Next Level Pros Episode #128: A Company That Helps You Automate Your Profits Isn’t Making Profit
Release Date: October 23, 2024
Host: Chris Lee
Guest: Andrew Schultz, Founder of Profit Automation
Introduction
In Episode #128 of Next Level Pros, host Chris Lee welcomes Andrew Schultz, the founder of Profit Automation, a marketing agency focused on automating profits for SaaS companies. Despite offering a specialized service aimed at enhancing mid-funnel marketing strategies, Andrew's business is currently unprofitable. This episode delves deep into the challenges Andrew faces, analyzing his financials, marketing strategies, and personal hurdles that hinder his company's success.
Business Overview
Profit Automation positions itself as a “growth firm”, striving to offer more than commoditized marketing services. Andrew describes the company’s niche focus:
“We take the free users that they've generated, which are basically for a company like that, they're just leads, and we're converting them into paid users.”
(Andrew Schultz, 04:21)
The target clients are product-led growth (PLG) SaaS companies with strong founder or corporate brands that drive significant free user traffic. Despite a well-crafted website and marketing materials, Andrew acknowledges confusion around effectively communicating his value proposition.
Current Challenges
Financial Instability
Andrew's financials reveal an unprofitable business after 20 months of operation:
“When you looked at the financials, it shows an unprofitable business so far.”
(Chris Lee, 00:07)(Andrew Schultz, 00:09)*
He relies heavily on a Home Equity Line of Credit (HELOC) to sustain the business after losing his previous sales job, with inconsistent monthly payments ranging from $4,000 to $10,000.
Marketing and Lead Generation Deficiencies
Despite having a background in marketing, Andrew confesses a significant gap in lead generation:
“I don't do lead gen in my business. I don't get leads for other companies and my efforts in my own business have yet to produce something that's repeatable and consistent to generate leads.”
(Andrew Schultz, 42:39)
His client acquisition has been predominantly through word of mouth and referrals, with minimal proactive marketing efforts. The struggle to define and package his offer has hindered the ability to scale and attract a broader client base.
Financials Analysis
Andrew provides a cash-in, cash-out overview, indicating total business income offset by business expenses and his own payouts. The inconsistency in income reflects the sporadic nature of client acquisition:
“I pay myself out of the business for family expenses. Those aren't, but those don't go in business accounting.”
(Andrew Schultz, 03:27)
The financial instability underscores the urgent need for a sustainable and scalable revenue model.
Marketing and Sales Strategy
Current Approaches
Andrew's marketing efforts include LinkedIn, YouTube, and a podcast, all aimed at building content and establishing authority:
“I have about 31 episodes all launched except for the last couple. Not a lot of listeners.”
(Andrew Schultz, 11:39)
However, these channels have not effectively translated into consistent lead generation or client acquisition.
Proposed Solutions by Hosts
Chris Lee and Daryl offer strategic advice focusing on:
-
Standardizing and Simplifying the Offer: Making the value proposition clear and straightforward to eliminate confusion among potential clients.
-
Diversifying Marketing Efforts:
- Paid Advertising: Allocating a small budget to test and scale effective marketing channels.
- Cold Outreach: Re-engaging in activities like cold DMing on LinkedIn to increase lead flow.
- Affiliate Partnerships: Establishing relationships with complementary businesses to drive referrals.
-
Shifting Mindset from Scarcity to Abundance: Encouraging Andrew to broaden his client base beyond reliance on a few referrals, thus reducing financial vulnerability.
-
Hiring and Delegation: Outsourcing fulfillment tasks to free up time for revenue-generating activities, enabling scalability.
“You have to get out of that mentality. It’s a very scarce mindset.”
(Chris Lee, 31:40)
Mindset and Personal Challenges
A recurring theme in the discussion is Andrew's scarcity mindset and need for certainty:
“I have a strong need for certainty.”
(Andrew Schultz, 60:38)
This mindset has led to hesitancy in taking risks essential for business growth, such as investing in paid marketing without a perfected offer. The hosts emphasize the importance of adopting an abundance mindset to focus on scaling and diversifying revenue streams.
“You have to have a vision and direction... you need to be certain in this thing I can do whatever it takes to make sure this thing is successful.”
(Chris Lee, 67:41)
Advice and Insights from Chris and Daryl
Chris Lee and Daryl provide actionable strategies for Andrew to overcome his business challenges:
-
Increase Revenue-Generating Activities (RGAs):
- Allocate at least 50% of daily efforts to activities that directly generate revenue, such as lead generation and sales.
- Focus on massive action instead of waiting for opportunities to come.
-
Test and Iterate Marketing Strategies:
- Start with small investments in various marketing channels.
- Continuously test, measure, and refine offers based on performance data.
-
Leverage Partnerships and Affiliates:
- Form strategic partnerships with businesses offering complementary services.
- Create affiliate programs to incentivize referrals and broaden client acquisition channels.
-
Develop a Scalable Sales Process:
- Hire commission-based or affiliate-driven sales personnel to minimize financial risk.
- Implement standardized operating procedures to ensure consistent service delivery as the client base grows.
“You're putting too much of your destiny on a very scarce resource.”
(Chris Lee, 32:03)
- Adopt a Scientific Approach to Business Growth:
- Embrace experimentation and resilience, viewing failures as opportunities to learn and iterate.
- Maintain a steady focus on building a robust pipeline to ensure sustained growth.
“Success is crawling, falling, crawling, falling, take a step, fall, take a step...”
(Chris Lee, 73:06)
Conclusions and Action Plan
By the end of the episode, Andrew acknowledges the need to overhaul his approach:
- Commitment to RGAs: Dedicate significant daily time to revenue-generating activities, moving beyond passive marketing efforts.
- Standardizing Offers: Continuously refine and simplify his service offerings to make them more attractive and understandable to potential clients.
- Expanding Client Acquisition Channels: Invest in diverse marketing strategies, including paid ads and strategic partnerships, to stabilize and grow his client base.
- Mindset Shift: Transition from a scarcity mindset to one of abundance, focusing on scaling and reducing reliance on a limited number of clients.
“I'm committed to creating that space of time for doing revenue generating activities.”
(Andrew Schultz, 77:08)
Andrew’s Takeaways:
- Intensify Focus on Growth: Prioritize lead generation and client conversion strategies.
- Simplify and Refine Offerings: Make the value proposition clear and compelling.
- Embrace Accountability: Consider partnering with others to maintain discipline and drive consistent action.
Final Remarks: Chris and Daryl encourage Andrew to persevere, emphasizing that business success mirrors personal discipline and resilience. They highlight the importance of being proactive, embracing change, and maintaining unwavering commitment to business growth.
“You've got to just go and get in front of 10 new people a day and offer your services.”
(Chris Lee, 34:13)
Key Quotes
-
Andrew Schultz (04:21):
“We take the free users that they've generated, which are basically for a company like that, they're just leads, and we're converting them into paid users.” -
Chris Lee (31:40):
“You have to get out of that mentality. It’s a very scarce mindset.” -
Chris Lee (32:03):
“You're putting too much of your destiny on a very scarce resource.” -
Chris Lee (73:06):
“Success is crawling, falling, crawling, falling, take a step, fall, take a step...” -
Andrew Schultz (77:08):
“I'm committed to creating that space of time for doing revenue generating activities.”
Final Thoughts
Episode #128 of Next Level Pros serves as a candid exploration of the hurdles faced by entrepreneurs in scaling their businesses. Through Andrew Schultz’s journey with Profit Automation, listeners gain valuable insights into the critical balance between mindset, strategic action, and effective marketing. The hosts’ practical advice underscores the importance of relentless pursuit of revenue opportunities, strategic offer development, and the transformative power of adopting an abundance mindset. For entrepreneurs navigating similar challenges, this episode offers both reflection and actionable strategies to propel their businesses to the next level.