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What could you do to add five million dollars to your bottom line without doing anything, right?

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What could you do to add ten million dollars to the business without adding anything any humans any people?

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Welcome to the game where we talk about how to get more customers how to make more

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For customers how to keep them longer and the many failures and lessons we have learned alone the way

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I hope you enjoy and subscribe

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Good morning everyone. Happy Saturday. I am a super pumped for this podcast because I'm gonna talk about

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What I do on 50,000 hour consulting days that I sell when I have higher level business owners like them in

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And I'll walk you through the biggest mistake that I've made for a business standpoint

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I think I think it's the number one biggest mistake that

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That I've made that you know set me back hard along and how you can learn from it. So

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How many I mean what is it two years ago three years ago?

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Jim launch was doing twenty eight million dollars

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We'd grown from I think six point eight to twenty eight million in a year

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So you know tremendous growth and at that point I made the mistake of thinking

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I should start another business

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Which was our sublimed business. I mean it still is a good business. It's great

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But I think that if I had continued to work on the Jim launch business

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I would have been able to grow to a hundred million and so what I want to walk you through is kind of some of the mistakes that I made

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But also the two fundamental things that I look at when when I do these consulting days right

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And so if you want 50,000 hours for the consulting in a nutshell

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That is what I'm going to cover in this podcast and so uh, so buckle up

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Number one whenever I'm trying to do some sort of you know high level consulting day

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The goal is not to increase complexity of their business

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But decrease complexity of the business and that also means that whatever the intervention that I'm going to try and provide

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I want it to be as simple as humanly possible in an ideal world

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We want to ask questions like what could you do to add five million dollars to your bottom line without doing anything

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Right, what could you do to add ten million dollars to the business without adding anything any humans any people right

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And so that's where you know

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One of the first things that we'll talk about is like pricing right so if we can price appropriately

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Many times we could add to three million dollars to the bottom line to a business without actually changing anything at all

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Right and so I say that just as an example of what what I would consider a very good intervention

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That's well worth the 50,000 dollars, you know that someone would pay me

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You know for a day right and so

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Anyhow the two things that I'll break this down into when I'm looking at someone's business or I'm trying to improve a business my own or otherwise

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is

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Growth right so there's only two elements of growth

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All right, so you've heard me talk about three levers right you can get more customers

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You can get them to spend more you get them to stay longer

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But if you want to go simpler than that

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The way to grow businesses you can either get more customers

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Or make the customers worth more all right, so I'm going to use a simple example

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Let's say that you your current sign-up rate of customers is 10 per month, okay

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And let's say each of these customers is worth a thousand dollars

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That means that if nothing changes in your business you will never grow past 10,000 dollars per month

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Right and so this is how I do the back of napkin math to extrapolate if someone's on a growth projection where they're going to plateau

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Because I know for example if someone's selling 10 people a month and the lifetime value is two thousand dollars

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And they're currently making 10,000 dollars a month that means if they change nothing they're going to continually grow until 20 and then stop

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So they're on a growth curve, but it will slowly slow down as it approaches 20

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It's called an asymptote so basically approaches that in infinity straight line

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And every month the increase becomes less and less and they pretty much stabilize around 20 right

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And so if we're looking at a business

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The first thing out of side is whether we need to focus more on the back end or we need to focus more on the front

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Right, so I made a podcast earlier called good enough for growth

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And that's where you're really focusing on the back end, right

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And so there's a huge amount of ways that you can increase the lifetime value right

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Pricing appropriately is a first and obvious one

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Second is adding in you know back in continuity or adding different levels of service

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four customers that want to upgrade

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Adding in retail products affiliate affiliate deals basically deals where you can refer portions of business to someone else

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Any of that type of stuff right and get and get kickbacks from them all of these things are things that can increase

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lifetime value decreasing churn

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All of those things

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Increased lifetime value and so

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I'll look at all of those components of what their numbers are now there's certain benchmarks that I'll look for you know

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Whether it's let's say it's a brick and mortar service right there's certain benchmarks that I look for if it's you know

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Let's say a chiropractor

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I'd be saying okay

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Well, what are you currently making for customer if they if I find out that the average customer comes in for five back cracks for 50 bucks each

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250 dollars is a really really bad

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Don't TV right

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Now if you're closer to 2500 to 4000 that I know that because and the reason this is important is because the cost of acquisition

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And many times is relatively the same

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So the cost of acquiring a small business owner

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In most markets will be between 500 and 1500 dollars right the cost requiring a b2c customer in a local market

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Might be around a hundred dollars, right?

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And so you can see these things kind of in a factor of factors of 10 right and so anyhow

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The reason that like when you get good enough for growth it means for me I would like to look at

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This is my metric at least a 10 to 1

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Return from cost of acquisition to lifetime value now that doesn't mean up front all right

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It's really clear here doesn't mean up front now. I mean perfect world. I'd like to be 20 or 30 or 40

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The the LTV to catch ratio for gym launch for example is 33 to 1 all right, so we spend

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For every dollar we spend in marketing. We get

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33 dollars back over the lifetime of the customer now that being said because we knew our metrics

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I actually lost money

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Or often lose money in the first one to two months

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But I'm okay with that because I have I just know the longevity the customers worth and all that kind of stuff right

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And so many people are come come to me like how can I achieve this level of growth?

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It's like well, we made our customers worth more to us than to anyone else by a very very wide margin right for the same people who are trying to compete

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For gyms most of their LTV was five to six thousand dollars right which is what the vast majority of

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You know agencies, gurus coaches, whatever that's most typically that's around where their lifetime value is right and so they're spending a thousand bucks

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And they're making six and that's that's where they're at and they have trouble scaling from there and usually marketing

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You know represents 20 to 30% of their total cost every month whereas for us it represents less than 5% of our of our total revenue right and so

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That's when I'm looking at the back end okay on the front end

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What I'm looking to do is how can we get more customers right and so again one of these things is simply spending more on marketing

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For many times we'll accomplish that right a lot of people have very limiting beliefs about how many people you can acquire on a specific channel

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All right

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I had a call recently with one of the agencies that we work with on the software side

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They're like I'm really afraid that I'm I've tapped out this market right

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They're in a market that's bigger than gyms. I'll just put it that way

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Um, and there's there's hundreds probably thousands maybe a thousand agencies that serve this one particular avatar

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Right and this client was selling about 20 of these a month all right and so for me

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It's always laughable because 20 clients a month in a marketplace that has you know 100,000

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clients is is just like

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Come on, like there's another hundred agencies that are also

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selling five ten people a month so there's no so there's a thousand of these of these let's say

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Pirepractors for example that are getting sold every month and you're selling 20 of them

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And you think that you're now tapping out the marketplace right so there's usually a ton more growth that you can have

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In a specific channel than you expect right

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So that's the first thing that I look at is like okay if the LTV on the backside looks right

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Then I'll focus on the front end and where most people get weird is that they say cool

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I've got this machine to make more money. I'm going to do I'm going to serve another type of customer

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I'm going to go downstream. I'm going to go upstream. I'm going to I'm going to I'm going to also work with another type of thing

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Right I'm going to go from fitness to sports performance. I'm going to go from female way lost to male way lost

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I'll go whatever right so a different customer because they only have one channel. They don't know how to scale it right

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and so

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The the way of scaling adequately. This is why this is one of the biggest mistakes that I made

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Early on at gym launch is that I just didn't know how I could scale past the amount of sales that we were coming in

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So I was like well the only thing I can really do is is add supplements on top

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And so there's actually a clear strategic meeting

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Where we we did the pros and cons of going gym launch international so that means gym launch China gym launch south these days

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You should gym launch south America right versus starting the supplement company and to me starting the supplement company

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Honestly, just sounded easier

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and so

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Rather than stick with the core avatar and simply do more bring more customers in by opening up more markets

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I which I could have done right

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I ended up adding complexity to business now it probably took me a year to re-simplify that business

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But that was a year of growth that I lost

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Hey guys real quick if you're new to the podcast. I have a book on amazon called one hundred million dollar offers

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That over eight thousand five star reviews and it has almost a perfect score. You can get it for 99 cents on kindle

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The reason I bring it up is that I put over a thousand hours into writing that book

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And it's my biggest gift to our community

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So it's my very shameless way of trying to get you to like me more

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And ultimately make more dollars to that later on in your business career. I can finish the program with you

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So that's my give go check it out

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Amazon and back to the show

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Right, and so there's multiple ways that I could have gone

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Through like if I could go back in time. This is what I would have done

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All right number one is I've looked at other acquisition channels

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So I would have prioritized getting

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Channel partners right which is people who can refer you business on a regular basis

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Second would be going international. So that's another way of scaling here

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I would have the same channel so that might be like Facebook or Instagram, right

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But I'd be doing it another marketplace. All right, so that would be a way of scaling

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I could find channel partners in the United States who own

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lists of Jim owners so that would be equipment dealers flooring people

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Shoot, you know, financing companies

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CRMs that serve Jim's all of these are people who serve the same customers me that could have served that would have been

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It would have been beneficial for that and me for their clients to work with me because they knew that their clients would stay longer

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They'd be more profitable and and far less likely to go out of business and set it right or they'll make more money

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And then buy more stuff because they'll be grown right

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So those are examples of just like two ways another way I could have done it would have been

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You know focusing all in on email outbound or cold calling outbound or

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Cold messenger right all of these are different channels that I could have used

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To scale the front end of acquisition now where this gets really interesting is that when I was in the room with the the guys

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We're doing half a million to our half a billion here. Excuse me

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You would be astonished at how simple most of their businesses are the bigger the businesses typically the simpler

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It has to be because

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Simples the only thing that scales and so basically once they've created the mouse trap once they have L to you that is good enough

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Right then really it becomes scaling acquisition now many times people have a really fucked up back at and you have to fix that right

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But once once this is good enough right once we know that

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Let's say a small business owner that walks through this mouse trap whether it could be an agency could be consulting business

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For me information doesn't run that right

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But if the backend let's say is making is $20,000 on air

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Just say we'll just use that $20,000 and we know that the cost of acquisition

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Um for a small business owner is going to be around a thousand bucks or around $1,500, right

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Then we can get to work knowing with that cost of acquisition isn't see if we can match that another channel

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Typically outbound is actually cheaper than inbound believer now

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Um, it scales more slowly

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But in some cases that can be good because then it just allows you to appropriately scale your backend

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One of the the blessings and curses of inbound lead gen is that you can you know 4x overnight

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Whereas you know scaling all of the people who fulfill the services

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4x in that overnight sometimes you need more difficult right

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And so

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Backing this up if I'm looking at a business owner who's coming in and says hey, I'm currently at

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I'll give you a real or example. I'd want the other day. This wasn't a 50 consulting. This is for all the

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Hs that are doing a hundred thousand dollars a month or more using Allen um, I I work with them for 30 minutes

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To kind of help them with their business and so

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One of the things uh, this is a real example. So they were doing um 200,000 a month and they want to get to a million

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Right and so I think they were selling. I've just used rough math. They were selling uh 30 people a month

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Okay, so they're selling 30 people a month and their current lifetime value was 12,000 dollars

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Okay, so if they're selling 30 and their lifetime value is 12

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That it means that if nothing changes in the business

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They're currently on a growth trajectory because they are doing 200 all right

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That means and they've been growing since it's been with us right and so that means that if they don't do anything

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They'll cap out at 360 right which is just 12 times 30 that's it with a zero

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That's all those so that means that they're going to cap at 360 per month, which is well shorter where they will be

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And so the question is how do we triple the business all right to get to the million dollars a month

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Which is what they decided was their goal

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And so we look at that I'm like, okay, well, you're currently using this one channel. They're using Facebook

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All right, and I said I think you could reasonably get to 60

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Um on this one channel without really breaking a lot of stuff

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Just increasing your ads been adding one or two sales people right that seems simple now on the back end

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If we can do these two things we can raise this price by 25% and we can ask people to you know

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Open more availability and we can do acting or whatever the steps that I have for them right

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I think that reasonably we get from 12k to 16k all right, which is not a massive increase

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And you'll notice that when we're doing these things we're tweaking it's very rare that there's like a huge

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Underhaul or overhaul the entire model. It's usually small adjustments, right?

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And so let's let's let's factor the example in so if we go from 12k to 16k

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When we take the acquisition on the front end from 30 to 60 and they actually had an organic method

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They had stopped doing that was generating them uh, I think it was 10 10 or 15 new customers a month

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Um, they stopped doing that to do the inbound legion right and so we said cool

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Well work the actual plan was we're gonna increase your inbound legion by 50%

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Because you're gonna have some your the cost actually ends up going up when you scale just let's walk that fly

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Um, but we're also gonna restart this

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Uh, outbound method, right?

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And so they're gonna get 15 here and go from 30 to 45 and so total depth 60 new sales per month

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Reliably and now in the back end

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We're just doing these small things to take us from 12 to 16

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And so if we go 60 times 16 now we're at 960 and just like that from those two tweaks

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We're able to get them to close to a million dollars in month, right?

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And so that was literally like that what I just walked you through is pretty much what these

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You know massive consulting things look like and the objective for me is to not give someone a hundred

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Things to do but one or two things they're gonna have the most leverage right in the definition of leverage

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Is something that has a smaller input than it does output right and that's why you can have you know the biggest lever in the world

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You give me a lever along and I can move the world

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That's the that's the objective when we're going to these things is like how can I create the most leverage for the person that I'm talking to

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In looking at how they can scale acquisition and then how we can simplify and make the back and more profitable right

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And so when you're looking at your business or I find this useful when I look at my business is I'm saying okay

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Do we is the back end metrics in terms of what we're what we're making for customer what our turn is what our pricing is

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You know what percentage of people are taking up sales all of those things. Are they right? Are they good enough?

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Yes, okay, I'm comfortable at this number. Let's say it's 15. It doesn't matter. You could you can add zeros remusers if it's $1,500

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Is your cost about is your lifetime value cost of acquisitions a hundred dollars then you're at 15 to one and that's awesome right same thing

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And so you're just looking at the arbitrage between these two things and in general the greater the arbitrage as in the greater

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The difference between the cost of acquisition and the lifetime value then the more money you'll ultimately make the more profit

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You'll make and profit is what begets growth right a lot of people want to get bigger

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In order to get better, but usually it's getting better that allows you to get bigger as in you need to have lots of profit

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In order to scale rather than say I'm gonna put all my profit back

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And not take it not have a big margin in my business because I want it to grow and it's backwards

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You have to have lots of margin in order for the business to grow

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Rather than think I don't want to have any margin because I want to make it affordable to everyone so that it grows and eventually I'll start making money

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Whatever you scale

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Expans so if you have low margin you're just scaling low margin for the most part

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There's a handful of exceptions, but the vast majority of people who are probably listening to this have what I would consider normal businesses

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That have services and employees that have to scale as the product scales right

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And an exception to that would be you know if you had an app or some sort of software and that's why software gets you know

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Has as crazy multiples, but it's also a very hard business and very competitive. So anyway

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Back to the main point

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The numbers that you need to look at and the three numbers that I'm looking at are if you're looking if you're curious

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You're like want to do this mental example with your own your own team is what's my lifetime value?

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What's my cost of acquisition?

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And if you're worried about cash

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Then what's my 30-day LTV? What's my what am I what am I expecting in the first 30 days of the customer?

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And that's if you're cash constrained if you're not cash constrained

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Then you're really just looking at cost of acquisition compared to lifetime value

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All right, and so in looking at that

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It simply becomes a a factor factor of how much more can I bring in the front end once these back metrics are correct

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Rather than adding more businesses adding more services serving more avatars

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Which is the mistake that I made and this mistake that many people

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You know who our entrepreneurs will make because I think that if I just said cool. We're at x

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Inflow per month from this channel. We're going to add we're going to I'm going to take the next three months and folks on partners

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I'll focus the next three months on YouTube or focus the next three months on building up on right whatever it is right

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I would have been able to continue to add channels

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And go from and literally triple the business that way rather than trying to add more things on the back

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Right

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And so hopefully that makes sense that is the process that I go through

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Those are the two sides of the coin early of the equation for growth

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I hope you find that valuable for me. It was very eye-opening

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I wish I could transfer like the the simplicity that I have seen from people have the biggest businesses

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But basically once you have a product that has a very that is very well oiled

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Very well oiled machine on the back end

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It's it takes up tremendous amount of effort to change your machine, right?

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And so in those instances once it's good enough

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You can always make the tweaks and whatnot but like fundamentally changing your oiled machine takes a lot of work and takes a lot of time

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Right also it has a certain amount of risk

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Whereas if you can just focus on like take your entrepreneurial ADD hat and instead of trying to use your ADD hat on

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figuring out a new product or figuring out a new avatar or anything like that

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Take your entrepreneurial ADD and learn another acquisition channel and let that be the focus of your entrepreneurial

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You know distractedness and shiny object. So um what that makes sense hope you enjoyed that

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If you did please drop a like or drop a question and I will try to

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Answer all of them as it comes in so lots of love stay amazing

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Found this valuable leave review and I'll catch you guys in slips. I have said bye