Building a $3,500,000 Business for a Stranger in 42 Mins | Ep 836

If you wanted to hit $3 million next year, I was like, we could do $10 million next year. I would just say we're going to take all of our resources. We're going to go all in on TikTok viral organic, and you're going to deploy everything into TikTok Shop and get influencers to do lives for you showing all these funny gadgets because like the trophies are so built for shareability. Yeah. What's up?

How we doing?

Good.

Awesome.

Let's talk about trophies.

Yeah. So my name's Cody. Cody Shilson. I own Trophy Outlet. So last year we did about $1.72 million in revenue, mainly trophies and awards personalization, about $110,000 in profit, 6.4% net margin. And I'm third generation owner of the company. We've been in business for almost 40 years.

So that's amazing.

Yeah, kind of fun.

So what's the— yeah, what's the goal?

The goal is $3.5 million in revenue. I really want to double revenue going into this year. This year? Yeah.

Okay.

I think we can do it.

So who do you help?

So mainly coaches, event organizers, as well as businesses and organizations, which is like the HR departments, business owners, sales managers, you know, people like that, as well as gag gift purchasers.

I got that. I got that vibe. Yeah. Okay. So how do you help them?

So we offer free engraving, fast shipping. Everything we do is personalized to the business or the individual, something like that. They go to the website, to our platform. Purchase, you know, add the personalization info, the logo, things like that. And then we fulfill it if it needs approval, anything like that. But most things ship in 1 to 2 days.

So sweet.

Quick.

So how do you make money?

How do we make money? All right. So on our website, directly on our website, most of our products kind of land in that $100 to $150 price point. We have products that range from $4 all the way up to $900. So it's a wide range. Most popular item is a 4, 5, and 6-foot trophy. Which kind of lands about $89 to $130. And then dash plaques, which are like little car show things that guys collect when they go to car shows. And yeah, so it's kind of selling for $1.25, minimum $50, but we sell thousands of them a year.

I've even heard of that.

Yeah, there's like these little pieces of metal that people just— they have these big boards that they set out at car shows. It's kind of funny, actually.

I'm always amazed how many ways to make money there are.

Right. And that's one of the things our company was started on. So.

Oh, good. So how do you get customers?

Trophy Auto started in 1985. So almost, you know, this is our 40th year. And we've launched our Etsy, uh, business in 2019, and we did about $70,000 the first year. And then in 2013— or 2023, we launched Amazon and did about $300,000. And then last year we launched TikTok Shop, and we did about $270,000 in revenue, but $250,000 of that came in December alone. So we had a video go viral with 20+ million views, uh, so it went crazy. So $250,000 of that came in, in one month. So that was kind of fun.

And you sold those?

We sold those, yeah. And not quite family appropriate, but yeah, little death signs that people bought for boss or whoever it was. So kind of fun, but so I was a little crazy for December.

No, I love that. And you were able to fulfill on the amount of orders that came in?

Yeah, yeah, we did about 13,000 of those.

So do you have manufacturing set up? Like, do you—

Yeah, we produce everything in-house. All right, so we engrave, cut, build it, all it, ship it.

Sweet.

Okay, across 4 different channels, uh, most of our clients come through, uh, online and internal is through SEO and Facebook ads. We just launched Facebook ads and Meta about October, November with an agency.

Yeah.

And then Amazon, we spend about $7,100 a month between agency and ads. And then Etsy and then TikTok, still kind of figuring that one out a little bit since it all happened in December, but about $2,000 so far.

Got it.

In ads there, so.

Well, how many customers have you sold so far?

Yeah, so in 2024, direct on our website, and I have this broken out per channel in a couple slides, but total visits is about 90,000 visits to our site, about 2,500 orders, just a 2.8% conversion rate. And about 781 products. So it's a lot of products.

So do you carry all those or is everything, everything made to order? Yeah, everything. Okay. So it's not, so it's not like you're carrying a ton of inventory, like you've got raw, raw materials and then—

Raw materials. Most of it we bring in from our vendors.

Okay.

Kind of as we need it. We don't carry huge, huge, you know, except for like the death signs and stuff. We'll, we'll kind of stock those up since they went so crazy. But that's kind of an exception to the rule.

All right. Then, What's been holding you back?

So I think it's marketing. Fulfillment-wise, we proved that in December we can handle about double fulfillment. I mean, with limited complexity. So, so I just need more people to the site, more people buying, and we can fulfill it. So, and also very product-heavy with low margins. So working on the margin piece, getting profits up a little bit.

So do you want to like sell this company eventually or like what's the— I need to do— want to double?

I haven't really had any thoughts of selling, but I want to create a business that is sellable.

Yeah.

So I have the option if I want to say no or no, but I would love for it to be a fourth generation business someday if that's an option. But, but yeah, that's kind of the ultimate goal.

All right. So how many locations do you have? Because you have brick and mortar, correct?

We have one retail location now. We have two locations total. We closed the other retail location down and it's production only facility.

Okay.

So the other retail location, you know, does maybe $150,000 in revenue out of that location.

So just like walk-in traffic and whatever.

Yeah, walk-in, email stuff.

Does it break even?

Not really.

Okay.

So we're kind of—

So you have a manufacturing facility and one retail?

Yeah. Which also does some manufacturing as well. Yeah.

Is there any downside to just like consolidating to the one?

It's something that we're actually looking at. Okay. And go more e-commerce and kind of cutting the—

Yeah.

The retail business. I mean, most of our stuff's e-commerce anyway, so.

I mean, online retail is— I don't think it's going anywhere. And I don't think many people are like, you know what, I'm gonna go to the trophy store today.

Yeah. I've never heard somebody say that.

Yeah. Yeah. Like on my list.

I walk by like, oh, I should go to the trophy store.

Yeah. Return some videotapes and then go trophy store.

Right.

So these are the issues. What are the metrics you got?

Yeah. So numbers, $1.72 million in revenue, about $110,000 in profit, 40% gross margin.

I would have expected gross margins to be higher for this business.

And it varies per product. We have tons of, you know, like certain acrylics.

I was expecting like, you know, one, like you buy these trophies and they're like, you know, a dollar and you're like, there's no, like, this is made of rubber, you know?

Like, yeah.

Okay.

So it varies widely between the products and platform and stuff like that. But net margin about 6.4%, LTV 133, and then CAC 1190, LTV to CAC ratio 11 to 1. And that's blended across all channels.

How do you come up with pricing?

Guessing for the most part, or I'll look at some competitors, but there's not really good apples to apples comparison necessarily.

Do you have like a— do you do like a cost plus or like— Yeah.

So I have massive spreadsheets of all of our costs, you know, things like that, factoring labor, and then I just kind of add my margins to it and You know, I've slowly been trying to bring that up over the years.

What percentage of customers are, are new versus return?

Got— I would say probably just on our website and internal customers, probably 50/50.

Okay. Because this is a real business, so you'd think there'd be a decent amount of return.

Yeah, a lot of our business— I mean, $530 million in revenue comes just internal. So emails, calls, things like that. Most of that is repeat business.

Do you have very high fixed costs in this business?

Not too bad.

No. Because if you have half the business comes in from word of mouth, I would expect the margins to be higher, like the net margins. Because I wonder, like, is it— I just think of, think of this as big hypothetical. It's like if we got rid of all of the new customers, right? And we just sold the $500,000 and something from return customers, that should be free customer acquisition. And then we should make money. Yeah, right, right. But looking at this, I'd be like, I don't know if we would make money.

Yeah, our COGS are pretty high.

Um, I do think there's a pricing issue. Yeah, which we'll get to. Okay, okay, this is good. But your LTV to CAC's pretty strong. Yeah, it looks like—

yeah, it's pretty decent. And I learned that a few months ago coming here the first time, so I started increasing.

And that's not like some revenue, that's worth profit?

That's profit.

Yeah. Okay. Yeah, interesting.

And we estimate people stay about 3 years, excluding Etsy, Amazon. Yeah, those ones are a little hard to calculate, but through Trophy Outlet, they order yearly pretty consistently. We've got customers been with us for 30 years, you know, things like that. So, so pretty heavy repeat business there. Once we get a customer, they're fairly sticky.

So with pricing, I'm gonna, I'm gonna hit on this one because I'm almost positive there's a big pricing issue. Who is in charge of pricing that whole time? Like, you took it over from your old— I guess he took it from his old man. So like You're third generation.

So yeah, my parents ran the company. They didn't have a price structure. They just kind of—

and on an annual basis, do you review all prices?

Every year. Yeah.

Interesting.

About February, March of every year is when our vendors raise prices, so then I adjust accordingly.

Got it. Was their margins the same when they were running it?

Uh, much less.

Lower?

Oh, way low. Like not making money at all. So my mom was running it. I remember very distinctly looking at a product and The cogs on that were like $50 and we were selling it for like $45. I mean, it's a—

This does not work. Yeah.

So I immediately raised prices.

Yeah.

It like, you know, doubled them almost.

Okay.

And I'm constantly just continually up them.

Yeah, I think I have some ideas there. All right. What else you got?

All right, so channel breakdown. So direct traffic and internal is our biggest, 13 to 1 LTV to CAC ratio. Amazon, our highest conversion rate. And 9.6% conversion. And of course the blended 11:1 LTV to CAC. So.

Interesting. And so you don't have LTV metrics on TikTok?

No, couldn't quite figure that out yet.

Okay. Well, the easiest way to do it is just go total revenue divided by total number of customers. So you did $262,000. Do you know how many customers you sold on TikTok?

I think it was about almost 13,000 customers.

13,000. So, okay, so $20, that sound about right?

Average, yeah.

Unless they have order value, right? We just don't know how many times they've purchased.

Right. Which is one as of this point, you know.

Thing is that might be artificially inflating your LTV to CAC metric because you have zero CAC there. Okay. Or did you not? Did you?

No, that's actually—

You just skipped it all entirely from the calculation. Yep. So you want to double revenue. Yep. Got it. What's this I hear about you wanting to buy another business? Yeah.

So I had a business reach out to me that's in the same industry. in the St. Louis market that we're already in. So he's getting old, wants to retire.

And what's he doing in revenue and profit?

He does about double what we do, about $3 million in revenue. I don't know profits yet or anything. We haven't even got to that point yet. But he's got a— from what I understand, he does pretty decent on his margins just through communicating and talking to him. He does a lot more custom stuff, so which is a lot higher margin on some of that stuff. He has a lot bigger orders. Yeah, which is nice. So he can bring it in from China or from elsewhere and keeps his margins low.

Mm-hmm.

Or keeps his margins higher. I'm sorry.

Yeah, I got you.

The biggest concern with him is 70% of his revenue comes through one customer.

Yeah.

So that's a pretty big, pretty big risk. Wouldn't buy that. Gotcha.

I would try and find out if I could who the vendors were that he has in China for his connections, for his raw materials.

Yeah.

So that I could Try and use those vendors.

Yeah. That was actually one resource I thought was, well, if I could buy this and it's cheap enough, it's monstrous customer risk. And especially if you have somebody retiring, that, that one customer might be, even if he was willing to stay on for 2, 3 years, 4 years to help that transition.

Well, part of it is what kind of business do we want to build, right? So you just want to like, you're close or you're considering closing down the first location. We have to basically, there's a bet that we have to make, which is like, do we think that the future of this business model is lots of brick and mortar locations? If so, then we have to think about the brick and mortar model in a lot more detail. Look at the unique economic return on capital, or it's, we're gonna be online. And if you're online, then why bother?

Which most of his stuff is shipped as well. It's not retail business.

I mean, it's not brick and mortar. Yeah. Yeah.

I mean, he has a retail storefront, but most of his business isn't, is online.

Yeah.

But 70% of it's not necessarily online. It's through, um, basically wholesale.

Yeah.

Wholesale customers that sell, you know, to large, large clients, things like that.

Like that. So that's a super common thing. I'm not thrilled about it.

Yeah.

Uh, one, there's the customer risk. The other thing is, it's like, it's not the business that you're, even though you're obviously in the trophy business, it's like, it's not actually how it's basically all net new. It's like B2B versus B2C. Because we have to think about all available moves on the board, not just like this. Because like, said differently, if he hadn't emailed you, would you have approached him?

I would have actually kind of pursued it a little bit just to get the information. I was a connection through our vent, one of our vendors. So that's how I got to know him.

Well, I'll zoom out from the, from back forward, which is like, what do we want to be when we grow up? Basically, this is going to become a media slash marketing business that monetizes through trophies, right? Or you can go the B2B wholesale route, which is probably like outbound sales team that's calling wholesalers and whatnot. Yeah. From what it sounds like, it sounds like you're better suited for the e-commerce direct-to-consumer side. That's what it sounds like.

I don't know if like Currently, that's where we're at. Yeah, we do some wholesale currently. It's just easier. Yeah, but that just kind of came naturally. It wasn't anything we pursued necessarily, but understood. Majority of it's all e-commerce.

And you might have one of the simpler plans that I have. Yeah.

Yeah.

Which is, I mean, simple doesn't mean bad. Simple is good. You know, sometimes you have like 10 things to do. It's better than 3 that move the needle a lot. And I think you're kind of in that situation. There's 3 big things, but I think we'll want you to come over here and then we'll, we'll we'll net it out. What percentage of customers are gag gifts?

So that's the Amazon, Etsy, TikTok. TikTok. That's all that.

So it's like 40%. Yeah.

Roughly. And that's kind of been the fastest growing since 2019. That's when we launched that. Which is all under a different brand technically. We started a different brand back then because we don't want the explicit vulgar to be under Trophy House.

Sure.

You You know, church moms and stuff get—

yeah, I hear you. I hear you. With this business, like, fundamentally, you just have— it's— you have traffic and a conversion page. Like, and then if you already have, let's call it, for right now, not a constraint on manufacturing or anything like that, the 3 big kind of levers that I want to go off of is number 1 is consolidation. Okay. Pricing, which also instantly adds to profit.

Absolutely.

And then media. So from a consolidation perspective, we have the SKUs, right?

Yeah.

And then we also have the brick-and-mortar locations and then we kind of have like model. So like in terms of like how I'm thinking through this. Okay. So from a SKUs perspective, if you're not carrying that, like normally I'd be like, we need to massively cut down on SKUs. But like if you're not, if you don't have like this warehouse full of stuff and it's just like more options for people to purchase, I don't think we need to like get rid of anything.

And a lot of the SKUs too, it's the same product, just maybe for football versus—

Yeah, right. It's a, it's a GOAT trophy and you just put a different plaque on it kind of thing. That doesn't bug me. And if you were like, man, it's, it's, it's super hard for my team to, to build all these different things, then I'd be like, all right, well then we should, we should look at that. But if it, it doesn't seem like you're stressed on the manufacturing side.

No, but that's where my skillset lies too.

Okay.

As far as operations, it's—

No, that's good to know. What's the, where's the constraint, right? So the second is the brick and mortar, right? Right. Yeah. So, um, if you have this retail location and it's basically breaking even or losing money, and that's not even the future of the business, then to me, I would say, let's just save our $50,000 a year in rent and then just add that to the bottom line. Right. I feel like that would be a good idea because that would increase profit by 50%, which is like chill pretty much instantly. Yeah. And also there's just like the headache of like, it's this thing over here. Yeah. And you've got, and you can probably just take the couple of good people from there. Bring them to bring them home, right? You know? Yeah. So that feels good. So the next one is model. So this is the thing that I'm really like, I don't know, torn on, at least for me, what appears to be the obvious solution is to go on the, where, where the fast growth is, right? Which is the gag gift thing. The problem is that there's zero kind of recurring nature of that, right? So it's basically like we when you have that business, you have essentially a media arbitrage business where it costs you almost nothing to get a customer, you make a spread, and then that's the business you're in. And every month you're going to be looking for how do I make new media? And that's, that's the game you're in. If you want to go, I want to just get every league in the nation. Like if you were like, this is like, if I wanted to make this the most valuable version of the business, not necessarily make the most money today, but the most valuable version of the business, it would be, I'm going to be really targeted with the few avatars you have, like leagues, event organizers, whatever, and say like, these are the 4 avatars we have and we're going to be targeted with our ads for those people and our SEO. And the whole business is around like, we only deal with customers. And I would probably even say that, do you have phone sales or anything like that?

Or some, or email to place the order.

What's the average order value for the, for the, like a league?

So internal orders, I think it's like, I want to say it was like $350K or something like that. I haven't, so it's a higher order value.

Yeah, for sure. Okay. Because I wonder if in some ways you have two businesses, let alone like if you were to like, forget about the third one you're thinking about buying, like you already have two and I'd rather have one. I'm not saying cut the one that you have. It's obviously a 40-year-old business, but like it really have to make that decision. And that's actually not a me decision. It's a you decision. So I'll say it the way that I think Layla, Layla loves framing opportunities this way. 'Cause I always think about upside. She always thinks about downside. And so it's like, what, what problem would you rather solve? So in the gag gift path, the problem that you're gonna have to solve is you're always gonna have to find new cheap forms of media. So it's gonna be like TikTok Shop is what it is today and live shopping, and that'll probably be good for another year or two. And then it's like, that'll start to get more expensive and other people will compete. And it's like, then you're gonna be in, in the next, whatever the next game is, and you're just gonna have to get really good at paid ads and creative and conversion optimization on the site, increasing average order, that kind of stuff. The other path is you build either an outbound sales team so that they can sell these, these kind of B2B offerings that are, you know, or B2C if you want to consider the fantasy leagues and, or just like a meta, just like a simple meta ad strategy that would lead people to call the number functionally. And then there you're saying, cool, our goal is to be your trophy provider for life. And I think the fact that your 40-year-old business sounds really good. It's like, hey, we're a 40-year-old business. Our goal is to be your manufacturer for life. And so of course we're going to do this one, but if you want, we'll also give you 20% off next year if you make the order now or something. I don't know. I'd play around with that, but which of the two paths sounds like the life you want to live? Yeah.

Gosh, that's tough. Only because media for me has always been a hurdle.

Do you like it?

Okay. Yeah. Fair. I will do it, but I don't know that I love it per se.

Because you could, because like if you wanted to hit $3 million next year, I was like, we could do $10 million next year. I would just say we're going to take all of our resources. We're going to go all in on TikTok viral organic and you're going to deploy everything into TikTok Shop and get influencers to do lives for you showing all these funny gag gifts. Because like the trophies are so built for shareability. Yeah. Like, and so that's, I mean, 20 million views is a monster video. I think if that was all you focused on, you would be able to figure it out because these are funny. Right. And I think having like little skit scenarios, uh, where people, you know, walk in and they see the boss's thing or they change their, their, uh, their plate or, you know, someone loses and then it just says like biggest loser, you know, like that, like the, the negative versions. I think that would just make for really viral content.

And I feel like that would be easier to replicate, just constantly doing that.

The leagues thing is like, that's like, that's the, that's the very stable version of this business. And if you did ultimately want to sell it in the future, you being able to go to a potential buyer and saying like, I have 5,000 leagues that buy our trophies from us every year. And leagues on average stay for 12 years, you know, like guys who do fantasy or whatever it is. It's like, that's fairly, you know, that's a pretty, that's a pretty reoccurring business. You know, that's a, that's a, That's a pretty good business. Harder to build though and slower. Right. That's also why it has more value. So that's the, so if between those two paths, the like, I would like to just make more profit now and potentially scale faster, then we can talk about the media version of this.

I think that's probably where I would.

Okay, cool. So first things first is we're going to consolidate attention. So we're going to shut down losing location. So that should right off the bat be a plus 50% improvement to profit, which is great. And I think it could be more than that because your attention is going to not be split anymore between two locations. Okay. The second thing you have basically something called a cost-plus model. You look at your costs and then you add a margin in and whatever. And a lot of businesses do it because it seems very logical. Uh, the problem is every business I know that does a cost-plus model doesn't make a lot of money. And so you want to switch to value-based pricing, which is purely based on what someone's willingness to pay is. And that could be unlimited and it doesn't matter what your stuff costs, because why do they care what it costs? Right? And so basically, like, as your vendors increase their costs to you, in some ways it shouldn't have any effect on the price of what you sell because the price of what you sell is completely divorced of that and based on what somebody is willing to pay.

Gotcha.

So in terms of how we can do this, there's a couple thoughts here. So A, which will seem a little bit less scary, is I would consider, and this will sound crazy, but like monthly, like 5% price increases, like just keep going and just keep going. That is like path one. And the thing is, is that every time you raise the price by 5%, you double your profit, or I'll say 6% if you want to be like, hey, I doubled my profit this month. then the next month you can raise by 6% and then more than double because it's 6% times 6%, right? So that is, that is one way. The other way is that you just start immediately split testing kind of like 80/20 on your, uh, highest sales velocity items. And so this is simple, right? This is simple to do. You don't have to do any thinking. You just add it and that's what it is. This one will probably get you more profit faster. It just takes a little bit more thought. So you'll take those 4, 4-foot, 5-foot, 6-foot trophies and just start like, just keep bumping the price and just seeing what conversion rate looks like because what we're trying to optimize for, did you have an engineering background? Okay. You said you were good at the manufacturing side of stuff. No, my dad came from manufacturing, so I kind of picked it up there, but yeah. So what, what you're trying to optimize for is gross profit, uh, times, uh, units sold. And so if you think about it, it's like, you know, down here it's like, I'll have a ton of sales velocity, but I'll have low, uh, low margins versus here I'll have fewer, uh, you know, fewer items sold, but it's like, where's the sweet spot where I get the most amount of units sold at the highest gross profit? Oftentimes it's, it's higher than you think it is because where I think a lot of entrepreneurs get stuck is like sales velocity goes down and then they get afraid. But the thing is, is that you will usually make more money before you make less money when sales velocity drops. Usually. So it's like we sell 10 people at, you know, with $100 of gross profit. And then when we, you know, move the price up, it's like we sell 80 people, but we're at $150. But you're like, all the sales teams like, I don't know, dude, the price, the price seems really high or like, oh, the conversion on the page drop. It's like, yeah, but we're making 50% more money. We lost 20% of sales. If it were me, um, I would 80/20 this and this is what I'm solving for, for pricing on the most sold products. Okay. You can have a much faster, uh, feedback loop for the testing. And so in terms of cadence for price tests, would you do it on the site more? Do you think you would be doing it on the phone?

It'd be on the site.

Okay. Yeah.

Cause that's where customers see the pricing, even if they call or anything like that.

Yeah. I don't know how many people like buy. Is it a super price sensitive market?

Trophies? Yeah.

Okay.

Like car show guys are cheap.

I'll bet you what's interesting about this is that your recurring revenue business is very price sensitive. It makes me lean more towards the the gag gift side anyways, because it's like we can get customers for free and we have far more pricing power because they're in the moment. They think it's funny whether it's $8 or it's $12 or $16. Like I kind of just want to buy it.

Yeah.

But that's, you know, the difference between $8 and $16 is monstrous, right?

Yeah.

For the business. Um, so psych price test and I would probably start with, uh, the gag gifts here and then I'll make 3. Can you try 1, 6%? On, uh, boring side. Now this is the major part, is if your focus is going to be media and that's going to be the direction that you're going in— was there an influencer or somebody who made the video that had the trophy in it?

It got tagged. Our product on TikTok Shop got tagged and we sold 70 to 100 off of that. And then we did a follow-up video and that's the one that had 16 million views.

Okay. How many TikToks do you make in a month?

Uh, right now we're doing about, uh, 1 a day and we're trying to ramp that up to 3 a day.

Okay. Yeah. Cause the thing is, is like your Amazon and Etsy, I would imagine are fairly passive. Normally I would consolidate it. If you were like, I'm running all these things, I would say like, let's, let's focus. But if that's like kind of on autopilot and I am familiar with like Amazon handles a lot. So the direct site traffic right now comes predominantly from SEO. So talk to me about that. Do you have an SEO firm or you're gonna do SEO?

Yes. No, it's an SEO firm agency.

How long you been working with them?

This one, about 8 months.

8 months.

Additionally, I've only, I've always had pretty good success with SEO.

Okay.

And then we stopped SEO because the company wasn't, previous company wasn't performing and we just let it go for several months and then hired another company.

And then when these guys came in, it started going back up again. What stops you from like doing more SEO? Or rather what stops that? Like if you were to say, hey, cause I mean, when I see 13 to 1, right? I'm like, that sounds interesting. If you were to say, hey, I want you to give me like 3 clients worth of focus so that you can give me 3 times the backlinks and 3 times the articles or whatever it is that they're churning out for you. Is there anything that's, cause if you get 13 to 1, it's like we should spend as much as we possibly can on that.

And that's why I started Meta is But it's different though, right?

Because it's interruption-based ads versus SEO where it's intent-based. Because it's also like, these things are things that are not taking your time. So this is like media one is SEO, uh, max out.

And the SEO company wants me to do Google ads.

Yeah.

Throw into that mix. Okay.

Yeah. Especially like these are both intent-based, right? Yeah. Like at the very least you should own your own terms, which is like all your names and derivatives of your names. Like I've, I've rarely seen anyone in any business just own their own terms and not make money off of it. And some people are like, why do I want to pay for a click I was going to get? The thing is, is like, you're not always going to get the click. And so having it there, I'm like, you're going to make the money, like just, you know what I mean? But then the second version of that is, you know, associated terms. That's where the, like the long tail keywords. And because yours, because the boring side. So this is all, this is all like the boring side of the business because trophies are so like, oh, I have to get trophies for the team this year. It's like, they're in this window and they're just going to buy whatever is like pretty much immediate. Yeah. So I think this all makes sense. I don't know if people, I mean, you're running the Meta ads to get the Boring trophies. I would bet that that's probably, I mean, you could do it, but this feels like it, like people, like it's less interruption based, more high intent based. Now gag gifts, 100%. No one's like, hey, uh, you know, fuck your moon, follow the plan, uh, you know, trophy, right. Or whatever. So this is the, like, if, if we're looking at this, these are all what I would consider like black and white, very low lift, almost guaranteed to make you more money moves. Almost all of these will just make you more money. This is 13 to 1. This is probably going to be high return. This could double the profit. This takes, adds $50,000 to the bottom line. The price says for sure going to increase, um, on the gag gifts. So now we can talk about the, the media side. So you're going to go from 1 to 3 a day. I think that's a good idea. What I would suggest you do is look for, so there's going to be you. So there's going to be you. So we're going to go from 1 to 3 a day. And I think that you should focus on trends and memes. So like, cause this is a gag gift brand. So it's okay for you to just like be silly and ridiculous. And so like just hire a 17-year-old. Um, yeah, yeah. I'd just be like, what's like, what's trending right now? You know what I mean? Like some, what's interesting is that a lot of these, um, TikTok ones also do well on Instagram. So you could repurpose there. Do you, do you post on Instagram? Yeah.

Okay.

Yeah. So yeah, at least you're getting, you'll, you'll get double, you know, you'll get double usage on that. But yeah, TikTok is like the perfect platform for you for the SBI! gifts. Like it makes complete sense to me. They did $250,000 in a month. And so when I, the reason I said the $10 million is like, okay, well that happened on accident. Let's do it on purpose. And if you can do 250 a month just from that, it's like, well, there's 3 million. I think you getting really ridiculous with the volume will get you a lot better. And I think this is one of those things that you should live close to.

Okay.

Like you, like these things are all things that you can do probably the week you get back. You know what I mean? This one is going to be the— this is like the big commitment of what's the bet we're making. The bet we're making is that mastering TikTok, live selling, etc. is going to be the way. Now, the second part of kind of like TikTok mastery It's going to be influencers. What's nice with TikTok Shop is that your stuff is automatically going to be listed there and other people can make videos for it. And you're in the price point that's perfect for TikTok Shop, like $20, $30, $50. Like it crushes for that stuff. And it's such easy videos for people to make. And I mean, fundamentally, like these are basically one-time work. This is the only ongoing work. That you do. And so trends and memes, and I'd be posting 1 to 3 times a day there, repurpose on, uh, on IG, right? That's, that's just free traffic. And then the influencers will also kind of, this will, it'll be like a loop here. So it's like, they'll give you, like, they'll, they'll do something that works well. And then that will feed, like, it'll just be this nice loop where they're also creating content for you. And then I'll put, I'm going to put number 7 on here because I think this is worth it. The TikTok ads, which you said you just started, you make the ad, right? Or sorry, you make the content. You already know where I'm going.

I know what you're going to say.

You're making content. That TikTok content, 10% go viral, whatever. And then 90% flop, right? Then this, you put ad money behind it and you send this to influencers and say, make stuff like this because this is what's converting. And then they'll make versions of this that'll also inform your content, which you'll then try to make iterations of what they're doing. And so like you're kind of your source, like you're starting, here's the TikTok content. Some does well, great, push ads behind it. By the way, guys, here's the ones that are working well. They make stuff. You can take theirs, push money behind it as well and model it and make permutations of it.

Gotcha.

And so for this stuff, I would be kind of hook-centric, meaning, like, for, well, for most short-form platforms, like, the hook is everything. And once you have a winning hook, I would, like, reuse it over and over again. And so, like, if you have, you know, whatever your winning hook is, and then you could just basically sell down the line of SKUs once you know.

We're using the same hook.

Yeah, exactly. Over and over and over again. I told you, you actually have a really simple one. The nice thing is that I have a lot of confidence in your, like, there's basically no, like, I'm not really sure, like Site Price Test could easily like 2x profit, like on its own because the margins are so slim right now, right? 6x, this is a 2x on profit for sure. SEO max out. Well, right now it's 50% of revenue is coming from that. So it's like if maybe we get a 50% boost. From them doing a better job on it. PPC will just get you good returns. This might give you like a 10 to 20% boost. So I don't think it'll be huge, but it's like, it's free and it's a one-time setup. So it's not hard to do. TikTok's going to be the big lever of like, how do we go from 1 million to 10 million? It's like, if you, if you did nothing else, but just say like a year from now, if all we did was master TikTok and TikTok Shopping, We would win. Like if you did nothing else, this is just going to take all of your existing business and make it more profitable so that you can take all of this cash and float into here. And the fact that you have such low margins excites me because when you make 5 or 10% improvements, you double or triple. And the fact that you haven't liked that there was no pricing, um, discipline, like there's no, there's no like process to pricing besides like, we'll just keep raising it when our costs go up. Usually there's just like, when I see a business like that, there's like massive unlocks. Like I'm saying 6% on boring trophies, but like you might be able to push 25 and that 4X is 5X is profit.

Right.

And gets very interesting. Yeah.

And the gag gifts have much higher margins too.

Yeah. And ooh, let me add something else in. What's the offer that you have in the box?

Usually it's a little code that says like 10% something to order here.

Why don't you give something much better than that? So we have to come up with a really compelling offer to get people who are buying. Because the nice thing, the important thing is, um, so is, are you doing fulfillment for Amazon sales?

Uh, we have some FBA, but most of it's FBM.

Okay, great. So you're fulfilling most of it. That's wonderful.

Okay.

So, and Etsy, same thing?

Etsy, we fulfill everything. Yeah.

Great. Okay. So that means that we can put something in the box to be really compelling to get them to, to buy something. So if now Amazon and Etsy, The purchasers who are buying there, are they more bread and butter people or are they more gag people?

I would say more gag.

More gag.

Okay. Because they're more like funny death signs, funny sayings and stuff like that.

I would put a BOGO offer in or a, so I would do buy one, get one to two free, and then just fix the pricing of the one so that it makes sense. But then the, I would basically have this little. Thing here. So that would be the headline on the top of my little, my little, my little doodad.

Yeah.

You got your QR code and then I would have my top 1, 2, and 3 gag gifts. Okay. Because they just bought one. So it's like, let me tell you the other gag gifts that people buy the most of.

Gotcha.

And I would put that into every one of the boxes.

Okay.

Uh, for them.

And would you have that QR code go back to that channel? So like Amazon, or would it go back to our website?

It's a good question. It's a good question. Well, to make that offer, you'd probably have to bring them back to the site. Yeah. Well, the cut I'm not as worried about. We just got to fix the pricing, but like, um, either way, I mean, it would be an interesting test, but I think this is the better, like, cause you can make a far more compelling offer. The other thing is, what do you, how big is your email list?

For Trophy side?

Yeah.

I think we have like 10,000 contacts.

Okay. Well, guess what? We just found ourselves another couple hundred grand. So let me tell you a stat that'll blow your mind. Most mature e-commerce businesses get between 30 and 50% of revenue from email.

We're missing out a lot on that.

So there's probably like $1.5 million sitting there. And that's all profit because there's no ad spend. Most e-commerce businesses basically break even or lose money. On spending ads to get customers and they make it up with their email follow-up. 9, it's going to be email follow-up.

Okay.

So what do you use? Use BigCommerce? So they probably have, so you're, there's going to be 2 different types of email that you're going to do. So number 1 is going to be flows. So these are based on user behavior. So when someone visits a specific product, they should get like a 5 email sequence of being like, hey, saw that you were looking at the goat whatever. Right. And that should just, that should happen for anybody who opts in or does a two-step or abandon carts. Right. The, um, the other piece is we need the long-term nurture. All right. So what I'd recommend is 3 times per week. The question is, it feels like a lot for trophies because trophy is a less frequent purchase. The gag, I feel like is a, it's like if you buy one gag gift, you'd be willing to like buy them for many people because you just think they're funny. They are separate brands though, because you have like, okay, so I would say this I'm, I'm cool with on the gag gift side. Because right now you're not making any return sales anyways, right? So you might as well get some.

We don't really have an email list for the gag side because it's all through—

Oh, because it's easy. Does TikTok not give you an email? Okay. So I think we'll go one time a week and we'll not worry about the gag gift. I think just one time a week of, and if, if your basically domain score, your domain health, your domain authority stays healthy and your open rates stay okay and your click-through rates stay okay, I would increase frequency. Okay. So you start with one a week and then you're probably thinking, okay, what am I going to, what am I going to email them about? Right. So when you have customer stories, cool trophies, because I'm sure there's every week there's like one trophy or something that's just like interesting that you guys have, right? Probably stuff about recognition, uh, status and cheapest compensation. So I think if I were to, if I owned your company, right? So I'd be like, okay, are we in the trophy business? No, trophy's what we sell, right? But it's really just the vehicle for giving people recognition, status, and compensation, right? And so my, the things that I would email would probably be about how you could either give your team a pay raise or you could give them a trophy. And believe it or not, here's this research. The trophy's actually even more meaningful. So they like it more and you like it more as a business owner, right? So it'd be that kind of stuff that I'd be, you only have to write 52. It's not that many emails, right? You could literally probably do it in like a day and a half or two days. And I would be hitting this and then I would just weave in examples and the examples will do enough modeling for people to basically click and then go back to the site. Because all we're trying to do is just bring them back to the site. Now, on every one of these, these emails, I would have a PS, funniest trophy of the week. So think about like newspapers, like they have all the articles that are serious, but then people just buy them to read the funnies. Or they read the cartoons. And so we do the same thing here because you probably have some hilarious trophies that get made, right? Yeah. And then just be like explicit, you know what I mean? I think that people would find it hilarious.

Okay.

Um, and if you're worried about explicit, then don't put those ones. But like, I still think that you have funniest trophy the week. And even if, and like, this is me taking the complete extreme stance. People, people may care about this. People might just think this is funny. And if you just did this, it's like you're almost just sending them jokes and memes. It's the same as making content on the internet. And so if they're like, oh God, what is the, like, what did they, what did they make this week?

Right.

Right. And then again, it's just like, I just want to stay top of mind. I want to remind them. And I think about this also seasonal. So what are all the things that are coming up that like, that are coming up next season? Cause you know what the buying cycle is for trophies. So it's like, what are like, okay, Christmas is coming up. Okay. So there's going to be end of year bonuses for people. There's going to be, okay, fantasy, what, what, what fantasy league ends in October? So probably like hockey ends or whatever, right? Like best costume. Exactly. So it's like, we have to remind them. Of what people get status and recognition for using trophies. That's the job of the long-term nurture. What things are people going to be rewarding next month that we could have to be people by this month? And we just, every month we'd like, you look at your calendar, you're like, I have to think of 4 emails that apply for next month. Right. And I would probably, I put this as like, okay, I've got my business one. I've got my, you know, season one. I've got my, Sports one. So these are like my buckets for my emails. So every email, it's like, it's almost like you're hitting from a different angle and reminding people of different components of their life. And so that's, that's probably how I'd have my long-term strategy and provided all of the metrics look good, I would just increase frequency.

Yeah. Okay.

So keep it low in the beginning just to like get a feel for it. See how like the first couple emails are going to shake out because you're going to have a super responsive list. And we want to keep these all text. You can have, I would say, link to the image because then the curiosity is going to drive the click. And also image-based tend to get lower deliverability rates than like full text one. And when people opt in or when people purchase or opt in, get the abandoned cart, the first one I would have is reply back for funniest trophy of all time. And so as soon as someone opts in, it's a double opt-in. So it'll increase your deliverability. And so they'll reply back and then it's an automation. You don't have to do anything. And then you'll send them the link for the clickable picture and they'll be like, this is ridiculous. And then underneath of that, so when you have the, when you have a clickable link, you want to have it take them to a page that looks like this. And then here you have, so like you can have the funniest thing, but it's also a CTA to get someone to buy something.

Gotcha.

Okay.

Just not in the email.

Yeah. Yeah. They see it. And if they want to buy it, it's right there.

Right.

Super cool. Well, I think we found a few doubles in the business.

Absolutely.

Feel all right? Little money, money, Matt? I think you will significantly more than double profits. Well, that gives you 50 and that's the first thing we do. This could easily double profits if we just add the 6%, right? That's all we'd have to do. If you increase SEO, you will make more money. How much more, we'll see, but more. This is free money, but This is actually the biggest, I think this is actually the biggest finding we have.

Is the emails.

Yeah. 30 to 50% of revenue, like clockwork.

Yep.

Especially, and so it's interesting is the, the less ad dependent your business is, the higher the percentage will come from email. So like if you have a fast growing company that's spending more and more money every month, then the percentage by math would be smaller. When you have a more stable, older business that's coming from email, like it'll be greater and greater. Like I know a company right now that does 90% They do a billion a year. 90% comes from email. Wow. Yeah. Okay.

And I would say also in that, kill Facebook ads for Trophy Outlet. Trophies.

It just, it wouldn't have been my, I mean, right now it wasn't profitable if I'm not mistaken. I'd rather redirect resources to the things that will make us more money. I'd rather just do TikTok ads instead of Meta ads. Given that's like, you did $250K for free.

Right. So yeah. Right. Absolutely.

Feel all right?

Yeah, I feel really good.