Diagnose Before You Scale. Q&A | Ep 943

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast, you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth. Wanna scale your business? ⁠⁠Click here.⁠⁠ Follow Alex Hormozi’s Socials: ⁠⁠LinkedIn ⁠⁠ | ⁠⁠Instagram⁠⁠ | ⁠⁠Facebook⁠⁠ | ⁠⁠YouTube ⁠⁠ | ⁠⁠Twitter⁠⁠ | ⁠⁠Acquisition ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Alex Hormozi?

  If you want to have a consistent world-class sales team, the process has to always go above the player. No one is above the process. And I do think that 95, maybe 98% of sales teams have no idea how sales training, how sales culture, how any of this stuff works. They just hire a bunch of people, see who closes deals, fire the rest, and so then you just have a bunch of mercenaries who work for you. But there is no culture, there is no team, and it's every man for himself. And that is what creates this volatility in sales. And some guy says something and he closes a deal and the other guy's like, I'm gonna try that now. And there's no consistency across the board. And that also gets you in trouble long-term because they start promising things and making deals that you can't cash.

• 0:50Speaker 01

  Hey Alex.

• 0:51Alex Hormozi?

  What's up?

• 0:51Speaker 01

  My name is Francis Aguilo. I am a real estate wholesaler.

• 0:55Alex Hormozi?

  Okay.

• 0:56Speaker 01

  We're currently averaging about $450,000 a month.

• 1:00Alex Hormozi?

  Okay.

• 1:00Speaker 01

  In revenue. I would like to be at a mean.

• 1:03Alex Hormozi?

  That's your spread? That's what you're making, or that's like house volume?

• 1:07Speaker 01

  Uh, that's gross.

• 1:08Alex Hormozi?

  Okay. So what's your, what's your spread on that? What's your take on this?

• 1:12Speaker 01

  So we're at 40%. So right around 250, 240.

• 1:17Alex Hormozi?

  Interesting. Weird. That's high. What kind of, what are you wholesaling?

• 1:27Speaker 01

  Alright, so here's the, um.

• 1:31Alex Hormozi?

  He's like, have you heard of brothels? So imagine a brothel, but now it's all midtrips. Okay, keep going. You're good.

• 1:38Speaker 01

  Okay, but here's the challenge we run into. So we're currently at 450 average, yeah? We've had 700K months this year already.

• 1:46Alex Hormozi?

  Okay.

• 1:47Speaker 01

  The challenge is every time we get to those numbers and I try to, hey, you know what? It's time to ramp up. Uh, for some reason, we tend to tank to, you know, 200, 250.

• 1:57Alex Hormozi?

  Okay.

• 1:57Speaker 01

  Um, I'm sick.

• 2:00Speaker 01

  I have cause to believe it's the sales team and just

• 2:03Alex Hormozi?

  Okay.

• 2:04Speaker 01

  You know, they have those power months where everyone, you know, takes home twenty, thirty grand.

• 2:09Alex Hormozi?

  Uh huh.

• 2:09Speaker 01

  And then the month after it's like.

• 2:11Alex Hormozi?

  Are they pure commission or is it split?

• 2:13Speaker 01

  So there is a base salary.

• 2:14Alex Hormozi?

  Okay. What's the split between commission and base?

• 2:17Speaker 01

  So they're at forty two base.

• 2:20Alex Hormozi?

  Okay.

• 2:21Speaker 01

  Uh, per annum and then ten percent of the assignment fees.

• 2:24Alex Hormozi?

  You have an ops issue, which is sales ops. And so it's like, this is gonna be much more weedy in terms of like tactics to answer this question. Um, but it's like, there's probably like twenty things that you need to be doing and you're probably doing like thirteen of them. And the other seven are gonna be the thing that make the difference. Uh, and creating the consistency of the team. That's at the service level. At the, at the, at the deep root of this is who's the leader of the sales team?

• 2:48Speaker 01

  I do have a sales manager.

• 2:51Alex Hormozi?

  Okay, so he or she is the problem. Because like, sales at the end of the day is a culture game. Well, everything's a culture game, but like, sales, you can feel it so quickly when things are good or not good. Because the performance, the feedback loops are so fast. Um, but for whatever reason, you do not have a culture of consistency within your team. I would wager that script adherence is low.

• 3:22Alex Hormozi?

  Because you have such variability in close rates. Unless there's a change in lead quality, which would be something else, but are the leads the same like this month as last month?

• 3:30Speaker 01

  Yes, the lead is the same.

• 3:31Alex Hormozi?

  Yeah, so it's a sales discipline issue, which then comes down to the training cadence, the scripting. Um, how people are being managed on a daily basis and weekly basis in terms of their career goals. How like you're doing morning, like it's, it's, this is all sales ops. I could like just start talking about sales, but like this is a pure sales ops issue and so. At the like, there's a two step, like I would approach this in two steps. Step one is we should do all the stuff that we are not currently doing, that we should be doing. Everyone should be reading the same script. If they're not reading the script, why are you on this team? Right? Uh, we need to have training that's every day to make sure that they are saying things the right way. We need to make sure that everyone memorizes the script. Some of you guys might have seen the YouTube video I put out like two days ago about this.

• 4:16Alex Hormozi?

  But like they have to breathe the script. If they were not saying the script word for word, you cannot be on this team. You cannot take these calls on getting these leads and not for you to go cowboy and make shit up. And that then if we cannot solve that problem, because for whatever reason you keep trying it and they don't adhere and they go off script because they just want to close the deals, it means you have a cultural issue, which is a leader problem. Because it means the leader is reinforcing behaviors that get people to go off script. And there's no consequences for doing it. And so if you want to have a consistent world-class sales team, the process has to always go above the player. No one is above the process.

• 4:57Alex Hormozi?

  And I do think that 95, maybe 98% of sales teams have no idea how sales training, how sales culture, how any of this stuff works. They just hire a bunch of people, see who closes deals, fire the rest. And so then you just have a bunch of mercenaries who work for you. But there is no culture, there is no team, and it's every man for himself. And that is what creates this volatility in sales. And some guy says something and he closes a deal and the other guy's like, I'm gonna try that now. And there's no consistency across the board. And that also gets you in trouble long-term because they start promising things and making deals that you can't cash.

• 5:33Speaker 01

  That makes a lot of sense. I, um, up until now, I mean, we have scripts, but they're more of suggestions.

• 5:38Alex Hormozi?

  Guide lines.

• 5:39Speaker 01

  Yeah, I mean.

• 5:41Alex Hormozi?

  I've done a lot of sales. Um, like, this is a straight out of the book checklist problem. Like, we have to do all of these things. If we do this entire checklist, we will get this outcome. If we can't do this checklist, the leader is the problem because they don't know how to reinforce culture. Which then means that they're not able to get the right people on and the wrong people out. Which sometimes means we might have to fire half the team to get the right people in so that we can build the culture we need to get to where we want to go. Cause you are in like, I showed the shapes of businesses. You are in a sales and marketing business. There's functionally no delivery. Like you're just basically like, are you, are you guys doing outbound or like smiling dialing? Or do you buy leads from setting teams?

• 6:20Speaker 01

  Inbound, it's Google Ads.

• 6:22Alex Hormozi?

  Google Ads?

• 6:23Speaker 01

  Yeah.

• 6:23Alex Hormozi?

  Okay. So you have inbound leads that are coming in and then you close. Like that's the business. Like you buy media, you sell shit. And so like this has to be a core, like you have to be world class at this. If you want to be world class at wholesale.

• 6:36Speaker 01

  Gotcha.

• 6:37Alex Hormozi?

  But that's the constraint.

• 6:38Speaker 01

  In the events that I have to, you know, let go of half the team because it's just not good enough.

• 6:42Alex Hormozi?

  Yeah.

• 6:43Speaker 01

  Where do you suggest I look for?

• 6:46Alex Hormozi?

  It's not about where, it's about how. So it's not like I'm going to find like, the better you get at training sales and creating consistent sales processes, the less skill someone can have and create a consistent outcome within your team, which becomes the arbitrage of your business. Just like I said, the cleaning thing before. If the whole constraint of that business is going to be finding, you know, basically taking a human being and then turning them to a great cleaner that actually shows up on time. You have to take the raw input of somebody who has no skill and just has work ethic, just has energy. And in 14 days, you can get them closing deals on wholesaling. That box is the value that your company, that is your IP. That is the trade secret. That's how your company is valuable. And so when I say who versus how, like where do I find these people?

• 7:29Alex Hormozi?

  You could run Indeed Ads and find like for this caliber of salesperson, they're everywhere. Uh, the issue is then what is the process and where the expectations were setting for those people as they walk in? And so typically when you're doing high volume sales like you are, how many guys you have on the team?

• 7:45Speaker 01

  Um, currently seventeen.

• 7:46Alex Hormozi?

  Okay. So when you have that, that, I mean, you know, midsize, uh, someone comes in. Uh, usually you get constrained because the amount of churn you have and people quitting, leaving is about equal to what you have to hire. And that's what keeps you stuck. Right? And so it's a process issue, kind of on the demand gen side for talent. And so. Usually we look at that and say, okay, what part of this can we screen ahead of time? So it's like, let's send them the script before they even show up. So people apply, we send them the script. And then send us a 60 second video of you saying the script. And then from the 60 second videos, we're going to invite people to a group call, not one on one, because we don't have time for that. And we're going to go quick drill, say the script, give a piece of feedback, see how they do it again. If they can take the feedback well and they were prepared, great, it means they're coachable.

• 8:30Alex Hormozi?

  They have work ethic. Awesome. Now we can take you to a job offer call. Somebody, you know, has attitude on the coaching, they're out. If someone doesn't show up prepared, they're out. Very easy screening. And so you take 10, you pick two, pick three, they go to the next one, you make job offers. And that's the flow. But like, the entire sales process of selling them on selling for you, sets the frame for how the company operates. Like, how disciplined you are and how militant you are in terms of how you set the frame for this. This is how we fucking do things here. Either get in or get out. I do not care, but we win.

• 9:05Alex Hormozi?

  If you can set that frame, you will attract winners.

• 9:09Alex Hormozi?

  And winning's not for everybody.

• 9:12Alex Hormozi?

  And so that means that on the team, there's probably some losers. And it's not for everybody. So that's the decision you make, and that's from top down.

• 9:20Alex Hormozi?

  So there's the tactics, and then there's the root issue. I would try this first. If this doesn't work, you have to probably gut things.

• 9:27Speaker 01

  Thank you.

• 9:33Alex Hormozi?

  I know he's the only person struggling with sales here. Everyone's like, I saw like more notes, like, okay, group interview, yeah, yeah. Go ahead.

• 9:42Speaker 02

  Okay, so my name is Sasha. I sell designer bags and sunglasses.

• 9:48Alex Hormozi?

  Cool.

• 9:48Speaker 02

  And we do about 6 million a month. No, sorry, a year, sorry, 6 million a year.

• 9:52Alex Hormozi?

  Oh, cool.

• 9:54Speaker 02

  And I would like to do 38 million.

• 9:58Alex Hormozi?

  Precise.

• 9:59Speaker 02

  Yeah, 38 million.

• 10:00Alex Hormozi?

  Okay.

• 10:01Speaker 02

  And what's stopping me is.

• 10:03Alex Hormozi?

  Why 38?

• 10:06Speaker 02

  Just because I figured, you know, 100,000 a day, something like that, round up, down, something like that.

• 10:11Alex Hormozi?

  Okay.

• 10:11Speaker 02

  And go up to roundabout.

• 10:14Speaker 02

  And, I mean, obviously more.

• 10:17Alex Hormozi?

  Yeah, okay.

• 10:17Speaker 02

  But I was thinking 38 would be fair.

• 10:20Alex Hormozi?

  Yeah, that works.

• 10:22Speaker 02

  And it is just recruiting.

• 10:25Alex Hormozi?

  Recruiting is the bottom line, as you're saying?

• 10:27Speaker 02

  Yeah.

• 10:27Alex Hormozi?

  Okay, got it.

• 10:29Speaker 02

  My house cleaner was my first employee and she just and because I consumed yours and Lila's content so much that I was like, I'm gonna be these two people in one. That's me. I'll be these two people. And as a result, I have a great team, a really great team. And it's just a matter of being militant in the recruiting process.

• 10:51Alex Hormozi?

  Okay.

• 10:53Speaker 02

  The, we do sell on whatnot quite a bit.

• 10:55Alex Hormozi?

  Who do you have what's stopping you?

• 10:59Alex Hormozi?

  So you make money, six million dollars a year selling handbags.

• 11:02Speaker 02

  And sunglasses.

• 11:03Alex Hormozi?

  And sunglasses. For you to sell more handbags and sunglasses, you need more people to do that?

• 11:08Speaker 02

  Yes, because we, we only go live for about five hours a day because we get tired. It's just me and, well, me and, I have three salespeople, but it's just we get tired. We could, if we were live more often, we could create more.

• 11:24Alex Hormozi?

  You're going live on like your Instagram page or your what?

• 11:27Speaker 02

  On whatnot.

• 11:28Alex Hormozi?

  Okay, got it. And do you have like a big following there?

• 11:31Speaker 02

  A hundred and ten thousand.

• 11:33Alex Hormozi?

  And so you're just selling to that same base? And if you just sold for longer, you would make more?

• 11:38Speaker 02

  A lot more. I could do a hundred grand in the show.

• 11:40Alex Hormozi?

  Okay. So you just need like two more salespeople or go on camera?

• 11:43Speaker 02

  Mm-hmm, but yeah, mm-hmm. And then the recruiting as well.

• 11:48Alex Hormozi?

  Recruiting for what?

• 11:49Speaker 02

  Packing, because we, we do a lot of.

• 11:52Alex Hormozi?

  You do your own 3PL or not third party, but like you do your logistics? Hmm. Why?

• 11:58Speaker 02

  And then, and then now you can have other people do it.

• 12:02Alex Hormozi?

  Boy, oh, boy. Yeah.

• 12:07Alex Hormozi?

  Step inside. Uh, yes. So, so functionally, like because of the nature of the business that you're in, we have to think like, because we have to, we have to consolidate resources. I'm not normally somebody who's like, uh, let's, let's cut, you know, parts of the business out. But unless your shipping is some key differentiator that you have,

• 12:27Alex Hormozi?

  like Amazon shipping became a competitive advantage, right? Um, but unless that's like. Some differentiator, then shipping for the most part is pretty commoditized. And there are people who all day long, they think about like saving fifteen cents on cardboard boxes and tape and packing peanuts and all that shit. And I think that that you having to like, think about that and run a functionally a warehouse. At the same time as running a marketing and sales and talent business slash media. That's not where the value is. The value is in the distribution and the sales. And so I would say like, can we outsource this, the logistics part? So that you can just go all it, because all we had to do is you get two more salespeople and you get two hundred thousand a day. We should do that.

• 13:14Speaker 02

  We have to physically show the product, like.

• 13:16Alex Hormozi?

  No, I'm not saying you don't have like some product on hand. You just don't need a warehouse.

• 13:21Speaker 02

  No, we do need it because it's like, go, go, go, go.

• 13:26Alex Hormozi?

  Okay.

• 13:27Speaker 02

  Feed. We run probably about.

• 13:29Alex Hormozi?

  So you're like, we sold this item to this person is how you do it?

• 13:32Speaker 02

  Yes.

• 13:33Alex Hormozi?

  Okay.

• 13:33Speaker 02

  So.

• 13:34Alex Hormozi?

  Um, got it.

• 13:35Speaker 02

  It's kind of like a warehouse. It's, yeah.

• 13:37Alex Hormozi?

  Okay, that's fine. Um, all right. So you just need to hire more people. So what's stopping you from hiring more people?

• 13:43Speaker 02

  The talent.

• 13:44Alex Hormozi?

  The talent to hire more people?

• 13:47Speaker 02

  Well, I'm, I'm learning now. That's why I'm here.

• 13:48Alex Hormozi?

  No, you're good. You're good. So I'm saying like, you have two sets of roles. You've got warehouse folks and you've got people who can get on camera. Right? So what are you currently doing to get each of those people?

• 14:00Speaker 02

  Well, we had ads on Indeed.

• 14:02Alex Hormozi?

  Okay.

• 14:02Speaker 02

  But I didn't realize how militant it had to be until I came here.

• 14:06Speaker 02

  It's, it makes a lot of sense, right? I know that there's that many interviews that are required.

• 14:12Alex Hormozi?

  And that's more for the warehouse side, correct?

• 14:14Speaker 02

  Both, because sales is.

• 14:16Alex Hormozi?

  I think that you'd be able to find salespeople, like.

• 14:21Alex Hormozi?

  I would probably look at. Amazon affiliates.

• 14:26Speaker 02

  How much would you pay them?

• 14:28Alex Hormozi?

  Percentage.

• 14:29Speaker 02

  Well, that's the thing. It's so, okay, so it takes skill to do what we do.

• 14:33Alex Hormozi?

  Yeah.

• 14:34Speaker 02

  Takes skill, like.

• 14:35Alex Hormozi?

  Agreed.

• 14:36Speaker 02

  Like, um, for example, my girl is better than me.

• 14:40Alex Hormozi?

  Great.

• 14:40Speaker 02

  Better than me. And it's like.

• 14:44Speaker 02

  Not only is it motor skills, it's, um, presentation and entertainment, like.

• 14:49Alex Hormozi?

  I, I get it.

• 14:52Alex Hormozi?

  I understand. I did a live for three days. I got it.

• 14:57Speaker 02

  So finding and training that, uh, that's definitely a process and takes time.

• 15:02Alex Hormozi?

  Yeah. The question is whether you want to buy or build. Do you want to buy the talent or build the talent? Building the talent is cheaper, takes longer, harder. Buying the talent is faster, more expensive. Which one do you, which one feels right for you?

• 15:15Speaker 02

  We're not always, so we are profitable per show. Yes.

• 15:18Alex Hormozi?

  Okay.

• 15:19Speaker 02

  Profitable per show.

• 15:20Alex Hormozi?

  Uh huh.

• 15:21Speaker 02

  But sometimes when the dip happening is like, let's just say it's a, a Wednesday.

• 15:26Alex Hormozi?

  Are you on cash based accounting or accrual? Probably cash.

• 15:29Speaker 02

  Yeah.

• 15:29Alex Hormozi?

  So you might like if, basically if you run a physical products business,

• 15:35Alex Hormozi?

  which you do, here, you're like, okay, we made money. Now let's take all of that profit, gross profit that we had and go buy more shit so we can sell more shit. Right? Right. So this is where like, you probably have, what's your, like, what's your financial, the financial side of the business, the financial ops look like?

• 15:53Speaker 02

  My accountant handles it.

• 15:54Alex Hormozi?

  Your who?

• 15:55Speaker 02

  My accountant.

• 15:56Alex Hormozi?

  Oh, your accountant does it. Okay.

• 15:57Speaker 02

  Yeah.

• 15:58Alex Hormozi?

  You will need to have soon, a relatively strong finance person, uh, who can give you better forecasting so that you can, it's not just like how much cash we have in bank account. Let's go buy more shit. It's like, we can only afford to buy this much, given this growth rate that we want to have.

• 16:13Speaker 02

  Mm hmm.

• 16:14Alex Hormozi?

  Um, otherwise you will get into these probably cash crunches that you're feeling right now. It's not that the business isn't profitable because I'm guessing the headcount's not super by.

• 16:21Speaker 02

  So our, so our shows will make anywhere from like five to seven thousand profit, depending on like the volume that we did that day. So we know the profit like per show, however, um, that's where the skill comes into play. Like if a show is not going well, we need to have that person trained to be able to do the, do the thing. And, and so that's why not knowing how much to pay them is.

• 16:42Alex Hormozi?

  Well, I mean, I think doing a percentage would make sense.

• 16:45Speaker 02

  Percentage of profit.

• 16:47Alex Hormozi?

  Yeah. Like a salesperson.

• 16:50Speaker 02

  Okay.

• 16:51Alex Hormozi?

  And so you can buy or build that, right? So you buy it as I would just go to mini, mini micro influencers who are already like on Amazon hawking stuff and be like, well, they already do live streams and they already do sell shit. And I bet I could teach them to do this for me. That is a buy version because you already know it's already proven. You're just saying, hey, do it under my umbrella. The build version is that you have to kiss a lot more toads and try and look for who has already built in a bunch of soft skills. And then you can hire for the small skilled efficiency that you know how to train.

• 17:23Speaker 02

  Okay, so Amazon affiliates.

• 17:25Alex Hormozi?

  Well, you could do either, but like, yeah, I mean, obviously this can be a lower risk thing. And then you'd have to have some agreement that they're going to only sell for you for X period of time.

• 17:31Speaker 02

  Hmm, like a contract, yeah.

• 17:33Alex Hormozi?

  Like a contract.

• 17:34Speaker 02

  Thank you.

• 17:34Alex Hormozi?

  Yes. But I would, but big picture, because I want to make sure that you're good.

• 17:40Alex Hormozi?

  The Indeed warehouse stuff, that's just like commoditized. I mean, you have a warehouse, maybe you have to have it for your business, but like, I don't see that as like, that's not a core differentiator. You might, you're not different because you have a warehouse behind you. That's not special. So the roles that you have there, it's like, they need to be like, have a pulse, have a good leader there. Let them just deal with it. Your, your star factor is going to be your ability to train people to sell. And so that's like, where's your, what is like, what is the true pinpoint of where the most value gets created for you as the founder, the entrepreneur, is that you need to be able to take somebody and teach them to sell. And you have to break it down in, in terms of the most concrete language you possibly can.

• 18:21Alex Hormozi?

  And so think of everything purely in terms of behavior and do new, do not use any amorphous words. So it's like, I need you to have higher energy. That means nothing. I need you to raise your voice. I need you to talk faster. I need you to have your shoulders back. You have to describe things that people can see. And then other people will describe them as having high energy, having charisma, having confidence. And so if you want to teach someone to present, you have to tell them what to do with their body and their voice. And that will be far faster for you. And what you'll find is the training lab, the reason it takes so long for people to train where they can, where they can't train, salespeople or presentation people, is because they literally do not use words that other people understand. Like this is the problem. This is why most companies cannot teach people to do shit.

• 19:05Alex Hormozi?

  Because they say have more charisma and then the person listens and is like, I'll translate that into what I think charisma means, which who fucking knows what they think it means. Right? And then we're just playing this telephone game where no one agreed on what are the behaviors I want you to do? That will compress the amount of time that will take you to get some one up to speed. And two, long-term, if you can develop the sales training, then you can have a stable of stallions that are on 24/7 for you, working in your, in your barn.

• 19:32Speaker 02

  So that.

• 19:33Alex Hormozi?

  I don't know why it's animals now, but let's go with it.

• 19:35Speaker 02

  So that, that's actually, that brings up the, a good point. So I, I, I have, um, so my girl, uh, like I said, she's my house cleaner. Shows up at my, my door one day and she's, she's like, hey, I want to be you.

• 19:48Alex Hormozi?

  Yeah.

• 19:48Speaker 02

  And she's like, I'm a copy and paste of you and she became me.

• 19:51Alex Hormozi?

  Yeah.

• 19:52Speaker 02

  Now there's a little bit like, a little bit of a, how can I? Cause obviously I had to learn the care part like from Leila. So I learned the care part. And, um, now I have it, but then I've seen her, I mean, I've seen situations kind of like, not go the way that they should because she's too, she's a copy and paste of me from yesterday. So, uh, I'm starting to see those.

• 20:18Alex Hormozi?

  What's the problem? We'll just put her in front of the camera, have her sell and get her out of the building.

• 20:24Alex Hormozi?

  If like, if she can sell.

• 20:26Speaker 02

  Yeah.

• 20:26Alex Hormozi?

  So let her sell. Don't have her manage people, have her sell.

• 20:29Speaker 02

  Got it. Understood. Thank you. Okay.

• 20:32Alex Hormozi?

  This is good talk. Yeah.

• 20:40Speaker 03

  Alex, my name is Sebastian. Four years learning. Thanks for everything.

• 20:44Alex Hormozi?

  Yeah. Thanks for coming out from Australia.

• 20:48Speaker 03

  Melbourne. Yep.

• 20:49Alex Hormozi?

  Melbourne. That's sick.

• 20:52Speaker 03

  Blue Sense Digital, we sell paid ads and growth advisory to eight and nine-figure econ brands.

• 20:58Alex Hormozi?

  Sweet.

• 20:59Speaker 03

  We do three and a half.

• 21:00Alex Hormozi?

  Okay.

• 21:00Speaker 03

  We'd like to be at 10 and 20.

• 21:02Alex Hormozi?

  Okay.

• 21:04Speaker 03

  Feel super clear on our top priority against our supply constraint.

• 21:08Alex Hormozi?

  Oh, talent?

• 21:09Speaker 03

  Yeah.

• 21:10Alex Hormozi?

  Okay.

• 21:10Speaker 03

  Talent acquisition and first getting LTGP on talent. Something that's unclear is we've just established this past 12 months, our leadership team. So we have two team leaders, head of growth and head of strategy.

• 21:25Speaker 03

  They're all just on salary at the moment, but putting together or building an incentive, a great incentive plan for them as a group to carry us as we two and three X headcount.

• 21:38Alex Hormozi?

  Um, I would just go profit share pool, 10 to 20%, and then they get slices of that slice. So it caps. So basically it's like, if you say like, simple math, a hundred dollars a year of profit, twenty dollars is always going to be allocated or 20% is always going to be allocated to all leaders. Um, and so they get slices of that pool, but then you always have 80. And then they think like you do, which is like, if we're going to bring this leader and we got to give up some of this pie, but they should be able to grow the pie, which is the exact same math that all of us do when we bring someone in.

• 22:08Speaker 03

  Yeah.

• 22:09Alex Hormozi?

  And so it gets them thinking more like owners. That's the simplest way I could break it down. Are you planning on trying to sell the business anytime soon?

• 22:15Speaker 03

  Uh, potentially. Yeah.

• 22:16Alex Hormozi?

  Okay. If you want, you can include a profits interest in the, in the sale, which you can have be proportional uh, to their interest.

• 22:23Speaker 03

  Yeah.

• 22:24Alex Hormozi?

  And then if they leave, comes back to you.

• 22:27Speaker 03

  How would you apportion that percentage split against those different roles?

• 22:32Alex Hormozi?

  So first off, you're going to want to leave probably two thirds for future talent. If you want to go big. And so do not be like, okay, I'm going to blow my whole like, slice of pie on these people because the best talent is in the future. It's not right now. But I'll give you the, the pitch or the walkthrough that I have with um, with somebody who's in this, in this position is that, and this will probably apply to half of you. Um, who here has somebody that they were considering tying into your business? Okay. So I'll give you quick, quick, big picture advice. If you never want to sell the business, don't give shares away.

• 23:10Alex Hormozi?

  The only thing that is guaranteed 10 years from now is that you will still be in the business. That's it. Everything else is not guaranteed. So I would not encourage you to give real shares away. Thing one. Thing two, there are four things that equity provides. One is cash flow.

• 23:27Alex Hormozi?

  The second is sale bonus, sale dollars. The third is risk and the fourth is control. And so when I have a conversation like this, I'd be like, okay, cool. So do you want any risk? And they're like, no, I don't want any risk. And you're like, okay, cool. So we don't want that. I'm not going to give you control. So that's off the table. So all we have left are cash flow and the chance that we sell. And that's what we're going to do. And so I'm sure in Melbourne, I know the legal situation, but like, there's a version of we'll give you a profit share, which comes off bottom line. And in the event of a sale, you'll get a sale bonus. Now, the issue with that is it's going to be taxed as income. At least it is in the U.S. if they have a sale bonus.

• 24:10Alex Hormozi?

  Rather than capital gains, but there is no real other alternative because either they have to take on risk and not get control and pay taxes on you gifting to them, or they have to buy it and give you money. Most people don't want to do either of those things and you have to agree on a valuation. It's a whole fucking mess. And so it's easier to say, I'll give you some money today. And if we sell, you get money tomorrow. And if you leave, you get neither.

• 24:32Speaker 03

  And then that sale, you know, I've just said that the sale number predetermined.

• 24:38Alex Hormozi?

  There's a zillion ways to slice this, but the simple way is like, if you have a 10% profit share, like for the whole company, right? And somebody, let's say gets 10% of that. So they have 1% of the profit. You could say, when we sell, you will get a proportional amount relative to the total for that 1%. So they get 1% of the sale.

• 24:57Speaker 03

  Sure. Yeah.

• 24:59Alex Hormozi?

  And when you write that, make sure that it's the percentage of cash, not calculated on the total value of the sale.

• 25:04Speaker 03

  Yeah.

• 25:06Speaker 03

  The head of growth is pretty much the sole sales guy. Or our first sales guy, not our founder led.

• 25:15Speaker 03

  He'd be at this table, commission on Clipper sales plus this percentage of profit share? Or it's one of the other?

• 25:21Alex Hormozi?

  Is he a founder?

• 25:22Speaker 03

  No.

• 25:24Alex Hormozi?

  It just sounds like he's your sales guy.

• 25:26Speaker 03

  Correct.

• 25:26Alex Hormozi?

  I don't.

• 25:27Speaker 03

  New role for us, yeah.

• 25:28Alex Hormozi?

  Well, he gets commission.

• 25:29Speaker 03

  Yeah.

• 25:30Alex Hormozi?

  He already.

• 25:30Speaker 03

  He's at the leadership table.

• 25:32Alex Hormozi?

  Uh huh.

• 25:33Speaker 03

  The other guys at the leadership.

• 25:33Alex Hormozi?

  But he do marketing?

• 25:35Speaker 03

  He started to, yeah. He's developing and he's backfilling that head of growth role.

• 25:41Alex Hormozi?

  Giving equity to a sales guy is like, kind of like one of those day one mistakes that I'd prefer you avoid.

• 25:45Speaker 03

  Yeah.

• 25:46Alex Hormozi?

  So I, if that guy's like really ambitious and really hungry and smart and you think that he's going to be there long term, I would say, I want you to leadership table. I don't think you're ready there yet. This is what I would need to say and just make it quantifiable.

• 25:58Speaker 03

  Yeah.

• 25:58Alex Hormozi?

  You need to get like, you needed master demand gen, which creates five deals a week, five deals a month, whatever that number is that you'd act like. If he actually did this, you'd be like, you earned it. So whatever that is.

• 26:09Speaker 03

  Sweet. Thank you.

• 26:10Alex Hormozi?

  Talk your own. Yeah, you bet.

• 26:16Alex Hormozi?

  No, you bet.

• 26:17Speaker 04

  Uh, my name's Trenton. We sell roofing in the metro Detroit market.

• 26:21Alex Hormozi?

  Sweet.

• 26:22Speaker 04

  Um, we're going to do about three million this year. We'd like to be at 10 million.

• 26:26Alex Hormozi?

  Okay.

• 26:26Speaker 04

  Um, quick context, we were primarily a storm contractor.

• 26:31Alex Hormozi?

  Yeah.

• 26:32Speaker 04

  Storms have uh, kind of vanished in our market, which was.

• 26:36Alex Hormozi?

  Hell, right?

• 26:36Speaker 04

  Yeah.

• 26:37Alex Hormozi?

  Global warming back here, you know? Climate change, whatever.

• 26:40Speaker 04

  Actually, the best thing that ever happened because it allowed me to step into retail.

• 26:45Alex Hormozi?

  Okay.

• 26:45Speaker 04

  So over this last year, I've really had to like rebuild my business because right before that we had hit to uh, five million, two years in a row.

• 26:53Alex Hormozi?

  Okay.

• 26:53Speaker 04

  And now we're seeing this drop off. So my biggest constraint or what's stopping me is that um, for the last, you know, eight years, all of our lead gen has been from.

• 27:03Alex Hormozi?

  Weather?

• 27:03Speaker 04

  From doors.

• 27:04Alex Hormozi?

  Okay.

• 27:05Speaker 04

  So it's been a hundred percent uh, door to door lead gen.

• 27:08Alex Hormozi?

  Right.

• 27:08Speaker 04

  And now when we're trying to knock for retail, it seems to be like, like heavier of a weight on the team.

• 27:15Alex Hormozi?

  When you say retail, what do you mean?

• 27:17Speaker 04

  So uh, like just people on market that need a roof.

• 27:20Alex Hormozi?

  It's like residential?

• 27:21Speaker 04

  Residential.

• 27:21Alex Hormozi?

  Okay, got it.

• 27:22Speaker 04

  Yeah.

• 27:23Alex Hormozi?

  And when you were doing door knocking before you were knocking on?

• 27:25Speaker 04

  Residential doors.

• 27:26Alex Hormozi?

  Okay, so it was.

• 27:26Speaker 04

  But we were getting funding from the insurance company.

• 27:28Alex Hormozi?

  Got it. Word. Okay. Yeah. Okay. So keep going.

• 27:32Speaker 04

  So now um, it, with me being a door to door guy, like purchasing leads and all that was like sacrilegious to me.

• 27:39Alex Hormozi?

  Okay.

• 27:40Speaker 04

  So there's some limiting beliefs there um, that I started to, you know, explore last October. We bought.

• 27:47Alex Hormozi?

  I just want to be lead curious. That's all I'm asking.

• 27:49Speaker 04

  Yeah, I, I am, I'm very lead curious now. And uh, but I basically got slaughtered learning this.

• 27:57Alex Hormozi?

  This acquisitionary binary, you know what I mean? Like be non-binary with your leads, like as many as you want.

• 28:01Speaker 04

  Yes, no, that's what I'm trying to do here. And when we did purchase leads and I was like.

• 28:06Alex Hormozi?

  You get the unedited version, by the way. Hey, go ahead.

• 28:09Speaker 04

  And when we started to, you know, stack the guys' calendars, there was a big culture shift.

• 28:14Alex Hormozi?

  Yeah.

• 28:14Speaker 04

  Um, where we actually saw like more buy-in from the guys, but then like the door knocking just.

• 28:19Alex Hormozi?

  Yeah, because it was easier.

• 28:21Speaker 04

  It was way easier.

• 28:22Alex Hormozi?

  Yeah.

• 28:22Speaker 04

  But um, like our CAC and all of that was absolutely horrid, right? So I was spending like seventy-five hundred dollars just to acquire one customer over the summer. Um, and it wasn't sustainable. So I just like.

• 28:34Alex Hormozi?

  You make from a customer?

• 28:36Speaker 04

  Um, on average, sixty-five hundred dollars.

• 28:38Alex Hormozi?

  So that does not work?

• 28:39Speaker 04

  No, it doesn't work.

• 28:40Alex Hormozi?

  Yeah.

• 28:41Speaker 04

  And it was just like a lot of the marketing agencies that we worked with were like younger people. They were like using AI tools, go high level like.

• 28:47Alex Hormozi?

  Yeah, sure.

• 28:48Speaker 04

  So we decided that we were gonna build it in-house.

• 28:51Alex Hormozi?

  Okay.

• 28:51Speaker 04

  So with that being said, now it comes into, you know, a leadership issue because I need somebody that like knows how to, you know, market better than I do so that I can focus on training and.

• 29:06Alex Hormozi?

  Can I pause you real quick?

• 29:07Speaker 04

  Yes, please.

• 29:07Alex Hormozi?

  Okay, cool. So you're at three, you want to get to ten, you rebuilt it from storm chasing to just straight up door knocking whenever. Fine. I think that was a good idea. Um, you had a door knocking team, you took the same sales guys, brought them on leads that you got them, they got lazy, fat, and don't want to do door knocking anymore. So, great rule number one, outbound and inbound are separate teams.

• 29:28Speaker 04

  Yes.

• 29:30Alex Hormozi?

  Inbound is what you graduate to. And so if you're an absolute savage, like you just take children's souls and just rip them out every day because you're a terrible person. Um, but you're, you're just unbelievable at sales. Then and only then, do you get the opportunity for me to feed you leads? Because these are the most expensive leads that we have to work very, very hard for to make sure. And like, we cannot waste them on anybody who cannot close everything. And so, thank you. I hope that was an amen. Um, and so, so first off is the team should be separate, but you're in this mix now. You're in a little bit of a mess. And so my, my two cents would be like, take that, because I'm sure their commissions have gone down since they now are selling nothing, basically.

• 30:11Speaker 04

  Yes.

• 30:11Alex Hormozi?

  Yeah. So I would say, guys, my fuck up, I went to this thing. He told me I did this big boo boo, which is inbound and outbound were together, which is not how it should be. Everybody get back on the streets. You guys do that. And then for the absolute savages of you, because you can usually have far fewer people on inbound. That becomes the Christmas tree of the career path. Because on inbound, I can feed you and you can do like five sales a day. You can't do that door knocking, right? But I, you can do it if I'm feeding you leads that are already qualified, already set, already gone through a VSL, whatever. Um, in the sales motion. And then those guys can absolutely clean up, but you get, you earn the opportunity to get that level of commissions. Now, the commission's structure should also be different on inbound because you have to pay for those leads.

• 30:53Alex Hormozi?

  So it's a different role. They graduate to it. It's more volume, lower per, but it's more reliable, which guys with families, things like that. If you have a bad day, you close two and a good day, you close seven. It's different than you have a bad day, you can close zero, zero, zero, right? It's much more, uh, it's much more stressful. And so guys will be happy to even give up, they'll even make the same money, but just have it be more reliable. They'll be make, and you don't have to be in the sun. So.

• 31:17Speaker 04

  So then we should hire for inbound sales.

• 31:20Alex Hormozi?

  Yeah, or take one of the guys you have who's really good at it. Um, and put everybody else back on the streets. So you just funnel everything to that guy who, because then you can iterate faster because you're new on this. And so you want, you never want to have too many news. Cause kind of like the brick analogy I gave at the beginning, the more news there are, the more likely something's going to fuck up. Right? And so it's like, I know this is an absolute savage salesperson. If they're closable, he'll close them or she'll close them. And so then the only variable we have is just what offer slash lead source am I getting? And like what process are you going from lead to talking to them? Those are the only variables you have to play with and you can control. It's much easier to iterate on that and then get it to go faster.

• 31:56Speaker 04

  So then I want to hire a marketing director or leader, um, to manage that. Now, Tim like was blowing our minds in the workshop, like.

• 32:06Alex Hormozi?

  He does do that. Our Asian Clark Kent.

• 32:08Speaker 04

  Yeah, it was, it was, yeah.

• 32:10Alex Hormozi?

  Racist today?

• 32:12Speaker 04

  I was almost going to say he was a ninja, but I, I didn't want to.

• 32:17Speaker 04

  He was anyways. So, um.

• 32:20Alex Hormozi?

  He's Chinese. I'll have you know.

• 32:23Speaker 04

  Samurai, Samurai.

• 32:24Alex Hormozi?

  Yeah. You're good, keep up.

• 32:27Speaker 04

  But he was talking about when, when another guy was talking about a constraint and he was talking about the trade off of, okay, so you, you know, you could spend $6,000 a month. You don't want to spend, you know, basically a hundred grand to replace the person. What I'm trying to figure out is, I think I've answered my own question. I won't keep going here. Um, it's, I've been working on the wrong problem, I think is what the situation is. And I'm trying to make sure-

• 32:50Alex Hormozi?

  Can I just put this for you? Outbound team goes out, inbound team becomes the one guy. You need to hire a marketer person who actually knows what they're doing, probably pay more than you expect, but then that person will be worth it. Your entire business is sales and marketing, so you should have the core elements of the business in-house.

• 33:04Speaker 04

  Okay, excellent.

• 33:05Alex Hormozi?

  If you need help with the sales process, we can help.

• 33:06Speaker 04

  Excellent. Thank you.

• 33:11Speaker 05

  Um, so my name is Evan. I sell duct cleaning supply to duct cleaners. Um, their year we will do 1.2 million in revenue and I think I'd like to be around three and a half.

• 33:25Alex Hormozi?

  Okay.

• 33:27Speaker 05

  Um, and I think what is stopping me is just being clueless.

• 33:31Alex Hormozi?

  Okay, cool. So let's, let's give you clues. So, let's do one more. How do you get customers now?

• 33:40Speaker 05

  Uh, strictly organic.

• 33:41Alex Hormozi?

  Can you take more customers than you have?

• 33:43Speaker 05

  Yes.

• 33:44Alex Hormozi?

  Okay. So you don't do anything, that's why. All right. So, um, no, I mean, like it's word of mouth. There's no like demand gen that's happening. All right. I've got, I've got good news and bad news. The good news is that your business probably, you probably are good at what you do because you've been relying solely on word of mouth. So that's the good news. The bad news is that you're going to have a steep learning curve for what you have to do next. And so you basically have to pick, do you want to do outbound as your way of getting customers, which could either be door knocking, it could be emailing, it could be cold calling, or you gotta be Instagram DMing, it could be anything, but outbound, you could do, uh, paid ads to get customers. Um, you can have affiliates, so you do those things to get affiliates, or you could post content. Those are your options. Which of these do you feel like you are best equipped to do?

• 34:28Speaker 05

  Um, probably paid ads, but one of the things I was thinking like is creating a higher value per customer, a good option, instead of trying to get more customers.

• 34:39Alex Hormozi?

  Okay.

• 34:41Speaker 05

  Um, I don't know which route to go, I guess.

• 34:44Alex Hormozi?

  So you'd want to double how much customers are worth?

• 34:46Speaker 05

  Um, I guess utilize my existing customer base with more consumables. So there's more repeat orders. So like they're ordering more.

• 34:55Alex Hormozi?

  So duck cleaners go clean ducks.

• 34:57Speaker 05

  Yeah.

• 34:57Alex Hormozi?

  Correct. And you sell them?

• 34:59Speaker 05

  We sell them to cleaning supplies, um, which is really high profits.

• 35:05Speaker 05

  And then we started selling some consumables, but they're low profits. Like, you know, they might buy 500 a year, but it's only like $6 a unit or something.

• 35:13Alex Hormozi?

  Uh huh.

• 35:13Speaker 05

  So there's not too much money in that yet. So.

• 35:16Alex Hormozi?

  Okay.

• 35:17Speaker 05

  Um, I guess the.

• 35:18Alex Hormozi?

  But are they buying regularly from you? It's just like, how many customers per month are new customers versus repeat customers?

• 35:24Speaker 05

  Um, we average 80 new customers a month.

• 35:27Alex Hormozi?

  Okay. So you do not have a lot of repeat business?

• 35:30Speaker 05

  No.

• 35:31Alex Hormozi?

  How?

• 35:32Speaker 05

  Um, unfortunately, but fortunately, the equipment I sell is really good. So it doesn't break down frequently.

• 35:38Alex Hormozi?

  But on the consumable side, what percent are, are all those repeat customers?

• 35:43Speaker 05

  Uh, consumables. Yeah, those would all be repeat customers. There's just like, even though the margins are well, there's just like, you can make so much selling a $6 product. Um, so I don't know if there's a way.

• 35:59Speaker 05

  I don't know, maybe through.

• 36:00Alex Hormozi?

  Yeah.

• 36:01Speaker 05

  Selling them education to maybe that be.

• 36:03Alex Hormozi?

  No, I mean, fundamentally, you've, you've a normal business. Like there's a zillion businesses that work this way. Auto dealerships work this way. Large equipment, you know, works this way. Like ink and printers work this way. You sell like you have three, you basically have three wheels of revenue in this business. You've got, you sell the machines, you sell the stuff that the machines use, and you sell the service around the machines. That's the three pronged approach. And so your ability to extend the customer LTV is going to be around the second two. Not where, I mean, most people will even like, the more sophisticated business will sell these at cost or at a, at a loss, because all their margin is on the consumables and, uh, on the service. Now, you can sell bigger customers so that those $6 things times 10,000 of those starts to add up.

• 36:47Alex Hormozi?

  Um, or we can sell more on the front end, but either way, the. Core focus of your business, like if I had a two step approach for you. Core focus number one is we have to know that we're retaining ninety, ninety-five percent of those people on an annual basis on all the consumables. So every year I should know that ninety-five percent of those people are, they have to buy it from somewhere and they should all buy it from me. And so what ends up happening is your business starts, that that becomes like the annuity of the business. So you acquire these new customers to sell machines for, whatever. And then this base of servicing consumables just continues to rise over time and that's super profitable. That's the game. Now, you said that you wanted to grow the business by making them more valuable. I think you will have a hard time making the individual more valuable. I think it would be easier for you to sell a higher tier customer.

• 37:31Alex Hormozi?

  So somebody who cleans more ducks, uh, so that they could buy in higher volume or buy for entire fleets, whatever. That would be the path, but it'll be a different sales motion than you currently do. And so you have like, you're at a crossroads where like, if you want to have significant growth, you'll either have to have a new acquisition, well, you'll have to have a new acquisition system, basically either way. Because you're either going to have a new acquisition system for a new type of customer or a new acquisition system for your existing customer. If I had my druthers, I'd probably rather you start with new acquisition system, existing customer, because you already know that flow. Once you have that, then I'd be willing to go up market.

• 38:07Speaker 05

  Gotcha. So would a good first step be to reach out to our existing customer bases with like, explain to them we have consumables, like we don't do any outbound to existing customers.

• 38:18Alex Hormozi?

  That would be an excellent idea.

• 38:19Speaker 05

  Gotcha.

• 38:20Alex Hormozi?

  We have things available for purchase. You should purchase them from us.

• 38:23Speaker 05

  That makes sense.

• 38:24Alex Hormozi?

  And so realistically, you should probably get them on a cadence or a subscription with the sale of the initial product. So I don't know what the offers that you use is probably beyond the scope right now, but like, that's, that's where a lot of the alpha is right there is like, what kind of maintenance programs are we selling upfront? What kind of incentives are we getting them for, for subscriptions upfront? Like the entire business and here, again, I have more good news for you. Is that you've been making the money that you are with none of the actual pieces that make your business make money, make money. Just great news. And so we just have to put these other two, uh, wheels in place and then develop the motions around those. And like the profitability of the business will go up a lot, like a lot, dude. Like you've got, you've got the front, you've got the hard part of a profitable business without the profitable part of the profitable business.

• 39:08Alex Hormozi?

  So we just, we just have to bridge that mode. That's it.

• 39:11Speaker 05

  Yeah, that makes sense. Yeah, I think that's my only question.

• 39:15Alex Hormozi?

  Okay, great. So, sales motion changed, offer changed, and then there's gonna be a re-engagement on the backend. Those are the three things for like today.

• 39:22Speaker 05

  Alright, cool. Thank you.

• 39:23Alex Hormozi?

  Welcome, appreciate you.