"Why Am I Hesitating to Spend More on Ads?" — Transcript

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1. 0:00We
2. 0:02sell
3. 0:04a sustainable growth platform for gyms.
4. 0:06We do $4 million revenue.
5. 0:08We'd like to be at 10 in 2 years.
6. 0:11>> Okay.
7. 0:13>> So
8. 0:13what's stopping you? I don't think
9. 0:14anything is stopping us. I guess the
10. 0:16question is more like
11. 0:18if you can help me identify the right
12. 0:19question to ask to
13. 0:21kind of ease the path, I guess, cuz
14. 0:22there's a lot of ways to skin the cat.
15. 0:23And there's there's options for
16. 0:24fulfillment, there's, you know,
17. 0:26acquisition.
18. 0:27>> Give me the metrics real quick. So it's
19. 0:294 million top line, right? What's
20. 0:30profit?
21. 0:31>> 2.2.
22. 0:32>> Okay. I'm just saying 2 whatever. Okay.
23. 0:34So you got 50%
24. 0:36what's CAC?
25. 0:37>> CAC is about 1,000 bucks.
26. 0:39>> Okay. And are you what's primary method?
27. 0:42>> Primary method right now meta.
28. 0:44>> What percentage is meta?
29. 0:47>> Probably 70% right now.
30. 0:49>> Okay. So you just want to say ads. Got
31. 0:50it. And you get some referrals or
32. 0:51whatever, right?
33. 0:52>> Yeah. We when I was doing more more
34. 0:53content organic was pulling for a long
35. 0:56time, but we started to the growth rate
36. 0:57wasn't keeping up. We started to hit
37. 0:59like net zero return. We started to add
38. 1:00ads on. That was the plan all along is
39. 1:01to go organic as long as you could and
40. 1:03then start to add ads in and that's what
41. 1:04we're scaling now.
42. 1:05>> Okay. What's lifetime gross profit?
43. 1:07>> Total rev top line for for each client
44. 1:10is about 12. I actually need to do some
45. 1:12math to figure out bottom line, but it's
46. 1:14pretty high.
47. 1:15>> Okay.
48. 1:16>> Cost like 20%
49. 1:16>> What's the monthly uh
50. 1:19monthly and then what's churn?
51. 1:21>> Monthly average client is paying 500.
52. 1:25We have a lot of annuals, too.
53. 1:27And then churn
54. 1:28>> So you get 2 years of stick.
55. 1:29>> It is there's some data risk right now
56. 1:30that we need to tighten up our churn
57. 1:31numbers. Stripe sucks for data, so we
58. 1:34need to get better systems for that, but
59. 1:35I think we're like 3.5%.
60. 1:37>> Okay.
61. 1:38>> Yeah.
62. 1:39>> Or 3. whatever. Okay.
63. 1:40Got it. That tracks. Okay.
64. 1:43Um
65. 1:44All right. And so uh sales velocity
66. 1:46right now, how many selling a month?
67. 1:48>> 35.
68. 1:49>> Okay. So you sell 35 units a month.
69. 1:53Times 12K.
70. 1:54So you're you're very very you're like
71. 1:58>> [snorts]
72. 1:59>> you're a little bit growing but you're
73. 2:00doing this
74. 2:01right now.
75. 2:02That's all right.
76. 2:03>> Yeah, we have a lot of room to scale.
77. 2:04Yeah, that's relatively new. We really
78. 2:06just 5 months ago we figured those out
79. 2:08and you know, top line row ads on that
80. 2:11is pretty solid.
81. 2:12>> Yeah, yeah. [laughter] No, no, I mean I
82. 2:14can see the math. Yeah.
83. 2:15Um okay. So now I'm looking at just for
84. 2:18everybody I'm looking at hypothetical
85. 2:19max which is if you look at sales
86. 2:21velocity times lifetime gross profit or
87. 2:23lifetime value rather in this situation
88. 2:25because you said you didn't
89. 2:26Um not that you don't know what you know
90. 2:27what I'm saying. Um
91. 2:29Uh so 35 times 12k so 35 times 10 is is
92. 2:32uh is 350 plus 70 420. Um so basically
93. 2:37if you kept his his existing thing he'd
94. 2:38be at 4.8 million. Um
95. 2:42Four times yeah. He'd be at 4.8 million
96. 2:44instead of four. That's given like we
97. 2:46changed nothing about the business. You
98. 2:47have a little bit of growth left with
99. 2:48the existing sales velocity, right? Um
100. 2:51and so you already have a lot of the
101. 2:53hard stuff solved which is that you have
102. 2:55I mean basically if as long as annual
103. 2:56retention is what it is and it stays at
104. 2:58those numbers here at 12:1 which is
105. 2:59pretty good. Um
106. 3:02Yeah, I mean it's a valuable business.
107. 3:03Uh you just need to make it bigger.
108. 3:05>> Yeah.
109. 3:06>> And so I mean we need to make sure that
110. 3:07the that the CAC CAC scales.
111. 3:10>> Sure.
112. 3:11>> And you're spending
113. 3:13You're spending 35,000 a month in ads?
114. 3:15>> Uh 30k, yeah.
115. 3:16>> Okay. Yeah, I mean it's just like you
116. 3:18have to get to like you know, 300,000 a
117. 3:20month in ads.
118. 3:21>> Right. You just get the volume.
119. 3:23>> Yeah, so you hit brakes when you when
120. 3:24you scale the volume. Why can't we do
121. 3:25more?
122. 3:26>> It
123. 3:27We don't know what breaks we have to hit
124. 3:28that yet.
125. 3:29If anything uh I would say there's a
126. 3:31little bit of murmuring on like some of
127. 3:33the fulfillment side with part of our
128. 3:35offering includes like building websites
129. 3:36for them.
130. 3:36>> Huh?
131. 3:37>> You know, there's some agency components
132. 3:38and coaching components and things like
133. 3:39that.
134. 3:39>> Yeah.
135. 3:40>> Um and the web team's starting to kind
136. 3:42of scream a little bit.
137. 3:43>> Okay.
138. 3:43>> You know, so probably just some
139. 3:44bandwidth there.
140. 3:45>> Yeah.
141. 3:46So you're
142. 3:47Yeah.
143. 3:48>> [clears throat]
144. 3:48>> So
145. 3:49um
146. 3:52You couldn't double your sales velocity
147. 3:53right now.
148. 3:56>> I made a message like my off-stage
149. 3:58earlier and he said
150. 3:59probably some people could, but some
151. 4:01people on the team couldn't. So
152. 4:02>> Okay.
153. 4:03>> Yeah, we probably could We definitely
154. 4:04have room to go, but I think we're going
155. 4:05to hit the wall here soon. So, one of my
156. 4:07questions was going to be that follow-up
157. 4:09like do I stop and fix that now or do we
158. 4:11just build the plane as we fly and just
159. 4:12keep charging?
160. 4:13>> I'd build capacity.
161. 4:15You're You're profitable.
162. 4:16>> Yeah.
163. 4:17>> And I have found in a business that's
164. 4:19like yours
165. 4:20as soon as I have cuz like you're you're
166. 4:22pulling off the gas right now. I'm
167. 4:25>> feeling it.
168. 4:26>> Right. Is that you're not like I'm going
169. 4:28to go balls to the wall right now. Um
170. 4:30you're hesitating.
171. 4:31>> Pulling your punches.
172. 4:31>> Definitely am, yeah.
173. 4:32>> Right. And so, rather than you always
174. 4:34being pulling your punches, I think this
175. 4:36kind of goes around really like how can
176. 4:37I, you know, make this happen? Um
177. 4:40I would say that I like
178. 4:43building capacity will keep your ethics
179. 4:45high.
180. 4:46And so, one of the one of the
181. 4:47interesting things is that like we
182. 4:49we have to either choose to sacrifice
183. 4:51profit or reputation.
184. 4:54And so, if you're out of capacity
185. 4:56constraint, you either have to reach
186. 4:58into your bottom line and build capacity
187. 5:00or you add to your bottom line by
188. 5:03increasing demand and having something
189. 5:05takes a hit. And so, it's likely going
190. 5:07to be your metrics or reputation. If
191. 5:09you're not in a rush, which it doesn't
192. 5:10seem like you are,
193. 5:11um
194. 5:13then I would build the capacity for you
195. 5:14to get three more reps [snorts] that can
196. 5:16build. Um how many people are building
197. 5:18the sites right now?
198. 5:21>> It's one and a couple of like VA you
199. 5:23know, VAs that are supporting it, yeah.
200. 5:24>> Yeah, so it's like you getting double
201. 5:26the VAs is not a hard task to do. Right,
202. 5:29so I would just do that now. That'll
203. 5:30cost you 17 cents. And then
204. 5:34Right.
205. 5:35Um and then once you have that and then
206. 5:37it's like now everything's super, you
207. 5:39know, tuned. Everyone's really happy.
208. 5:40And then it's like then you're going to
209. 5:41feel really bullish and you'll feel
210. 5:43really good about spending. That would
211. 5:44be the approach that I would have.
212. 5:46>> Yeah. I got I got another question.
213. 5:47>> From the hip, yeah.
214. 5:48>> More more personal because you obviously
215. 5:50work in my space, work with gym owners
216. 5:51for a long long time. And I've heard you
217. 5:52talk about it but yeah.
218. 5:54And I you know and I I share some of
219. 5:55your pain when I hear you talk sometimes
220. 5:57in some of the podcasts about like
221. 5:59why you having at the time why you move
222. 6:00on from that because of the
223. 6:03There's a bunch of talented gym owners
224. 6:04out there that are like some of my best
225. 6:06friends that are like you you've hired
226. 6:07some of the ones that are your your
227. 6:08clients, right? Cuz they are there's
228. 6:09talent in there but most of them have
229. 6:12very little level of sophistication. And
230. 6:14you know it's one of those things where
231. 6:15you feel like, okay, level 10 skill set,
232. 6:17level three opportunity. You know, at
233. 6:19what point did you cross that bridge of
234. 6:21like screw this we're just going to move
235. 6:22on like
236. 6:24you know, obviously I'm not there yet.
237. 6:25We have goals in this business
238. 6:27but like I've got like this seven-year
239. 6:29itch you know it hasn't been seven years
240. 6:30yet.
241. 6:30>> Yeah.
242. 6:32Um
243. 6:35I think that when you are no longer in
244. 6:37love with your avatar.
245. 6:40And that's what I said when I started
246. 6:41the business was like I will I like when
247. 6:43people ask me the first two three years
248. 6:44of Jim Launch I'm like where do you see
249. 6:45yourself? I was like hell no. I was like
250. 6:47I I want to you know save gyms like save
251. 6:49gyms from the niche to defeat like we're
252. 6:50going to fix the industry the best
253. 6:51degree I can.
254. 6:52Um
255. 6:53Uh
256. 6:55There was a turning point it might have
257. 6:56been cuz I was also like younger and
258. 6:58probably more immature than I am now who
259. 6:59knows. Um where I grew disenfranchised
260. 7:02with it.
261. 7:03Um
262. 7:04And it wasn't if I'm being honest it
263. 7:06wasn't a boredom I I grew resentful
264. 7:09of
265. 7:11you know, what have you done for me
266. 7:11lately?
267. 7:13Um and I think that part again I was
268. 7:14like 20
269. 7:16I should have I got into business when I
270. 7:17was 26. I was like I was watching I mean
271. 7:19I was 10 years you know 10 years younger
272. 7:21than I am now.
273. 7:22Um
274. 7:24I like I made some massive mistakes in
275. 7:26that business and I didn't see how big
276. 7:28it could have been. Like Jim Launch for
277. 7:30sure if I were if I were if I could like
278. 7:32scoop my brain and put it back in time
279. 7:34like we could have exited for 400
280. 7:36million with changing very little about
281. 7:37the business. Um
282. 7:40And so there's for sure massive
283. 7:41opportunity there.
284. 7:43Um
285. 7:45So I wouldn't I wouldn't like I wouldn't
286. 7:46consider I couldn't see at the time a
287. 7:49way to make Jim much bigger.
288. 7:51And that's why I sold it. I didn't know
289. 7:52what else I could do.
290. 7:54I now know a lot of things I could have
291. 7:55done to make a half a billion or a
292. 7:57billion dollar exit. I just didn't have
293. 7:59the And some of this is like I wish I
294. 8:01knew then what I know now, but like I
295. 8:02only know what I know now because I went
296. 8:04through what I didn't know, right? And
297. 8:06so um you know, the most expensive
298. 8:08things in life are the things that we
299. 8:09don't know we should.
300. 8:10>> I should focus on the bright spots like
301. 8:12you know, cuz obviously you know, we've
302. 8:14actually probably shared some clients in
303. 8:15that former Jim Launch clients come to
304. 8:17my my company.
305. 8:18>> Yeah.
306. 8:18>> We have Jim Launch Jim Launch clients
307. 8:20come to Jim Launch clients come to
308. 8:21>> Oh yeah, of course. Yeah. This we know.
309. 8:23We hear about those too.
310. 8:25You know, no matter where they're coming
311. 8:26from they always they always badmouth
312. 8:27the other guy, right? They always say
313. 8:28that guy sucks, right? You know, and
314. 8:29it's like that's the kind of thing you
315. 8:30get resentful about where you're like,
316. 8:32"But you didn't show up to any of the
317. 8:33calls. You didn't do any of the work,
318. 8:34right?" And like And then like you know,
319. 8:36early on we were like, "Yeah, we're
320. 8:37better than Jim Launch cuz you know,
321. 8:38we're burning people." And then like we
322. 8:39realized later that like all have to
323. 8:40find somebody to do the work. And it's
324. 8:41like, "Oh, it's not anything else
325. 8:43they're doing wrong or taking anything."
326. 8:44And it's the same feel that same
327. 8:46resentment.
328. 8:46>> Based on the numbers that you
329. 8:47demonstrated, you have a good business.
330. 8:49The metrics are strong.
331. 8:52Um you have all the makings of a thing
332. 8:53that could become significantly more
333. 8:54valuable than it currently is. There's
334. 8:55obviously a couple moves off the board
335. 8:56that are probably beyond the scope right
336. 8:57now.
337. 8:58Um
338. 9:00But you have all the fundamentals. I'll
339. 9:01say that. There is for sure a
340. 9:03nine-figure plus opportunity with the
341. 9:05business as it currently stands.
342. 9:07Um
343. 9:08Just need to put some pieces in place.
344. 9:10And there's probably a couple of
345. 9:11strategic investments that you could
346. 9:12make that would make it like really
347. 9:14attractive. Cuz I know that you got
348. 9:16probably approached by acquisition at
349. 9:17some point.
350. 9:18>> A couple times now. Yeah, and
351. 9:19it really was the things in the
352. 9:20worksheet that, you know, it was kind of
353. 9:22mutual. On one hand I like when they
354. 9:23talked about potential amount I was
355. 9:25like, "Well, I can make I can collapse
356. 9:26that time frame and make the same money
357. 9:27in three years instead of the seven next
358. 9:29year offering potentially." And then
359. 9:31also they were like, "Well, you're kind
360. 9:32of really too, you know, so you know, I
361. 9:34see it too. It's just a want.
362. 9:36>> Yeah.
363. 9:36>> Yeah, so.
364. 9:37>> Appreciate you.
365. 9:38>> Thanks, Alex.
366. 9:38>> Yeah. If you like this video and you're
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375. 9:53can click here and you can check it out.
376. 9:54Again, absolutely free. And since you're
377. 9:56a business owner, I appreciate you and
378. 9:57uh enjoy.