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- [00:00]
A
We're having cash flow problems. That's okay. Send more traffic. Our payroll is higher than our revenue. That's okay. Send more traffic. Our inventory is low, but we don't have enough money to put in a po. That's okay. Run more traffic.
- [00:17]
B
In my experience, sending more traffic from anywhere doesn't necessarily solve a problem. It usually creates and exposes the problems.
- [00:26]
A
More ads does not translate to more money or less problems. It's more problems, less money. Welcome to Follow the Yellow Brick Road, the show where online businesses learn how to turn clicks into customers and growth into real scale. I'm your co host, Emma Rainville, the wizard of ops, helping companies transform chaos into systems that actually run.
- [00:47]
B
And I'm Mitch Barham, the wizard of ads, the guy who knows how to turn paid traffic into predictable revenue. Together, we break down what really drives profitable online businesses. From traffic and funnels to operations scaling and everything behind the curtain. Because getting customers is only half the battle.
- [01:02]
A
The real magic happens when ads and operations work together. So if you want smarter traffic, stronger systems, and a clear path to scaling your business, you're in the right place. Let's follow the yellow brick road. I have a question, and actually it's more of like a statement I'd like you to follow up with. I worked with so many clients that no matter what the problem or issue that they're having in their business is, I'll say something to the effect of we're having cash flow problems. That's okay. Send more traffic. We're losing money not just on the front end, but on day 45 as well. That's okay. Send more traffic. Our payroll is higher than our revenue. That's okay. Send more traffic. Our inventory is low. I'm not kidding you. This is real. Our inventory is low and we need to do a manufacturing run, but we don't have enough money to put in a po. That's okay. Run more traffic.
- [02:09]
B
That makes total sense.
- [02:11]
A
Right? Right, Right. So I know that you've heard a ton. Ads aren't working. That's okay. Spend more money. Just spend more money. Send more traffic. Send more traffic. That is a big myth that higher traffic send increasing spend. And sending more traffic or there's tons of different traffic forms is, you know, paid traffic. There's affiliate traffic, there's your organic traffic that you get. But more traffic, in my opinion, operationally tends to expose and increase whatever problem you already have. Makes it worse.
- [02:51]
B
One million percent. Yes.
- [02:55]
A
So talk to me about when more traffic actually solves a problem and what you Generally will suggest clients do instead of sending more traffic. When things are broken, like it's usually money issues, revenue and profitability issues. So talk to me about what problem does sending more traffic actually solve?
- [03:20]
B
I'm going to be honest. Like sending more traffic. The only problem that that could potentially solve is just sales. But there's not really like an. I mean, correct me if I'm wrong, but in my experience, sending more traffic from anywhere doesn't necessarily solve a problem. It usually creates and exposes the problems.
- [03:45]
A
Versus, I can't think of one problem that sending more traffic helps. If your sales team has low conversions,
- [03:53]
B
it's not gonna fix it.
- [03:55]
A
It's not gonna fix it. If your sales team has high conversions but the quantity is low, that's not a problem, that's an opportunity. So I would say, I would say personally, me, if there's a problem, an issue, a true one, then outside of we're ready to grow. Yeah, you should never send more traffic.
- [04:17]
B
No. 100% agree. I was, I felt like I was trapping myself with my saying no. There's like, there's no.
- [04:24]
A
I honestly cannot think of one true problem.
- [04:27]
B
No.
- [04:28]
A
Someone may consider having low quantity of sales coming in a problem. I don't consider it a problem. I consider it an opportunity. If operations are going well and we're profitable on our product, because you should be profitable on your product whether you sell 2 or 2 million 100. And so if we're profitable on our product and things are smooth, then that's an opportunity. That's just not an issue to me.
- [04:56]
B
Right.
- [04:57]
A
So what we're trying to say for those of you listening is that more traffic, more customer base, more spend on traffic likely is an answer I'd like to talk about how to diagnose the fix. Profitability. Then you need to look at your price point. No, I know. And we could have a whole episode on price point because you can't charge more than your competitors. And what the market justifies.
- [05:37]
B
Yep, meritocracy. The market sets the price.
- [05:39]
A
The market absolutely does set the price. Not your hopes, dreams, wishes and aspirations. So if, if the average, you know, joint health supplement online can go for 69, you can't go charge 110 because you can't figure out how to make it profitable.
- [05:56]
B
Right.
- [05:57]
A
However, if it's 47, you can certainly test 69.
- [06:01]
B
Yeah.
- [06:01]
A
However, if it's 69, you could certainly talk to your manufacturer about how you get your cost down. Maybe you change the bottle cap. I actually did that once. 5 cent bottle cap. Instead of a 10 cent bottle cap. Astronomically changed. I mean, they were doing a thousand sales a day.
- [06:16]
B
Yeah.
- [06:16]
A
But it astronomically changed the profit margin. So it doesn't sound like it would, but it absolutely, absolutely does.
- [06:23]
B
Volume, it.
- [06:24]
A
Right?
- [06:25]
B
Totally does.
- [06:25]
A
Right. The other thing we did is they were printing 100 labels at a time.
- [06:29]
B
Oh, no.
- [06:30]
A
At 12 cents a label. When they're doing a thousand sales a day. So we just started printing 25,000 labels at a time. They're like, what if we change the formula? The bottles are made? Like the manufacturing's done. We're not changing the formula, bro. Like, what do you mean? Not for 25,000 bottles?
- [06:47]
B
Yeah. I bet you that label cost dropped to like a penny.
- [06:50]
A
It was like 4 cents. Yeah, I don't know who would defer a penny. But that is. That is huge. Actually. That many pennies per thousand bottles over 30 days, over 365 actually was quite a lot of money. When you're at volume. And volume, really a thousand sales a day isn't that high of volume. Actually, it's completely reasonable numbers. But when you get to even 100 sales a day, a few cents will astronomically change your piano over the course of a year.
- [07:18]
B
Interrupt this podcast to ask you to do a huge favor for us.
- [07:22]
A
Huge.
- [07:22]
B
We drop so much knowledge to help you guys. But you're not going to be notified unless you hit that subscribe in the notification bell to be notified the minute we drop a new episode to help you grow and scale your business.
- [07:34]
A
Because you never know when we're going to be taken off YouTube.
- [07:37]
B
You have no idea. Like, I could all of a sudden be like Liam Neeson with a particular set of skills.
- [07:42]
A
Also, we read every single comment.
- [07:44]
B
So leave a question or comment, we will reply to it and maybe we'll even talk about it in a upcoming episode.
- [07:49]
A
Probably. If you troll us, we will definitely talk about you in an upcoming episode. Thanks. So much money. You need to make sure your products are profitable. Two, it could be your foundation. So, you know, just because my cogs dictate X if I have an office in downtown Miami, that's $25,000 a month. And my Internet, because it's downtown Miami and it's commercial Internet with high speeds because I'm uploading videos is 750amonth and then my utility is 750 bucks a month. And then my film crew that I have following me around because I think I'm a rock star and my life is a documentary that goes nowhere costs $25,000 a month. And then I have expensive camera equipment, but I have a supplement that's doing 100 sales a day. Like these are generally the issues that I like. There was one company I went into many, many, many years ago. It was many years ago and they were doing 8 million but spending 8.1. The owner was a CPA. Like he understood numbers and he's like, I don't understand why we're spending so much effing money.
- [09:00]
B
Yeah.
- [09:02]
A
And so I go and the first thing I immediately notice is they've got these saltwater fish tanks. And I'm not talking about small saltwater fish tanks. I'm talking like the kind you see built on TV and like reality TV shows.
- [09:16]
B
Oh dang.
- [09:17]
A
For 20, $30,000 they go custom ones and they've got someone coming in that has to clean them because nobody in the office cleans them of course. So they get somebody coming in and maintaining them. And it's a full time salary for the office. Additionally, the four executives had refrigerators in their office with snack and alcohol service. Nice, right? They all had like BMWs or Mercedes paid for by the company. For one of, for the marketing guy, I'm gonna go there. But for the marketing guy, they had rented a yacht for his birthday. Yeah. 40 grand for his 30th birthday. And they're like, it was a skin care line that was doing like lotions and stuff. And they were importing things from China and it was like super, super cheap. And they were selling it for high dollars. But they also put it in a beautiful box that was, you know, a little bit expensive. That all would have been just fine. It was spending they were doing in the office.
- [10:18]
B
I like the media buying the marketing guy. Getting a yacht. I like that. I think that's okay.
- [10:23]
A
It was for a day.
- [10:24]
B
That's fine.
- [10:25]
A
And he wasn't a media buying guy. He was the marketing guy.
- [10:28]
B
Oh.
- [10:28]
A
And so he designed the very expensive box. And that's about all I know that he actually did. But they also paid for his apartment in Hollywood in Florida. And like it was a really nice three bedroom. Really nice three bedroom. Huh?
- [10:43]
B
I want to go work for these guys.
- [10:45]
A
They are not in business anymore if you could imagine. I actually, there was so much stuff I found, I literally gave them their money back for the consult. Cuz I didn't want to be on record anyway. So back to our point.
- [11:00]
B
Yeah. Expenses that you're willy nilly thinking your business is your savings account, bank account, cash, like for, I mean it is for you inevitably. But Silly things. I've seen the same thing where they're paying for their gym membership. And at least you con.
- [11:14]
A
And you can. You can like guys, you can do that. You absolutely can do that. If you can afford it. If the amount of profits that you have in your business as an executive, you want to get the company a vehicle.
- [11:28]
B
Right.
- [11:28]
A
If you want to allow the executive team to get massages once a week as a perk to their. Their role. If all the executives have to get it. But there's a lot of things that you can do around that to take some of the things like, hey, go get your hair cut on the company. We're also going to provide you like Evernote provided all of their executive team. Not Evernote. I'm sorry. It was. Oh, gosh. It was the video game company I worked with for a while. They did Tomb Raider. It starts with a B. It's here in Austin.
- [12:04]
B
I don't know.
- [12:05]
A
Lizard.
- [12:05]
B
Lizard. Yeah.
- [12:07]
A
They actually, all of their executives had a housekeeper twice a week because they didn't want them to have to worry about their home.
- [12:13]
B
Makes sense.
- [12:14]
A
They wanted them to be worried about work all the time.
- [12:16]
B
Right.
- [12:16]
A
And so they removed the element of personal need. They had personal shoppers, they had haircuts, they had massages. They brought in a keg on Fridays because they wanted you instead of wanting to go out Friday night, they wanted you to come. And brains. That was the brainstorming session from 6 to 8 every Friday, and they were there until midnight. It was actually a really cool company. So really cool company. But you can do those things when your company is bringing in the kind of money that you would have paid that money in taxes instead.
- [12:46]
B
Right.
- [12:46]
A
Not when you sold a little bit and got a little tiny bit of a success. So you decided that all of that needed to go into these extravagant lifestyles.
- [12:55]
B
Treat yourself, insert parts and rec. Gift.
- [12:58]
A
I mean, the reality is, is that you should be buying computers for your business. You should be buying things that actually translate into making your business money. But, you know, there are perks that you can do. Another problem that we see a lot where people are like, turn up the ads, their team will be overloaded. This is a good example, I think, of why this is a myth. Because I'll hear it all the time, like, my team's overloaded. I have to hire more people, sell more.
- [13:30]
B
So you need to sell us more. And.
- [13:32]
A
Yeah, right. Why is that a bad idea? Do you know?
- [13:38]
B
I feel like this is a trick.
- [13:40]
A
It's not. It's most business owners Won't be able to figure this out. It takes it.
- [13:44]
B
Why is it a bad idea?
- [13:46]
A
Why is it a bad idea to take. Okay, we're making X dollars. We have X amount of employees. I need to hire more employees. Go turn up the ad so I can sell more money so I can hire more employees.
- [13:55]
B
Well, every single employee has to be onboarded, trained and taught how to do the job. And so then you're going to overwhelm your current team and like even more then try to train these new people.
- [14:05]
A
So that's absolutely true. That's not where I was going, but that. It's not where I was going, but that's absolutely true as well. But here's the problem. If it's not manageable where you're at right now, it's not going to be manageable at a higher scale.
- [14:18]
B
True.
- [14:20]
A
So it's like if you can't afford to hire, when you scale, you will need to hire, you will need to create agents, you will need to create some way that work can be delivered upon.
- [14:38]
B
Right.
- [14:39]
A
But if at this rate and this dollar amount you can't afford enough, you're not going to be able to afford enough at a higher rate and a higher dollar amount. Does that make sense? You're missing systems, you're missing processes, you're missing components and elements of a framework of how your business works and communicates. And more people are going to make that worse, not better, unless you hire someone to come in and specifically work on that.
- [15:11]
B
Right.
- [15:11]
A
Which no one ever wants to do.
- [15:13]
B
No, nobody wants.
- [15:14]
A
Nobody ever. I want delivery, delivery, delivery, delivery. More money, more money, more money, more money. But probably you want, you want to keep more money more than you want to influx more money into your top line revenue. And that is the magic of, of operations. So I would absolutely say that's one that a lot of people come up with and most people get stumped on it and they're just like, yeah, that makes sense, but it really doesn't because this dollar amount gives you this. A higher dollar amount is going to give you more of whatever you're experiencing now. If you have low profits, you're going to have more low profit. Your profits are going to be more low profits. No, you're going to have higher percentages of low profits. It's going to continue, it's going to scale right with it. So more ads does not translate to more money or less problems. It's more problems, less money. That's it for today's episode of Follow the Yellow Brick Road where The wizard of Ads and the wizard of Ops break down what it really takes to build and scale a product profitable online business.
- [16:16]
B
If you found this episode useful, make sure to go to follow the yellow brickroad podcast.com to check out the Hidden Control Chamber for all kinds of awesome freebies, guides, checklists, everything that we do to grow businesses.
- [16:29]
A
So hop over there and grab all those free resources in the Hidden Control Chamber. And remember, getting traffic is one thing. Turning it into customers that build the systems to support real growth. That's where the real magic happens. Until next time, keep following the Yellow Brick road.