Helping A Failing Business Owner Fix His Business | Ep 870

Summary

Podcast Summary: Helping a Failing Business Owner Fix His Business | Ep 870

Title: Helping A Failing Business Owner Fix His Business
Host: Alex Hormozi
Release Date: April 14, 2025
Podcast: The Game with Alex Hormozi

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Introduction: Understanding the Crisis

In Episode 870 of The Game with Alex Hormozi, host Alex Ramosi engages in a candid conversation with Alexio Mar, a legal attorney specializing in services for musicians. Alexio faces significant financial challenges, currently losing $100,000 with only six months of cash reserves remaining before his business potentially folds.

Notable Quote:

[00:25] Alexio Mar: "Our revenue for the last 12 months has been 300,000 profit negative. So we're losing money."

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Current Business Overview

Alexio outlines the structure of his business, which comprises three main units:

1. Services: The profitable segment, generating $131,000 in revenue with a $10,000 profit.
2. Education: Matching the services' revenue at $131,000, but contributing to the overall loss when combined.
3. Software: Contributing approximately $40,000 in revenue but adding to the financial strain.

Key Insights:

• The business is currently operating at a net loss of $100,000.
• The Services and Education units are underperforming when combined with the Software segment.

Notable Quote:

[00:38] Alex Ramosi: "You're like, I could have done nothing and I would have just had zero at the end of the year instead of working all year and then being worse off."

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Customer Acquisition Strategies

Alexio explains his current methods for attracting customers:

• YouTube Content: With 90,000 subscribers, YouTube serves as the primary platform, driving most of the traffic.
• Instagram Engagement: Many YouTube viewers transition to Instagram, leading to direct messages (DMs) that convert into sales.
• Website Traffic: Approximately 7,000 visitors generate around 150 leads monthly through free course sign-ups.

Notable Quotes:

[02:08] Alexio Mar: "Yeah."

[02:58] Alexio Mar: "So we don't have that number. We know that from the website. We generate about 7,000 visitors."

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Sales Process Breakdown

The sales funnel operates as follows:

1. Content Creation: Engaging YouTube videos attract subscribers.
2. Lead Generation: Visitors opt-in for free courses via the website.
3. Nurturing: Subscribers receive emails aimed at converting them into paying customers.
4. Sales Conversion: About 5.4% conversion rate, translating to 9 out of 150 leads purchasing the main course at $500 with an additional $500 upsell for monthly Q&A sessions.

Notable Quote:

[17:17] Alex Ramosi: "I'm going to give you a hint. It's more than 250. So hopefully the price is right with what you're going to charge."

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Challenges with the Software Unit

The Software segment is a significant concern:

• Revenue: Generates $40,000 annually.
• Costs: Operating at $7,000 monthly due to staffing cuts.
• Value Proposition Issues: Customers often download contracts and leave, leading to high churn rates.
• Potential VC Interest: Some B2B traction, but uncertainty remains about scalability and profitability.

Notable Quote:

[06:25] Alexio Mar: "It's a VC story. So if you want a horror story."

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Strategic Recommendations for Business Optimization

Alex Ramosi proposes a comprehensive strategy to pivot the business towards profitability:

1. Focus on Services:

   • Shift all customer acquisition efforts through Instagram DMs.
   • Eliminate reliance on the website for sales, redirecting traffic to direct messaging.
   • Qualify leads based on income, need, and urgency before scheduling sales calls.

2. Revamp Pricing Strategy:

   • Transition from hourly rates to outcome-based pricing to align incentives.
   • Increase the basic service package to $5,800 with an optional percentage commission on deals closed.

3. Enhance Sales Funnel:

   • Embed multiple Calls to Action (CTAs) within YouTube content to drive traffic to Instagram.
   • Implement automated DM responses to qualify and convert leads efficiently.
   • Develop a Video Sales Letter (VSL) to prepare leads before the sales call, ensuring better conversion rates.

4. Streamline Operations:

   • Potentially discontinue the Software unit to cut losses.
   • Allocate resources to scale the Services unit, leveraging existing demand.

Notable Quote:

[11:28] Alex Ramosi: "If you lose a negative, it's a positive. So, okay, so in a world hypothetically where you just ended the software tomorrow and then you have the education and services, what is required for you to maintain the education work wise per week?"

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Implementing the New Strategy

The conversation details actionable steps to implement the recommended strategy:

• Redirect All CTAs: Pin CTAs on YouTube videos to direct users to Instagram DMs.
• Automate Lead Qualification: Prompt new Instagram followers with questions to identify potential leads.
• Upgrade Pricing Models: Introduce higher-priced packages to ensure profitability with each sale.
• Utilize Existing Resources: Leverage the current followers and community for sustained growth without additional marketing expenditures.

Notable Quote:

[27:06] Alex Ramosi: "We're going from spraying the traffic all over place into places that lose money, to pointing three different places to the one place that makes money and doing more of what already works."

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Identifying and Addressing Business Mistakes

Alex Ramosi highlights six common mistakes that Alexio's business is currently making, categorizing most in red as critical issues:

1. Overexpansion: Managing multiple business units without adequate focus.
2. Underpricing: Misaligned pricing strategies leading to insufficient revenue.
3. Single Product Focus: Lack of a clear, dominant product offering.
4. Compensation Issues: Potential mismanagement of compensation structures.
5. Lack of Focus on Profitability: Neglecting to prioritize profitable segments over less profitable ones.

Notable Quote:

[31:07] Alexio Mar: "So we're getting Spanish for lawyer. Yeah, you're doing it right. So I'm giving you a little Puerto Rican Spanish there."

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Scaling and Future Growth

To ensure sustainable growth, the following steps are emphasized:

• Focus on Core Services: Prioritize the profitable services unit to stabilize finances.
• Team Expansion: Hire additional lawyers and support staff to handle increased demand.
• Maximize Revenue Streams: Increase client acquisition and conversion rates to generate substantial monthly revenue.
• Long-Term Investments: Utilize profits to reinvest in marketing and operational efficiencies.

Notable Quote:

[35:37] Alex Ramosi: "People say that, but let's imagine we have $100 of revenue, all right? To keep this simple, if you have a 20% gross. Sorry, 20% cost, but 80% gross margin business, then it's like, cool."

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Conclusion: Turning the Tide

The episode concludes on a positive note, with Alex Ramosi instilling confidence that by restructuring and focusing on profitable segments, Alexio can not only save his business but also set it on a path to multi-million dollar revenues. The key lies in optimizing current operations, eliminating unprofitable ventures, and leveraging existing customer bases effectively.

Final Takeaway:

[37:52] Alex Ramosi: "You absolutely can be at multiple millions a year. Like no question. Given the fact that you have a 90,000 YouTube following, you have a 23,000 person Instagram following, you have a community of people who love you and are raving fans, you have all of the foundation. So the good news is that all the work that you spent doing over the last however many years was not wasted. You just didn't monetize it well."

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Closing Remarks and Special Offer

Alex Hormozi wraps up the episode by offering listeners a special gift: a Scaling Roadmap that breaks down scaling into ten stages across eight business functions. This comprehensive guide is available for free and can be personalized by visiting acquisition.com/roadmap.

Notable Quote:

[35:55] Alex Ramosi: "So you've got marketing, you've got sales, you got product, you got customer success, you've got it. You got recruiting, HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level."

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End of Summary

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Transcript

[Alex Ramosi]

You are about to watch a conversation between me and Alexio Mar, who's a legal attorney for musicians. The problem is that he's losing money and lots of it. And he only has about six months of cash left before his dream is going to go under. My name is Alex Ramosi on acquisition.com. it's a portfolio of companies that last year did over $250 million in aggregate revenue. And we're going to take all of those findings and help him save his business. Enjoy. Let's do a quick, quick overview. So walk me through the businesses it currently stands right now. What's revenue?

[Alexio Mar]

Our revenue for the last 12 months has been 300,000 profit negative. So we're losing money.

[Alex Ramosi]

Okay. How much we lost?

[Alexio Mar]

100,000.

[Alex Ramosi]

Okay. Minus 100,000.

[Alexio Mar]

Yes.

[Alex Ramosi]

You're like, I could have done nothing and I would have just had zero at the end of the year instead of working all year and then being worse off.

[Alexio Mar]

Heard.

[Alex Ramosi]

All right, what are the business units right now?

[Alexio Mar]

We have services.

[Alex Ramosi]

Okay.

[Alexio Mar]

We have education.

[Alex Ramosi]

Okay. And who do you sell to?

[Alexio Mar]

I sell to artists and entrepreneurs in the Latin music industry.

[Alex Ramosi]

Musicians who are Latin American, who speak Spanish.

[Alexio Mar]

Yeah.

[Alex Ramosi]

Okay. And you sell service. You sell education. Was the last one. Software. What's the revenue breakdown between. Did any of these make money?

[Alexio Mar]

Yeah, the services.

[Alex Ramosi]

So this made money was profitable?

[Alexio Mar]

Yeah, that was profitable.

[Alex Ramosi]

Okay, what was the top line and bottom line here?

[Alexio Mar]

So we made 131,000.

[Alex Ramosi]

Okay.

[Alexio Mar]

And we made about 10k for the. In the last 1012 months in profit.

[Alex Ramosi]

On that because you just didn't lose money on this one, basically. Okay. And then education, 131 as well. Oh, how coincidental. Profit.

[Alexio Mar]

But we lost their, like, most of the money we lost between the two. Okay, so it's between the two because they're under one company.

[Alex Ramosi]

Got it. And so this is 40k. I'm just gonna put this as for the software. And then the money that you lost here was how much in total? I guess 110,000.

[Alexio Mar]

Mm.

[Alex Ramosi]

Okay. Put a little negative smiley face there. Maybe a little tears. There we go. Very sad.

[Alexio Mar]

Okay, More tears.

[Alex Ramosi]

Yeah, more tears. All right, so how are you. How are you getting customers right now? Before we talk about how we're going to fix this, how are you getting customers?

[Alexio Mar]

So we create content on YouTube. We have about 90,000 subscribers.

[Alex Ramosi]

Is that where most like, everybody's coming from?

[Alexio Mar]

Yeah.

[Alex Ramosi]

Okay, so we got YouTube. All right, what else we got then?

[Alexio Mar]

They usually go to our Instagram page from YouTube? Yeah.

[Alex Ramosi]

Okay. Is that the. That's like the call to action in the videos?

[Alexio Mar]

No, the call to action is to go to our website. But a lot of people go to Instagram to just ask questions like, hey, I have this problem, can you help me?

[Alex Ramosi]

Interesting. Okay, got it. So where do the sales come from then?

[Alexio Mar]

The sales comes through DMs, so usually they go to Instagram and they'll ask a question.

[Alex Ramosi]

So the place that you don't intend people to go is where you make your money.

[Alexio Mar]

Yeah, Instagram.

[Alex Ramosi]

And you don't tell people to go there, they just find.

[Alexio Mar]

No, yeah, they just find us.

[Alex Ramosi]

Okay. All right, we'll put a little star next to that. If all the money is coming in from Instagram, how many DMs do you get?

[Alexio Mar]

So we don't have that number. We know that from the website. We generate about 7,000 visitors.

[Alex Ramosi]

Okay.

[Alexio Mar]

And for example, in April, we made 150 leads this far.

[Alex Ramosi]

So 7,000 clicks. Got it. All right, and then that goes into 150. Okay, got it. So you're converting 2%. Okay. Into opt ins.

[Alexio Mar]

Yeah, they're for free course.

[Alex Ramosi]

Okay. They're getting opt in for a free course. Yeah, got it. Okay. And then from there, and then from.

[Alexio Mar]

There, usually we'll try to sell them the course, our main course.

[Alex Ramosi]

How do you try and sell them? Do you like reach out to them? Do you?

[Alexio Mar]

With every video, we usually tell them, hey, and if you want to learn more about this, make sure to enroll in our community. The next step for that, they'll go through the course and receive some nurturing emails.

[Alex Ramosi]

And then from the emails is how they buy. And what are they buying from the emails?

[Alexio Mar]

So right now we're selling about nine.

[Alex Ramosi]

Nine out of the 150.

[Alexio Mar]

Our basic offer is $500, one time fee. So they have access to all of our courses now and forever.

[Alex Ramosi]

Okay.

[Alexio Mar]

And then we have an upsell of another 500.

[Alex Ramosi]

Is that on a funnel or something?

[Alexio Mar]

Yeah, in the same cart.

[Alex Ramosi]

Okay.

[Alexio Mar]

Where they, when they buy the 500, will upsell them to another 500 for monthly Q and A per month. No, just lifetime as well.

[Alex Ramosi]

Forever. Yeah. Nice. Okay. Oh, gosh. Okay. So there's so many, I mean, where there's so many things before we, you know, tear this apart. The good news is I actually think that you'll be able to make significantly more money pretty quickly. So. So this is your education side.

[Alexio Mar]

Yeah.

[Alex Ramosi]

All right. What's the services side?

[Alexio Mar]

So on the same Instagram page, if they want a consultation instead of learning, because they say, I'm not interested in learning. I just want you to do it. Yeah, Want you to do it. We'll then send them to our calendar link to schedule a consultation. And that's $250 for an hour.

[Alex Ramosi]

So you go DM to calendar. Okay. And then you charge before you have the call.

[Alexio Mar]

Yeah, man.

[Alex Ramosi]

Okay. Okay, 250, dude. The good news is there's lots of room for improvement. Okay, great. So you have your calendar, and then you charge 250 per hour and they pay on the calendar to have access. Yes, man. All right. And so that means that you sold somewhere in the neighborhood of 600 or 630, something like, whatever the math is. 131 times 4, that's 400, 520. So 524. So 524 hours is what you were able to sell in services last year. You could get 31,000. Okay.

[Alexio Mar]

Between the consultations. Because usually when they go through the consultation, say, for example, the. In the last three months, we've averaged about nine to 10 calls. So then from there we'll either tell them, do you need a deliverable service? So, for example, registering your trademark or business formation. Those are three out of the 10 you can say. And then another three are ongoing legal services.

[Alex Ramosi]

Okay, and what other business do you have? Let's talk about that.

[Alexio Mar]

So the other business is the software.

[Alex Ramosi]

Because you're like, you know, I'm not losing money, so I should. I am losing money. Excuse me. So I'm going to. I'm going to spread my attention even more. Yeah, okay.

[Alexio Mar]

So we're like, there's a story behind that.

[Alex Ramosi]

I know, I know, I know.

[Alexio Mar]

It's a VC story. So if you want a horror story.

[Alex Ramosi]

I can give you that. We'll get into it, I'm sure. All right, so there's a software company. Okay, so let's walk through that.

[Alexio Mar]

So the software is Instagram.

[Alex Ramosi]

Where's coming from?

[Alexio Mar]

It's the same thing. Usually they'll say, I don't have $250. I just want contracts.

[Alex Ramosi]

Okay.

[Alexio Mar]

And we'll tell them, well, you can access, you know, all of our contract templates inside our software, so you can pay for that.

[Alex Ramosi]

Okay.

[Alexio Mar]

And that's what happens right now.

[Alex Ramosi]

We're getting so via Instagram. You just send those people a. Not a calendar link. And you don't send them to the site. You send them to.

[Alexio Mar]

To our web, to our software website.

[Alex Ramosi]

Which is a different website. And then they just check out on.

[Alexio Mar]

That page, they start a free. We had a Freemium. Now we're using free trial.

[Alex Ramosi]

Okay, and what's the membership price?

[Alexio Mar]

Right now is a thousand per year.

[Alex Ramosi]

And that's what. So it goes straight to 1000 per year is what you were billing?

[Alexio Mar]

Yes. We also have a monthly version.

[Alex Ramosi]

They were like, I can't afford $250. And you're like, yes, I pay $1,000.

[Alexio Mar]

A year before we have $500 per year. So it was easier. The problem is that the value proposition at first was, well, pay us and we give you the contracts. But learning that people were churning because once they have the contract, they'll download it and just go away.

[Alex Ramosi]

We have a couple of decisions that we have to make. Is there any reason that you just don't sell services and make money sales?

[Alexio Mar]

Well, the reality is we started selling services back in 2019. So in 2021, people, we got a lot of demand. I couldn't keep up. I started selling courses so they could, you know, learn about how to do them themselves. And then after that, and also contract templates, and then the education side just, you know, we started making them same amount of money.

[Alex Ramosi]

And education going to be an important one for you.

[Alexio Mar]

Yeah.

[Alex Ramosi]

All right. So actually, you know what? I'm going to show you it on my logo. Two most important concepts in business, supply and demand and leverage. So if supply is low and demand is high, what happens to price?

[Alexio Mar]

It goes up.

[Alex Ramosi]

Is that what happened?

[Alexio Mar]

Yeah, we started doing that. Yes.

[Alex Ramosi]

But then you created this other thing that was much cheaper rather than just saying, I don't have enough supply, pay me more.

[Alexio Mar]

Right.

[Alex Ramosi]

All right.

[Alexio Mar]

We wanted to help more people instead of just.

[Alex Ramosi]

Yeah, but the thing is, is that a long enough time horizon, you'll have no one if we don't make this business profitable, right?

[Alexio Mar]

Yes.

[Alex Ramosi]

So, okay, tell me why we can't shut down the education and software so that we can just do services and then we can fix the service business to make it make money.

[Alexio Mar]

Yeah. So the educational side, we already have over 800 people.

[Alex Ramosi]

They all bought, like, lifetime everything. Lifetime everything.

[Alexio Mar]

Lifetime everything. The thing with the education is that it's part of. We are giving back to the community, and nobody else is doing this. So every time, thanks to the education efforts, we are traveling the world and teaching other people in Guatemala, in the Dominican Republic, in Spain, how the music business works. Because in those places, our content is the university's content. So it's an impact project. Right. So that is why the education, it would be very difficult for us to shut down. And the education, without the Software is not losing money. It's the software that actually.

[Alex Ramosi]

Okay, so when we did this breakdown how you said the education loses money. So how much money does the education make if you don't have the software?

[Alexio Mar]

In reality, the education would be a break even.

[Alex Ramosi]

Okay.

[Alexio Mar]

That whole money that we're losing.

[Alex Ramosi]

Zero.

[Alexio Mar]

Yeah.

[Alex Ramosi]

You said this is 110,000 of losses. So that means the software costs you 150,000 a year and makes you 40.

[Alexio Mar]

Yes.

[Alex Ramosi]

Okay.

[Alexio Mar]

You could say that.

[Alex Ramosi]

So why can't we be done with the software?

[Alexio Mar]

So the software right now, there's not a specific reason we can shut it down. We, we've seen traction on the B2B side of companies in the music industry that are interested in using our software because their clients, like big companies now need a music contract software to manage their documents. So they play there for us.

[Alex Ramosi]

So what the software?

[Alexio Mar]

Software. But that is something that.

[Alex Ramosi]

How much it costs you to develop the software?

[Alexio Mar]

Right now it's burning 7k a month because we cut every, every, you know, every employee before.

[Alex Ramosi]

How likely is it, do you think that you're going to sell the software?

[Alexio Mar]

I'm not sure. And the other thing is the software actually right now the way we are seeing it grow is by bundling services with software.

[Alex Ramosi]

What's obvious is the service is the thing that everyone needs and then we just have like this other stuff that we did to be cute. Where do you want to grow from here? What do you want to have happen?

[Alexio Mar]

The thing that we need is to be profitable.

[Alex Ramosi]

Okay. That we can solve very easily. That's the good news. Yeah, but it will just be painful. Yeah, but it's good pain.

[Alexio Mar]

Growing pains.

[Alex Ramosi]

Yeah, call them growing pains. If you lose a negative, it's a positive. So, okay, so in a world hypothetically where you just ended the software tomorrow and then you have the education and services, what is required for you to maintain the education work wise per week?

[Alexio Mar]

Right now it's only one live stream with the community.

[Alex Ramosi]

Per month or per month?

[Alexio Mar]

Yeah, that's the only thing. That's it.

[Alex Ramosi]

Okay, great. Can we just shut down the software?

[Alexio Mar]

We can do that.

[Alex Ramosi]

Wow, that was easy. Okay, great. I love this for us. Okay, so we're going to X this out. Let's use a red. Let's keep this, you know, keep this, keep this on brand here. So this is a red. I'm going to say that this isn't really a business. I'm going to say this is a charity. You might even want to operate like a nonprofit because it doesn't make any profit anyways. And you're, you're very, you know, kind of impact driven and whatnot. So then what's the cost on the 131,000 in services?

[Alexio Mar]

The cost would be the associate who is delivering the services. Right now we have a rev share model, but we also have because the services, for example, this year we are already at 150k.

[Alex Ramosi]

Okay, great.

[Alexio Mar]

Because now, thanks to the education, the next generation of artists are looking towards us to represent them. In deal Close. In deal. Right. So from there we take a commission from the deal.

[Alex Ramosi]

Okay.

[Alexio Mar]

So for example, we've recently closed several deals that are above 500,000 for the artist.

[Alex Ramosi]

Amazing.

[Alexio Mar]

And we take 5% from those.

[Alex Ramosi]

Okay, so do you guys act as an agent for that?

[Alexio Mar]

They're no, they're lawyers. Representative. Those are legal fees that the label will also pay us. The music industry is a commission, is heavily commission based. So they get an advance.

[Alex Ramosi]

Yeah.

[Alexio Mar]

And the label, will the services strike.

[Alex Ramosi]

Again in making money?

[Alexio Mar]

Yeah.

[Alex Ramosi]

Wonderful. So what I want to do is reimagine the business in the simplest format possible that's organized to make you money both short and long term. Is that okay?

[Alexio Mar]

Yes.

[Alex Ramosi]

All right, so I'm going to draw it across the top here and we're going to draw it in green because this is the money path. All right, it's the money path. You keep your YouTube where it is. Now what I want you to do is I want you to have four different places that you're going to embed calls to action. Alright? So number one is at the 30% mark of every video, I want you to make a quick 30 second, like, hey, by the way, you know, if you want us to help you out with your music business right now, just DM me on Instagram and I'd love to help you out. This is my handle. Okay. Number two is the description. All right. And you want to make sure that it's above the fold. So you know, below this video right now you'll probably see two links. One is for people who are trying to start business, which they go to school and if you already have a business and you're trying to scale and you're like, you know, a million bucks a year or more. You know, 500,000 a year or more or $10 million a year or more, you can go to acquisition.com and you know, schedule, call our team and see if we can help you out. Right. So we have a description now on top of that pinned comment. So you can own that real estate. We Also have your profile on YouTube, which gets traffic as well. And so those are four places that we can actually just put. And all of the CTAs here are DM me on Instagram. Why are we doing that? Because it already works, so I'm not trying to break it. All right, so now everything's going to Instagram. So instead of having the site. We don't even care about the site. Who cares? Doesn't matter. So we're going to DM me on Instagram and then from there what I want you to do is I want you to have them book a call without paying. And then what we're going to do is we're going to sell them and what we're going to do is we're going to sell them a package and we're going to sell it to the outcome. And you're going to say, hey, a lot of lawyers like to charge by the hour. The reason that we don't do that model is because it disincentivizes us. Basically. Our incentives are adverse to you. When we do it by the hour, we're incentivized to take as long as humanly possible. So it means it costs you more and it takes longer. That sucks. So what we're going to do is we're just going to charge you for the outcome, period. That's it. How's that sound?

[Alexio Mar]

Yeah, so we have to qualify them before they can go to the landing page. Because you know, there's 10 million artists on Spotify and only a thousand are professional. Maybe 2,000 are professional. So do you see that? The landing page?

[Alex Ramosi]

Yeah, but they all eat, they all have cars, they all have cell phones, they all pay mortgages and rent. We're not, we don't. You sell to a lot of up and comers and newcomers. They're going to use. Just like you have been spending your education money that you make money on this dream that you have and losing money. We're going to have them do the same thing. They're going to take their job money and spend it on their dream and hopefully they make it. But our goal isn't to try and figure out who's going to make it. Our job is to enable the opportunity. So the pre qualification that I would have here is just income, not like. And if you want you can add their Spotify if you think that matters, you know, in the qualification. But fundamentally, yeah, okay, that's what I figured.

[Alexio Mar]

So yeah, because if you. I've worked with different artists that there's Spotify for example. I have a Spotify. I'm a guitar player and I have 15,000 monthly listeners. But you wouldn't take that to determine whether I can play you or not. So income, but we are currently doing it that way. Yeah, you're right. Yeah, you're right.

[Alex Ramosi]

So what we're going to do is income, but we're going to do through budget authority. Need timing. That's the big four. Right. So do you have the money? Is there somebody else who needs to be on the phone? Your grandmother, your dog, your agent, whatever, need. So how important is this to you? And then timing. If we were to get you set up, how quickly would you want us to make this. Get this trademark or get this thing filed? Right. You want to take the people who have the money and want to do it now and are able to make this decision. That's the qualification. Now, the big. The big question is, what are we going to charge?

[Alexio Mar]

So you're asking me?

[Alex Ramosi]

Yeah, I'm going to give you a hint. It's more than 250. So hopefully the price is right with what you're going to charge.

[Alexio Mar]

So the average ticket on the service size between the ongoing one time and the consultation is about 1500. That's the average.

[Alex Ramosi]

Okay. And a lot of that is from people just getting hourly charged.

[Alexio Mar]

It's. No, it's basically the. The ongoing right now is about. The lower ticket is about 1,000 per month.

[Alex Ramosi]

Okay.

[Alexio Mar]

Because we are not charging them by the hour like a traditional lawyer. So. So. And this is 750 usually. So you can see that if you combine the other. Yeah, they usually get to.

[Alex Ramosi]

So this is what I want you to do. I would love you to charge 5,000. I feel like that's going to be a stretch for you emotionally. So how about we start at three?

[Alexio Mar]

Yeah.

[Alex Ramosi]

Can you do five?

[Alexio Mar]

We can do five.

[Alex Ramosi]

Can you emotionally do five?

[Alexio Mar]

Yeah, we're selling right now three months for 4,000. So.

[Alex Ramosi]

Great. So, well then, shoot, then we might as well do six. Six is the same as five. You know what? I'll meet you in the middle. 5800.

[Alexio Mar]

Okay.

[Alex Ramosi]

All right. This is where we're going to sell. That's your retainer. Right. So either we can sell. So, okay, this is a question for you. I do. I would prefer to sell the outcome if it's just a clear outcome that they're going for. Or you can sell a retainer, right. And just say like, it's 5,800. I'll draw from that. Whatever. I prefer outcome personally. Because I don't want you to be tied to hourly if you can, if you can afford not to. You good with that?

[Alexio Mar]

Yeah. We can move towards the outcome if it's the type of deal that we want to work with.

[Alex Ramosi]

Like, for example, when I say outcome, I mean like the contracts or that kind of thing. Like when it's the commission based stuff, I want the 5,800 plus the percentage.

[Alexio Mar]

That's how we're doing it right now.

[Alex Ramosi]

Good. We just need to raise the prices. And we also need to organize the business so that we're optimizing for this outcome, not three different outcomes and confusing everybody.

[Alexio Mar]

Right.

[Alex Ramosi]

Okay. Now if on the sales call someone is unqualified. So this depends on your deal flow, but I'm assuming that you've got time to take calls.

[Alexio Mar]

Yeah, because my time is spread around trying to understand this.

[Alex Ramosi]

I'm gonna help you, man. All right, we're good. This will work. When you have these people that are coming the call, what I want to add is before we have to sell the outcome. So this is kind of like on the call right here beforehand we're gonna add a vsl. Okay, so you familiar with the VSL video sales letter?

[Alexio Mar]

Do you have one right now for the course? Yes.

[Alex Ramosi]

Okay, so instead I just need you to make 17 minutes. You know, five to seven minutes doesn't need to be long. Just explaining how you do things in your process.

[Alexio Mar]

Okay.

[Alex Ramosi]

And the other people that you've worked with, some of the successful outcomes, reviews, things like that. And then also I would set expectations, which is like on this call we're gonna have one of two outcomes. Either you want more personalized attention and we'll, you know, give you the outcome that you want, or if you're like just starting out, we do have an education thing that if you can't afford our actual services, you can do it on your own. Yeah. Now the thing is, is that, you know what, I don't even know if I like that. I'm deleting. I'm deleting that. Okay, so the VSL is going to sell the services. That's it. When you get on the call, if the person lied about their income or lied about their qualifications, which does happen, then you can immediately triage them and say, so triage this. And like you split and say, you know what, you can tell like this isn't going to be a services sale for $6,000 plus a percentage. Instead it's going to be, you know, a one time education product sale. And then you can sell that now, right now you have this 500 then 500. I'm going to wager that you don't need. Like if you're getting people to buy this on a checkout page, typically you can triple the price with a phone call of the same thing. Okay, so you could probably sell for three grand. So if we're charging six here, I would say probably somewhere in the neighborhood of like 2 to 3k is the right price point for the education downsell. But the only purpose of that is just so that you can maximize your time on the call so that you can still kind of have something. And if you need to do a payment plan or whatever, you know what I mean? At that point you're just trying to liquidate your time. But fundamentally, if we were to do this, let's walk through what it actually looks like. Now you have your YouTube videos. Now all of the calls to action. The way I see my YouTube is I have, you know, 2000 video, whatever how many videos I have. And each of them are basically like little mini ads that are always running. And underneath of the video or the quality ad, I have my actual call to action. And I can, I have this surface area across the whole Internet that I can change and redirect all of that traffic from all of my videos to wherever I want. Then you can go back and on your biggest videos, go get pinned comments that you know that have the same call to action. Nick is some people just read the comments, change your profile and then going forward in your videos, you'll put the CTA towards DMing on Instagram. We're going to completely ignore the site since that's where all of your, all of your sales are happening on dm. So let's just push everyone to dm. Now how many followers per month are you getting?

[Alexio Mar]

I'm getting about 800 perfect new followers.

[Alex Ramosi]

Guess what we're gonna do? Okay, so this is thing one, thing two is that for every new follower you get, I want you to DM them and say, are you here for free content or entertainment? Whatever entertainment. Or do you want help? And then every person who says they want help is a lead. So right now, if you think about that, you got 800 new leads a month that you can work. Realistically, you close 5% of those. I mean it's 40 more sales a month at 6K, there's 240. That's just from that not including your existing volume, which we're now going to redirect everything to the most efficient Monetization model. What stops you from doing this?

[Alexio Mar]

Nothing.

[Alex Ramosi]

I think this will make you a lot and I think this will save your business and I think this will also make you very rich.

[Alexio Mar]

So we can help more people.

[Alex Ramosi]

Yeah, because you can't help people if you're broke. The thing is, is that the education, I think long term. Long, long term, you might end up just giving it away for free because people are coming from that group as well, I'm assuming. And then they buy your services. And that's why I'm not trying to attack this because this is long term lead nurture for you. So where is this hosted?

[Alexio Mar]

Kajabi.

[Alex Ramosi]

Kajabi. Well, there's your first mistake. I knew it. No, but if you, if you were to do it on school, there's a couple of benefits. The biggest one is that we have more active users than any other group platform and community platforms. So like you'll probably just get people coming into your community anyways. But you can also, every single person who gets into the group, you can offer a free onboarding call as a part, as a benefit of being in the community. And then you can use those as setting calls to either triage them to services or just refer them to free stuff.

[Alexio Mar]

Right. Like instead of coming from YouTube, they would come from the school.

[Alex Ramosi]

And then think about it like this, this is actually a really good visual. So your old way, let's do this in red because Michael loves colors.

[Alexio Mar]

Love colors too, Michael.

[Alex Ramosi]

So old way was this, you had one source of eyeballs, right. And you were splitting it between three different places. The new way is you now have three different sources of eyeballs and, and you're forcing all of them through the most efficient monetization vehicle because you've got your YouTube, you've got your Instagram and then you've got your group. And all three of those are pushing to the one thing that we know makes you the most money, that also people want. And we're pricing it in a way that actually makes you money.

[Alexio Mar]

And the question would be, so we would create from the Instagram, from the DM or the WhatsApp, we would create Calendar link. They'll go there, they'll get the, the initial consultation for free is going to.

[Alex Ramosi]

Be, let's be clear, it's not a, it's not a consultation, it's a sales call.

[Alexio Mar]

Yeah, it's a sales call.

[Alex Ramosi]

Yes.

[Alexio Mar]

Then from there that once they schedule the consultant the call, they go to a VSL to prepare them.

[Alex Ramosi]

Yes. Yeah. Before the call.

[Alexio Mar]

Before the call. Yeah. To prepare them and their expectations and everything. Then on the sales call, we'll identify whether we can sell them our services or if not down sell them to our course.

[Alex Ramosi]

Exactly. Right.

[Alexio Mar]

So our core offer is the results, Right? The outcome. That's our core offer.

[Alex Ramosi]

Yeah.

[Alexio Mar]

And that outcome, it's based on your specific need and our ability to fulfill that. But we're not saying when people are coming to us because we're lawyers in this specific niche. We don't have to talk about specific outcomes.

[Alex Ramosi]

No, not like you getting signed with a record label. No, no. We're going to do the work to prepare you for that. You're still gonna have to do that on your own. And then when that deal comes, we ask for 5%. And the reason we do that is because it makes it affordable for you at 5,800. If we didn't charge the percentage and if you're like, oh, I don't want to pay that percentage, then you can pay us 25,000. So we'll do 25,000 without the percentage or we'll do 5,800 with the percentage.

[Alexio Mar]

Got it, Got it. And then do you think that that.

[Alex Ramosi]

Also gives you a very nice price anchor?

[Alexio Mar]

Yeah, it makes, it makes sense because the percentage right now, the last two deals, the average has been like 40 something K. Okay. And the lead magnet would be the sales call.

[Alex Ramosi]

Yeah, I want to just do this as the easiest, like, was the easiest thing that I can do to immediately fix this business and make it profitable. If we wanted to add something else, we could, but I just don't want to right now.

[Alexio Mar]

Okay.

[Alex Ramosi]

We're going from spraying the traffic all over place into places that lose money, to pointing three different places to the one place that makes money and doing more of what already works. And we're just gonna add a little bit of qualification, add a little vsl, fix the pricing, and then we're also gonna route all the new followers that come there too. So you're gonna have it. You will likely have a lot of opportunities, so you'll likely be taking 8, 10, 12 sales calls a day.

[Alexio Mar]

Okay.

[Alex Ramosi]

Which is a good thing.

[Alexio Mar]

But it's great. And I have three people that can actually do that with me. So if everyone has their own calendar link, as you explain in your book, then. Okay, I have a book on the best selling author in Spanish in this niche.

[Alex Ramosi]

Right.

[Alexio Mar]

How do you. Where do you see that fitting in? Maybe that's the lead magnet, like giving it out for free like you do. Because they usually become super fans like yeah, of course.

[Alex Ramosi]

Yeah.

[Alexio Mar]

Or is that just another.

[Alex Ramosi]

So there's a couple. So there's. I would say like right off the top of my head, there's two places that we could. Like if you wanted to use it now, I would say that you could give it to people who are unqualified. If you don't think you could. Like if you look at somebody's profile and you don't think they look like, I mean, you can probably tell if somebody's not qualified. You could say, hey, it doesn't look like you're ready for our level of services. But because I want to invest in the relationship long term, Here's a copy of my book. I think that would be a very elegant way to not overly complexify what already will work long term. We could start using it as a way that we would drive traffic in the future. And then you can have a call team, call the people who bought the book and then see if they're, you know, they want more help. And then you could basically bring. It would just. We. All we would do is we added another. But right now you have three more than sufficient traffic sources that you were just wildly under monetizing. And we just need to fix that.

[Alexio Mar]

Okay. And the last question would be on the software side.

[Alex Ramosi]

Yeah.

[Alexio Mar]

Because the product roadmap is almost finish entirely with all of the features that the companies are looking for.

[Alex Ramosi]

Yeah.

[Alexio Mar]

If I'm not investing any energies on that, I want to know.

[Alex Ramosi]

I'll believe that when I see it. Okay.

[Alexio Mar]

So if I'm. Suppose I'm not spending energy in a.

[Alex Ramosi]

World that doesn't exist. Yes.

[Alexio Mar]

Yeah. Suppose that in fantasy land, is there a way that we can create like a sunset period where we would say, okay, I'm going to give the team X amount of time to roll out all of the features that these companies that are saying, I want to use it, I'm going to pay for it, 15, $25,000 per year for the software. Is there a way to create that while we're focusing on this?

[Alex Ramosi]

So at the very beginning, you know, I said like, what do you. What do you want? Right. And so we had to fix making this make money because you're going to run out of money.

[Alexio Mar]

Yes.

[Alex Ramosi]

And so we have to solve that. The thing that makes me hesitate with the software is the amount of work. The amount of expertise it takes to make software really work is really high. And so I would be more inclined to say, like, if you have some of these big companies, you might just give them the software or have them just say, like. You're like, hey, instead of 25,000 a year, if you just pay me 100 grand or pay me 200 grand, I'll just give you the whole thing. And that's basically you getting it at cost and saving two years, and then you can focus on this.

[Alexio Mar]

Got it.

[Alex Ramosi]

That's, of course, if you want to make money.

[Alexio Mar]

Of course. No, no, no, I understand. I just want to have, like, the different scenarios.

[Alex Ramosi]

Yeah. I mean, the alternative scenario is that you burn the education, you burn the services to the ground. You go all in on the software, and you need to be able to fund that loss for a while and then actually build it. Right. That doesn't seem like it's a it. That's too more fantasy than reality. Then you learned a ton of lessons, which is fine. Everybody just gets better from learning. And you build a really good business, which I think you have all the makings. You literally have everything in place. They were just organized wrong. That's the good news. It's like, we don't have to build anything. We just have to take what we already had, redirect it through a better monetization vehicle, and that's it. And so this is the first step. We add traffic here as the second step, and then we'll add the book as the third step later. But for now, you just need to step one and step two, we have enough leads to probably fill up your calendar, plus one other person, maybe two. And if you have three people selling full time and you have a $6,000 thing, you could be at $18,000 a day, $30,000 a day, $50,000 a day. And the next problem that's gonna hit you is that you're not gonna have the team to actually deliver on this stuff, which will cross later. But that's what this is gonna do. This is gonna break the business. But you'll be making money. And then we'll take that money that we're making, and then we'll solve the thing that's broken, which is that we're gonna hire more avogados.

[Alexio Mar]

So we're getting Spanish for lawyer. Yeah, you're doing it right. So I'm giving you a little Puerto Rican Spanish there.

[Alex Ramosi]

Puerto Rico.

[Alexio Mar]

So our constraint right now on your framework, on the scaling workshop is demand. Is demand.

[Alex Ramosi]

Yeah.

[Alexio Mar]

Because we're not only starting and stopping, but also we're not directing them through the proper channels.

[Alex Ramosi]

And you were mispriced. So you. So I have my little moniker for the six big mistakes. That small Business owners make. So let's make those in red. And I think you were making almost all of them, which is great.

[Alexio Mar]

The good thing is it's only up from here.

[Alex Ramosi]

Yeah. So you were selling to too many different avatars. So that's number one focus, which is that you had more than one business. So you were hitting that one, you're hitting this one, you weren't. So over expansion, which I will not say that you were wrong. So we put it under focus. I'll give you a neutral on that one.

[Alexio Mar]

Put it there to be aware.

[Alex Ramosi]

Uh huh. Then we have compensation. So it's are you overpaying your people? Which right now I don't get that impression. Underpriced, which you were or mispriced. So you had that one and then this one is single product. So that's when somebody has a front end and a backend. Which I'll say that you had kind of like a half issue. We had the $250, you know, per hour service fee but we didn't have that kind of percentage win rate yet and it wasn't part of a standard offer. So I'll say that you had like a half, a little X, a little mini X. Okay there. But the good news is that these are the mistakes that most small business owners make and it's normal and it's okay. And that's why we're fixing them.

[Alexio Mar]

And the next phase, to have a timeline or at least to be aware of our next phase would be do this until we get to a million per month. Is that your.

[Alex Ramosi]

I don't know if you'll get to a million a month from this. You will certainly make a lot more than you are now. And the next thing that's going to break is you're going to run out of lawyers. So the next issue you're going to run into a supply constraint. I actually think you have probably more demand. Like you will not be able to sell through the demand that you already have without expanding supply. But if we completely utilize your existing supply of, you know, work that you could do at the appropriate price, you could absolutely make this into a multi million dollar per year business.

[Alexio Mar]

Yeah, it's just becoming a law firm, you know, a bigger law firm.

[Alex Ramosi]

Yeah. And a specialized law firm which is good. So you have that niche down. You have a very specific niche. And there's nice thing is that there's a lot of people who want this service and the price point that we're charging is an appropriate price for somebody who's Wanting to make a bet on themselves in their career, you have to make an investment. Just like you do, they have to make an investment, too.

[Alexio Mar]

Yeah. And that number. Is that the $5,000? Is that for any type of outcome?

[Alex Ramosi]

No. I mean, you'll know this better than I do, but I just want to make sure that you, you know, the.

[Alexio Mar]

Average ticket, I want to.

[Alex Ramosi]

I want to make sure that I'm running at at least 80% gross margins for service, minimum. So your actual cost. So your actual cost on this should be. Let's see, it should be less than. Call it like 1200 bucks or let's say 1100. So if you're less than $1100 in terms of total cost to deliver that, to deliver that, then you can. Then you charge 5,800. And so I'm guessing your man hours are going to cost you less. I mean, I don't know what you pay your lawyers, but let's say it's a hundred dollars an hour. If it's less than 11 hours to do it, then you're good to go. And if they do it in five, amazing.

[Alexio Mar]

Okay, so if I had the cost, for example, a lawyer cost me X amount per month. Now I know that I need to be making five times more. Five times more, minimum. Okay?

[Alex Ramosi]

And that may sound crazy to anybody who's listening to this, who doesn't have a business, but let me. Let me show you a visual. So good. So good.

[Alexio Mar]

This is great.

[Alex Ramosi]

People say that, but let's imagine we have $100 of revenue, all right? To keep this simple, if you have a 20% gross. Sorry, 20% cost, but 80% gross margin business, then it's like, cool. So we already have $20 gone. So we have $80 left. But we're still going to have marketing that we got to spend. We're going to still have admin costs, you know, people who are scheduling and all that stuff. We have sales that we're going to have to pay on top of that. And that's going to be the majority for this business because the labor is going to be here, right. In terms of your cost of goods. And so maybe all of these things cost, you know, 60%, right? So then we still have a 20% margin in the business. But that sounds greedy when you're like, oh, my God, there's 80. It's like, yeah, but we got to do all the other costs out of the 80, and then whatever's left is our profit. Now, hopefully you can run this thing at 30, right? And then you have a 50% margin here, which would be wonderful. And we smile.

[Alexio Mar]

Got it.

[Alex Ramosi]

So all in all, we went from sad face to smiley face. Did it great.

[Alexio Mar]

I was aware that services was the play when we focus on services this year and we're already making way more money. But that was you already the business.

[Alex Ramosi]

Just by focusing on that one thing and that's with still having the distraction. Like you absolutely can be at multiple millions a year. Like no question. Given the fact that you have a 90,000 YouTube following, you have a 23,000 person Instagram following, you have a community of people who love you and are raving fans, you have all of the foundation. So the good news is that all the work that you spent doing over the last however many years was not wasted. You just didn't monetize it well. And the good news is you can't do it now. So no big deal.

[Alexio Mar]

What's the role of, for example, now that we're getting invitations to go and speak to other countries, what do you think about that from the focus side? Is that something for distribution like, because if no other lawyers are doing that, no other lawyers are publishing their books. Is that something that we can use to differentiate from other, particularly in service based businesses?

[Alex Ramosi]

It's a good question. It's a tough call. And the reason for that is that it's a, it's for sure a long term investment to speak on stages and things like that. The thing is, is that you're currently not demand constrained. So you speaking on stages will just generate more demand that you can handle. Let's play it out the other way. If you speak on stages and you take your eye off the ball in the business, you lose. If you focus on the business and you continue to grow the firm, the stages still be there because you'll just be bigger.

[Alexio Mar]

So that is why maybe the counter argument would be if you want us to go to the stage, you have to pay us an amount that's worth it.

[Alex Ramosi]

If you know that you generate three sales a day at $6,000 when you're there and it takes you two days, then your speaking fee is at $36,000 plus travel.

[Alexio Mar]

Exactly. You already have the number because you have it on a day to day basis.

[Alex Ramosi]

Yeah. And also to be fair, the opportunity cost isn't just what you, what money you would have made, but also the focus and the distraction that takes away as well. So there's hard costs and soft costs. The hard cost is you really just won't make these six sales. The soft cost is. What else would you have done in between? And then not had to deal with any of this hassle?

[Alexio Mar]

Perfect.

[Alex Ramosi]

Will you do this?

[Alexio Mar]

Yes.

[Alex Ramosi]

All right. Deal done. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you got customer success, you've got it. You've got recruiting, hr, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30ish pages for each of the stages. Once you enter the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com roadmap R O A D map roadmap.