this ONE EQUATION got my service business to $1M revenue

People always wonder, how can you grow your business? What should you do for marketing and advertising? Today I'm going to be sharing with you the only thing you really need to know when it comes to knowing your numbers to know what's working for marketing and how you can grow your business past a million dollars in revenue and grow very quickly using this one strategy.

Now there's plenty of books about sales and marketing and advertising and branding and all that good stuff and we could go down the rabbit trail and there's certainly value to doing that. However, if you zero out and step back for if you want to grow your service based business to as big as you want it to be, whether that be millions or just getting past six figures, or getting a side hustle going, if you want to deploy capital, you want to spend money on your business. Typically the fastest way to grow the business is to spend that money on marketing. Just getting more trucks, just getting more equipment, just hiring people does not bring new revenue to the business. How you get new revenue is you get new customers and, and how you get more customers. You have awareness, you bring awareness to your products and services and how do you bring awareness? Typically you're going to advertise, you're going to market, whether that be online, whether that be in person, whether that be via print marketing. All of these are absolutely great ways and I provide a lot of these resources in the links below in the description. But there's really just one thing you gotta know and there's a few numbers that you can calculate relatively easily to know what's working in your business and when it comes to marketing, advertising, and is it actually working? And if you know these numbers, you can theoretically infinitely scale. Now what infinitely scale means to me is the money that I spend on marketing. I know I have a predictable result and as quickly as possible I'm able to get that profit, take that profit, and if I want to keep growing, keep that infinite loop of growth going, I can put the marketing dollars back into the business and spend more money on advertising. So what's the formula? All you really need to know is this, how much do I have to spend to get a new customer? That's also known as your customer acquisition cost. How much do I have to spend marketing and advertising on average to get a new customer? Then what I got to know is, well, what's the value of that customer after I've made the sale? And you got to kind of think about this because it's not always easy with service based businesses to determine the value or the ltv, the lifetime value of the customer. It's always easy because you have recurring services. Sometimes it'd be easier if you were selling a $5,000 product to know that, okay, if I spend $100 on my customer acquisition costs, I sell a one time product for $5,000. Relatively easy. It's a little bit harder to determine the ltv lifetime value of a customer when it comes to recurring services like mowing or cleaning or any sort of maintenance on a home improvement business. So how do you determine lifetime value? Well, here's a quick way to do it. Ask yourself what percentage of your customers leave every single year? This is also known as your attrition rate. Number of customers, the percentage of customers that leave every year. Maybe they pass away, maybe they move, they sell their house. What percentage of your custom just leave or stop service? Maybe they're unhappy, there's customer service issues, they're not satisfactory service to them and they leave. What percentage every year make you have no more customers? Well, that's called attrition. So what you could do is say, okay, if my average lifetime value, if I'm trying to determine what that is, let's just say, for example, I mow people's lawns and I make $1,000 per year in revenue from the average customer. Now if I can also assume that I lose about 20% of my customers every year to attrition because they move, they pass away, they're unhappy with my service, whatever it might be, then I can assume that I have an average lifespan of five years for that customer. Again, 20% attrition. This would assume that I have an average five years per customer, which would then assume that I have $5,000 in lifetime value for the customer. That's $1,000 per year multiplied by five. So now the question is, well, is it worth it? Because there's one more thing you need to know, and that is what is your profit margin? Because I know what my customer acquisition cost is, I know what my lifetime value of my customers in terms of re, but what is the profit margin on that revenue that I get from the customer? Let's just assume that we make 20% in net profit. This is after all your expenses after you as the owner have been paid. Let's assume we have a 20% net profit margin. So on that $5,000, I'm going to make $1,000 in profit. So this is where the infant money loop begins. Because if I can get a customer theoretically for under $1,000, I should be able to Keep the growth of of my business going and infinitely scale it. Because every single dollar I spend in marketing results in more dollars eventually in my business. The problem is I don't want to wait five years to get my money back. I want to have a better return than waiting five years to get. Take, you know, my $1,000 I spent on marketing and then get my $1,000 by getting the customer. That means that that customer acquisition cost would be really, really bad. I want my customer acquisition cost as low as possible. I want my annual lifetime value of the customer as high as possible, and I want my profit margin as high as possible. Because the my customer acquisition cost really low and my lifetime value, the customer really high and my profit margin really high means that the discrepancy between customer acquisition and then the lifetime value that customer is extremely high. And that means I can get the money back from that customer very quickly after spending the money on customer acquisition, because that's the goal. I want to spend $10 on marketing and within a matter of a few weeks get that money right back to me so I don't have to go into debt. I don't have to go get other money and get lines of credit to fund my growth. I can do it sustainably and really fund the growth of my business with my own cash as long as I can get the cost of the acquisition, the customer acquisition cost back into the business in the form of profit as soon as possible. So let's say, for example, using our example of $5,000 is a lifetime value of the customer, and we came to that number because of $1,000 per year to mow their lawn, and we on average keep them for five years because we know the we have a 20% attrition rate. So that $5,000 became $1,000 in profit because of our 20% margin. But now the question is, what is our customer acquisition cost? Because that is very, very important. And you can always optimize your customer acquisition cost. Having a great website is why we started lawn care web design.com and homeservice web design.com to help you grow your business and get leads for cheaper so you're not always having to rent space from Facebook and Google and getting leads to your, to yourself and to your business. But the goal is to get that customer acquisition cost low. Let's assume that we have to spend $50, $50 on customer acquisition. In other words, I have to spend $50 to get one customer to actually buy my mowing service. So in theory, I'm taking $50 and I am turning that into. This is the beautiful thing about small business. I'm taking $50 and I'm turning into $1,000 over the next five years. That is incredible. I'm literally having a 20x return on my money. 50 dol.

Dollars in profit over the next five years. Let that sink in for just a moment. The returns on that is phenomenal. There's very few stocks over the course of 5 years will return 20x on the money that you originally invested. The return on investment is incredible. What it comes down to is, do you know those three numbers? Do you know your customer acquisition cost? Do you know what it takes to spend on advertising to get a customer? Then do you know once you get that customer what the revenue per year and the lifetime value of that customer is? And then do you know your profit margin? If you know those three numbers, you can literally determine what the return on your investment is when it comes to marketing and spending money on your advertising budget. If that was helpful, check this video out here where I talk about another part that's very important to your small business when it comes to marketing, because we can talk about advertising all day long, but if you don't know this one hat, you will not be able to grow your business. And it's very, very simple. I'm Mike Andes, founder of Augusta lawn care. We'll see you tomorrow.

Sam.