Consulting For Equity With Luke Havard

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All right, welcome back to the show. This is Brad and I'm excited to have you with me. Thank you for subscribing to the show. If you're not a subscriber, hit the subscribe button. And I think you're going to love every single thing you hear on the show. Today I am bringing back a former guest and a very, very good friend of mine named Luke Haverd. Luke was on the show before and I will place a link to that show in the show notes so you can go listen to it, especially if you really love what he has to say. The reason I invited Luke back, ever since our very first podcast together, we have remained very close. We've done business together and we talk probably every single week. And Luke has always impressed me. But what's really impressed me is some of the things that he's been doing as a consultant in the past year or so. And I've just really seen some tremendous changes take place in his business and some tremendous leverage. And we wanted to get on the podcast today to share some of the strategies. Now this is going to be particularly fascinating for you if you are currently a marketing consultant or service provider, if you help business owners in any way, shape or form grow their business or service them, then what you're going to hear us talk today about is I'll just call it equity based consulting. And Luke will go into this even more. But the topic is got the ability to completely change the way you do business and put another zero or two into your bank account if you pay close attention. And the primary thing I want you to understand is what's really possible in this world when you think just a little bit differently. And Luke and I both think differently. So you're going to hear us chat today about some of the real deals that he's been doing lately. And I want you to kind of put yourself in his position and think, wow, I wonder if I can do that. And if you think so, then we're going to provide you some information at the very end of this episode. That's one reason you should stay around to where you could potentially get more information on this without Further ado. Luke, are you on the line?

I am, Brad. Good to be here again, my friend.

Absolutely. It's good to have you. So, for those of you who don't know or can't tell, Luke is over in England. Where exactly are you? Again, I can't remember. You're not in London, are you?

I'm not, no. A small little place that's about 90 minutes south of Birmingham, which is like the center of England, if you like. I'm to the west, the West Midlands. So, yeah, little, little place. It's famous for two things. Cider, apple. So they make cider here. And one of the most elite armies in the world, the sas. So, yeah, it's kind of a brutal combination. If you put those two together on a Friday, Saturday night, SAS and apple cider, it can get pretty hairy. Yeah, they could take out a whole division, those guys. So, yeah, I'm. I'm over here in the UK and, you know, it's a small little place where I come from. London's obviously the big smoke. Everyone thinks whenever we speak to someone from overseas, you know, it's the first thing they ask you. Are you from London? And it's like, no, there are other places. But you know what's interesting? It's in this day and age, like right now, we're talking from our laptops. I'm in my home office, you're in yours, and we're talking over Skype, of all things, with the recorder. And you can be anywhere in the world, doing business globally. And that's exactly what I do every day. So no one knows where I'm from. No one even knows where it is. But it doesn't matter as long as the Internet works. And, you know, I've got something interesting to say, have lots of very fun and interesting conversations, and do lots of deals from my laptop in a place called Hereford.

Absolutely. Well, you and I always have some fun and interesting conversations. And for anybody who really wants the backstory on you, I want you to go check the previous episode, because we could talk all day about, you know, where you came from and whatnot, but that's already out there. And I want to treat this as, you know, letting the listeners be a fly on the wall on some of the conversations. I want to further a lot of the conversations you and I have been having privately recently. And I want you to share, first of all, what this whole concept of equity consulting really is and the way that you do it, kind of the big difference. And I want to go over, first, the Broad overview, just so that people get it. And then I want to dive into some very real life examples of what's possible of what you've been doing and why you think that a lot of people are missing the boat if they don't really understand how to do this and they're simply selling services for dollars.

Yeah, cool. Yeah, sure.

So give us the broad overview. Give us the kind of the difference between what most people do and what you used to do and what you're doing now.

Yeah, great. So I think.

Okay, so you get your regular coaching consulting or service provider there. The low end. So low fees, you know, they're just a commodity at the end of the day then obviously more. So the big thing right now, the big sexy thing is high ticket fees, ticket offers, and that's really good. And I think people should charge an awful lot more. And when you understand that if your positioning is right and you're really good at what you do, then.

It'S a massive shift in order to just get paid a lot more. But then there's a whole nother level because at the end of the day.

Even if you have a leveraged model of coaching consulting, and that's the next, that's the big sexy thing right now as well, you know, group coaching masterminds or you know, leveraged consulting, et cetera, there's a limit to that too, because at the end of the day, you know, you only get paid the fee that you ask for. Okay. And even if you're getting paid on a perpetuity basis or, you know, what's the word I'm looking for, Continuity, then at the end of the day, you're only getting paid that initial fee. But here's the thing, the next level up from that for me would be a profit share or revenue share. And that's really awesome. And that's another level of gain because obviously if you're getting paid your fee and it's a one time lump sum fee or it's a monthly fee, then ideally you could be making your clients at least 3 to 10 times x what they're paying you, if not a lot more. And depending on the business model, you could be making an awful lot more, 50 to 100 times more. But you're only ever seeing that fee that you've asked for that they've agreed to give you. If you do profit or revenue share, then obviously you get a percentage of the upside that you create them. And that's pretty awesome too. But that will only be typically on the work that you do for them. And if that campaign or that product or whatever it is that you help them to grow or to leverage or increase, if, if obviously that stops for some reason, they discontinue it, they stop selling it, then your profit or revenue share stops. So for me, that aha moment, the eureka moment was like, well, what if I could get a piece of the, of the whole business? So not just the work, the project, the campaign I'm working on, what if I could get a piece of, you know, the value that they created but also the upside that I created. So by getting a piece of the whole business, there's a couple of different things that you get in this scenario. Firstly, you get the whole value creation, not just what you, not just the value that you add. Secondly, the way I look at it is a big problem with the whole coaching consulting industry is turnover, attrition. You know, clients leaving, you know, they get what they want. They say, thanks very much for putting that campaign in, Mr. Marketing Consultant or business growth expertise. I'll see you later. I'm going to take your work that you've put in, that I've paid you for and that you asked for, and I'm gone because I don't need you anymore. And you know, a lot of that's a problem I think a lot of people face. But the other issue is, okay, what if you need to scale? Well, then you also need more clients, you need to keep on marketing, keep on adding more clients. And there is an issue with capacity. There's an issue with, well, the more you have to put in, like, as in clients or, or client turnover, then you need other elements. Like you need more team, you need more systems, processes to deal with that. And I just thought, well, what if you could scale your company, your consulting business with less? So what if you could just have maybe anything from three to 10 clients that you have a piece of equity in their company and the more that they scale, the more that your, your fee, your piece of the pie scales with it, if that makes sense. And I just looked at it and I looked at the model and it just made more and more sense. And then when you look at who the wealthiest people on the planet are, the Forbes billionaire list, et cetera, almost all of them are investors in some shape or form. Even Zuckerberg, Mark Zuckerberg and some of the big tech startups, they all go on to invest, they all go on to acquire. So they all go on to buy competitors, to buy other people. And typically that's where they make Their most money, that's where they create more wealth. And actually that's what happens with public and private companies. They.

Keep growing. Their fastest way to scale is through acquisition. So to buy another company because you can double triple 10x in size in an afternoon by just buying your competitor.

Absolutely.

So I just looked at it, I thought, you know, that's the way forward. And when you have the equity consulting model that I've kind of, I suppose I've coined it, you know, the equity consultant model. I've been saying it for a while now, then essentially you become an investor. But here's the really cool part. You know, whereas, you know, typical investor, most people look at them and say, well, they've got money or surplus money or they've got access to funds or capital to invest. I don't. Well, with equity consulting, you don't need that surplus cash. You're investing with your expertise and your knowledge and your experience. And so it's, and here's the, here's the alternative. And I'm not knocking any other investment strategy, but I'm just trying to present a different alternative option. And my perspective. If you're already a consultant or service provider, I think it's one, a safer option, an alternative, and it's far more lucrative to begin with if you're trying to get your, you know, foot on the ladder of investing. Because here's the thing, look at the other alternative, which could be real estate. With real estate, you have to have either debt, borrowing debt, or you have to have capital from someone else or yourself. Now here's the problem with that. That's risk. So it's either you're borrowing from a bank, an institution, or a high net worth, or, you know, you're taking it out of your own bank and you could lose it all. So there's risk involved in that and there's, you know, a lot of pressure and there's a lot of uncertainty. But here's the other alternative. If you're doing equity consulting, you haven't put any money in yourself. So there's no debt, no borrowing and no risk of losing your own capital.

Right.

And pure upside.

Okay, so, so let me, let me recap a couple of the big ideas here that you've talked about so far. And I want to dive into some, you know, real, real world examples. So bottom line, as a consultant or service provider, you can go in and do fee for service, right? Pay me, pay me a flat fee or pay me a percentage, you know, ad spend or whatever. And all right, you Know, you're really just a contractor at that point, or you can do give me some profit share. And actually I've done a lot profit share in the past, which is. All right, here's the baseline and I come in and I'm able to, you know, my marketing campaigns, et cetera, add an extra million dollars to your revenue, pay me 20% above the baseline, etc. One of the biggest. So, and that's great. I've made a lot of money doing that. I do know that one of the big issues is tracking the things that I do in one area affect the entire business positively. And I don't get. And it's really hard to track that revenue that's attributed to what I did. So for instance, if I went in and I created a marketing funnel for a client, for instance, right. Create that marketing funnel, and that marketing funnel does a million dollars in sales by itself, just in the cart million dollars. However, that company has a sales team and then those leads that came in maybe didn't buy or whatever got upsold to $20,000 programs and something much, much bigger or. Well, I never got a piece of that action because that wasn't directly attributed to me, even though they knew it was. It was like, well, we've got to keep this kind of separate because, well, you know, we have to track what you're doing. That was really, really hard to do. And that's one of the things I don't like about just doing a profit share or a percentage of baseline, you know, increase in profit. It's the trackability. And I know that I'm losing out on a lot more money that could have been happening. Plus, it keeps me just my brain thinking about this one little compartment of their business. And truthfully, as a, as a business and marketing strategist, I have a lot more to give to businesses than simply this one little sliver of a department. So I'm not really serving the client in my best use by not thinking about the entire business in general. And the only way to get me to think about somebody's entire business truthfully is exactly what you were saying is if I have a real vested interest in the overall growth of that business. Right.

Yeah.

If I have equity in that, and it can be a small portion of equity, it can be a large portion of equity. So I want you to go into a couple big examples here because as I said, I mean, I want you to razzle dazzle some of these people because I know that I always thought that I was pretty creative deal Maker. But you've come up with some pretty interesting ways to do this. But I know for a fact that two big things that are weighing on people's minds when they think about this, and I want to address this, and we'll bring them up in a minute. Is a. Okay, that sounds kind of. That sounds awesome. But I have no idea where to start or who the hell would give me equity. Like, how do I just ask a company for a piece of their. A piece of their business?

Whoops.

How do I ask a company for a piece of their business? Like, they don't really know me from Adam, and I'm just supposed to come in and say, yeah, I want a percentage of your baby. And that is a big, big mental hurdle and limiting belief that a lot of people have. Even myself, I still. I know it's possible, but I know that there's companies out there who would be like, yes, I will give you a percentage of my business if you are able to help me do that. So before we address the little limiting beliefs and the frequently asked questions, let's. Let's have some fun. Let's talk about some real world scenarios. Tell me about some of the deals that you've done that were, you know, the most fun and the easiest and most astounding to even yourself.

Wow. Where to start? Okay, so there's one.

That I can think about. I won't go into. You don't have to go into names.

And get who the company is. You can just get like, general industry maybe. And that's about it.

Yeah. So Guy approached me from the recruitment industry.

Brilliant recruiter, but not so good at running a recruitment business because business obviously is not just what you do, it's all the other elements. So we were talking and I was just advising him. He wanted to raise capital for all this stuff. And you and I know, Brad, I always say raising capital sometimes is almost the easy option. You know, people think they need money to fix problems and actually fix the problem or the money or, you know, it doesn't matter how much money you throw at it, you'll burn money. So that was the scenario. He said, oh, you know, if we raise a couple million here? And I'm like, yeah, we could do that, but what are you gonna use the money for? And it just kept on coming around to the fact he's trying to solve a problem, he's trying to plug a hole. I said, well, look, don't plug that hole because. Because that's not the issue. The thing, you know, the hole is the issue, you need to figure out how to plug the hole. Not with the money, though, because you're just going to burn it. So we looked at the scenario, and I knew that I could help him plug the hole. And so essentially what happened was I just kept on telling him, okay, here's what you need to do on the call. Because to be honest, I knew from talking to him that he couldn't do it himself even if I told him what to do. Okay? So he understands intellectually what I'm saying, but he just doesn't have the experience and that confidence to implement. So I just said to him, look, here's the deal, man. I've told you my opinion. You're more than welcome to go against that and go and try and raise the capital. However, it's not going to solve the problem, I promise you. So he said, what do you think we should do? Then I said, well, you know, I've told you the different steps I think we need to do to fix the problem and to scale the business. And he's like, yeah. And I said, so, you know, I can help you, or you can go it alone. You're totally free to make that choice. And here's the real difference between, I think what a lot of people will be used to in terms of the kind of the coaching or consulting model where it's like, get on a call and make them feel the pain and close them as quickly as possible. And I'll explain in a minute, but that just doesn't work in this scenario. We're not talking about a little fee here. We're talking about taking equity in a company, so you have to build rapport. So this was like two or three conversations in. And then he said, look, Luke, I'm certain I need you involved. You know, you've given so much value. I just get the sense that I need you on board. And it's just going to go really, you know, it's going to go a lot better from here for me. So I said, cool. What do you think? Then I said.

Why don't you make me an offer? And this is a strategy I like to use. I think anyone who speaks first is, you know, a danger, really, at kind of undervaluing, you know, or giving away too much.

So negotiation 101.

Yeah, exactly. So I said, well, you. Why don't you tell me what you'd be comfortable giving me? And he said, and I'm thinking in my head, I'm going for 30. 30%. Okay, right. Because I knew the value And I mapped it out and I've done it before. I've got evidence to prove it. So it's like, dude, if you like what you see, you can call those people that I've worked with before, and you can, you know, they'll tell you the same. So I said, if you want.

Real quick, let's. I want to leave the audience hanging for just one moment before you tell what he said. But real quickly, some of the stuff, some of the advice you were giving him, it was. It wasn't just about, like marketing funnels. It wasn't just about one thing. It was about what kind of topics.

In general, it's about. The whole business is about team scalability. It was about systems, processes, operations. You know, how do you. How do you work yourself out of a job? How do you ensure that you're not the job?

Right.

How do you ensure you're not the. The team and the HR and the secretary? How do you ensure that this is a business, not something that you have to be in 247 for it to work and make you money? So had a whole process put in place, like a whole processed map, if you like, of. Right, so here's the product, here's the service, here's the marketing strategy and the plan. Here's the vision, here's the KPIs, here's the monthly, quarterly, yearly milestones we need to hit. You know, here's the this and that and the third. So we went through everything. That's the whole structure. So he was blown away because he had no structure, no. No strategy, no plan whatsoever.

And now everything that you gave back to him in value, was it just. Was it just verbal or did you present to him anything written, Any kind of, you know, written frameworks of what you would do if you were working with him, or was it just all through conversation?

Yeah, I gave him some rough emails, but I was careful. You know, again, there's a balance, you know, you got to. I think you need to. You need someone to show their hand before you start kind of spending too much time. And then they go, oh, no, I wouldn't give you equity. And it's like, ah. So I, you know, I gave it just enough to kind of keep him really hanging on. And here's another thing. Before I kind of tell you how much he offered me, I always do. You know, the difference between, I think sometimes someone who wants that deal and they need to close that fee is they come across pushy, like, and they try and close the deal. I do the Opposite. I try and hold them arm's length.

I do the exact same thing. It's like, I'm gonna slow play it, and I'm not gonna slow play it because it's an effect. It's a hyper effective way to actually get a client. I'm gonna slow play it because especially when you're going for a very big deal like that, you got to make sure that you want to deal with that client.

Yeah.

Or because it becomes a partner at that point.

Yeah. You want to know who you're jumping into bed before you. Yeah. Before you. Before you go that far. So. So, yeah. So essentially I said, look, I need to know that you're bought into this. I'm not here to play games. I'm not here to mess around. And I need to be really upfront and honest and lay the expectations and the foundation. The bottom line is this, that I'm not here to work in this business. I'm here to be a strategic asset. So that means I'm not in here as an employee every day making phone calls or doing this on that. I will, you know, present each time the chunk of, right, we need to do this. Here's the next step. You know, here, let me illuminate your path. Do X, Y and Z. Right. Hire that person. So we were hiring, you know, recruitment consultants. We were doing this, we're doing that. And it was like I would just oversee. I'd say, right, here's the script of, you know, what they're going to, you know, read out when they're, you know, doing their recruitment thing. And I didn't go into that deep either. I had other people bringing that content for me. So anyway, I had all this stuff, and I stacked the value in terms of, look, here's all the stuff I can bring to the party. And then I said, so now you better decide what you feel comfortable giving me. So he just, you know, we're on a call like this. We've never met in person at this point. And this is another thing I can tell you about. I do deals with people all around the world, and I've got equity in companies I've never met in person.

Just Skype.

And it doesn't. Yep, just Skype. It does not matter. Sometimes some of them I've never even seen. But I. I know everything about their company because we do a full due diligence process, fully legal, eagle documentation. So everything's done right. We can find out. Trust me, we can find. Well, I'm not going to go into too much detail right now because something's just happened recently, but we can find out anything we need to know on someone. We can make sure they're not full of shit. So anyways, we kind of gone through this little process here and then it's like decision moment. Look, I like you, my friend, but I don't want to talk to you all day long about this. We're going to do something together and let's move forward and let's make it happen. If not, then that's fine, but it's crunch time. So he just said, okay, I've made my decision, so cool. And he said, yeah, I'll give you 50%.

Five.

Zero. Yep, yep. And I said, so you understand that I do not promise to raise any capital for you for that money. I'm not putting any of my own capital in. So I had basic kind of expectations of what I will do and what we will achieve. Anything above and beyond that is, you know, the icing on the cake. So you have to really structure everything because that's another thing. Once you verbally explain it, then you put it into an agreement and then you sign on the dotted line. So there's been a build up before you sign anything and have an agreement in place so they know there's no misunderstanding. You agreed to this multiple times before we came to the signing on the dotted line. Okay, absolutely. So that's what happened.

Now let's go into a little more detail here so that people can really understand the way this looks because they think, okay, that's cool. You talked to some guy, you really impressed him. By the way, how did you come across this person? Is he your uncle?

Yes, it's my uncle. No, he. This is really random. So it was on. So I was on Twitter and you remember if people have listened to the previous interview, they will remember that we were talking about taking companies public and stuff like that. Yeah. So I was looking at that point to be involved and, you know.

Amalgamate some recruitment companies. So I was talking to a bunch of recruiters about doing it for them. And randomly one of these recruiters said, hey to another recruiter. Been asking, I'm looking for investment for my company. Do you know anyone? He said, yeah, I know the perfect guy. So he referred me. Perfect.

Okay. So it was a referral in. You spoke with him. He was really very impressed by the fact that you did all this, you know, strategic advising before you ever asked for anything. You didn't actually ask for anything. You set it up that, you know, I'm sure you set it up that the way you work is that.

Did you already say this? Like, how did you frame up that I want to. I want a piece of your business? Like, how did you say that? Did you say, hey, listen, I don't work for fees, I work for equity? Or, like, specifically, how did you. How do you bring that up the first time I.

Here's the thing, and I said this to you the other day when we were looking at a potential deal. I said we always. I've learned to weave everything into any conversation in a very natural, you know, totally normal way. But I'm always asking the right questions up front so I don't waste time with people who've got no money, no assets, no. No nothing really. So I'd already found out what his turnover was, what the profit was, what the ebitda potential was, etc. Etc. So I had all the information that I need up front. So I knew what he was playing with. I knew that he would probably be better suited to equity than fee. Because, by the way, I will do whatever is best in the situation. If someone's got tons of surplus cash to pay me fees, high fees, very high fees, I'll take the money, you know, because sometimes, and here's the thing, I will play the situation off, you know, it's a counteractive situation. So, for example, you can either I can present the fee and it's high, or I can present the equity option or a combination of fee and equity or revenue share, whatever I want. And I can say, right, so you got this option, this option. And when people have got options, they'll choose one exact. Rather than saying, no, I'm out because it's too expensive. And that's exactly what nearly all consultants or coaches will come across at some point or are struggling with right now. They'll get beaten to the post by someone who's cheaper or someone who presents the offer better, whatever, because they haven't got enough creativity to offer something different. So, yeah, I always do that. I always say, look, we've got this option, this option or this option. So we talked about it and it came. Apparently, he's like, oh, man, I don't care.

What it takes, I'll find a way to have you work with me. Bingo. So I'm listening for the right cues.

He said, look, if I could get the money for you right now, for your fee, I'll pay you tomorrow, you know, but. And there was the. And then it came out that obviously he was looking for investment to fix the problem of cash flow, blah, blah, blah. I said, no problem, I've got another alternative. That's when I started to seed the idea of equity or revenue share or what have you. And he was comfortable with it from the get go. And then you keep seeding the idea every time you talk, you drop more value every time you talk so that the desire is increased, etc. This, you know, sales 101. And then by the time it comes to the kind of final conversation, and I will, I'll see that in every email, I'll say, listen, so today, you know, I think it's time that we talk about, you know, putting a deal together. If this is something you want to do, no pressure if it's not, but if it is, we should, you know, put our cards on the table and make something happen. And so he already was prepared for that. And I let him have plenty of time to know that this was what we were going to do. And so when we talk on that call, it was maybe 15 minutes and bam. By the end of it, you know, I've got 50% of the company. I said, right, here's the agreement, bam. And we signed it. It's done.

Okay, that is perfect. Perfect examples of.

The way you frame that up, the way you go about it, hopefully it's kind of dispelling some of the, some of the questions that people are probably having already. I want you to now kind of explain real world. Okay? They, he says, all right, I'll give you 50%, but you've got a cool, unique way of structuring it. So he's not just giving you 50% equity and then no fee. I mean, how do you start to protect yourself? How do you start to create cash flow? And then I've got a follow up question, but, but tell me now the structure of the way that something like this might work.

Okay, so, and keeping in mind for.

The audience that what he's about to say, and you've heard him say this several times, there is no one way to do this. The beautiful part about this business is it's a, it's creative. I can give you multiple options and you know, I'll take a little more equity, a little less cash, a little less cash, a little more equity. But you know, tell us some of the structure, the way this works.

Yeah, so I liken it to a slide in scale or a pendulum, you know, so on one side you've got fee, just pure fee. On the other side you've got pure equity. And in the Middle of that scale or that pendulum is multiple different points where you can have, okay, so let's. So my high fee is this. And they're like, whoa. And then you say, okay, well, listen, if that, you know, we've got another option here. What if I were to take a smidgen of equity plus this fee? And they say, oh, that fee is still a little higher. Okay, well, what if we take a bit more equity plus this fee? That feels right, but is there anything else we can do? Yeah, we can take more equity plus this fee, or we can do revenue share and you just find a middle ground until everyone's happy, you know. And for me, here's the thing. They may be thinking in their mind, well, I've got the better deal here, but trust me, I've always got the better deal in terms of I'm not losing out, I'm not compromising on what I want or need. Because if I know that I can achieve this much upside and I can see the potential, and I've really evaluated the situation, the deal, the opportunity. Well, I'm not losing out in any which way or form, so I will do really well out of that. And so essentially, let's say, you know, a very basic deal structure could be. So I'm going to get. And this is basic, I know obviously you've heard me say I can get a lot more, but let's say I go for 10% or 5% equity plus a monthly management fee. And that could be anything from 8,000, 10,000, 15,000amonth.

So that's the structure. And that fee would be set, for example, or.

It could be like a dividend fee. So what that means is it's a percentage that comes out of the profit. So, okay, if we make certain, you know, so much profit that month, then If I've got 10%, for example, of equity, then I would get 10% out of the dividend of the profit. So that kind of profit draw, okay, so we would do 80% of the profit. We would dividend out 80%, leaves 20% of the profit in the company that month, and we would distribute it out through, you know, to the shareholders. So I would get my 10% out of the 80% dividend as my fee. So, you know, obviously if one month it was less than the set fee, for example, of just say 10 or 15,000, then that's what it is. But if another month, it's way above that, then that's great. And obviously, the more that you grow the company, then it could be an awful lot more than 10 or 15,000. And it's flexible. So it depends on how they want to play this. I don't mind either way. Whatever they feel comfortable with. I'll figure out a way that it works for me and we'll all, we'll all be very happy.

I love that. The.

Okay, so you'll come in, you'll get that. Now, do you get any pushback? If you come in now, you've got equity and you're getting your, you know, you're getting your fee as well, etc. And then you say, okay, now we're going to have to.

Bring in this expert, this, you know, or this service, this service or this service. And all of a sudden now you're creating a bunch of potential expenses because it's things that just need to be done. Have you gotten any blowback on that? If they're like, wait, we didn't budget for this. We just thought you were going to come in and do it. Because I know that managing expectations for what you're doing is a very big thing.

Yeah, I mean, yeah, it depends on. Depends on the person. I mean, and that's another thing, you know, finding out the information.

Ahead of time. Yeah, definitely. So, you know, how much money did they have in the bank? And if they're broke, then, yeah, you're gonna have to allow for that. And so you do really have to be smart and factor in all these different things. So if they're broke and I'm turning them around because they've got cash flow problems, well, I'm really gonna have to figure out a way of creating cash rather than spending it. If they've got plenty of surplus cash, then that's a different story altogether. So, you know, I've got, for example, you know, recent deal I've done, which if you would like me to. I can talk to you in a minute after I just explained this concept. We are, because we have, for your viewers, knowledge. We have. So I have a boutique consulting group, a luminous group that does business growth. And that's my kind of bag. And I have primarily myself for that role. And then on the other side, I have a digital marketing team who run Facebook ads, Google Ads, YouTube, Bing, etc. For this particular company I've recently acquired equity in.

So essentially they need some Google Ads. So my team will deliver that. In this particular scenario, we're not taking a fee, we're taking revenue share. Okay, so we have equity. We have 50% equity in the company plus a revenue share. And so they have to supply the ad spend, but it's very minimal and we're working creative again with that ad spend and really dialing in the ads and being very conservative and efficient with our spendage. And I'm also on my end doing lots of things like you and I typically discuss low hanging fruit, fruit leveraging the assets they already have, customer database, monetizing that, etc. Etc. So yeah, you know, it's what you, you have to be smart. You have to know what you're working with up front. If they've got plenty of surplus cash, then I don't think it matters. As long as you get the job done. As long as you produce, they don't care. Right. So yeah, I hope that answers your question on that.

No, it does. The.

The ideal.

Criteria for somebody or at least even the minimal criteria for somebody that you personally would be like, yeah, this is a, this is a good candidate for somebody that I would want to do equity consulting with. Because the thing is, this is one of those, this is one of those tools that any consultant really should have. But it's not like you're only going to do this because there's a time and a place for fee and there's some people that you don't want to, you know, there's some women or men, depending on who you are, that you know, you don't want to date and have as a boyfriend or a girlfriend or a husband that you just want to kind of go out with and have fun. There's some businesses you just want to take fee. What are the ideal clients, types who you know would make a good equity partner, etc.

Hmm. Who are you looking for?

Let's just say it's a company doing $500,000 in revenue and they're keeping 50,000 net and they're selling products online. I mean, is that somebody you're like, eh, I'm not really worth my time on this. Kind of give me your minimals.

Yeah, the profit margin would be too low on that.

Yep.

Yeah, I mean, I'm looking for, you know, for me, I'm looking for scalability, I'm looking for, you know, asset. So if they've got nothing to begin with, then it's not really a business.

Like if it's just a digital, if it's just a digital product company, maybe they're an E commerce company or maybe they're information product company, something like that. Those aren't ideal. Right.

What I mean by that is if they've got asset in terms of so do they have like a large customer database? Yes. Cool. Then I'm interested. Does it have, you know, high profit margin? So a company we recently acquired has 50% profit margin. That's awesome. I'm definitely interested. Does it have other products that they can sell to the customers, you know, and are their products useful for other synergistic businesses? So it's looking, you know, the criteria really is, you know, is it. Does it have good cash flow or can it have good cash flow? Does it have scalability?

Does it have the ability that I'm not going to be in it all the time having to do lots of stuff, you know, does it provide me with leverage? Does it provide the owner with leverage? Is it a sellable asset, you know, or can I make it a sellable asset? Because here's the other thing that we haven't really gone into. And again, we can touch more on this. The other side of doing all this is that not only do you get the fee and all that other cool stuff, and not only do they not, not only do they not leave as a client, unlike a normal client who's not tied to you, you also get paid a gain when you exit the company and you get paid significantly more than you would from any fees. So, you know, can I sell that thing? Is there any exit strategy? If I cannot see any way possible for it to sell, then it's not really a business I want to be involved in. You know, there's no, there's no reason to kind of improve it that much or it can't be improved that much. So I'm always looking at the future upside, the future potential. You know, for me, it's, you know, there's warning lights as well. There's warning signs, like if they haven't been able to do something or someone else, you know, sometimes you'll look in this world, this marketing world, this business consultant world, small, right? There's millions of people out there claiming to be business consultants, etc. But actually the ones who are worth their salt, we know who they are. So let's say as one of those being involved, they have. Why haven't they stuck around? Hmm, That's a red light for me. You know, it's a red flag. I'm wondering what's going on there. And so you have to keep your eyes open. You have to kind of assess. Look, it's a trade off. If a client wants to pay. Look, I mean, it's down to ethics. If a client wants to pay you high fees, but you See no potential in that business. I personally wouldn't even take that job on if it was just for fees because I've got ethics. I don't want to work with someone knowing that. I just don't think they've got much potential to scale even if they've got the money to pay me.

Right.

You know, because that's just not ethical from my standard. But let's say for example, you got a client who wants to pay you high fees and they've got the money, great, we'll help them scale. But if you've got the trade off of they've got scalability but they don't have the cash flow right now to pay the high fees. And that's a perfect example of taking equity. And guess what? It will be even more attractive to them because they, they haven't got as much bargaining power, as much as much leverage. So you wouldn't go to a massive company and say, yes, Mr. Fortune 500 company, give me equity. They'd say, why go buy it on.

The stock on E Trade?

Yeah, exactly. Like go and get a trading account. You know, why we, why do we need to do that? There's no logic in it.

So it's kind of a, it's a nebulous target. Like there is, it's not just a, alright, I need a company who's doing X in this industry. Boom, boom, boom. It's do they have the ingredients that I can work with? And obviously that, you know, this takes some very fluid thinking. This is not a business in a box type of a thing. It's an advanced strategy. You know, somebody who's not a, you know, a business or a marketing consultant. Right now this is not the best thing to do because you can't be fake, you can't fake this, you can fake selling fees and stuff like that. You can't fake being good at this. That said, there's a lot of ways to find companies like this. But how do you start if you, if you are good and you have this understanding like what are you doing right now besides talking to people? Is it the same way that you would typically look for consulting clients now? It's just that when you talk to them, you would, you start to bring this up, you know, how do you go about finding ideal targets for.

This? Well, okay, so yeah, I mean, look, it's, I'm gonna try and make this concise. It's, for me, it's, it's an all encompass, encompassing practice. So what I mean by that is there's not one strategy. There's not one thing I do. Like, everything I do is positioning me for someone to find me or to hear about me or to even look for me and say, oh, this guy's not just a consultant, he's an investor. Okay, so if I'm gonna, give me.

Some examples of things you're doing.

So if I'm at a networking event, they'll say, what you do? I say, oh, I'm a business investor. Oh, really? What does that entail? Well, you know, I can either I'll look to buy businesses for my portfolio, or I'll look to, you know, invest in business and help them scale. Oh, really? That sounds really interesting. You know, I've got a business, and they'll. That's, you know, and they either they'll come be interested or they'll tell their friend. And it's, you know, so that's the first thing. Word of mouth, you know, good. Good news spreads, bad news spreads, etc. You know, another thing is, you know, like this, doing podcasts. People, you know, hear me, you know, talking about it. I also have a bunch of introducers. So they're like my. My networkers, if you like, and they're global. I have strategic people who are based, you know, in the major cities and countries around the world. And, you know, their role is they're a connector. They're someone who has influence, who knows the right people, who people go to, you know, who do you recommend, etc. And so they'll be in the right place at the right time, and someone will say, hey, Jim, you know, I'm looking for X, Y and Z people to help me grow the business. And they'll say, I know just the right person.

Who are some of these types of people that, you know, around the world that are. That have been really good connecting resources for you. Like, do they. Do they share certain types of professions or anything?

Yeah, yeah. They'll be in the marketing or business space, but they'll have a different complementary role to mine. Yeah, so they don't do what I do, but they. They have. They understand what I do, so they can speak to it. But I've also trained people, if you like, without training them officially. So I've kind of.

Groomed them so they know. Know how to present me and pitch me, and I'm not paying anything up front for that. Yep. So they'll go and say, right, I know I'm getting a percentage of the deal that Luke does. And what I mean by percentage is like a, you Know a royalty or profit share or whatever. So it's not too much skin in the game, but it's enough that it can be very lucrative for them. Yeah, and I'm more than happy to pay that, you know, because it's, you know, I'm not going out there doing any of that work. They're doing it on my behalf. So I have a whole process to qualify and to.

Position who I am. So by the time they, someone like a prospect, a lead will get on a call with me, they've been, they've typically been referred or they've seen a video or a webinar or podcast, what have you, they've kind of gone down my.

How'S the word? I would like unconventional marketing funnel. It's not really a funnel as such. It's just a process that I've created that will, you know, position me really strongly but also pre qualify them and make sure that they're the right caliber of person. So by the time we speak, they're already really confident who I am. They've seen case studies, they know the type of things I do, the people I work, work with. They've been recommended personally by someone they trust. And so it sounds a bit, you know, okay, but 90% of the sales process, if you like, for me is done before I even speak to them. And that's all very purposeful and strategic because I want them to almost on the call sell themselves for the deal rather than me. I'm not trying to sell any of the deal here. You know, I'm, I'm very carefully saying, well, if this works then cool, let's look at how we can put this together. But I'm not attached to it particularly. And I tell you know what I'm talking about here, Brad. The more you are like that, the more people want it.

Yeah.

So it's, it's very, you know, and it took a long time to get to this because I had to really figure out, you know, and this is all genuine. It's not me acting or trying to be something I'm not. This is just the way, you know, I'm very. When you become an investor in your mind, and here's the way you got to look at this. So for everyone listening, the way you look at it is this. Imagine you've got 10 million in a fund and you're looking to invest in people. How would you behave when you spoke to potential investment targets? You're not going to just give away millions willy nilly because it's going to Be gone and you're going to lose your investment. But it's the same when you invest your expertise and your time and your energy.

It's the same sort of capital, but actually it's even more valuable. We can always make more money, we can't get more time. So you've got to really be very shrewd and be very unattached. You know, it's hard because you get emotional, you think, wow, what a great deal. I want it, I want it, you know, I want to close this deal. And the more I've done that, the more deals have gone south. So I've learned to be unattached but very, you know, if I see something good, then I'm going to be calculated about it and I'm going to really position the value very strongly and I'm going to make a very shrewd offer and I'm going to get that deal. But yeah, it's funny when you become like that, people take you more seriously because you are an investor, then you're not just someone who's a consultant trying his hand, trying his luck. You're someone who can add real value and you've got a real investment strategy now where you're like, I'm looking for these types of people, these types of businesses, these types of potential and upside. And when I see it, I know what I can do to help them. I know I've got.

Plan and a strategy already that I can share with them that will fit their criteria, my criteria. And by the time it comes to making an offer, I'm very, very confident that we'll get what we need, you know, on both sides.

I love that. I love that. And it's a, it is a long term thinking, big game approach.

Yeah.

To the entire thing. And you know what's great about it is it elevates you past, I mean, a lot of marketing consultants and professionals are looking for a unique selling proposition. What makes me different than the guy down the street? This makes you different? Yes, this makes you absolutely different. And I know that, I mean this has been a part, it's been a smaller part than it will be going forward of, you know, my business practices. But it'll be, it's something that I'm constantly trying to.

Do more of because it really is where I personally want to go. And I also know this. Some of the stuff that you have in your brain that we're not really talking about right now because we could talk about this for hours and hours and days, is some of the microscopic Details that make or break a deal that.

That secure your position, that keep you out of risk and harm's way. But at the same time, you have a lot of interesting things you do to reverse the risk and position it so that the equity partner that you're working with also feels extreme amounts of comfort so that they're not worried. Because I know that that's still this nagging thing in the back of people's mind. Like, man, this sounds like so complex, and I don't think people will go for it. It's a huge limiting belief. But I know from talking to you that you've got a lot of strategies and tactics that allow you to overcome almost any situation. So we're coming to the end of the show here, but I want all the listeners, like, who are. Who are still with us, and hopefully I can't imagine we're losing anybody because it's been just amazing and fascinating and I appreciate you sharing all this. If they feel like, okay, I like this, I don't know if it's right for me or not, but I need to get this into my brain. I need to have this. These tools so that it's an option for me. Do you have any resources or anything they can do if they want more, Luke? Because there's got to be some curious people out there.

Yeah. And let me just speak to this really quickly, Brad. So you know that I, you know, so I wasn't interested in teaching this stuff because I'm not the guru. I'm just. I'm the guy who does it. So I don't teach it, I just do it. But here's the thing. You know, it's kind of like when someone. So a bunch of people found out what I was doing. You know, I've talked a lot about it with you and various others, but some other people were like.

I really want to do that. And I looked at their business model, and this could be, by the way, this can be people working one on one or even one to many. So even people doing leverage coaching or masterminds or group coaching can actually do this, too. But I had a bunch of people asking me, could it work my business model? So I looked at it and I said, yeah, absolutely. You could. You actually leave in millions on the table by not doing this. And so some people just said, listen, what will it take for you to help me do this? You know, implement it in my business? So I said, look.

So I took on a few people one on one. And for example, one person I took on One on one, great guy, really skilled at what he does and valuable service. And he's not a coach or consultant even, he's a service provider. He provides a marketing service like funnels and things like that, so that the marketing kind of flows and you get leads and you capture them and you nurture them and you sell products to them. Now, he'd never even considered doing this, didn't even know that you could do this. Like most people probably listening. And I thought, I don't know if this is going to be possible for him to do it because I don't think that I'm particularly special, but I am very different. So maybe not everyone could do this. I thought. So I thought, well, why not just try and experiment with him and see if it works. So three weeks into working together, he had four equity deals on the table and he's just, I had to tell him to slow down, he had too much deal flow. So I absolutely know that it can work for anyone who fits a certain criteria. Now the criteria would be business consultants or coaches or service providers who serve businesses. You know, they, you know, you yourself, if you're listening and you fit that criteria, you will be at least earning six figures plus doing what you do. You're highly skilled at what you do, so you get tangible, real results for your clients. Now if you're in that stage already, then there isn't really much that can stop you not doing deals like this. What you need though is you need a process and you need a framework to do it. So I've really, I suppose, boiled down my process into eight kind of chunks, eight modulars if you like. Now that goes from your positioning, so your mindset and your position and I'm not into all this woo, woo mind stuff, but mindset stuff. But it really is true, like you said it earlier, we discussed this a lot. If you really don't believe you can do something, you won't do it. So I've boiled it down into, you know, the mindset and the positioning. So you believe it and now they believe that you're an investor. Then you go from, you know, your deal criteria, how do you really, you know, what do I do to have a criteria for the deals I'm looking for? You know, and you go through all these steps all the way to, you know, how do you attract and qualify the prospects through to how do you do the consultation and negotiation stages, how many consultations should you have and what should you say, like scripts and everything through to the final thing where you actually you know, you do the deal. And you know, one thing you mentioned earlier, I have like a process which I develop, which when you do hit a objections from prospects or, you know, they're, you know, almost afraid to do this because they're just not sure how it will work. You can completely, you know, overcome those objections and fears and concerns with this strategy that I use which pretty much removes the risk for them. So by the end, you know, I've got the process and I've also got the legal documentation, the due diligence process that you need to go through. And so I've got the whole process really, that anybody who is a skilled business consultant or service provider can use in their business. So essentially, if people would like that, like I said, I'm not really interested in having a big coaching program or seminars about this, but I am open to talking to a few selectives, high caliber individuals who want to implement this in their business. And you know, the thing is this, you have to be somebody who really understands the concept that. And I've kind of coined this phrase that consulting fees will pay your bills, but consultant for equity will make you rich.

Mm.

Literally. Literally. I mean, you know, think Warren Buffett. All these people out there, what do they do? They acquire equity, they acquire the asset, they buy it. They have skin in the game. They don't just charge fees. You don't see any big consultants on the Forbes billionaire list. You see investors. So the bottom line is you charge fees for something, they will walk away with millions in upside. You'll walk away maybe, you know, if you're lucky, 100k per client, if you're lucky. But if you get equity, I mean, whatever upside you create, you own that as well. So not only do you get your fee, you also get whatever the company is worth when it exits. So that's what I'm, you know, that's what I want to help other people to do. You know, create more than just a consulting business. And, and just to round up, I mean, think of it this way. I was talking to one guy and you know, this individual literally charges a fortune. You know, he really makes a very good living doing this. But he, you know, when we looked at it, he, you know, I asked him, I said, well, what's going to happen when you stop consulting? And he said, well, the business will stop and the money will dry up. Said, exactly. And so what we said was, what if you, you know, he's got a whole portfolio of clients? I said, what if you had a piece of equity just 5%, 2% in each of these businesses, you know, 20, 30 businesses. And these businesses keep working for 10, 15, 20 years longer. Well, what happens when they all start to sell? I was like, you get a big lump sum here, you get a big lump sum there. That's your retirement, and you're going to retire very, very well. So that's what I want people to grasp. You know, this is. This is a wealth creation strategy. This is not just, you know, paying bills. This is. This is wealth creation.

Yeah. And it's. It is such an important. It's just such an important concept to grasp and to be able to do that. So how. How can they get more. Did you say that? How they can get in contact with you, get more information on this.

If people want to find out more and they want to talk to me about this, like I said, I'm not interested in.

Selling you on some big.

Training package, big info product that you're.

Like, hey, I'm not interested in some $9.99 info product.

If there's a fit and I think I can help you and I believe in what you do.

We can discuss how I might be able to help you and mentor you one on one to do it. Simple, really. So if people want to reach out, you can reach out to me by my coachingukehavard.com.

Or you can reach me on Facebook. So just lukehavard, fairly easy to find or LinkedIn or various other platforms. You might find me on social media. So, yeah, just reach out and tell me that you were on Brad's show and that you heard me talking about equity consulting model, and I'll be happy to see if I can help you.

Love it. Absolutely love it. Well, thanks again, Luke. I appreciate it, you taking the time and opening the kimono and sharing some of the details and the strategies on this. Folks.

If you're intrigued by it, I'm suggesting you get a hold of Luke and you just find out if this is something for you or not. Luke and I literally talk every week. We talk about a lot of things, much 10 times deeper than this and very, very real. And there's a lot of deals we're personally working on together. So I think that it's a solution that you need to have at your fingertips. If you're a business owner and you're not a consultant, but you're like, well, shit, this guy could, you know, help me grow my business as well. Maybe I don't mind giving up some equity if he's able to perform and you can see Luke is not in here just all about a cash grab and can I get the money. He is here to make a huge difference for some business owners and obviously attach himself to the performance and everybody makes more money together. So I encourage you to check Luke out. Also listen to his previous episode on this show. As I said, I'll put a link in the show notes and.

If you are enjoying this, the best thing in the world that you could do is just share this episode on Facebook or Twitter. Tag me in it. Tag Luke in it. Let us know that you you're loving it. And as always, you can email me with any questions@askbradaconwrappedbusiness.com Luke thanks again brother. I appreciate your time and look forward to talking to you here real soon.

Thanks man.

Talk to you guys soon and stay tuned. Subscribe. See you next time.