I Fixed These 4 Things and Beat the $1M–$3M Swamp

All right, so I'm listening to an Alex Hormozi podcast, and he's talking about one to $3 million businesses being the swamp. And that fundamentally, things have to change to go from 1 to 3 million to a 5 to $10 million business. And as I'm listening, I'm like, oh, my gosh, I actually beat the swamp. I was at a home service business that was stuck at $2.7 million. And in the first two years, well, first they went to 4 million, then they went to 5 million, and I beat the swamp. And I was starting to think myself, okay, well, what exactly did I do for this home service business to help them break out of the swamp? And I started at this home service business. This was back in 2018. I was the director of business development. And when I went there, the business had been around for 20 some years. They had done five years straight of 2.3 million, 2.5, 2.7, 2.6, kind of just stagnant growth. And initially when I came in, it was just grow at all costs. Whatever we need to do, we need to fix all the problems and grow. And so in this video, I distilled it down to four reasons why they were in the swap and also four things that we fixed in the business to help them get out of the swamp. And the goal is that if you're in that 1 to 3 million dollar range, this video is going to be exactly how we solved it. They went 4 million, 5 million, and then sold to private equity, and we beat the swamp. All right, so the first thing is, why is one to three million dollars a swamp? And really, Hormozi talks about this. It's that the hustler has to die and the leader has to be born. What gets you to 1 to 3 million is hustling, building relationships, sales, doing jobs, being out on the truck, making sure that your CSR or admin or calls get answered, your estimates get done. Kind of revolves around you as the hustler. But to break through to the next level, the hustler has to die and the leader has to be born. So the first thing that we identified was that the business can't run only through the owner. What that means is that the business owner can't be the one with all the ideas and, and all the execution. You have to have team members that can come up with ideas and execute, not just you coming up with ideas and running around trying to do all this stuff. The second reason why it's a swamp is because usually to get to 1 to 3 million. You're working with cookie cutter marketing companies. And when I say cookie cutter, I'm saying like, you got some people that do Facebook ads over here, you got some people to do SEO, you got some Google Ads, something like that. But what you're not doing is using your data and automations to tie it all together. Usually in the swamp area, you're getting on a call with a marketing company and they're asking you what the return on ad spend data is or how things are performing. And it's very hard to grow your business when you are the chief marketing officer trying to figure all this stuff out and also all the other stuff. Chief everything officer. The third thing is that all the sales run through you. So when, when you are the only one that's doing the sales or even just the big ticket sales, but you don't have an overlap of sales, if you go out on vacation or you go out and do something else, usually in your business, you might be giving 20, 30, maybe 40% of your time to sales. The rest of it is going to a bunch of other stuff, maybe CEO stuff, maybe admin stuff, maybe marketing stuff. And you don't have a dedicated 100% of the time person focused on sales only. And again, this is why it's a swap. And then the fourth one, and this is a big one, is that usually, you know, you're doing 1 or $3 million, you have 10, 20%, maybe 30% profit margin. If you're crushing it. So you're making, you know, 200, 300, $400,000 plus, and you're like, okay, I'm crushing it. Like, this is the most. I didn't even think I could make this much. And I'm making this, this is what, what we uncovered at our business. I'm making more than I ever thought that was possible. You know, I have a high school degree. This was my exact situation. And I started this business, you know, from scratch. And Now I'm making $600,000. And it's very, very hard to take that money and redeploy it back into your team where you have to kind of buy back your time. And this was a even me, you know, full transparency in my business. This is something that I struggle with a lot. We're in the swamp area as well. And you know, I repeat it once, I'm going through and beating it again. But it's the, you know, making a bunch of money. But then you got to take, you know, 100, 200, $300,000 off the table and hire great people and hopefully it works and build systems so that way you can go to the next level of, let's say, you know, 7 to $10 million business making 10 or 20% and you go from making 4 or 500,000 to making 1.5 or 2 million. It's a whole shift, but it takes, the hustler has to die and the leader has to be born. And I'll, and I'll give you one other bonus one specifically for home service businesses. Why this is a swamp is because lead management is broken. It's usually not a lead problem, it's a lead management problem. Leads start coming in from all over the place. Especially like when you start getting 2 or 3 million, you have leads all over. You have referrals coming in, you have past customers, you have Google, you have, you have ads, any other aggregators that you're doing. And they're coming from all over messaging platforms, texting, emails, calls. And you don't have a central place to manage your leads because in your CRM, this exactly what we face. In your CRM, there's not a lead management process. So what the first iteration that we came up with was everything goes into an email, you print it out or calls get printed out and you go into a binder and then you have this binder and every time you call someone, you check a box and you do left message. Obviously that's, you know, very, very basic. But any, anything is better than no lead management process which most companies 1 to 3 million, no lead management plan in place because you just have a CSR or someone who's more of an order taker, who's not thinking bigger picture of how can I elevate this process to get more juice out of the squeeze. They're just running around doing tasks. All right, so here's exactly how we beat the swamp. And I'm going to go through an exact order of what I implemented in this business to solve this problem. And, and the first one goes right into this bonus one, which is lead management. And when I talk about lead management, there's really three parts. The first one is calls. Calls come in and usually this is the bread and butter. Calls are coming in and you don't have a call script or a process to convert the calls into actual leads or into actual jobs because it's just a one shot that you get, which is you get a call and hopefully you book a job. But there's a better way to do it and the better way to do it is when you talk to this person, you, if you don't book it, you have some type of a follow up process that goes to them. So let me give you an example. Someone calls in and says, hey, I want to get X, Y, Z done. How much does that cost? Okay, Usually a business that is just running around swamp, right, they got so many things going on, they just say, well, you know, tell me a little about your home, tell me a little about this. And they might get to the point of giving them some type of a price estimate. I'm not saying that's bad because like you know, gutter cleaning, duct cleaning, these types of companies that have straightforward pricing, then, you know, give them the price. But you got to have this follow up process which is what's the best email to send over this professional estimate to? This is the first one, you know, Then you get their email, send them the estimate, then they have some type of an email auto response. Same thing. If they have questions about pricing and you don't want to give it, you might have a pricing guide or a breakdown of all your pricing that you can text or email over to them to the next step. Now if you don't get questions about pricing, but someone's like, hey, my H vac unit is not running properly or I need to have someone come out and take care of this or do this, whatever. What you need to do is have a systemized process to book that job on the calendar and get over any type of price hurdle or objection. Usually your booking rate. And this is the next part to this lead management plan is your call booking rate. You need to know what your call booking rate is. Because if that's the example and you just go out on a dispatch fee to fix things, your booking rate should be 60, 70%. Most people don't know what their booking rate is. And here's a very simple way to track it. What you should do is have your CSR every single call that they get on a piece of paper, have them put a dash like this and then if they book it, have them make an X. Then at the end of the day they got 10 calls and they have five X's so they book 50%, then have them send that to you. This is a very basic way to track your booking rate. I highly recommend fixing any type of call script, any type of booking rate thing, issue that you have that, because then it's gonna lead to the next, the second step that we fixed. But before we get to that, inside of the lead management plan, you need to have a lead management process. So I kind of hinted at that. A call comes in, a form comes in. Any leads coming in? You need to say, okay, I called this person. They didn't answer or they didn't book. They need to go into a lead management plan. Usually I would recommend having this at least a three day nurture sequence or 14 or 21 day nurture sequence. And how does this look? You talk to them on the phone or they submitted a form, you called them, they didn't answer. Now they go into a bucket, and in that bucket they get a text, an email drip campaign over time to nurture this lead and ultimately get them back into the funnel. So with this business, for example, when we solve this problem, it immediately alleviated the issue of our, our jobs are light tomorrow or we don't have any leads coming in. So we don't have any jobs to service later this week because we had tons of leads inside of this process that now we could call when we're slow. We also had leads that we could send promos out to to get them back into the funnel to get them on the books. The biggest thing is having some type of a lead management plan. So we talked about in step number one that we fixed was lead management plan. So we talked about call recordings, then having an actual lead management process and then the third one. And this really transformed the business was having goals. And when I say goals, I'm talking about having a job booking goal as a team. So at this company, we had about four customer service representatives, and we didn't know, you know, how many jobs that we were booking or what was matter. We just, you know, whatever came in, came in. This is why they're in a swamp. So what I did was I looked last January and I said, okay, last January we booked 500 jobs. This January, if we want to grow at 20%, we need to book 600 jobs. So on the whiteboard in the CSR office, I wrote 600. And then every day I would go in and update how we're doing towards these jobs. And I broke down every single CSR based on their booking rates and their call volume. And I gave them each a goal. And I said, hey, if we hit this goal, if we go from 500 to 600, we're gonna have a big party, we're gonna go out to lunch, we're gonna go out to dinner, we're gonna get pizza, we're gonna go out to escape room, whatever it is, whatever they want to do. I would even Say, hey, I'll let y' all decide. Even if it's like, okay, if we hit 600, I'll give everyone, we'll have a bucket of $600 and we'll break it up between four people so you make an extra 120 bucks or 100 bucks, whatever it is. So having a goal inside of your lead management process will help you solve this job booking problem. And this, the reason that I say that this is the first thing to fix is because you don't want to fix marketing, you don't need to fix sales. You need to fix the initial intake, because the next thing that we're going to fix. The second thing that I fixed was the actual marketing process, because once you have your lead management plan in place, all you gotta do is just get more leads. And that's what we did next. So the second thing was a lot of times, and my company included, we were working with a cookie cutter marketing company. The cookie cutter marketing companies, you know, they do SEO ads, you know, fluff stuff that you should be doing. But to go to the next level, you need a company that's going to take your data and make sure that everything is working properly. And what I mean by that is your return on ad spend every single month dialed in with the process. So here's exactly what we did. We're spending money on Google Ads. You Yelp meta Angie. But we didn't know what was working. When we reach out to our marketing company, they would say, oh, yeah, you got 10 leads from your Google Ads. You spent $2,000. So it's $200 a lead. And I would say, well, who are these leads? And they would say, oh, well, it's these people over here. And I'll say, okay, well, did they turn into any revenue? You know, I don't know. You need to go into your CRM and figure this out. And again, it was on me trying to fix this in my business. And nine times out of ten is on the business owner trying to fix five, find out this information in their business. So when we solved this problem, we said, cool, Yelp's crushing it. Let's go spend more money on Yelp Google Ads, not crushing it too well. So let's take that money and allocate it to our Google local service ads and let's dial in our Google search ads to get that ramped up. Once we knew our numbers, then you can make better decisions and you can figure out, okay, I'm going to take a step back with the leads we Know that we need to book 600 jobs. We know that we're booking at 60%, so we need a thousand leads to book 600 jobs. Thousand leads, 60% booking rate, 600 jobs. Then how do we get 1,000 leads? We need to figure out what our cost per lead is and all these different channels. How much is it going to cost us to get a thousand leads? It's just a numbers game, but when you don't know the numbers, you can't make the best decisions. And that's the problem that a lot of companies face. The third thing that we did in this business was buying back your time. And the owner was very strategic about this, which help teach me how to do this as well. And what he did was he realized that he's really good at being a visionary. He's good at the big ticket sales, but what he's not good at is running the day to day business. And I was the director of his development. So I'm the director of sales, right? I'm just focused on growth, growth, growth all day. Revenue, revenue, revenue. And what he's looking at is okay, you know, we had a little back and forth because I'm like, we need to execute like we need the technicians out on jobs, we need our CSRs running on at full steam. And I didn't have the authority to run all these things. We needed a COO and buy back your time. For a lot of businesses, right, they're making the 4 or 500, $600,000 to hire someone for 100, $150,000 is a big chunk of the money that they pay themselves or the profit that's left over. And so it can be like, oh my gosh, I'm taking, you know, 10, 20, 30% of this and giving it to someone else. It's a lot of money, but it allows you to then buy back your time and elevate the company to the next level. And that's exactly what happened here. He hired a coo, a GM type person to come in and run the company. And it was like rocket fuel because I had all of the systems and processes dialed in from the sales and marketing side. We had an ops person that was running the technicians, like, you know, head tech, lead tech person that was running. We had 28 technicians. So someone just to oversee the techs and manage them. And then having the COO at the top to make sure that it all worked together. Who's hiring these people? Who's making sure that everyone's executing. And of course it wasn't all rainbow and sunshine, right? I'm pushing revenue. He's like, hey, you need to chill out, let's get all this stuff in place. But buying back your time is essential to get to the next level. And actually there's a book on this by Dan Martell called Buy Back youk Time and he has this five run replacement ladder admin. So hire a csr. If you're like a million dollars and you don't have a csr, that's the first thing you got to hire or a good csr. Office manager. Number two, delivery. Usually if you're at a million dollars, you have other technicians or people doing the work and most people skip the first step, which is admin, but someone to help you manage your emails, that kind of stuff. Then the technician. The third one is marketing. I mentioned cookie cutter marketing. You need to level up to the next level, not pay these people to $2,500. They're not doing all the stuff that you want them to do. You need to go to the next level. Four is sales and we're going to talk about that in a sec. And then fifth is management. So that's the buyback loop, buyback rungs and, and what you need to do in that order. We did it a little bit different. But number three, he hired the COO buy back his time. And the fourth thing is sales. So kind of different order here. With the fourth rung. What he had to do was find other people in the business who could sell. So he had CSRs that were booking jobs, going out, techs were selling. He was, the owner was a really good salesperson. So he would be doing the big commercial sales. Not bad. Of course, you know, he has his day to day running with residential stuff. But he needed another layer because let's say he's out or he's not spending all of his time doing sales or he needs to go do something else. He needs to have other people that can sell. So he actually trained me on how to go out and do commercial sales so that way I could support him and close more deals. And I think a lot of people run into this, which is they are the best salesperson. They're worried about giving up the sales because that's their lifeblood of their business. And instead of hiring more people or doing training, they just try to hire other people and just focus on sales themselves. I don't disagree with this strategy. I know with that, that buyback your time, five run replacement ladder, you can still do the sales. I still do the sales for my company, we have a salesperson that we just hired that we're training up. But I love sales. So I think that you shouldn't own the seat. You can still do work in that seat, but you don't have to own it. You can have someone else who 100% of the time, they're out hunting and doing sales for your company. Okay? And that is exactly how we beat the swamp. We went 3 million stagnant first year, 4 million second year, 5 million. Then private equity came knocking because they were very interested in the growth trajectory of our business and the profit margin. And they came in and said, hey, let's buy this company and let's take it to the next level. So if you're in that swamp area and you need a better lead management plan, a better marketing company, that's not cookie cutter, better sales acumen, understanding the data. This is exactly why I built the company that I have. The owner of that company that I worked at, he literally said, phil, you need to go out and help other businesses do exactly what you've done for me. And we've done that for a bunch of different home service businesses. And I talk about it a lot because I was in the trades. I saw these problems firsthand that he was facing, and I fixed them. And when we fixed them, he grew his business. So that's exactly what we do at my company. If you have comments, questions, I'm curious to get your thoughts on the swamp and things that you've seen. Maybe to get out of the swamp. Drop a comment below and if not, I'll see you in the next video.