Answering Your Top Business Questions for 1 Hour

Summary

Highlights

• An impactful story of managing an unexpected guest situation and turning it around. 🌟
• Advice on running efficient onboarding to reduce churn and enhance user experience. 📚
• Importance of leveraging consumer market scale before moving to B2B. 🤔
• Challenges and solutions for diverse business portfolio management. 🎯
• Strategic recruitment focuses for supply-constrained industries. 🧠

Key Takeaways

• Address customer grievances by overcompensating and turning negative experiences into opportunities. 🎯
• Optimize onboarding processes to improve client engagement and reduce churn. 📈
• Focus on data collection and analysis to drive informed business decisions. 📊
• Maximize existing successful strategies before branching into new ventures. 🚀
• Recruiting and training are crucial for leadership development to ensure organizational growth. 🏗️

Overview

Chapters

• 00:00 - 00:30: Introduction and Setup Alex Rosi, an investor and owner of acquisition.com, introduces the session. He shares his experience of hosting 100 business owners at their headquarters to help them scale their businesses. Alex emphasizes providing tactical solutions that can be immediately applied by viewers. He expresses gratitude for a past dinner that had a significant impact on his life and business.
• 00:30 - 02:30: Handling Mistakes and Turning Them Around The chapter discusses a mishap where a sales event was moved, but one salesperson was not informed and ended up selling spots to six individuals for an event that didn't occur. These individuals, including one from Israel, turned up expecting the workshop. Despite the mix-up, the perspective was taken that this situation presented a positive opportunity.
• 02:30 - 06:00: Low Engagement and Churn Solutions In this chapter, the focus is on tackling low engagement and customer churn. The discussion centers around the idea that simply refunding a customer isn't enough to mend relationships and retain them. The author highlights a case where the team spent a day and had dinner with dissatisfied clients to amend a negative experience. The key lesson is about going beyond just making things right, but instead exceeding expectations to truly resolve issues and improve customer satisfaction.
• 06:00 - 12:00: Scaling B2C vs. Moving to B2B This chapter discusses the challenges and strategies in scaling business-to-customer (B2C) models compared to shifting towards business-to-business (B2B) models. It highlights the importance of minimizing mistakes and tragic moments in business. The chapter shares a statistic from Disney, emphasizing that it takes 37 positive experiences to make up for one negative one, thus underlining the crucial need to avoid mistakes. Furthermore, it suggests that if a mistake occurs, overcompensating can help to mend relationships with affected customers.
• 12:00 - 15:00: Leadership and Delegation Challenges The chapter discusses the challenges of leadership and delegation by focusing on turning negative experiences into positive outcomes. It tells the story of a skeptic who became a strong supporter after a heartfelt story shared by a leader. This transformational opportunity is presented as a strategy to build strong reputations instead of resorting to issuing refunds to dissatisfied customers.
• 15:00 - 21:00: Focusing on Core Strengths and Scaling The chapter discusses a business's struggle with deciding its identity and scaling its operations. They are offering a backend service for $195 a month or four months for $595. However, they are facing a high churn rate of 50%, weighted to 30% because only 7% of the customers engage with the service they purchased. This lack of engagement is severely impacting the perceived value and retention rate.
• 21:00 - 27:00: PE Firm Strategy: Concentration vs. Diversification The chapter titled 'PE Firm Strategy: Concentration vs. Diversification' discusses different strategies that private equity firms might adopt. The transcript suggests a discussion on logistical processes involved in onboarding clients, which is one aspect of strategic operations. There are eight weekly sessions that clients can choose from, and specific coordination is required to ensure clients are expected by the correct coach for their chosen sessions. The strategy involves understanding logistical angles as well as tackling larger, more complex considerations.
• 27:00 - 33:00: Supply Constraints in Service Businesses The chapter focuses on strategies for enhancing customer experience in service businesses by addressing supply constraints. It emphasizes the importance of refining logistics to make services more enjoyable and efficient for customers. Additionally, the chapter discusses a marketing tactic of maintaining communication through tools like email lists and highlights a sales technique referred to as 'band famam' which stands for booking a meeting from a meeting to ensure continuous engagement and onboarding.
• 33:00 - 37:30: Recruitment as a Business Core Focus The chapter emphasizes the importance of personalized onboarding as a core focus in the recruitment process. It suggests that in order to ensure the success of new recruits, it's beneficial to conduct four to six one-on-one sessions with them before transitioning to a group setting. This personalized approach can be adjusted in terms of pricing if necessary and aims to better integrate individuals into the organization.
• 37:30 - 39:00: Conclusion and Additional Insights This chapter emphasizes the importance of creating a welcoming and structured environment for participants in any process or program. It suggests using onboarding techniques to help individuals feel more integrated and less isolated when entering an ongoing activity. The approach includes starting with minimal processes and observing how they develop, with a focus on maintaining consistent engagement (baming) through regular interactions or sessions. In the final minutes of each session, it is recommended to collectively decide on the next meeting time, ensuring commitment and continuity from all participants.

Answering Your Top Business Questions for 1 Hour Transcription

• 00:00 - 00:30 I'm Alex rosi and I'm an investor and I own acquisition. comom it's a big portfolio companies it makes me more money than I'll ever need rest of my life I had a 100 business owners who FW out to our headquarters to scale their companies and so they ask me questions for an hour I try to do my very best to make the solutions as tactical ass humanely possible so that you can watching from home immediately use them in your business first off I have to say thank you for uh taking me out for dinner last time that conversation that we had literally changed my life and changed my business so um yeah I appreciate that um can I tell the story
• 00:30 - 01:00 of what happened for sure we had an event that was scheduled had to get moved the memo got passed down and everyone found out except for uh one sales guy and he sold six people into an event that didn't exist on like a random Monday we had six people showing up came from Israel and he was like hey I'm here for the workshop and I was like this looks awesome for us I'm really happy I'm really happy that we that we're in this situation we've always tried to come from the perspective of like when you when you have something that gets me
• 01:00 - 01:30 up like you can't just like refund somebody cuz they're still net negative right like he still flew from his real if i' said hey my bad here's the money back he still like screw this guy right and so we had the team spend the day with the the six and then we took them out to dinner and I I bring that up just because it was a great like example um of like something that took me too long to learn was that like you can't just make it right you have to make it more than right um in order to actually make it right you know that was obviously a super unfortunate situation and you know
• 01:30 - 02:00 every business if you have humans you make mistakes right and so that was a mistake that we had made I remember hearing the stat from Disney which is that it takes 37 magical moments to overcome one tragic moment and so the moral of that statistic is not let's do 37 magic moments it's avoid the tragic moments if at all possible but if you do find yourself in a tragic situation here's an interesting thing that Lila taught me which is that believe it or not the people that you wrong and then Super compensate to make it super
• 02:00 - 02:30 become your biggest ambassadors he flew back out and he gave such a heartfelt you know you know story that like it took somebody who was negative and I think you know from at least what it sounded like he was super positive towards us and I think that that's in some ways as terrible as it is when you do have one of those tragic moments just see it as an opportunity to flip someone from a hater into an ambassador rather than being like Oh we got to give these people refunds it's like no like we actually get to build a reputation and
• 02:30 - 03:00 decide what kind of company we want to be we're we're stuck at right now so we're selling the backend offer 195 a month um for semi-private okay um or four months for 5.95 our turn for both of those is 50% so weighted its 30% churn and the reason why we've got such terrible churn is nobody shows up like 7% of our student body actually shows up to the calls and actually gets the value from the thing they purchased what's the
• 03:00 - 03:30 onboarding look like so we have the closer um get them to see the calendar of we have eight sessions a week that they can join so they show them the calendar they say okay which one of these do you think you can come to and then they get them to say okay this one and then the closer says okay I'm going to tell Jenny who's the coach on that call she's going to be expecting you there's two there's two kind of like different angles to attack this one is the kind of like logistic side which I'm going to cover first because it's easy and just process stuff and the other is kind of like the bigger Mor morphous
• 03:30 - 04:00 stuff which is like how do I make our thing easier uh easier and more enjoyable for people to kind of experience um on the logistic side I'm sure that you're on my email list if we had dinner you better be on my email list uh by the way if you got anyone here read the mosy minute anyone I think it's the best like I some of the best stuff I put out anyways it's really good I think it's really I spend like my Sundays on it um anyways so band famam is way of life so book a meeting from a meeting right and so the sales guy should obviously book to the onboarding
• 04:00 - 04:30 call right or the whatever I do think that you probably need to add one onboarding call that's specific to the person not just have them drop in how much do you want this to work really bad okay so this is what I would recommend doing you'll probably want to do something in the neighborhood of four to six sessions that are oneon-one I'm just being like now if you need to adjust price in order to do it fine but it's four to six sessions of one-on-one before they kind of like qualify to go into the kind of the group setting and so it's like you you will personally onboard them so that they have this way
• 04:30 - 05:00 better buyin they're way like they don't feel like they're just like in no man's land and just getting tossed into the middle of a conversation like you kind of like on-ramp them after you have the onboarding which should be and you can you can cut I mean at the very beginning just do two you know what I mean just to start and then you can kind of see how it goes um from there you basically want to keep bam faming um per session so all the people are showing up the last five minutes I would say okay everybody let's pull up the calendars when are you guys showing up again great and I would book it with everybody so that keeping people
• 05:00 - 05:30 forward and you have to back that up with probably the reminder sequence that they're going to get because it's actually a scheduled session so they should get automated reminders and they should probably get a manual reach out from the person who's running the session of the people who are supposed to who are supposed to attend at the very least do the automated one and that would probably get a huge amount of like that will probably do a lot and so this is actually believe it or not this is an onboarding process for a gym so if you have large group training if you take people and just toss them into the group it's much harder than having kind of a more dedicated onboarding experience the
• 05:30 - 06:00 ideal is you do like six one-on-one sessions with someone they feel more comfortable in the gym they understand people they understand how the kind the vibe the culture is and then they kind of graduate into the group sessions and so what happens also is that the group sessions are now on a pedestal it's like you're not you're not ready for that yet right it's like you got to earn that and all a sudden becomes the prize that they earned and now they got onboard does that make sense can you see how that would work for sure yeah so this would probably be you set that up as like a big head longtail sort of pricing system and the question that you'd ask um if you want to give an AB close for this
• 06:00 - 06:30 is you would say would you rather train uh you know start your start your thing in a group or oneon-one with me that's if you're selling if it's somebody else or one-onone with John and they're a lot of times they're going to be like I'd rather do it with John and you're like great so this is the price for that and then you just go for that sale if it's not like no worries we can just start you here not a big deal and then if you want if normally you sell six you can say you know what I'm still going to give you one if you do that because it's going to be way better an experience for you so then it feels like a gift and doesn't feel like they're like well now
• 06:30 - 07:00 well now I don't want the group thing right so just give them one or two if you if you sell a six for example does that make sense so um he presented obviously with a a low consumption issue which then probably translated into low renewal and probably low high turn and so the the the issue that typically precedes that is low consumption right and so in order to first get consumption you know figured out I like to get attribution in place and so I don't know what kind of tracking he had but I think
• 07:00 - 07:30 he said like 7% or something like that um and so he had some level of tracking which allowed him to even take action on the problem but most times when I ask more questions i' say nine times at attend the entrepreneur has a problem but doesn't collect any data that precedes the problem and so then the first step is to just go collect the data and once you have the data typically the solutions become obvious and so a lot of time is wasted in this space of like trying to ideate and figure out this hypothetical solution without any data and you're like I don't know is it this or this or this that we
• 07:30 - 08:00 could do it's like well you have no data so you have no idea and so you just keep circling and so when you don't know what to do get data first and then it makes the path easy I sell career coaching services to corporate Executives um so basically we help these people find their next role so we did 7.2 million in Revenue last year congrats about 2 million in profit amazing and um we know how to grow BC we know that we can do that but we're really wanting to get B2B going okay so these Enterprise level deals are a little bit more they're a different ball game right okay so we're struggling to get our first B2B do
• 08:00 - 08:30 because they have to be big enough to have the budget why do you want to do B2B so this entrepreneur is obviously doing well you know he's doing multiple millions of dollars a year and he's got something that says decent margins and he said in order to scale he should do B2B but he was in a consumer-based market and consumer markets are huge there's way more consumers than there are businesses so he had a proven product with a proven acquisition Channel and was profitable and was growing and he was spending you know $3 or $5,000 a day I was like this is nothing um in terms of the amount of scale that's available for the product that he had and so when he said he
• 08:30 - 09:00 wanted to do this other new thing I had an inkling that it was for no actual reason besides he probably encountered some sort of difficulty that he assumed the New Path wouldn't have and so this is just a classic woman in the red dress why can't you just do more what you're currently doing we can I mean like we hit like 980 and uh in October and like that was a big like a million month like that was the Milestone where it's like okay let's start doing different stuff I I'll tell you what my initial reaction is what you're already probably guessing which is like I will exhaust more before
• 09:00 - 09:30 I look at anything new and so someone would have to make a very strong argument for me why I can't do more of what I'm already doing so if I were to like buy your company tomorrow I'd be like yeah don't worry about that just what are you what are you currently doing to get uh to get customers oh just Facebook ads okay so what are you spending a day uh anywhere from 3,000 to 5,000 a day right I'd be like okay so how do we get to 100,000 a day and spend a day yeah wow like what stops us from getting to 100,000 a day okay and the answer to that question is the con straint so what stops you from getting
• 09:30 - 10:00 so let's say 10,000 a day so that's a triple so like what stops you from doing that we were there in October right around 10,000 a day and then we had like sales efficiency issues and stuff like that obviously Q4 is not like the best time to have that type of service and so really just like making sure that our backend or our front end like sales called to close rate all that good stuff is like able to profitable and we have a lot of like services like one-on ones that we pay our coaches really well we have a writing team in house that we pay so there's there's cost so what would but that those costs are fixed because
• 10:00 - 10:30 you'd have that cost of the BB right okay so what stops US the problems that exist in the BET Toc scenario also exists in the B2B scenario and so he's like hey I've got I've encountered this problem I don't know how to solve and so my way of solving it is to not solve it and start something else that will C create even more problems in my business and so when you say it like that it sounds ridiculous but this is a decision-making process that or rather a mistake making process that a lot of people follow fundamentally you want to ask why can't we do more and the answer to that question is the constraint and the only
• 10:30 - 11:00 in my opinion proper constraint for deciding to uh go after a new Avatar is that you run out of the existing Avatar so think about this just have you ever done B2B like Enterprise okay so the thing is is that um they are higher leverage but you're also going to have like 10 15 touch points and so the number of deals per guy is going to go down a lot there's also going to be multiple stakeholders they have to get involved on their side and multiple stakeholders that you're going to introduce on your side so just in general for B2B like Enterprise level sales you increase conversion rate and
• 11:00 - 11:30 stick of a customer by increasing the number of people that are involved in the transaction on both sides so basically you want to show you want to show as have as many of these ties as you can to do Enterprise sales the the lowest risk adjusted return move in any business is to do more of what's already working and answer the question why why can't we do more and so if you have a sales efficiency issue then like solve the sales efficiency issue because it's holding you back from tripling the things that you brought up are all fixed problems as in their they're problems on
• 11:30 - 12:00 both paths so to to to forgo the path you're currently on for A New Path that's completely unproven with with the same problems that you know already exist is a much higher risk move than just saying yeah why don't we just get to 30 million okay so just focus on maxing out B Toc about B2B till we're like fully confident BC like we're doing everything well not even that you're doing everything that you have exhausted the market of C's okay okay right like it's so if want diversity then I'd still I
• 12:00 - 12:30 would rather you go diversity of Channel rather than changing customers the riskiest thing you can do it's a new business basically you're have you have to have a new offering you have new acquis like everything's new and so I would rather if you if you have the itch for new just get a second Channel but I don't think you're even close to that you're at 3 to 5,000 a day I think you can totally spend 50 100,000 a day for sure just on meta what will likely be the next uh thing that gets in your way is that your rowes is going to drop uh and so typically that's going to be uh you're going to need to have option one
• 12:30 - 13:00 better lead magnet option two better creative option three Superior cro conversion rate optimization just on the the pages option four improve sales efficiency option five all four and then that allows you to scale and like fundamentally the difference between companies that can spend 100,000 a day and 5,000 a day profitably is how good they are it's literally just making all of this pieces better and that takes time because you're going only change one of those at a time and this is why business takes time to grow I sell bleacher rentals to festivals and fairs
• 13:00 - 13:30 so we do around 4 and a half million in revenue and about a million in uh profit congrats what's stopping me is having my leadership team delegate fully some of their responsibilities and I think it has to do with um creating processes that are followed by all if we need to hire key people and we don't have the processes then we can't delegate properly so how do you train leaders so this this is this is a good
• 13:30 - 14:00 question that I'm going to Chunk Up one level because I think it'll be valuable in general um which is that fundamentally when we're hiring anyone we look for the smallest skilled deficiency possible fundamentally you've got traits as people call them and then you've got skills now based on Alex's worldview uh this is not a thing it's just that a trait is just a series of skills right and so when you hire a CFO for example
• 14:00 - 14:30 you're going to try and hire for the smallest skilled deficiency and so if the CFO is a dick for example but they're exceptional and all these other things then you're like maybe I can teach them to be kind in these ways now that'd be a big you it's a lot of skills to just have some like go from not kind to kind right a lot of subskills underneath of that and so if it's two days to train sales and two months to train kindness take this person who's kind and then train them on sales later on sometimes you have people who you're like okay this person's a little
• 14:30 - 15:00 different than our Vibe they're not going to be you know oil and water um but they have this massive skill set that we can use and this tiny deficiency that is around this stuff that we can be transparent with them up front that they need to fix I've seen this happen like again and again and again where a manager or a leader talks to somebody else and says hey and then uses a morphous terminology that's very hard to pin down to basically say change your behavior and they're like but how and they're like change it and you're like okay I don't know what that means and so the reason so obsessive about
• 15:00 - 15:30 operationalizing terms like what is patience what is courage what is you know what is humility like what are these what do these terms actually mean in terms of behaviors like patience is figuring out something to do in the meantime like if you do figure out something to do in the meantime you're by default being patient right and so it's telling someone what they actually have to do not who they have to be stop being lazy is very hard for someone to solve it's like I keep telling her to not be lazy and she keeps being lazy but you have to break the term down into what behaviors you describe as lazy cuz when you talk to you know your your partner you talk to somebody else you
• 15:30 - 16:00 say hey Sarah's kind of lazy have you noticed that there are things that she did that you observe that you ascribe the label lazy too and so you have to think more deeply like what did they do to deserve the title and it might be like they don't respond quickly to slack messages these are things that if you said hey Susan instead of insulting her and saying hey you're lazy instead we'd say hey you don't respond to slack messages quickly enough you aren't responding you know after hours and our hours keep going till 9:00 p.m. and you're not responding until after you know after 5: and so for this week I
• 16:00 - 16:30 want you to focus just on responding to slack messages so let's turn on notifications let's turn it on both of your phones and and turn it on your computer so that you can see it is there anything else that's going to get in the way of you responding quickly now when we ask that question we might find out that Sarah's overwhelmed because she's doing somebody else's job who we laid off and we haven't backfilled it's like okay well now we have context but until we get to there we can't appropriately measure Sarah's inherent value or traits rather behaviors to give her a label so
• 16:30 - 17:00 to your question how do you train leaders I think that attracting good leaders so one of it's recruiting right so um Chick-fil-A's head of people said this she said a lot of people are trying to fix process when they really lost the championship in the draft and so a lot of people are trying to to figure out what Playbook they should be using with a team that's never going to win so the big framework that we use for training in general is document demonstrate duplicate
• 17:00 - 17:30 and so first you figure out exactly what the checklist is and I like checklist more than quote Sops that's a a personal preference and say like and you want to be able to break it down into behaviors and I think this is where a lot of training goes wrong I think most companies aren't very good at training they're just they basically hire a bunch of people see who's got the skill and then fire the rest but if you do get good at training it's like how do you train kindness well you say okay well people who are kind when they come on a phone they they smile right and they nod their head when people are listening and they repeat back what someone says and
• 17:30 - 18:00 they you know raise their voice when uh when uh they walk into a room right and so if you boil it down to some of the behaviors then the onus is on us as Leaders to be more specific with what we tell our subordinates to do and I think a lot of times if you're struggling to train some of these key traits with leaders it's because you're not being specific enough about what you want them to change and so it's like you're just not getting it it's like well no one can do anything with that and so it's like you have to and this is where the work comes in from the top down we're like okay when you do this and so the easiest
• 18:00 - 18:30 way to bucket this that's a p there we go is Sarah I need you to stop doing this I need you to start doing this and I need you to keep doing this and so just being more granular about what Behavior you want them to stop or what Behavior they're not doing that they need to begin or combination and so um giving someone the feedback of I need you to do this in dead of this has been some of the most
• 18:30 - 19:00 effective way that I've been able to change people's behavior and it's about around the specificity and so if your leaders aren't doing what you want them to do document demonstrate duplicate this is the step process let me show you how I do it now you do it in front of me and this is what we're going to have you stop doing you're going to now do this instead and keep doing the other stuff that's good I sell professional book publishing services to entrepreneurs and Executives we do a million dollars in Revenue I'd like to be at 3.2 million in Revenue very precise and I just
• 19:00 - 19:30 32s my favorite number this the best this is the best explanation for of Revenue goal I've ever had that's great what's stopping me is I'm at the stage where I need to make more money before thinking about other things and the challenge I'm facing is a lot of things have worked for us up to this point but I need to know what to I need Clarity around what to do more of so what's the input so what's the thing that drives the business the the biggest thing that drives the business right now is referrals okay second biggest thing is related to organic in the form of
• 19:30 - 20:00 speaking social media and guest coaching and then we have a split between cold email outbound and Facebook at you're doing all the acquisition channels all of them and we didn't even mean to do all of them we just kind of tried them all and they all seem to work enough what's the greatest percentage of your customers what channel they come from the greatest percentage of the customers be after referrals would be organic okay um and that's now you you put that both in organic content but also like speaking and things like that okay how many speaking things are you doing online like a monthly basis it's about
• 20:00 - 20:30 one per year last year okay so I have an idea um so I would I would ask the question like how like I think I might have told this in a short but a really close friend of mine um he took over uh reel which is a public traded um real estate brokerage their primary way of getting more agents is him speaking at real estate events and so in Q4 he did 66 speeches and um in 24 months he took from 200 million to 1.2 billion in Revenue and so he's doing you know 270
• 20:30 - 21:00 plus events per year uh in person we were having dinner and he was like no one gets it he was like no one understands how much more we do than them and I'm I'm I'm only telling you the story not to make hopefully it comes across the right way yeah um because I think you just you like if if and I'm guessing if that event generated business for you yeah I mean every time I speak we make a significant amount well yeah so I'd be like let's like how do we go from you know one a year to one
• 21:00 - 21:30 a week and start there just like Target 50 next year and so he rightly identified that he simply needed to do more the next natural question I was going to be asking is like what are all the ways to you customers which he obviously answered and so then it was like okay the next followup question I'm thinking is where do we have the most leverage so either that's going to be which thing is taking you the least amount of time that makes you the most amount of money uh or which one is the thing that cost you the least amount of money that makes you most amount of M so it's either time leverage or it's money leverage or both now the fact that he said I always make a bunch of money after I speak I was like okay that's a
• 21:30 - 22:00 positive indicator and as soon as he said I only do one Speaking event a year I was like I don't need to know anymore like if you're get if if that's a significant amount of Revenue and it's one day once a year like I see that and think okay well we could 50x the business if we just did 50 of those and so then the constraint then becomes okay how do I get booked on these stages but then that's you follow the same core for you do the Outreach you post cont and then you reach out to people to find out and sometimes you have to pay to be on the stages sometimes you get a booth and then they'll give you a speaking slot there's always ways to get on if if you need to uh we acquire companies in the
• 22:00 - 22:30 UK and Dubai um current Revenue across the portfolio is about 35 million the metric isn't so much want to get to a revenue metric want to try and create a minimum of around 50 million Enterprise Value um do you own all of them out right no so it's it's varied I think the problem is do we focus on building out the double down on the companies we already have grow eidar that way or do we keep acquiring and build the eidar through acquisition how many do you have
• 22:30 - 23:00 14 14 are they similar no that's the thing so if we was to grow through acquisition we'd have to try and create Synergy down a line yeah so you're you're in a very classic kind of PE No Man's Land uh so you have more companies than most funds would ever have um and you didn't pursue a synergistic strategy in order to accommodate volume and so on one extreme you have like constellation which you're probably familiar with Canada it's like they only buy vertically integrated SAS and they
• 23:00 - 23:30 go sub3 million and they just do 100 deals a year right and they just know their playbook uh on the other side you have traditional PE that would have a variety of different businesses they buy you know detail shop and then a supplement company and then a whatever but they only have 68 companies in a fund and they have a decent you know decent holdco team to to to add value um to the company and so if I were in your position first thing I would do is probably ask myself who do I want to be when I grow up in terms of what you want the actual day-to-day of the business to
• 23:30 - 24:00 be because you can hit 50 on either of those paths right and so it's which of these do I feel more like more me like do I feel like I do have a couple of these businesses that you're like I really understand these ones um and if you don't feel that way then I would probably look at these and go 8020 and say okay what's the 20% that's driving 80% of the of the Enterprise Value and trim honestly I would just like go completely passive on those ones or just return Equity or do some sort of deal so I could get my attention back and then double down on the ones that you are good at so this gentleman who had a had
• 24:00 - 24:30 a PE firm uh suffered from a classic issue that I cover in the offers book which is that he had not committed to the niche so this is Page 38 of the book and I tell the story where um I try not to Niche slap people which is that they need to pick one Niche ideally now this gentleman had basically two paths that he could follow he could follow a more concentrated path of just a few companies that could be desperate or different in nature but because of a
• 24:30 - 25:00 team of fiveish people he could probably preside over those call it six companies that are the the better ones of the portfolio double down on those inject Capital bring you know recruit higher higher level Talent maybe improve the strategy and then grow the companies the alternative path um was that he just gets really vertical meaning he tries to get as many uh companies that are of the same type so that he can see trying not to use fancy words but synergies between the companies so that
• 25:00 - 25:30 they all together kind of the sum of the parts is greater than the whole because you can centralize some costs which adds profit to all of them you can have cross business learning so if you have 10 HVAC companies started by 10 different Founders all of them are going to have a few things they do well so you take the best practices from each of them individually and then you implement them across all of them and so you get this cost savings off the bottom line by centralizing costs and then you distribute out best practices is and so that is a typical uh kind of private
• 25:30 - 26:00 Equity play which is a rollup play where you can buy 10 things for a million dollar and sell all 10 together for 50 million and so he was obviously shooting for $50 million exit and the crazy thing is and this is true of Entrepreneurship is there's a lot of ways up the mountain the bigger the goal is the fewer the ways up the mountain there are so you want to get to a trillion dollar company well there's you have to you're going to have to do some crazy new technology that probably doesn't exist um in order to get there if you want to have a $50 million exit you can do that with just about any business by just getting it to
• 26:00 - 26:30 a decent amount of size and yes that includes chains of brick and mortar that includes online B like you can you can absolutely do it in any Niche no matter how small it is I sell health and wellness so basically Physical Therapy personal training 35 to 45 year old athletes okay are is the Avatar and we do about a little over 3 million the biggest thing that's stopping me you have a huge shortage in practitioners um to give context there's about 16,000 open positions you're Supply
• 26:30 - 27:00 constraint yes so um I need more producers to produce um so I decided to kind of pivot and say well if I can't find the people I'm going to increase price well I'm glad you did that as as the thing you decided to do so that's fine like I started another business on e-commerce yeah yeah instead of start teaching people to uh yeah yeah so that went well to the tun of we didn't lose Revenue okay um but I'm at
• 27:00 - 27:30 that point where now do I go all in on continuing to increase price and move more into almost like a concierge membership model or do I go all in and just try to crush and find the people and do what nobody else is possibly doing do you have any issues on getting customers no we have more demand out that we could book people so um have you heard my story about uh buddy m is the cleaning business all right I'll tell I'll tell
• 27:30 - 28:00 you so um former gym owner uh crushed it with gym launch and then decided he started making enough money that he started investing in real estate as all entrepreneurs do and then after he was you know crushing in real estate he was like you know I should probably start a cleaning company because he started doing airbnbs out of his real estate he's like this is costing me a ton of money I should vertically integrate and so he started the cleaning company uh to clean you know his airbnbs and he's like well now that I have the cleaning company I might as well start selling other C don't want to leave money on the table right uh and so you can see how this spindles right the moral of the
• 28:00 - 28:30 story though is that I called I called him up um and he was telling me he like dude it's crazy he's like selling cleaning customers he's like CAC is like 25 bucks it's insane every like it's so easy to get customers and I was like oh you should scale this to the Moon he's like yeah you know it's kind of hard to get English-speaking Maids who don't take stuff from people and do a good job and show up on time and are willing to work for $115 an hour and I was like okay so the nice thing that you have is you have a supply constrainted business that he was used to Fitness which is
• 28:30 - 29:00 typically demand constrainted so it's just it's it's hard to get people who want to show up to the gym right uh not hard to get people to say they want somebody else to clean their house um and so basically the reframe that I gave him is what I'll give you which is you're not actually in the physical therapy business you're in the recruiting physical therapists business the whole Paradigm that I would have around this is what do the career path look like for the physical therapist so that I can make this really enticing on top of that I have to still think
• 29:00 - 29:30 through the same you still have the same core four right you've got you got warm Outreach you've got cold Outreach you've got paid ads and then you've got um I should know these I wrote the book okay organic content right so these are the these are the four things that you can do right and then you've got head hunters right which is basically recruiters um and you have uh Word of Mouth from your existing oops Word of Mouth from your resisting staff and so these are the ways that you can get um physical therapists and so we have to approach this the same way we approach getting customers they are just now the
• 29:30 - 30:00 customer and so um maybe running in dads is probably not the way that's that you're going to get them but I'll bet you that Outreach will work exceptionally well um to get therapists and I would probably bet that if you had a really good referral incentive um over time that would compound now small not as much you'll probably need to do this to start as you get bigger though there's going to be enough of a base where a few percentage every month of referral girls is material and so let me
• 30:00 - 30:30 just put this in math for you so that you can so this will motivate you to do it how much do you make in gross profit off of a physical therapist per year on average about 350 okay so if I told you that I could add $350,000 in gross profit per year to your business how much would you be willing to pay for that in the first year quite a lot right and so giving someone $500 for referral not that motivating if you said I'll give you 20 grand for a referral I'll bet you'll get them to
• 30:30 - 31:00 move most businesses are either comp Supply constrained or demand constrained now if you have a business that's both then it's like you don't have customers you don't have employees like that's a tough place to be most of the time it's one or the other and what's interesting is that entrepreneurs will often try and solve basically like not solve the real problem and this was kind of exact what she was presenting with she was like should I do this other thing or should I like should I should I change my model all together but the crazy thing is just like her model was doing great she was
• 31:00 - 31:30 making good margins she had she's doing good Revenue out of two locations it's like why are we going to break the model like the constraint of the business is that you just don't know how to recruit so let's just solve that problem because her other path of like just raising prices which to be fair I'm all in favor of at some point it's like you can't raise the prices anymore like you're becoming like a luxury business and it's just like you're changing all the Dynamics of the business but her business worked already and so for me the lowest risk thing to do is not change the business model but just
• 31:30 - 32:00 figure out the problem of the business and solve it and for her biggest problem was I can't get people but I don't think she had Quantified how much she should be willing to invest in getting more talent and I think this is wildly underrated it's like think about it from a return on on profit I only did it on gross profit right it was $350,000 per employee so I'm like why would you not pay I mean like just being real why would you not pay $50,000 or $100,000 right if you know that if I people are happy to put you know $100,000 in the stock market and get 10% back and make 10,000 but in their businesses they're
• 32:00 - 32:30 hesitant to give a commission of of $110,000 for $300,000 thing right and so if you're like well what if that doesn't work out then push it out where there's a contingency that you're happy to do it and if you want keep raising the price until you get people to refer like with enough incentive you can move the world and So speaking of this Physical Therapy brick and mortar business uh I did a brick-and-mortar breakdown of five locations of caropractor that had done through m&a uh on how to accelerate the growth of the business and it's super tactical and it works whether you have a single location or you're even virtual a
• 32:30 - 33:00 lot of the Tactical carry over to any business to help it grow enjoy