Making Money For Dummies (And In a Crowded Market)

[Learner Guy]

Thanks ICK, great thread.

 

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[MikeAU]

I just have to say @IceCreamKid and echo one point from what he has said here (great, great thread btw) and that is you really have to have some love for what you are doing in these types of industry especially. Be it the building process or the industry, having phone calls all day or talking about the service can really get you down and make you throw it all in if there is no desire to be in it.

I have been in a service industry for a few years and have had dramas from business partners stealing $$'s to being short of staff and having to get into the grind and do the actual work (countless times)

As great as these industries are they as others always come with pitfalls and barriers. Please make sure you understand then before you jump in and though there is no way to completely protect yourself. At least you can with learning from others hopefully negate these crappy times!

Yes there is great money to be made but it's not all roses.

I look forward to hearing some success stories from this thread.

Cheers, Mike




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[Learner Guy]

Mike, care to share a bit more about your industry and your business? Sounds like you've accumulated a lot of sometimes painful experience!

 

[Cmilll6]

My primary goal for this thread is to hopefully open your eyes to the fact that although everyone is jumping on the online entrepreneur bandwagon, there is still plenty of money to be made in the offline world. Hopefully it helps somebody out.

You can take almost any old school biz and apply basic direct response marketing principles to the advertising to scale it to a very good 6-figure income. I'm guessing you can scale it to 7-figures as well, but I haven't done that myself nor am I going to pretend that I have.

The Details

Why carpet cleaning?

-Solid profit margins. A $300 job will require $10 worth of cleaning solution. There's also the cost of gas, insurance, etc but the profit margins still remain good if you apply the proper tweaks to the biz. If you play the bait n' switch game like a lot of the competition then you won't last long.

-Recurring revenue. IMO, the greatest benefit of recurring revenue is that it gives you the opportunity to acquire customers at breakeven or even a loss in some cases. I try not to take an upfront loss on a customer though.

-Any ordinary man can learn to clean carpets. It takes plumbers and electricians months or years to get certified, but you can learn to clean carpets in a weekend.

-Low start up cost. If you know where to look and buy used stuff, I'd estimate that you can start the biz for around $1k. As you scale up, you'd want to buy better equipment and a nicer van/truck.

-Unsophisticated competition. It's quite easy to gain traction in this niche because the competition mostly hasn't spent any time learning marketing. Most will just say stuff in their ads like, "XYZ Carpet Cleaning. Call us for the best price". My prices are in the top 10% most expensive for the area. Positioning, positioning, positioning.

-SIMPLE. SIMPLE. SIMPLE. No fancy knowledge needed. EPC, CPC, CPA, none of that.

The Story

I took over the steering wheel of a carpet cleaning biz earlier this year. For years, it was struggling with approximately $50k annual profit. Where I live, you're poor if you make $50k.

I immediately began implementing marketing systems for customer acquisition and customer retention. I never changed the website simply because I'm lazy and running 3 other businesses alongside the carpet cleaning biz. I'll get around to it one day.

There are 2 types of entrepreneurs: the Elon Musk types who create brand new innovative products. They don't need to spend any money advertising because their products are so unique and attention grabbing. Then there's everyone else...the guys who cast a wide net selling many ordinary things. They need to advertise.

The biggest help was that I started using a service called Every Door Direct Mail. This allows you to send postcards to entire zip codes at nearly half the normal postage rate. The postcards had all of the classic elements of direct response marketing.

-Stating the problem

-Addressing objections

-Establishing credibility

-Testimonials

-Risk Reversals

-Described what was unique about our service/product

-Call to action

What I found is that depending on the zip code, I would get back $3-7 for every $1 spent on advertising. Neat. Scaled it like a kid in a candy store once I knew the metrics.

You are literally one direct response marketing campaign away from making a cool 6-figures, perhaps 7-figs...even if you're in a boring niche like carpet cleaning. Study direct response marketing. Once you have the direct response skills embedded into your brain, you can go into almost any niche and make a very good 6-figure income. Or you can just keep it simple and jump straight into carpet cleaning. It's not sexy, but it just plain works.

Here's the YouTube vid that inspired me to jump in. Last I heard, the guy was doing $3M/year in carpet cleaning.

Ask me anything about direct response marketing, the pitfalls of this niche, the process of cleaning, or just anything in general. There are a lot of details I left out simply because it would be too much to type in this already long post.

Jump in. Take action today. Success loves speed.

Hey @IceCreamKid i really appreciate the value you drop on these threads. do you mind telling me how do i go about to start and take action?

1. Get equipment and a van
2. find a good area where its gated community and people have big homes
3. send the EDDM and wait

Is that all i need to start?

 

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[IceCreamKid]

Hey @IceCreamKid i really appreciate the value you drop on these threads. do you mind telling me how do i go about to start and take action?

1. Get equipment and a van
2. find a good area where its gated community and people have big homes
3. send the EDDM and wait

Is that all i need to start?

I don't like giving step-by-step advice for this stuff because this isn't a one-size-fits-all type of thing. I don't know your personality type or risk tolerance. Start by doing whatever feels right in your gut.

Some people are very risk averse so they'd rather rent a van and equipment first before starting out. Others have no problem going all in and spend big on marketing, equipment, vehicles, etc straight from the start. I personally like running lean in the beginning then scaling up a few months later.

If you have absolutely no clue about what you're doing, I highly recommend that you jump over to truckmountforums.com and just absorb as much info there as you can. There are a good number of millionaire biz owners there who freely give out advice. Some of them actually give out links to their website. If you spend some time on there, you'll get a good feel for what the successful guys do differently from the rest.

Develop the skills for delivering quality results and crafting quality marketing campaigns. That stuff is more of an art than a science IMO which is why step-by-step advice isn't so simple to just throw out there.

 

[Cmilll6]

@IceCreamKid thanks for the advice bro, i really appreciate it!

 

[Eldi4n]

Well, thanks.. As a person who loves manual works this appear to be really inspiring ;-)

 

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[kelvinleang]

Great post @IceCreamKid. If I may ask, have you ever experienced customers who are trying to pirate your employees?
Like when they get his personal number and contact him directly whenever they need a cleaning? If so, what do you do to prevent these kind of things from happening?

 

[IceCreamKid]

Great post @IceCreamKid. If I may ask, have you ever experienced customers who are trying to pirate your employees?
Like when they get his personal number and contact him directly whenever they need a cleaning? If so, what do you do to prevent these kind of things from happening?

Yes, I’ve experienced it. After you get enough clients, it’s a mathematical certainty that there will be a small percentage that will try to pull some shady moves. Fortunately, the good people far outnumber the bad ones.

Honestly, I don’t do anything to try to prevent it. After you deal with so many obstacles in biz and life, you learn to not sweat the small drama and focus solely on high leverage activities. I no longer have the energy or mental space to want to deal with people’s BS so I’m quick to refund customers and fire employees if I feel that we’re not a good match for each other.

I think that’s one of the coolest things about getting older…you just develop less tolerance for garbage behavior because you start coming to terms with the fact that you aren’t going to live forever. As a result, you focus solely on high leverage activities.

What is a high leverage activity? Creating marketing campaigns, driving traffic, innovation, customer acquisition...

 

[Jakawan]

Some gold nuggets here:

https://www.truckmountforums.com/threads/my-tips-for-growing-your-business.46626/

 

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[marklov]

I think that’s one of the coolest things about getting older…you just develop less tolerance for garbage behavior because you start coming to terms with the fact that you aren’t going to live forever. As a result, you focus solely on high leverage activities.

Does this affect your opinion on leaving behind a legacy or building some type of "empire"?

I am probably way too young to even think about my legacy or what I want to leave behind.

-----------
Your initial advice in older threads about copy sent me down one hell of a rabbit hole where I found myself in telemarketing but it helped me to reach, where I am today.

Not rich by any means but independent.

I don't believe I have ever thanked you.

Thank you ICK.

 

[Learner Guy]

ICK, I am looking at a landscaping business to buy, and would really appreciate your thoughts.

It's doing $2m in sales (only $150K as monthly maintenance - mostly one-time projects), $100-150K in pre-tax cashflow, and the owner is willing to stay in for up to 2 years. I'd use the first year to push really hard on the marketing, and the second year to either sell it with his help if I can't get the sales up 25%+, or to find a replacement for him with his help. The business is pretty solid on execution from what I've seen, it's sales that are the bottleneck and the margins need a tweak.

Where I'm stuck is getting a feel for how much of an impact my plans are likely to have. He's adamant about getting $500K, so it's a decent chunk of money. $200K in hard assets at FMV, and it would have to be worth something as a business even if I bailed in a year, but it could still be an expensive mistake and I've had one of those in the past!

Do you have any suggestions for getting greater clarity on the likely impact of my improvements? Or maybe some way of testing them without having to risk $500K to do so?

Obviously what he's doing now and what I'd plan to do are pretty important, so here's a summary:
- sales process is time intensive at three hours minimum, lots of competitive bids, underselling the company's experience (I'd aim to qualify more leads over the phone, avoid competitive bids by selling a design up-front, and go to town with pretty pictures of past results >> more conversions per salesperson effort)
- no PPC being used, newish web site with some strengths but not ranking well (I'll aim to push PPC +/- expert help, and get the site ranking well for the key phrases >> more 'warm' leads)
- no print ads or direct marketing (I'd try direct marketing like you've done it, have a go with telesales >> more 'warm' leads)
- some low-margin work, only 5-10% EBITDA (I'd aim to increase margins on materials, track job profitability better to scrap stuff that doesn't make financial sense, build recurring revenue >> more stable and higher margin revenue)

I am finding it very hard to know if I'm smoking crack to think maybe I can get it to $3m in sales, at which point the free cash flow would be great... Maybe I come up with 10 great ideas, but they only translate to $2.2m in sales WITH his expertise, which means I'm not in good shape once he leaves. Or maybe it gets up to $3m and I'm very glad.

Thanks for any thoughts!
LG

 

[IGP]

ICK, I am looking at a landscaping business to buy, and would really appreciate your thoughts.

It's doing $2m in sales (only $150K as monthly maintenance - mostly one-time projects), $100-150K in pre-tax cashflow, and the owner is willing to stay in for up to 2 years. I'd use the first year to push really hard on the marketing, and the second year to either sell it with his help if I can't get the sales up 25%+, or to find a replacement for him with his help. The business is pretty solid on execution from what I've seen, it's sales that are the bottleneck and the margins need a tweak.

Where I'm stuck is getting a feel for how much of an impact my plans are likely to have. He's adamant about getting $500K, so it's a decent chunk of money. $200K in hard assets at FMV, and it would have to be worth something as a business even if I bailed in a year, but it could still be an expensive mistake and I've had one of those in the past!

Do you have any suggestions for getting greater clarity on the likely impact of my improvements? Or maybe some way of testing them without having to risk $500K to do so?

Obviously what he's doing now and what I'd plan to do are pretty important, so here's a summary:
- sales process is time intensive at three hours minimum, lots of competitive bids, underselling the company's experience (I'd aim to qualify more leads over the phone, avoid competitive bids by selling a design up-front, and go to town with pretty pictures of past results >> more conversions per salesperson effort)
- no PPC being used, newish web site with some strengths but not ranking well (I'll aim to push PPC +/- expert help, and get the site ranking well for the key phrases >> more 'warm' leads)
- no print ads or direct marketing (I'd try direct marketing like you've done it, have a go with telesales >> more 'warm' leads)
- some low-margin work, only 5-10% EBITDA (I'd aim to increase margins on materials, track job profitability better to scrap stuff that doesn't make financial sense, build recurring revenue >> more stable and higher margin revenue)

I am finding it very hard to know if I'm smoking crack to think maybe I can get it to $3m in sales, at which point the free cash flow would be great... Maybe I come up with 10 great ideas, but they only translate to $2.2m in sales WITH his expertise, which means I'm not in good shape once he leaves. Or maybe it gets up to $3m and I'm very glad.

Thanks for any thoughts!
LG

Without seeing a P&L and knowing the idiosyncrasies of the business, no one could possibly give you this answer.

Is it 100K or 150K Adjusted Owner's EBITDA? That's a big difference.

5X for a Landscaping business seems quite large to me, but again without all the information it's impossible to give solid advice.

 

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[iAmTrade]

Having personal experience in a similar industry- what you'll be buying is- assets that can break any day- will cost to repair.

And a name. The brand- if it *even* exists.

Take your $500,000 and start your own from scratch.

I doubt he is doing ANYTHING TO DIFFERENTIATE HIMSELF.

Use 10k-20k in tools/equipment (only buy the bare necessities thats prob around 10k).

Spend 10k in marketing every month.
And take 10k a month for 3-4 months to pay for your starting 4-5 employees.

And as I said- really do *spend* the 10k monthly on marketing.

---

This is a traditional, no entry barriers type of a business.

You can EASILY GET YOURSELF 150k profit yearly just for your own pocket.

What you are in a sense buying is a system-

Sales come from x, do y, charge z, do the job after you get a signature.

X and Y and Z is what you are really paying for...

Take 30$ and buy a "how to run a landscaping business book" from amazon and read it and learn it, then do it.

If you really want to spend the rest of the 400k you won't need to spend on your own company from scratch...message me- I could use a partner for a business I'm in the midst of starting (not joking).

Thanks! I HOPE YOU LISTEN AND DONT SQUANDER YOUR $.

Sent from my iPhone using Tapatalk

 

[jazb]

Having personal experience in a similar industry- what you'll be buying is- assets that can break any day- will cost to repair.

And a name. The brand- if it *even* exists.

Take your $500,000 and start your own from scratch.

I doubt he is doing ANYTHING TO DIFFERENTIATE HIMSELF.

Use 10k-20k in tools/equipment (only buy the bare necessities thats prob around 10k).

Spend 10k in marketing every month.
And take 10k a month for 3-4 months to pay for your starting 4-5 employees.

And as I said- really do *spend* the 10k monthly on marketing.

---

This is a traditional, no entry barriers type of a business.

You can EASILY GET YOURSELF 150k profit yearly just for your own pocket.

What you are in a sense buying is a system-

Sales come from x, do y, charge z, do the job after you get a signature.

X and Y and Z is what you are really paying for...

Take 30$ and buy a "how to run a landscaping business book" from amazon and read it and learn it, then do it.

If you really want to spend the rest of the 400k you won't need to spend on your own company from scratch...message me- I could use a partner for a business I'm in the midst of starting (not joking).

Thanks! I HOPE YOU LISTEN AND DONT SQUANDER YOUR $.

Sent from my iPhone using Tapatalk

I agree. 500k is a lot of money for that. its probably much better to launch one yourself for a lot less money. ask yourself what 500k gets you

 

[Learner Guy]

Without seeing a P&L and knowing the idiosyncrasies of the business, no one could possibly give you this answer.

Is it 100K or 150K Adjusted Owner's EBITDA? That's a big difference.

5X for a Landscaping business seems quite large to me, but again without all the information it's impossible to give solid advice.

Thanks IGP. There is some variability in the profits year to year.

It may be an unanswerable question, but I was hoping ICK would be able to give me an idea or two that would help me get a better handle on the likely impact of the improvements I'm making, rather than asking his opinion about the purchase price.

That said, thanks for your thoughts about the multiple. The $200K in assets reduces the risk a bit, and although I'd far prefer to be paying $400K I'm in a market where there are few businesses for sale at any one time (this is a lot better than everything else I've seen in six months of very active looking and two years of reading every advertisement for business sales), I don't have capacity to bootstrap something like this myself, and if I felt confident that I could move the sales needle significantly I'd pull the trigger.

 

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[Learner Guy]

Use 10k-20k in tools/equipment (only buy the bare necessities thats prob around 10k).

Spend 10k in marketing every month.
And take 10k a month for 3-4 months to pay for your starting 4-5 employees.

And as I said- really do *spend* the 10k monthly on marketing.

---

This is a traditional, no entry barriers type of a business.

You can EASILY GET YOURSELF 150k profit yearly just for your own pocket.

What you are in a sense buying is a system-

Sales come from x, do y, charge z, do the job after you get a signature.

X and Y and Z is what you are really paying for...

Take 30$ and buy a "how to run a landscaping business book" from amazon and read it and learn it, then do it.

Thanks for the feedback. This is a business with a good name in my town. I received and read Tony Bass' E-myth landscape contractor book yesterday. If I can invest $500K and make changes that mean that after six months I can take out $150K pre-tax every year, I'm happy. I'm just not quite sure I can do that with this business, and it's the sales part that makes me nervous.

 

[Learner Guy]

I agree. 500k is a lot of money for that. its probably much better to launch one yourself for a lot less money. ask yourself what 500k gets you

Thanks jazb, it's a good question. To my mind, it gets me $200K of assets (the price I could realise selling locally over the next month), plus a 1-2 year headstart on profits of $150K (which might not materialise at all for a startup).

 

[IceCreamKid]

Do you have any suggestions for getting greater clarity on the likely impact of my improvements? Or maybe some way of testing them without having to risk $500K to do so?

It's very difficult to give a solid answer without knowing all of the nitty gritty details of the biz you're interested in buying.

Correct me if I'm wrong on this, but I'm sensing that you're not absolutely sure of your odds of success. If I was going to drop $500k on an experiment, I'd want laser precision confidence about what I'm getting into.

Do you have experience and expertise in the industry? If not, I'd highly recommend honing in on your chops for the niche before just jumping in with $500k. It's natural human tendency to have wishful thinking and crunch the numbers to see how rich we're all going to be, but trust me on this...you WILL experience setbacks that you didn't foresee. That's just the way of entrepreneurship.

Forget the money for a minute. Spend some time to really understand your customer's pains/needs so that you can tailor your marketing around that.

For example...
Before I spent a dime on marketing, I made sure I understood very well that in the carpet cleaning niche:

• 95% of the customers are female/99% of the technicians are male
• the women's #1 concern is, "Can I trust this male stranger in my house?"
• their #2 concern is, "How good is their cleaning?"

All of the marketing was tailored around those 2 concerns of theirs. All of the competitors compete on price, but my mailers were different because I took time to understand the pains/needs of the customer.

Do you know the concerns of the customers? Do you REALLY know the concerns...as in have you TALKED dozens of them, gotten a feel for what they want, what they don't want, etc.

How can you innovate in a way that "speaks" to the pains/needs of your customers?

As entrepreneurs we tend to ASSUME that we know what they want...don't assume anything. I'm amazed by how wrong I can be when I assume things.

Talk to your customers. Dozens of them. Forget the numbers...the money will come after you have a rock solid understanding of the problem and innovate in a way that speaks to it.

 

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[Learner Guy]

Thanks ICK, that's thought provoking...

I will see how I can arrange that. Although I have the ballpark income and net worth of a likely customer for this business, I'm not the target market in the sense that if I had landscaping work to do (which I do, in the next month or two) I'd hire a guy or two and oversee it myself.

It's a different proposition from a bootstrapping 'experiment', as it has a 10 year trading history, but I take your point about the level of certainty required given the investment size. That's the sticking point right now, and I think you're right that a better understanding of the target market and their pain points is required, as well as a sense of how much growth could be derived from optimising the selling of the present systems and USP (this second part was the main thrust of my question to you, initially).

Thanks again, and if anything else occurs to you, I'll be very glad of your input!
LG

 

[kelvinleang]

ICK,since you jacked it up from your buddy's original price, how did your customers react or respond to it? How do you raise your prices "seamlessly"? Like when customers don't react to it much.

Because in my country,there are not much home cleaning type of service as compared to yours. Also, even though there are a few small businesses of this type in my country, I still want to validate the demand for this service by going door-to-door and offering them an MVP version of my service(Vacuum cleaning only). How much do you think should I initially charge them for? These few companies have a certain range on their prices. Should I charge the same? or is it ok to charge higher right off the bat? I was inspired by you being able to charge a lot higher rates by delivering exceptional services. I would want my business to be like it as well.

Sorry for the long post and for my english, ICK. Hope you respond! Thanks!

 

[kelvinleang]

ICK,since you jacked it up from your buddy's original price, how did your customers react or respond to it? How do you raise your prices "seamlessly"? Like when customers don't react to it much.

Because in my country,there are not much home cleaning type of service as compared to yours. Also, even though there are a few small businesses of this type in my country, I still want to validate the demand for this service by going door-to-door and offering them an MVP version of my service(Vacuum cleaning only). How much do you think should I initially charge them for? These few companies have a certain range on their prices. Should I charge the same? or is it ok to charge higher right off the bat? I was inspired by you being able to charge a lot higher rates by delivering exceptional services. I would want my business to be like it as well.

Sorry for the long post and for my english, ICK. Hope you respond! Thanks!

 

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[iAmTrade]

ICK,since you jacked it up from your buddy's original price, how did your customers react or respond to it? How do you raise your prices "seamlessly"? Like when customers don't react to it much.

Because in my country,there are not much home cleaning type of service as compared to yours. Also, even though there are a few small businesses of this type in my country, I still want to validate the demand for this service by going door-to-door and offering them an MVP version of my service(Vacuum cleaning only). How much do you think should I initially charge them for? These few companies have a certain range on their prices. Should I charge the same? or is it ok to charge higher right off the bat? I was inspired by you being able to charge a lot higher rates by delivering exceptional services. I would want my business to be like it as well.

Sorry for the long post and for my english, ICK. Hope you respond! Thanks!

I don't mean to be demeaning, what in the world makes you think we know more about prices in your country?

This is once again PEOPLE WANTING THINGS HANDED TO THEM- charge whatever you feel is right- after you have called your competition, faked like you needed the service & found what they would charge you.

Stop wasting people's time with dumb questions, there is such thing- and do your own homework- and get your a$$ cracking.

Stop faking action.


Sent from my iPhone using Tapatalk

 

[Learner Guy]

Stop wasting people's time with dumb questions, there is such thing- and do your own homework- and get your a$$ cracking.

Stop faking action.

iAmTrade, is there any need for such rudeness? Maybe you've seen a pattern with kelvinleang's posts, but if not, your post is unnecessarily obnoxious.

kelvinleang, you will only be able to charge a premium price if you're delivering a premium service and can demonstrate that to your prospects. ICK lays out, earlier in the thread, some of the ways he does that. It's well worth reading again. Best of luck.

 

[kelvinleang]

It's cool, thanks @Learner Guy and @iAmTrade!

 

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[IGP]

Before I spent a dime on marketing, I made sure I understood very well that in the carpet cleaning niche:

• 95% of the customers are female/99% of the technicians are male
• the women's #1 concern is, "Can I trust this male stranger in my house?"
• their #2 concern is, "How good is their cleaning?"

All of the marketing was tailored around those 2 concerns of theirs. All of the competitors compete on price, but my mailers were different because I took time to understand the pains/needs of the customer.

I wanted to quote this because this is GOLD. If you are in this niche or getting into this niche, @IceCreamKid just gave you the ultimate bread crumb.

 

[IGP]

@IceCreamKid great posts. Thanks for all the nuggets in here!

Just recently I have had the opportunity to purchase a carpet cleaning business. It's an established company 15+ years old with tons of existing customers. They have a positive cash flow of a couple hundred grand, but the owners do not know how to market in this day and age. As a result, the company has been declining in revenues for the last few years.

The reason it was of interest to me is that marketing is my bread and butter and there is little doubt I can turn it around. I was most likely going to pass on the opportunity as it has a lot of moving parts (15 employees and several additional services offered other than carpet cleaning) and I hate to buy business with declining revenues.

However, after reading this entire thread I am reconsidering my options. So, I just wanted to say: Thank You!

@IceCreamKid After a ton of due diligence, it's looking like I may be purchasing this business. Of course, now I have a lot of tough decisions to make. Would you mind sending me a PM to discuss a few things?

Happy to reciprocate value to you in any way I can. Thanks in advance!

 

[IceCreamKid]

@IceCreamKid After a ton of due diligence, it's looking like I may be purchasing this business. Of course, now I have a lot of tough decisions to make. Would you mind sending me a PM to discuss a few things?

Please post your questions in the thread so that the entire community has the opportunity to learn.

Don't post any personal or financial info about yourself though. You never know what kind of freaks and thieves lurk behind the curtains on the internet. The older I have gotten, the more skeptical I have become.

 

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[IGP]

Please post your questions in the thread so that the entire community has the opportunity to learn.

Don't post any personal or financial info about yourself though. You never know what kind of freaks and thieves lurk behind the curtains on the internet. The older I have gotten, the more skeptical I have become.

Thanks, but what I want to discuss is best not done in public. No worries though, I will figure it out.

 

[Learner Guy]

After a ton of due diligence, it's looking like I may be purchasing this business.

Even if you're not going to post the question that's still unresolved, maybe you could post a bit about how you've gotten to the stage you have? I for one would be interested to read!