Building a $3,500,000 Business for a Stranger in 51 Mins

This is Cody. He runs a custom trophy and plaques business doing $1.7 million per year. It's a family business that's been passed down for 4 generations, but the business only makes 6.4% profit, barely $100,000, and after taxes it's even less. So if Cody wants to pass this down to his kids one day, they're not going to inherit a thriving business, just a low-paying job with long hours and a lot of risk. I'm Alex Hormozi. I own Acquisition.com, a portfolio of companies that generates hundreds of millions a year, and I also sold and built a physical products company, so I'm very familiar with some of the problems that what he's dealing with. My suspicion is the key things that are going to catapult his business are fixing his pricing, scaling his advertising, and figuring out how to generate repeat business from his existing customers. And so first I'm going to dive deep into the business, then we're going to break down all the tactics that he and you can use to scale your business. What's up?

How are we doing?

Let's talk about trophies.

Yeah, so my name is Cody, Cody Shilson. I own Trophy Outlet. Last year we did about $1.72 million in revenue, mainly trophies and awards personalization, about $110,000 in profit, 6.4% net margin. And I'm third generation owner of the company. We've been in business for almost 40 years.

That's amazing. So when I saw his low profit margins, I immediately think, is it a per unit thing that he doesn't have good economics on, which could indicate a pricing issue, or he just needs to sell way more volume based on his fixed cost? And so anyways, I needed to dig to find out more. So what's the, yeah, what's the goal?

The goal is $3.5 million in revenue. I really wanna double of revenue. The reason this goal is so important to me is it's a legacy to me. If I can create a business that's profitable and can sustain itself, that's a fourth generation, maybe fifth generation business.

So who do you help?

So mainly coaches, event organizers, as well as businesses and organizations, as well as gag gift—

yeah—

purchasers.

I got that vibe.

Yeah.

Okay, so how do you help them?

So we offer free engraving, fast shipping. Everything we do is personalized to the business or the individual. They go to the website, to our platform, purchase, you know, add the personalization info, their logo, things like that. And then we fulfill it if it needs approval, anything like that. But most things ship in 1 to 2 days.

Sweet. How do you make money?

How do we make money? All right. So on our website, directly on our website, most of our products kind of land in that $100 to $150 price point. We have products that range from $4 all the way up to $900. So it's a wide range. Most popular item is a 4, 5, and 6-foot trophy, which kind of lands about $89 to $130.

Okay.

And then dash plaques, which are like little car show things that guys collect when they go to car shows. And oh, interesting. Yeah, so it's kind of selling for $1.25, minimum $50, but we sell thousands of them a year.

I've never even heard of that. So how do you get customers?

Trophy Isle started in 1985, you know, this is our 40th year, and we launched our Etsy business in 2019, it made about $70,000 the first year. And then in 2013— or 2023, we launched Amazon and did about $300,000. And then last year we launched TikTok Shop and we did about $270,000 in revenue, but $250,000 of that came in December alone. So we had a video go viral with 20+ million views. That's awesome. So it went crazy. So $250,000 of that came in, in one month. So that was kind of fun.

You guys are blowing these up on the TikTok Shop. And since I'm in charge, I got to be here today to make sure these all get shipped out. If you can keep it going, maybe next week I'll make the fucker come in and they can take care of it. Have a good Sunday. And you sold those?

We sold those.

Yeah.

And not quite family appropriate, but yeah.

No, I love that. And you were able to fulfill on the amount of orders that came in?

Yeah. Yeah, we did about 13,000 of those.

So do you have manufacturing set up? Like, do you—

Yeah, we produce everything in-house.

Oh, right.

So we engrave, cut, glue it, all that, ship it.

So what I found really interesting about these gifts is they're very shareable, both in that like they're funny and you could share like a video about it. On social media, but also because whenever you gift, you literally send a product to somebody else. And so I'm trying to think through, you know, are there ways that we can harness that or at least lubricate that process so we can get more shares, more referrals, more return customers across 4 different channels.

Most of our clients come through online and internal is through SEO and Facebook ads. We just launched Facebook ads in Meta about October, November with an agency.

Yeah.

And then Amazon, we spend about $7,100 a month between agency and ads and and then Etsy, and then TikTok, still kind of figuring that one out a little bit since it all happened in December, but about $2,000 so far in ads there. The channels get super overwhelming because we're spending so much money on ads and agencies and what's working, what's not working, you know, so just getting clarity from Alex on that piece alone is super helpful.

Well, how many customers have you sold so far?

In 2024, direct on our website, and I have this broken out per channel in a couple slides, but total visits is about 90,000 visits to our site. About 2,500 orders, just a 2.8% conversion rate, and about 781 products.

So it's a lot of products. Is everything, everything made to order?

Yeah.

Okay, so it's not, so it's not like you're carrying a ton of inventory, like you've got raw, raw materials and raw materials.

Most of it we bring in from our vendors kind of as we need it. We don't carry huge, huge.

So when I asked, is it made to order, that was an important question because inventory can be one of the biggest costs in a business, and especially with somebody that had that many SKUs I got really worried about it. But because it's made to order, then it's really just like optionality. So then you just look at operational efficiency of like how difficult it is to make all these different things. And I bring this just from my own physical products experience with Prestige Labs, which is my supplement company. You know, you've got to be looking out, you know, 8 weeks, 12 weeks, sometimes 16 weeks ahead of time to make your orders. And that can be a huge cash drag on the business. What's been holding you back?

So I think it's marketing. Fulfillment-wise, we proved that in December we can handle about double fulfillment. I mean, with limited complexity. So I just need more people to the site, more people buying, and we can fill it. So, and also very product heavy with low margins. So working on the margin piece, getting profits up a little bit.

Do you wanna sell this company eventually?

I haven't really had any thoughts of selling, but I wanna create a business that is sellable, so I have the option if I wanna sell or no. But I would love for it to be a fourth generation business someday.

All right, so how many locations do you have? 'Cause you have brick and mortar, correct?

Well, we have one retail location now. We have two locations total. We closed the other retail location down in this production-only facility.

Okay.

So the other retail location, um, you know, does maybe $150,000 in revenue out of that location.

So just like walk-in traffic and whatever?

Yeah, walk-in, email stuff.

Does it break even?

Not really.

Okay, so you have a manufacturing facility and one retail?

Yeah, which also does some manufacturing as well.

Yeah. Is there any downside to just like consolidating to the one?

It's something that we're actually looking at and go more e-commerce and kind of cutting the— Yeah, the retail business.

The fact that he has 2 physical locations is a bit odd given the nature of retail in 2025. The vast majority, you know, and it's continuing to grow as people are doing online sales and especially with the amount of customization that he offers, it makes more and more sense for him to sell to a national base, which he's already doing. So these are the issues. What are the metrics you got?

So numbers, $1.72 million in revenue, about $110,000 in profit. 40% gross margin.

I would have expected gross margins to be higher for this business.

And it varies per product, right? Tons of, you know, like certain acrylics.

I was expecting like, you know, one— like you buy these trophies and they're like, you know, a dollar, and you're like, there's no— like, this is made of rubber, you know? Like, yeah, okay.

So it just varies widely between the products and platform and stuff like that. But, uh, yeah, net margin about 6.4%, uh, LTV $133, and then CAC $1,190. LTV to CAC ratio, 11:1, and that's blended across all channels.

How do you come up with pricing?

Guessing for the most part, or I'll look at some competitors, but there's not really good apples-to-apples comparison necessarily.

Do you do like a cost-plus or like—

Yeah, so I have massive spreadsheets of all of our costs, you know, things like that, factoring labor, and then I just kind of add my margins to it. And, you know, I've slowly been trying to bring that up over the years.

Yeah.

When Alex was pointing out the margins and they're really low, and I agree, I just don't quite know what to do yet, but it's a problem we've been looking to solve for quite a while.

What percentage of customers are new versus return?

I don't have a percentage for that.

Gut?

Gut, I would say probably just on our website and internal customers, probably 50/50.

Okay, 'cause this is a 4-year-old business, so you'd think there'd be a decent amount of return.

Yeah, a lot of our business, I mean, 530, dollars in revenue comes just internal. So emails, calls, things like that. Most of that is repeat business.

The fact that he's getting $500,000 per year in return customers, I'm going to be poking on that to see if there's any unmissed opportunities there that we can squeeze the hell out of that and maybe double, triple that if we do it on purpose rather than on accident. Do you have very high fixed costs in this business?

Not too bad, no.

Because if you have half the business comes in from word of mouth,, I would expect the margins to be higher. Like the net margins. Think of this as a big hypothetical. It's like if we got rid of all of the new customers, and we just sold the $500,000-something from return customers, that should be free customer acquisition, and then we should make money. Yeah, right. Right? But looking at this, I'd be like, I don't know if we would make money. And real quick, for those of you who are new, fixed costs are basically costs that stay in the business independent of how much you sell. So rent is a fixed cost. Some kinds of labor is fixed cost. Your internet connection's fixed cost. These things you have to pay every single month. Variable costs are cost as a result of sales. So if I sell more products, I have more cost of goods, right? I have more maybe labor in creating those products. The costs basically work by their name. They're fixed or they're variable.

Yeah, our COGS are pretty high.

I do think there's a pricing issue. Yeah. Which we'll get to. Okay. But okay, this is good. Your LTV to CAC's pretty strong.

Yeah, it's pretty decent. And I learned that a few months ago coming here the first time. So I started increasing.

And that's not lifetime revenue. That's lifetime. That's gross profit. That's profit. Okay, interesting. So what I'm zeroing in on is, is there a pricing issue and to what extent is there one? Because this is a great litmus test, because if you get free sales, which return customers are free sales, it costs you nothing, somebody else tells them about it and then they come in, right? You should be the most profitable on those customers. And so if at that level of volume you're still not profitable, you either have high fixed costs, which I asked in the beginning, or we might ding-a-ling-a-ling have a pricing issue. It's a 40-year-old business. Who was in charge of pricing that whole time? Like, you took it over from your— I guess he took it from his old man, so like your third generation.

Yeah, my parents ran the company. They didn't have a price structure, they just kind of— yeah, you know.

And on an annual basis, do you review all prices every year? Yep.

Interesting. It's about February, March of every year is when our vendors raise prices, so then I adjust accordingly.

Got it. Was their margins the same when they were running it?

Uh, much less.

Lower?

Oh, way low, like not making money at all. So my mom was running it, I remember very distinctly looking at a product and the COGS on that were like $50 and we were selling it for like $45.

I mean, this does not work.

Yeah, so I immediately raised prices, like, you know, doubled them almost. Okay. And constantly just continually up them.

Yeah, I think I have some ideas there. All right, what else you got?

Channel breakdown, so direct traffic and internal is our, you know, biggest. 13:1 LTV to CAC ratio. Amazon, our highest conversion rate, at 9.6% conversion, and of course the blended 11:1 LTV to CAC.

Interesting. And so you don't have LTV metrics on TikTok?

No, couldn't quite figure that out yet.

Okay. The easiest way to do it is just go total revenue divided by total number of customers.

Okay.

So you did $262,000. Do you know how many customers you sold on TikTok?

I think it was about almost 13,000.

Michael, $262 divided by $13,000. So that's $262 divided by 13— 20. Yeah, clean. Okay, so $20. That sound about right? Average, yeah. Well, that's the average order value, right? We just don't know how many times they've purchased.

Right, which is 1 as of this point, you know.

So AOV is typically used in e-commerce or retail, which is average order value. He's saying that he has a low average order value on TikTok., but it's very different for different customers or on different channels. And so it's valuable to understand what the AOV is by customer and by channel. Now this is a little bit of data, but at the end of the day, if you wanna win, you gotta know your numbers. If we're thinking about the business zooming all the way out, we have the cost of getting a customer and then we have what customers are worth. And the first transaction you get is gonna be the average cart, right? The first transaction. But then after that you want repeat purchases as well. And so I'm gonna probably be pruning into like, okay, how many of these people buy again? Or is it a one-time purchase? And things like that.

So, ah, well, bonus for you. So I've been following your content for quite a while And, you know, obviously you have the calves of God. So here's the calf goat. I am honored.

Calf goat. Thank you. I wish. Is it a cow? Is it a calf goat? Oh, it's a goat. For a second I thought it could have been a cat, like a calf, like a little baby cow.

I could have done that too.

I didn't think about that. This is great.

Yeah, this is one of our top-selling products, actually. Is it really? Goat trophy.

Oh, that makes sense.

That makes sense.

It's trendy. Well, thank you so much. I appreciate it. Thank you. I will put it on my desk and I'll show Layla. Just remind her of my CAF excellence.

Yeah. So we actually have a gift for Layla also, which is in the bag.

Oh, is it? Is it for me to give to her so I can get some husband points?

You can get some husband points.

You love this. She'll love this. This is great. She'll love this. I love these. These are really good. Yeah. So you want to double revenue. Yep. Got it. What's this I hear about you wanting to buy another business?

Yeah, so I had a business reach out to me that's in the same industry in the St. Louis market that we're already in. So, um, he's getting old, wants to retire.

So, and what's he doing in revenue and profit?

He does about double what we do, about $3 million in revenue. Don't know profits yet or anything, we haven't even gotten to that point yet. Um, but he's got a— from what I understand, he does pretty decent on his margins. He does a lot more custom stuff, so which is a lot higher margin on some of that stuff. Biggest concern with him is 70% of his revenue comes through one customer.

Yeah.

So that's a pretty big, uh, I wouldn't buy that. Wouldn't buy that.

Gotcha. I would try and find out if I could who the vendors were that he has in China for his connections for his raw materials. Yeah. So that I could try and use those vendors.

Yeah, that was actually one resource I thought was, well, yeah, I could buy this and it's cheap enough.

It's monstrous customer risk, and especially if you have somebody retiring, that one customer might be So at acquisition.com, we have a scorecard called the Value Acceleration Method, which essentially how can you both maximize value and then also minimize risk, which ultimately makes a company more valuable. In this one, he says there's two big red flags here. First is you've got key man risk, which is when you have a small business, you've got an owner that's retiring. Oftentimes they are key men in the business. Now they've been working for however many years, and there's so many things that they're unconsciously competent of and unconsciously are doing to keep the wheels going. And it's often not documented or at least well documented. So that's a big concern number 1, but by far the biggest concern number 2 is that 70% of the revenue is coming from one customer. So if that customer leaves because maybe the guy retires and he has a relationship with them, then I'm so out, right, on this deal. Now the third thing here is we have to answer the question, why bother? Right? Like why are we even doing this? What problem are we solving? Now he did bring up that this guy has some better connections for raw materials, which can improve his margins, which I do think is valuable, but do I want to buy a business to get a connection? I'll zoom out from the back forward, which is like, What do we want to be when we grow up? Basically, this is going to become a media/marketing business that monetizes through trophies. Right. Or you can go the B2B wholesale route, which is probably like outbound sales team that's calling wholesalers and whatnot. Yeah. From what it sounds like, it sounds like you're better suited for the e-commerce, direct-to-consumer side. That's what it sounds like.

I don't know, like— Currently, that's where we're at.

Okay. Because I think you could more than double.

Currently, um, and it's just easier. Yeah, but that just kind of came naturally. It wasn't anything we pursued necessarily, but understood. Majority of it's all e-commerce.

And okay, you might have one of the simpler plans, um, that I have. Yeah, uh, yeah, which is— I mean, simple doesn't mean bad, uh, simple is good. You know, sometimes you have like 10 things to do, it's better to have 3 that move the needle a lot. And I think you're kind of in that situation. There's 3 big things, but I think we'll, um, why don't you come over here and then we'll, we'll We'll net it out. So Cody is actually at stage 5 product ties in the $100 million scaling roadmap. So if you look at marketing, he needs to spend more on niche down marketing. And so the issue here is that he's, he has 2 different avatars and we have to get him to pick, pick and commit. The nice thing is that I can probably tell you what the other problems he's going to be having at this level are and what he needs to do to graduate to get to the next level. We broke down the stages of scaling a business into 10 steps and we did it across all 8 functions of the business. So product, marketing, sales, customer service, IT, recruiting, Finance and HR. And the nice thing is that businesses behave in patterns. And so if you want to know where you're at and what you need to do to get the next level, this scaling roadmap is absolutely free and it comes personalized to you. So we built this bot, you plug in your business information and we'll send it right over to you. Now, if you like the interaction that I'm having with Cody and you're like, man, I would love it if acquisition.com would take a look at my business and see if they could help me kind of move the pieces around and make it significantly more valuable. We run scaling workshops under our advisory practice throughout the year.. And if you want that on the thank you page, you can schedule a call, talk to my team and see if it's a fit. Otherwise, get the scaling roadmap. It's absolutely free and enjoy the rest of the video. What percentage of customers are gag gifts?

So that's the Amazon, Etsy, TikTok, TikTok.

That's all that.

So it's like, so what's that?

40%.

Yeah, roughly. And that's kind of been the fastest growing since 2019. That's for sure. When we launched that, which is all under a different brand technically. Okay. We started a different brand back then because we don't want the explicit vulgar to be under Trophy Outlaw. Sure. You know, church moms and stuff get—

Yeah, I hear you. With this business, like fundamentally, you just have— it's— you have traffic and a conversion page. Like, and then if you already have, let's call it for right now, not a constraint on manufacturing or anything like that, the 3 big kind of levers that I want to go off of is number 1, is consolidation, which instantly adds to profit. Yeah. Pricing, which also instantly adds to profit. Absolutely. And then media. These are the big ones. Okay. So from a consolidation perspective, we have the SKUs, right? Yep. And then we also have the brick-and-mortar locations, and then we kind of have like model. So like in terms of like how I'm thinking through this. So from a SKUs perspective, if you're not carrying that, like normally I'd be like we need to massively cut down on SKUs. But like, if you're not, if you don't have like this warehouse full of stuff and it's just like more options for people to purchase, I don't think we need to like get rid of anything.

And a lot of the SKUs too, it's the same product, just maybe for football versus baseball or something, you know, it's a very similar product.

Right. It's a GOAT trophy and you just put a different plaque on it kind of thing. That doesn't bug me. And if you were like, man, it's super hard for my team to build all these different things, then I'd be like, all right, well then we should look at that. But if it doesn't seem like you're stressed on the manufacturing side. No.

But that's where my skill set lies too, as far as operations.

That's what I'm good at. So the second is the brick and mortar. If you have this retail location and it's basically breaking even or losing money, and that's not even the future of the business, then to me I would say let's just save our $50,000 a year in rent and then just add that to the bottom line. I feel like that would be a good idea because that would increase profit by 50%, which is like chill. Pretty much instantly. Yeah. And also there's just like the headache of like it's this thing over here.

Yeah.

And you've got And you can probably just take the couple good people from there, bring them to, bring them home. Right. You know? Yeah. So that feels good. So the next one is model. This is arguably the most important decision that he has to make in this entire kind of interaction with me. Because this is the strategy or the vision of the business. Like, what kind of business do you want to be when you grow up? And I think a lot of entrepreneurs get stuck in no man's land and they just can't decide. And so if you think about what the definition of decide is, it actually comes from Latin, which is decidere, which means to cut off. And which means we have to figure out what path we're going to cut off by I'm making a decision. But like, if he wanted to have an exit of some kind, then the revenue retention's gonna be a really important thing. If he just wants to make money and grow, then it would probably be faster for him to just go the consumer route and simply arbitrage media and make the spread, which tons of people are doing right now, and I think would totally work for him. But what won't work is trying to pursue both masters and ultimately serve neither. So in some ways you have two businesses. Let alone, like, if you were like, forget about the third one you're thinking about buying. Like, you already have two, and I'd rather have one. I'm not saying cut the one that you have. It's obviously a 40-year-old business. Real business, but like, I really have to make that decision. And that's actually not a me decision, it's a you decision. So if I'll say it the way that I think Layla loves framing opportunities this way, because I always think about upside, she always thinks about downside. And so it's like, what problem would you rather solve? So in the gag gift path, the problem that you're gonna have to solve is you're always gonna have to find new cheap forms of media. So it's gonna be like TikTok Shop is what it is today and live shopping, and that'll probably be good for another year or two. And then it's like that'll start to get more expensive and other people compete. And it's like then you're going to be in the next, whatever the next game is, and you're just going to have to get really good at paid ads and creative and conversion optimization on the site, increasing average order, that kind of stuff. The other path is you build either an outbound sales team so that they can sell these, these kind of B2B offerings that are, you know, or B2C if you want to consider the fantasy leagues and or just like a meta, just like a simple meta ad strategy that would lead people to call the number functionally. And then there you're saying, cool, our goal is to be your trophy provider for life. And I think the fact that you're a 40-year-old business sounds really good. It's like, hey, we're a 40-year-old business. Our goal is to be your manufacturer for life. And so of course we're going to do this one. But if you want, we'll also give you 20% off next year if you make the order now or something. I don't know. I'd play around with that. But which of the two paths sounds like the life you want to live?

That's Gosh, that's tough. Only because media for me has always been a hurdle. Okay.

It's not something I'm overly great at. Do you like it? Mm-hmm. Okay.

Yeah.

Fair.

I will do it.

Yeah.

I'm happy to do it if it makes money, of course.

Yeah. You know?

Okay. Um, but I don't know that I love it per se.

This is a tough one. Yeah. I'm trying to think of what, you know, 'cause you could, 'cause like if you wanted to hit $3 million next year, I was like, we could do $10 million next year. I would just say we're gonna take all of our resources. We're gonna go all in on TikTok. Viral organic and you're gonna deploy everything into TikTok Shop and get influencers to do lives for you showing all these funny gag gifts. Because like the, the trophies are so built for shareability. Yeah, like, and so that's, I mean, 20 million views is a monster video, but I'll bet you could probably get, you probably crack off a million views all the time with these types of, these types of videos. I haven't figured that out yet, but you know, it all just, I think if that was all you focused on, yeah, you would be able to figure it out because these are funny. Right. And I think having like little skit scenarios where people, you know, walk in and they see the boss's thing or they change their plate or, you know, someone loses and then it just says like biggest loser, you know, like that, like the negative versions.

We still need to make this decision though. Hearing you talk, like going to here to $10 million, I like that better. Even if I have to do, like I'll get used to videos and content.

Yeah. The leagues thing is like, that's like, that's the very stable version of this business.. And if you did ultimately want to sell in the future, you being able to go to a potential buyer and saying like, I have 5,000 leagues that buy our trophies from us every year and leagues on average stay for 12 years. You know, like guys who do fantasy or whatever it is, it's like that's, that's fairly, you know, that's a pretty, that's a pretty recurring business. You know, that's a, that's a, that's a pretty good business. Yeah.

Harder to build though and slower.

Much harder to build. Right. That's also why it has more value. So that's the— yeah. So if, if between those two paths, the like, I would like to just make more profit now and potentially scale faster, then we can talk about the media version of this. I think that's probably where I would— okay, yeah, cool.

You know, I chose the TikTok route because of the scalability of it versus sticking on the path we're on. Yeah, it can become a big business, but I look at the competitors that have been in the business for 40 years, and that's a long road and a long life. Versus the scalability that I can then turn around and put people in place that I don't have to be there. Like, that's more appealing to me than just, just creating a big business.

So first things first is we're going to consolidate attention. So we're going to shut down losing location. So that should right off the bat be a plus 50% improvement to profit, which is great. Cody cutting down that extra location is going to cost basically no revenue because he's getting so little foot traffic that I'm not worried about the loss in sales because he's going to more than make up with that in two ways. One, he's going to have the $50,000 a month cost basically drop straight to the bottom line. And for his business, given the low margins he has, that's significant. The second thing is that he's going to consolidate his attention so he can take the best people from there, bring them to the, you know, bring them to home base, you know, get rid of the people that aren't necessarily as good, or as I like to say, release to free agency so they have better opportunities somewhere else. And then this way he can kind of like make the dream team at home base and really double down on what matters. And I can't really emphasize this enough. The amount of return you get on focus as an entrepreneur is higher than any resource. And fundamentally, this is strategy. It's prioritization. And that means that if it's not a priority, you don't do it. The second thing, pricing. So, what I want you to do is I want you to switch from—

And you're probably familiar with this.

So, there's a lot of different pricing models but you have basically something called a cost-plus model. You look at your costs And then you add a margin in and whatever. The problem is every business I know that does a cost-plus model doesn't make a lot of money. And so you want to switch to value-based pricing, which is purely based on what someone's willingness to pay is. And that could be unlimited and it doesn't matter what your stuff costs because why do they care what it costs, right? Basically, like, as your vendors increase their costs to you, in some ways it shouldn't have any effect on the price of what you sell because the price of what you sell is completely divorced of that and based on what somebody's willing to pay. Gotcha. So in terms of how we can do this, so A, which will seem a little bit less scary, is I would consider this to sound crazy, but like monthly, like 5% price increases, like just keep going and just keep going. That is like path 1. Yeah. And the thing is, is that every time you raise the price by 5%, you double your profit, or I'll say 6%. If you want to be like, hey, I doubled my profit this month, then the next month you can raise by 6% and then more than double because it's 6% times 6%, right? So that is one way. The other way is that you just start immediately split testing kind of like 80/20 on your highest sales velocity items. This is simple, right? This is simple to do. You don't have to do any thinking. You just add it and that's what it is. This one will probably get you more profit faster. It just takes a little bit more thought. So you'll take those 4-foot, 5-foot, 6-foot trophies and just start like, just keep bumping the price and just seeing what conversion rate looks like. What you're trying to optimize for is gross profit times units sold. And so if you think about it, it's like, where's the sweet spot where I get the most amount of units sold at the highest gross profit? Oftentimes it's higher than you think it is. Because where I think a lot of entrepreneurs get stuck is like sales velocity goes down and then they get afraid. But the thing is, is that you will usually make more money before you make less money when sales velocity drops. Usually. I'm referencing something called price elasticity, meaning if we make the price go up, how much the sales go down. In general, when you raise a price, fewer people buy. But the question is, by how many? So for example, if I were to double the price of something, and that might triple my margins or quadruple my margins, and 25% fewer people buy, I should absolutely do that, even though fewer people ultimately say yes. And so he's in one of these situations where he's selling barely enough to stay profitable. He's selling a decent amount of volume. And so I'm just saying, I wonder if there's a way that we can bump this price even by 6% would double his profit. That's why I'm testing like, how sensitive is this market? Now, he did indicate that the customer that he decided he wasn't gonna pursue, which is the car show guys, the B2B sales, the people who were kind of not the gag gift thing, those people are very sensitive. And so it's like, okay, if they're the sensitive ones and we're going away from them, are the ones that we're going towards less sensitive? And it seems like the answer is yes. And to me, that's a big profit opportunity. In terms of cadence for price tests, would you do it on the site more, or do you think you would be doing it on the phone?

It'd be on the site.

Okay.

Yeah, 'cause that's where customers see the pricing, even if they call.

Or anything like that. Yeah, I'll bet you right now, because I don't know how many people like buy—

is it a super price-sensitive market? Trophies? Yeah. Okay. Especially with certain avatars, like car show guys are cheap. Which ones?

Car show guys. Car show? Yeah. So I'll bet you what's interesting about this is that your recurring revenue business is very price-sensitive and your gag price— your gag business is not. Not at all, right? Yeah. I mean, it makes me lean more towards the, the gag gift side anyways, because it's like we can get customers for free and we have far more pricing power because they're in the moment, they think it's funny. Whether it's $8 or it's $12 or $16, like, I kind of just want to buy it. Yeah, you know, the difference between $8 and $16 is monstrous, right? Yeah, for the business. So psych price test, and I would probably start with, uh, the gag. Okay, gifts here, and then I'll make 3— let me try 1, 6% on, uh, boring side. Boring trophies. At the end of the day, you shouldn't take anyone's advice, including your own. You should just take the customer's advice. And the way the customer gives you advice is by running a test and just actually seeing, will you buy it or not? And the nice thing is, if you raise the price and you go too high and you ultimately have people, you know, sales decrease, then you can always lower it again. Not a big deal. But not testing your price is the most expensive thing that you can do in a business from the profit that you should be making but aren't. Now this is the major part, is if your focus is going to be media and that's going to be the direction that you're going in. Was there an influencer or something who made the video that had the trophy in it? No, it was my operation. Oh, you guys did it?

Yeah, and it just happened to just crush. It got tagged, our product on TikTok Shop got tagged, and we sold 70 to 100 off of that. And then we did a follow-up video, and that's the one that had 16 million views. Okay, how many TikToks are you making a month? Right now we're doing about 1 a day and we're trying to ramp that up to 3 a day.

Okay. The GIFs that he has, the gag GIFs, the head mofo in charge, those types of gag GIFs lend themselves really well to being shared and going viral. And so him doubling down on all the different permutations of that as different hooks and different organic content, that makes complete sense and he should just do as much of it as he possibly can. And for anyone who's listening to this and is like, okay, he's going to go from 1 to 3, I want to just break a belief for you. You can post 100 times a day. The platform is incentivized to distribute your content to as many people as possible to retain attention. And so there's a lot of mythology on all platforms of people who say don't post more than X times. I think it absolutely just comes down to a quality metric, which is how many times can you post good stuff? But there's an Instagram page that's in Bollywood that posts 100 times a day and gets like 9 billion views. And so the thing is, is that not the same people are going to see every post. And so right now when you make a post, only 1 or 2% of your audience likely see it. And so if you make 10 more posts, it might just show to other people in your audience that aren't the first people who saw it. So the direct site traffic right now comes predominantly from SEO. So talk to me about that. Do you have an SEO firm or you're good at SEO?

Yeah, no, it's an SEO firm, agency. How long have you been working with them? This one, about 8 months.

8 months.

Traditionally, I've always had pretty good success with SEO. Okay. And we stopped SEO because the company wasn't— previous company wasn't performing, and we just let it go for several months and then hired another company.

And then when these guys came in, it started going back up again. What stops you from like doing more SEO? Or rather, what stops that? Like, if you were to say, hey, because I mean, when I see 13 to 1, right, I'm like, that sounds interesting. If you were to say, hey, I want you to give me like 3 clients worth of focus so that you can give me 3 times the backlinks and 3 times the articles or whatever it is that they're turning out for you, Is there anything that's— because if you get 13:1, it's like we should spend as much as we possibly can on that.

And that's why I started Meta.

But it's different though, right? Because it's interruption-based ads versus SEO where it's intent-based. Do you think you go to the SEO agency and just say like, how do you max me out? I could absolutely do that. Okay. I would, because it's also like these things are things that are not taking your time. Right. Right. So the SEO was interesting to me because he had an outsourced agency that was handling the vast majority of it. So it wasn't actually a big time drain for him and it had really good returns. And so again, allocation of resources. Think about this. This way. If you have a machine that you can put a dollar and get $13 out, what do you limit your dollars in with? You don't. You just put as many dollars in as you possibly can, which is why I asked the question, like, how do we do 10 times more of this?

So this is like media one is SEO max out, and the SEO company wants me to do Google Ads.

Yeah.

Is that something you'd kind of— Yeah.

Throw into that mix? Okay. Yeah, especially like these are both intent-based, right? Yeah. Like, at the very least, you should own your own terms, which is like all your names and derivatives of your names. Like, I've rarely seen anyone in any business just own their own terms and not make money off of it. And some people are like, why do I want to pay for a click I was going to get? The thing is, is like, you're not always going to get the click. And so having it there, I'm like, you're going to make the money. Like, just, you know what I mean? But then the second version of that is associated terms, like the long-tail keywords. Now, gag gifts, 100%. No one's like, hey, you know, fuck your mood, follow the plan, you know, trophy, right?

Or whatever.

Probably not scrolling on Facebook. Yeah, I'm really looking for— yeah, I've been looking for a goat calf trophy. Right. Okay. So this is the— like, if we're looking at this, these are all what I would consider like black and white, very low lift, almost guaranteed to make you more money moves. Almost all of these will just make you more money. This is 13 to 1. This is probably going to be high return. This could double the profit. This takes— adds $50,000 to the bottom line. The price, that's for sure gonna increase on the gag gifts. So now we can talk about the media side. So we're gonna go from 1 to 3 a day. And I think that you should focus on trends and memes. This is a gag gift brand, so it's okay for you to just like be silly and ridiculous. And so like there are so many memes. Mike, where do we find our like TikTok meme stuff? Just hire a 17-year-old. Just sit there and scroll. Yeah, yeah, and just be like, what's like, what's trending right now? You know what I mean? Like if you're a little bit on the on the older side, perhaps you're a millennial, right, and you have a graying beard and you're ultimately gonna be taken out to pasture in the next 5 years, right, and put to rest, as I am, you have to get people who are younger than you who are in the game of social media, who know what's hot right now and can make contextually relevant or native media that ultimately gets way more shares, way more views, and then ultimately more conversion. +1,000 aura to Cody. So what's interesting is that a lot of these TikTok ones also do well on Instagram, so you could repurpose there. Do you post on Instagram?

Okay.

Yeah. So started. Yeah. At least you're getting, you'll get a double, you know, you'll get double usage on that. But yeah, TikTok is like the perfect platform for you for these VIPs. Like it makes complete sense to me. They did $250,000 in a month. And so when I, the reason I said the $10 million is like, okay, well that happened on accident. Let's do it on purpose. And if you can do $250,000 a month just from that, it's like, well, there's $3 million. Yeah. I think you getting really ridiculous with the volume will get you a lot better. And I think this is one of those things that you should live close to. Okay. Like you. Like these things are all things that you could do probably the week you get back. You know what I mean? This one is going to be— this is like the big commitment of what's the bet we're making. The bet we're making is that mastering TikTok, live selling, etc.

is going to be the way. It's definitely a new skill. It's a little intimidating to know like, okay, this is where 80% of my time is going to go now for a new task that I've never done, but very innovative, which I love innovation. I love thinking about like, oh hey, how can we be different than the industry?

And this is definitely different. Now the second part of kind of like TikTok mastery is going to be influencers. And so what's nice with TikTok Shop is that your stuff is automatically going to be listed there and other people can make videos for it. And you're in the price point that's perfect for TikTok Shop, like $20, $30, $50. Like, it crushes for that stuff. And it's, it's such easy videos for people to make.

And that lines up with what TikTok has been telling us to.

Wait, have you been reaching out to them or, you know? We have an account rep now. Oh cool, great.

Well, I guess you did $250, so yeah.

But yeah, affiliates, they said hit affiliates hard. Yeah. And I mean, fundamentally, like, these are basically one-time work. This is the only ongoing work that you do. Trends and memes, and I'd be posting 1 to 3 times a day there, repurpose on, uh, on IG, right? That's That's just free traffic. And then the influencers will also kind of— this will— it'll be like a loop here. So it's like they'll do something that works well and then that will feed— like it'll just be this nice loop where they're also creating content for you. Real quick, this type of content I've gotten a ton of positive feedback on, and so I'm going to continue to make it. But what I need your help on is helping it distribute because this isn't wide algorithm stuff. A lot of people aren't going to see it because it's narrower and it is for business owners. So if you know a business owner or you have kids and you want them to learn business, or if people are business interested, it would mean the world to me and my team who put so many hours into making this stuff for you. It would just mean the world if you send it to them. It would mean a lot. And then I'll put— I'm going to put number 7 on here because I think this is worth it. The TikTok ads, which you said you just started, basically the process is going to look like this. You make the ad, right? Or sorry, you make the content, you're making content, right? You're making TikTok content. That TikTok content, you know, 10% go viral, whatever, and then 90% flop, right? Then this, you put ad money behind it. You send this to influencers and say, make stuff like this because this is what's converting. And then they'll make versions of this that'll also inform your content, which you'll then try to make iterations of what they're doing. And so like, you're kind of your source, like you're starting, here's the TikTok content, some does well, great, push ads behind it. By the way, guys, here's the ones that are working well. They make stuff, you can take theirs, push money behind it as well, and model it and make permutations of it. Gotcha. And so for this stuff, I would be kind of hook-centric, meaning for, well, for most short-form platforms, like the hook is everything. And once you have a winning hook, I would like reuse, reuse it over and over again. The reason I'm recommending he double down on TikTok is you want to go where the fish are, right? You want to go where the getting is good. And so right now TikTok Shop is crushing it. It's blowing up. Lots of people are doing very, very well on the platform and he already has seen some success. And so as soon as I get that little inkling of success, there's that little blood in the water. That's when I want to just like go, go ham on it. So one is how do we increase volume? Secondarily, how do we increase quality of output. Basically, once we do these easy fixes, this is really the long-term strategy that he needs to get really good at, is that he's got to get really good at media. You actually have a really simple one. The nice thing is that I have a lot of confidence in you. Like, there's, there's basically no, like, I'm not really sure. Like, Site Price Test could easily, like, 2x profit.

Yeah.

Like, on its own, because the margins are so slim right now, right? 6x. This is a 2x on profit for sure. SEO max out, well right now it's 50% of revenue is coming from that. So it's like maybe we get a 50% boost from them doing a better job on it. PPC will just get you good returns. This might give you like a 10 to 20% boost. So I don't think it'll be huge, but it's like, it's free and it's a one-time setup. So it's not hard to do. TikTok's gonna be the big lever of like, how do we go from $1 million to $10 million? It's like, if you did nothing else, but just say like a year from now, if all we did was master TikTok and TikTok Shopping, we would win. Like, if you did nothing else. This is just gonna take all of your existing business and make it more profitable so that you can take all of this cash and throw it into here. But actually fairly straightforward. That's a good thing. That's a good thing rather than like we have to bet the farm on something, which sometimes has to happen.

Yeah, that's awesome.

Way simpler than I was thinking. Oh, good. Yeah. Dude, we just do more of what works. And the fact that you have such low margins excites me because when you make 5 or 10% improvements, you double or triple profit. And the fact that you haven't, like, that there was no pricing discipline, like there's no, there's no like process to pricing besides like, we'll just keep raising it when our costs go up. Usually there's just like, when I see a business like that, there's like massive unlocks. Like I'm saying 6% on pouring trophies, but like you might be able to push 25. And that 4x is 5x again. Profit, right? Whenever I see a business that's mispriced or extremely mispriced, I get really excited because I know it's one of the lowest operational drag moves that you can do. Functionally, everything else you have to do in a business, you got to do something. With pricing, you literally change a number or you say a different word at the end of a phone call. Like, it's that easy to change, but it has such a dramatic impact on how profitable a business is. And what's crazy about that is that entrepreneurs tend to be the most afraid of pricing changes. So it's all between your ears and psychology and fear, just having the courage to just say a bigger number. The fear is that you're somehow going to lose your business. You just— if it doesn't work, you just lower it back again. Not a big deal. But this could change his life, and so I'm very interested to find out more there. What's the offer that you have in the box? Usually it's a little code that says like 10% or something to order here or again. Why don't you give something much better than that? Okay. So we have to come up with a really compelling offer to get people who are buying. Because the nice thing— the important thing is, are you doing fulfillment for Amazon sales? Uh, we have some FBA, but most of it's FBM, so we're fulfilling most of it. Okay, great, so you're fulfilling most of it, that's wonderful. Okay, so, and Etsy, same thing? Etsy, we fulfill everything, yeah. Great, okay, so that means that we can put something in the box to be really compelling to get them to buy something. So if, now Amazon and Etsy, the purchasers who are buying there, are they more bread and butter people or are they more gag people? I would say more gag.

More gag, okay. 'Cause they're more like funny death signs, funny sayings, like that?

Okay, I would put a BOGO offer in, or a— so buy one, get one to two free, and then just fix the pricing of the one so that it makes sense. I would basically have this little thing here, so that would be the headline on the top of my little, my little, my little doodad. Yeah, you got your QR code, and then I would have my top 1, 2, and 3 gag gifts. Because they just bought one, so it's like, let me tell you the other gag gifts that people buy the most of. And I would put that into every one of the boxes. And the framework that I'm talking to him about right now, which is, you know, we're gonna do buy 1, get 2 free, buy 1, get 3 free, like what are we gonna do? That actually is a little Easter egg for what's coming out in my next book.

How big is your email list? For trophy side?

Yeah.

I think we have like 10,000 contacts.

What do you do for long-term nurture? Not much. Okay, well guess what? We just found ourselves another couple hundred grand. So let me tell you a stat that'll blow your mind. Most mature e-commerce businesses get between 30 and 50% of revenue from email. Wow. We're missing out a lot. —on that. So there's probably like $1.5 million sitting there. And that's all profit because there's no ad spend. Most e-commerce businesses basically break even or lose money on spending ads to get customers and they make it up with their email follow-up. Gotcha. We just found a big bag of money. How about that? So this was a late nugget, but I'm glad we found it. I assumed because anybody who's in e-commerce, or at least if you're in e-commerce, you're in physical products or retail, email marketing is just massive. And the difference between small companies and big companies is oftentimes just what percentage of customers are return customers. And one of the primary vehicles for doing that is email and SMS. And so he's not doing really any at all. And so this was just a massive profit opportunity because he's getting all these customers in the door and then just never talking to them again. And so if you're a business owner right now and you have this big list of customers and you haven't like emailed them in a while, It's the closest thing to free money. You just send the email out with some sort of offer and you can get money immediately for basically no cost because you already incurred the cost. Now, the structure that I talk about with emails is that obviously you can't do that forever because then you just fatigue the list and people would be like, well, I don't want to listen to this thing. All this guy does is try and hawk stuff. I like to try and have some sort of value if possible. Now, value can be described in different ways. If you have gag gifts, then it's probably going to be in the form of entertainment more than it is education, right? Like people are going to like, oh, let me, let me, 6 ways to use trophies. Like, I don't know if I'm really into that. But if I see funny versions and maybe even emailing some of his content that's— that really does well, might be a great strategy for him to get people to continue to click and basically reinforce that loop so that they want to open it. Because at the end of the day, people buy newspapers because they want to feel educated. But what they read is they flip to the back and often read the funnies. And so it's like, how can we take that old school human behavior from an old platform and how can we mirror it on a newer platform? So it was our offer, which we added in. Yeah. 9, it's gonna be email follow-up. Okay, there's gonna be 2 different types of email that you need to do. So number 1 is going to be flows. So these are based on user behavior. So when someone visits a specific product, they should get like a 5 email sequence of being like, hey, saw that you were looking at the goat, whatever, right? And that should just— that should happen for anybody who opts in or does a 2-step or abandoned carts. Right. Do you have a banning cart? We do have a banning cart. Okay, good. The other piece is we need the long-term nurture. All right. So what I'd recommend is 3 times per week. It feels like a lot for trophies because trophy is a less frequent purchase. The gag, I feel like, is like if you buy one gag gift, you'd be willing to like buy them for many people because you just think they're funny.

They are separate brands though, correct?

Yeah, technically they're kind of separate brands. Because you have like— okay, so I would say this I'm cool with on the gag gift side. Okay, because right now you're not making any return sales anyways, right?

So you might as well get— we don't really have an email list for the gag side because it's all through—

oh, because it's all through Amazon, TikTok. So does TikTok not give you, uh, email? So I think we'll go one time a week and we'll not worry about the gag gift. Okay. I think just one time a week of— and if, if you were basically domain score, your domain health, your domain authority stays healthy and your open rates stay okay, your click-through rates stay okay, I would Increase frequency. So, you start with one a week and then you're probably thinking, okay, what am I gonna email them about? So, when you have customer stories, cool trophies, 'cause I'm sure there's every week there's like one trophy or something that's just like interesting that you guys have, right? Probably stuff about recognition, status, and Jeepers compensation. So, I think if I owned your company, right, so I'd be like, okay, are we in the trophy business? No, trophies, what we sell, right? But it's really just the vehicle for giving people recognition, status, and compensation, right? And so my— the things that I would email would probably be about how you could either give your team a pay raise or you could give them a trophy. And believe it or not, here's this research, the trophy is actually even more meaningful, right? So they like it more and you like it more as a business owner, right? So it'd be that kind of stuff that I'd be— you only have to write 50 tips. It's not that many emails, right? You could literally probably do it in like a day and a half or 2 days. So keep it low in the beginning just to like get a feel for it, see how— like the first couple emails are gonna shake out because you're gonna have a super responsive list. And we want to keep these all text. All text, okay. Yeah, all text. I would say link to the image because then curiosity is gonna drive the click. Okay. And also image-based tend to get lower deliverability rates than like full text one. And when people opt in, or when people purchase or opt in, they abandon cart, the first one I would have is reply back for funniest trophy of all time. And so as soon as someone opts in, it's a double opt-in, so to increase your deliverability. And so they'll reply back, and then it's an automation, you don't have to do anything, and then you'll send them the link link for the, for the clickable picture, and they'll be like, this is ridiculous. And then underneath of that, so when you have the— when you have a clickable link, you want it to take them— you want to have it take them to a page that looks like this, whatever. Uh, and then here you have buy. So like, you can have the funniest thing, but it's also a CTA to get someone to buy something. Gotcha. 1 through 5 plus 9. Yeah. Are all like bread and butter, do these, zero thought. Yeah. And so in terms of order here. All right. So this is number 1 because this is just going to give you time back first. This is probably second. Is it the same agency that does this and this? Yeah. Okay. So that's for both of these. That's one call. This is fourth, fifth. 6th, put the email follow-up in place because we're basically going to optimize other things and then we'll basically follow up with everyone. And then this is going to be 7th.

Awesome.

Cool. Yeah, super cool. Well, I think we found a few doubles. Yeah, in the business. Absolutely.

I love it. Feel all right?

Yeah, I feel really good. All right, yeah, you bet, man. This is awesome, it's gonna be great.

And it's much cleaner and simpler than I thought. Oh, good, good. I just got done filming with Alex. I'm super excited after this. I mean, to have a 9-point bullet point of here's a tactical of what to do to grow 2x, 5x, 10x, it's pretty cool.

So whether you have a trophy company or not, all of the fundamentals that we're walking through here is: one, we're consolidating costs because there wasn't a strategic advantage to having a larger footprint. Number two is that running pricing tests regularly so that we can optimize how how much money we get per customer and see how much, how much higher we can drive it. Especially with older businesses, they often don't change the prices as frequently enough. And especially with the amount of inflation that's happened over the last 3, 4 years, if you haven't really adjusted prices in a big way, like 50% plus, then you're making significantly less money. The next one is doubling down on what works. So in two senses, one is he had good returns on SEO, but also we know that his organic with TikTok is working. And so I want to double down on those things. But if you look at how these things are ordered, so I tend to order them using ICE, which is impact, confidence, ease. So how big of a difference is it going to make? How likely is it to occur and how hard is it? And so if you have something that's really likely, big impact and easy, you start with those first and then you just work your way down. And number 4, and this is a big one, we make sales to get customers. We don't get customers to make sales. And so the point of the first transaction that I'd like to shift Cody's perspective on or anybody's perspective on is you get the gag gift sale, but then you do everything else to turn it into a lifelong or at least repeat customer. And so we're doing this through multiple paths. One is that we're creating the offer to get them them to come back so we can own the data. On top of that, then we have the remarketing in place that's going to happen in terms of email follow-up. On top of that, we could just have remarketing across all social media for anyone who hits a site. Each of these things have one clear intention, which is how do we get somebody to buy again? So if you liked this video, you're going to love this video I did with Raymond, who's a multi-location chiropractor. I break down tons of stuff that applies to many, many businesses. Click, go watch, enjoy.