In this podcast episode, they discuss the three main ways to scale up your business.
They look at what seven-figure businesses do that’s different from six-figure companies.
And Will goes over an actionable assessment he uses to scope out potential revenue share partners.
Table of contents
a. Trapped by scope creep
b. What $100,000 is really worth
c. What the other challenges were
d. James’s $100,000 experience
3. Seven-figure versus six-figure businesses
4. The concept of setting triggers
5. The counterintuitive way to increase profit
6. Sometimes one coach isn’t enough
7. Reputation lets you charge more
8. A framework for growth
a. What are you doing and not getting paid for?
b. Where are you undervaluing your business?
c. Who are the wrong clients for you?
d. What does your market actually want?
e. Fix, then scale
The three ways people scale
As founder and owner of a marketing agency, Will Wang has seen many people scale a business, and there’s only three ways they’ve done it, he says:
1. Getting more customers
2. Charging more per customer
3. Having recurring purchases or more offers or products people can buy
Boiled down, you might say it’s just two areas – more customers and more value per customer.
It shocks James, he says, that some business owners aren’t even thinking about those things.
The $100,000 business scenario
Now taking $100,000 yearly as the starting point for scaling, what does a business at that stage look like? It could be a solo affair, one person selling a product or service, and people often get stuck there.
Will recalls, at $100K revenue, he was working a lot of hours, doing many different services, most of the time outside scope, for a lot of customers.
Trapped by scope creep
James wants to clarify, what does scope creep mean? Because it’s a major issue for most service providers, and one they don’t anticipate.
In Will’s case, he did funnels and Facebooks ads, but a client might say, You’re doing ads for me on Facebook – why not on Google and LinkedIn as well? I’m paying you anyway.
That could escalate and grow until Will was handling all their marketing strategy and copywriting and graphic design, while all he was charging for was Facebook ads.
And what prevented Will from charging for everything else?
Confidence was definitely a factor, says Will, and not wanting to lose clients – back then at $100K, they had only five or six clients, so losing just one would seriously hurt. It seemed less painful to just do everything they asked him to.
What $100,000 is really worth
When James was a kid, $100,000 was a lot of money. Now, though, when you have your own business and are making $100K, there’s not much left after taxes and expenses.
And depending on where you live, $100,000 a year could very well be too little.
What the other challenges were
Because of the extra work Will and his team were doing, and because things were tight, it was hard to invest back into growth.
Businesses at that level often experience an income roller coaster – after a good month, say 10 or 15K, the next month dips, because there’s not enough time to fulfill services, and because there isn’t a good pipeline of growth behind them.
In that situation, you might start taking jobs you shouldn’t, doing more than you should, and clients start to leave because there isn’t enough of you to go around.
And you might do unhelpful things like start a new business model, says James, in an attempt to escape the rat wheel.
James’s $100,000 experience
In James’s case, the first $100K was from affiliate marketing, which he did at night after his day job.
When he’d reached a certain saturation point, he doubled by competing with himself – putting up another website and selling against himself under a different brand.
James maxed out there, however, and the next way to double the business was to add a service division. He was concerned that would take up much more of his time – and so he quit his job.
James then added his own info products into the mix. But as he added income streams, it became hard to keep things spinning.
In his current model, James says he’s pretty focused. But half of his income comes from a portfolio of multiple different businesses.
Seven-figure versus six-figure businesses
James thinks they should talk about, what are the seven-figure businesses doing that a six-figure business is not doing?
The key thing Will has seen is consistency. Up until they reached seven-figures, it was something his business had been missing.
Now they have consistency in terms of their own marketing, message, content, growth, and just having someone in the business, whether the business owner, or some of the team, who’s in charge of driving the growth.
They have a metric of how many phone calls or sales calls they need to come through every single week. And if it doesn’t happen, someone on Will’s team raises the alarm.
If you look at a good seven-figure b usiness, says Will, it’s all about the consistent growth.
It’s all about understanding your numbers and knowing off the top of your head, Here’s my numbers, here’s my margins. Can I afford another team member? Or, where are we looking to get the growth from?
The concept of setting triggers
James talks about setting triggers for that. When you reach a particular number, percentage or ratio, that can be the trigger to activate the next hire or take the next step.
And it can help to have someone like James or Will who can tell you, based on experience, what those metrics look like.
When James had an SEO business, they knew that for every X number of clients, say 20, they needed another support person. That’s an example of a trigger.
The counterintuitive way to increase profit
Many people James knows who run six-figure businesses make too much profit as a percentage of their revenue.
That sounds counterintuitive. But if you had 100 percent profit on $100,000, you’d make $100,000 profit, whereas if you made 50 percent profit on a million dollars, you’d make $500,000 profit – that’s 500 percent more at a 50 percent profit margin.
The big challenge James has is reeducating six-figure businesses: You need to invest more, you need to reinvest some of that revenue back into growing your business. Will just said it, consistently investing in growth.
That could be having a coach, it could be having a done-for-you service, it could be hiring team members, it could be getting contractors. It could be attending events, travel, networking, etc.
These days, it could be investing in content marketing, getting materials like a book, a lead gen funnel, a challenge, or a webmaster, running ads. But it’s very little point doing this unless you’re tracking the numbers and the margins.
And the other thing seven-figure businesses do is form an identity beyond the solopreneur, beyond the owner.
Sometimes one coach isn’t enough
That was a key growth point for Will. But he’d like to expand on the coaching James mentioned.
In soccer, says Will, they’ve got coaches to teach offense, coaches who work with the goalkeepers, coaches who work on fitness. And in his own journey and those of some of his clients, the fastest growth he’s seen is with a similar kind of model.
The clients Will’s had since he worked with James have seen exponentially more growth than other clients who have one coach they trust to do everything. Because, Will says, while he and his team excel at the funnel, the offer, the copy or the marketing part, they’re not strong on operations and business model like James is.
And a lot of the seven-figure businesses Will works with and beyond have a really good board of directors or advisors or mentors that help them.
When James worked with smaller businesses, he was typically the coach – just him. Now with some of the seven or eight-figure clients he helps, he’s part of a coaching panel, and he’s totally fine with that.
James recognizes and respects that these clients invest in improving their abilities through external intervention rather than figure things out themselves.
Reputation lets you charge more
Now on having an identity, a brand or reputation, that was one of the things Will did to grow beyond the six-figure mark.
They established a reputation for what they were really, really good at, and that allowed them to charge higher prices.
Look for a part of your service that you’re really great at, or that one segment of your customer base gets a lot of value from. If you can go deep into that and specialize, you can generally start feeling the growth from the reputation and increase your prices.
It takes guts, says James, to let go of trying to be everything to everybody. It’s a common problem with a six-figure or $100,000 person.
But if you can really get clear about what you’re good at, that’s how you move forward and upwards to be that seven-figure business. Because you’re now the absolute best in the business at the thing you do, and the thing you do is much clearer and everybody knows it.
A framework for growth
Now Will would like to share a kind of framework or map he looks at when businesses come looking to do revenue share.
That would be amazing, says James.
For those who don’t know, revenue share is an arrangement where you help someone grow their business or provide some kind of service or value where you will get a small percentage of their revenue as your royalty or fee.
Will’s framework for selecting the right partners goes back to the idea of, what can they help people with as well. He’ll be looking at common factors that they need from both themselves and the partner before they look at what makes a good revenue share for them.
What are you doing and not getting paid for?
The first thing Will examines is, how can they make money really, really quickly? And the first point he looks at is, what are you currently doing in your business or service or product that you’re doing for your clients but you’re not getting paid for?
The best example is Will’s newest rev share client. They sell listings on a website for a particular industry, and companies pay them to be listed on the website.
But what they were doing on top of that was actually nurturing leads coming from the content business and giving them to the people who were listing their businesses. But they weren’t charging for it.
That was a valuable service, which included lead nurturing, lead filtering, getting information about the leads, and even talking to the leads before they passed them through.
So number one thing is, what are you currently doing at the moment in your business that’s either outside of scope, or you just added on as goodwill, but you’re not getting paid for?
Such an obvious win, says James. And it’s a real advantage to come into someone else’s business and see all the things that they’re blind to.
It goes with the point they made about coaching, Will says. So many times, James has pointed things out in Will’s business that he was clueless about.
And if the world-class athletes have coaches, and they’re already at the top of their game, why shouldn’t everyone else?
Where are you undervaluing your business?
Second part, says Will, is, where are they undervaluing their business?
His own business is a great example. They were getting amazing results with their copywriting, but somehow didn’t feel that they could charge more.
The first deal James helped Will with was a copywriting campaign, for which Will was charging around $5,000.
James asked him, If you can even get half of the results you think you can get these clients, how much money are they likely to make?
Easily $300,000 or $400,000, said Will.
James replied, So you’re charging less than one percent of the value that you can generate for them. They’re going to say you’re too cheap, you can’t do the job properly, because you’re not pricing, so you’re not taking the time to do it correctly.
And if you’re providing millions of dollars of value, why couldn’t you take at least 10 percent of that value? That’s only a fair exchange.
So where are you underselling yourself?
Who are the wrong clients for you?
After the first two bits, what Will then does with his clients is help them structure a new offer that they take to their best clients, and that generates immediate revenue. This is because of the third point, looking at, who are the wrong clients for you?
For all their new rev share partners, Will does an analysis of, who are the clients who love working with you and bring you lots of profit? What are they buying from you?
And they also look at, who are the clients who take up too much time, on whom you make zero profit, who make you wonder what you’re doing wrong, or who just make your life miserable?
Then they try to move these problem clients into a better situation, by maybe charging them more or getting them to play by your rules, or if all else fails, referring them to someone else.
The first two steps should create enough extra revenue that people can afford culling 30 percent of their clientele if needs be. And to grow and not be restrained and capped, they need better clients to whom they can provide better service.
James has been filtering clients for so long now he has next to no drama in his life. Filtering will make your business much more pleasant, and it will put you in a better position to serve the people who you’re a perfect fit for.
What does your market actually want?
The next point is looking at the products or services that are actually your best sellers, and what your market actually wants.
One of Will’s revenue share partners sold recruitment training, and was struggling to make sales. When they looked closer, they realized that people who bought were after her bonus offer – to actually help them hire and recruit people.
Business owners didn’t want to learn a recruitment system. They wanted someone to find them awesome team members, train them up, and have their team running like clockwork.
Will helped restructure the offer – his client would find good people, and even write the job description. Leads who were previously on the fence opted in, and were ready even to pay a much higher price.
So Will’s fourth point is asking, what is my most profitable and high-ticket offer I can make to my market that they actually scream for?
A product inventory is essential, says James, and something he and his team do regularly.
Fix, then scale
Now Will runs a marketing agency. When do they look at lead generation marketing?
Says Will, it’s only after they look at everything else in terms of the offer, the structure, who you’re working with, what you’re best at, what your pricing is. Only after they’ve figured that part out, which generally already brings extra revenue to the business. Only after that do they then look at, let’s get back to market and find more people to buy this.
There’s no point scaling a broken business, says James. Do the things he and Will have talked about to fix the business first, and you’ll be alright.
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