Growing a service business (whether it's coaching, consulting or another professional service) can be challenging. In the beginning, it's important to focus on customer acquisition and service delivery. But after a certain point, once success starts to set in, it's important to get a real grip on how to grow and scale your business without being overwhelmed.
That's where the growth journey begins. Zion Kim, the co-creator of the R.O.I. Method, join us in this episode to talk about how you can scale and grow your service business while making a big impact at the same time.
Zion reveals the quickest way to go from six to seven to multiple figures, no matter what business you are in. He also said that this was the best interview he's ever given.
Some Topics We Discussed Include:
Zion Kim is the CEO of 1MT and the co-creator of the R.O.I. Method. He was kicked out of business school his freshman year and has since started six, 6 and 7 figure companies, two of them while still an undergrad.
His company 1MT is currently on a mission to support 1 million entrepreneurs to 7 figures and beyond to add a trillion dollars to the global economy.
Today I'm interviewing Zion Kim. Zion and I met at the Internet Marketing Party in San Diego. I remember us having a drink. We met, we hit it off and then next thing I know, Zion’s off doing some other cool stuff with a former guest, Scott Oldford.
They cofounded and some amazing IP and a method for growing a business. Since then, Zion has gone on to scale not only his own business but helped a lot of other companies because he's the CEO of a company called 1MT. Along with Scott, he's the co-creator of the ROI Method.
Interestingly, he was kicked out of business school in his freshman year. He didn't tell me why but we might find out. He has since started six and seven-figure companies, two of them while he was still an undergrad, which is pretty impressive.
His company, 1MT, is on a mission to support one million entrepreneurs to seven figures and beyond to add $1 trillion to the global economy, which is a huge goal. I absolutely love it.
Zion has always been a wealth of information from the stuff he shared with me privately. Welcome, Zion, to Bacon Wrapped Business. How are you?
I’m amazing. Thank you so much for having me and you absolutely nailed it, that's exactly where we met.
I remember having drinks at the bar. I don't even remember exactly what we were talking about, but I think it was some fun stuff. It’s been cool to watch what you've been able to build.
I'm interested in diving into this. These conversations are like us sitting down and having a glass of beer or a coffee and kicking it. I do want to hear a little bit about the backstory.
You said you got kicked out of business school. If it's not a salacious, crazy story, I don't care. Were you cooking meth in your dorm room?
Nothing crazy like that. My freshman year when I got there, I was definitely taken over by the social aspect of college and didn't go to any classes at any point that my grades plummeted.
They gave me a warning when I first got there because I had some serious senior-itis and didn't do anything. After that semester they’re like, “By the way, we meant it so we're totally giving the boot.”
They don't like me essentially telling that story publicly because I've since been invited back a few times as a speaker and got invited even as a lecturer there at the school. The reason why I put it in is that it’s a fun fact.
When we met, it wasn't long after we met that you and Scott Oldford partnered up in order to bring the ROI Method and a lot of the business strategies behind that to the market. I want to dive into some of that stuff that you have created and I've got some questions.
I'm a little familiar with it, but I want to dive deeper and I also want to talk about what it takes operationally to scale once you've got a little bit of momentum. A lot of people hit that ceiling and I want to dive in there.
What were you doing prior to that? I don't mean the entire journey, but I'd love to hear some of the relevant things that you were doing prior to that partnership.
I did start a couple of businesses before then. My first one was custom apparel where that's probably where I got my appreciation for operations and especially what operational scale was not.
We had this one week where we literally got thousands and thousands of custom orders where of course that's great because we had a campaign go viral at the time.
They’re all custom orders. That's where I learned about the paradox of choice and that people only think they want options but they actually don't. That was custom clothing for fraternities and sororities. Since then, we opened up New Jersey's largest coworking space.
That's where I got an awesome appreciation for community in general where I got into the startup world and a bunch of other random stuff in the middle there. I was in the affiliate marketing space.
I'm doing more on the performance side and then moved into more running my own digital agency where we work with the smallest companies. We're probably on the $2 million to $3 million side and then the next thing is companies are $20 million to $50 million up to a few billion in revenue.
I got very fortunate that the common denominator with a lot of these companies was that they're industry leaders. I got to peer into the companies from the outside looking in and this time actually being on the inside running their digital acquisition strategies.
That was in all kinds of different industries like home services, specialty insurances, moving companies, real estate development companies, you name it, it’s all over the place.
That gives you a good breadth of experience. Is that what you were doing right when we met?
What was the catalyst to partner up with Scott and co-create the ROI Method and whatnot?
When we launched a coworking space, we did it because we're interested in launching an incubator accelerator. Since then I've always wanted to do it, but I never felt that I quite had what I needed both in terms of relationships, skills, experience, whatever it might be.
Scott and I are on a Facebook Messenger DM one day and like, “What is it that you want to do?” We went back and forth and we realized that we both had this interest in helping these companies at the six-figure level or the seven-figure level and as well as seven to multiple seven, whatever it is.
Next thing you know, he blows up his entire company, does a complete reset on it, launches a new program. I approached him. He was looking new coaches at the time.
I shot him a message and said, “I'd be interested in coaching for you. We talked about working together. I figured this would be the best way for me to see what you're all about, see you're not full of whatever it is.”
I got on through the door. I saw a lot of things that I liked and saw a lot of opportunities for improvement. Being the guy that was like, “By the way, we should change this and this,” that eventually became the ROI Method.
That was all by accident as well because I had actually come over his house in Venice so that we could redesign that program that we were launching, which was relevancy engine at the time.
The next thing we know, we're literally going through every aspect of the ROI Method and flushing it out and making it digestible and teachable for people and applicable.
That's something that I’ve always been good at, Scott is not as much. It's like how do we teach these things? That's not with Scott. That's with anyone. When you're good at something and it's in your subconscious competency, it's hard for you to figure out what about it is actually working.
I came as an outside perspective, looked at what he was doing and said, “There are a lot of psychological reasons why this is working. There are a lot of tactical reasons why this is working.”
My job was to not only essentially explain what the ROI Method was and all the different parts. ROI stands for Relevancy, Omnipresence and Intimacy. It was also to make this teachable so people actually implement it in their businesses.
Part of that is you were extracting out a lot of this stuff that Scott was doing. Was it unconsciously competent or whatnot?
He discovered the whole methodology by accident. He was messing around on Facebook and started posting a ton of content up and structured it a certain way and all of a sudden it was like, “You're everywhere. How can I do that?” That's how everything came to me.
Have you ever created a process by which you do that for yourself? It sounds like that's something in your zone of genius is extracting that from other people.
Do you also have a methodology which you either use, teach or have other people utilize to extract that information from somebody else about how to take what somebody else does naturally or unconsciously competently into a programmatic systematize way?
We've only done it probably at a higher level. There are two ways that we've done it. One is a higher level where it's coming up with their own signature process.
It's talking about, “There’s a certain framework and a certain set of steps and stages that you're taking people through. What is that? How do we turn that into essentially like your marketing methodology and your framework so that you’re naming your process?”
A lot of people underestimate the psychological power of what happens when you actually name a process that you do every single day. We forget because we do this all the time.
We might not have the appreciation for it, but the moment that it becomes named and branded and it's out there, then it contextualizes everything that you want to talk about.
It also suggests, “You guys have this nailed.” It's a repeatable, duplicatable process that you've done over and over again to achieve a certain outcome. That's essentially what we're trying to tell the marketplace.
With all the people you work with, how do we extract that out so that can become one of your battle cries of this is the thing?
Especially because I work with a lot of personal brands and companies, it gives an opportunity for people to almost take the spotlight off of themselves and put it onto something else where now they become this ambassador evangelist for the actual process itself.Go fish where the fish are. Figure out who you want to serve, where these people are, and go find them. Click To Tweet
That also becomes fun because if you build it the right way and build the assets the right way, then it truly does become an asset. There's a lot of fun business models I can come up with that and from licensing. You have different types of JV deals and whatnot.
It's one of the areas personally, that although I've helped people, some of my clients do exactly that same thing. It's always a hard thing to do for yourself.
Whenever you're looking at yourself, you can't see the same things that other people see because the perspectives are totally different, which is why having coaches and consultants is so critical oftentimes.
Like you, I've worked in so many different industries and with so many different types of clients. I've never had that specialized focused on one area. I'm a business and growth strategist.
My clients come to me when they need clarity and confidence, they can't figure it out. They need a roadmap for the whole thing. That might involve one aspect of this.
It's always been hard to codify and systematize what I do or memorialize it in a way that's like, “This is a methodology.” In fact, I did name my process or in essence or what I do. It's different than that.
It's not necessarily a method, but I do what I call compression coaching or compression consulting sometimes. I do this with clients and sometimes it's one-off and sometimes it's in a small group. I call it a compression session because it rhymes and that rhyming is cool.
In essence, it's distilling down everything. It's like getting rid of all the fluff and how can I compress all the time, energy, effort and information into the most actionable stuff so that you don't have to go through 150-module course or something.
The completion rate of a lot of people's programs is actually low. It's funny, but I've done a lot of this work on myself. How do I pull out the things that I do and into a framework that can be duplicatable?
I think for you, because you and I are very similar in that we cover a breadth of things and there are a lot of different things. I think coming up with something where it's talking about let's say compression.
If compression's the core foundational pillar of whatever it is that you're doing, then how do you apply compression to all these significant areas and what are they? Because if we boil it down and went through that process, it's likely that there's probably like four or five areas.
When you look at business in general at a high level, there are five areas; marketing, sales, finance, central, budget operations. For you, it's like how do we apply compression to each of these different areas and what's the secret sauce in each of those areas?
How does that roll up to this one big thing, which is the big outcome that they want, which of course is good. I'm seeing a visual here where it's almost like all these things stacked up and you're taking like, “This is what it actually looks like if we were to stretch it out almost like a slinky.”
It's like, “This is almost what it looks like, but what we're doing is this is what I'm actually delivering to you. It's all bite-sized.”
What I ended up doing is reverse-engineering where you want to be. What's the most critical path to get there? There are a lot of things we all could do.
There's a lot of things we should do, but it's super hard to do it all until you get to a point where now you have the resources and you build a huge team and everybody comes in and you refine the machine.
Dan Sullivan from Strategic Coach, if my readers aren't familiar, he has a great little pamphlet book called The 80% Approach, which I've always liked. You get it done 80% and you can always refine it later. Mine is even sometimes I get it done sometimes 30%.
You'll be amazed what happens when you get into momentum and you get that inertia moving forward, then that allows you to start creating the income and plug in the holes quickly as opposed to trying to build a masterpiece from scratch.
That's a pretty significant differentiation there right away where it's the aspect of compression, let's not even focus on the 80%. Let's focus on getting you started so you're moving in the right direction that you could actually get it done.
There are a couple elements that are different, because there are a lot of people where they're very much a hammer and they're looking for their nails.
Every single growth problem that they come across, “We can totally solve that with Facebook ads.” You're not necessarily that person.
I think even that of, “We're looking at what's available to us.” I'd imagine it's like, “What's the goal? Who do they serve? Where are these people living? Let's go find them.”
I've got another client who's going through this turbulence here. It's when you get to a point where you are doing well.
Let's say you're making six figures, low seven figures. Let's say mid-six figures. You’ve got to help the business. She's a coach.
You get to that point where adding another couple of clients is not going to move the needle. You need to start building the team. You need to start introducing frameworks in order to scale and operations that can handle things.
Otherwise you're going to go to debt because you're doing more and you're not doing it more efficiently. For instance, one of her issues is her funnel. It stopped generating leads.
I helped her create something to where the leads were not a problem. She's getting great ROI on the ads. The problem is now her time.
Her entire schedule is crap. What we did is we took a marketing and lead problem and we made it a sales problem. Now she's going through that process of hiring and trying to find the right salespeople in order to replicate her so that she can focus on the IP.
This is a thing that I wouldn't say a lot of people but the fortunate ones who get to this point where they're like, “I'm hitting my ceiling. If I keep doing the same thing I've always done, I'm not going to grow.” Making that switch over can be challenging.
What have you found is effective when people hit that and they're pedaling so fast? If they let up, things start to fall apart. How do people get over that turbulent time and go from hustler to business owner?
You mentioned something interesting because I think the first thing is having the lens and the paradigm shift of, “You have a lead issue, but what if you don't have a lead issue?”
A lot of people, when they're at that juncture where they're up that critical inflection point, they can't imagine what happens when that lead issue is solved.
Most people think the holy grail is, “I need my lead gen problem solved and then everything else will take care of itself,” but the fact of the matter is that's when all your problems actually start.
I would say the first thing is knowing that lead gen is not where it ends. It's actually where it begins and that's where the true growth journey begins.
I would say that in order to go over that hump, sales is definitely something that you need to outsource, especially when you’re at that six-figure level, you're doing your own sales.
You can't imagine giving up your sales function to somebody else. It's mind-bending to people because you also can't imagine creating an application process because you want as many sales calls as possible.
It’s this inflection point when you start generating a bunch of leads where you get to pick and choose and that becomes a whole different world for people in general.
It's also the transition point between living in a mindset of scarcity versus abundance where you get to look at your business in a completely different way.
When you're in that situation outside the sales issue, before you even get there, I'd actually make sure that the delivery component is taken care of as much as possible. It sounds like the client in this situation is mostly doing their own and doing all their own coaching.
There's an aspect to what they do can be downloaded to someone else so that they can actually repeat the process themselves.
It is a balancing act because here you are wanting to show up to delivery but you can't necessarily get the delivery off your plate unless you have your lead gen situation figured out. It almost all happens in tandem, which is why a lot of people don't make it through it.
I'd say that while the lead gen is growing and scaling because it’s obviously going to take some time and you're trying to get those things going on.
The moment you actually get that sales function off your plate, I'd say the first almost immediate thing is do you actually have a reliable process for delivery where you're out of it?
Especially as a coach, as a consultant, any service provider, any CEO in general, if you actually have the goal to grow the company and to become a CEO, then your number one job is to get out of every critical process in the company. I would do it in that order.
It's challenging for a lot of people who build, start off with a personal brand and they're selling themselves and then you want to migrate to selling your system.
You're constantly trying to remove yourself from the process, but it's hard when you started off selling yourself. It's a big mental shift for a lot of people to make.
To go back to early in the conversation, we were talking about this methodology. That's why it helps to have this other asset where it's like, “This is an asset that all of our people are trained on.” It is the process.
There's nothing special about me. It's almost this interesting part where you have to go get over this egoic hump where it's also not all about you. You're almost trying to take attention off yourself saying, “All my people are actually better than me.”
You get to edify everyone else on your team and say, “This process is the one that we've gotten dialed in. We have a whole team trained on it,” and then you're selling the process.
That shift from when people want you to the moment that they want your team or you want the methodology and the process, it actually happens quite seamlessly and quite quickly.Lead generation is not where it ends; it’s actually where the true growth journey begins. Click To Tweet
Unless they do want to work with you, then you start giving them the price tag because when the moment you have another team involved, then your price tag obviously goes up. Once they see that in contrast, they’re like, “I’m happy working with the team.”
You've given me so much to chew on here and I'm trying to think. I know one of your specialties is in operations and making things run smoothly. Once somebody got the lead problem and the sales problem taken over, what are some of the operational things that they need to get a handle on?
What should they focus on in order to create that confidence and stability in their business so that they're not floundering and worried that it's all going to fall apart at a moment's notice?
I'd say that the number one thing is making sure that you clearly understand who you're actually serving and what the outcome you're actually delivering for that person is.
The quickest way to actually go from six to seven to multiple seven figures, no matter what business it is, it's very paradoxical in that actually choosing one type of customer to serve is actually what's going to give you the highest payoff and the highest growth trajectory.
That's hard for a lot of people wrap their mind around because it's very counterintuitive, but it also simplifies everything. There's actually this one thing that you have to do where you have to start deciding.
I take people through a very simple process where I ask them who are the people that you either enjoy working with and you wish you had another millions of them or whoever you had the best results for. You have a lot of case studies to go off of.
I'd say the first thing that you need to do is actually nail that down and then that will actually further help your marketing efforts and everything else. Because without that getting nailed down, you can never ever nail down the nuances of the actual operational delivery.
I'll give you a perfect example. One of the folks that I work with right now trains hairstylists on how to make more money in their slots. It's like, “Fair enough.” Here we thought we nailed the avatar. Then we checked in after she launches her first program.
She was like, “I actually have hairstylists who own their own company or own their own salons. I have hairstylists who own salons, but they rent booths out to people. I have hairstylists who actually have those booth rentals. I also have hairstylists who work in teams and they get commissions.”
All these people have completely different issues and the way you would speak to each one of them is also vastly different, which is going to affect your delivery, which is also going to affect your operations, which is also going to affect your sales conversation, which is also affecting your marketing.
I would say that's actually the first step in nailing that down and then you actually can start to move towards operationalizing everything from that point forward. It's niching down, nailing a niche, which also doesn't mean that you have to be small.
I think that's also the biggest misconception about niching down. It's like, “I'm going to be small.” Oftentimes, it comes from a great place because entrepreneurs want to serve and help and impact as many people as they can. It's the fear of not being able to show up in that space of service for everyone.
Speaking of that, that made me think of one thing because I was giving advice to somebody else, a business coach. It's very easy, the fact that we can advertise the entire world, our services or just the entire country.
I think a lot of people, especially if they live in a decent-sized city, if they focused and did the ROI method and all the advertising and all this other stuff in their city alone, there is more than enough money in your backyard.
There's no reason to have to go big and global. Big is not always better. That was one of those things that he had a little epiphany going, “I actually never thought about that. Why don't I double down in my city because I could actually get a lot more exposure, a lot more bang for the buck?”
All of a sudden, everybody there sees you. You always get from a local celebrity. That made me think of a conversation I was having a couple of days ago with somebody.
I'd imagine you'd do the same thing when you go into any company. It's like, “Who are your customers? What are they? Who are your favorites?” It's figuring out all the different people that they serve.
It's like, “You're saying that most of your customers are this person. Why is that? Do you know it?
“No, I don't actually.” “Let's go find that out.”
Oftentimes when you're already at this level, all the answers are in front of you. It's a matter of whether you want to look and whether you want to ask and actually find out. Because once you do, then the whole game plan is already written for you.
It's like, “Find that person,” and whatever. Outside of that and delivery, I'd say diversifying lead sources is probably the next big one.
If your entire business is reliant on one source of traffic, then it's a recipe for disaster. We had this other client that we work with where his ad account got shut off.
Finally, it got turned back on because they're like, “Our bad. It was a mistake,” but we lost a whole week's worth of the potential revenue generated. Fortunately, we already have LinkedIn going.
We had Ad Words going, we had GDN going, we had YouTube going, we have organic going. It was one of the things where it was a big bummer, but it wasn't the end of the world for us. The business didn’t end.
Speaking of that and getting more tactical, I know a lot of the people are so reliant on Facebook as the only channel that they do advertising on.
Are there any non-obvious lead sources that either you guys have used or that some of your clients have used that people should be taken advantage of in paying attention to?
Ones that actually would not have been top of mind, but that's super effective. That depends on the business as well.
I don't want to give you the, “It depends,” answer, but I'll give you like the one that I've seen almost across the board.
The people especially who have relied on paid traffic to grow the business because of the consistency, the rate of growth, how quick it is, dollar in dollar out or $1 or $2 out often actually forget about all the organic sources.
It's the one that isn't the instant gratification. I would say that it's focusing on one of those organic sources that you can build on.
I've seen across the board that's the one that gets underutilized the most is, “Are you making sure that you ranked in Google search? Are you making sure that you ranked for YouTube videos?” Depending on your audience if you're a content-heavy, it doesn't even matter.
Even Quora, I'd say Quora is a massive opportunity for most people that they're not tapping. To give you an idea of the diversity, my friend runs an eCommerce company where they sell grillware, grill tools and grill brushes and all this other stuff.
One of his biggest channels was actually Quora because he would go on there and start answering people's grilling questions and all these other things. I'd say that Quora is a pretty massive missed opportunity.
Another fun one, other than Instagram and all these other ones that people were probably on, I'd say that Pinterest is still probably one that most people don't take advantage of, especially if you have a primarily female audience.
If you don't, then how do you figure out a way to get a primarily female audience? Because money runs through women technically. Any purchase is technically made by women. If you're a man, especially in a relationship, you're heavily influenced by your significant other anyways.
I'd say Pinterest is probably another massive source that's being missed out on. I'd say those are the ones where you can actually build assets where it's not, “Let's do a bunch of work and it's going to die off.” Those are the ones where you can actually invest in time and keep getting returns over time.
Those are perfect examples of the non-obvious things that people are like, “I actually neglect that because I don't know if it's worth it.” If you do it right, if you learn the system, anything can be worth it.
A question jumped into my mind that I thought I'd ask you because you guys have worked with a lot of people in the coaching and consulting service, personal brand industries. You don't have to name any names, but I'm curious what are some of maybe the models that are not super obvious?
I'll give an example of the super obvious. This person or people have got this stuff dialed in and figured out. This business model may be a little unique or innovative or works super well.
The obvious one, which I think a lot of coaches and consultants are familiar with is enrolling people into a group coaching or a group model and take them through maybe an eight to twelve-week class or something of that nature. That's the 101 version.
I'm curious if you've come across anybody who's got coaching, consulting models that are innovative, unique and for a way that's like, “This is dialed in.”
I wouldn't say there's much innovation on the actual group coaching model because there's a reason why a lot of people are doing it because it's working or the model works.
I'd say the more innovation I'd probably seen is what people do on the backend of that model and what people do on the front end of the model. How do you actually lead people into it and then what are you actually backing people into?
I'll give you an example for someone else. My buddy is an investor. He’s probably done 70 different deals, had six exits and he's doing a group coaching model for the sake of deal flow. For those first three months, he gets to look at the company.
They obviously get an outcome with him and they're super happy, but then he has an opportunity to approach them as an investor and actually get inside the actual deal. I'd say that's an interesting innovative thing on the backend of a group coaching model that I haven't seen a lot.
I had a conversation with someone else where they're thinking about also doing that group coaching model on the front end. On the back end, they want to do more of like a retainer model where they actually invest the amount that they're paying for.
Let's say that this guy's rate is typically $25,000 a month. He's saying, “We're going to do this supreme discount at $6,500 a month.” Every month you're investing with him.
Let's say you work with him for the year. That's something like $70,000, $80,000 or whatever it is, then you're fully invested for that year. The next year, that $80,000 thing kicks in as a residual for him. I saw that as a pretty interesting model. There are a couple of people that are doing similar things.
I want to rewind that so I make sure I understand. Let's put this in terms of me and you. You're the consultant, I’m the client.
I'm paying you. Normally your fee would be $25,000. By then you're going to charge me, what did you say?Without nailing down who you want to work with, you can never ever nail down the nuances of the actual operational delivery. Click To Tweet
Let's use $5,000 for easy numbers.
At the end of the year, I will have paid you $60,000. Talk about the vesting aspect and then what happens there.
Basically, the residual kicks in based on how many months you actually work with them for.
Explain the way the residual works.
Let's say that you work with him for six months. Now we're saying six months, $30,000, that becomes vested inside of based on the actual performance residual.
Therefore, once the actual term of the coaching agreement is over, then you're still paying him $30,000 a year for X amount of years thereafter. He might also bake in some accelerator clauses for some equity participation.
That way, he's not necessarily the cap table, but they might have another deal because the goal is to exit, therefore when you exit, give me a multiple on this.
I don't necessarily have to be an equity partner. That way you don't have to explain to your investors who I am or whatever. We didn't go too much. That's what we talked about. It was fresh from my mind.
In essence, the residual gets paid. Does the residual continue to get paid even after the delivery is done? It sounds like it is in return for the discount. You can pay me $25,000 a month or you can pay me this. Once this was all done, I want my residual. It's an exchange for the discount.
He's advised a couple of companies. The last company, he brought it to a little over $100 million before his exit. Now he's advising companies with fast growth and fast exits. You know you want to exit.
That's one model he's been exploring and then that's where I tossed in, “Before you get into bed with these guys, maybe you want to vet them out. Why don't you do a group coaching program to do that on the front end?” That's an example of one type of deal.
Another type of deal is where you typically get a person who comes into your program and then all of a sudden, they want to do what you did for them because all of a sudden, a bunch of people in their industry are asking them. We had this one guy where he helps people launch programs.
He helped the lawyer launch a program and all of a sudden all the other lawyers are like, “You're crushing it. What are you doing? You're clearly doing something differently. How did you go about doing this?”
He's now partnering with the lawyer as a JV, licensing his IP out to that lawyer. He's the face and then now they're JV-ing out on the market and doing a share on the backend. That's another fun and exciting backend deal.
We're also piloting that model as well at a little bit of a larger scale. I have a couple of variations of the backend one. I'd say that there are also a lot of fun things that you can do.
A lot of people when they come into this world, they're like, “I want to try high ticket.” They start forgetting about some of the basic principles of why you would have lowered ticket in the first place.
There are some people that refuse to release lower ticket because, “That's going to hurt my brand,” whatever. It's like, “No, as long as you deliver value.”
I'd say that it's like, “Are you making sure that you're actually giving good value on the frontend so that you can bring people into your world as customers?”
Other than the typical trip wire where low-end sale on the front end. I have someone that's actually selling a challenge, which is interesting. I use this as an example. I work with him right now. His name is James Walkway.
He sells a program on how to essentially quit drinking. At the time, he was selling this one challenge for $67. We had a conversation, I was like, “I bet you could probably get this for $5,000 if you sell to this exact audience.”
What we eventually found out was now we're a couple of months along in the sales process, we found out that all the people that spent the time with him in that challenge are the ones that are converting the best. We realized that these 30 days are basically this paid indoctrination period.
He does training every single day. You get to build the relationship and then it's like, “What's next?” That's a fun frontend that I don't see a lot of people doing.
I see a lot of people doing free challenges to get people into their world and they do a webinar on the third day, the fifth day, whatever it is. That's something that I'd been keener on is something like a paid challenge for the indoctrination period.
If you have the audience and you’ve done a good job with the paid traffic, built a great audience, then I would actually go on the lower end and launch a lower end membership of some sort. I would treat that almost as a paid email list.
You have this amazing customer base to tap from, you have a recurring revenue stream in your actual business. You can actually then keep on escalating people into the world. It depends on what you want the customer journey to be.
I think that there are a lot of very interesting business models that you can strategically align to make sure that everything's working the way that you want it to.
It's interesting what you said and I made me a search my Evernote for this. A little while back, I found an article from Bryan Harris from VideoFruit.com. I don't know if you're familiar with him.
He did an article. He talks about consequence pricing. He's like, “One dramatic change to improve your sales by 15x.” In essence, what he did is it's similar to the challenge idea.
I think the end course that he wanted to sell was something about like how to create a $10,000 a month email program or email newsletter. It's something big.
Instead, what he did is he started off a course, which I think it was a small course and it was designed to get people to pick their topic, set up their website, name it and then write their first email.
It was called the Decide Already course. I thought this was pretty innovative. He goes, “Here's what we did. First, we looked for all the moments of doom for the first phase,” all the things that keep them from getting into momentum are those four things.
Pick a topic, set up your site, name your site and write your first email. They created a course on that. In order to get the course, you had to choose a consequence for yourself if you didn't complete it. The consequences were $10, $50 or $100.
He goes, “If you completed the course, then you got it for free.” I'm guessing that's either a refund, I think. I didn't go that far down this rabbit hole.
You might even fill in a $0 put your credit card in here and you have to report back. If you don't report back that you did it and you said you'd pay $100, we're going to charge you $100.
He goes, “If you completed the course and you got it for free, you successfully blew past your pick your topic moments of doom. If you didn't do the work successfully and complete the course, then you were charged the amount that you've chosen for yourself.”
The percentage of successful students was 80% if they picked the consequence versus 15% for those who didn't. More importantly, the number of people who then signed up for his bigger program was fifteen times more likely to buy his other program than the ones who didn't.
I thought that was a genius case study and it was innovative. It's a challenge, but with consequence pricing and it goes to prove one of those things I was talking about earlier.
If you can get somebody in a momentum that one of Newton's laws, I don't remember which one it is, but an object in motion stays in motion. That was something you said that immediately made me think about this. I hadn't even looked at that in a couple of years.
The principles of what he's doing there are exactly the same principles that are being employed in the challenge. As a side tangent, a lot of people don't ask enough of why does it work? They just want it to work. They don't ask why.
The best that you can do for anyone, and this is what makes it a great lead magnet, what makes it a great piece of content, is can you get them to get one result? You're responsible for them getting one thing done.
They can now credit it to whatever it is that you gave to them. I think that people underestimate how significant it is to move that first milestone to completion. From there it's like, “I finally got this thing done. What's next?”
“I think I can. I know I can.” It's that aspect. When I've reconstructed my success early on with my very first info product that I ever launched back in 2008, I looked back and I realized that unconsciously I never focused.
I read The 4-Hour Work Week and I was like, “This looks great,” but I never focused on the result having either a four-hour work week or the result of having thousands in dollars a month or whatever.
I never thought it was going to be a business. I thought it's going to be a vehicle for me to learn the skills. The first time I ever wrote a piece of copy, the first time I set up a website, I celebrated.
I was like, “I know how to do that. I didn't know how to do it before.” By focusing on those little bitty wins and the momentum, it kept me going into the next one. Funny enough, I've had to remember that because these days, it's harder for me to focus on those because I know how to do those things.
Now I'm focused on the outcome and the results so I get more frustrated. I almost needed to go back to that beginner's mind of, “If you're trying to do something you've not done before, focus on this.” You set this up, you've set that up.
That's a big takeaway for our readers who are trying to accomplish something big. Focus on each step of the process as a gigantic win as opposed to being like, “How come I don't have this result yet? Zion said it would worth $10 million in 30 days. Why are you lying?”
On that note, I think it's also super important to think about where you actually want to lead your customers? If you're working with them over the course of a year, two years, three years, where do you actually want to land with them?
I think that a lot of people aren't super clear on the vision of how far do you want to take people? Of course, the answer is also it shouldn't be further than where you can actually take them based on your own experience because I've seen that a lot. We see a lot of that everywhere.
“I will help you make $1 million a year. I've never made more than $100,000, but I'll help.”Niching down doesn't mean you have to be small. It comes from a great place because you're serving and impacting as many people as you can. Click To Tweet
I can do it. It’s based on a popular framework, the escape and arrival or heaven and hell or whatever it is. What are they escaping from? Where are they arriving? What are all the major milestones along the way? What are all the sub milestones for them to reach that milestone?
I love what you said here of those moments of doom. Where are the moments where you're going to have those bottlenecks where you know that they're going to trip up and you know that they're going to need that help to get to that next step?
To be able to take that and take a slice of it and then to be able to actually give it in the context of your larger customer journey, I think it makes a lot of sense.
I was also thinking about this where everyone, especially with ClickFunnels growing as quickly as it did. It’s like, “Funnels, funnels, funnels.” They forget, “What is a funnel anyways?”
A funnel is a process and a series of steps for you to get to your intended outcome. If you think about it that way, what's the thing that you actually want them to do? What do you want them to do next?
You can actually design based on that, rather than thinking of this funnel as a super esoteric thing of I need this thing, which is essentially the outcome.
In this case, the outcome is the funnel. I need it and then I'm going to be a millionaire, whatever it is. If we do boil it down, you get intimately aware of how do people even make their decisions.
On my most recent launch, I launched a $99 product for the first time in two years after launching all these $10,000-plus programs. That was a super eye-opening experience for me. We did it all on Facebook. We did it through Messenger.
I was paying attention to what questions are people asking me? What do they not understand about it? From that, I got all the nuggets I needed for the copy, I got all the nuggets I needed it for the actual funnel itself.
We put it to cold traffic and the frontend opt-in page is converting at 70%. The take rate right now is almost 4%.
Is this for a challenge or something?
I'm happy to send it to you, but we created a checklist of the ideal sales process for coaches and consultants. I basically outlined like, “Here are all the drop-off points and here are every email and text messages that you need.”
I gave them a checklist. In the checklist I said, “In this email, you should have something that basically tells them to do this. Then this email you should have something that tells them to do this.” The upsell to that, which is $99, was the list of all those templates.
Where can people go to see that?
I can send you the link. I forgot what my link was for it.
What would you say is the principle behind that and why it's working so well?
I'd say the biggest thing is I took the time to actually talk to people and see what questions that they had, see what they appreciated, see what they didn't appreciate, see why they liked it. See what they wanted, why they wanted it and why they liked it.
It's understanding that if they asked me a question, why did they ask me that question? I got to resolve all that through the copy.
I'll give you a perfect example. A ton of people ask me, “What are the actual emails in here?” For some people, I literally gave them the doc and I was like, “If it's valuable, pay for it. If it's not, then give me feedback.”
Nine out of ten times, every single person would pay me anyways after they saw it. On the sales page, I literally have screenshots of specific emails that I poured it over onto the sales page so people would see it and can see the actual template itself.
I have a scrolling page so they can see the actual deliverable in the asset because some people don't know what they're buying. I pretty much show them everything before they buy it so they know exactly what they're buying.
It's only been going for two weeks. We sold almost 200 of them. We have one refund because of one person's like, “This wasn't what I expected.” I don't know how I could have been clearer.
That would worry me if you didn't have one.
At the sake of jumping around to a slightly different topic, I talked about this because I wrote this down and I forgot that I had written it down. I talked about if you're doing six figures, you're doing $500,000, how do you start to scale?
What about the folks who let's say they're doing $5,000 or $10,000 a month? There's a lot more hustle that they could probably put in and they can get $15,000 and $20,000 and $30,000. I'm a big fan of Leapfrog Theory.
One of the bestselling business books of all time is by a guy named Robert Ringer in a book called Winning Through Intimidation. It's actually not about winning using intimidation. It's winning through it, how not to be intimidated and understand the way it all works and win.
The concept of Leapfrog Theory he posed, and if other people haven't heard it, it's remarkable. He says, “No one has an obligation, moral, legal or otherwise to work his way up through the ranks.
Every human being possesses an inalienable right to make a unilateral decision to redirect his career and begin operating at a higher level at any time that he and he alone believes he's ready.
If you aspire to great accomplishments, it will serve you well to understand that the quickest way to the top is not by fighting through the pack but by leapfrogging over it.
There's one catch, however. If you don't have the knowledge and skills to rise above the competition, and despite any bold proclamations you make, the business world jungle will knock you back down.
However, if you have the knowledge and skills to be at the top of your field, it's enormously frustrating to know deep down inside that you're capable of bigger accomplishments.”
You're spending most of your time and energy fighting day-to-day battles in the midst of a rank and file mediocrity. If you're truly prepared to move up the ladder in your profession, there's no law that requires you to wait for the conventional wisdom crowd to anoint you.”
He goes on and he talks about more stuff. In essence, one of the things he says is, “If you know your thing, if you're good at this, you don't have to work your way up linearly. You can find ways to find leverage and leapfrog your way to the top of the pack.”
In some cases, one of the most obvious cases is to say stop charging $100 an hour for your advice and create a $10,000 program. The minute you do that, you have leapfrogged and established your value. If you suck at what you do, the market's going to tell you.
In context of the question I asked, let's say somebody is doing $5,000 or $10,000 a month and they've got a business, but it's nowhere near where they want to be.
They're like, “I can try to get more, do more and do a little bit better and try to go grow to $20,000 and $30,000 and $40,000 and $50,000 and $100,000, but I know I'm going to need a team. I know I'm going to need resources and stuff like that.”
What can people at that level do, whether it's partnering with the right people, whether it's hiring the right resources, what are some of the things that they're like, “I'm not willing to wait?” What do you suggest to them in playing much bigger before they're comfortably ready?
I go back initially to those questions that we talked about, which is who do you want to work with? Who is the actual customer? What's the biggest problem that they have and how are you going to solve it for them? Nail that. I think that's step one.
As an example, let's say somebody is a health and fitness transformation specialist that are amazing and getting people into the best shape of their lives. All of their friends are certified personal trainers and they're charging $100 an hour for that.
They've created a signature program, they've done all that stuff, they know it and they got people enrolling in an eight-week program for $2,000 apiece and they've got ten people in it or something like that, “This is cool, I'm making $20,000 a month.” That's the scenario I'm throwing out.
In that scenario, I'm a fitness professional, so I ask myself, “Who am I training already?” As a male trainer, I noticed that all my clients happen to be women.
Let's take it another layer deeper. Do all these folks work in a certain industry? Do they all live in a certain area? Do they all share certain types of hobbies or whatever it is, to get to know this person well?
Let's say, for whatever reason, that all these folks worked in tech or they all worked in digital marketing or whatever it is. What problems do they uniquely have that might be different from some of the other customers that you had? Can you pull that out?
Are you also doing something different with these folks, and likely you are, that you wouldn't do with some of your no clients? Are you treating it differently?
Are you giving them different diets? Because they're super busy executives, are you having to plan special schedules where they're only working out for X amount of minutes per day?
I think it's also nailing down who the person is. What about them is unique? What are the unique problems that they have that some of the other folks don't have? Then let's actually get that solved for them.
I'll give an example. Let's say it's a tech executive. The constraint is they work in technology. Why does it matter? It matters because you speak their language and that's the only reason why it needs to matter.
You get what their day looks like. You get that they're running a tech company. You're probably working with investors. You get that they're probably suffering from, “I have to hire developers all the time,” whatever it is.
There are a lot of nuances to that person and you speaking their language will gravitate you. That's the one aspect of the tech. The executive, what's their biggest thing? Time. How are you going to make their time more effective on the meal side of things?If your entire business is reliant on one source of traffic, it's a recipe for disaster. Any purchase is technically done by women. Click To Tweet
How are you going to make it more effective in the actual workouts or things? What's the type of schedule that you're going to get? The very first thing I'd do is nail that. Now let's talk about the actual leapfrogging aspect of it.
A lot of that has to come to do with like the operational. They're like, “I want to take this up. I don't want to wait to scale. I want to make this rock.”
Because now all of a sudden you have a program specifically for tech executives and maybe there's a certain place where you do it or whatever it is, but operationally it changes the nuances of the actual delivery and it changes the nuances of the product.
You can become the best at working with this type of person. You can also add a lot of things on the other value chain where you might partner with other folks who can also serve tech executives in different way.
Maybe it's people that are handing them candidates left and right, and maybe it's people making introductions to investors, whatever it is. What are the tertiary services that can also service them?
From there, now you're super clear on delivery. You're super clear on who you want to serve. I would probably go through partnerships of some sort. The biggest thing that I would want to do is also look at who else has my audience of people that are reading whatever it is I'm doing?
I go figure out what value can I add from them? The publication’s a little bit easier because the values create some epic content. Actually, write it first and then give it to them and say, “Here's the actual piece.” Don't pitch them without anything in hand.
Pitch them with, “Here's the thing. No one else has it. I wrote it for you. Here's why.” The publication is an easy one. This is actually a fun example. Another one of my former clients literally walked into the office building. Have you ever heard the game Clash of Clans?
It’s one of the craziest mobile games of all time. He literally walked into their office lobby. He was like, “I will train everybody here, one free session for everybody.”
The fitness guy?
The fitness guy says, “One free session for everybody here.” Eventually they hired him for the entire company to do the sessions. All of a sudden, he has an enterprise account and then he decides he's going to open up the gym and guess who was the first investor? It’s the founder of that company.
Speaking of leapfrogging, here's a guy that came into the country with nothing but his skillset. Then has arguably one of the largest and most popular gaming companies in the world that now sit on the board of his gyms. I'd say that's a pretty interesting story. I would say go fish where the fish are.
Operationally when it comes to people at that level, a lot of times what we end up doing is we either learn how to use a lot of the systems ourselves and we're doing a lot of that. We get a virtual assistant and then maybe we go to Upwork or Fiverr and we start to put some people together.
I do want to lead this into what some of the other higher-end services you offer, but I know you don't offer this full-blown accelerator for many lower-end businesses yet.
I know that sometimes it can be the catch-22 of, “I need all these resources in a team to do a lot of this stuff for me so I can focus on my area of genius, but I can't necessarily build a team and the right people until I get to a certain level. I might not get to that level unless I have a team.”
What would you recommend on that? I have some friends and some people that I know and be like, “That's exactly my question,” because I've actually had that question posed to me.
The scenario is the business us pretty small, under $10,000, might be starting off.
Maybe a 30% profit margin, 40% profit margin.
Let's say that I know that I need to start hiring some talent but I know I can’t afford the best talent. I know it's going to cut into my margin too much. If it’s my 30% margin without your team being baked into it, then I need to look at that.
One thing that I did earlier in my career that I no longer do now is to build an internship program into the company. The local universities will actually give the student college credits based on that program that you have.
You can build a relationship with the internship office at the local college. You can post on the job board and essentially say, “I have an internship for credit. Here's essentially what the roles and responsibilities look like.”
There are a lot of aspects to that that you’ve got to be mindful of and be careful because I think there are some internship rules where you're technically not supposed to have them do things that they're supposedly to get paid for.
Are you familiar with a company called GenM?
No, I’m not.
You might like this. I had a call with the founder of it, and it's GenM.co. They're an internship company or marketing apprentices. Think of a job board, but some of them are actually pretty skilled. A lot of them are not necessarily, but they're trying to learn this.
GenM gives them some general marketing courses on social media, paid ads and these are people who want to learn more. The cost of this is in essence, you sign up, you pay $150 for a total of three months, so it's $50 a month.
You get to hire one apprentice. You get to go through the interview process. You find somebody who may have a little experience or education here, but they want to get more and they work for you basically for about ten hours a week.
You're supposed to meet with them once a week. it’s not like slave labor, it's not stuff like that. You want to give back to them and you want to talk to them. Some of them are good.
I had a guy for three months named Jared who was amazing and he was helping me do my podcast production and show notes and everything else.
Normally that can cost a lot of money, but because he wanted to learn more about this and he got to learn a lot by listening to me, it cost me a grand total of about $150 for three months. He learned a lot and he got a new skill.
GenM is a cool resource for people who are eager to learn this stuff. After three months, you can decide to roll over and get somebody new or to hire this person full-time.
If you go to BaconWrappedBusiness.com/genm, I believe that will give you a $25 off because they're one of my sponsors. It’s a $25-off code. Feel free to check them out. It's actually innovative and cool what they're doing.
I like that a lot because if we're coming full circle with this, let's say you're actually selling a program on whatever skillset it is that you're teaching this intern. You position it more as a scholarship to that program.
I think that's an interesting way to position it because it's very much like an apprenticeship at that point anyways where it's like, “This is the number of calls you're going to do.”
The caveat to internships is that if they're giving you their time, you have to give yours, which is why I stopped hiring interns. I'd rather pay for them.
One of the problems with hiring unskilled apprentices and interns is you have to have the skills. If you're great at fitness and all this other stuff, the desire is how I can hire or partner with somebody who's good at all this crap that I'm not?
Somebody who can build, manage my ads, do my social media. How do I bridge that gap? I'm ready to bring people on.
Granted, I could go raise money and do it. I find a lot of people in that conundrum like, “I have no money, do I go and build out the team? At what point do I do that?”
I don't know if you have worked with many people where you've given them resources or ideas besides that which allows them not to have to wait until they're doing six figures in order to start building.
There are a couple of groups of people out there that you can actually activate and leverage in order for you to get them to work inside your company. There are a lot of moms out there who are literally sitting at home and take a lower rate because they want something to do.
I would say that's one group of people. They also appreciate the convenience and the time flexibility and all these other things. I'd say that's one group.
There are a lot of skilled professionals in that group that can be leveraged. I would say that's one group. There are a lot of people that aren't necessarily retired, but they're in transition. They got off doing their last big thing and they're waiting for their next big thing.
I'd say that's another group that can be activated there. The way that I've always approached that conversation where I essentially can't afford to pay their rate, but let's say I can afford to pay something.
Let's go back to that fitness example. How are you going to enroll them into the conversation of essentially working with you to take on all these responsibilities when they're super skilled?
My answer to that question has always been what's the vision and mission of what it is that you actually want to do? The vision being the change that you want to see in the world and mission being how do you know that you're actually doing it?
There's one person I was working with. He's a videographer. He's like, “How do I differentiate myself?” I said, “What do you actually care about?”
He’s like, “The whole reason why I got into this business in the first place was that I wanted to get the message of wellness and health and all these other things out there that don't have the voice, but are the things that are working.” I said, “Great.”
All of a sudden, he took that and now that's his thing. He went from being in this copywriter and videographer who is known for making entrepreneurs cry to all of a sudden, “I'm here to further advance the message of health and wellness out in the world.”
The question I always give people, and this is a question I gave you in our DM is, “What do you want to be absurd in ten years?” What does that mean? Let's say that you're driving down driving on the Coast in California and you see someone literally tossing a McDonald's bag out the window.People underestimate how significant it is just to move that first milestone to completion. Click To Tweet
Number one, it's absurd because someone's littering in this super beautiful, pristine place. Number two, that there are still people out there that consider McDonald's food.
Answering that question first can help you distill down what is it that you actually deeply stand for that you can speak with from a place of conviction? Because it's likely something that you either have a very personal experience with or something that you're super frustrated or angry about.
The flip side of anger or complementary energy is passion. Anger and passion are very much on that same wavelength, but one could be converted for very productive use.
Being able to lead with that message when you are sharing that with someone shows that you actually care quite a bit more than the next videographer, the next fitness trainer, the next person. All of a sudden, what's the difference between you and every other videographer out there?
In the enrollment conversation, I'd actually start the question with, “What's the thing that you've always wanted to do that you haven't been able to do yet? Is there anything that you've been wanting to do that you haven't had the chance to actually work on?”
What I'm looking for when I ask that question is, is there something that they deeply care about that they've been wanting to work on that they haven't been able to yet?
The reason why I say ask them first is that anyone can pare it back anything that you say to them. If you're coming at it from a clean slate, you ask them the question, they come back to you and then all of a sudden, you see whether there's alignment in terms of those values.
Kicking off that conversation from there, it's like, “We're clearly aligned to what we want to do. Two heads are better than one. Why don't we do this together? What does that need to look like?” I've had this conversation a number of times, especially when I was first starting.
It's like, “I can't pay you what I know you deserve to be paid, but what do you need to make this work so that we can then come up with a plan on how we can get you what you want?”
Anyone who is a high performer that's worth their salt, that wants to invest or contribute their time, they're probably going to be smart enough to help you come up with that plan on how they can increase their comp.
In a nutshell, that's the enrollment conversation I've had with some pretty significant senior-level individuals like my COO when we first started. Her last gig, she was getting paid $500,000 a year. I was like, “I can't afford that.” We went through this exact same process.
I was like, “What can we do here? What does that need to look like?” If they need to start part-time, start part-time. It's great. I always find out different ways I can help pad her income. There are other ways that you can help get someone paid that isn't always monetary value either.
The more skilled somebody is and the more successful, there's a multitude of studies that have shown it's not about money at that point. It's about contribution and growth and everything else.
It sounds like you're saying, and I totally agree, you can give somebody the opportunity to be more significant, to add more contribution, to experience more growth and in new ways that they haven't done before.
You're an outlet. They may do it because it's something that helps satisfy their soul as opposed to their pocketbook.
That's the most important thing. There's this whole idea out there of the genius and the thousand helpers or whatever. What if we live in a world where the person deeply cares about what it is that you also deeply care about and you are aligned and now you can do it together?
The positioning on that is, “Use this company as the vehicle for us to do this together.” That's the power of having a significant mission, the power of having a significant vision for the change that you want to see. How do you want things to be different because we did this together?
If you are someone who's not trying to make a buck and you want to make a difference, this conversation has worked with me from C-level executives that worked at billion-dollar companies. I was like, “I can't afford to pay you much right now.”
They're like, “Whatever you can pay me, pay it for me because you don't want free work from me, whatever.” It will be a different conversation every time. That conversation alone can tick off a significant level of alignment where you can make some pretty interesting things happen there.
I know your business has gone through some interesting changes here. Are you still doing Project Nuclear? Is that something Scott's doing?
Project Nuclear is something that we decided to retire, at least for the time being. We have a lot of different reasons for that. Essentially, we saw what it looked like and we didn't want to do it anymore.
There are a couple of different businesses that I've been helping to incubate where I'm working on this hub and spoke model. What are the biggest issues that this industry faces from a coaching consulting perspective?
My goal is, “Can I create the playbook for this industry? Because there's a right way to do it. Can we answer all the questions we have so we stop reinventing the wheel? Can we essentially have the right way to grow this type of business so we can essentially give it to people and be like this is what it is?”
We're starting that process off with documenting everything that we can and taking one function of the business at a time. We're actually starting off with sales. Most people are not interested in operations but they're still very interested in sales.
Everything from hiring a salesperson to managing that salesperson, to onboarding that salesperson, to having the right sales process in order. End to end, we are getting that process nailed down so we can essentially plug and play anyone into that process of, “You need a sales process.”
“Here it is. Here are all of our automations, here's all the reminders, here's all the tech that you need,” then we'll work on the next department and then eventually the next industry.
Are you doing that with individual clients right now?
Who are some of the ideal clients that you are looking to work with?
Ideally, it's usually the person who's still doing their own sales, who is getting enough leads that they need to get sales off their plate because they want to ramp up their leads. The second ideal client is someone who needs more salespeople because they're hard to find.
I'd say it's usually between those two. More times than not, it's usually the person who is still doing their own sales.
Is there any size revenue that they should ideally be at?
Typically, over $50,000 a month in revenue.
What's a way that they can find out more about your offer and they can go check that out?
I'd say the quickest way is to email me or find me on Facebook because all of our pages are under development. That would be a way to check out on 1MT.co and then eventually, AlignSales.co. We're about to get that page up pretty soon here.
What about the best email, contact information?
It sounds like you’re working hard rolling that out. What's a nut you're trying to crack right now for yourself or your company?
That can be people you're trying to find. Anything different than the stuff you already know how to do. Anything that's like, “This is a stubborn nut. It's not cracking.”
Whether it's money you're trying to raise, people you're trying to meet, skills you're trying to learn, anything. This is where myself and my readers can jog our brains and think if there's a way we can help you.
I'd say that the biggest thing that I've been wanting to learn more about is getting proficient in the M&A space in general, acquiring companies, acquiring assets. I'd say that's probably the biggest thing where I've been trying to build my mentor base of who can I turn to and stuff like that.
As you know, I'm playing in that industry and I'm not hyper-experienced. I've got a little experience and trying to do more.
I met a couple of interesting people already, but I'd say that's probably the number one thing that I'm trying to get more interested in. One of my mentors who I've found too I wanted to introduce you to, he's like, “Don't start anything new. Go buy it.”
I think for me, because I'm so good at launching and starting and once it launches, it has a pretty good run rate to start. It's not doesn't feel like a startup all the time. I can go buy that company instead of merging and rolling it up. That's probably the world where I'm still wanting to get better with.
I'm happy to share any of the resources and people that I've been utilizing on that road as well. It's funny. My friend and former guest, Ace Chapman, do you know Ace?
Anyway, he does a lot of this and he left me with a great metaphor that stuck in my head and helped me make this shift as well. We start businesses for a lot of reasons, to make an impact in the world, to make change.
More than anything, every single business with very few exceptions started as a vehicle to provide cashflow for our lives, our business. Ultimately, all the altruistic reasons aside, it's a vehicle for cashflow.
He says, “When we want housing, when we want shelter as people, we typically don't go to Home Depot, buy a bunch of wood and nails and get on YouTube or buy a course on how to build a house.
We arrange financing and we find somebody who's built a house that we want. We go buy the thing.” When we want transportation, we don't learn how to build a fuel injection engine and all this other stuff and then go buy all the metal and do it ourselves.The flip side or the complimentary energy of anger is passion. Click To Tweet
Why is it as entrepreneurs, we think we have to build our cashflow from scratch? Our cashflow, that vehicle already exists somewhere. Somebody has built it. It runs. It may not run as smoothly as it could, but with our skills, we can arrange financing.”
Financing for M&A is an entirely another topic, but we can arrange financing and buy that cashflow and then tune it up as opposed to doing it. I love that metaphor. Why am I trying to build this thing from scratch? What's the outcome I want?
Do I want to have this vehicle that can allow me to do all this other stuff? One of the exercises I've personally been working on, and I haven't figured it out yet because this is a recent thing, but it’s utilizing that analogy to say, “What are the criteria I would have? What would be a perfect scenario?”
A perfect scenario for me, and I'll use very easy mathematical numbers here, but let's say if I can buy a business that generates $10,000 in dividends or payments to me every single month where I'm the owner but I'm not the operator.
I'm off the organizational chart, but it produces $10,000 a month and I have a little oversight. I get to advise the guys who are running it. Would that be a worthwhile thing?”
I'm like, “Absolutely. That would be worthwhile because that's passive income with the ability to grow.” Now you start to reverse-engineer. What would it need to have in order for me to arrange financing to buy that?
Let's say it's operating at a 20% margin. It needs to be doing $50,000 a month net. If it's doing that, that's about $600,000 a year. After all the salaries and expenses, what would I pay for that? Let's say I was going to pay 3X, I'd have to pay $1.8 million for that.
If I was going to pay $1.8 million, what kind of financing would I have to arrange? If I can work backwards to say, “What businesses in these sectors are doing $600,000 a year with these things in place and what debt service or owner financing would have to be through where I can reverse engineer that?”
That's some of the stuff I actually like thinking about going. How do I reverse-engineer what I want and I go find somebody who's built it and buy it for a price that makes sense?
Thinking about going and doing the deal and bringing my skillsets to the table and saying, “I can help you run this thing. I can definitely grow the thing or whatever,” I've also never raised money.
I'm actually in the very beginning stages of a capital raise for another business I have and I'm out of my comfort zone.
That's the thing that I definitely would love to learn because here I am essentially taking people's audiences and monetizing it, which is arguably not the easiest thing to do in the world.
If we have an existing business, let's grow this thing. I would say that's definitely my number one thing I want to learn more of, I want to do more of. I appreciate you asking.
I'm happy to connect with you offline about any of this and share some of the strategies, resources, mentors and people I know as well. I feel as though I know enough about the marketing side and I'm starting to get bored with marketing.
I still like it but it's like, “How can I utilize my skills? How can I leapfrog?” This is a leapfrogging skill we’re talking about. I know all this stuff. I could build it from scratch.
I could go find somebody who's got it and who's already got momentum and inertia. We were talking about that earlier and now all we're doing is adding octane to it. One of my previous guests who talked about this a lot was Carl Allen. Have you ever come across Carl?
I believe so.
He's bought 200 businesses. He'd been involved about 200 business transactions. I was asking him even specifically, “How do you buy these things and then stay out of the weeds?” He goes, “There are a few ways. Number one, I may know somebody who can run it.
Obviously, I may buy it out and have an earn-out and the CEO has to stay on. One of the things I love is when I find a company where there's a president, a CEO and a COO.
The COO is the number two guy and he knows where the bodies are buried and he knows how to run this thing, but he's still number two.” He goes, “Sometimes I'll find a way to buy out the CEO. Then I install the COO in as CEO. He gets a prestigious jump. Plus, you give him equity that vests over time.”
Maybe he didn't have equity in the business now, but you're like, “I'm going to give you maybe a raise, a promotion and the ability to earn 20% equity in this business over the next four years.
You'll earn 5% a year as long as you continue to do this.” I thought that was actually brilliant because that's how you start to structure those deals.
I had another friend of mine say something very similar where he said, “That's easy. I stay off the org chart.”
Is that Roland?
“Off the org chart,” is my favorite line of Roland's ever. I’m like, “Roland, that's a little easier said than done.” Roland, on my interview with him, shared an amazing story of what he did. I think he said it was his very first-ever acquisition and I think he said he had never bought one before.
I don't remember what business it was and I don't remember what the starting price that it was. He said, “I negotiated them down to a $2 million price on the business,” which was lower than is asked. He said he talked him into taking 20% down, and then 80% financed over the course of X number of years.
He goes, “I had to come up with $400,000. Two million times 20%. I didn't have $400,000, so I went out and I talked to some people who I knew who did have money. I told them how excited I was and I borrowed debt, $400,000 at 10% interest.
I put the money down and now I own 100% of the company. The problem is I didn't want to run it. There were other people better to run it than me. I went out and there were a couple of guys I knew who were also friends or business partners,” I don't remember the details.
“I told them how excited I was and I got them to say, “Is there any way I can be involved in that?” He said, “Sure, I'd love to have you guys step in as CEO and COO and you could run this thing. Would that be interesting?”
They said, “Yes.” He goes, “I need you to have skin in the game, so I'll let you each buy 10% and I'll let you guys run it. The business is worth $4 million.”
In a very short period of time, he buys it for two, he immediately doubles the valuation to $4 million. At the end of it, the punchline of the whole thing is he goes, “Now they put in $800,000.” Four million times ten. $400,000 times two.
“Put in $800,000. I turned around and I pay the loan off of $400,000 plus $40,000 in interest.” He goes, “Now I'm left with 80% of a company, two people who have paid money to run it and I have $360,000 in cash in my pocket.” I’m like, “You dickhead.”
We've been talking for quite a while. Hopefully everybody's enjoyed this. Anything you want to add, anything we missed, anything you want to leave them with?
Just how I can help. I have a lot of free trainings, free stuff, whatever. Message me, shoot me over whatever problem you have and I'm happy to send over whatever resources I can to help you out.
We'll make sure that happens. Thanks a lot for joining me, Zion. It's been so much fun and I look forward to staying connected offline as always.
Thanks so much.
Zion Kim is the CEO of 1MT and the co-creator of the R.O.I. Method. He was kicked out of business school his freshman year and has since started six, 6 and 7 figure companies, two of them while still an undergrad.
His company 1MT is currently on a mission to support 1 million entrepreneurs to 7 figures and beyond to add a trillion dollars to the global economy.