The Offseason Book: Chapter 7: Start a New Brand (Cure 5)

Chapter 7 Start a new brand the fifth and final cure for seasonitis is to start a new brand. We've looked into several strategies. Tier 1 lockdown mode which involves shutting down and laying off staff.

Boost sales through better advertising and upselling. Providing adjacent services through cross selling. Cure 4 establishing recurring maintenance programs Lets discuss creating a completely new brand for your business. This cure helps businesses when the first four cures don't completely fix. Q4 collapse. It's a last resort meant for implementation after you've tried the previous approaches. If you can't reach over 50% of your peak monthly revenue or keep facing losses in off seasons, then it's time to think about cure 5. Lets shift perspective for a moment to manufacturing. What does a factory do when demand for its products drop a lot? They could shut down production, turn off the conveyor belt, turn off the lights and lay off everyone. That's the same as Cure one lockdown mode. The factory could boost sales by advertising and growing its market share for the limited demand. That is our second solution. Sell more and better. The factory could sell similar products by making small changes to the current conveyor belt. Tier three Sell an adjacent service. The factory might stabilize revenue through recurring contracts. They could enforce regular shipments on a monthly basis year round. This would stabilize production demands and cash flow. That's the equivalent of Tier 4. They could finally start a new production line. This line would feature different products and demand cycles. R cure 5 cure 5 carries high risk and high reward. The reward potential is high. You're reaching a different demand curve that isn't part of your core service. But I want to emphasize that this is a last resort. Improve your current business using cures 1 through 4 first. Then think about creating something new. Many people jump to using cure 5 before it is appropriate. As Alex Hormozi says. Focus on more and better before new I looked at the climate, demographics and Q4 performance of each Augusta location. About 31% may not achieve a complete cure for seasonitis with the first four cures. That's when Augusta Christmas lights and augustalights.com were born. Why Christmas Lights? Several factors made it ideal. It targets the same customers. People who use lawn services usually don't put up their own holiday lights. It requires no major equipment purchases. We use the same trucks and crews. Adding it to our liability insurance was easy. We didn't need a separate business entity. Demand for Christmas lights is zero during our spring rush. It spikes right after our lawn season ends in October. Christmas lights installation is also a recurring service. We can come back each year. And the margins get much better after the first year. This is because we reuse the same lights. The cash flow is great. We collect payment upfront, buy the lights, and then schedule installation. We won't spend any cash up front in later years. We will earn even more profits with the same materials. What are the advantages of starting a new brand? First, you can reduce your per hour overhead recovery cost. Businesses spread fixed costs like rent, utilities, insurance and wages across more hours worked. For instance, if your fixed expenses are $16,000 each month, that's $192,000 a year. If you have six workers each working 1500 hours for nine months, you will have a total of 9,000 labor hours. Dividing 192,000 by 9,000 hours gives you $21.33 per hour in fixed costs. But if you create a new brand that keeps your crew busy year round, at 2,000 hours each, you now have 12,000 total labor hours. The same $192,000 in fixed expenses divided by 12,000 hours drops to $16 per hour. That's an extra $5.33 profit per hour. You achieve this by spreading fixed cost over more productive hours. You can also promote your new service to current customers with special offers. Your established customer base becomes your initial market. But starting a new brand comes with significant warnings and risks. It often becomes a distraction. It's exciting to launch something new, but you soon discover unexpected problems. Avoid Shiny service syndrome. Don't keep jumping to new services or industries. The next one may seem better, but it often isn't. The skeletons in the closet will reveal themselves. Focus on your core business instead. Several specific risks deserve mention. First, customer confusion. Wait. The person who mows my grass also does painting. This confusion can damage your brand's reputation. Second, you might dilute your marketing efforts if you have $10,000 for ads. Splitting it between two brands means they both get less exposure. You won't get the six or more impressions needed for conversion. Training employees on new services, uniforms and procedures adds extra costs and time. Look at McDonald's. They can hire a 16 year old with no skills. In days, that teen can start earning $120 an hour for the business. McDonald's does this through systematization and simple services. They're not trying to train employees on 50 different things. They do not customize each burger. They simplify and standardize the process. They simplify and standardize the ingredients. They simplify and standardize the training, restaurant layup and menu design. They avoid complexity and customization. Adding a new brand is the easiest dollar to earn in a short amount of time. Taking your core service and doubling it will be harder, so you'll always make more revenue with a new brand, at least in the beginning. Plus, it's fun to create a new LLC website and logo. Buying a new website domain is the entrepreneur's version of crack cocaine. We convince ourselves that is good because of higher revenue. We made hundreds of thousands more dollars, so it must be good. This is hard to deny or refute, but but in truth, you might be ignoring your main business. With the right focus, you could achieve better results. Many people choose Cure 5 due to its excitement, but Cures 1 through 4 have a much higher probability of success. You're more likely to succeed by improving what you already do. Starting something new can distract you, dilute your marketing and complicate employee training. It also brings extra work with trucks, equipment and logistics. Let's assume that after all these cautions, you still need to start a new brand to solve your Q4 collapse. Do you need to start a new website to start a new brand? Yes. If a service page on your current site works, it counts as cure 3 adjacent service instead of cure 5. Do you need a new legal entity? That's a qualified answer. In most cases, a DBA doing business as or trade name is enough. It allows you to run a different brand with minimal legal or financial issues. This is what we usually do for Augusta Christmas Lights. You'll need a separate entity for different liability, protection or tax benefits. This might also be useful if you plan to grow the second brand bigger than your main service. Consult your accountant and attorney to determine the best structure. Should you create a new Google business listing? Yes, but keep it updated throughout the year. You can't let it sit inactive for eight to nine months until your off season returns. Alternatively, you can change your business name on Google to include both services, e.g. augusta Lawn Care and Christmas Lights. This might trigger re verification from Google, which can be a hassle, but it also means you won't have to manage two separate accounts. I recommend using a business name that echoes your current brand. This will help with cross selling. We didn't name it Billy Bob Christmas Lights. We called it Augusta Christmas Lights using the same mascot with slight variations. This helps customers identify the connection between brands and simplifies cross selling opportunities. Here's a case study from Joel Heck at Augusta Lawn Care in Lafayette, Colorado. He said Augusta Lights were a great addition this year. 36 installs and $37,000 in revenue. November was our best month with $65,000 in revenue and $24,000 in profit. Essentially, it added a 13th month of revenue for the year. This was his best month of revenue in his first two years of business. Jason Murphy from Augusta Lawn care in Middletown, Kentucky, reports, Christmas lights transformed my business. In three years of doing lights, we went from burning through $100,000 during winter months to adding $100,000 in profits. That's a $200,000 swing in just three years. Now, five years into lights, Q4 is by far our most profitable quarter. Brian Payne from Augusta Lawn Care in Rockport, Texas, shares, we don't do winter services, so year round mowing and Christmas lights have been our two tracks. Christmas lights have added up to $100,000 in revenue in Q4 during our best year and added $18,000 our first year in a tough market. He emphasizes that Christmas lights can determine whether you lay off employees or not, whether your family has a good Christmas or none at all. On page 22 of your workbook, list three new brands or services you might start in your company. Practice pitching one to someone as if they were an existing customer. For example, sell Christmas lights to a customer who already uses your mowing services. Practice your pitch. This way you can turn many Spring Rush customers into off season revenue. Remember, Tier 5 is a last resort. Do not jump into starting a new brand. Examine cures 1 to 4 first. Only use cure 5 to treat seasonitis if you cannot solve Q4 collapse without it.