Original subtitles

I've been in business for 14 years.

Acquisition.com, our portfolio, just

over $250 million per year. Nine weeks

ago, just did $106 million in sales

alone, making the Guinness fastest

selling non-fiction book of all time. We

doubled the formal record. And so that

is just my credibility for what I'm

about to share with you, which is 12 of

the most important kind of rules of

thumb that I've learned or picked up

along the way in my business career that

you can use to analyze your business to

know where you are versus where you

could or should be, whether this is a

problem to solve or something that you

just need to manage and pay attention

to. And so this will help you allocate

where you're spending your time within

the business with a clear yes no answer

of am I doing a good job or not. So

let's dive into the first one. The first

one is close rates versus pricing. So if

you sell people stuff, now this is be

specifically for people who sell with a

salesperson in person or a salesman

online, so on the phones or Zoom if

that's how you fancy it. Um I want to

kind of give you kind of a tier ladder

list to think through in terms of rules

of thumb. And so the reason that there's

a relationship between obviously price

and close rate is that if you lower the

price, we know our old supply demand

curves. If you lower price, demand goes

up, etc. Um, the idea is if you're

closing at 80% or more in whatever you

sell, so four out of five people you

talk to buy your thing, you're typically

underpriced by 3 to 4x. That might sound

mindblowing to you, but that is just the

data that I've, again, rule of thumb

that I've collected over many years of

business. Now, underneath of that, let's

say that your closure isn't necessarily

over 80%, but let's say it's 60 to 80.

So you're closing between, you know, uh,

three and four out of five who are

there. You're probably underpriced by

between two and 3x. So if you're

currently charging 100, you might

definitely consider going to 200. And

you might have a 250 or 300 in you, and

you'd be able to make more money. Now,

the next tier above that is between 50

and 60%. So as we get closer, you'll

notice that the uh the jumps compress.

If you're between 50 and 60%, typically

you're underpriced by one and a half to

2x. So that $100 price point should

probably be one and a half. So $150 or

$200. Now if you're between 40 and 50%

close rates, you're probably between

1.25 to 1.5x underpriced. Meaning now

you should be at maybe 125 or consider

150 as a final price point. Now if

you're like, okay, between I'm at 35%.

Well, you're between 30 and 40%. which

for me is appropriately priced under the

assumption you have all of the selling

mechanisms in place to educate a

consumer prior to the purchase so that

you're not creating a pitch or a spiel.

Instead, they've already consumed all of

this stuff prior to the pitch and then

the entire close call is about

personalization and helping them make

the decision. That is appropriately

designed sales motion. If you have that

sales motion and you were closing 35%,

you're appropriately priced. Now,

sometimes people have that close rate,

but they don't have any of that stuff.

And in those conditions, then you still

probably have a double or a triple in

your price if you set a proper sales

motion in place. Now, if you're below

30%. So, that means that less than one

out of three people who you talk to buy,

then you either have an avatar issue,

you're selling to the wrong person, you

have a sales motion issue. Um, and I fix

those two first before ever considering

lowering price because it almost always

is the thing that the sales team might

consider wanting to do if you have a bad

culture on your sales team or an

entrepreneur who's afraid. But more

realistically, raising prices is almost

always the direction that businesses go

in with one clear exception, which is if

you have a business that has unlimited

scale. Let's say you sell a software

product.

Uh that pricing is going to be that

pricing decision is going to be

incredibly important to you because it

balances two of the strongest uh

influencers on the value of your

company, which is going to be if you

lower the price, it will also typically

increase growth. And so uh you've got

your gross margin, which is what the

price dictates. and also the growth as a

result. So if you have these two things

then you lower the price growth rate

goes up. If you raise the price uh gross

margin goes up but growth rate goes

down. And so the idea is we want to

maximize both of those things. Now

that's only for SAS companies which is

probably like 5% of you here. For

everybody else that is kind of my point

here which is that you probably have an

unscalable business which 80% of

businesses are unscalable meaning

they're service- based. And in those

conditions there's only one way you go

in service which is up. Because if you

play it out long enough, you get good.

You get enough demand because you're

good. You can't service everybody. So

you change your chart. You go up. You go

up in price. And then around and around

you go. And the faster you spin that

loop to going up in price,

the more you will progress in business

because your gross margins will go up,

your reputation will go up, you'll be

able to hire better talent because you

can pay them now. And it becomes a

virtuous cycle versus the vicious cycle

of trying to serve more people and

paying less, having lower gross margins,

hiring worse people, having worse

customers at lower prices and around and

ready you go into the toilet. So that is

the end end all beall that is the

pricing ladder that I use between price

and close rate which brings up rule of

thumb number two LTV to CAC. So you'll

notice that a lot of these are

relationships between numbers. And the

reason that's important is um it's not

like oh your price should be this. That

would be ridiculous. Every business is

different, but when we take two

different pieces of the business, we're

t typically paired or anothetical in

nature. Uh so like an example of this

would be like speed and quality. These

are things that are going to be ratios.

So you want to settle as many support

tickets as you can, but you want to make

sure that the support tickets are done

right. If you cleaned buildings, it

would be I want my cleaners to clean as

many places as they can as long as we

still get five star reviews or we still

get we still get retention, we still get

referrals. So it's always going to be

relationships between two things that

are paired which create rules of thumb.

And again these are not written in

stone. These are rules of thumb. So

let's go to the second one. LTV to CAC.

So for those you don't know lifetime

value, how much a customer spends with

you. How much gross profit you make over

the entire lifetime of the customer. CAC

is cost of getting that customer the

door. So in plain speak that's how much

money does it cost you to make more

money. CAC is how much money it cost

you. Lifetime gross profit or lifetime

value is how much you make. Now a very

traditional rule of thumb here in the

software world was 3:1 and this has been

you know pushed all over the internet

and many businesses took that because

all these big tech giants and very you

know huge company CEOs talk about 3 to1

as though it's a rule of law and I want

to say it is true under specific

conditions which only apply to like 5%

of businesses. So let me give you the

other scenarios and what I consider to

be ideal for that. So 3:1 and this

relates to I don't have anything drawn.

Hold on. I'll draw this for you guys. So

this will make more sense. So let's

imagine.

Do we have overhead cam on? Okay.

You guys digging this? All right. So we

have our attraction, right? How we get

people in the door. That's number one.

We have our conversion which is how do

we actually get them to give us money

number two. And then number three we

have our delivery.

So if we were to use a binary scale of

uh zero or one zero or one zero or one

then we would say if we have zero

basically of unlimited scale I put zero

operational drag for attraction

conversion and delivery. What is that?

that's probably a SAS product, right?

You can run ads to a checkout page and

then the SAS the software does the

delivery, right? All the way zeros all

across. And so for that, when you have

all zeros,

3:1 between how much it cost you to to

get a customer and how much you make is

an appropriate uh uh ratio. But what if

one of these three things includes a

human? So, let's give a simple example.

You run ads to a checkout page and then

you have somebody who does delivery. You

have a human being who does delivery.

Well, as soon as that occurs, or said

differently, maybe you run ads to a

salesperson and then you have some sort

of lighter touch delivery on the back

end. In any of these scenarios, I want

to now have six one. Sorry, this is a

one. I want to have six one. Now, why

would I double this? So, let me explain.

As soon as you add a human in the loop,

as soon as you add a human to the

system, you're going to have lumpiness

or inconsistency. So, what do I mean by

that? If, let's use the salesperson

example, you're running ads to a

salesperson. As soon as you get to a

certain point where you've capped that

salesperson's calendar, what do you have

to do? You have to hire another

salesperson. And what happens when you

hire a new salesperson? That person's

not going to be as good as the main

person, especially right off the bat,

and maybe even ever. And so we have to

build into the business padding so that

we can incur the cost of trading

somebody up and also having them suck

because if we're at six to one uh with

our one guy or rather if we were at 3:1

with one guy selling as soon as the next

guy comes in we're below 3 one right and

so we have to be at six to one so that

when that next person comes in we have

some we have some we have some cushion

we got a little cushion for the

cushioning if you will uh that that

gives

Again, padding. I'm keep saying padding,

so you'll probably hear padding a bunch

of times, but that's what it is. Now,

let's say that you've got two of these

three. So, now let's say we're uh we're

running ads and we have a we have a

manual person who's taking the phone

call, closing, and then the delivery is

also service. This is honestly, this is

many of you guys is that you are in

service businesses and this like this is

what it is. Okay, when I'm in this

situation,

I want 9 to1. Now, the reason this is so

difficult for people to wrap their heads

around is that most people want to scale

when their business model has not been

nailed yet. And so, that's why we say

nail it then scale it. And so, people

get ahead of their skis, they

overexpand, they they bring on, you

know, they try to open more locations or

bring on more reps too fast because

their ego is tied to the number rather

than looking at the fundamental

economics of their business and saying,

is this ready to scale? Because if I had

the pick of like I would rather scale

really fast for three years and then

realize the business is broken or spend

three years just nailing all my nailing

the model getting all the metrics right

and then scaling it I would obviously

pick the second one. But the thing is is

people if I say that to you most people

be like well of course I pick the second

one. But people don't behave that way.

And so what you say you would do versus

what you actually do are typically very

different. And so because now I have two

humans in the loop, I'm going to have uh

inefficiencies on delivery when I bring

in a new rep or a new technician or new

whatever who's not going to be as good,

not as not as effective as the other

people. I got to be able to eat that. If

I have a bad uh salesperson when they

come in, I'm going to have to be able to

eat that. And so now I got to be at 9:1

to have the cushion to scale. And then

finally along the same line of thinking,

if I have three people all the way

through, I've got humans who are doing

the attraction, humans who are doing the

conversion, and humans who are doing the

delivery, then I want to be at 12 to1.

All right. Now, I want to put this in

perspective for you guys.

One of the gifts that I could hopefully

give is frame shifts in the change of

perspective. So, [cough]

let me know in the chat. the first year

of gym launch when I started running

ads. Okay, so we had automated here and

I would say we were like probably a.5

here. It has half media um but we had

half kind of like some support reps that

help with tech stuff and then this was

human-based. All right, we had a phone

sales team. What do you think my LTV to

CAC ratio was? Let me know in the chat.

5:1

4:1 6:1 What do you guys think?

Where do you guys wait? Let me see some

nums. Let me see some digits. 6 to1,

4:1, 9 to1, 2:1, 30 to1, Liam. Nice. 30

to1, 3:1, 15 to1. I appreciate the the

belief, guys. Our pit 100 to1, you crazy

mofo. Uh, Ronald 5 to one, 25 to1, 20

to1. Okay, you guys want to know what it

was?

I'll tell you.

The first year of gym launch, my LTV CAC

was 100 to one. I spent a hundred grand

and made 10 million.

Wild

recommend. Uh it was wild, wild times.

Okay. Now, what how is that how is that

possible? Right? How is that possible?

Most of the money that I've made in my

life has happened during these distinct

windows of opportunity where there was

huge arbitrage between what it cost me

to get a customer and what a customer is

worth to me. And uh I've had that happen

four times in my life. And each of those

times have been above 30 to1. And so the

reason I'm so adamant about this is that

I know because I've had it happen that

you have to just keep beating up the

system. You have to keep tweaking the

money model, which is why I made the

book Money Models. You have to keep

cranking on this thing until eventually

you crack through that lever. And so you

see 12 to1 people like that's crazy. I'm

like this is the minimum. And again this

is if you want to scale big you can

absolutely run a business that does six

to1 and you know make a million bucks a

year. Couple million bucks a year. Like

you can do that. I'm saying if you want

to see what the biggest companies in the

world have they have absurd LTV to CAC.

Now what is there's only two ways to

improve that ratio, right? Way one is

you drive CAC down to zero because

there's only two long-term winning

strategies in business. Have extremely

low CAC, which means you build massive

brand A, or B, you have a product that

is viral. Those are the two types of

things that great really big companies

on the cost side. On the other hand, you

have the extremely high LTV side. So

looking for a company, I'll give you an

example of each. So Facebook is a

company that wasn't, oh, we have

unlimited LTV. No, they have a business

where CAC approached zero. And so if you

can get CAC 20 to zero, you could

figuratively get eight billion people

for zero dollars. And when you do that,

even if you make a couple hundred bucks

a year on them, you still make a lot of

money. On the other hand, you might have

a company that's like Salesforce, right?

Uh and a company like that, they might

make a million dollars or $5 million per

year on an enterprise level customer.

Now, that customer isn't coming to them

for free. Now, they do have some brand

of course that's going to offset some of

those CAT costs, but there's still going

to be huge cost of getting those

customers, especially the larger

customers with contracts. They have to

bid against other CRM, etc., etc. And

so, both of those are big companies. The

idea is that you have to know what type

of company you're going and your winning

strategy to scale. And so, to make this

extraordinary LTV to CAC ratios, one of

these has to approach zero or infinity.

That's the game. So, that's the second

rule of thumb. Look at your three steps.

Am I zero to one on attraction? Do I

have unlimited scale on attraction? So

if if you're like, what's an unscalable

version? This would be like I do manual

outreach. That would be human in the

loop versus I run ads or I make content.

Conversion here would be checkout page

is scalable. Human uh phone team or

sales team in person that has a human.

Delivery. If I sell services, I'm going

to have humans. If I sell software, I

sell media that's going to not have

humans. I sell physical products for

example, that would still not have

humans by my definition. That's the

idea. You can see what your LTV

character ratios are. You can see where

you're at and whether you need to

improve them. Which brings me to rule

numero t. That is uh Spanish for rule

number three. I think it be. But like

let's not get crazy. Um no gift.

I messed that one up. Either way,

hopefully you're with me. Real quick, I

have a gift for you. This is the $100

million scaling road map. It's something

that my team and I put 200 plus hours

into building and breaking the stages of

scaling into 10 steps. All right? All

right. And so what we did is we broke

down everything that got us basically

got us stuck and what we did to break

free at each level of the business. And

if you'd like to know what product,

marketing, sales, customer service, IT,

recruiting, human uh resources, and

finance look like at the stage that

you're currently at, this is a free

gift. So all you have to do is go to

aquis.com/romap. You can plug in your

business information. And if you want

our help, you want my help to help you

break through whatever level of scaling

you're at. This is not a promise. I'm

just saying we'd love to help. Um on the

thank you page, you can book a call. Uh,

every month we have a workshop out here

at my headquarters. You actually talk to

my real team that does does our

marketing, does our emails, does our

ads, does our copy, does our does our

does our sales, does our finance, does

our recruiting, the real people are

doing this at a very high level. And

what's really cool about that is that

they can typically find and spot what

the constraints are in a business like

that. And so it's one of the most

valuable things that I could possibly

do. Obviously, you know, space is

limited based on our actual

headquarters. Um, but if that's

interesting on the thank you page, you

can book a call. No pressure. This is a

gift either way. It's absolutely free.

So rule number three is rule of 100. So

fundamentally, if you're trying to grow

the business, I have never seen a

business not grow when they implement

the rule of 100 when they're starting

out. And to be clear, this works for all

levels. So it's either rule of 100 on

your first acquisition channel or rule

of 100 and ideally for 100 days. So 100

and 100, right? And if you're like,

wait, 100 times 100, you're like, you're

right. That's 10,000 actions. And what

happens when you take 10,000 actions in

one specific direction, you tend to get

results. And the amount of like

screenshots of like uh content and reach

and impressions that I've got from

people who actually tick the box 100

days in a row doing 100 actions that

they get their first customer. Most

people get it by like the third week.

But you have to commit to doing 100

days. And it's kind of like the very the

the the idea of like the heart of a

missionary versus a mercenary. You have

to commit in your heart that you're

going to do 100 days. And then it

happens very quickly. If you try to do

this for 100 days to try and prove me

wrong, congratulations.

You won. You're still not succeeding.

Probably not the perspective because it

won't change anything in my life. All

right? And so where this uh becomes a

symptom that you can recognize in your

business is volatility. All right? And I

said this applies to all levels. So if

you're a bigger business owner, you take

the rule of 100 and you just apply it to

new channels. And so if you're like, we

run meta ads, it's like great. Well, we

needed to take the same perspective on

how we're going to run YouTube ads or

Google ads, right? If you're on content

side, it's like we make, you know,

reels. Uh, awesome. It's like, okay, we

do it on this platform. We need to do

this on a second platform. If you're

doing outreach, you every time you

expand into the new platform or medium

or channel, you would implement the rule

100 yet again. Now, if you're a smaller

business, which most businesses are

small by statistics and reality,

95% of business left in a million

dollars. So here we go. If your business

feels feast or famine, meaning if you

get a sale this week and then there's

nothing and there's nothing and then

next week you get one and then two more

weeks and then one two and then another

three weeks of famine. The issue is not

that you have quote inconsistent

lead flow. It feels inconsistent because

the timeline you're measuring it on is

too small. So, if I were to look at it

year-over-year, if you're the type of

business that does a small amount of

advertising, you might sell about the

same amount of number of customers every

single year, but that volatility or the

perception of volatility is a symptom of

insufficient volume. You're not doing

enough to get enough out. Now, if we

expand that time horizon, let's say that

we expand it to 30 days and let's say

that you on average get third three

customers a month. Okay, 30 days, three

customers a month. That means you get

one customer per 10 days. And so that

means that in 10 days what we can

reverse this into is that there is an

amount of advertising that is occurring

either through content through word of

mouth through uh outreach through paid

ads whatever affiliates people referring

to you who are partners or you know

centers of influence if you will or

we're sending you business that in that

10 days there's enough advertising for

one sale to occur. And so the idea is,

okay, well, if I can just look at the

amount of advertising that I'm doing

probably haphazardly over a 10-day

period and then do it deliberately

instead of on accident on a daily basis,

then I could take what I do in

advertising in 10 days and do it in one.

And if I do it in one, then I'm going to

get the same outcome as doing one sale

every 10 and I'll get one sale every

day. And so the companies that are doing

30 times more sales than you are

typically doing 30 times more

advertising than you are. real. And so

I've put this in perspective many I've

seen I mean because obviously businesses

fly out here every every week.com so I

know a lot of numbers around what

businesses are doing at different

revenue levels. If I look at a one or

two million dollar business and I look

at how much content they're putting out

just on a pure volume basis and the

thing is is like of course there's

quality of content but the thing is is

if if you look at it across all pieces

of content with the outliers already

baked in that you know that one out of

10 or one out of 100 are going to be

super outliers of course the top 1% the

top one out of 100 the top 10% you know

one out of 10. Um with that volume baked

in things tend to normalize again. And

so we make whatever it is 450 pieces of

content a week, right? Almost 500 for

simple math. So we're looking at third,

you know, 25 30,000 pieces of content

per year. And many of the people that

are at $1 million are doing something in

the neighborhood of like one a day. And

so they're doing 365 and we're doing

like 25 or 30,000. And so we get nine or

10 times the uh sorry uh uh way way more

than that. Sorry, that's a thousand

times uh thousand times the outcome that

they are. Now, you could even make the

argument that I'm even less efficient

than they are, but diminishing returns

are still returns, right? So, like if I

do a thousand times more than you, but I

get a hundred times the outcome, I'm

good with that. And I think this is the

piece that people really mess up is they

see diminishing returns and then think,

"Oh, I should stop because my return per

action has gone down." Rather than

thinking, "I'm still getting more and

it's still worth it." And that's the

part that I think most people who are

smaller miss out on. the amount of

conversations I've had with small

business owners who are all about

optimization. Again, there's nothing

wrong with that. You just can't have

both. You can be like, I want to

optimize. It's like fine, you can get

the most for the least, but you're not

going to get the most. Period. And the

difference is that the people who want

the most are the ones who win.

Which leads me to rule number four, lead

response times. So, rule of thumb here,

for the love of God, please call your

leads within 60 seconds. I don't know

how how many times I have to say this

across how many videos and it's just

like do you hate helping people? Do you

hate having more revenue and more profit

in the business? Would you prefer to pay

four times more per customer than you

currently are because you are like, you

know what we're going to do? So this

person just opted in. They're like, you

know what? I really want to solve this

problem. This company looks interesting.

And then you're on the other side

saying, let's let them cool off a little

bit. they're a little they're a little

too he hot and heavy, you know what I

mean? Like, let's make sure they don't

make a decision that they would regret.

You know, I don't want them to take that

wallet out too fast because that might

be unreasonable. And so, let's let them

simmer. Let's let them marinate for a

couple days. And you know what? Let's

let them date around. Let's let them

call some other businesses so that by

the time we finally get to them, if we

ever do get to them, they have a lot

more information from different

competitors so they can compare the pros

and cons of our business and our

offering to everyone else so that we can

get in a pricing war all the way to the

bottom. And so when we do that, not only

are we spending four times as much as we

should to acquire a customer, we're also

not able to make as much per customer

because your close rates will go down on

top of that and so will your gross

margins. And so it's one of those like I

think Brian Johnson from Blueprint was

talking about this. You're like where is

he going with this? I'll bring it back

home. He said he has boiled down like

however many years of doing all this

research and stuff into one number which

is your resting heart rate before bed.

He said if you show me that number I can

see your soul. To me I would say LTV to

CAC would be that number but [laughter]

underneath of that number would be would

be your lead response time. And the

reason for that is like it's how you do

one thing is how you do everything. And

I have some elements that I take take uh

offense to that particular term. But I

do think that it is a way of doing

business. How dedicated to excellence

are you? Right? And if you know if you

know this has been proven over and over

again in business studies and in the

real world, right? Saying, "Hey, you're

going to 4x your sales." People think,

"Yeah, but I can't I can't afford to

hire somebody to call my leads in that

speed." Well, do you think if you had

four times the revenue you currently do

that you'd be able to afford it with the

revenue that you would now make from

that person? This is how business works.

You invest and then you get something

back. That's how it works. But this is

the first time I think I framed it the

other way around. Look at how much it

cost you to get a customer. If you

divided that by four, would that improve

your LTV to CAC ratio?

Would that be the thing that you need in

order to scale? Do you think that it

your leads cost too much might be a

factor of the fact that you don't know

how to sell?

So when I look at rules of thumb, it's

like, well, I'm going to attack these

areas first because there's huge returns

for minimal effort. Talk about, you

know, maximizing, optimizing. For the

love of God, please call your leads

quickly. [sighs]

Sorry, a little passionate about that

one. All right. Think the spirit moves?

I'm sorry.

I don't take it back. We can just move

on. Okay, which brings me to rule number

five. 70% calendar utilization. Okay, so

this is a rule of thumb. So when you

have more salespeople,

there's another issue that starts to

come up, which is my sales team's

underutilized or they're booked out. So

what's the sweet spot? The reason this

is important is because well, if you

miss it, you will let me let me go

either extreme. If you have your sales

team completely booked out, fully

utilized, here's two things that happen

as a result that are bad. Number one is

that your total lead conversion will go

down. You will make more sales because

they're booked out for sure. Absolute

will go up, but your your conversion

rates will go down, meaning your CAC,

your cost to acquire customers will go

up. Um, which is depending on how

sensitive your numbers are, could be

very bad for the business. And so that

utilization happens. And as a result,

one, people have to start booking out

further and further because tomorrow,

the next day, they're all booked out.

They can't find convenient times. So,

one, it's further out. And so, show

rates on further out appointments

compared to sooner appointments goes

down. Number two, show rate on

appointments that are inconvenient

versus convenient. Maybe they do it a

little bit sooner, but it's still not

the time they'd ideally like. Show rates

go down. Number three, what happens if a

sales guy is making calls all day long?

What are they not doing? They're not

doing outbound. What are they also not

doing? They're not following up on the

the calls that they should just they

have six-inch putts. They have some

tipins that they need to do that they

just aren't doing because they're on

calls today. And rightfully so. They

should be focused on like they should

reasonably focus on the leads that are

in front of them. But it is your job as

the entrepreneur to move their calendar

better utilize their time so you can

maximize conversion. Okay. So on the

other extreme, let's say that you have

30% utilization. uh so you know 70% of

their calendars uh empty. The problem

with this that I found is that sales

team morale can start to drop because

they're they don't really ever get in

momentum. So if you have like two calls

a day, like the calls sometimes mean too

much. And so guys have kind of

commission breath. They're like, I have

to close the sale, right? I'm not going

to get paid. And so it's a balance

between both those things. So I've found

70% is kind of the sweet spot. I don't

let it get above 85. Um and I try not to

let it drop below 60. And so that's kind

of give you a range. I would say 707 75

is right around the sweet spot for this.

And I'll and I'll explain the reasoning

why. When we see conversion rates, as in

if we get 100 leads, we want to maximize

the conversion of those leads, which

function functionally is what a sales

team's supposed to do. Why why you have

sales team rather than just a checkout

page. If we want to maximize that

conversion,

then we want to give the time we want to

give one enough times for the prospect

to book soon. Two, enough times for that

time to be convenient for them. Both of

these things increase show rates. Number

three, we want to have the salesperson

have enough blank space in their

calendar so they can work their pipeline

and bring people back in. And I remember

the realization I had around this was we

would have high weeks and low weeks with

ads in terms of book calendars, but our

sales remained relatively the same. And

I was like, how does that work? And it

was just because when a big wave came

in, the guys were really inefficient.

And when there was, you know, a famine,

if you will, and there was more empty

calendars, the guys squeezed their

pipelines. And so I was like, man, if we

just squeezed our pipelines all the

time, we would just make on the high

weeks, we'd make so much more money.

Well, how do you do that? You typically

need to hire more sales people. And I

will say as a as a personal note, I have

yet to make less money by hiring more

sales.

So like when in doubt, sales tends to

drive business. And I also have some

belief around the fact, and this is most

cultures, not ours here at Acquisition,

but the vast majority of sales cultures,

guys will get fat and happy. they will

make enough sales to make whatever that

nut is for them that they don't want to

work that hard anymore. And so I would

rather have the guys just below whatever

that that that amount is. So they're

always striving. They're always

squeezing the pipeline rather than you

know they can sell to their goal within

the first two weeks and then they take

the last two weeks of the month off. And

that's where um you know entrepreneurs,

hey do I need to change my sales

commissions? Maybe. But more often than

not, it's like you can just add sales

people so that they can squeeze their

opportunities better. All right, which

leads me to rule number six. Payback

period. Actually, that sound felt very

aggressive. Payback. Um, so what is

payback period? It's how quickly you can

recover the cost of getting a customer.

Now, for me, ideally, I try to do within

30 days. So, payback period in general

is how fast you get the money back from

what it cost you to get somebody. My

goal is within 30 days. Why? Because

just about every business owner, at

least in America and at least the

developed world, can typically gain

access to a credit card which gives you

30 days of interest free money. Now, the

reason that's important is that if you

have interest free money, that it means

that you can grow without money out of

pocket. And that allows you to have

limitless growth. If it if I can take a

$100 of credit card money, which I don't

have to pay anything for until the end

of the month, and I can take that $100

and go get me a customer, and at the end

of the month, make that $100 back, then

at the end of the month, I owe no one

anything, and I now have a customer.

That is the power of this. Now you can

repeat that at infin item which is Latin

for lots of times. It's into infinity

but let's not get let's not get too

technical. Um so the reason that I use

that as my as my as my rule of thumb is

for that very practical reason. Now you

might think to yourself well our payback

period is 90 days. There's nothing wrong

with that. It's the same as like you

know we had LTV to CAC at gym launch of

100 to1. It didn't stay 100 to1. It was

1001 the first year right and over time

it ended up being somewhere in the area

of 30-ish to1. Um but the idea because

as you scale more levels of of

infrastructure will get introduced to

the business and so that will drive down

operating margins and that's okay as

long as you have a business that scales.

Now back to payback period.

You can I want to shift the perspective

on this which is that like even if you

currently spend and get paid back in 90,

you should still think to yourself like

is there a way is there a money model?

Is there a setup? Is there a

configuration of pricing and products of

what I currently have without

introducing operational drag or too much

operational drag that could pull cash

forward? And functionally, this is

literally what the entire book for money

models was about was driving more cash

flow forward. Now, if you have a

business where you're funded from the

outside, A or B, you're very large

business that has huge capital reserves,

you have a huge base of recurring

customers, then you can get more

aggressive, of course, right? Like if if

you're going to go head-to-head with,

you know, Apple, then sure, they can

they don't need to get their money back

in 30 days. I mean, they are a bank at

this point. Like, they can they can

borrow money from the entire world and

and fund whatever they want. Um, but for

again everybody who's watching this,

most of you guys are bootstrapped.

Actually, can we do a poll real quick?

All right, let's say who here is

bootstrapped versus has investors.

That's it. Bootstrap versus investors.

Okay, great. So, one out of 25 of you

guys, you don't have to worry about the

payback period, but you still should.

Uh, which is all the investor bros. Now,

all the guys who have in outside

investors, I promise you, you will get

investors frothing at the mouth if you

can uh show that you can get payback

period within 30 days. Number one.

Number two,

if you have payback within 30 days,

guess what? You also don't need

investors because you don't need their

money to scale, which gives you a huge

amount of leverage into when you're

getting into your fundraising period.

Now, that's the one out of 25. For the

other 20 out of 25 of you who are

bootstrap business owners, y'all are

like me, which is that I like Bank of

Alex is what's funding this stuff. And

so, we have to think, are there

initiation fees? Are there setup fees?

Are there is there an onboarding

process? Is there an on-ramp? Is there a

front-end defined program or setup that

I can sell? Can I can I bundle in some

sort of physical product upfront with my

services? Can I sell a bundle of an

extended period of time to cash flow at

day one? Can I do a buy one get two? Can

I get them to pay for the last month up

front? All of these are different

tactical versions of solving for the

same problem, which is I want to pull

cash forward so I can recover CAC within

that first month. Because when that

happens, I'm telling you, like all of my

businesses, every single one that's

gotten really big, we have been able to

recover what it cost us to get a

customer in the in the first 30 days.

Period.

So, it's the strongest recommendation I

can give you. All right, with that being

said, let's go. Rule number that's a

six. There you go. Rule number seven,

gross margins. So, gross margins are

wildly misunderstood, which is

interesting. Um,

if you are if you are a business owner,

you you have to learn the language of

business. All right? It is it is for

sure. There there are different

languages, but there's there's not a

huge amount of words that you have to

know. You might need to know like a

hundred terms. And think about this is

like you were studying for a test,

right? Like learning a 100 terms not

that hard to understand. And almost all

of them are relationships between two

things. That's what almost all of these

terms are. So what is gross margin? It's

one word that's a relationship between

two things. How much you charge and how

much it cost you to deliver the thing.

And the difference between those things

is your gross margin. To be clear,

that's not your net profit margin, which

is a different ratio, right? Between

two, not necessarily ratio, but the

difference between two different

numbers, right? But your gross margins

are very important because it is what

dictates everything else in the

business. So what do I mean by that? If

you like your net margins cannot exceed

your gross margins. Think about that for

a moment. If you have if you're like,

"Man, I'd love to run a 50% net margin

business." That's an amazing goal and I

love that goal for you. If your gross

margins are 50%, that means that you can

have literally no other cost besides the

thing you sell in the entire business.

You can't have any cost of acquiring

customers. You can't have any fixed

overhead. You can't have any employees

that are not specifically in delivery.

You can't have any admin, any help, of

course. Now, the likelihood of of you

getting to a 50% margin when you have

50% gross margins is basically zero. And

so this is why and and traditionally

small business owners will undercharge

because they sell out of their own

wallet, right? And they sell out of

their own wallet in two different ways.

They sell out of their own wallet

because they don't have that much money

and so they feel bad charging other

people when they don't have much money

because they're like, "Man, I get what

it's like to struggle." And I think

there's nothing wrong with that. It's

just understand the business is not

going to grow. You're not going to hire

more people. The other reason they sell

out of their own wallet is that they

believe that the service they deliver is

not that valuable because they know how

to do it. So to quote the joker, right,

my father always told me when you're

good at something, never do it for free,

right? And so the idea is that like you

I like if you're good at fixing cars,

right, you're like well it comes

naturally. It's not that hard. You got

to know where the you know it's like

it's what we do is really

straightforward to you. to you, but to a

customer, we have to sell off the value

of what their life would be like if they

didn't have this problem solved. That is

what we have to charge off of. And when

we charge off of those prices, then we

create more opportunity for gross

margin. Now, here's why this is so

important. Let me give you a math

example that will blow your minds. And I

always, you know, everyone everyone gets

harpotations when I say math. So, let's

just say a money example. Okay? So,

let's give you a money example that'll

get you really happy. All right? So,

let's say that I've got some service

that I that I deliver, okay? And it

costs me a 100 bucks a month, okay?

That's what it costs me in services and

whatever. All right? So, if I want to

have

80% gross margins, which I said these

are rules of thumb. My rule of thumb for

services is at least 80. Okay? So, I

want to show you two different scenarios

here. So, at 80%

at 80% this $100 I have to have $500 has

to be my price. Okay, at 70%

and I have a $100 cost.

Who's who can do this math for me? All

right, I got to do this. All right, 100

equals.7.

Julian, you were premed. Do it for me.

or I'll tell you what [laughter]

I'll tell you what 90% looks like

equals $1,000. [laughter]

All right, where is it? Where where we

at? Why you jackasses keep asking alive?

Thank you, G Salons.

Is it 350? Is that it? We should We

should know this. I feel like as a

collective community we should be able

to figure out when uh 30% okay so it

should be 100 divided by.3 is what it

should be so 100 divided by.3 right

is 330 thank you so that would mean that

233 should be 70%. Um,

so 233 divided by 333,

correct? Thank you. Okay, so 333.

Okay, so look at how big of a difference

this is, right? Between these between

these numbers, look at how like when

people are like, "Oh, well my my margins

are at 60%, so I'm close to 80." It's

like, bro, we're not even like you're in

a different stratosphere. Okay, so let's

take this to the natural end.

If you have a business, let's say that

runs 20% margins at net margins at the

end of the year, what you can pay

yourself, right? If we say, "Hey, is

there a way you think we could go from

70% to 90%." Well, that that sounds like

it's not that big of a deal. But when

you go from 70 to 90, what happens to

the actual margin?

You double. You make way more money. And

sometimes it means a lot more than that

because sometimes the incremental margin

is all margin whereas every dollar

revenue up to that point covered cost,

right? And so what is our

we make $233 here, right? We make $400

here and we make $900 here per customer.

Big difference, right? And so when

people hear these numbers, because these

numbers look similar, they think that

these are going to be very similar and

they are not.

And so this is why I'm so adamant that

80% is my minimum. I target like that's

my baseline. And then from like I will

not get into a business with less than

80% gross margins. I won't do it because

I know that I then have to run

everything else off of this 80. Right?

So if I want to have a 50% net margin

business, I only have 30% left. I got

30% to cover everything else. I got to

cover rent. I got to cover admin. I got

to cover insurance. I got to cover um I

got to cover uh marketing. I got to

cover sales. I got to cover everything

else with just this 30% so I can have

50% left over.

Is this is this ringing? Is this ringing

with you guys? Is this making sense?

Even if it's a service based business,

bro, this is for service- based

businesses, not DN Australia. This is

for service- based businesses.

And this may this is why like

so ideally I like to have I mean again

this is minimum and I know this is going

to blow your minds here like I like one

of the first things we did when we fixed

gyms is we made sure the pricing was at

least 80% gross margins.

That's a service business. Now some of

you are like well there that's not

possible. Of course it's possible. It's

not possible when you sell a commodity.

If a customer can look at your thing and

somebody down the street's thing and

say, "These are about the same. I'll buy

the cheaper one." You sell a

commoditized service just like you can

sell a commoditized product. And so you

might have salt and salt and you got FSG

salt and whatever, you know, pink

Himalayan, it's salt, right? And so how

do we make these two things different?

We have to brand it's pink Himalayan

versus just normal salt, right? And they

charge a premium for that. And so you

have to figure out how to reconfigure.

If only there were a book written about

how to make an offer that's

decommoditized so that you could achieve

80% or higher gross margins, that would

be amazing, wouldn't it? And for those

of you who don't know, I wrote a book on

this. It's called $100 million offers.

27,000 five star reviews. You should

read it. But I I want to draw this

because this like if you're trying to

figure out what's wrong with your

business, it's usually because your

margins are off. You're mispriced. But

again, sometimes this is this is the

this is the fundamental mathematical

problem with the business. But this

might really be the symptom of the fact

that you have a commoditized offer. A B

you have a sales process that doesn't

function properly, right? Um, and so

that's the that's the big idea. So if

you want to run a high margin business,

then you have to run exceptionally high

gross margins for whatever it is that

you sell. Okay, cool. That math was

tough, wasn't it? All right, so let's do

rule number eight. Rule of thumb number

eight, if you will. Uh, 30-day cash

collected. So, this is a this is an

add-on to the the the 30-day payback

period. So,

what is the exact amount of money that I

want to have collected within that 30

days? It's going to be COG. So, the cost

of delivering cost of goods sold. I'll

just write out cost of goods

sold. Now, the goods sold can be

services too to be clear. So it's cost

of goods sold, how much it cost you for

the stuff plus cost of getting

customer.

Okay, so if we have the cost of getting

the customer and the cost of whatever we

got them back, we want both those things

together.

We want whatever we collect to be

greater

We want the gross profit or the cash we

collect in that first 30 days to be

greater than this plus this.

The reason this is so magical is that

once this occurs,

customer comes in, you acquire that

customer and then you have to deliver on

that customer. And then that customer

pays you back all of that cost and then

what can you do?

Go get you another customer.

That is why it's so magical. And so that

is what the whole point of this 30-day

cash collected thing is. We want to pull

it forward.

Cool.

Great. Now, manufacturing study with

Zoro. No. Manufacturing, you're going to

have different margins because you have

cost of goods sold and that's going to

be a little different. Um I would to be

fair, I would still prefer to have a

business that has 80% gross margins. But

with services, for human services, um I

I have that as my rule of thumb is that

I always want 80% or higher gross

margins. Okay.

That brings us to rule number 10, which

is functionally rule number nine, but

we're calling it 10 because I skipped

number nine. Let's just go with which is

turn and retention. So,

I want to only have to acquire customers

once. The reason that most businesses

cannot get big is because they are

always filling a leaky bucket. Now,

you've heard this terminology before,

but think about how difficult it is to

acquire a customer. It's a lot of work,

right? And to go through that entire

process only to lose them to have to go

get another one is exhausting. And so

you want to be and this is John Paul

Deorio uh is the quote from him. He said

you don't want to be in the sales

business you want to be in the reselling

business. And so what he meant by that

is how do we get customers to just buy

again and again and again which does

come down to product primarily and then

brand secondarily. And so the idea here

is that for your business to be a

significantly more valuable but b way

more fun to run you want to keep the

customers you have. And so when you're a

small business owner, you're typically

just barely figuring out what's going

on. And so what happens is people will

typically try to scale too fast before

they've actually figured out revenue

retention and churn. And so what are

quote good benchmarks? Well, good

benchmarks for anything B2B is you

probably want to be above 80%.

In terms of retention annually that

means that if I get a 100 customers gen

1, right? So, this is January 1.

Let's say 2025,

Jan 1, uh, 2026. I want to make sure

that I have at least 80 of these

customers. Now, this is where people get

confused. Let's say that they grow

because they get better at marketing

sales throughout the year. They and they

come January 26 and let's say they're at

160 customers is how many they have.

They think, "Oh, well, I definitely

retained all 100 customers and I also

got 60 more." Uh-uh. We're looking at of

the original 100, how many of them made

it to here. This is the issue. Now, you

can take whatever your annual retention

is and then you can basically reverse

engineer into what your lifetime uh

value of a customer is. So, if you have

50% annual retention, then you can take

whatever someone pays over a year, let's

use simple math and say someone pays

$100 per year. If you have 50% annual

retention, then it means that you can

basically double it. So, you divide it

by 50%.

equals $200 is what you're going to make

from a customer. Now, here's where this

gets really wild. Let's say that you

have 80% annual retention. Doesn't seem

like that much different, right? It's

only 30%. What is it actually different

from a math perspective? It means that

you're going to get functionally

four turns, five turns, five turns

because every year you're going to lose

20%. Right? And so, simple math on that

is around the back of napkin on that is

about $500.

what

a lot.

All right. And so think about two

businesses and this is why this is so

important.

The cost of getting customers between

different businesses is typically very

uh commoditized. So CAC in an industry

is a commodity. Think about how weird

that is as as a sentence. If there's two

social media marketing agencies that

both sell generically similar services,

now of course we don't want to do that.

But this is how the the industry by and

large works. If you have two different

businesses that are selling the rel

relative to the same thing, the cost of

getting customers there is typically

about the same. Here is where one

business can become 5, 10, 100 times

more valuable is that those customers

are worth five, 10, 100 times more to

the other business. And so they are able

to to play a huge arbitrage game. So

they can spend way more money in the

acquisition than the than the the

business that only has call it 50%

retention. Right? This guy's getting two

and a half times more per customer than

the first company. Even though maybe the

cost of getting the customer in both

these scenarios might be the same. This

is where there's huge amount of alpha or

kind of arbitrage above what market

could get um in terms of improving a

business. And so right now if you don't

know how many customers stay with you

year-over-year, definitely worth

figuring out. And so that is my rule of

thumb is that I target. And so for each

of these numbers as I'm sharing them is

like this is my target. This is what I

want to get to. And if I don't have

that, I see this as a huge problem in

the business and I have to go fix it.

Otherwise, I just know that I'm going to

create a I'm going to scale problems.

Right? When you scale problems, they

just get meaner and uglier and they have

more faces on them. Right? You do not

want to do that. And this is where most

people's ego gets tight dominated, which

is why most entrepreneurs can't scale.

All right. So rule number 11. What is a

good rule of thumb for how many people

prepay? So, a lot of you guys uh some of

you guys follow my stuff. Um I'm

obviously a big fan of pulling cash

forward because of all the reasons I

already mentioned. One is if someone

prepays for a year, no one can churn if

you prepay, right? You already pay for

the year. Can't really turn out, right?

Uh what other benefits uh happen when

when you prepay? Well, if you uh prepay,

you get all that cash today. If you get

all that cash today, what can you use do

with that cash? Go get more customers,

right? Think about this.

Everybody here should at least give a

10% discount for getting paid in full

today. Why? Because the value of money

today is typically at least or at least

that same value of that money in a year

will be worth 10% more at minimum. You

could take the money, put it in the darn

stock market, right? And then wait a

year and it would be worth 10% more. All

right? [laughter] And so like at

[clears throat] minimum that is a that

is the amount that I'm willing to give

to pull cash forward. All right? Now,

what percentages rule of thumb uh should

you expect? So, let me give you a

couple. So, um if you have uh call it a

a uh like a buy 10 get two type deal,

like you pay for 10 months and you get

uh you get two for free, you can expect

somewhere in the neighborhood of like 15

to 20% of people to take that offer. All

right? if you give uh discounts in

excess of that and and you give bonuses

for people prepaying. And so the way I

think about that is three ways you can

do that. How can I how can I deliver

something to them faster? How can I make

it less risky? Uh and then how can I

make it easier? So if I say, "Hey, um

you can prepay and if you prepay, you

skip the line." Ah, that sounds nice.

Hey, if you prepay, you'll get a

dedicated concierge versus being in

group. Hey, if you uh prepay, I'll also

add in our guarantee or I'll double the

length of our guarantee. Right? So,

these are some of the things that you

can manipulate in terms of variables to

pull cash forward. Now, when you have a

a moderate discount plus one of one or

more of those kind of like um ancillary

benefits that I just rattled off, you

should expect 30 to 40% of people to

prepay. That's a monster difference in

terms of cash forward. Now, simply

offering that for many of you, if you're

not doing it, we'll pull cash forward.

Now, a correlary to that is whether you

have a third party financing company.

Now, this is directly from um a firm. Uh

so, I know a lot of the high-ups at a

firm, not a lot, I just know a very high

up at a firm, I'll just say that. U a

handful of them. Uh and the the metrics

that they quote is a 35% increase in

sales overall. Kind of interesting. So,

not only does that money come forward,

if you have good financing, you can also

increase sales overall. People who would

not have been able to buy are now

willing to because they have more

convenient ways of paying. So, that kind

of gives you a double whammy of, oh,

people who wouldn't buy did. And they

went from not buying to me having all

that cash today, which is why having

very good financing partners can be a

huge game changer for a business. Now, I

will I'll put this little caveat in

place, which is that financing will not

save your business. If your if your food

sucks at your restaurant, financing it

will just get more people to find out

that the food sucks faster. All right,

so I've never seen a business get saved

by this. But I have seen businesses grow

for sure by making some of these deals

and putting them in place. Now, let me

give you a couple payment structures

that you can use um that have worked

really well for me. So, right off the

bat, if you just say like, "Hey, people

go into monthly." It's like, "That's a

way of doing things." But I would prefer

to sell durations and then say, "Cool,

prepay and get guarantee, priority, and

concierge, right? Let's pull it

forward." If they still can, I say,

"Great. Let's split it. Half now, half

in a month." Now, this is little little

pro tip on this. Half now, half in a

month. I might sell 3 months or 6 months

of stuff. There's no need for me to wait

3 to 6 months to get paid. I still want

to get paid now and in 30 days cuz they

got the money. I might as well ask,

right? The worst they can say is no.

After they say no to two, I say great,

let's go for a third payment. Again,

one, two, three. Even if it's a

six-month or 12-month, I want to pull

that cash forward. Now, a little pro tip

again is always ask if it's to uh if

you're if you're talking to a wage, uh

[gasps] ask them when they get paid and

then align the payments on those days.

If you're not talking to a wugee, you

can ask when they have the prim uh the

majority of their deposits hit, when

they are the most cash flush cash flush

in the business, and then you can set it

for those dates. Um, you do not need to

coordinate payments with your delivery.

Now, one of my favorite uh methods of

payment so that I can pull cash forward

is something that came out of the

depression in the 1930s, which is

something called Leo. It might be

something as old as time. I'm sure it

was in 2000 BC, but I just know from the

from the depression because of course I

lived there um at that time. And so the

way it works is simple. You start paying

now and when you finish paying, you get

the thing. Very straightforward. That's

it. So you can I remember and I remember

the first time I did this um I had I was

selling this is with Allen. I was

selling uh we had this big onboarding

because what Allen was hire kind of

enterprise SAS. So, we would sell to

agencies. Uh, it was $25,000 to white

label and then they would use it kind of

as their own operating system. And so,

it cost 25 grand to kind of like get

onboarded. And so, I would do two two

agencies at a time. We do a full day

onboarding with me and my team and we'd

help them get set up, walk them through

everything, etc. Right now, I remember

having uh uh two partners who were on

the phone uh saying uh they're like 25

grand. They're like, "That's awesome."

Um, and then uh they said, "Can we split

into payments?" And I said, "Sure." And

they said, "Well, um, how many payments

can I split it up to?" And I said, "As

many as you want." And they were like,

"Oh, amazing. We'll just spend, you

know, we'll just do 2,000 bucks a month,

um, and we'll we'll pay it off, you

know, this year." And I said, "Okay,

cool. So, we'll just set your onboarding

for a year from now." And they were

like, "Oh, we got to like pay before we

come in." And I was like, "Yeah." And

they, it was, this was why it was such a

reinforcing moment for me. They just

said, "Oh, okay. Okay. Well, we'll do

half now and half in a month and we'll

be out next month. And so, what's cool

about layaway is that when people

understand that like the faster they

pay, the faster they get, they are now

incentivized to pay it off as fast as

possible rather than you trying to pull

it forward, which is why I'm such a big

fan of layaway as a payment option. In

addition to that, collections become

significantly easier because they

haven't got anything yet and so they've

already decided they want this thing. I

also like layaway because people have

anticipation. Think about the last

thing. Maybe you were a kid when you did

this, but like I remember there was this

pair of Oakley sunglasses that I thought

were the coolest ones. You might have

remembered them. They were in um X-Men.

Cyclops had that like orange that orange

pair. I think I was like I don't know

young when that came out. And I thought

he looked like the coolest guy ever. So

I saved up for a whole summer doing

chores to buy $160 sunglasses, right?

Which is absurd. But I I I think they

were $120 or $160 at the time,

inflation. Um, and they were like the

hottest, coolest sunglasses. So anyways,

I save up the money. I get the

sunglasses. And I remember the

anticipation of being able to get the

sunglasses at the end of the summer was

better than the sunglasses ever were. In

fact, it was so good. I literally never

wore them because I was so afraid of

losing them because I spent so long to

save them. Um, which was also a great

lesson in like sometimes you got to just

learn to spend money and enjoy what you

spend. a different thing for a different

time. Um, but that being said, you also

benefit from that customer anticipation

when you set up the payment this way.

So, there's a lot of benefits to doing

this way. And the biggest one of all,

you risk nothing. They pay before you

deliver anything. And so, you get to

have the cash before you have to risk

delivery. So, those are all different

ways you can accelerate cash flow in the

business. Um, I'll give you a Let's see

here. Do I have do I have any more notes

that I wanted to go over? Yeah, I was

going to give you guys some rules of

thumbs for like different kind of

conversion metrics. So, one of the

simple ones would be like if you're

doing thing is there's so many

variations. So, it's like if you're

closing off of meta leads for in person,

it's like you should close 10% of the

leads that that you have. So, you get

100 leads for an inerson service

business, you should close about 10%.

Um, if you're, you know, above that,

amazing. If you're below that, you

probably have some opportunity for

improvement. Um, if you're closing off

cold webinar leads, um, if you're

selling to broader markets, you're

probably looking at 2 to 3% conversion

of those leads, as in webinar opt-ins to

sales. If you are a little bit more

niched, then that can go up to 5% of

leads. Um, the craziest I've ever seen.

And like again, that's leads, not shows,

right? Or people who are there during

the offer. That's just overall like you

had 100 people opt in for webinar. All

right. Um, if you have a salesperson

that's in person, right? If you're going

to someone's home, um again, my rule of

thumb with sales people in general with

a proper sales process is 35%. I would

like them to close at least one out of

three um of the prospects that they're

getting touched with. Typically, if it's

higher than that, I will raise price. Um

and if it's below that, then uh then I

will fix the process before I even

consider lowering the price. Um web

pages, most times it's going to be

between 1 and 2%. Um in terms of

conversion rate on those pages, I'll

I'll give you a fun factoid for uh

school. So I think school right now is

at like 4%. It's really good u for

school about pages and it's because when

you have trust in a platform that starts

to increase your conversion overall. So

I'll give you a wild example on this.

Again these are rules of thumb. Um my

Amazon page for my books. So like offers

for example this is the last time I

looked. Um we convert roughly a quarter

of the traffic that hits that page. That

crazy is one out of four clicks buys.

Now, what you trade off when you have a

platform like an Amazon, right, is that

I'm not making all that money. Amazon's

basically making all the money and then

like paying me a small commission. And

so, you just have to play with the

numbers there, which is like, okay,

instead of it being uh, you know, 25%,

I'm getting two and a half%. So, I'm

getting 10x the conversion per click and

I might be getting onethird the gross

profit. Is it worth it? Yeah. Still

making three times as much money, right?

But you just have to understand the

difference between those things. I'll

leave you with a final uh rule number

nine, which is my I'm filling the holes

back up. Rule number nine. Uh anybody

remember love potion number nine? I

might be dating myself. Uh that was a

that was a movie. You can Google it.

Anyways, uh

I'll bring this up, which is this

industry averages are dumb. And so what

do I mean by that?

The amount of times I've had a

conversation where someone says, "Hey,

you know, manufacturing these these uh

you know, these are these margins are

pretty good for manufacturing." Or,

"Hey, uh, you know, our margins are this

in our industry." It's like, if the

average American is in debt, divorced

twice, overweight, and just mid as

right? Why would I want to have that be

my bar to compare myself against?

You say you have this I mean so many so

many you know business owners have this

hatred for their competition. They hate

their competition. They want to crush

their competition. And yet you want to

measure yourself by the same stick that

your competition measures themselves.

Well, it's a great way to be average,

right? Is use averages as as your

determination of whether or not you're

good. And so I would highly encourage

you to just ignore averages altogether

and play to win. And that is just

something that has that has really

served me well, which is like somebody

will I'll come into his space and we'll

say, "Well, you know, you'll learn, you

know, I don't know if you guys have seen

this clip um of Tiger Woods when he's

doing his first interview before his

first masters or something." And the

guy's like, he's like, "Well, uh, you

know, how do you feel being so young,

you know, coming on on the Masters

tour?" And he's I don't know how it gets

to it, but he's like, "I'm here to win

or I'm playing to win." And the guy's

like, "You'll learn. you know, you'll

see. And then they play it forward like

a year or two or whatever and he's there

with his jacket talking to the same guy

and the guy just has to like eat his

words. Like it's so visceral. Like the

moment is amazing. And so like that is

what I envision when I go into an

industry that I don't know anything

about. It's like that is the advantage.

I'm not going to you I'm not going to

I'm not going to operate within your

frame of reality. Like why would I

operate within the frame of beliefs that

what the average person has achieved is

what I will achieve. Why would I say

that is the appropriate outcome that I

should be shooting for? What? Because

fundamentally when you quote an average

to say this is good enough, you've

accepted that you are no longer going to

try to get better. And I just

wholeheartedly reject that. Like

like the winner of every category is not

the industry average. And I and I can

almost promise you that they don't look

at the industry average because why

would they care? Like there is only like

one rule that matters which is physics.

If it's as long as the rules of physics

allow it to exist, there's no reason

these that that we cannot get this

outcome that we desire. Period.

And so I'll get asked a question like,

do you think you can have uh margins in

a manufacturing business that are above

10%. Yes. You know how I know? I also

have a friend of mine who does complex

machinery. You know what his margins

are? Net 70%.

Net. Well, what does that mean about his

gross margins? That means they got to be

way above 70. You want to know what how

he did it? He builds machines that he

sells to big industries that automate a

huge function of different workflows.

And he will charge $400,000 and a

machine will cost him 17 grand because

he has knowhow. And so if you think

about what a business is, a business is

functionally a black box

that transforms raw materials into an

output where the value is higher than

the inputs. That's it. That's all a

business does is we have raw inputs. We

transform these inputs into something

that is more valuable at the end. That

is all a business does. And when we do

this over and over again over an entire

civilization, we take many raw inputs

and we we increase value and that is how

the entire world moves forward. And so

that being said, those are my 12 rules

of thumb uh that I've learned uh in

business. Different ratios that I use as

my guidepost, my lights, my lights, my

what's the light towers? What are those

things on the edge of oceans?

>> Lighthouse.

>> Lighthouse. Those are the lighouses that

guide my path. Um, and I hope they serve

you as much um as they have served