How We Grew Profit By 6,500%

Connect with me!
Instagram: https://www.instagram.com/js_shoez_/
X: https://twitter.com/Shoeinvestor2
TikTok: tiktok.com/@thewater_boy_official
Youtube: https://youtube.com/@justinshoemaker9582?si=DSsbCeNl1kgH3EKK
LinkedIn: Justin Shoemaker

Transcript

From Revenue Drop To Profit Surge

SPEAKER_00 0:00

My company increased profit last year by over 6,500%, but we also reduced revenue by 15%. We also became ranked the number one best bar treatment company for value by Grok and ChatGPT, but I also almost went out of business. And I want to compress everything I learned last year into this one video for you. Let's go into the first lesson that I learned last year. And that is you don't need as many people as you think you need. We had over 20 people working here when I was losing money. To give you context, I was doing about$1.2 million a year and I was negative. And eventually I just had to say, okay, there's something wrong with my business model here. So what we ended up doing was we just reduced our entire overhead, basically fired everybody who wasn't a core person, which ended up being just two other people besides myself. So I ended up taking control over the entire front end sales. I had one of my back end office people who's a rock star stay, and then my head installer, who's an absolute savage, he stayed on as well. Now, when I did this, I was actually a little worried because I was like, shit, we might not be able to actually make money now. I don't have all the sales guys, how am I keep up with the volume? And this actually forced me to change my business model from a in-person type of selling to a virtual type of selling, which is something that in my industry of water treatment isn't really done. And I was doing about 30 to 45% close rates in the business. And when I switched this model, our close rates dropped to about 15% because I had to figure this whole new way of selling out. The good news is I was able to figure it out. And after about three months, because I was taking all the sales, I didn't have to pay commissions anymore. We were able to actually start making money again. And by month four, I was able to figure out the scripting, the lead sales process, the nurture process, the actual pitch. I did a lot of analysis on what closed, what didn't, recorded everything. And now we close around 50% of our leads virtually. And what's amazing about this is it allowed me to then find a new sales guy who had the skill set, but maybe wasn't locally where I needed them to be to actually run appointments and do what I needed them to do. And what this has now allowed me to do is run a business that has way less overhead. And it also taught me what A players really look like. Before I had the A players I have now, I just had a bunch of C and B guys. And I thought at the time they were A players. And I honestly thought I needed this big business, I thought I needed all these people to operate, but I didn't. So by reducing headcount, it actually showed me the flaws in my business that I needed to fix, which is obviously a very scary thing to do, uh, especially when you're a small business and you need money. But I can promise you, if you're looking around and you're wondering why you're not making money or your business isn't growing the way you want it to go, you probably have people in your organization that you don't need. And I would highly suggest you do an audit of your individuals. And the ones that aren't absolutely crushing it and doing the top-tier work, let them go. And the way I characterize A players is not necessarily through their skill set of are they a top producer? Because sometimes they can be the most toxic in the organization. But instead I look at their habits. So do they have discretionary effort, which means do they do work and do tasks above what is they're mandated to do without you asking them to do it? Do they take accountability when things mess up? Are they on top of their own work? Do they take pride in their work? Do they actually want to build the organization and take ownership in the organization? If they do, those are your A players who then, if they have a skill deficiency, you can build around. And if you look around your organization, I promise you you're gonna find people who are not A players. And by being able to learn that pattern recognition, you'll actually be able to then in the future hire more A players because you know what those habits look like instead of guessing and hoping that people will become the A players when they're really not. And what's great about when you actually find an A player is you get a bunch of these downstream effects. Like number one, you'll have to manage them less often because they take ownership over their own tasks. And because they take that initiative, they'll actually bring ideas to you that will help you push the business forward. So you don't actually feel like you're the lone captain on a ship. And that's really how you get businesses to move fast is you have people who take ownership who can bring you ideas. They're in the trenches, they see things that maybe need to be fixed, and they have the ability to bring them to you with solutions. An eight player can really do the work of four or five B players. So you're actually able to get way more work done with less headcount, which operationally just lowers your management stress of having to keep track of all these people. Because I can tell you personally, one of the biggest things that is tough as an entrepreneur is managing people. So if you have people who number one are better at their jobs, you have to manage less and they make you more money, win, win, win. So find those A players, cut the rest. All right, number two, you can charge more money than you think. So raise your prices. Of all the things I learned, this had number one, the greatest impact on my business, but was also the thing that was the most scary for me because I really didn't think people would say yes uh to higher price items. So to give you context, my average sale last year was probably around five or six grand. Okay. My average sale this year is around$12,000. So we almost doubled our average ticket price. And the way we did that was number one, once I had my A player set, I knew that we could now confidently provide better services. So I added more guarantees and more additions to the actual offering that we were making that made our offering significantly better for the client. And then what I did, I said, okay, if I'm gonna offer more of this good stuff that I know my customers would need to be successful with my products, let me just see how much I can charge. The way I did this tactfully is I had a really expensive piece of equipment that really only maybe 1% of people would want to pay for. It's high medical grade filtration. For most people, it'd be overkill. But I knew I could charge a lot of money for it. So I used that as my price anchor. And that gave me freedom to then offer lower items that were still relative in cost, but they didn't have to pay for this big expensive unit. And to give you context, that unit is priced at 16K right now. I then was able to do a menu scale where I had an offerings at 11K, an offering at 8K. And then just to help myself not be scared, I had a cheaper unit that I had pretty good margins on still at around five, six grand. So that way, if you know a customer really wanted something cheaper, I could then offer them that unit. Well, here's what was interesting. When I had them look at all the products together, a lot of people, yes, did not want the top-end product. So I ended up just saying, hey guys, you probably don't need this. And by me making that damning admission of saying, hey, this is a really expensive unit, only buy it if you really want like medical grade filtration. Otherwise, this unit and this unit are gonna be the best bets for you. Customers went with those units. And to give you context, those units were now selling at 11k and 9K. Wow, significantly more money. And what ended up happening was it made me confident that okay, as long as I can deliver on the new guarantees and the new service levels that we're promising, then we're ethically giving these customers a much better service, and we just now have to be able to deliver on those. And then something crazy happened is I started getting customers buying my 16k unit. And then out of nowhere, that's all people were buying. It was my 16k unit and my 11k unit. But fundamentally, all I did was change the price, added more service guarantees and value into the actual offering itself to make it worth it. And that value translated on these sales. And what's awesome about this is I'm actually now able to deliver that higher grade of service because I'm making more money. I have now been able to reinvest in higher quality talent, which has now allowed me to fulfill on these higher quality offerings. And so I know for me, I was really scared to raise prices because I knew I was gonna be more expensive than everybody in the market. But it's now actually allowed me to serve my clients better. And I have now gotten more five-star reviews, I've been getting more referrals. And what it has taught me is that what you charge is indicative of the value that you present. And truthfully, as long as you can deliver a class service and you have a team of savages around you that you know are a cut above the competition, then you should charge for that. Because as long as what you charge and what the delivery is matches, your customers will love it. And then they will see you as a higher premium product, and then they will raise your company up on a pedestal because they feel good because they paid for something expensive, which inherently makes them feel like they're getting something very valuable. You know, think if you buy a Ferrari compared to a Nissan Ultima. Ultimately, there are two cars that get you from A to B. You feel way more status buying a Ferrari than you do a Nissan Ultima. You also expect that the Ferrari to have some bells and whistles that the Ultima doesn't. So as long as you can supply those bells and whistles, you're gonna be fine. And ironically enough, I had way less people, when presented with better offerings, go for the cheaper offerings. Because I think fundamentally, people want better stuff and they're willing to pay for better stuff. I just think as owners and business owners, we get scared of making big offers to clients because we're just afraid of them saying no. And that has happened to us for sure. We get told no more often now, but we also make way more money. And that is what led me into my next big lesson, which is choosing your avatar and having one avatar, one niche, and niching down as best you can. And the way that we did this was when I first started my water treatment company, I was literally selling everybody with a pulse. It didn't matter what your home value was, didn't matter really what needs you had. I was gonna try to find a solution for you. We would actually sell people that are now not in my idea and client profile, and it didn't work well for me. We would still try to deliver top-tier service at a discount and they wouldn't appreciate it. They operationally caused me more money because every little thing that they thought was wrong, I had to go back and fix, even if it was the client's fault. They weren't appreciative of our services that we'd give them, and so they'd complain more. My whole team would get pissed off, it'd frustrate everybody. And because I'm not gonna charge my clients uh for me to come back and look at things for them, which I guess I could, but not a good relationship I wanted to start. It became a nightmare, which again cost me more money. Now we are very strict on the clients that we serve. We only serve clients that want to invest in premium filtration. If you're looking for something that I would say is more reasonably affordable or below the 5K mark, we will actually give you a free water education seminar and then allow you and give you options of some cheaper alternatives to us. So we still want to help people, but we will be very upfront of saying, I don't think we're a good fit for you. I think you should go for this cheaper option, and then we will tell them where they can find those cheaper options. And this has given us so much brand authority, it's hard for me to really articulate how much it has impacted our business. Yes, we've gotten told no way more times. But the type of clients we get now, the quality of clients we get now, is so significantly better that they actually appreciate the white glove service that we offer. They appreciate the higher tier filtration that we offer. And so we've been getting way better referrals now. And because we're actually selling less people now, we are actually able to focus on our actual clients way more and deliver more to them post-install and actually giving them this amazing customer journey that we weren't able to deliver on profitably before. And so this becomes a very virtuous cycle because now I get top-tier clients, I can make them happy. They refer me to more top-tier clients, I can make them happy, and round and round and round the wheel goes. I've also had clients that didn't fit my ideal client profile, but because I was very upfront about it, they decided to still find a way to do business with us. And so I think you have to have a standard as a business. And it's really tough when you're starting out to have this. I know I didn't, but when I finally decided, you know what, I'm gonna be okay losing money in the short term to establish this reputation. Now we have been able to skyrocket in how much we've been able to do. When customers actually see you turn business away, you become a more trustworthy business because they understand you just want to deliver on your promise. You don't just want to sell widgets to everybody just because you can. The fourth thing I implemented this year that skyrocketed my profit was I cut every single acquisition channel except for one. Now, for me, I reduced down to Google because when I did the math on all of my different advertising channels, I learned that my Google and my SEO, although that's where I was getting the less number of leads from, was where I was getting the most profitable leads from. So I said, F it, I'm going to cut Home Advisor, I'm gonna cut mailers, I'm gonna cut any box store dealerships that I have, I'm gonna cut my Facebook ads for now. I'm focusing on the one profitable ad channel, and that was Google and SEO. And so I took all of the marketing dollars that I was spending everywhere and funneled it into one place. And what was crazy is we exploded. And it was slow at first. I mean, we went from doing 20 deals a month in an aggregate to about five. Scary. But again, we reduced headcounts, I was able to survive it. But then we went from five to seven, then seven to eight, then from eight to ten, then from ten to fifteen, and then it started stacking. We did it, we had a month where we did$140,000 and we only sold 14 deals. Where before I was doing 20 to 30 deals and I was barely crossing 70k revenue months. Crazy. I was doing more work before for less profit. And so this ability to focus on one ad channel crushed it because I was able to target the exact clients I wanted, and I was able to build some sort of authority on that channel. And because I did the math, I knew that was the most profitable for me, I was able to put more marketing dollars in there, and I still am because every dollar I put into this gives me about$7 back right now. It's actually probably a little bit more now from the last thing I did. I think my last data analysis, I think we are now at about 1301 ROAS. So we do about$13 for every$1 we put in. Pretty awesome. And this is why having data in your business is so important. So if you haven't been tracking the data, you need to go through every single ad channel you're doing and actually calculate how much do I make for every sale in this ad channel. And what you're gonna notice is you will have an ad channel that makes way more money compared to the other ones. And don't just look at the top revenue number. Remember, revenue doesn't mean shit. Okay. This was something that took so hard for me to learn. You need to look at the profit. So see which ad channel is the most profitable and then cut everything else, put all your money into that one ad channel, have a little bit of patience and watch your business grow. All right, the fifth thing that we did, and I talked about this earlier, was we changed our model from in-person to virtual. And not every business will be able to do this, I understand that, but most can. And the reason why I even wanted to take this leap was I was watching an Alex Ramosi video, and there was a guy at one of his seminars who owned a roofing company, and he had just sold his company for$20 million, and it was all virtual. And so I looked at this and I said, huh, if this guy can do a roofing business where you need people to inspect roofs, and he was able to have this massive exit, I bet you I can figure out how to do it for water. And so I did. And this has reduced operational cost, it's allowed me to recruit top-tier sales count from anywhere in the world. And honestly, it makes life way easier because if you have been in sales, you know in-home sales as a sales rep is a bit of a nightmare when you're driving all over to have terrible leads and talk to people in their homes. It's not fun. And as we've learned, it's also not that fun for the people on the other side. All right. Homeowners actually like to make decisions in the comfort from their home. Now, what I did learn from this as well is you don't get the same day sales that you're used to in homes. And I was trained that you gotta get the sale the same day, otherwise the leads disappear. That fundamental belief has been proven to be false. And because I am now a high-ticket sales company and not a discount sales company, most people, if they're gonna make a high-ticket purchase decision, they need some time to actually digest it. So by allowing them to have the time to digest it, I've actually closed most of the deals that were actually qualified. Hmm, pretty crazy. So this was again core belief that I had to break in myself. And it was scary because, like I said, we were closing at about 15 to 18% on average while I was figuring out how to get this model going. Not easy. But once you can crack the code and you figure out what works for you, it blew my business out of the water. The sixth thing that I did was I actually switched up my content and I focused more on value and consistent posting to help build AI searchability. So here's the new wave of what's coming. And if you're not on this, you guys are gonna get crushed. AI is here. And believe it or not, most people are now using AI to search for what they want. We now religiously build our business to be AI centric. So, what that means is if you search my company, we do backlinking, we do blog posting, and we feed the algos to make sure that we now show at the top of AI searches. The same way you want to try to show up the top of Google searches, we are now doing that for the AI landscape. And this has helped us so much. We have gotten so many leads now from Grok and ChatGPT because these AI bots are now saying that we are the number one company on their platforms. And that only happens by having consistent reviews going out, by posting content, posting blogs, posting enriched content that the AIs can search for, because that is how AI finds its information. It finds the most recent and most accurate information on the web, aggregates it, and then presents it to the end user. So if you're not doing SEO, if you're not implementing blogs, if you're not putting out content that is value driven that AI can pull from, you're gonna get left behind very, very quickly. And then these companies, like myself, if you're an established company, are gonna come up and absolutely destroy you. So you need to make sure that you are doing everything you can to build a platform where AI can get this information from. Because if you have a company that has way more content than you, the AI is gonna prioritize that content over you, and then you will get buried in the searches. And as of right now, there is no way to pay for searchability in AI. Will that become a thing, kind of how Google is? Probably, maybe. That's also gonna be more expensive if you have to start from scratch. So start now. Number seven, fast cash plays, which got us out of debt. So this saved my business. Like I mentioned, we literally were about to go out of business. Uh, we made a mistake of getting MCA debt, which I'll touch on later, but I needed a way to catch up. And as anyone knows, once you're in a bit of debt, the hardest thing is getting out of that debt. And so for me, I had to get creative on how to do this. And thank God again for the Hermosy playbooks. In his playbooks, he talks about a bunch of different fast cash plays that you can implement to make more money today. And this can help if you have to expand, do payroll. A bunch of good things come from fast cash plays. So the fast cash play that I did was we have to do annual tune-ups and filter replacements on our systems. And I decided to say, well, if I can get clients to prepay and offer them a discount, we can get a bunch of these services paid up front and help us pay down our debt. And that's exactly what we did. And so we offered a three-year and a five-year prepay in aggregate within 45 days of running this. We had about 35% of our entire client list take one of these offers. And I think in total money, we made around 40k cash off that fast cash play. That allowed us to pay off a bulk of my MCA debt. So then we were actually able to get out of debt and then become profitable. Uh, without that fast cash play, I don't think we'd be in the position we are today. And so every business has some sort of lever or some sort of recurring thing that I'm sure you can implement to get cash pulled forward. And learning how to pull cash forward is probably one of the best skills you can learn. The best fast cash play that you can do if you really need it is if you have a recurring business model, is get them to pay a bulk of that up front at a discount to them. You get the cash paid forward and you can use it for whatever it is that you need. All right, number eight, we added more upsell services. So before when I was selling my products, I really didn't have any upsell services for my clients. It was just here's my system, here's the tank, here you go. And so I had to look inside my inventory and say, well, what can I do to add as an upsell? So here are a couple of the ones that I decided to add on. Upgraded faucets. So we sell countertop reverse osmosis systems. And to be honest, the faucets that come with them don't look the best. They're these. Little chrome faucets. So we went out and sourced compatible faucets that looked way nicer. And so we just simply added that onto our quotes. Every quote now has an optional faucet upgrade. And we don't even talk about it in our pitch. We just do our normal pitch, send them the quote. It's at the bottom, and we get about a 35% take rate on that. So the additional faucet costs about$250 for my clients to buy. And the margins for us are really good. So what this ends up doing for us is actually just covering some of the acquisition costs that it cost me to get the client in the first place. And this lowers my acquisition costs tremendously. So having these small little upsells in your own business are a great way to just lower acquisition, increase profit, and honestly give a better experience to the customer. The next thing that we did last year that really helped us get that insane profit was we created a better offer, but also created more number of offers to present. So before when I was selling my systems virtually, uh we were really only offering one or two units to our clients because I kind of already knew what the best systems that we had to offer were. But what I found is a lot of my clients, and if you probably see those of your clients too, they have different wants and needs. And just because I personally know I want really high-tier stuff, some people do want lower tier options. So we were able to structure our offers in a way where we were able to expand our offering by offering ultra premium and then having things in between as well as a low ticket offer. And having that low ticket offer that's still high margin is really, really good. Obviously, with the low ticket offer, we strip away a lot of things that we had on our super high ticket. For example, the units won't be able to filter out as much. Uh, there's not as good of warranties on these units, service calls and costs might go up, but that's a trade a lot of clients want to make when they're looking at the units in their totality. You have to also be careful that you don't give them buyer fatigue. There was a study done that basically showed, and I think it was like a Harvard or Yale study, someone can fact-check me on this, but it showed that the most amount of offers you should offer somebody is three. The human brain works better that way, and they're able to decipher, okay, I can pick between this low limit selection. And I think that's why a lot of companies go that route. But what I found worked for me is do a presentation that covers the wide array of offers that you do. And then before you actually send out your quote and make your final offer, you go ahead and you dial it down to the two main ones they want. Obviously, if they want the three, send the three. But I found really good take rates by just saying, hey, after everything we discussed, what's your gut feeling telling you about the unit that you want the most? And more often than not, as long as you're doing a good presentation, they'll be able to dial it down to the two they think is the best fit. And then this also allows you to get inside their head when it comes to objection handling and know really what why they want the unit they selected. And you can ask them, like, hey, why did you want to go with this particular unit? They'll actually tell you the reasons, start selling themselves, and then you can just reinforce that decision, which will help increase your close rate tremendously. All right, the 10th one, which is not very sexy, is money management. So last year we didn't really have a money management system at all. I can tell you the way we're running it before was I had one checking account for the business, I had my credit card, I had some credit lines, and what would come in would just go out through that one account. And I read a book called Profit First, which was a tremendous book. And although I didn't implement everything in the book, it did teach me the fundamental reasons of having separate bank accounts within your same accounts. So let me explain. So in my current banking uh account now, I have an OpEx account, which is all the operating expenses will come from. So anything that I know is recurring or money's gonna come out of, I put right into that OpEx account. And that account tells me this is what you have to run the business with. Then what I do is I have a set aside and payroll account. So what I'll do is every week I look at what the payroll is and I put money from OpEx into that set aside account. So that way I know I have enough to make payroll. And then I also have stuff like if I know I have a big project I want to work on, or you know, for my company, for example, we have this customer retention thing that we're building, uh, which should hopefully get us way more referrals. But it's an expensive endeavor. So I've been putting money aside into that set aside account so that way when it's time to spend that money, I have it. This also helps as like an emergency fund if you have legal fees or things that may come up that you want to have safety for so you don't have to go and pull a loan out or have to borrow money. And then finally, I have a profit account. And what I do is anytime I get money in from any of my clients, I take a percentage of that number and I put it into my profit account. I right now do about 10% of every single purchase goes into that profit account. The rule you must have with this is you do not touch that account. That account just stays as profit. And then you operate within your set-aside and your OpEx account. And by doing this, it forces you to operate in some constraints so you don't just use the money that you have. And I was very guilty of looking at my bank account and saying, oh, I have X number of dollars in there, I can spend it. But by doing this simple money management technique, I am now way more confident in knowing what I actually have to operate with, which is one, made me more fiscally responsible, canceling a lot of things that I really couldn't afford to have. But it also made me feel more comfortable because when I have money aside, I know if we have a bad week or a bad month, I now have money that if I really need to pull an emergency, I have it there. The main rule for this is do a percentage that's low enough that you don't notice it. Now, I chose a very high percentage because I'm trying to funnel as much money as I can into this savings account for the business, only because I had such a bad experience with debt the first two years. So I want to make sure we are completely safe. But you should do a low enough amount that you don't notice uh a change in your business where like you can't operate. Um, and you're not enticed to dig into that account. So that will be different based on what level of business you are, what overage you have. But this one technique saved me a ton. All right, the next thing, and this is a fundamental business belief that I have, is your reputation is greater than any dollar it costs to make a client happy. Let me explain. So if you run a business, you are undoubtedly going to have upset customers or something out of your control will go wrong. And we have contracts in place that protect us when things like this happen, which really put the blame on the client. I have yet to this day enforced any of those. And here's why. When something goes wrong, the real money I come out of for this is usually maybe a part to replace that item on the unit, and then what I have to pay my installer to go out. So I might pay anywhere from$500 to$1,000 to go out and fix an issue. Now, the trick behind this is if you're having so many issues that this is really starting to hit your bank account in a major way, then you have a big operational issue that you need to fix first. Whether your installers aren't good to go, your delivery is not good to go, there's some other issue that is in your business that you need to fix. But for us, these issues don't happen that often. So when they do, we want to be able to take care of them, which again is why I have that money management system. So if something happens, I have money set aside so I can take care of the clients. What this does is it makes the customer experience that much better. And it will turn a pissed-off client into a five-star review client who then refers you. Because when things go right in a business, you really don't have the opportunity to prove why you are as good as you say you are. The true mettle of whether a company is a good company or a bad company, in my opinion, is what do you do when things go wrong and is not advantageous to you? Our stance is we'll always go and make it right. Now, obviously, if it's an absurd claim that is based in not reality, uh, we're not just gonna pay customers if they mess their own stuff up, but we will help them in any way that we can. This has proven to greatly help us. And I can promise you, your reputation is everything. Everyone shops online now, they're using AI to see if you're a good business. You want to protect that reputation with everything that you have because if you start getting a bunch of one-star reviews, even if they're customers that you did everything for, which will happen, other customers may not see it that way. So you need to do everything you can to make sure that you have that five-star reputation and go above and beyond. There's a uh there's a quote that I'm going to butcher by uh by Disney. And essentially it comes down to it takes five to ten magical moments to make up for one bad moment. And that is something I truly believe, in my soul, you have to do in this business, or any business for that matter, is if you have a customer that is upset or pissed off, you have to do way more to make it right. You can't just solve the problem, you need to go above and beyond. And we do things like compying service calls, giving them discounts on things they might have already paid for, maybe even doing rebates, things that actually have some sort of material value to it to try and make up for that. We also will put them on a follow-up cadence just to make sure if there were issues, we're staying on top of it, following up with them so they can feel super confident that we are taking care of their needs and not just letting them go by the wayside. Uh, one trick I've also learned if you are trying to protect your reputation, never ever, ever blame the customer, no matter how crazy the thing they're saying is. You always want to get more mad at the situation. So if they say something's wrong, you need to be way more pissed off about it. Say, I'm gonna take care of this, this is unacceptable, someone is gonna get paid, blah, blah, blah, blah. We're gonna handle this. This is not the way we do business. Go match their energy, and that will calm them down. And when you get off the phone with them to call your boss, your supervisor, or if you're the boss and you take the time to call your team, by the time you call them back, they are going to feel like you are actually taking this serious. And almost every time I've done that, they are super calm and just thankful that we are not blowing them off. Taking accountability, even when it's not your fault, is the best way to do customer service. And it sounds like a very basic thing, but I can't tell you in my own personal life how many times I've called a cut a company, not even looking to get them to refund me anything, just to bring out an issue. And the moment I did, they immediately started blaming me. And I can tell you from that moment on, I didn't trust the business. Take full accountability and just fix the problem and protect that reputation at all costs. All right, the next one. And this, let me tell you, if you are a struggling small business, I need you to hear me on this one. Like, if everything that I've talked about, this is the one I need you to take to your soul. All right. Never, ever, ever, ever take on MCA debt. Okay. Focused on client finance acquisition models. That will make you more money. When I started out in this business, I was told the same lie that everyone else was probably told when they started a business is that you needed this huge lump of cash to make money and get customers. And it's just not true. And if you guys don't know what MCA debt is, it stands for merchant cash advance, and it is the most predatory type of loans that you can get. And I will tell you, we got probably 80K in MCA debt. I had to pay roughly 10K a month just to pay this back. And here's what sucked is they pulled the money out of my account every single day. It was around$400 a day they pulled. Tough. So imagine if you're a small business trying to scale, trying to put money into advertising, trying to recruit top talent. What do you do when you have$400 a day coming in? What do you do if you can't make payroll? What do you do if you don't get deals in? You are handcuffed. And that year was the most stressful year I'd ever had because I was dumb. I didn't understand the workings of this. I had a partner who got us into it, which is still my fault for not taking the time to learn. I that's when I thought it was gonna be over for us because I'm looking at this 10K a month bill that I have, and I gotta somehow make money. So we couldn't have a bad month. We couldn't have installs not go through, we couldn't have bad customer experiences. And that whole year, I basically worked for free because any profit the company made went right back into the debt. And because all that money was going back into the debt, I didn't have any money to invest in scaling. Pretty wild, right? But the crazy thing is, we were able to finally get out of that just over halfway through the year. And that's when I figured out about the client's finance acquisition model. And from that, that is where that 6,500% of profit came from. It's from that model. And the way client finance acquisition works is the money you collect in a 30-day period needs to be at a minimum three times what your cost to acquire is. If it costs you$10 to get a client, when you sell them, you should get at a minimum$30 up front within 30 days. Why is that the math behind it? Because if you have a credit card, if you have money you can put into ads, you could run, and once you have this proven, you will get three to one right away. And most credit cards have that 30-day layover period where it's like you won't get any interest in the 30 days if you pay off this amount. So you can max out the credit card, put a big chunk of money into advertising. And as long as you're getting that three to one, then the clients with the cash they give you in that three-day period will then pay for their acquisition, right? Because it's$10. They'll also pay for you to acquire another customer at$10, and then you get$10 in profit, which, if you do the math, you could put that extra$10 back into marketing, and then you get another three to one, another three to one, and it scales. Ideally, if you can get more than three to one, the bigger that machine can go. As of right now, our 30-day cash collected on a client is around probably 10 to one. And that is what really has allowed us to scale because now every single month I continue to raise my ad spend, I continue to put more money into the marketing. And because my marketing is not only profitable, but I bring enough cash forward by asking for down payments and having a tighter install schedule by now ordering equipment in bulk so I can get them in in 30 days, the business becomes self-funded. And at that point, you don't need to take MCA debt. Now, for those of you who are so broke right now that you are literally looking at taking that MCA debt, you're like, I have no money. But let me promise you something. If you're under two years old and you don't qualify for an SBA loan and there's no other way you can get funding, I would highly, highly recommend you put the business on pause or let everybody go and run it yourself until you start making money again. All right, it's not fun to take those steps back, but that's essentially why I had to gut my entire team. We weren't profitable. I thought we were profitable, and I didn't understand that the business model was broken. And the the truth is, if you're so broke that you need to take an MCA loan, your business model is broken. Okay. And you have to accept that. And the only way you're gonna be able to go from here is if you just take a step back, analyze why your business model is broken, and start testing things to try to fix it. And then once things start working and you start getting clients, you start making money, and then you see that three to one, and you start seeing that every single client that you bring in is actually paying you more, then you can put more money into it, build the team, hire people back on, and now you have a business that can actually scale. The only time you should take any type of money, in my opinion now, is when you have a functioning business and you need an injection of cash, whether that's buying equipment in bulk to get economies of scale, whether that's trying to recruit key talent, whether it's an actual expansion into a new territory which has a bunch of upfront cost, that's the only time you should do it. And ideally, I would look at some sort of equity position where you can have an outside firm take a small bit of equity in your business for a larger chunk of cash where you guys are both committed to the same goal, especially if they have resources that you don't have. That is something that I am currently in the process of doing because I have a model that works. I now want to supercharge that model with money that I don't currently have in my possession because I want to go bigger, faster, but I don't want to rush that until I know I can do it on my own. And here's the thing: if you don't want to give up equity, let the model do its thing. Over a long enough time horizon, you'll get to the same goal anyway. The reality comes to a personal decision of how fast you want it to happen. Me personally, I am more willing to give up my total upside to get there a little bit faster, mainly because I have a bunch of things I want to do in life and I don't know if I want to spend the next 30 years getting to that point. But that is a personal decision. So I hope that helps. If there's one thing, like I said, please do not take the MCA debt. It will, it can destroy you. Okay, now these last ones are leadership techniques. And the 13th thing that I implemented, and this took me a long time to really materialize, even though I was in the military for 10 years and had to lead people, this one for some reason was really tough for me. And that was you have to become less agreeable, especially on bad work. So I am naturally a very caring person, especially when it comes to my team. That has also not worked out for me. And I will say, over the last two years, I have been pretty damn lenient on bad behavior. Not something I'm proud of to admit, but it's true. And I did that because I thought it was keeping my morale of my team high. I know people make mistakes, so I didn't want to go ahead and just be the guy that was super gung-ho Nazi on everybody. The thing I learned is when you're at the tippity top of this thing, it's a balancing act. You can be compassionate and not be agreeable on bad work. So I then flipped it to where if you're gonna do bad work and you're gonna have bad character traits that I see, there is no more room for that here. There is no I'm gonna tolerate this. There is no, we will we'll have a discussion. It's you if you have bad work and bad behavior, you will have it directly addressed to you. And if it doesn't get fixed, you're immediately gone. And what this has shown me is that the real A players don't have this problem. And this is my litmus test. If you have someone that does bad work in the first 90 days or has character traits like they can't show up on time, they can't take criticism, they're not trainable. I gut them right away. Because especially when you start a new job, those first 90 days should be the best version of them. So if that best version of them sucks, it's probably not gonna get any better. And there's always the argument that yes, you could train them up. I would rather train for skills than I would for personality, especially for most service-based companies, the skill set is probably the easier thing to get right. But the actual intangibles, like will someone take ownership? Will they be a hard worker? That takes so much time to train. And I prided myself on trying to be the person that could train that. The truth is, it takes too much time, and a lot of times you got to spend way too much money to make it happen. And if someone doesn't have a vested interest in better than themselves, which most people don't, let them learn on someone else's dime. What this has done materially in my business has set a culture of high performance. Because we now have a team that won't tolerate bad work either, because they know that's a standard, they self-police and raise everybody to that same standard. And I found that the biggest cancer in most organizations is just complaining or capitulating to subpar effort. And if you don't allow that to fester, it won't. And then you'll only keep the people that enjoy those types of environments. And the reality is, people that don't like those environments are probably not people you want on your team anyway. All right, which sets me to my last and final uh tip that I implemented last year was set high standards, enforce high standards, no matter the cost. And that might mean firing people. And I want to give you an example of this is we have very high standards here at my company, very, very high. And when I hire people here, I let them know that this company will hold them to a higher standard than anywhere else they have ever been. And if they don't want to do that, that's cool. No hard feelings, just don't work here. And we do things in a way that demand more of them. For example, we'll do trainings more often, we do follow-ups more often with our guys. We also expect them to have a certain level of character. And one of our biggest things is we tell all of our employees the number one thing that will get you fired is if you lie to us. You can mess up in your job, as long as you're honest about it, we can get through it, right? People make mistakes. But our true promise is I'll never lie to you, don't lie to me. And I had a guy who was actually a fantastic guy. Uh, he had some performance issues that we were working through. But what ended up happening was we found out he lied. And he had a ton of potential here. But he lied to us about a situation, and immediately we fired him. The crazy thing, and as hard as that was to do, because it's never fun to fire anybody. Is by doing those things, it reinforced the actual standards of your organization. The tough thing about being the leader is no one vocalizes what they're thinking, but they definitely are paying attention. And if you have bad behavior or you say this is the standard we're gonna have, and someone deviates from that standard and there's no recourse, then they think, oh, this isn't actually real. And that's where you start to get people that start slipping. And that's where your actual standards in your company start falling down very dramatically. And that even goes for your top-tier guys. Now, you can always still lead with empathy, right? You don't have to be a dick. Um, in fact, you shouldn't be a dick to people, it's not going to get them to work any harder for you. But I had even my top guy not do what he was supposed to do. He wasn't putting in some certain photos where he was supposed to do, he was rushing on certain installs, and so I called him out on it in a very loving way, right? Didn't come down on him like an asshole, but I brought it up to him, made sure he knew that he was slipping. And you know what was crazy? Because he's a high performer, he took accountability. He was like, you know what? I'm sorry, this is why this happened, it won't happen again. Perfect, we're good. And then he got better. But it's a way of also having their back because if you set a standard, if an employee is not meeting that standard, what ends up happening is the organization and people around them just end up complaining about the person. They're like, oh, this guy sucks. He's not actually raising the standard, he's not doing what we want, but nothing ever happens. So now people just get more and more pissed off. If you address it and handle it, that person probably doesn't even know they're slipping. And so you're doing them a disservice because what's gonna end up happening is they'll probably end up getting fired eventually because you're tired of hearing people complain about this person and you're too much of a pansy to talk to them. I promise you, you gotta enjoy that confrontation or at least suck it up and do it because it's your company. So you need to set the standard and hold everyone to that, including yourself. And I can tell you, if you ever slip up or mess up, you should tell your team because it will humanize you to your team. It will show that you're not above the standards that you set, and it will also show them that you know what? At some point you may fail to meet the standards we set. But if you can be up front about it, listen, we can keep moving forward. And they will respect you more, and you'll actually get way more work out of your employees. Because the reality is no one wants to work for someone who thinks they're holier than now, that they are infallible. It's just not the truth. It's not reality. So don't try to be that, okay? I'm telling you, it doesn't work. So set those standards, enforce those standards, and I promise you things will go great.