5000 and these industry associations. What's your initial outreach like? Is this email, is this phone call? What does that look like? My philosophy is a good game is a fast game or a fast game is a good game. So I like to do things very quickly. I hate cold calling. I don't know about anybody else that's had to go through that process of trying to engage people. But what I found was, for me, I needed to create an excuse to have a connection. So I would find out who a CEO of the company was, and then I would quickly craft an email saying, hey, just basically want to know your opinion on industry trends, what's happening, where the important issues are in the industry.

7:12You're a recognized leader within your market. You've won awards or whatever the case may have been. I'd just love to take five it is your time to ask a one question. And that one question would be, in terms of your opinion, one of the most important key areas of growth in your industry basically is what I was going after. And that would open the door up to other questions. So I would send that email and then I would literally pick up the phone straight away as soon as I've hit the sent button and just dial in and say, hey, I just need to speak to Bob. I just want to make sure he got the email that I shot through.

7:41He knows about it. And then I'll generally 70 % of the time I get in. And then my opening line to Bob is, hey, Bob, you don't know me from a bar of soap. But I just wanted to make sure you got the email I just sent you. And he went, no, half the time the email never gets there. So my next lead into that would be, look, if you give me 60 seconds, I can certainly let you know what this is about. And at the end of that 60 seconds, you can decide whether or not we can continue the conversation. Is that fair? And Bob will say, yeah, sure, it's a reasonable request. So now I just let him know what I wrote in the email, which is I need to ask you a question.

8:11So then it starts the conversation. So it's pretty simple stuff. So I would do that. Now, my conversion ratio to get through to Bob, and we'll call him Bob, and getting through the gatekeeper is a fun game. That could be a whole episode of itself. But for me, with the gatekeepers, if I'm trying to contact somebody specifically, I kind of act like I already know them. And I give the gatekeeper as little information as possible. And I'm very, very specific. So I'm very direct. So there's a level of confidence in my voice when I take the approach. Now, 70 % of the time, I'll get the CEO on the phone.

8:41Wow. The 30 % that I don't wear, the gatekeepers in the United States, apparently the gatekeepers, her name's Becky. Oh, it's always Becky here? Becky is always the one. In Australia, it's Karen. In the UK, it's Charmaine, right? Okay. But in Australia, Becky, good old Becky, some Beckys are very, very thorough. They're great gatekeepers. They do a great job to protect their CEOs. But generally, you can get through to them. Okay. So how's that first conversation go? So 70 % of the time, you're getting through to Bob and you say, hey, I just have this question for you. Yeah. I'm just talking to people just like yourself.

9:15So I created an affiliation to the fact that I'm talking to other people of significance in his industry. I might even mention, and I wouldn't have spoken to them yet, but that I'm reaching out to certain people that this person may know or reaching out to certain companies that this person would understand, would know who they were. So, I'm trying to create a slight affiliation or affiliation to build a level of acknowledgement of credibility, right, in my call. So, I will say, now, I'm not misleading the person because I'm speaking to his peers as well or I'm connecting with his peers. If I've connected with his peers, I'll say, look, I just spoke to Peter Johnson over at ABC Company and he was very gracious with his time.

9:53And I know that you're in the same market and you're also one of the leading people. I just want to touch base and ask you this question. So my question will go around, look, the reason I'm asking these questions is I want to look at the significant areas that are important. And I'm looking to feed back the information and look perhaps solutions that may offer some opportunities down the track. But that's not what this call is about. This call is about you and your opinions and what you think. And then just walk through some questioning. What do you like about this business? What don't you like about this business?

10:19How long have you been in this game? Number one thing, most important thing to you moving forward as an industry, where do you think your opportunities are? And I'll start highlighting those things. What are the factors that are holding you back or what are the friction points that are holding you back from realizing those opportunities? And that's where the conversation starts to really open up. So by getting into just being very fairly general and when you ask people for their opinion, let me tell you, they're very forthcoming and I'm forwarding to give it to you. And the key part of this thing is I'm not going in there to say I'm going to build some software, right?

10:48In fact, that word doesn't even enter my vocabulary in any of these conversations. for me it's to be as present as I can be to direct the conversation through questioning so to control that conversation through questioning and to just listen because you never know what can happen out of a phone call when you give people that space it is amazing how much gold they will give you so the purpose of my call is to take is to come in with that concept of a level of understanding and at the end of that to be able to feed that back so that I'm on the right path and also to perhaps identify the area that is red flagging for them and then say, okay, well, tell me a little about that and then walk through the process of asking questions.

11:28So there's one company, the solar company in Australia. Yeah. Was that the one with the half a million dollar logistics problem? No, they were a company that had a quarter of a million dollar a year problem. And this just came up out of like, hey, what do you see as your biggest challenge right now? Or what bothers you about your business or something? It was really weird because what happened in that phone call with the solar company is he had just got off a call to get a price for a presentation folder that he was developing for a particular niche. And he didn't realize how expensive the folder was.

12:00It was quite a costly expense because of production and printing. He was looking at spending like$50 ,000 just on a brochure, basically, which is a significant amount of money. I was just saying, well, who's the brochure for? He said, oh, it's for the realty industry. I said, oh, okay, so why are you targeting realtors? And so, well, we come in and we're developing energy-saving systems, and one of the areas is hot water systems. And so, we want a nurture relationship. They'll refer vendors or clients to us, and then we obviously generate those clients. And we've seen success, but we're looking at building a strong relationship.

12:29And I said, so how much does it cost you to manage that relationship with real estate agents? He said, well, I don't know. I haven't really worked it out. I said, well, we know that there's$50 ,000 in brochures right now, and that was a figure that hurt. Like, you didn't realize that that was going to cost you. but there's 50 grand in brochures but what happens with a brochure well our guys so how many guys there's two guys okay so two guys are going to go out there and what they visit these people physically so yeah i said well how many agents are there so there's 160 agents that we've actually targeted that we are starting that relationship process with i said so how long does it take to visit 160 agents because i would imagine that's not you know it's not like they're next door some of these people are all over the city right we're talking travel time so we're talking vehicle expenses, but we're also talking the time of the salesperson to go out there and have those conversations.

13:14That takes at a cost. And then there is the cost of managing those relationships because one of the problems was is the pricing for their solutions would change so dramatically in the course of a month. You might have two or three different price changes. So, if you quoted a figure one week, two weeks later, that figure would be redundant and incorrect. So, you would have to get another price. So, this created another friction point where the person would have to call up and get another price for the actual solution. So, this was a really big problem because there was no way around this whole dynamic of managing the sales relationship with these realtors.

13:49You're just following this guy down the rabbit hole at this point. Yeah. Yeah. How much does it cost? And we worked it out. So, we worked it out. You had two people, full-time, 50 bucks an hour, including 401k, or we have superannuation in Australia, health and medical, there's taxes. Then you've got two vehicles that you're servicing on the road. They cost you a thousand bucks a month. So, there's 24 grand a year. The time alone, the actual time cost was$4 ,000 a month. And then, so you had$50 ,000 on the brochures. So, you're already at, what's that? We've got 12. So, it's 48, 100 ,000 plus the brochures, 150 ,000 plus the vehicles, 170 ,000 plus the fact that you had to go and like there were other things that were mitigating costs.

14:33So, it worked out about 250 ,000 in costs. And I said, imagine if there was a place where all these people could go to and actually access your information in real time where you didn't need to go and physically visit all these people but you gave them a portal that they had physical access and it was dedicated to them specifically would that be useful and he went wow that's exactly what i want he actually articulated the point to me he said you know what would be really cool because i asked him well knowing that you're spending a quarter of a million dollars on this what do you think would be better he said it'd be really cool if we could just send them somewhere where we could actually update that pricing and it's up to the minute.

15:08So whenever they accessed it, it was always the right price, right? So they didn't have to think about it. And we could give them a system where they could put their data or the information that we're required to be able to facilitate, make that easy for them. And it'd be really cool if we had a way that we could regularly update them or communicate any changes physically to them as well. Now, for those of you who are listening, what I've just described to you is a website with a backend that you can update information on and you can add a autoresponder sequence too to support that whole facilitation to mitigate$250 ,000 worth of expenses.

15:41Yeah, I can build you there for a lot less than 250K. Yeah, we built a portal for 35 ,000, but the cost of that portal was about$1 ,600 because there was a little bit of programming there as well. There was a little bit of support that was attached to that. So the profit was high, but I said, right now you're spending a quarter of a million. In four years' time or five years' time, that quarter of a million dollars is going to turn into a million dollars,$1.2 million in costs. Is it worth investing 30 grand up front to get this nipped in the butt, which is 20 grand less than your brochures that you're about to print to get that done?

16:11You're not the technical guy. So how did you go and get this done? Okay. So this is what happened in my scenario. I said, listen, I just want to figure something out because we might be able to significantly save some money here. I knew what the solution was once he said what he said, right? Because anybody with half a brain in our world would see that would be the solution. But it's important to let him, that it's his idea, right? Exactly, exactly. It was his idea. So, I basically said, look, if you give me 20 minutes, I just hop in your boardroom. I just want to make a quick phone call to somebody.

16:40It wasn't a phone call, it was an email. I wanted to just have a quick phone call to somebody. I just want to verify something. I can actually give you a rough idea of what it would cost you to get this fixed up, right? So, all I did was hopped on an email, sent an email to, I actually sent out, opt on Odesk, created a job description outlining what needed to happen. So just roughly this is what it's going to be. And I basically said, it'll be, give me an idea. So give me a range for a project price of something like this. Within 10 minutes, I had 16 replies. Well, it's Odesk, so there's always people trolling.

17:16My criteria for selection was people who had done over a thousand hours worth of work who had specific knowledge and understanding of programming. So I was very selective in my criteria, but I literally had 16 people quote me on the job within 10 minutes. What I did was double the quote. So whatever I was quoted, I just looked through, scanned through very quickly. Whatever I was quoted, I just doubled the price to what I would think the real price would be. Okay. Just to be safe. Just to be safe. And then I just sat down and thought, you know, what's a couple of deals worth to this guy in profit?

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19:38There's no need to wait any longer. Speed up your hiring right now with Indeed. Side Hustle Show listeners get a$75 sponsored job credit to get your jobs more visibility at Indeed.com slash Side Hustle Show. Just go to Indeed.com slash Side Hustle Show right now and support the show by saying you heard about Indeed on this podcast. Indeed.com slash Side Hustle Show. Terms and conditions apply. Hiring. Indeed is all you need. What was the quoted price out of curiosity? Oh, the quoted price was, I was getting between$800 to$1 ,600. Okay. But you already told me it was a quarter million dollar annual problem.

20:14I knew it was a quarter million. Well, he told me. Yeah. You sat there and worked it out together. At the end of that, he was pretty much upset about it. He was deflated because he got, oh, I did. I mean, there's an open wound. What are you going to do? You might as well scratch it. Bleeding neck problem. Yeah. Yeah. Just keep scratching it away. Stick your finger in there. So in that process, in that 10 minutes, I roughly had an idea of how much it was going to cost for me to facilitate. And one of my criterias was the fact that we could deliver the solution within at least four weeks. Okay. So I just wanted to know that we can get this done in a month, right?

20:46Because he was shelling out in that month, he was going to be shelling out$25 ,000 in costs. Okay. Yeah. So I got the feedback and then not more than 20 minutes after that, I made a phone call to a person just to verify a couple of coding issues around internal spreadsheeting with number changes and stuff like that because I just wanted to know. But all up, the project was$2 ,400. I quoted$30 ,000. I said$15 ,000 up front and then$15 ,000 on delivery. Okay. Wow. That's a nice margin. Yeah, that wasn't bad for an hour's work. not bad at all not bad at all facilitation in that and it was project management involved and now here's the funny part of this story nick just to sort of cap this off at how ridiculously simple this was these were the third-party tools that we used to develop this product right essentially we developed a niche portal for the real estate industry specifically we used a program that a lot of people may or may not be familiar with called optimized press as the front end.

21:48Then we used another product, which is a free product, plug-in called S2 Member to manage the process. We branded it for the realty industry in that city that this company was in. So it was exclusive to them. We then designed the back end, which was providing them the method to be able to utilize the system. So it was an easy process. Essentially, it was just a series of forms that I had to fill out. So it made it easy. We did a step one, step two, step three, press the buttons. So we made that the interface was very basic, very easy to follow. It gave people exactly what they were looking for.

22:20We put pricing structures in there that were changeable. Basically, it was an Excel spreadsheet. We used Microsoft LifeScribe for the PowerPoint presentation that we embedded into the back end when they signed up. And all we did was brand the portal. The only marketing for this is we actually created a business card that gave them the private membership to this. When they opened the back end, we had a responsive theme. So we had a little download this button on your iPhone or your Android where you can bookmark and access it from your screen. So all we do is open up the system. They can log in and access all the information from any portable device.

22:57And MailChimp was the autoresponder service that was connected to it. So it's pretty cheap to build. And the only real cost was in the programming for the price changing software. And then I created a three-minute video on how they actually could change the price. that was it so that was the components optimized press s2 member mail chimp and then somebody came in and put some excel stuff in there so that i can embed into the back end they could change and that was basically how they managed the process and everybody's happy everybody's happy so that took less than six days to build oh so but you promised him a month so yeah yeah i promised a month now here's a silly thing and this was just me i'm thinking man i quoted this guy let's get of tea at the end of the month and I've got the thing sitting here now ready to go right and like if I go back to him tomorrow and say hey it's done he'd be sitting there going man I paid 30 grand he had this done in six days yeah starts to raise a little raise a little eyebrows yeah well this is just me that was just my thing that was going on in my head so what I did was I held on to it for another six days and then said hey got the beta version ready to go but we can actually start using this now.