Going Fastlane Like My Life Depends On It.. (continued)

[mikecarlooch]

20 paying clients currently.

At some point in a new business you realize there are two beasts you face:

1. Getting your first sales

2. Getting profitable

Do not underestimate the time the second may take.

 

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[Black_Dragon43]

20 paying clients currently.

At some point in a new business you realize there are two beasts you face:

1. Getting your first sales

2. Getting profitable

Do not underestimate the time the second may take.

You're not profitable Mike? That's bad. We were profitable from... month 1.

If you're not profitable, you should fix it now, and then worry about getting even more clients. Raise your prices, even if you lose half the clients, if you get a decent profit margin in, that would be great because it gives you cash you can reinvest in the biz to grow even faster. Obviously make sure your new pricing makes financial sense, ie there is ROI in it first for the clients.

Either that, or simply grandfather current clients at existing prices AND LET THEM KNOW OF THIS HUGE FAVOR YOU JUST DID FOR THEM, and start selling new customers at much bigger prices.

 

[mikecarlooch]

You're not profitable Mike? That's bad. We were profitable from... month 1.

If you're not profitable, you should fix it now, and then worry about getting even more clients. Raise your prices, even if you lose half the clients, if you get a decent profit margin in, that would be great because it gives you cash you can reinvest in the biz to grow even faster. Obviously make sure your new pricing makes financial sense, ie there is ROI in it first for the clients.

Well what I'm trying to get my partner to agree to is the following:

We have some clients that pay much more per lead and some that pay less than half of that.

The difference between the two is - high end vs low end. rich vs middle class.

For specific leads, people are willing to pay more.

But my partner's philosophy is that we should be selling to everybody instead of just the affluent clients.

We worked out the math for becoming profitable in what we're doing currently. We are on our way to it.

Basically, the more signups we get the more leads we can sell the more profitable we are.

The amount of testing we've had to do to get to this point has cost us a lot of money, a lot of failure and successes.

Open to advice

 

[Black_Dragon43]

Well what I'm trying to get my partner to agree to is the following:

We have some clients that pay much more per lead and some that pay less than half of that.

The difference between the two is - high end vs low end. rich vs middle class.

For specific leads, people are willing to pay more.

But my partner's philosophy is that we should be selling to everybody instead of just the affluent clients.

We worked out the math for becoming profitable in what we're doing currently. We are on our way to it.

Basically, the more signups we get the more leads we can sell the more profitable we are.

The amount of testing we've had to do to get to this point has cost us a lot of money, a lot of failure and successes.

Open to advice

Okay, don't turn anyone away, but how about orienting your marketing solely towards the affluent clients?

Like you must be able to determine which areas have more affluent clients and focus on those, in each city I suppose.

That way you get to sign up top-tier clients mostly. The only reason why you wouldn't do this is if somehow the top-tier clients are much harder to convert than the brokies.

 

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[mikecarlooch]

Okay, don't turn anyone away, but how about orienting your marketing solely towards the affluent clients?

Like you must be able to determine which areas have more affluent clients and focus on those, in each city I suppose.

That way you get to sign up top-tier clients mostly. The only reason why you wouldn't do this is if somehow the top-tier clients are much harder to convert than the brokies.

They're actually way easier to convert.

And i think instead of our $100 / month we can charge them $200 / month + performance.

They're also way easier to deal with. The brokies have no idea how to work a lead and then come back mad at us because they are trash sales people with no track record.

The affluent (& many of the middle class) are getting great results.

But this sounds like a good strategy. Don't turn anyone down, but tailor marketing toward the affluent & raise prices.

 

[MJ DeMarco]

Congrats Mike on this entire process, it's a win regardless of outcome.

Upgraded to GOLD (a bit late on it!)

The brokies have no idea how to work a lead and then come back mad at us because they are trash sales people with no track record.

LOL, as someone who worked in the lead business for 10 years, this is always the most frustrating as people don't want to follow leads, they want the lead to call them and show up at their office with their wallet open...

Your service didn't work!
Of course it doesn't—I sent you 100 leads, and you followed up on none of them.

 

[Black_Dragon43]

LOL, as someone who worked in the lead business for 10 years, this is always the most frustrating as people don't want to follow leads, they want the lead to call them and show up at their office with their wallet open...

Your service didn't work!
Of course it doesn't—I sent you 100 leads, and you followed up on none of them.

Literarily the most common complaint from people who don't understand our service. You wouldn't believe how sucky at sales your average "business owner" is. I have no idea how some people built the businesses they did, honestly

 

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[mikecarlooch]

Congrats Mike on this entire process, it's a win regardless of outcome.

Thank you MJ! envisioned getting a gold from the second I started this thread.

Our next part of the journey is profitability

We have a huge profit margin on our sales, it cost us probably $20 to generate a lead we sell for 20-30 fold of that. It's just kind of been like a big lab experiment up to this point. Spending money on something that doesn't work, then finding something that does, and exploiting it.

For example we've spent thousands of dollars on things that were just a total bust, and we continue to do things like that until we find massive wins.

The main thing stopping us from being profitable currently is our constant spending on testing things. Our desire to find a massive win that ends up actually eliminating one of our expenses and allowing us to be even more profitable, or allowing us to get our clients better results.

Upgraded to GOLD (a bit late on it!)



LOL, as someone who worked in the lead business for 10 years, this is always the most frustrating as people don't want to follow leads, they want the lead to call them and show up at their office with their wallet open...

Your service didn't work!
Of course it doesn't—I sent you 100 leads, and you followed up on none of them.

It's very refreshing to hear that I'm not the only one. Do you have any advice on dealing with this @MJ DeMarco and @Black_Dragon43 ? Your advice since you've been there would be invaluable for us.

 

[Black_Dragon43]

The main thing stopping us from being profitable currently is our constant spending on testing things.

What are you testing and why? There needs to be a rationale for doing this. Don’t just throw money away on ads to “test”. Or if you do that, you need to reduce budgets, you don’t need to test so aggressively. You already have something that works. Keep riding that until it stops working and experiment with a small budget instead to find some new funnels / future avenues.

Do you have any advice on dealing with this @MJ DeMarco and @Black_Dragon43 ? Your advice since you've been there would be invaluable for us.

You need to set clear expectations in the sales process even if it means turning prospects away. I don’t even try to convert prospects on a sales call anymore — I’d much rather eliminate the ones who are a bad fit from the get-go.

Explain to customers clearly what YOU do and what THEY have to do to get results. That is most important.

 

[mikecarlooch]

What are you testing and why? There needs to be a rationale for doing this. Don’t just throw money away on ads to “test”. Or if you do that, you need to reduce budgets, you don’t need to test so aggressively. You already have something that works. Keep riding that until it stops working and experiment with a small budget instead to find some new funnels / future avenues.


You need to set clear expectations in the sales process even if it means turning prospects away. I don’t even try to convert prospects on a sales call anymore — I’d much rather eliminate the ones who are a bad fit from the get-go.

Explain to customers clearly what YOU do and what THEY have to do to get results. That is most important.

1. Discipline myself and stop spending money
2. Start qualifying potential clients and reject those who aren't promising
3. Focus on the better clients and charge more money.

Implementing all starting today. Get back to you soon with results

 

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[mikecarlooch]

And just like that, we’re profitable. All we had to do was stop spending so much money. Sometimes you just need the right person to come and tell you you’re doing shit wrong in order to set you on the right path. In this case for me it’s @Black_Dragon43

Wow, it feels so good. We’re starting to enjoy some of the fruits of our labor

My business does require my time of course. But just 10 minutes ago I’m at the gym and make a single sale that profits me what a $20 per hour employee would have to work hours for.

I smell the fastlane.

But now is the time to go harder than ever !

 

[Black_Dragon43]

And just like that, we’re profitable. All we had to do was stop spending so much money. Sometimes you just need the right person to come and tell you you’re doing shit wrong in order to set you on the right path. In this case for me it’s @Black_Dragon43

Wow, it feels so good. We’re starting to enjoy some of the fruits of our labor

My business does require my time of course. But just 10 minutes ago I’m at the gym and make a single sale that profits me what a $20 per hour employee would have to work hours for.

I smell the fastlane.

But now is the time to go harder than ever !

Of course – remember, competitors are our friends.

 

[mikecarlooch]

We're starting to get some clients who are doing things like this, introducing us to new people out of nowhere.

@MJ DeMarco following your advice, at what point do you determine that a service is capable of productocracy?

 

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[mikecarlooch]

A client just tried to offer me a full time job for doing what my business provides.

That, is how you get a good job without a degree !

Of course, I said no.

 

[MJ DeMarco]

@MJ DeMarco following your advice, at what point do you determine that a service is capable of productocracy?

Level 1: Referrals.
Level 2: You can continue growing with no advertising because all new business is referral based.

 

[mikecarlooch]

Well well well..

Today I had my first run-in with the commandment of control.

I never thought @MJ DeMarco 's words would come true, and thought i'd be the outlier that beats it, but no no no. The commandment of control will get you.

For us, it was twilio.

Sudden shut down.

It's stopped our operations for now, but it's a good thing. Because now we can find a solution where we have more control.

Even if we need to change what we're doing, we have found out what people want, how much they'll pay for it, and how to sell to them. So it's OK.

 

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[Black_Dragon43]

Well well well..

Today I had my first run-in with the commandment of control.

I never thought @MJ DeMarco 's words would come true, and thought i'd be the outlier that beats it, but no no no. The commandment of control will get you.

For us, it was twilio.

Sudden shut down.

It's stopped our operations for now, but it's a good thing. Because now we can find a solution where we have more control.

Even if we need to change what we're doing, we have found out what people want, how much they'll pay for it, and how to sell to them. So it's OK.

Same thing happened to me last year when I got banned from LinkedIn. Was honest with the clients, told them the truth, and told them not to run for the door since this was a mistake, but many didn’t listen. Lost 40% of our revenue in 1-month, until I recovered my account.

This is the weakness of our business model. And you know why it’s a weakness?

Because someone else nowadays controls the infrastructure. They control the roads, basically. If they don’t like you, they shut off the roads, and you’re dead, can’t get your product to clients.

This is what companies like Facebook, Amazon, Google and yes, at a smaller level Twillio, have done. They trick you to believe they’re helping you, and in a way they are, but they drain your energy to build up their own infrastructure, so they have full control.

Nowadays in order to get to the leads, you need to pass through one of the toll booths, and pay the price. The owners of the toll booths earn most of the cash and have everyone by the balls.

 

[mikecarlooch]

Same thing happened to me last year when I got banned from LinkedIn. Was honest with the clients, told them the truth, and told them not to run for the door since this was a mistake, but many didn’t listen. Lost 40% of our revenue in 1-month, until I recovered my account.

This is the weakness of our business model. And you know why it’s a weakness?

Because someone else nowadays controls the infrastructure. They control the roads, basically. If they don’t like you, they shut off the roads, and you’re dead, can’t get your product to clients.

This is what companies like Facebook, Amazon, Google and yes, at a smaller level Twillio, have done. They trick you to believe they’re helping you, and in a way they are, but they drain your energy to build up their own infrastructure, so they have full control.

Nowadays in order to get to the leads, you need to pass through one of the toll booths, and pay the price. The owners of the toll booths earn most of the cash and have everyone by the balls.

Well the question I have for you is..

Did you do anything to gain more control after they banned you the first time?

I think our problem was the lack of an opt-in.

So we're going to try the ads strategy you were telling me your friend uses.

I wonder if @MJ DeMarco ever ran into control issues in the lead business?

 

[mikecarlooch]

We're going to build our own small version of twilio. That's the only way around this.

 

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[Black_Dragon43]

Did you do anything to gain more control after they banned you the first time?

Unfortunately not yet. It was never my priority. I did think of some ideas, but haven’t really implemented. That’s one of my biggest problems. What I did do was add extra services and leveraged past case studies to sell higher ticket items and get back to previous revenue levels with fewer clients.

I was really hit with what basically was supposed to have been game over for the business. My own account banned, volume of outreach you could do limited to 4x less than before. I used the same strategy I used for clients to grow.

Everyone was hit hard. I had to put a lot of money back in the business to pay the 11 people involved for August/September and keep the team intact. It gave me PTSD.

So from September to December I worked really hard and we got revenue back to previous levels. And I did achieve that. December was 97% of what we did in our previous high in June. We’re in a slight downtrend now, but still around 80% of peak levels.

I’d say in the past few months I’ve worked on a lot of internal processes mainly to reduce churn and leverage a more serious understanding about who gets results and why, and have recently started pushing much more targeted marketing again. Will try for one more big swing hopefully before another consolidation phase where the control issue will need to be addressed in more depth.

It gets harder when you have a large team. Large revenue becomes “standard”. So $80K becomes like $3K when you’re alone… you dip below $3K, you enter desperation mode. The most valuable people who are most key to success usually consume a lot of resources. Which makes sense, business is a team sport. Things can also happen… last year I needed a lot of money for a family issue for example.

Right now I’m still at a phase where a control issue could wipe me out and do so in 2-3 months.

The thing with the internet is that it’s also a high-speed industry. Some business, like real estate, take time to play out, which gives you more reaction time and reversals whether positive or negative aren’t as violent.

I wonder if @MJ DeMarco ever ran into control issues in the lead business?

I would throw a random guess out there that MJ had a lot fewer control issues than we have because the market’s infrastructure was less consolidated in the hands of a few players back then.

 

[mikecarlooch]

You know what, I’m actually very happy this happened.

Thank god it didn’t happen when I have 100+ clients. I can catch it early and solve the problem.

This problem is going to be the single reason why we are able to scale the company to new heights.

If never happened, we’d have stayed small longer.

The biggest curses will become the biggest blessings! Antifragile!

 

[mikecarlooch]

Some unfortunate news.

We started reading about the law and what we've been doing is unfortunately in a gray area when it comes to legality and we had to shut down our operations the way we've been doing it right now or eventually suffer consequences.

Well, the fastlane sure is a journey of ups and downs, isn't it?!

Now, we will either pivot to a way of doing it that is not bordering legality..

Or, we're going to pivot to providing a service that solves a problem for the same people we're serving with the assets we already have.

Let's see what good comes out of this bad situation.

Also, if anyone has advice I'd greatly appreciate it.

The good thing is, we know what people want, how to sell to them, and how much they'll pay.

 

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[Paul David]

Some unfortunate news.

We started reading about the law and what we've been doing is unfortunately in a gray area when it comes to legality and we had to shut down our operations the way we've been doing it right now or eventually suffer consequences.

Well, the fastlane sure is a journey of ups and downs, isn't it?!

Now, we will either pivot to a way of doing it that is not bordering legality..

Or, we're going to pivot to providing a service that solves a problem for the same people we're serving with the assets we already have.

Let's see what good comes out of this bad situation.

Also, if anyone has advice I'd greatly appreciate it.

Yes its not actually Twilio its more the phone companies clamping down. Too many people using services like that for spam.

I see a lot of people pushing things like database reactivation for clients in various marketing groups and this won't work at all soon by SMS the way things are going.

I spoke to this one guy a few weeks ago who was selling birthday campaigns for restaurants and said it was doing well, then I touched based with him yesterday and he's spent the last week selling AI bots to home service businesses.

I don't get this. Selling various solutions to different markets and constantly changing. Sure I understand you have to pivot if you lose control but there's a lot of people just bouncing around from one thing to another. What's this guy going to do when he's 60, the same thing? Like a jack of all trades master of none.

I'd much rather focus on one service/solution to one niche. And make sure the niche is big enough so that I never run out of clients and in 10 years I'm doing exactly the same. Building a valuable company that's worth something instead of essentially being in consultancy which is like having a job without guaranteed pay.

I hope something else comes up Mike, you're much better off now for the experience.

 

[MJ DeMarco]

I wonder if @MJ DeMarco ever ran into control issues in the lead business?

Yes, I would have ISP service providers who would block our IP address and we couldn't send leads to our customers.

Most of our battles were fought in this area.

 

[mikecarlooch]

Yes, I would have ISP service providers who would block our IP address and we couldn't send leads to our customers.

Most of our battles were fought in this area.

@MJ DeMarco I was reading through TMF again and you mentioned in the chapter talking about how your competitors were undercutting your leads, how you "had better joint venture partners".

Do you have any advice on utilizing joint ventures in the lead business? Anything from your time that maybe can be applied to today's world?

Thanks.

 

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[Bounce Back]

Also, if anyone has advice I'd greatly appreciate it.

Making assumptions here based off the Twilio / legal aspect I am guessing you are doing something in the ballpark like texting contacts you didn't get their opt in for? Which is prob why Twilio dropped you.

I looked into this a bit when I was trying to buy a lead autoresponding company and may be able to give some pointers/ideas. Of course I am not a lawyer but you may have ways to tweak what you are doing and keep it going but it just depends on the upstream of how you got the contact #s.

 

[mikecarlooch]

Making assumptions here based off the Twilio / legal aspect I am guessing you are doing something in the ballpark like texting contacts you didn't get their opt in for? Which is prob why Twilio dropped you.

I looked into this a bit when I was trying to buy a lead autoresponding company and may be able to give some pointers/ideas. Of course I am not a lawyer but you may have ways to tweak what you are doing and keep it going but it just depends on the upstream of how you got the contact #s.

We ended up hiring a paralegal to help us out, we'll see how it goes

 

[mikecarlooch]

@MJ DeMarco I was reading through TMF again and you mentioned in the chapter talking about how your competitors were undercutting your leads, how you "had better joint venture partners".

Do you have any advice on utilizing joint ventures in the lead business? Anything from your time that maybe can be applied to today's world?

Thanks.

https://s3-us-west-2.amazonaws.com/jayabrahamassets/Books/From+Mediocrity+to+Millions+--+Joint+Ventures.pdf

found this slab of gold as I was searching about JV's.

 

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[mikecarlooch]

Well,

We'll likely be spending $5k on internal software that allows us to gain more control and scale our infrastructure.

Had to invent a creative solution to the problem.

The paralegal we hired helped us identify what we can and can't do, all of the laws in each state, and how we can work around it.

In the meantime we need to be creative about serving our clients and may need to put them on hold in maintenance.

This is what happens when you build a business that has uncontrollable factors.. It's a risk!

But.. With the right ideas, we can buy our way into control.

 

[Alekqqqq]

Your thread is truly inspiring! Thank you for sharing your experiences. It shows that small steps towards a goal, with testing and adjustment lead to big things. Good luck!