Ep 108: How to Find the Hidden Profit in Your Business

Transcript

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Welcome to Tiny Marketing.

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This is Sarah Noelle Block, and this is a podcast that helps B2B service businesses do more with less.

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Growing your business with tiny marketing.

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Hello, this is Sarah Noelle Block and you are listening to episode 108 of the tiny marketing show.

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Today, we are talking about how to find the hidden profit within your business.

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So let's talk a little bit about numbers.

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I hate math, but for some reason, when it comes to money, math clicks for me.

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Finally, because I have some, I care a little bit more.

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It has to do with money, anywhoozle.

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Let's talk about that.

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When you are determining your revenue goals, what is it that you look at to decide I want to make $300,000 this year.

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I want to make $500,000,.

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I want to hit over a million.

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What is it that you're looking at to determine what your revenue goals are?

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So I'm going to tell you a little story.

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When tiny marketing was just a wee dream and a side hustle, my goal was to make enough revenue to make up the cost of daycare.

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I was working full-time, my husband's working full-time, and I was side hustling tiny marketing, and all I really wanted was for it to cover daycare and anyone who has kids knows daycare is freaking expensive.

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It costs more than our mortgage.

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So that was my initial goal.

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And then, a few years later, I decided to take tiny marketing full-time and my goal was to make my salary.

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I wanted enough contracts to make up my salary.

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Now, little did I know then that I had to make about triple.

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I had to sell about triple what I needed.

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If I wanted to take home $100,000, I needed to sell $300,000.

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That's what I'm trying to say as blah, blah, blah, blah, convoluted as it's coming out of my mouth.

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So all of my revenue goals for years and years were completely arbitrary and numbers that didn't really add up to what I would actually need or actually take home.

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And then I started working with a coach who had me look at my business expenses and my home expenses.

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So what do I absolutely need to spend money on every single month?

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What did I want to spend money on?

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So that's when we would take into consideration.

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I want to pay off all of my debt.

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I want to increase my savings.

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I want to go on vacation, but actually you know, attributing those specific numbers to those things.

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And then the last one was desire.

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So we had three categories.

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We had need the things that I absolutely had to spend money on, couldn't walk away from.

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We had want, so those were just a little bit loftier of goals.

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And then we had desire.

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So this might be my dream vacation, might be added to that, maybe I want to spend $10,000 on and take my kids to Disney World world.

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So, combining that information, we used her snazzy little spreadsheet to determine what my true revenue goals should, be based off of the numbers of my spend in the need, want and desire category, and also adding 30% for taxes, which is not something that I had taken into consideration back when it was only a side hustle.

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So that gave me an actual number to strive towards.

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And because I had this number and I knew how much my average sale was and how many people converted from a sales call to a client, I knew exactly how many leads I needed to get in order to make that revenue.

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Then making sales became easy, because it was basic math.

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It became so easy and then I started hitting my numbers because I had a real reason to hit them.

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They weren't just pulled out of my rumpus, they were actual numbers I needed to hit.

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So I have a workshop coming up on November 12th or 13th I can't remember off the top of my head, called the Growth Playbook.

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It's called the 2025 Growth Playbook Experience.

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It's actually beyond a workshop.

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The 12th is when we're doing the live portion of it, but there's also going to be a secret podcast with trainings in there.

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There's going to be spreadsheets and templates, but basically, what we're going to do is this we're going to determine what your revenue should be for 2025 and reverse engineer it.

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How many leads do you need, based off of metrics that I already know?

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Like on average, you can expect this conversion, because if you don't have your actual numbers, we can use a baseline like that.

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But from there it gets even better, because we're going to build out our marketing plan.

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What marketing do we need to do in order to bring in those leads and hit those revenue numbers and come up with our content bank?

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What kind of content do we need to talk about in order to overcome objections, help people understand the transformation they're going to go through, help people trust that they can actually go through that transformation with customer stories.

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So we're going to do those three things.

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We're going to determine what revenue you need to make in 2025, how many leads you would need in order to hit that revenue goal, and what marketing you need to do, including that content bank, in order to get those leads.

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So if you are not already signed up, make sure to do that.

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It's in the show notes page.

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But let's get into today's episode, because I am talking to Peter Giordano III and he's talking about how to find the hidden profit within your business.

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Because we have these revenue goals, we know we need to hit a certain amount of leads, we know what marketing we need to do in order to hit those leads.

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But what if we can hit those numbers and take home even more money?

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Because we have uncovered hidden profit that was eaten up by things that don't matter within our business.

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That's what Peter's getting into today and you need to go follow Peter.

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If you don't know him already, he has an offer called 10K in one day, where he will go through all of your information with your business and uncover $10,000 in hidden profit within your business.

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I recommended him to one of my friends and she was like he's no joke, legit.

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He found that 10K really easily and some.

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So I highly recommend you try his 10K in one day.

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He is offering tiny marketing listeners a 25% discount on that, so it's normally $1,000.

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You get 25% off of that and he has a promise that if he doesn't find that 10K, you get all of that money back.

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So if you don't get that 10K, then you get the $1,000 back.

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$1,000, then you get the $1,000 back.

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So it's well worth it.

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It's well worth it.

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Okay, so stay tuned as we get into our conversation with Peter and talk all things profitability Backs.

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On this a little bit and I'm always like what's new.

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Everything's always new.

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Everything's always new and they don't warn you, hey, Peter can you introduce yourself to the audience?

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Hello, hello, I am Peter Giordano III.

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I'm an operating strategist for Founders who Sell Services and I use that term specifically.

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The reason being is because I look at kind of the business model holistically like, because the job that I do honestly is to make more money, make more profit.

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But I love how I do it is a little bit different, right, you and I have talked about this before.

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I love to look at business in terms of analogies and metaphors, so I'm going to give you one.

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Can I do that?

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Yes, I want to, All right.

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All right.

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So this is how I would envision it.

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Ready.

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What I do is from an operating strategy is like this Think of the business as like a whole set of gears.

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Sales is one gear, marketing is another gear, finance is another gear, but when you turn one they kind of all move together right, because all the teeth are kind of connected, and so my whole thing is to try to, for every revenue that comes in, make sure that those gears are effective they're efficient and it turns as much revenue into profit as possible.

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That's what I do.

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I love that.

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So we work together in the Gateway Offer Challenge and you started.

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That's when you started conceptualizing the 10K in one day.

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Can you describe that offer for everybody?

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I love this.

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This has been such a yes.

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The gateway offer challenge was a huge driver in its finalization.

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But I realized like after so long, I was like this has been in the works forever.

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So I've been working.

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I've been a operating strategist and consultant for five years and I've been working on driving profits through these like business sprints.

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At first it was 60 days.

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I was like, ok, I can make it 30 days.

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And well, you know what, when the gateway offer challenge kind of came up, I was like why can't I package this all in one day?

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And so prior to that it was kind of this amorphous, like growth and like how can we make more money?

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But in reality I just wanted to add constraints and you actually helped me with that, which was this idea of let's focus on 10K and let's make it as fast as possible, and the reason being was it attacked kind of three levers.

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Do you mind if I talk about those three levers?

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I'd love to hear those three levers.

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I'm all about strategy.

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I used to work at Harvard as a strategist.

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I'm currently obviously in strategy right now and I love the big picture and the thinking game.

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But I thought about this.

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I was like strategy is so important but there are actually three problems with it, and one is it tends to be intangible.

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Right, strategy just inherently is intangible, but it's still super valuable.

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The second thing is it tends to be higher priced.

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Didn't say that it's expensive, I just said it's higher priced, it just tends to be that way and really like.

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The last thing is that it's long-term, so it's hard to kind of grasp right now.

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And I believed in strategy work so much that I wanted to create 10K in one day as almost like a launch pad or a kickoff to say let me prove to you that we can make 10K right now.

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So that's tangible, let's do it in one day, short term, and let's reduce the risk entirely of it being high priced, because if we don't find 10K, you don't have to pay anything.

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And so that was kind of the kickoff for 10K in one day to really be the launchpad and kickoff for profit growth and working with other people.

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I have never heard of strategy talked that way, and it's so accurate that it's hard.

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It's hard to sell strategy because people want the thing that happens after strategy, but that thing is going to be ineffective if you don't have that foundational strategy in place.

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So you really answered all of the objections that people would normally have around strategy with this offer.

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Yeah, and like strategy is the art of making decisions.

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At least from my lens Now, strategic thinking is probably more like the art of making decisions, but in strategy is a foundation, but it's a, it's a tool, like it is the direction right, and I find that without that clear strategy, it makes things really hard to move in the right direction that you want to, and so this was my way of helping people understand and getting feeling a little bit less risky in that endeavor.

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Yes, If you don't have a strategy, it's chaotic.

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You're running in every direction at one time.

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You're just testing things out, hoping that they work and they're not gonna.

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So what I wanted to really grasp onto today we're going to be hosting that 2025 growth planning experience in a couple of weeks, and you are brilliant at finding that profit growing revenue and I wanted to get into how to reverse engineer your profit based off of your offers.

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So what would be the first step in that?

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How do you determine what revenue you should be making instead of choosing an arbitrary goal?

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yeah, the word arbitrary is really important there.

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I will actually go one step higher and then lead into your question, which was I think there's first has to be a little bit of awareness in your business model and and I use the word growth as a little bit amorphous maybe earlier on and I do an exercise in 10K in one day called max revenue, and all it is is to say, within the way in which you currently operate today, your business model, whether it's your pricing, number of services, how long it takes you to actually deliver those services.

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It's like how much can you actually make If you had your time?

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Now it's not a hundred percent, because every business always has a business development and always has administrative stuff and non-revenue generating activities, but it's like if you dedicated a hundred percent of your time to actually revenue generating activities, like what could you max me?

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And that will tell you that's pretty much the most you can do without tweaking anything to your business model.

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So step zero, honestly, is like that awareness, what is the max that you can do?

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Yes, with your current offers, because you can always adjust them.

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Totally true.

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Now, I'm talking about services here because obviously with digital products that you can sell many times, that's technically and in theory infinite.

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But what I'm really focusing in on right there is the services that you actively offer.

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And that is the most.

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Most people who listen to this is in that category.

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Yeah, yeah, most digital products support the actual active services versus being the entire thing.

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That said, it can't, it could still be, but typically that's the, that's the relationship.

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So, to answer the question, right, that was step zero, because one of the first things you need to make to make that profit and cost your cost could make up a number of things.

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Right, it is how much it actually physically costs to run your business without generating any revenue, any fix, the cost for you to deliver your services.

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Right, and so just knowing that as your baseline is really, really, really important.

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One step above that, obviously being price, now price we could talk about a whole different, a whole episode dedicated the philosophy, excuse me, the principles that you have as well, whether you like hourly or fixed base or value-based.

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Plus, it needs to account for this formula, this sustainable formula, that the cost must be less than the price, which is less than the value, and then your real driver is to increase the value or decrease the cost.

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Now, again, I'm going off on a tangent here, but I think that formula is absolutely critical to determining your success and determining what you should actually price, as well as your revenue and your profit levels.

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I want to pause right there.

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How do you determine the value of your offer?

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Yeah, I think that's a very hard question because this goes back to the first thing that we talked about with strategy right, it's a little bit intangible, and with strategic work, it tends to rely on outside factors.

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Right, the market.

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There is the actual execution.

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So what I like to describe as value let's go back to my 10K in one day.

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My 10K in one day is $10,000 worth of value, at least $10,000 worth of value.

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Is $10,000 worth of value, at least $10,000 worth of value.

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And so what I did there was I wanted to take that really hard, intangible, like as much as possible number and I wanted to put boundaries to it.

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So one way in which I approach this kind of hard answer to value is by adding constraints and getting more specific to say I will give you this with this for this specific to say I will give you this with this, for this, an outcome plus timeframe, Correct.

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I mean, that's a perfect way to also think about what your offer containers should be.

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What outcomes are you going to provide in what set of time?

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I'll just speak to just a principle that I mentioned.

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I kind of approached this idea of being a magic money machine.

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So, with strategy and with the words value and uh, running a business is, my fear is, I never want to be seen as a cost, ever, ever, ever, ever, I only ever want to be seen as an asset.

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And so one of the answers to value is how can I create value, how can I always be seen as an asset?

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And it goes back to this formula right, if I can give you value, price is less than that and cost is less than that, then I have a sustainable business model.

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And so what I want to do is magic money machine is you give me one, I give you two, and in this case it's really you give me one, I give you 10, right, four for 10K in one day.

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So, in the grand scheme of things, yeah, that makes sense.

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Okay, so we have an idea on how to price according to value.

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Now how do we figure out what our revenue goals should be?

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this is in in the first year of business.

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It's really hard to determine that, because I think you're really fixated on figuring out how to do this.

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Same is true probably for years two years, three years, four and I play.

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I say this because I think this is a really long-term game.

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I like to say the goal isn't to win, the goal is to keep playing, and so revenue is simply a formula for the business game, right?

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If you back in from your cost, you back into your services, you're going to be able to derive basically how much revenue that you have to have to actually make to make this, as I said, sustainable, to be able to keep playing.

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And so I think that this is a little bit of a push and pull game in terms of how much profit you actually have to make.

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I told you I was all about profit in the beginning, so what I'll ask you is what are your thoughts basically on that question in terms of how you develop revenue?

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Yeah, so I wrote about this on LinkedIn recently, where originally my revenue goals were based off of my salary, like I wanted to match my salary when I left corporate.

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But then I realized, you know, my salary is not what I'm getting, it's the profit.

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I would need to match my profit to my salary for it to actually equate.

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So now what I do for my revenue goals is I look at my business expenses and the lifestyle expenses that I have what do I need in order to live the lifestyle that I want?

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And I just break it down to every little piece of what my life costs and then, you know, add 30% to for taxes, and that's how I roughly come up with my revenue goals.

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Now price is the price of your services, times how many services you actually deliver, and so you're taking this really super formulaic approach that fits both your lifestyle needs as well as your business needs.

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Yeah, and I mean I needed to, because I didn't know what I didn't know at the beginning.

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Originally it was I want to cover daycare costs, and then it turned into I want to cover my salary.

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And then I was like, well, that's not enough either.

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And then I had to look at you know, what do I actually get at the end and what do I need?

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Yeah, another way of answering that.

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You just said two words that were really important need and want, right.

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And if we think about this I mean strategy is a big picture game, right, we need to think about this.

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Need, want, love, right.

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How much do I need to actually make to keep this game going?

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How much do I want to make right to achieve my goals?

00:21:40.609 --> 00:21:51.757
How much would I love to make to really just feel, because I think feeling and emotion is really a big part of it is also that I feel like I'm going to continue to make progress, and so there probably are three thresholds.

00:22:02.294 --> 00:22:30.214
Knowing the base level is really important because at some point, if you don't convert that revenue into profit, the game will be over bills that we just couldn't get away from and it was like the baseline of what we needed to make, want and those included those little extras like paying off debt completely, putting together your savings and all of that, and then desire, which was, you know, adding in your dream vacations and things like that.

00:22:30.214 --> 00:22:36.525
So we had like three levels of revenue goals that we would work towards.

00:22:36.525 --> 00:22:41.726
And then myself I took that one step further and I was like okay, well, how many?

00:22:41.726 --> 00:22:43.371
What's my conversion rate?

00:22:43.371 --> 00:22:45.457
How many leads do I need to actually make that?

00:22:45.457 --> 00:22:48.191
How much profit am I making from each of those clients?

00:22:48.191 --> 00:22:49.615
What's the lifetime value of them?

00:22:51.178 --> 00:22:58.498
See what you're saying here and I love this because you are bringing a formulaic approach to business and which we sometimes wrap our identities in.

00:22:58.498 --> 00:22:59.661
There we do totally.

00:22:59.661 --> 00:23:09.318
Business is part of us, uh, but business is also a formula, right, and it is levels, conversion and math that is associated with it at different levels.

00:23:09.318 --> 00:23:17.282
Now, what's awesome is you and I keep talking about this idea of, while we're talking about revenue, the pivot point is cost and profit.

00:23:17.282 --> 00:23:24.589
That's the determinant, because you can make a million dollars and have $900,000 in expenses and still get to $100K.

00:23:24.589 --> 00:23:31.894
But you could also make $200,000 in revenue and have $100,000 in expenses and still make $100K, and so it still results in the same outcome.

00:23:31.894 --> 00:23:34.346
Yes, I think that that's where a lot of people get lost, and so it still results in the same outcome.

00:23:35.028 --> 00:23:37.337
Yes, I think that that's where a lot of people get lost.

00:23:37.337 --> 00:23:43.663
They hear about you know 100K months, but how profitable was it?

00:23:43.663 --> 00:23:46.803
Maybe you made that much, but you spent $80,000 in ads.

00:23:47.244 --> 00:23:47.385
Yeah.

00:23:48.430 --> 00:23:50.375
Let's look at the full picture here.

00:23:52.138 --> 00:23:54.752
Perfectly said Full picture, right Strategic lens.

00:23:54.752 --> 00:24:14.200
We talked about how all the business connects, and I think that's really important, because the moment you move something over here, it moves something over here, and knowing the relationship between those spaces is really critical, and so I will continue to agree with you that, while revenue is really important, to formulaically create, profit ends up being the pivot point.

00:24:14.200 --> 00:24:17.074
That's really the leverage point that you would drive home.

00:24:17.955 --> 00:24:24.214
So you're digging into people's businesses all the time in your 10K in one day.

00:24:24.214 --> 00:24:29.144
So I want to know where do you find that profit gets lost?

00:24:30.009 --> 00:24:32.394
Oh, yes, Okay, let's do.

00:24:32.394 --> 00:24:33.958
I'll share it.

00:24:33.958 --> 00:24:37.089
There's five items in 10K in one day that we look at right.

00:24:37.089 --> 00:24:38.153
I kind of talked about this idea.

00:24:38.153 --> 00:24:42.883
The first is costs right, Costs and cash management.

00:24:42.883 --> 00:24:52.067
There are a lot of times just simple, simple levers, which is, these are costs that can be avoided or these are costs that should be included in here, Like health insurance.

00:24:52.067 --> 00:24:57.038
Sometimes people don't realize that especially small companies realize that health insurances can be a business cost.

00:24:57.641 --> 00:25:08.203
um software bloat like from a lens of right software is super, super easy to do that and again I have to say I'm not a tax advisor whatsoever and I'm not providing any tax advice at all.

00:25:08.203 --> 00:25:10.571
You should consult your tax advisor or your cpa.

00:25:10.571 --> 00:25:23.738
But that being said, is there are a lot of expenses that do cause blow or could be included in a business and as a cash management as well, you can do stuff with your cash to actually put it to work, and I'm all about putting it to work.

00:25:23.738 --> 00:25:35.855
So cash and cost management is easily the simplest lever, but it's also limited, because if you have a hundred thousand in expenses, you can only ever cut a hundred thousand dollars of of costs.

00:25:35.855 --> 00:25:37.018
You can't do any more.

00:25:38.039 --> 00:25:47.692
The second one that I like to look at is where I talked a little bit about max revenue is like the time, like how do you spend your time within your operations?

00:25:47.692 --> 00:25:50.159
How long does it take for you to fulfill your services?

00:25:50.159 --> 00:26:07.036
And knowing how you can actually efficiently use your time or even trade up your time right From non-revenue generating activities just saying like doing your finances or doing your invoicing, that's you're not making any revenue at that point to moving it to where you're actually doing sales and delivering your services.

00:26:07.036 --> 00:26:09.181
Is there a way in which you can scale up your time?

00:26:09.181 --> 00:26:16.182
To me, that is always a huge lever of profit and a huge lever of opportunity.

00:26:16.521 --> 00:26:18.132
I want to pause there for a second.

00:26:18.132 --> 00:26:21.579
This is something that I love.

00:26:21.579 --> 00:26:33.859
I think that marketing, biz, dev and sales should always play together, that every marketing activity you do should also do biz, dev, dev or sales at the same time.

00:26:33.859 --> 00:26:46.096
So because marketing could be just like a time stock if you're not doing it right, but if you're making sure that it's revenue generating, it's a whole other thing.

00:26:47.730 --> 00:26:52.958
Yeah, the relationship between revenue generating, business development and non-revenue generating is really important.

00:26:52.958 --> 00:26:56.574
You can't do 100% of any of them.

00:26:56.574 --> 00:26:59.140
My framework that feels good for me, right?

00:26:59.140 --> 00:27:12.182
This is something that has taken about five years to figure out is 60, 30, 10, 60% of my activities being in revenue generating, because revenue generating means I'm making money today, so that tends to be sales and delivering of my services.

00:27:12.182 --> 00:27:24.134
30% is in business development, so that is doing the work today that is going to drive future revenue, and that's that's surrounded a lot by marketing and branding and strategy.

00:27:24.134 --> 00:27:34.298
And then the last 10% is all the admin stuff, the smallest, the invoicing, the things that don't actually result in any revenue but it is a requirement to keep your business going.

00:27:34.298 --> 00:27:38.079
And that is my framework and that's the relationship that I like to use between those three.

00:27:38.789 --> 00:27:46.711
Yeah, yeah, and you also talked about, like, the amount of time that it takes to deliver your services.

00:27:46.711 --> 00:28:12.178
So just making sure I like to pull out little action points that you're doing time audits when you're doing projects, especially like at the beginning, figuring out how long it takes you to deliver those projects, and then doing it you know a year later and seeing if you're doing it any faster or if you implemented some AI pieces to it, like how much time did that save you?

00:28:12.178 --> 00:28:16.085
So you know exactly how much the delivery costs you.

00:28:16.085 --> 00:28:24.432
I'm obsessive about timing, how long, how, doing time audits and making sure I know how long it takes for me to deliver.

00:28:24.854 --> 00:28:25.615
Yeah, yeah.

00:28:25.615 --> 00:28:33.323
That's super important because that is the majority of our work is delivering on those services, and I didn't want to not finish my five statements right.

00:28:33.323 --> 00:28:35.154
I want to make sure that I cut off all those.

00:28:35.876 --> 00:28:36.778
Just finished two right.

00:28:37.259 --> 00:28:39.034
I just did two, so the last three.

00:28:39.034 --> 00:28:40.278
One is pricing.

00:28:40.278 --> 00:28:42.959
Again, that is always the biggest lever of profitability.

00:28:42.959 --> 00:28:58.778
Pricing is assessing if you're underpriced or even possibly overpriced, and then three and four, or sorry, four and five, end up being really, can you actually just do more sales volume, like can cause sometimes you actually can do more sales volume.

00:28:58.778 --> 00:29:05.941
That is the easiest lever to pull because it's just doing more, but it it it tends to be the furthest.

00:29:06.041 --> 00:29:09.454
And then the last one is, I would say, call it value ads.

00:29:09.454 --> 00:29:11.641
Can you increase the customer lifetime value?

00:29:11.641 --> 00:29:16.801
Can you add different offers and different value points that actually increase?

00:29:16.801 --> 00:29:31.459
And my favorite one is if you were to build a, if you were a wine rack builder and you built this beautiful wine rack in somebody's home I know that it's not a service businesses like I am, but this is a great example is, at the end of it, can you work with another company to fill it Right?

00:29:31.459 --> 00:29:36.534
Can you work with and get a commission off of that of filling actually the wine rack itself?

00:29:36.534 --> 00:29:41.976
It's like the small value adds that are really really high margin to you and don't take a lot of time.

00:29:41.976 --> 00:29:44.301
And so those are really the five that we go through.

00:29:44.869 --> 00:29:47.992
Yes, okay, I want to dig in a little bit more on all of those.

00:29:47.992 --> 00:29:51.738
So one we had price.

00:29:51.738 --> 00:29:58.885
So how do you figure out what the best price model is for your service?

00:29:59.605 --> 00:30:04.740
Yeah, there are three frames that I kind of think about price.

00:30:04.740 --> 00:30:07.999
I think the first one is the knowing your numbers right.

00:30:07.999 --> 00:30:13.798
We go back to the whole cost versus price, versus value, and that is literally just taking a formulaic approach.

00:30:13.798 --> 00:30:26.554
That is the first one and that makes sure that you keep going and you keep growing, and you can do that through exercises like max revenue or working with you to basically develop that formulaic approach.

00:30:26.554 --> 00:30:29.020
The second one is philosophical and principle.

00:30:29.141 --> 00:30:36.182
I'm going to tell you a little story right now, and what I mean by that is you could be hourly, you could be fixed, you could be value-based.

00:30:36.182 --> 00:30:39.999
I started as hourly, and I talk about this idea of principle-based because it matters.

00:30:39.999 --> 00:30:41.492
I started as hourly and it works.

00:30:41.492 --> 00:30:42.916
I was a consultant.

00:30:42.916 --> 00:30:49.474
I am a consultant, I can charge hourly, but something didn't feel right because I'm in the business of thinking and I'd be thinking while I was brushing my teeth.

00:30:49.474 --> 00:30:51.576
But do I charge somebody while I'm brushing my teeth?

00:30:51.817 --> 00:31:01.487
And so there's like this philosophical aspect that is really really, really hard, and so you kind of have to massage around that to figure out what's right for you.

00:31:01.487 --> 00:31:10.650
And so, while the formulaic approach, approach number one could say do this your internals kind of say it just doesn't feel right.

00:31:10.650 --> 00:31:17.923
And so I moved to a value-based approach, like 10K in one day, which says let's do it outcome-based, you're going to pay me based on my outcome.

00:31:17.923 --> 00:31:19.992
If we don't hit that outcome, you don't pay me at all sort of deal.

00:31:19.992 --> 00:31:25.054
And then I think the third positioning that we'll talk about actually is the word positioning.

00:31:25.054 --> 00:31:27.721
It is, how do you want to use price as a filter?

00:31:27.721 --> 00:31:34.086
Because price truly is a filter and you can position it really high, you can position it very low.

00:31:34.086 --> 00:31:35.791
There is strategy in your pricing.

00:31:35.791 --> 00:31:40.431
And so I think those are the three approaches of many that you could go down the avenue.

00:31:40.431 --> 00:31:45.222
But that second one really took some experience to figure out the philosophical piece.

00:31:45.990 --> 00:31:47.612
Yeah, yeah.

00:31:47.612 --> 00:31:54.122
Well, I'll walk through how I did my pricing throughout the lifetime of tiny marketing.

00:31:54.122 --> 00:32:01.136
I definitely also started hourly, but I wasn't transparent with the hours it was.

00:32:01.136 --> 00:32:08.298
I knew how many hours it took me to complete a project on average and how much I wanted to make an hour.

00:32:08.298 --> 00:32:14.440
So I priced it as a project, knowing how much it would be, because I didn't want to equate.

00:32:14.440 --> 00:32:15.382
I wouldn't.

00:32:15.382 --> 00:32:24.473
I didn't want them to equate my time with ours or start dissecting what I did and saying why did it take you that long?

00:32:26.698 --> 00:32:47.086
so it projects based off of the hours that I knew and the price that I wanted, and now that I'm creating more like scalable offers, if there's not a lot I can work with, it has to be like on market with where everybody else's are in that scalable offer.

00:32:47.768 --> 00:32:52.246
So it's a comparison yeah, project-based pricing to me is super.

00:32:52.246 --> 00:32:54.400
It's also effective.

00:32:54.400 --> 00:32:57.086
But you really need to be dialed in on what you do, right?

00:32:57.086 --> 00:33:04.308
Because you could price it at a thousand dollars, but it takes you 50 hours or a hundred hours, right?

00:33:04.308 --> 00:33:08.140
So project-based pricing, I think, is really effective once you know exactly what you're doing.

00:33:08.780 --> 00:33:39.327
Yes, yes, I was doing time audits for years before I took tiny marketing full time and I was able to know exactly how much it would be and there were clear deliverables that were every single month, so it made it a lot easier for me to know what, what, how much time it would actually take me, so I knew the profitability on it, but um the more do you approach value-based pricing, then do you approach value?

00:33:39.347 --> 00:33:41.357
do you use value-based pricing or performance-based pricing?

00:33:43.161 --> 00:33:44.542
no, I've never done that.

00:33:44.542 --> 00:33:56.205
I um because, well, when I first started, it was all content creation that I was doing, so it was really hard to equate that to the specific value that you would get.

00:33:56.205 --> 00:34:15.666
Now I'm creating strategies with people to help them hit their revenue goals, so it's more like growth that I'm helping them with, but I'm doing it in this scalable way where you know I can't charge a bajillion dollars just because they want to make a bajillion dollars.

00:34:16.956 --> 00:34:20.996
Yeah, you keep driving up the revenue, then you can send over to me and I'll help drive out the profit.

00:34:21.416 --> 00:34:22.217
Yes, that works.

00:34:22.217 --> 00:34:31.568
Yeah, it's crazy how much you need to think about your profit versus your revenue.

00:34:31.568 --> 00:34:42.061
You don't think about it until you're in it and you're like why am I getting this much in sales if I'm only taking home like my taxes are showing me that I'm making so little?

00:34:43.362 --> 00:35:03.739
yeah, I, I was, uh, like I said, I worked at harvard for seven years and even before that a number of other companies, and just the transformation from earning earning an income right To having to generate a revenue right, generate revenue or generate dollars as a business was fundamentally different, and it was, it was.

00:35:03.739 --> 00:35:13.320
It was different for me because I was always what you might call like back office, like I was in finance and strategy and and so everything was kind of the infrastructure behind it.

00:35:13.840 --> 00:35:25.019
So when I moved over to become an entrepreneur or run my one person business, it's like, wow, this, this definitely feels a lot different, and so the idea of revenue may seem simple.

00:35:25.019 --> 00:35:27.003
It is not whatsoever.

00:35:27.003 --> 00:35:29.047
Now it can be a formula, but it doesn't.

00:35:29.047 --> 00:35:36.152
The aspects of it is aren't simple and there is nuance to that, particularly when you've been an employee for so long.

00:35:36.271 --> 00:35:44.929
Yeah, I mean, I know I was an employee for 15 years before I started Tiny Marketing and a lot of other people out there.

00:35:44.929 --> 00:35:52.289
I know very few people who, like, left school and started a business immediately.

00:35:52.289 --> 00:36:03.487
I do know a couple which I'm like you're brave, I was not, but yeah, coming from that world and trying, all of a sudden you're thrown into.

00:36:03.487 --> 00:36:11.478
I need to be the operations person, the finance person, the salesperson and then the delivery person of everything.

00:36:11.478 --> 00:36:25.168
It's a hard adjustment and it took me a long time to figure out how to do it right and the art of reducing my expenses to increase my profit.

00:36:26.538 --> 00:36:27.461
Yeah, art and science.

00:36:28.014 --> 00:36:29.201
Yeah, it really is.

00:36:29.655 --> 00:36:33.043
Yeah, we brought up formulaic and that's the science side.

00:36:33.043 --> 00:36:42.184
But then there's the art side, right, we talked about philosophical and principles and the nuances to it, and I'm totally on board that there is both art and science in this game.

00:36:42.954 --> 00:36:44.077
Yeah, there really is.

00:36:44.077 --> 00:36:53.411
So there was one other piece that I wanted to pull out from your formula, and that was increasing the lifetime value of your customers.

00:36:53.411 --> 00:36:57.405
So there are a couple of ways to do it.

00:36:57.405 --> 00:37:03.820
You can do it with cross sells what else would make sense for them to have after they've purchased another thing?

00:37:03.820 --> 00:37:05.204
Or order bumps.

00:37:06.416 --> 00:37:07.677
Yeah, I think.

00:37:07.677 --> 00:37:22.871
Well, I also want to add in the pre so, like the gateway offers, because I need to, I'm not just plugging it, but like the value of demonstrating the first half step is also critical to the post step.

00:37:23.715 --> 00:37:33.521
And I think and having something to sell for the next step is really important to have, because sometimes you you don't have anything, and so you mentioned upsells.

00:37:33.521 --> 00:37:41.623
I I mean personally like I think, uh, referrals are actually really important too is like can you like my wine, example, right?

00:37:41.623 --> 00:37:47.664
Or commissions or however that may be, so long as it's allowable is, can you add value at a high margin?

00:37:47.664 --> 00:37:54.405
What are the small little tweaks that you can actually do that create much higher margin for your little time?

00:37:54.405 --> 00:37:58.356
And so, like upsells, I get it Recurring up.

00:37:58.518 --> 00:38:33.318
either subscription or one-time offers are also really helpful in that, but I think it's really I think the most value you get is tacking on to the primary and signature offer that you actually have, because they're going to keep coming back for more yes, so I would consider that an order bump tacking on to the original one, yeah, and you can do that through a referral partner if like a partner who can help with the other steps that you don't or affiliate partnership, so you're getting a commission for passing along that.

00:38:33.318 --> 00:38:35.722
Oh, there was something.

00:38:35.722 --> 00:38:39.416
Oh, thinking about your offer ecosystem as a staircase.

00:38:39.416 --> 00:38:41.721
So you mentioned the gateway offer.

00:38:42.041 --> 00:38:52.916
That is such an important piece that you can't miss out on because it's setting the strategy for the signature offer, taking them through the complete transformation.

00:38:52.916 --> 00:39:02.382
But it really is a staircase because you're earning trust and then, with the gateway offer, you're building the initial strategy.

00:39:02.382 --> 00:39:06.820
So you know exactly what you need to do to get them through that transformation.

00:39:06.820 --> 00:39:08.746
And they're on board.

00:39:08.746 --> 00:39:14.840
They have to say hell yes to it before they're moving on to upselling, to that signature offer.

00:39:14.840 --> 00:39:25.054
And then the next step up in that staircase would be what you were talking about those order bumps, cross sells, the referrals, the partnerships that you have.

00:39:27.016 --> 00:39:33.320
Yeah, I find it's so cool when I go through these 10K in one day and even just formally in businesses.

00:39:33.320 --> 00:40:01.396
I like really connecting specifics to so instead of just being order bumps, just like, and the operating models, because they probably have skill sets and they have value that they don't even realize that they have and it's just the small little tweaks that you can make to that signature offer or to those former offers.

00:40:01.396 --> 00:40:11.847
And if we spend a little bit of time just thinking about what else, what else could I do to help this client or help this customer, and every single time you say what else can.

00:40:11.887 --> 00:40:12.347
I actually do.

00:40:12.454 --> 00:40:14.443
I think an opportunity shines a light.

00:40:15.494 --> 00:40:25.235
I love that you said that, because that's the magic of a gateway offer is that you are having that conversation with the company.

00:40:25.235 --> 00:40:32.965
I have all of the stakeholders in mind and you're getting all of the challenges that they're going through, all of their goals.

00:40:32.965 --> 00:40:48.467
You know exactly what they desire that transformation to look like so you can customize your offer to meet their needs and you can find those plug and play partnerships and referrals to further enhance what they needed.

00:40:48.487 --> 00:41:07.556
Yeah, yeah, and I've been thinking about this recently, which is night the, our game of business, like we will work with others to solve a specific problem at a specific time and as time passes, right, you, you kind of grow out of you, go into a different problem.

00:41:07.556 --> 00:41:08.940
Right, you solve one problem.

00:41:08.940 --> 00:41:11.224
The next problem in line is standing there waiting for you.

00:41:11.626 --> 00:41:28.057
And it just kind of shifts and it morphs, and the longer that you can keep helping an individual solve the problem, while having that trust is super impactful, right, you can save the next problem, the next problem, or even have a network of people that you can call upon to help.

00:41:28.458 --> 00:41:43.643
Right, because you're still within the ecosystem, and that's not just to say to keep them within the ecosystem, but in all honesty, it's like you have developed a language while you're working together at this current moment in time, and the more problems that you really can help them solve, the faster you can bring them along.

00:41:44.045 --> 00:41:56.637
Now, when I say faster, I don't just mean like let's make as much money as fast as possible can, because I do think that there is this notion of the cliff, um, where you grow too fast and every broken promise falls off the cliff and it echoes loudly.

00:41:56.637 --> 00:42:06.101
But it's just like I think that you can work with an ecosystem of people at a given moment in time and just keep building and building, and building, and then at some times, it's time to go right, it's time to move on.

00:42:06.101 --> 00:42:19.666
They've graduated from from your work, and you yourself, as the business owner or the service provider, also has probably graduated on from your work and you've adapted and you've evolved and you've created kind of a new set of skill set that you can solve for others.

00:42:20.688 --> 00:42:32.909
I love that you said that it's exactly how you should start mapping your offers is look at that dream client that you want.

00:42:32.909 --> 00:42:34.831
I've talked about this before.

00:42:34.831 --> 00:42:41.226
I've talked about this in the five golden offers that you want to.

00:42:41.226 --> 00:42:49.548
Your lead magnet should be three steps before they're ready to work with you in a one-to-one and thinking about it in that way.

00:42:49.548 --> 00:42:50.898
But keep going.

00:42:50.898 --> 00:42:57.076
You're talking about it Like when you're done with your signature offer, what's the next problem that you can solve for them?

00:42:57.076 --> 00:43:07.565
And that could be the next step of your offer and you can really map it out, thinking holistically on what they're going to be dealing with at different times.

00:43:09.496 --> 00:43:25.027
I'll say this to grab onto that, which is a lot of times we default to being problem solvers and I would say your advantage is being problem identifier Because, like I said, there is always going to be a problem somewhere.

00:43:25.027 --> 00:43:28.027
It's probably going to be bigger, stronger, faster once you solve this one.

00:43:28.027 --> 00:43:37.177
If you can be a problem identifier and really understand what that problem is for someone, I mean, you've probably almost made the solution itself obvious.

00:43:37.177 --> 00:43:46.795
So it's like approaching this idea as being both the problem solver but also this problem identifier and creating that clarity, because they're a founder right, you're a founder.

00:43:46.795 --> 00:43:48.097
You have a million things to do.

00:43:48.378 --> 00:43:49.782
You have a million things to do right.

00:43:49.862 --> 00:43:52.447
If you don't do one, the business starts dying, right?

00:43:52.447 --> 00:44:10.228
I mean, that's a little bit over the top, but in the grand scheme of things you have a lot of things to do and if somebody as a service provider can help, that founder can really just identify and get super clear and understand whether it be the revenue formula or what's that expense or just what's next in your trajectory.

00:44:10.228 --> 00:44:13.804
It's really important Be the problem identifier, totally be the problem identifier.

00:44:14.454 --> 00:44:15.177
Yes, yes.

00:44:15.177 --> 00:44:19.065
Once you hit that goal, what's the next thing that's going to be going on?

00:44:19.065 --> 00:44:38.938
It might be like scalability, expanding your team, but you can identify those problems when you think about your client over the lifetime of their business and where they will be at different points, because if you do your job, you're getting them to that next milestone and new problems arise when they get to that milestone.

00:44:38.938 --> 00:44:39.960
I agree.

00:44:40.141 --> 00:44:49.496
I mean we may be strategists or consultants or coaches or service providers, but there's like little aspects of each, that kind of infuse into what you offer.

00:44:49.496 --> 00:44:50.599
You're not just this one thing.

00:44:50.599 --> 00:44:59.686
Like we're human, right, we have different skill sets and we have different lenses and different perspectives and we can help and kind of shape their direction.

00:44:59.686 --> 00:45:04.123
One of my frameworks like I told you about a number of frameworks is what I really want to be.

00:45:04.123 --> 00:45:05.614
Is I want to be the bumpers on a bowling alley.

00:45:05.614 --> 00:45:10.918
Right, that's what I want you to do, because if you want to hit a strike or you want to knock the pins down, my goal isn't to say just throw it here.

00:45:10.918 --> 00:45:21.521
My goal is to basically say, here, this is where I'm going to give you the guardrails, I'm going to be the safety net on that side, but it's your job to actually throw the ball and and position it to the problem that you actually want to solve.

00:45:22.041 --> 00:45:24.382

Ep 108: How to Find the Hidden Profit in Your Business | Expert Guest Peter Giordano III

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