Q&A. From Sales God to Scale God | Ep 931

I have now the distinct pleasure of doing lots of Q&As for businesses selling to rich investors and entrepreneurs who are trying to avoid taxes. You do $6 million in revenue, you'd like to be $24 million in revenue, and what's stopping you is that you're 68% of your revenue despite the fact that you have 7 agents.

Yes, 7 plus me, and I'm $4 million of commission.

That's a brag. Yeah, I don't know if you noticed. Okay, cool. So why can't we do more? So each agency has 7 agents that now do $2 billion in aggregate. Are they unskilled?

No, I'd say they're industry average. Two of them are quite young and good for their age. So they've done a few hundred thousand dollars each. One's 21, one's 23. So for their age, they're—

okay. So let's just skip here and say that you have enough human beings in your market who could do this. Do you have metrics for their funnel process?

To be honest, I've just been designing the system.

So far, so good. So you're good with your model, right? Can you afford to— do you have good margins in your $6 million? So we can skip money.

Yeah, we have about $4 million now.

Cool, fantastic. And that's tax-free, by the way. Manpower is the issue.

There's one unique issue in my market, which is my time.

So it's manpower is the issue. Why can't we do more? Yeah, so what's the unique thing about your market?

Yeah, so in the UAE you need to get smashed.

Yeah, it's cool, it's cool.

You need the office before you can hire the person. She can't hop this because everyone needs a visa, so you actually have to make a big leap, take the office for 40 people and sign a 4-year contract because the government will come inspect.

How much does that cost?

The office that we're negotiating at the moment in dollars Like $350,000 plus per year. Yeah, per year.

Okay.

So yeah, we negotiate.

Make $4 million profit. Yeah, right. But you can make $3.6 and then have all these scaling opportunity, you know, we negotiate in the office now. Yeah. Take 10% of your profit, reinvest in growth of the business. Yes. Okay. So what's the issue?

Hiring the talent, I guess, cuz I'm so much—

So that's not the problem anymore. So we, we nipped that.

So it's lower risk.

I mean, thanks for being a sport, by the way.

I've had a good year.

Okay, well, not that good, you gotta scale. Okay, so your market's obviously not an issue.

Yeah, market's good.

Okay, so let's take out your 4.

Yeah.

$2 million is what it is. Yeah. And so 7 people equals $2 million. So let's say $300,000 per person, just using rough math. Yeah. So if you wanna get to $24 million, you need 80 reps. Yeah. Okay, cool. So you need, whatever, 73 more reps than you currently do. So what are you doing right now to acquire agents?

Yeah, not much. Like nothing, to be honest. Yeah, nothing.

Well, yeah, that explains the—

Yeah, we've only got 4 desk space left, so we're in this like—

Dude, I'm so past this. So I'll give you this for everybody. There are some negotiations that I have made in my life that were so dumb in retrospect Let me put it differently. If you were going to get office space for sure, if you want your goal, right? The difference in cost of office space between this space and a better negotiated space for the same space, or this space and yet another— Office A at a good price or Office A at a mediocre price versus Office B, whatever. The jump to there is you negotiate to $300,000 a year, so you save £50. Who gives a shit, right? Sell the house. Whatever. The point is that let's say it takes you extra time, it's like you make $500,000 a month right now.

Yeah.

So what's that? That's 2.5 days of work is generated, right? You can generate the difference in 2.5 days. So if it takes you a month extra to try and nickel down, who cares? You have the one you're doing right now.

We had to submit a planning application. Basically waiting on that and then we're done. Price is negotiated.

It is negotiated.

I mean, we trying to get approval from the government for change.

Okay, so you're going to do the space? We're going to have 4 desks open right now.

Yeah.

Okay, so that's like 50% growth. So why not more?

Because I don't take the time to train people as much as I should. So I need to hire that out because obviously I'm earning a lot and it's low risk for me and better for me to keep billing what I'm billing. So I need to hire the person that does the hiring.

I'll softly push back. I'm not against it. This is more just figuring this out. At some point, your identity will have to shift from sales god to sales training god. Yeah. And it'll be about not how good I am at closing, but how good I can make anyone at closing. And so fundamentally, you do behaviors. You do a big laundry list of behaviors that you do. And you being really clear about what those are— this is what's tough with winners in general, is that a lot of people don't know why they win. Michael Jordan, way better player than coach. But there are things that you do that if we codify those things, we can get somebody else to do those things. And if we do that, then they'll sell more and make you money. Right now, you can out-earn anyone. You will not be able to, in the business you want to build, out-earn everyone. And so the sooner you can bridge that gap, the sooner you'll start building the business you ultimately want. Now I'm sure on some level, your ego is tied to how much money you made. But like, big game, right? No one cares what you make. Yeah, they're going to care that you built an infrastructure that has 80 guys or 100 guys, it's knocking $30 million a year on, and you're for him, right? And I'll say this, I think you keeping your chops, being the aspirational person, I think there's elements of that, especially in the space you're in, makes sense. I think that if you were to say right now 25% of your time, so you lose $1 million a year, I'm saying roughly you hard block for reinvesting in the team, you will get disproportionate returns. You will make more than $1 million back getting each of those other guys an extra 1 deal a year. Yeah.

It's also like I do all the content, so all of my leads are organic. So like, yeah, so time is— yeah, so it's also okay.

So back to this, what do you have to do to get— we should fill those like tomorrow, right? You have 4 desks, why not use it? Yeah, but your entire marketing— you are in the hiring and training business, ironically. That's the business you're in. He's our president here at BCQ. He was the former president of Real Brokerage. Yeah, super familiar with the space. But all this time doing hiring, training, all recruiting, all they did was recruit agents. And so he knew that they had a system. If you work through our system and you have our resources, you're going to sell X houses per year Period. So once you know that input/output, it's just like how many people can we put through this black box. Right now you don't have the black box because it's up here.

So as we go through the process now, it's really good to document the success of sales in each step and then try to get it.

When you walk into a house, where do you sit? Has he ever walked you through the process of selling a house before? No. Okay, this is called the game plan. Let's walk you blah blah blah, whatever. You have to script all this stuff out. Yeah. Anything someone says to a customer should be scripted. Okay.

Okay.

I think you actually can get to $24 million a year. You could totally do it in 24 months if you shift your perspective from sales god to sales training god or sales recruiting god.

Yeah.

Right.

It's to take that leap when the new office is done. You start trying to take it now.

Yeah. And I think that long term, the business that you want to ultimately build is going to be one where agents that are already good, that are already doing $1 million, $2 million, $3 million are attracted to your brand because it's big enough. That you can start feeding them leads. Yeah. And then you don't have to start taking these people from zero to hero. You can just take heroes and make them superheroes.

Yeah.

That's where you want to be.

Nice.

Does that help you? Of course. We have to build a brand.

Yeah.

But going from 7 to call it 20 or 30, and then this firm going to call it, you know, that'd be like 12-ish, maybe 15 million a year that you'd be doing. They're doing a million a month plus, right? You can actually reinvest a portion of those profits into consistently reinforcing your brand. The long term, your big brand should attract talent and reinforce high status so that people would rather be with you and get mentorship and help from you for their careers.

Thank you.

Thanks, guys. Make your girl feel nice, you know.

Alex, you probably didn't know this, but I'm your long-lost Chinese cousin from Australia.

I believe you.

My name is Max. I take your mission very seriously. Within 24 hours of your book launch a month ago, I was so excited, had 8 shots of coffee, and I saw the light that morning. My site is a school community called The Money School, inspired by you. I do what you do, but for the Chinese entrepreneur niche. I had 75 members join within the first week, charging $1,000 each.

Lifetime, monthly, one time?

I'm doing a founding member stage, so it's once off for life, and then we'll do $1,000.

Okay, got it.

I got 2 questions. The first one is, I really want to hit the $1 million monthly revenue target on school as soon as I can. What do I need to do?

Right now you're at $75K total? Yes. Okay, so what did you do to get your first set of customers?

I have a book, I have about 20,000 subscribers, and I summarized your 3 books in Chinese.

What am I doing? If you're like, write another book, I'll just make some money. What is the consistent value that you provide to people?

So I've done this for many years and I've made— I'm not summarizing your book, okay?

He's like, I take your content.

I've been a small-time KOL in Australia for the Chinese community. KOL? K-Opinion Leaders.

Okay, got it.

On YouTube.

Okay.

So I have a group of audience. Guys, and—

Who's the audience?

Overseas Chinese entrepreneurs who are starting or making some money.

Okay, got it. So the thing with membership— who here has recurring revenue business? Well, then this will— I'm going to go a little deeper on this because it's probably valuable for him, for you. In order to make a recurring revenue business actually recurring, one of the big mistakes in the education business, which is the way you're in right now, is that people will take something that is inherently valuable and try to bill for it like it's consumable. So education has super high one-time value, right? The day before you know how to advertise, advertising is unbelievably valuable. The day after you know how to advertise, why would I pay for something I already know how to do? It goes from huge to zero. That is the problem with education in general. Everybody who has an education business wants to build continuity. Continuity is very hard to build if you purely have education as the primary value proposition. In a school community or any kind of recurring revenue business, you need to create or at least demonstrate consumable value. I'll give you a couple examples of this. So there is a super low churn community that does 3D printing in school. What they do is they find the hottest trending items and then create the 3D blueprint. I don't know how this stuff works, but like, whatever, 3D blueprints. And then every week they upload those blueprints to their community. And so because it's trending, it's new, it's consumable. You consume this week's things and next week's the trends are different, right? News in and of itself is consumable. Last week's news is no longer viable, this week's news is, which is why news subscriptions do work, right? Different example, there's a real estate business that did wholesale. They would find all the hot deals in an area, pre-vet them, do their calculation, and say these are all the hot lists. And so every week in every local market, people in their community would see the building and if they liked it, they already knew new pre-vetted. So that creates this consistent thing that gets consumed. And then next week there'll be new deals and some of those deals are gone. Like Gym Launch, we made new ads that we tested every single month that we would then give to the gym owner. So rather than them spending money, wasting money on production and testing ads that don't work, we would pre-film, test, and hand them only the winners. And you would just take winning ads and run them. But what do you need next month? More winning ads. And so that's what gave Gym Launch the super high margins that it had. And kept it sticky because it was media functionally rather than, quote, education. And so we sold the box, which is like, this is the Gym Launch System, this is how you run the gym, this is the price point, the sales process. Once you know the sales process, you know the scripting of the bundles, you have the white label stuff, you got it. It's zero value now. So what we do is we want to sell— like, if you have inputs, you've got a black box And then you've got output being money, right? This is your one-time thing that's very valuable. You can only charge for it once. This is much smaller, but you charge for it on a recurring basis. You sell the inputs to the machine. So with your business, you will probably have to niche down, which is why niching is so valuable, because you can actually create the machine and then sell the inputs. Like I couldn't make ads for 100 different businesses because they're all different, right? I can't test 100 different businesses. If you have a super new or beginner network, you teach them 1, 2, or 3 different business models that would work, and then you sell the inputs the same way. If you have medium and larger business owners, it has to be about something different, which is probably gonna be network. It's gonna be access, group negotiated discounts that you can do on behalf of everyone. And that is gonna be valued much less than something that's one time that's gonna immediately make them more. Sometimes I think this is where a lot of entrepreneurs make mistakes, is that there needs to be a very big discrepancy between what you charge that one time versus the true willingness to pay for the small recurring revenue component of the business. That's okay, provided it's sticky, right? Because if you charge $10,000 upfront and then $500 a month after that, it probably would be relatively sticky. Someone's willing to pay 10 and it's $500 a month. As long as the $500 a month was still like $10,000 buys you some time, but as long as the ongoing value surpasses the $500, usually by 3 or 4x, then you're good to go. So I would really just back into how can I provide value to all these people? And ideally, in what way can I make it so that each additional member does not detract or dilute the value of the community, but actually adds value? Functionally, that's what a network effect is. Does that help? Second question.

What would it take me to become your global Chinese partner? To help share your message with 15 million overseas Chinese entrepreneurs?

Um, you'd have to have credibility. Real talk. The reason that I think the content that I have has been able to perform really well is because I had the backdrop of the proof. The Alex Hormozi brand was built off of $100 million net worth prior to this. It wasn't like coaches coaching coaches about whatever. I've already done this and that's my proof. I don't need to do this. I do this because I like it and I have other missions in my life. But that proof is the backdrop that everything stands on. If I were to partner with someone, I would want them to be bulletproof from a proof perspective in terms of what they had done to prove that they were ready. Because anyone can repeat the words. I mean, shoot, literally anyone can repeat the words. The idea that like, why does, why does my content outperform yours? It's because the messenger is 80 or 90% of the context within which the message is received. Elon can tweet, "I'm shitting on a toilet right now," and it'll get 200 million views because Elon's the richest man in the world. That backdrop is so embedded in the message that they're inextricable. And so obviously there's core components of value, but the "why should I believe you" is always the big blaring Vegas lights above everyone's head. Why should I? 'Cause if you think about why is authority compelling, right? Authority's compelling because it actually decreases risk. And so we listen to an authority because we don't have to spend nearly the mental effort to deduce whether this is true or not, or to what degree I think this is risky to follow. If Warren Buffett gives some sort of investing advice, most people would just say, Warren Buffett's one of the richest men in the world. He's arguably the best investor of our generation. Therefore, I will just listen to him. It's actually a more efficient way to consume information, to follow authoritative sources, because it takes less cognitive load. That being said, being high agency as a person, you should separate those things. People aren't in general, but if you are a high agency person, you should be able to separate messenger from message. No one does though. And so for me, let's use Napoleon's quote, I'd rather have lucky generals. If I were to do something like that, I would rather somebody have a big proof point that they can sit on. Then all of the content makes sense within that context.

Thank you.

You bet. Thank you.