Loading summary
Transcript1 lines
- [00:00]
A
What if I told you that mastering all the levels of business had nothing to do with how many followers you had or what your fancy website looks like? And everything to do with doing the right thing at the right time in the right order. Once I understood this, I went from living out of motels in my first business, working 1618 hour days barely sleeping, to literally running teams of hundreds of people on my way to building a billion dollar company. So let's get into it. Stop doing everything and start documenting everything instead. Prioritize. Okay? This is like you're going to have somewhere, like you have a team, you probably got five to nine employees at this point. Point your business starts to become real, right? And I think that level four, at this point, it's really about building scalable infrastructure. Okay. There is one shift that separates businesses that scale from millions of dollars to those that fail. Usually at this point what has happened is that you have said yes to everybody. You have built a Frankenstein offer. As I like to say, you have three different customer avatars and they all want different things. When I was building my first company gym launch, this was something that happened very quickly actually, because we succeeded very quickly is I started noticing, I was like, oh, all these people coming in, we were signing up gyms. We had like yoga studios, Pilates studios, big box gyms, small gyms, all the stuff. And they were all coming in and I noticed a lot of them wanted different things. And I was like trying to service all these different things. And so it felt like everything was custom in a weird way, like a weird custom negotiation. That was the point where I realized I had too many avatars. And so that's when we said like, we are for small group training gyms. We, we are not for Pilates, we're not for yoga, we're not for big box. Later we expanded into those, but we did not for a good three or four years because they wanted different things. And the constraint prior to that was like we were just trying to be everything to everybody. And it felt good at first because like revenue's growing, margins are, you know, there, but they're not amazing. But like there's growth, but it's like even with the growth, it felt so chaotic. It was like everything was a mess. I didn't know how we were going to consistently deliver or like have standardized delivery. It was hard to train people. What you realize at that point is like you're not building a business. It's if you don't standardize things, you're basically running a consulting firm. That you call a product, but it's a consulting firm. And so how do you get to the next level? The next level is you actually have to do the opposite of what you've been doing. You need to niche down and tighten your qualifications. Start trekking. And this is really painful because it's like, oh, my God, I have to say no to money. I had no money not that long ago. Leila. I don't wanna say no to money. I have to say no to opportunities. I had no opportunities a few months ago. I understand, but saying no to people who want to give you your money but aren't your actual customer is the best thing that you can do at this point in time. You have to know who do you serve, one avatar, what do you sell them, one core offer and product, and how do you qualify them? What is the specific criteria that predicts success? I bet you right now if I asked you, who are your best customers? And when I say best, I'm sure what you're thinking. It's customers that pay you the most money, the most consistently, that take the least effort. Those are your best customers. So once you figure out who those people are, it's like, well, maybe we should just sell to them. And then once you know that, you want to start tracking things. We're not just tracking at this point, like, how much money is in my bank account today and tomorrow, how much was there yesterday and the day before? Because that's the beginning. What you're probably doing is checking your bank out every day, which I know because I did that you start tracking. What is my conversions, what are my lead to show? What are my lead to close? What are my show to close? What's my churn? What's my cost of delivery, what's my response time on my customer service? Because you're not able to fix the things that you can't see in your business. And so this is also a stage where, like, doing good enough starts to kind of die because you can't skip scale. I'm just. Just good enough. And I think a common mistake here is that you think you're gonna focus later, after you hit some, like, revenue milestone, you're gonna start saying no to customers, but you won't. You're gonna have way more chaos until then. I will tell you guys, like, is a very hard but required mindset shift here. This is where most people get stuck. This is why so many businesses don't make it past, like, 3 million a year, 5 million a year, because they don't know how to not chase every dollar. And you don't see that the very thing that you're chasing to make more money is actually preventing you from making more money. And. And so you have to stop chasing every dollar and start building a machine that can deliver consistent results to one person, one avatar with one product. Now, once you've hit that level, you can go to level five, which is productized. This is 10 to 19 employees. If you get past level four and you're level five, you have made it past one of the hardest humps to get through in business. Because at level five, now, you're real business. You have a team, you have systems, you've got revenue. But you're going to hit a ceiling. That ceiling is economics. The money coming in only goes so far. And you have to find a way to make it sustainable. There's. There is really only one way to grow from here. You, at this point, to sustain hiring the team and building out the company. You're not making enough money per customer. That's almost always the issue. Or they're turning too fast. Either way, it's like the math is not mathing here. So I remember there was a point where we had a business that we took on and they were getting in a ton of different customers into the business. And like, when I say a ton of customers, I mean like they had one specific type of customer and they were getting about 10,000 of them a month. This business was cranking. But what was crazy is I was like, why are our margins so bad? What we realized the constraint was just low LTV to cac. By the way, LTV means lifetime value. It's like the total amount of money that someone pays you for however long they stay with your business. CAC is cost to acquire a customer, which is how much money does it take to get a customer. So that means how much does it take to market them, to pay a salesperson, and then to get them to finally sign, which is often the constraint in businesses at this point. It's like you can get people in the door, but the cost of getting in the door might eat away a lot of the margins of that product that you have. That if you don't have another product that you add on, you can't really scale the business with all the costs that you're adding on to get the right infrastructure to build a bigger business. So those are the two things. So what we want ideally is that it costs us less to acquire the customer than the ltv. Now, if it costs us the Same amount to acquire the customer as the ltv. Well now we're only making any money, we're just zero. Which why the fuck have a business if you're going to do that? So what we want is that cost to, to acquire a customer is lower than LTV by a lot. In fact, the more the discrepancy, the better it is for your business. Okay. Now you can do this in a few ways, which is either you build a back end product that they can buy that costs more money. Lots of companies do this. This could be like buy one, get three for half off. Like those people are immediately trying to liquidate their cost to acquire a customer. Another way you can think of this is if you've ever signed up for, you know, coaching program and they're like, oh it's group coaching. And then they're like hey, by the way, you know, in week two they're like, do you want to do one on one coaching? It costs more. But you can do this. They're, that's an upsell. Another way that you can do this besides upselling someone into something is by reducing churn. So another piece here is like you can have low lifetime value because a lot of people are leaving your business. Churn just means people leave your business. So when you think about churn, how do you get more people to stay longer? Maybe your product is missing some things. So it may be that like for example, let's think of something that has bad churn, which is clothing, apparel, right? It's like they buy something one time and they're gone. So it's like the whole business is churned, right? How do they get recurring revenue which lets them increase lifetime value? A lot of them. Have you ever seen they have memberships? Have you seen like fabletics, members included, you have skims, has a membership. Like there's so many clothing brands. Aloe, lululemon. Lululemon like was notorious for theirs because if you're a personal trainer you automatically get like this insider club thing. Like there's so many clothing brands that do this because now they have recurring revenue which means they can spend more money to acquire customers and build their business. At this point you've built a great entry offer but there's just no back into it. So it's like every customer is a one and done transaction and they likely leave quickly. So you're always on the hunt. And so it feels like this revenue treadmill. I understand where it's like oh my God, I want to make sure I can pay these People next month. And so the way to graduate this level is you need to sell your second product and create consistent delivery standards so people don't turn quickly. Which, by the way, these two can do the same thing. You. You can create consistency that stops people from turning. You can also create a product that stops people from turning. Either way, keep people longer and get them to pay you more money. That's it. That's what this is about. We can say it fancy and say we want an ascension path, which means get them to pay you more money. We could also say keep them longer. We can say it, reduce your churn and your customer bad block, whatever, get them to stay longer. That's all it is. Those are the things we want to do at this level. So at this level, there's a few things that you will probably help you nail these down. One, documented delivery processes. Usually you've documented your sales and your marketing. This is just how people work. But they haven't documented delivery. The second is you want quality standards, which is like, what is the quality that a product must meet in order to get into a customer's hands? Third, training for your delivery team. A lot of times we have, like training for the sales teams. Train your delivery team the same way you train your sales team. You should be drilling them the exact same way. And lastly, we want to mimic sales track customer success metrics. How do you know that you have succeeded in delivering the product to your customer? What are those metrics that tell you that if you start mim measuring those things, it's really easy for you to tell, do I need to create a product that makes us more money, or do I need to learn to keep them longer? And then once you put one of those in place, you can measure its effectiveness by having those things there. This is also the phase where you get the first true like leadership tax. You realize that you cannot manage more tasks anymore because you are managing people who also some manage people. And that requires an entirely different skillset. And so there are multiple things that you are up against at this point in time. But I want you to know, like, that is normal and we can get to the next phase. So this phase, if I had to sum it up, stop adding more, start extracting more value from what you actually have. Which brings US to level six, which is optimized. Now we're at 20 to 49 employees. I understand we're starting to get in thin air here, right? The truth is, you have a lot to offer. You're probably able to keep up with Your customers. Now, at the rate you're growing now, if you don't put systems in place soon, things are going to start to fall apart. And this is the phase where it's like everything feels inefficient, Training is inconsistent, customer journeys are conflicting. And like your sales and your delivery teams are not on the same page. So systems are messy. You realize you don't have security. So if somebody leaves, you're like, how the do I get them out of systems? Money starts disappearing in weird places. You're like, I thought our margins were this. Why is there only this in the bank account? I remember during this phase feeling like all of a sudden it's like outside my control. That's the biggest thing you realize, like, you're making a lot of revenue, your profit starts to go down, you're growing headcount, but your productivity per person is flat. Like, stuff feels off, but you don't really know what's off. You're just like, something is wrong here. And your constraint is that everything is inefficient. This phase, I remember at this phase in my business realizing that there was a day when I looked at, it was like the P and L came in and our margins had dipped by like 20%. And I was like. And so I was like, how would that happen? Like, we added more people to the customer success team and more people to the sales team. Why would our margins go down? And so I started digging in and then it's like what I come to found out is that these people that were coming in, our customer service team was no longer actually doing reach outs for refunds anymore, and they were no longer doing reach outs for failed payments. And I was like, what the fuck? So right there was like 10% of our margin. And then I found out the sales team wasn't working leads as hard anymore. In fact, what I found out is that we would have people for our funnel. People would apply and then they would book a call. But there's plenty of people who applied and never booked a call. We always worked those leads. Of course, those are very hot leads. Well, apparently they stopped working them. So in one month, both those things happened. And what I realized is that those systems, the ones that work for 10 people, they don't work for 30 systems built off memory systems that don't have triggers, systems that don't have cues. So it's like everyone's working harder. Like, no doubt my team was working hard, but less was getting done and our profit was decreasing. The second thing I started noticing Is like, meetings took forever. It was terrible. Decisions are really slow. Handoffs are super sloppy. Information is mostly in people's heads. So I would have to constantly ask people questions rather than, like, be able to see it on a dashboard. And now, from this level, in order to graduate, what are the things we need to do? We need to install training systems, segmentation for our customers, and actual operational discipline. Like, we need ops in the business. So what does that actually translate to? One thing. Formal onboarding programs. Not just shadowing, but, like, for a salesperson that comes in or a CS person that comes in roles that you have multiple people for, you need a formal training program. You can't just, like, wing it anymore because if you don't have formal training, you don't create consistent delivery or you don't get consistent results in that department. The second one is customer segmentation. So you have now at this point, multiple products, and you have different types of customers and you're big enough to handle it. But. But you need to make sure they're not all treated the same way. They don't all have the same customer journey. Because if you treat a customer who pays you a thousand dollars a month the same way you treat one that pays you $30,000 a month, and then the next piece is data. Like, at this point, you have no single source of truth. It's like you're living on like 17 spreadsheets, which feels terrible. So you need to clean up your data. Which then if you clean up your data, you can get financial visibility like a real P and L. Not just like checking your bank account, but like, you can get a P and L delivered to you every month. That tells you where all the money in the business is. And then going with that is role clarity. Everybody knowing what their job is, having a job description, having clear lanes, knowing what decisions they can make, Notice this all starting to feel professional. That's what it does. That's what happens at this stage. You stop being good at business and you start being good at running a company. That is what you need to focus on. Often at this time, it's where you're like, I need an operator. Kind of have to transition from a founder mindset to an operator mindset. Now why? Founder builds foundation. You've built the foundation. You're not inventing things anymore. You're optimizing things and professionalizing things. You need to wear a different hat. Your business is never gonna outgrow your capacity to lead it. Okay? So if you're stuck, look at what stage you're in, look at the constraint you're facing and ask yourself, am I building the right function? Am I taking the right steps? Or am I just doing more of what I'm already doing because I'm afraid and because I'm good at the thing I'm doing right now? Most people stay stuck in business not because they're bad at the next thing, because they're so good at the current thing that they don't wanna take a risk. And if you want to walk through this roadmap, I've actually built what I call the Scaling roadmap along with Alex, my business partner and husband. You can check out that in the link below.