MBA2367 Three Things That Make Your Business Way Easier + Free Ride Friday

Summary

The $100 MBA Show: Episode MBA2367 – Three Things That Make Your Business Way Easier + Free Ride Friday

Release Date: September 22, 2023
Host: Omar Zenhom
Podcast: The $100 MBA Show

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Introduction

In episode MBA2367 of The $100 MBA Show, host Omar Zenhom delves into three pivotal elements that can significantly simplify the management and growth of a business. Drawing from his extensive 20+ years of entrepreneurial experience, Omar provides actionable insights aimed at helping entrepreneurs build more efficient, profitable, and enjoyable businesses with minimal resources.

1. Sell a Drug, Not a Vitamin

Timestamp: [02:00]

Omar emphasizes the importance of addressing urgent problems ("selling a drug") rather than offering preventative or supplementary solutions ("selling a vitamin"). He explains that products or services that alleviate a significant pain point are inherently more marketable because they fulfill an immediate and pressing need.

Omar Zenhom [02:15]: "It's better for you to sell a drug than a vitamin. Better for you to help people that are in pain, that need a cure to that pain than for you to try to sell something that's going to prevent them from having the problem in the first place."

Examples Highlighted:

• Beauty and Fitness Industry: Cosmetic procedures like liposuction address immediate aesthetic concerns ("a drug"), whereas services like personal training are more about long-term well-being ("a vitamin").

• Business Solutions: Offering a solution that helps businesses reach revenue milestones (e.g., $1 million in sales) addresses a critical need, making it easier to secure sales compared to non-urgent services like HR software, which, while beneficial, do not address an immediate pain point.

Omar references Bruce Lee to underline his point:

Omar Zenhom [04:05]: "Bruce Lee's wise words is life is all about avoiding pain and seeking pleasure. So people are constantly avoiding pain, whether in their business or their life or whatever it might be."

By focusing on remedies for acute problems, entrepreneurs can create offerings that resonate more deeply with customers, ensuring higher demand and easier sales processes.

2. Maintain Thick Margins

Timestamp: [05:00]

Omar underscores the critical role of profit margins in sustaining and growing a business. He advocates for maintaining fat margins, suggesting that a minimum of 20% is essential, with higher margins (30-60%) offering significant advantages.

Omar Zenhom [05:30]: "Margins solve a lot of problems. You can have a business with a lot of problems. You might be not doing things perfectly. Maybe there's a few holes in your business plan, but if your margins are thick, it will cover up all those holes."

Benefits of Thick Margins:

• Reinvestment Capability: Higher margins provide the financial flexibility to invest back into the business, whether it's for marketing, product development, or expanding the team.

• Hiring Talented Team Members: With ample margins, businesses can afford to attract and retain top talent, which can drive further growth and innovation.

• Resilience: Thick margins act as a buffer against economic downturns or unexpected business challenges, ensuring long-term sustainability.

Omar uses luxury brands as exemplars:

Omar Zenhom [06:25]: "Think of big time luxury brands. These brands last forever because they have very big margins. As nice as a pair of Prada shoes are, they're beautiful and they're well made. It doesn't cost them thousands of dollars to produce. It doesn't even cost them hundreds of dollars."

These companies leverage their substantial margins to invest in quality, marketing, and brand prestige, enabling them to weather various market conditions effectively.

3. Achieve High Lifetime Value (LTV) of Customers

Timestamp: [07:30]

The third key element Omar discusses is maximizing the lifetime value (LTV) of each customer. High LTV means that customers continue to purchase from the business multiple times over an extended period, reducing the need for constant customer acquisition.

Omar Zenhom [08:00]: "What does this mean? This means that the total amount of money that people spend during their lifetime with you is high. It doesn't mean that the actual price of your products have to be expensive, but it means that the total amount of money that a typical customer would spend or average customer would spend is a lot."

Strategies to Increase LTV:

• Diversified Offerings: Providing a range of products or services that cater to different stages of the customer journey encourages repeat business. For example, Disney’s vast array of movies, merchandise, and theme parks keeps customers engaged over many years.

• Subscription Models: Implementing subscription-based services, like Amazon Prime or Uber's offerings, ensures a steady revenue stream and fosters customer loyalty.

• Product Line Expansion: Car manufacturers often release multiple models at various price points to attract customers early in their vehicle lifecycle and retain them as their needs evolve.

Omar cites Amazon and Disney as prime examples of businesses that successfully maximize customer LTV:

Omar Zenhom [09:20]: "Disney has an incredibly high lifetime value per customer. They're going to movies, they're buying merchandise. People are going to their theme parks and spending money year after year."

By focusing on strategies that enhance LTV, businesses can ensure sustained revenue growth and reduce the strain associated with acquiring new customers continuously.

Free Ride Friday

Timestamp: [12:00]

As part of the episode, Omar announces Free Ride Friday, a weekly giveaway where listeners can win a lifetime membership to the $100 MBA program by leaving an Apple Podcast rating and review.

Omar Zenhom [11:50]: "On Free Ride Fridays, we give away a lifetime membership to the $100 BA program, showing you how to become a better entrepreneur, 100% guaranteed. Just leave us an Apple Podcast rating and review and you enter our weekly random draw a call Free Ride Friday."

Winner Announcement:

Omar Zenhom [13:00]: "Today's winner is Tyler Jeffcoat. Tyler says very nice show. Five stars. Thank you for the show. Short and sweet from Tyler. Thank you so much for the review."

Listeners are encouraged to participate by leaving reviews to increase their chances of winning valuable resources to enhance their entrepreneurial journey.

Conclusion

Timestamp: [12:30]

Omar wraps up the episode by reiterating the importance of building a business intentionally, focusing on solutions that address significant pain points, maintaining healthy profit margins, and maximizing customer lifetime value.

Omar Zenhom [13:10]: "The beauty of having a business is you get to create whatever you want. It's your own world. So you might as well create something that's easier to run, that makes your life easier, that makes the business easier, that makes it more enjoyable. Don't create something you're going to hate, okay?"

By incorporating these three foundational elements, entrepreneurs can create businesses that are not only profitable but also sustainable and enjoyable to manage.

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Key Takeaways

1. Address Immediate Needs: Focus on solving urgent problems for your customers to ensure higher demand and easier sales.

2. Maintain Healthy Margins: Strive for profit margins of at least 20%, with higher margins providing greater flexibility and resilience.

3. Maximize Customer Lifetime Value: Develop strategies to encourage repeat business, reducing the reliance on constantly acquiring new customers.

Notable Quotes

• Omar Zenhom [02:15]: "It's better for you to sell a drug than a vitamin."

• Omar Zenhom [05:30]: "Margins solve a lot of problems."

• Omar Zenhom [08:00]: "The total amount of money that people spend during their lifetime with you is high."

• Omar Zenhom [13:10]: "Don't create something you're going to hate."

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Resources Mentioned

• Omar Zenhom's Company: Webinar Ninja
• $100 MBA Program: 100mba.net
• LinkedIn Ads Promotion: Encourages targeting specific professional demographics with a $100 credit.
• Ramp Expense Solution: Promotes streamlined expense submissions via texting at ramp.com

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This episode of The $100 MBA Show offers invaluable insights for entrepreneurs aiming to streamline their business operations, enhance profitability, and build lasting relationships with customers. By implementing Omar Zenhom's strategies, business owners can create more efficient and resilient enterprises.

Transcript

[LinkedIn Advertiser]

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[Omar Zenhom]

Yay. Free your team from expense reports today. Switch your business to ramp.com hey o. Welcome to the $100 MBA show. Because your business is not going to get better by itself. It needs you. That's why we deliver practical business lessons. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started back in 2014. And today is Free Ride Friday. On Free Ride Fridays, we give away a lifetime membership to the $100 BA program, showing you how to become a better entrepreneur, 100% guaranteed. Just leave us an Apple Podcast rating and review and you enter our weekly random draw a call Free Ride Friday. Listen in on Friday just like right now to see if you won. It's that simple. We announce this week's winner a little bit later in the episode. In today's episode, you will learn what are the three things that make your business way easier. These are three aspects, three traits of a business that if you have them, it makes your life so much easier. Trust me, I've been doing this for 20 years. I've run several kinds of businesses and anytime I had a business that didn't have at least one of these traits, it was really, really difficult. It was more difficult than it should be. So if you want to make your life easier, if you want to make business funner, more exciting, more profitable, then you're going to love this episode. So let's get into it. Let's get down to business. So three things that I have learned that make your business way easier than without them. Here they are. The first one is going to need a little bit of explanation, but it's basically, it's better for you to sell a drug than a vitamin. Better for you to help people that are in pain, that need a cure to that pain than for you to try to sell something that's going to prevent them from having the problem in the first place. Let me give you some examples. In the beauty and fitness industry, cosmetic surgery, liposuction, this is a drug. This is kind of just solving the problem as soon as possible. Done and dusted a vitamin is more like getting a personal trainer. Working out hard work takes a long time. It's preventative more than anything else. Of course it can get somebody in shape. When it comes to business, people have a problem with hitting a certain threshold of revenue, let's say, like they have a hard time getting to a million dollars a year. People want the solution to this problem. If you offer it, they're going to be willing to buy. It's going to be easy for you to sell a product like this because they're in pain. But say, for example, selling an HR software or incentive package to employees in a company, trying to sell this to the founder of the company, this is a good idea and it can help them in the long term have a healthy culture in their company. But it's not easy to sell because it's not a dire need. They're not in pain, things are kind of fine and things are okay. This would be nice to have and I'm sure it's good in the long term. But right now I'm looking to make more money. So if you can find a way to solve painful problems for your customers, it's going to be a whole lot easier for you to sell those products or services that offering. People are in pain, they want a solution, they want to be out of pain. Bruce Lee's wise words is life is all about avoiding pain and seeking pleasure. So people are constantly avoiding pain, whether in their business or their life or whatever it might be. So if your product does that, if it helps cure a pain, it makes life so much easier. Trust me, I. I've sold vitamins before. I've sold nice to haves and things that maybe are delightful and beautiful and cute, but really it's not gonna stand the test of time. And it's hard to sell because I could convince people that they want it now. Don't get confused. Don't think that just because it's not a basic need, like survival need, then that it's an actual vitamin that people need to be sold on it. A good example of this is holidays, vacations, right? Everybody needs to take a vacation at some point, regardless of your budget, even if it's just a road trip, even if it's a camping trip. People need to take time off and enjoy life. And if you can provide that, people will buy because they need it. Okay, so the first one is having a business that solves a big pain versus trying to make their life a little bit better with a vitamin or a preventative measure or something that helps them avoid something from happening. The second thing that will make your life a whole lot easier, make your business a whole lot easier is one word. Margins. Fat, thick, large margins. The larger your margins, the more you can reinvest in your business and make your life even easier. When you have thin margins, it's very hard for you to hire great team members that can help run your business, that can actually improve your business because they're talented and they're smarter than you. When you don't have fat margins, you can't reinvest into marketing. If you don't have fat margins, you can't reinvest in the product and make it better or add more products. If you don't have fat margins, you are not reaping the benefits of having a business. You can't get a dividend out of this business. Right. You can't actually enjoy the fruits of your labor. Margins solve a lot of problems. You can have a business with a lot of problems. You might be not doing things perfectly. Maybe there's a few holes in your business plan, but if your margins are thick, it will cover up all those holes. It's very hard to go out of business when your margins are so, so big. Think of big time luxury brands. These brands last forever because they have very big margins. As nice as a pair of Prada shoes are, they're beautiful and they're well made. It doesn't cost them thousands of dollars to produce. It doesn't even cost them hundreds of dollars. So with these thick margins on volume, they're able to really invest in the quality of their product and in their marketing, in their branding and becoming an item that people are wearing to the Oscars. And they're not going anywhere because they can weather any storm with the margins they have. They have a treasure chest of reserves. Margins, margins, margins.

[LinkedIn Advertiser]

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[Jim]

Race the sails. Race the sails.

[Omar Zenhom]

Captain, an unidentified ship is approaching. Over.

[Jim]

Roger, wait. Is that an enterprise sales solution?

[LinkedIn Advertiser]

Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. We'll even give you a $100 credit on your next campaign. Get started today at LinkedIn.com results. Terms and conditions apply.

[Jim]

And we're Back, folks. It looks like Jim from sales just got in from his client lunch and he's got receipts. His next meeting is in two minutes. The team is asking, can he get through his expenses in that time? He's going for it. Is that his phone? He's snapping a pic. He's texting Ramp. Jim is fast, but this is unheard of. That's it. He's done it. It's unbelievable.

[Omar Zenhom]

On ramp expenses are faster than ever. Just submit them with a text. Switch your business to ramp.com. so we said sell a drug, not a vitamin. We talked about how important having thick margins are. And if you're wondering, are my margins large enough? 20% is the minimum. In my opinion, anything higher than that, you're going to start seeing the benefits of the margins, because 20% is just making sure you have a little bit of wiggle room just in case you have a tough month or tough year. You got 30%. Now you're talking 40, 50, 60. You're building an empire. The third thing that you want to have in your business to make it a whole lot easier is high lifetime value. What does this mean? This means that the total amount of money that people spend during their lifetime with you is high. It doesn't mean that the actual price of your products have to be expensive, but it means that the total amount of money that a typical customer would spend or average customer would spend is a lot. A good example of this, again, is Disney. We talked about Disney before. Disney has an incredibly high lifetime value per customer. They're going to movies, they're buying merchandise. People are going to their theme parks and spending money year after year. And by the way, all this is reoccurring money, meaning that every time they release a new movie, the same people that love Disney go and spend money on watching that movie. Every time that movie comes out, it comes with merchandise. And they buy toys and lunch boxes and accessories and costumes with those characters. Every time they want to go on a holiday, the kids are screaming Disney World, Disneyland, whatever it might be. So the lifetime value of each customer, meaning how much money they spend with Disney, adds up to a lot of money. So does your business have lots of ways through the lifetime of your company or your business to continue to buy your products and services? Great example of this, again, is Amazon. People buy Amazon Prime. People go and buy books on Amazon and they buy paper towels. And they do this over and over and over. Same thing with Uber. People buying Uber Eats or maybe getting an Uber ride to the airport every time they Get a ride or need a ride throughout their life, they're ordering an Uber. Car manufacturers ever wonder why car manufacturers create all these different models? Why does Honda have the Camry and the Corolla and the Yaris? Why don't they just make two or three high end cars? Well, because they know that if they can get somebody in when they start driving and they can actually meet that price point and say, hey, your first car is a Toyota, people are nostalgic and they'll come back to Toyota. They come back to what they know they'll continue to buy from Toyota over and over. Even the luxury brands are doing this now. If you look at BMW back in the day, they used to have only high end cars and now they're having all these entry level cars because they want to get people into a BMW earlier in the buyer cycle. So what about your business? What about your products and services? Is there a built in way for them to keep coming back for more and more of what you have to offer? Whether they run out and they need more or they want to continue to improve, or you're solving different problems for them in their life or business? Increasing the average lifetime value of each customer makes your life so much easier because you don't have to go out and get new customers constantly, right? When a customer just buys one thing and never buys again or buys once at a low margin or a low price, you're constantly hunting for the next customer to replace them. But if you know every time you get a customer, the lifetime value of that customer is really high. Let's say for example, they spend $10,000 with you in their lifetime. You know that you can actually spend a lot of money to acquire that customer. You're going to spend $1,000 to acquire this customer and you can still make a 10x return. That's why high lifetime value makes your business so much easier. Thanks so much for listening to the $100 MBA show. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's and the winner is Tyler Jeffcoat. Tyler says very nice show. Five stars. Thank you for the show. Short and sweet from Tyler. Thank you so much for the review. Your mission is to email me over at omar100mba.net so I can hook you up with the lifetime membership through the $100 MBA program. Our six part course on how to become a better entrepreneur. 100% guaranteed over at 100 MBA net. If you want to win a free ride, just Leave us an Apple Podcast rating and review and you enter our weekly random draw we call Freeride Friday. Listen in on Friday just like right now, to see if you want. It's that easy. Before I go, I want to leave you with this. The beauty of having a business is you get to create whatever you want. It's your own world. So you might as well create something that's easier to run, that makes your life easier, that makes the business easier, that makes it more enjoyable. Don't create something you're going to hate, okay? Be intentional about how you create your business, the products you offer, how you offer them. This is why I thought this episode was so important, is because if you have these in mind, you can start thinking, hey, how can I pivot, change, improve my business so that it's a whole lot easier to run? Thanks so much for listening. I'll check you on Monday's episode. I'll see you then. Take care.

[Jim]

And we're back, folks. It looks like Jim from sales just got in from his client lunch and he's got receipts. His next meeting is in two minutes. The team is asking, can he get through his expenses in that time? He's going for it. Is that his phone? He's snapping a pick. He's texting round. Jim is fast, but this is unheard of. That's it. He's done it. It's unbelievable.

[Omar Zenhom]

On ramp, expenses are faster than ever. Just submit them with a text. Switch your business to ramp. Com.