How to Create a Profit System

Today I want to talk to you about manufacturing business success. Because if you. If you see somebody who's running a successful business, they're making a substantial amount of money. There's some kind of process going on. This does not just randomly occur. This is not something that. That. That's spontaneously animates into the universe. Something is occurring. There's some kind of process or systemization or something is. Something intentional is going on. So what does that mean? It means that if we can model out a system that is working and that's being intentionally executed, then you should be able to copy it and emulate the results the same in your own business and for your own life. And the way I would like you to imagine this is via an assembly line. Like, as if you were running a manufacturing facility. Like, you're, like, you're making, like, widgets, and. And a widget has all these different parts that must be connected together. And this machine makes this part, but the next machine is only able to make the next part in the presence of the last part. So a lot of people, they like to imagine a business as a funnel, and at the top it's wide, and then it gradually goes down. It's like a whole process like that. The way you should actually think of it is as a circle. And towards the end, we can make two delineation points in a circle where they'll meet. And one is money, and the next is. Is traffic. Because traffic costs money either in the form of time or in the form of actual capital, like ad spend. Right. So if you're. If you're doing cold email or cold outreach, that requires labor. Labor costs money. So, like, you have to imagine it if you were doing that, if you're doing labor to acquire clients, at some point in the future, you would have to outsource that and pay somebody else to do it in place of you. Therefore, it would always turn to capital anyway. Right. But where you get the capital from? You get the capital from the clients who are paying you. Right. So all. And then we can model out exactly what's happening here. So let's imagine it like this. I was reading a book, and the book is called the Goal. And it's basically just a story of this guy who's the manager of a manufacturing plant that is failing, and he can't figure out why it's failing. Like, they can't. They can't produce enough stuff. And there's all these bottlenecks that are occurring. And this guy, for the life of him, literally just cannot Figure out why this is happening. So he finds himself talking to a consultant. And the guy is a professional at making turning around manufacturing facilities to become profitable. Right. Now, the gist of what's going on here, like the whole premise of the story is that as I said earlier, you can only one part of every part of the system relies on a previous part of the system. So let's say for instance, that obviously you want revenue. But how do we get revenue? We get revenue by signing clients. But how do we sign clients? We sign clients by closing sales calls. And then that would have its own closing rate, right? Some percent of the calls you take end up becoming paying clients, and that's your close rate. But how do we get sales calls? Well, we get sales calls by getting leads. And then you have a percent of lead to call booked, and that's your lead to call booking rate. But how do we get leads? We need traffic. So what does that mean? We need to buy traffic either in the form of ads or in the form of executing the labor via outreach or cold email or paying for automation to automate outreach, which also costs money.

You see what I mean?

And then, even then, inside of outreach, we have all the other variables associated with just that. So what's our response rate? What's our positive response rate? What's our positive response rate to call booking? And then therefore down the line in this, in this whole circular fashion. Now what you need to understand about this is that the presence of a call can only occur in the presence of leads. So therefore, and in order for your close rate to be optimized and improved upon, we need to have calls that are occurring. But in order for us to have calls that are occurring, we need to have leads that are occurring. And in order for us to have leads that are occurring, we must have positive responses that are occurring. And in order for positive responses to be occurring, we must have negative responses that are occurring. And in order for all responses to be occurring, we must have messages that are going out. We have. So what does this mean? It means that if you're confused as to why you are not closing any calls, you can just identify every single thing that is occurring in the system and see where does this start. And you need to imagine this circular, this, this whole big circle. There's an amount of time it takes from. You put some, you put energy into the first section of the circle. So like, let's say you're doing cold email outreach to sign clients. You're putting energy through that resource, right? Either time or Money, you're throwing that in there at that point right at this, this, this bottom of the circle right here. And in order for that energy to travel throughout the system, what this means is that it takes time, it might take three weeks, four weeks or five weeks for a piece of energy to enter the system and then fully be manufactured into revenue. This is how you have to imagine this now the way you can imagine all these rates so your, your positive response rate. So like what does this mean? That at some point in the circle, you get up towards the circle, you, you're losing energy. Like there's, there's holes in the, it's like it's like a pipe system. There's holes in the pipe and energy is being lost in the form of heat, right? That, that's like literally what would happen if like you're like, like that, like, like an engine literally works. You lose energy to heat instead of it becoming the kinetic energy, right? And the way you make an engine more efficient is that you make it lose less of the energy via heat and you, you try to get it to the highest throughput to remain as kinetic energy through, through the system. So you have these holes, right? But now the problem with a lot of people is they start with these holes, right? But they're doing it in the wrong location in the beginning. So like what they're doing is they go, they go spend their money on like some eight thousand, dollar, eight thousand, fifteen thousand dollar project management system. From this, like, from this, from this seven. I'm going to build you a project management system. And it's like what you're doing over there is you're like trying to patch a hole for like for, for, for fulfillment. That's way on the tail end of the pipe. Like you, you don't even have energy through putting there at all in the first place. So like that resource you allocated towards the time you spent working with this whatever company, the money you spent on it for this tail end metric that you don't even have energy going through at all is a complete waste of resources. It is the, the least efficient thing that you could do. The most efficient use of your time and resources is optimizing the holes in the beginning of the pipe because that's where you're losing all of the energy. So how can you, how can you, most of you, you're losing, you're losing efficiency by not even putting enough energy into the system in the first place. So if you're not doing any outreach, if you're not making any Content. If you're not running any ads, there's no energy to even help you identify where the holes are. So that's the first thing you need to, that you need to resolve here is you just start actually doing the outreach. And this is so, just stupidly simple that, bro, Like, I don't know why I'm not selling clients. And mostly the reason why is because you don't have an offer. So what I want you to imagine is the strength of your offer is that's basically how wide the pipe is and like how easy it is to get energy through it, like how much it can handle. Right now, once you have a good offer, this is when you start throwing energy towards this. And when I'm saying good offer, all I'm saying is that there's demand for this. Like, other people are selling this offer and it's making money. Don't, don't do this thing where you, you make shit up and you don't, you just try to make up this new thing and there's no, oh, I'm gonna build this like super AI process system for businesses like this. And bro, do you know literally anyone selling this offer at all? You need a, you need, you, you need an offer. It's very specific, it accomplishes a very specific function and it's sold to a very specific person. If that is the case, then, and you know someone else making multiple millions of dollars selling this offer, then you're good to go. I would approve your offer if that is the case. Right. However, I will assume you have got past this. Right. So we start throwing energy into the system. What's the first thing? Let's assume it's outreach. You're doing like manual outreach, like LinkedIn outreach or something. What's the first bottleneck that's going to occur here? Where is the first hole that could conceivably occur? The first one is going to be your response rate. That could be the first hole. So how can we optimize this system here? And the answer is really quite simple. It's just change what you're saying in the message until you find a message that works at a higher percentage rate. And you keep changing the message forever and ever and ever and ever as you progressively find better response rates. And you just keep doing this forever and ever and ever. And you just keep a little Google Doc and you're like, this message. How many people got this message? 100. How many responses did I get? 12. Cool. This is a 12%. Next week I'm going to try A different message. I'm going to change the script up to be a little different over here. I'm going to say this instead. Cool. You do that that week, how many responses did this one get? 14. Cool. 14. And you keep doing this and then maybe you try one and it's like nine. So like, let me go back to this one now because I want some more leads and you got the throughput going. Right? What's the next thing that could, that could occur? A determination of whether how many of them are positive and how many are negative. So how would we optimize this? Well, one indication of all the responses are negative would probably be that you're sending it to an irrelevant audience. So let's try sending it to a different audience.

Right.

Another indication could be that these people don't want this offer. So let's try changing the offer up a little bit. Right. And then now when I change this offer up, what's the positive response on that? Like, oh, okay, cool. So now the positive response rate is going up. Like, okay, cool. So now what's the next thing that could occur? It's how many of the positive responses actually turn into calls booked? Right. So now we can model this out this week. How many positive responses did I get of those specific positive responses over this next two week period, how many of those converted to a call? Right. And now how do we optimize this system? Well, we would optimize it by sending follow ups and maybe if you're doing cold email, maybe you cold call them like, hey, you sent me this message back like, and I wanted to see if you got some time to talk today about this. Right now you set meetings and this is how you optimize that, right? And now you're getting calls. So what's happening on these calls? Like how many of these calls are closing? And you should be recording every single call, right? Because this is, this is game footage you need, you need game tape, right? And now what you want to do is, okay, so this, this, this is going to be my sales presentation on, on here. I'm going to make, I want to make this ROI calculator for them. We're going to sit here on this call and we're going to model out, like if I were to, like, these are all your stats you currently have in your business and here's what I'm going to do for you. So that should change these stats up here to this, to this, this, this to this. And then if we do that, you should make this much more money because your close rate is this. And you're doing effectively this same process that I'm teaching you now that you're doing for your own business. You're doing with the client on the phone and modeling out the manufacturing circle for them so that you can project how much additional money the client would also make for you doing whatever service you're doing for them.

Maybe it's lead gen. You see what I mean?

You model out how much additional money that they would make, you tell them you'd make projected about an additional $35,000 per month. I'm only charging you $5,000 per month. You have a, you have about a 7x return working with me here.

You see what I mean?

And now you're opt, and now you're optimizing this sales presentation, right? And now let's assume that, okay, we had 10 calls and two of them closed. But how can I get this up to three? Well, one way to do that would, might be adding a risk reversal. Like, hey, if this doesn't work out as we're modeling here, I'll give you your money back if you do this. So now, let's see now. Oh, we added the money back guarantee, so now we're closing 40%.

You see what I mean?

Another way that you can optimize the close rate is by targeting higher level people in the first place. So when you are doing these financial models, the spreads are wider.

You see what I mean?

Because if you're doing these ROI calculators with small businesses who don't even make much money or have much leads in the first place, you do this financial model, it might only look like that they'll make an additional 4,000 or 5,000amonth. But you do it to a larger business and the same exact thing you're doing just for a larger business, it's not making them an additional 4 or 5,000, it's making them an additional 40 or 50,000. So now the spread is much wider and it's much more reasonable of a proposition for them to execute this service with you. So now your close rate is going up, right? And now you have a client. So what's the next variable that we get to help increase this? Well, now you start getting to the point where you're optimizing your profit margin. So let's say that you maybe you got some team members who are helping you with fulfillment and your gross margin is like 60%. Well, you might be able to go negotiate some deals if you have suppliers for something, let's say you're using like a freelancer to help you, like do designs or write copy or whatever, depending on what you're doing. And you negotiate some deals with them and then you get their rates lower based on a volume discount because now you're going to do more.

You see what I mean?

So now you're able to optimize that. Let's say you have like, let's say you have a client success manager and you build out some processes and systems with them. So now they can go from handling five people to eight. So now your gross profit is increasing.

You see what I mean?

And you, but you do this, you do this, you start at the beginning of the pipe. A lot of people, they don't, they don't, they're optimizing these things on the back end. But, but there's no energy flowing through the system to be, to make it even worth your money at all. Like, it just makes, it makes absolutely zero sense.

You see what I mean?

And then you can get, you can start getting into some really good stuff. Like, like you start focusing on client success. Now. What, what does that do? If, if the, if the amount of client success that you have increases, that means you get more case studies. And now because you have more case studies, those are more sales assets that you can use as content on the front end which inputs more front end energy through the system. And you use the case studies as sales assets for the people who are the leads who haven't booked a call yet. And you use it for the people who have booked a call and not closed yet. So you have now, now this, this one thing on the tail end, your client success and your case studies has this triple amplification. It helps everywhere. So not only when you get client success do you get more happy customers who send more referrals. It also just sends more energy through the front end and patches these holes even tighter. So what you have to understand and what I'm trying to get you, trying to get you to like fully ingrain your head, is that every single piece of this system, everything, your whole process, your whole business, everything is system wide. Like you, you, everything plays into each other. If you increase the amount of outreach you do, it increases how many clients you get. It increases via increasing how many leads you get, which also increases how many calls you get. You see, everything is system wide. One thing you do somewhere affects every single piece of the system. Everything. This is so important to understand. And it's, it, it's way simpler than what you actually think. Like this is not some like crazy complicated system. It's, it's just a, it's just a very simple circle of its own little set of processes and that's it. And you just, you just, you just loop this around forever and ever and you just do that. And that's it. Now you're probably wondering, well Daniel, what do I do from here? I have a 44 minute training video that you can watch at client ascension.com the link, it'll be the first link in the description. Also if you want to talk to me one on one, if you want one on one help with your stuff, you go to DanielPhazio IO that will be the second link in the description and you can just get a one on one call with me and we can walk through your whole system, walk through everything in your business, can help you set up ad campaigns, build your offer. Sales scripts, product processes, CRM automations. I do all this. We did just last month. It was $688,000 in revenue. I believe most of that actually came from a done for you offer. So I'm not sitting here where all my money comes from consulting like I'm actually doing this, spending 5,000, $6,000 a day on ads. So if you want help with that, I can definitely help you with that. I'm working with one guy right now, it was 5k for a month. He's getting a bunch of one on one calls with me. He has my phone number, I'm going back with him. Literally two weeks. We're already launching the ad campaign. Shit is going really good. So if you want help like that I can do, you can go to Daniel Fazio IO I can help you over there. But watch that 44 minute training video or@clientinsension.com it's very valuable, it's very deep. It goes into financial models of everything and exactly how to operate the system. If you guys got some value from this, please share the video with someone. I don't know, click the share button, throw it in the group chats, grow it on, throw it on your Instagram or your, your Twitter or your LinkedIn, wherever, subscribe, that's it for me today. If you want to, if you have a recommendation for the next video, you want me to make a video on something else specifically, throw that in the comments and I can do that as well. All right, that's it. I love you. Peace.