Pod Insights The Game with Alex Hormozi Diagnose Before You Scale. Q&A | Ep 943 About this episode 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.
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0:02 Alex 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.
0:50 Speaker 01 Hey Alex.
0:51 Alex Hormozi? What's up?
0:51 Speaker 01 My name is Francis Aguilo. I am a real estate wholesaler.
0:55 Alex Hormozi? Okay.
0:56 Speaker 01 We're currently averaging about $450,000 a month.
1:00 Alex Hormozi? Okay.
1:00 Speaker 01 In revenue. I would like to be at a mean.
1:03 Alex Hormozi? That's your spread? That's what you're making, or that's like house volume?
1:07 Speaker 01 Uh, that's gross.
1:08 Alex Hormozi? Okay. So what's your, what's your spread on that? What's your take on this?
1:12 Speaker 01 So we're at 40%. So right around 250, 240.
1:17 Alex Hormozi? Interesting. Weird. That's high. What kind of, what are you wholesaling?
1:27 Speaker 01 Alright, so here's the, um.
1:31 Alex 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.
1:38 Speaker 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.
1:46 Alex Hormozi? Okay.
1:47 Speaker 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.
1:57 Alex Hormozi? Okay.
1:57 Speaker 01 Um, I'm sick.
2:00 Speaker 01 I have cause to believe it's the sales team and just
2:03 Alex Hormozi? Okay.
2:04 Speaker 01 You know, they have those power months where everyone, you know, takes home twenty, thirty grand.
2:09 Alex Hormozi? Uh huh.
2:09 Speaker 01 And then the month after it's like.
2:11 Alex Hormozi? Are they pure commission or is it split?
2:13 Speaker 01 So there is a base salary.
2:14 Alex Hormozi? Okay. What's the split between commission and base?
2:17 Speaker 01 So they're at forty two base.
2:20 Alex Hormozi? Okay.
2:21 Speaker 01 Uh, per annum and then ten percent of the assignment fees.
2:24 Alex 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?
2:48 Speaker 01 I do have a sales manager.
2:51 Alex 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.
3:22 Alex 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?
3:30 Speaker 01 Yes, the lead is the same.
3:31 Alex 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.
4:16 Alex 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.
4:57 Alex 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.
5:33 Speaker 01 That makes a lot of sense. I, um, up until now, I mean, we have scripts, but they're more of suggestions.
5:38 Alex Hormozi? Guide lines.
5:39 Speaker 01 Yeah, I mean.
5:41 Alex 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?
6:20 Speaker 01 Inbound, it's Google Ads.
6:22 Alex Hormozi? Google Ads?
6:23 Speaker 01 Yeah.
6:23 Alex 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.
6:36 Speaker 01 Gotcha.
6:37 Alex Hormozi? But that's the constraint.
6:38 Speaker 01 In the events that I have to, you know, let go of half the team because it's just not good enough.
6:42 Alex Hormozi? Yeah.
6:43 Speaker 01 Where do you suggest I look for?
6:46 Alex 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?
7:29 Alex 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?
7:45 Speaker 01 Um, currently seventeen.
7:46 Alex 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.
8:30 Alex 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.
9:05 Alex Hormozi? If you can set that frame, you will attract winners.
9:09 Alex Hormozi? And winning's not for everybody.
9:12 Alex 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.
9:20 Alex 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.
9:27 Speaker 01 Thank you.
9:33 Alex 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.
9:42 Speaker 02 Okay, so my name is Sasha. I sell designer bags and sunglasses.
9:48 Alex Hormozi? Cool.
9:48 Speaker 02 And we do about 6 million a month. No, sorry, a year, sorry, 6 million a year.
9:52 Alex Hormozi? Oh, cool.
9:54 Speaker 02 And I would like to do 38 million.
9:58 Alex Hormozi? Precise.
9:59 Speaker 02 Yeah, 38 million.
10:00 Alex Hormozi? Okay.
10:01 Speaker 02 And what's stopping me is.
10:03 Alex Hormozi? Why 38?
10:06 Speaker 02 Just because I figured, you know, 100,000 a day, something like that, round up, down, something like that.
10:11 Alex Hormozi? Okay.
10:11 Speaker 02 And go up to roundabout.
10:14 Speaker 02 And, I mean, obviously more.
10:17 Alex Hormozi? Yeah, okay.
10:17 Speaker 02 But I was thinking 38 would be fair.
10:20 Alex Hormozi? Yeah, that works.
10:22 Speaker 02 And it is just recruiting.
10:25 Alex Hormozi? Recruiting is the bottom line, as you're saying?
10:27 Speaker 02 Yeah.
10:27 Alex Hormozi? Okay, got it.
10:29 Speaker 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.
10:51 Alex Hormozi? Okay.
10:53 Speaker 02 The, we do sell on whatnot quite a bit.
10:55 Alex Hormozi? Who do you have what's stopping you?
10:59 Alex Hormozi? So you make money, six million dollars a year selling handbags.
11:02 Speaker 02 And sunglasses.
11:03 Alex Hormozi? And sunglasses. For you to sell more handbags and sunglasses, you need more people to do that?
11:08 Speaker 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.
11:24 Alex Hormozi? You're going live on like your Instagram page or your what?
11:27 Speaker 02 On whatnot.
11:28 Alex Hormozi? Okay, got it. And do you have like a big following there?
11:31 Speaker 02 A hundred and ten thousand.
11:33 Alex Hormozi? And so you're just selling to that same base? And if you just sold for longer, you would make more?
11:38 Speaker 02 A lot more. I could do a hundred grand in the show.
11:40 Alex Hormozi? Okay. So you just need like two more salespeople or go on camera?
11:43 Speaker 02 Mm-hmm, but yeah, mm-hmm. And then the recruiting as well.
11:48 Alex Hormozi? Recruiting for what?
11:49 Speaker 02 Packing, because we, we do a lot of.
11:52 Alex Hormozi? You do your own 3PL or not third party, but like you do your logistics? Hmm. Why?
11:58 Speaker 02 And then, and then now you can have other people do it.
12:02 Alex Hormozi? Boy, oh, boy. Yeah.
12:07 Alex 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,
12:27 Alex 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.
13:14 Speaker 02 We have to physically show the product, like.
13:16 Alex Hormozi? No, I'm not saying you don't have like some product on hand. You just don't need a warehouse.
13:21 Speaker 02 No, we do need it because it's like, go, go, go, go.
13:26 Alex Hormozi? Okay.
13:27 Speaker 02 Feed. We run probably about.
13:29 Alex Hormozi? So you're like, we sold this item to this person is how you do it?
13:32 Speaker 02 Yes.
13:33 Alex Hormozi? Okay.
13:33 Speaker 02 So.
13:34 Alex Hormozi? Um, got it.
13:35 Speaker 02 It's kind of like a warehouse. It's, yeah.
13:37 Alex 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?
13:43 Speaker 02 The talent.
13:44 Alex Hormozi? The talent to hire more people?
13:47 Speaker 02 Well, I'm, I'm learning now. That's why I'm here.
13:48 Alex 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?
14:00 Speaker 02 Well, we had ads on Indeed.
14:02 Alex Hormozi? Okay.
14:02 Speaker 02 But I didn't realize how militant it had to be until I came here.
14:06 Speaker 02 It's, it makes a lot of sense, right? I know that there's that many interviews that are required.
14:12 Alex Hormozi? And that's more for the warehouse side, correct?
14:14 Speaker 02 Both, because sales is.
14:16 Alex Hormozi? I think that you'd be able to find salespeople, like.
14:21 Alex Hormozi? I would probably look at. Amazon affiliates.
14:26 Speaker 02 How much would you pay them?
14:28 Alex Hormozi? Percentage.
14:29 Speaker 02 Well, that's the thing. It's so, okay, so it takes skill to do what we do.
14:33 Alex Hormozi? Yeah.
14:34 Speaker 02 Takes skill, like.
14:35 Alex Hormozi? Agreed.
14:36 Speaker 02 Like, um, for example, my girl is better than me.
14:40 Alex Hormozi? Great.
14:40 Speaker 02 Better than me. And it's like.
14:44 Speaker 02 Not only is it motor skills, it's, um, presentation and entertainment, like.
14:49 Alex Hormozi? I, I get it.
14:52 Alex Hormozi? I understand. I did a live for three days. I got it.
14:57 Speaker 02 So finding and training that, uh, that's definitely a process and takes time.
15:02 Alex 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?
15:15 Speaker 02 We're not always, so we are profitable per show. Yes.
15:18 Alex Hormozi? Okay.
15:19 Speaker 02 Profitable per show.
15:20 Alex Hormozi? Uh huh.
15:21 Speaker 02 But sometimes when the dip happening is like, let's just say it's a, a Wednesday.
15:26 Alex Hormozi? Are you on cash based accounting or accrual? Probably cash.
15:29 Speaker 02 Yeah.
15:29 Alex Hormozi? So you might like if, basically if you run a physical products business,
15:35 Alex 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?
15:53 Speaker 02 My accountant handles it.
15:54 Alex Hormozi? Your who?
15:55 Speaker 02 My accountant.
15:56 Alex Hormozi? Oh, your accountant does it. Okay.
15:57 Speaker 02 Yeah.
15:58 Alex 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.
16:13 Speaker 02 Mm hmm.
16:14 Alex 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.
16:21 Speaker 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.
16:42 Alex Hormozi? Well, I mean, I think doing a percentage would make sense.
16:45 Speaker 02 Percentage of profit.
16:47 Alex Hormozi? Yeah. Like a salesperson.
16:50 Speaker 02 Okay.
16:51 Alex 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.
17:23 Speaker 02 Okay, so Amazon affiliates.
17:25 Alex 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.
17:31 Speaker 02 Hmm, like a contract, yeah.
17:33 Alex Hormozi? Like a contract.
17:34 Speaker 02 Thank you.
17:34 Alex Hormozi? Yes. But I would, but big picture, because I want to make sure that you're good.
17:40 Alex 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.
18:21 Alex 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.
19:05 Alex 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.
19:32 Speaker 02 So that.
19:33 Alex Hormozi? I don't know why it's animals now, but let's go with it.
19:35 Speaker 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.
19:48 Alex Hormozi? Yeah.
19:48 Speaker 02 And she's like, I'm a copy and paste of you and she became me.
19:51 Alex Hormozi? Yeah.
19:52 Speaker 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.
20:18 Alex 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.
20:24 Alex Hormozi? If like, if she can sell.
20:26 Speaker 02 Yeah.
20:26 Alex Hormozi? So let her sell. Don't have her manage people, have her sell.
20:29 Speaker 02 Got it. Understood. Thank you. Okay.
20:32 Alex Hormozi? This is good talk. Yeah.
20:40 Speaker 03 Alex, my name is Sebastian. Four years learning. Thanks for everything.
20:44 Alex Hormozi? Yeah. Thanks for coming out from Australia.
20:48 Speaker 03 Melbourne. Yep.
20:49 Alex Hormozi? Melbourne. That's sick.
20:52 Speaker 03 Blue Sense Digital, we sell paid ads and growth advisory to eight and nine-figure econ brands.
20:58 Alex Hormozi? Sweet.
20:59 Speaker 03 We do three and a half.
21:00 Alex Hormozi? Okay.
21:00 Speaker 03 We'd like to be at 10 and 20.
21:02 Alex Hormozi? Okay.
21:04 Speaker 03 Feel super clear on our top priority against our supply constraint.
21:08 Alex Hormozi? Oh, talent?
21:09 Speaker 03 Yeah.
21:10 Alex Hormozi? Okay.
21:10 Speaker 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.
21:25 Speaker 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.
21:38 Alex 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.
22:08 Speaker 03 Yeah.
22:09 Alex 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?
22:15 Speaker 03 Uh, potentially. Yeah.
22:16 Alex 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.
22:23 Speaker 03 Yeah.
22:24 Alex Hormozi? And then if they leave, comes back to you.
22:27 Speaker 03 How would you apportion that percentage split against those different roles?
22:32 Alex 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.
23:10 Alex 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.
23:27 Alex 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.
24:10 Alex 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.
24:32 Speaker 03 And then that sale, you know, I've just said that the sale number predetermined.
24:38 Alex 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.
24:57 Speaker 03 Sure. Yeah.
24:59 Alex Hormozi? And when you write that, make sure that it's the percentage of cash, not calculated on the total value of the sale.
25:04 Speaker 03 Yeah.
25:06 Speaker 03 The head of growth is pretty much the sole sales guy. Or our first sales guy, not our founder led.
25:15 Speaker 03 He'd be at this table, commission on Clipper sales plus this percentage of profit share? Or it's one of the other?
25:21 Alex Hormozi? Is he a founder?
25:22 Speaker 03 No.
25:24 Alex Hormozi? It just sounds like he's your sales guy.
25:26 Speaker 03 Correct.
25:26 Alex Hormozi? I don't.
25:27 Speaker 03 New role for us, yeah.
25:28 Alex Hormozi? Well, he gets commission.
25:29 Speaker 03 Yeah.
25:30 Alex Hormozi? He already.
25:30 Speaker 03 He's at the leadership table.
25:32 Alex Hormozi? Uh huh.
25:33 Speaker 03 The other guys at the leadership.
25:33 Alex Hormozi? But he do marketing?
25:35 Speaker 03 He started to, yeah. He's developing and he's backfilling that head of growth role.
25:41 Alex Hormozi? Giving equity to a sales guy is like, kind of like one of those day one mistakes that I'd prefer you avoid.
25:45 Speaker 03 Yeah.
25:46 Alex 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.
25:58 Speaker 03 Yeah.
25:58 Alex 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.
26:09 Speaker 03 Sweet. Thank you.
26:10 Alex Hormozi? Talk your own. Yeah, you bet.
26:16 Alex Hormozi? No, you bet.
26:17 Speaker 04 Uh, my name's Trenton. We sell roofing in the metro Detroit market.
26:21 Alex Hormozi? Sweet.
26:22 Speaker 04 Um, we're going to do about three million this year. We'd like to be at 10 million.
26:26 Alex Hormozi? Okay.
26:26 Speaker 04 Um, quick context, we were primarily a storm contractor.
26:31 Alex Hormozi? Yeah.
26:32 Speaker 04 Storms have uh, kind of vanished in our market, which was.
26:36 Alex Hormozi? Hell, right?
26:36 Speaker 04 Yeah.
26:37 Alex Hormozi? Global warming back here, you know? Climate change, whatever.
26:40 Speaker 04 Actually, the best thing that ever happened because it allowed me to step into retail.
26:45 Alex Hormozi? Okay.
26:45 Speaker 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.
26:53 Alex Hormozi? Okay.
26:53 Speaker 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.
27:03 Alex Hormozi? Weather?
27:03 Speaker 04 From doors.
27:04 Alex Hormozi? Okay.
27:05 Speaker 04 So it's been a hundred percent uh, door to door lead gen.
27:08 Alex Hormozi? Right.
27:08 Speaker 04 And now when we're trying to knock for retail, it seems to be like, like heavier of a weight on the team.
27:15 Alex Hormozi? When you say retail, what do you mean?
27:17 Speaker 04 So uh, like just people on market that need a roof.
27:20 Alex Hormozi? It's like residential?
27:21 Speaker 04 Residential.
27:21 Alex Hormozi? Okay, got it.
27:22 Speaker 04 Yeah.
27:23 Alex Hormozi? And when you were doing door knocking before you were knocking on?
27:25 Speaker 04 Residential doors.
27:26 Alex Hormozi? Okay, so it was.
27:26 Speaker 04 But we were getting funding from the insurance company.
27:28 Alex Hormozi? Got it. Word. Okay. Yeah. Okay. So keep going.
27:32 Speaker 04 So now um, it, with me being a door to door guy, like purchasing leads and all that was like sacrilegious to me.
27:39 Alex Hormozi? Okay.
27:40 Speaker 04 So there's some limiting beliefs there um, that I started to, you know, explore last October. We bought.
27:47 Alex Hormozi? I just want to be lead curious. That's all I'm asking.
27:49 Speaker 04 Yeah, I, I am, I'm very lead curious now. And uh, but I basically got slaughtered learning this.
27:57 Alex Hormozi? This acquisitionary binary, you know what I mean? Like be non-binary with your leads, like as many as you want.
28:01 Speaker 04 Yes, no, that's what I'm trying to do here. And when we did purchase leads and I was like.
28:06 Alex Hormozi? You get the unedited version, by the way. Hey, go ahead.
28:09 Speaker 04 And when we started to, you know, stack the guys' calendars, there was a big culture shift.
28:14 Alex Hormozi? Yeah.
28:14 Speaker 04 Um, where we actually saw like more buy-in from the guys, but then like the door knocking just.
28:19 Alex Hormozi? Yeah, because it was easier.
28:21 Speaker 04 It was way easier.
28:22 Alex Hormozi? Yeah.
28:22 Speaker 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.
28:34 Alex Hormozi? You make from a customer?
28:36 Speaker 04 Um, on average, sixty-five hundred dollars.
28:38 Alex Hormozi? So that does not work?
28:39 Speaker 04 No, it doesn't work.
28:40 Alex Hormozi? Yeah.
28:41 Speaker 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.
28:47 Alex Hormozi? Yeah, sure.
28:48 Speaker 04 So we decided that we were gonna build it in-house.
28:51 Alex Hormozi? Okay.
28:51 Speaker 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.
29:06 Alex Hormozi? Can I pause you real quick?
29:07 Speaker 04 Yes, please.
29:07 Alex 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.
29:28 Speaker 04 Yes.
29:30 Alex 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.
30:11 Speaker 04 Yes.
30:11 Alex 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.
30:53 Alex 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.
31:17 Speaker 04 So then we should hire for inbound sales.
31:20 Alex 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.
31:56 Speaker 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.
32:06 Alex Hormozi? He does do that. Our Asian Clark Kent.
32:08 Speaker 04 Yeah, it was, it was, yeah.
32:10 Alex Hormozi? Racist today?
32:12 Speaker 04 I was almost going to say he was a ninja, but I, I didn't want to.
32:17 Speaker 04 He was anyways. So, um.
32:20 Alex Hormozi? He's Chinese. I'll have you know.
32:23 Speaker 04 Samurai, Samurai.
32:24 Alex Hormozi? Yeah. You're good, keep up.
32:27 Speaker 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-
32:50 Alex 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.
33:04 Speaker 04 Okay, excellent.
33:05 Alex Hormozi? If you need help with the sales process, we can help.
33:06 Speaker 04 Excellent. Thank you.
33:11 Speaker 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.
33:25 Alex Hormozi? Okay.
33:27 Speaker 05 Um, and I think what is stopping me is just being clueless.
33:31 Alex Hormozi? Okay, cool. So let's, let's give you clues. So, let's do one more. How do you get customers now?
33:40 Speaker 05 Uh, strictly organic.
33:41 Alex Hormozi? Can you take more customers than you have?
33:43 Speaker 05 Yes.
33:44 Alex 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?
34:28 Speaker 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.
34:39 Alex Hormozi? Okay.
34:41 Speaker 05 Um, I don't know which route to go, I guess.
34:44 Alex Hormozi? So you'd want to double how much customers are worth?
34:46 Speaker 05 Um, I guess utilize my existing customer base with more consumables. So there's more repeat orders. So like they're ordering more.
34:55 Alex Hormozi? So duck cleaners go clean ducks.
34:57 Speaker 05 Yeah.
34:57 Alex Hormozi? Correct. And you sell them?
34:59 Speaker 05 We sell them to cleaning supplies, um, which is really high profits.
35:05 Speaker 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.
35:13 Alex Hormozi? Uh huh.
35:13 Speaker 05 So there's not too much money in that yet. So.
35:16 Alex Hormozi? Okay.
35:17 Speaker 05 Um, I guess the.
35:18 Alex Hormozi? But are they buying regularly from you? It's just like, how many customers per month are new customers versus repeat customers?
35:24 Speaker 05 Um, we average 80 new customers a month.
35:27 Alex Hormozi? Okay. So you do not have a lot of repeat business?
35:30 Speaker 05 No.
35:31 Alex Hormozi? How?
35:32 Speaker 05 Um, unfortunately, but fortunately, the equipment I sell is really good. So it doesn't break down frequently.
35:38 Alex Hormozi? But on the consumable side, what percent are, are all those repeat customers?
35:43 Speaker 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.
35:59 Speaker 05 I don't know, maybe through.
36:00 Alex Hormozi? Yeah.
36:01 Speaker 05 Selling them education to maybe that be.
36:03 Alex 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.
36:47 Alex 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.
37:31 Alex 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.
38:07 Speaker 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.
38:18 Alex Hormozi? That would be an excellent idea.
38:19 Speaker 05 Gotcha.
38:20 Alex Hormozi? We have things available for purchase. You should purchase them from us.
38:23 Speaker 05 That makes sense.
38:24 Alex 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.
39:08 Alex Hormozi? So we just, we just have to bridge that mode. That's it.
39:11 Speaker 05 Yeah, that makes sense. Yeah, I think that's my only question.
39:15 Alex 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.
39:22 Speaker 05 Alright, cool. Thank you.
39:23 Alex Hormozi? Welcome, appreciate you.
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