How I Took My Agency's Profit Margin From 18% to 47% (Exact Breakdown)
In this training session Tim (Speaker A) and Julian walk through how they transformed their agency’s profit margin from roughly 18% on a $500k‑per‑month run‑rate to about 47% within a few months. They begin by describing the problem: rapid 5× growth created bloat, bad paid‑traffic arbitrage, and inefficient operations. They introduce a four‑layer “profit pyramid” – Offer & Market at the base, then Founder, Operations, and finally Profit – to illustrate the hierarchy of importance. They explain how they simplified their offer, matched it to a more suitable market, and made the offer easy to explain (e.g., “same‑day shipping”). They stress founder discipline, communication, and personal habits as the driver of culture. Operations were overhauled using a “salary‑cap” budgeting model that forces each department to stay within a fixed percentage of revenue (e.g., 35% marketing, 15% sales payroll, 5% overhead, 10% fulfillment) to hit target profit margins. Hiring A‑players and eliminating B‑players reduced payroll waste, and they adopted performance‑based compensation. Raising standards for team members, vendors, and software was highlighted as a continuous lever. They discuss paid‑traffic arbitrage, showing how improving the spread between ad spend and revenue dramatically lifts margins. They also mention using AI‑driven QuickBooks dashboards for real‑time visibility into costs and salary caps. The session ends with a live Q&A covering niche selection, churn rates, campaign structure, and when to use a VSL, reinforcing the practical steps for other agency owners to replicate the profit boost.
Chapters
All right, ladies and gentlemen, we've been cooking in the lab, as they say, over the last couple months, and we did something I think a lot of you guys are going to get a ton of value from because you're probably going to make the exact same mistake that we did. And hopefully this can allow you to avoid making that mistake and learn how to do what actually matters most in business, which is making money and making profit. Right. So in today's training, we're going to be talking about how we took our agency from an 18 profit margin at 500k per month to a 47 profit margin just in January. We did 320 this month. We should be doing a lot more. And I honestly think we can get our profit margin even higher because we haven't fully implemented all of these things and optimize as much as we possibly can. So, as always, let's dive right on in. This is not theory. This is something we're actively doing. This is literally over the last seven days, screenshotted my WAP processor. You can see the little WAP logo there. $95,000, not including any wires, which, Julian, how much did you say we collected in wires?
It was 17 to 20. Exactly.
All right, so I don't do math without a calculator, but a little more than 100 grand, I believe. So.
Cool.
Let's talk about what we did a few months ago, the problem with what we were doing and then how we ultimately solved it to pretty much 3x our profit margins in a matter of a few months. And also how you guys can do the same thing, too, right? Because it's cool to watch what Julian and I are doing in our own agency, but really this only matters if you can take what I'm going to show you and then implement it into your own business so that you can actually make more money and not just put more money through a payment processor, but deposit more money into your bank account so that you can invest it, buy whatever the hell you want to buy, or go to nice dinners every night. I don't really care. But the point is, revenue is not actual money. Profit is actual money. So that's what I really want to walk you guys through and talk about. So what actually happened and what caused this problem? Well, for one, we basically 5x our business in a matter of 12 months. Realistically, we 5x our business in a matter Of 4 months last year. Right. We went from about 100k to 500k from the month of March to the month of August. Right. We basically 5x. And when you grow very fast, you basically keep a lot of the bad habits and mistakes that you had earlier. And then you just take those same bad habits and mistakes and you're doing them on a bigger scale. So we basically got a ton of bloat and waste within the business and we were doing something which I'm going to talk about a lot more, which is we basically had bad arbitrage on paid traffic. So I'll explain more about what that means, but this is essentially what happened. Julian, anything to add to this, anything I'm missing in terms of the context here?
I think the only thing that matters here, and we might touch on this in just a moment, is there's a little quote that I picked up from one of the big influencers in the space, Alex Hermosi, and he says you should nail it before you scale it. And what we did was we just scaled it and the only thing we nailed was a lot of massive bloat, like you said, in waste. And when we kind of trimmed back down and cleaned things up, it's like now, now if we look at scaling, let's say we 5x the business, even if we take 35 hit or something to the current profit margin, it's like we're still making way more money than we otherwise would had. We continue to do it this way because we're finding that you need to scale the efficiencies of a system, which is business 101, right. You scale the efficiencies of the, of the business. And whatever you take, whatever starts at the bottom just gets worse at the top. Unless. Unless it's a positive flywheel, which most things are not. So I think that's something we can talk about a little bit more here shortly.
100. Yeah, I think that's huge. So this is something. I went and visited Julian last weekend and we did a little ski trip in Colorado. Julie just moved out to Colorado and that's. That's why we didn't do a live last week. Side note. But anyway, I was on the home, on the way home on the plane and I drew out this little picture, right. And basically this represents, not just in an agency, but in any business, what your profit is going to be. Okay. So the way that this pyramid works is the lower on the pyramid, right? It is. The more important it is and the more it is foundational to your success. Right. So the bottom of the pyramid. You can't have the top of the pyramid without the bottom of the pyramid. Right. Put simply, so at the very base of the pyramid is your offer and your market. So what are you selling and who are you selling it to? Right? The way that this essentially is structured is you can think about it like this. If you have a great founder but a horrible offer and a horrible market, the offer in the market trump the founder, right? If you have a mediocre founder or a bad founder, but a great offer and a great market, offer and market trump the founder. So the lower it is, the more important it is. And if you don't have the bottom thing, the other layers will not happen and they will be inconsequential, right? So, for example, a lot of people, I see people that try to spend a bunch of time optimizing their operations and making their operations really dialed in and really good, but they have shitty team members. They have B players that are actually running the systems. And so they don't actually have good operations because the people that are operating the business are just not. Not quality employees, right? So it's more important to have good people in your business than it is to have the best operations. Right? So to walk you guys through this, the first thing you need to look at in the foundation is what is your offer, what are you selling, and who are you selling it to? Right? Anything to add to that bottom layer. Julian?
No, I don't think so. I mean, everything's built off of. Everything's built off of that, like nothing else matters. And this is a lesson we learned the hard way, unfortunately. For years we had the right offer for the wrong market and we just kept making them the offer better, but the market wasn't getting any better. So it was just like, yeah, constant insanity. And I see a lot of people that, especially people like, reaching out to me now, being on YouTube and stuff that are asking me questions like, I had a guy get my number the other day and he's like, you know, you know, hey, we're doing this, we're doing that. And it's like, with his revenue level where it is at currently, I already know that there's gotta be some sort of offer or market issue because of the revenue for how many people they have. It's like it's automatically popping up. I'm also coaching someone in the same space that works in that same market, and he's also struggling with it as well. But I think a lot of it comes down to if you don't have that offer and market dialed and they have to match because you can have the best offer in the world. Like, you could have the best. I could have a tomahawk steak that comes out on fire. But if I'm in a room full of vegetarians, like the market doesn't want it, I can't sell anything. I'm going to go out of business. And so this is like the most important. Cannot drive this home enough. This is number one on the totem pole. If you don't get this, don't even worry about it. Just go get a job. Like, this is. This is the absolute delta that increases your success or failure. So I just wanted that.
Yeah. And I mean, I. You can make money without it being super dialed in. We, I mean, we did that like 500k, 18% margin. Like we're still making money. Like, it's not like we're. We're not getting paid. We're making more than 95% of Americans. But if you want to make you money and you want to just print cash and have a money printing machine where you can step away from the business and take a month off and still print cash, that's where this matters. That's where you have to be dialed in if you want to just have disgusting profit margins where the people in your family and the people that know you think what you're doing is illegal, even though it is legal, that this is where it starts. Right. Your offer and your market have to be absolutely dabbed. And this is something that we saw is we changed our offer a bit. We made it more simple. We'll talk more about that in a moment. And a lot of things changed. So offer and market most important next is the founder. So who are you as a person and what is your skill level and ability to attract team members and set the culture right? The culture of a business is simply downstream of the founder. So if you're lazy and a bad communicator, your team is going to be lazy and a bad and bad at communicating and your culture is going to be that. So the second layer of the pyramid is who are you as a founder? What is your discipline? Like, how, how invested are you in your team? How are you as a leader? Your culture stems from you and your team is just a byproduct of your culture. Right. And then the last piece is operations. Most people skip all of this other shit and they just go straight to focusing on operations. Like, oh, if I had a better SOP and a better CRM system, I would make more money. No, wrong. The thing is, Elon Musk says the. The worst thing that you can do as an Engineer, which is business owners. You basically are just a systems engineer. You just build systems. That's all that you do as a business owner. You're, you're a highly paid or poorly paid systems engineer. The worst thing an engineer can do is try, is working on a problem that shouldn't even be a problem, right? So you trying to solve your operations when your offer is not even dialed, or solve your operations problems or fix this process or that process in your business when your team is just full of donkeys, right? If you just fix the fact that your team was like your team didn't have two brain cells to rub together, you wouldn't have to build all these systems. Right? That is the thing. And that's why this pyramid is so powerful. The last piece, which you can see is golden and highlighted and has a dollar sign in it. This is your profit. So all of these other things have to be dialed and correct or your profit will not matter. Right. Anything to add to this, Julio?
Yeah, I think the biggest thing with the founder piece of it is like as the founder, it's not just about being dialed in on your skills. I think communication is the number one skill to have because it trickles into your ability to sell, market and lead people. If you can't do those three things, you won't have a business for long, if you have one at all. But the most important thing I think of it is also just being dialed in as an individual. So like waking up at the same time, going to bed at the same time, like having positive inputs, like, you know, looking at what other successful founders are doing. Like Tim was just talking about studying Elon Musk, you know, looking at what, like people that are ahead of you, that you want to be in their shoes, like what are they doing, how do they act, what do they do on a day to day basis? Because everything is just, everything's all a game of systems and all the systems are just input and output equations. And I, I think that if you can dial yourself in, you might not even be the best salesperson in the world. And I get a lot of founders that ask me about this. They'll be like, yeah, you know, I'm not really great at sales, like what should I do? You know, like the closers that I hire don't respect me. And it's like, yeah, for sure, maybe they don't, you know, think that you know more about sales than they do. But if you can generate respect as an individual through discipline in your day to day habits, people will respect you. Just because you do hard, consistently and don't give up. And like, you don't have to be the best salesperson or the best OPS person or whatever, but you do have to be a good communicator and you do have to be a disciplined individual to gain that respect and ultimately be able to influence people to work within the business and help you to create it. So.
So that was.
Powerful.
Absolutely. Fire. All right, so I'll let you talk about this part because you've been on the phone selling our new offer and kind of just explain it. And I think without literally saying exactly what our offer is. And the reason that I don't want to just say exactly what it is is because people will probably just try to copy it without understanding the reason that it works. And like, here's the thing, before Julian dives into this, sure, you can go out and look up what our company name is and just copy our exact offer, but I guarantee you, you're going to get fucking smoked. Because if you don't understand why we're doing what we're doing and the experience behind us doing what we're doing, none of it, none of the rest of it matters, right? Like, if I were to start over, I wouldn't even do the offer that I'm doing now. I'm doing that because I have the experience and the advantage of five years in the industry that I'm in. If I didn't, I would be be looking at a different industry. And you can look at all of the niche videos that I've made on this channel talking about what are the best niches. And again, you're welcome to try to copy us. I'm just telling you, like, that is not going to be the best option for you. Because if you don't understand why we're doing what we're doing, if you don't have all the context and the industry expertise, you're just going to get smoked and you're competing with us and we're going to smoke you. So with that being said, Julian, do you want to kind of explain what we were doing before conceptually, and then what we're doing now?
Conceptually, yeah. So, I mean, the biggest thing and Is my audio good? Can you hear me okay? Yeah. Okay, cool. My mic on the screen on streamyard wasn't lighting up. I don't know why, but anyways. So the biggest thing I think that I kind of took away from this situation is. And I'll tell a little bit of a story to illustrate the point. I Think parables are the best way to learn things. So when we started last year, when we started going downhill, we experimented with an offer in a new market with a friend of ours. And it was. The results were unbelievable. No proof, super high ticket. We were closing deals, like, pretty consistently, considering the fact that, like, if you looked it up the business up online, it was like cartoon characters that came up and it was crazy. You know, there's literally nothing about it, no reviews. Like, I can't tell you how, like, this was the hardest it gets. Some of you guys are watching this and thinking, dude, that's me. That's what we were doing too. So we just did this a few months ago. What was interesting though, was that business started suddenly making more. Basically making more profit in terms of percentages, significantly more than what we were doing in our own business that had been around for years. We were like, dude, what the hell? We looked at it, we pondered it, we went through. We ended up not pursuing that opportunity. But what happened was, is we realized there was one difference in the entire thing, which was one market to offer, and the offer was basically the same or similar. You know, they're two different markets. But what. What was interesting was the offer was just simple and it required no effort and sacrifice pretty much from the. From the clientele we were selling to versus with what we were doing. It was like ton of effort, ton of sacrifice. And ultimately, like, it was extremely complex to explain. And I think that was probably like the worst part of it all is like, it's okay if your offer has like. Like Amazon is a complex offer. Like, same day shipping is not an easy problem to solve, but it's like.
Yeah, but you can explain it. You can explain it in three words exactly.
Same day shipping. It's like, it's super simple to explain. And so the offer is amazing, but it is complex. And so, like, one of the things that we kind of learned in this court in this last quarter, in the last year really, is that a lot of your ability to convert people is not down to how good you are at sales, which is definitely, like, important, but it is about your ability to be able to explain an offer simply. Even if it is a complex problem that you're solving. The articulation of the problem that you're solving and how you solve it should be very simple. Like, for example, same day shipping is. That's. That's like the best example ever. So that. That's pretty much. I think all I got on this. I don't know if there's Anything you want to touch on with this specifically, Brother Tim?
No. Why don't we give maybe like a separate industry example so. People actually work in practice. I always use like the roofing agency example. Like, kind of just explain what it would look like conceptually, basically.
Sure, let's take. We'll take the roofing industry for an example because we always, we always do that. Next thing you know, everyone online's gonna be doing roofing. But the, yeah, the. Let's give the roofing example for. For a second. So let's say that I'm. I'm running ads to roosters and I'm telling them that I'm going to help them get new customers and it's going to be using this flashy new thing that I figured out, blah, blah, blah. And then when they jump on the sales call, it's like basically 20 to 30 minutes of explaining more or less how it works. If they, if they're asking you and you'll know this is a problem. If you're on your sales calls right now and you're like, dude, nobody gets. Nobody gets it. There's too many objections like that. That's the leading indicator. If there's too many objections and nobody gets it, you're not explaining it well. Stop blaming the customer. Start taking accountability. And so like, let's say I'm. I'm selling to roofers and I'm like, yeah, you know what? You're gonna get all these appointments and all you have to do is set up every single ad channel, start a social media profile, start filming videos daily posting, texting, tweeting, you know, whatever, right? Like, you need to do billboards, you need to do geolocation commercials on. On TVs. Like, you're just basically like, it's just so complicated and complex. And then you're like, yeah, we have this one little mechanism that's like super great. And so we kind of like go through and offer them a free roof, but it's bait and switch. So then when we come back on the back door, we actually get the insurance company paper. It's like, it's so complicated where it's just like, you know, we could say same offer, same thing, could even be the same mechanism. And it's just like, hey, you only pay when you get roofing clients. Or, hey, you know, you're going to pay for people who want roofing quotes or whatever, right? You can just take everything, crunch it down, keep it simple. And then on the sales call, we don't need to talk about every little fine detail of every button that needs being clicked. It's like, hey, you need clients, we get clients. What are we doing here? Right? Like, it's like the more you, the closer you can get to that, the better off you are. And that's kind of like what changed for us is like the sales calls have become like 30 minute, 40 minute, one call closes. Because we're able to just come in and say, hey, you know, you want clients, we have clients. What are we doing here? You know, that's pretty much how it goes. So.
Yeah, I agree. I think you're talking about Amazon. Jeff Bezos says, eat the complexity for your customers. Before, we were like vomiting the complexity onto our customers, and now we're, we're eating the complexity for our customers. Like, same day shipping is complex to fulfill, but it's easy to explain and so very easy.
Yeah.
So this alone, I'm telling you guys, if you just do this, like the off, remember, the offer is the base of the pyramid. If you just do this, you'll make so much more money. Okay, I'm gonna take this one. This kind of leads me to talk about ad arbitrage. So basically I, I had two little graphs made here. Let's look at business number one on the left. So this would be, I don't think we were spending exactly 50 of our cash. It was closer to like 30 to 40% of our cash. So if we did 100k, we would spend about 30 to 40 grand on ads to do that. 100k. Right. So that's like okay, arbitrage, but it's not great. So what do I mean when I say arbitrage? So arbitrage is basically a term that means the spread on something. So like they say they, they call. What is it like real estate arbitrage is you buy a house for $10 and you sell it for $50. Right. Obviously you wouldn't buy a house for $10, but you get the concept. It's basically your margin is the arbitrage. It's your ability to get something for a lower price and then sell it for a higher price. That's what arbitrage is. So paid traffic arbitrage, just as your ability to spend X on ads and, and get back a higher number on ads. That's what paid traffic arbitrage means for anyone that doesn't know, your ability to turn $1 into $5. Right. So the better your arbitrage is, $1 into $2 is obviously worse. Arbitrage, the $1 to $5. That's what I'm saying here. So your ability to invest X number of dollars into marketing and return a higher number of dollars will influence your profit margin. And this is a perfect example that demonstrates that. So let's say you spend $50,000 of your $100,000 of revenue on ads. Well, that means that your ops and your team, all of your other costs are going to take up, let's say they're 40k. These are usually going to be fixed costs. You're only left with 10k in profit. But if your offer is dialed and really good and it's simple and easy to explain and you can sell it over the phone in like 30 minutes and everybody wants it, you're going to have good arbitrage and you're going to go to make more money here. If you only spend 20k, you spend 40k on operations and team that the remaining money is left over for you. Right? So what I found is there's fixed cost and there's variable cost in a business. The better you can control the variable costs when it comes to getting and acquiring customers, the more profit you're going to have. Does that make sense?
100%. I think the cool thing that we can also like note here as well is like, and we, I talked about that. I alluded to this a little bit earlier. I was like, hey look, if you have a problem, you're going to scale the problem. The problems get bigger as you scale, not smaller. And so like for example, if you're looking at this graph and you're like, well dude, I'm closer to the business on the left. Like I'm closer to bad arbitrage. You know, this is not good. It's like, yeah, and you can scale bad arbitrage too. Like you still have a little bit of leftover money. But then what happens is, is one thing what a restaurant is, bro. Yeah. A lot of times then one thing goes wrong though. It's like, hey, you know, one person that the top salesperson leaves the you, you have to fire them because they steal your, you get your ad account banned. You, you're fulfillment team just goes on strike. I don't know, whatever. Like the point is, is that you're basically one boo boo away if you're running this type of bad arbitrage business from just imploding more or less. And so it's like the biggest thing I've seen on, on the, on the social media front right now is like there's a lot of, in the last probably year and a half, two years. There's been a lot of, like, scale, scale, scale, scale, scale. And everyone's like, scale vomiting about how, like, revenue is the only way to be successful. And that, like, revenue is important, but profit is ultimately what you're paid. And so that's realistically, that's actually all that matters at the end of the day. Otherwise, you're just working to work. Which if you want to do that, that's cool too.
But yeah, in an agency or an info business, like, you're not really building. It's not like you're gonna build brand. Like, you're not building equity. Like, it's not like a software business. No.
So it's like in that scenario for you to live a good life. And you're seeing a lot of the narrative is starting to shift on social media with a lot of the big influencers out there where they're now starting to talk more about profit. Like, they made the scaling mist, you know, jamming revenue through a funnel. And then everything broke. And like, that's the same thing that we did. So that's the only reason why we can even speak to it. But the good arbitrage, like, you want to get as close as you can to this, and the biggest issue that I see is that I'll see guys that are on the good arbitrage side and they have like a seven or an eight or a nine row as, and they're like, yeah, bro, like, just can't scale, dude. Like, I think our market's tapped. And it's like, dog like that. You have the good arbitrage, nail it, scale it, and get rich. But they'll just hang there. And then somebody that's got balls to put on the table will come in, steal their lunch money, and then they're like, damn, dude, the niche was just too saturated. And then they blame the market when it was really just a nail it before you scale it. Good arbitrage situation that prevented them from being able to. To grow from limiting beliefs.
So 100. Do you want to touch on this?
Yeah, I can talk about this. One of the biggest lessons that we learned, man, like last year when we went through and did that little experiment with our friend, it was like probably like the best business therapy of all time because we just learned so much. And this is something that when we went through and we were building our business originally, it was pretty much just like, scale, scale, scale, scale, scale. Let's just try to outsell the ads as we grow. And hopefully we don't go broke, pretty much. That was an unspoken more or less business plan. Like, if you looked at a sheet, it was just like, spend more, make more. Like, that was the. That was the business plan right now, what we're doing instead. Tim always gives this reference for basketball where it's like in the NBA, they have what are called salary caps. And so like, salary caps basically says, like, you can only spend so much on players, and so you can't have like The Steph Curry's, LeBron's, Katie's, and Lucas on the same team because it ends up breaking the salary cap. And ultimately there's a strict limit on what you're able to spend for each department. And so we brought this concept into the business. We got this from a friend of ours that we were going to do the other business with, and he actually.
Put us onto this too, the salary cap thing, which when you hear it, it makes so much sense.
Yeah, this is exactly what. Yeah, he, he put us onto all this. We. We just totally got it from him and we've been running with it since. But basically you say, hey, I want to make 50% profit and everything else needs to fit in the other 50%. And so maybe that's operations and team marketing and acquisition. And no matter what, when you're making financial decisions now, it's no longer like, hey, dude, I'm just gonna spend, spend, spend, spend, spend and grow. It's like, okay, cool, why am I not growing? And what do I need to change within this salary cap model that's going to help me to achieve my desired outcome? And sometimes it's firing people that are underperforming. Sometimes it's automating something that, you know, you have people doing on your team and it buys you a bunch of time back and makes you a bunch of extra money. Sometimes it's eliminating a task altogether, and oftentimes it's. It's realistically like just canceling the stupid. The softwares, the 30Vs that you have on the team that you shouldn't have because, you know, you're. They're not doing anything and you're giving them each one task a month anyways, but you're paying them off, you know, hourly wait or salaries. It's like, what are we doing here, right? There's so much waste that goes on in businesses because profit is an unnatural thing. And so to create profit, you have to set constraints. And it's kind of like a progressive overload. Like in the gym, when you're trying to gain Muscle where you may not hit 50% in your first month, but that's when you have to go back and look, okay, what can I cut? What can I cut? What can I cut? And the new mental model that I think through when looking at this is, am I completely effed without this? If no, cut it. If yes, why? How can we eliminate, automate or delegate that situation? And then if. If it's still irreplaceable, like, there's just nothing I can do to get rid of it, and it's a fact of life, then it's like, okay, cool, I've got to factor this into my 20% of operations and teams. But like, that just. That needs to be known, that it's always going to be there, for example. And so, like, then you'll have to move in other departments and in other ways or in acquisition costs or ad channels or whatever to cut and crunch those numbers down to be able to hit your desired outcome in terms of profit. Yeah.
100%. 100. Yeah. I love this. This alone for me was like one of the biggest unlocks. Just viewing it like this. And what's. Cool, I have a video coming for you guys. I'm telling you, I've been doing some psycho on AI and making dashboards to, like, see all your data I'm gonna have to put you guys on. But you could literally connect your QuickBooks account to AI and then just have it track everything in terms of what you're paying each person, your salary caps, what you're spending on what, organizing it by departments. Like, you can do all of it. We're in a. We're in a crazy time. So I have. I have a really crazy video coming for you guys soon on that. Cool. So let's see. Fix number three. I'll touch on this one. And I'm sure you got some stuff to do here too, is B players. So one of your biggest expenses as you scale is going to be payroll. All right? And there's. Have you ever heard that joke? It's like, how many. Insert random profession does it take to change a light bulb? You know what I'm talking about, Julian? Like, how many doctors does it take to change a light bulb? It's like some rant. It's always like a random punchline. They usually make sense. Well, for this, it's like, how many B players does it take to change a light bulb? Probably five times as many as it would. As it would one A player. Right. And so what happens is. And this is why, like, when we Go back to this pyramid I was showing you guys. It all connects to. This is like your operations and your systems and everything that you're basing it off of is going to be based off of who you have on your team. So for example, there's been instances in our company where it's like, hey, this process is broken and this is not working. We need to go build out a system or we need to go hire somebody else to go and take on this role. When in reality one good employee could do this job completely fine. But because you have a B player in that seat, they're making you go out and build all of these systems that you wouldn't have to build because they just suck or they're like, hey, we need to hire somebody else to help me out here. It's like, no, dude, you just suck. And we need to put somebody else in this role that can handle a higher workload. Right? There's people that can just simply handle more than others. And so inside of your business, if you can put the people in those seats that have a higher tolerance for work, you don't need as many people, which gives you more profit margin. Like I'm telling you guys, paying The a player 20 more or 30% more is worth it as opposed to having to hire three people to do the same job. Anything else to add there?
Yeah, I mean I think ultimately like performance based pay is like what a players are going to want also. So oftentimes it's not even a fixed cost that you're going to add in terms of paying them 30% more. It's usually bonuses and commissions and things like that for outcomes. So if you can think through that lens when you're attracting a players, that'll be a huge, huge benefit to you as well as them. But another thing is back to the founder pyramid that we talked about earlier. It's like, remember you are the constraint of the business at all times as the business owner. And no matter what, it's always your fault because you own the business. You know, if the ship is docking and trading and that's great, if the ship sinks, it's your, it's bad. You know, it's great too because it's all your fault and you can fix all of it anyways. But if you are a founder and you're not an A player, a players are not going to want to follow you. And so that's back to like that personal discipline. Back to that, back to those habits, back to those skills that you're building. Like Being a clear communicator and things like that have to happen because even if you do somehow hood link an A player into your business, if you're a C player and, and they somehow jump in there, eventually they'll just quit within a couple weeks because they're like this is bullshit dude. I'm not going to work for this clown. And so you need to be constantly leveling up as a founder so that you can stay on track to constantly lead better people and so that you can continue to attract better people constantly as well.
100%. Yeah. Businesses, it's the ultimate like it's the ultimate forced self development. Like you have to just become better every day. So that's huge. Do you want to touch on this one as well? Higher standards? Yeah, this is something that's ever evolving.
Ever evolving. Yeah. With, with one of the things that we realized and this was actually something that I realized like I would say like I probably, I learned this lesson multiple times last year personally with the business is like whenever you think that you have high standards, there you, there's still room to raise them. And the way that you can kind of see how this plays out is like right now if you're below 100k a month, you're basically a recreational soccer team. And so wherever you live in the country or in the world, go drive to a soccer field and look at the recreational team play and practice, like watch. It's just, you know, oftentimes really disorganized, somewhat embarrassing for some of the people on the team. There's usually one or two standout people. And that's just about it. And that's what your company is right now when you have not raised your standards. And this is what our company was like for a long time, actually for probably, I don't know, two and a half, almost three years as we were first starting out, stuck below 100k a month. It was just a recreational soccer team. And so as you raise your standards, if you're going to play on the next team or if you want to be coaching the next up, the next level up team, you have to level up as an individual and then hold people to the same standard that you play at. And so this is why it's a kind of for self development because you have to constantly get better so that you can expect and demand better out of other people. And then you're going to have two types of people on the team really three if we're being honest. But there's mainly two. Number one, they, they Just crack under the pressure of having any standards whatsoever because they're just total B players and they're just going to go back to the recreational team and that's okay. It's not a personal thing, it's a professional thing. You're going to have other people that are just going to get on board and they're going to keep raising their standards with you. And then a lot of the middle of the road people, and this is the third one that I forgot to mention in my, when I was first starting, is those people that they try but just don't make it. And it's like you love them, they're a great culture fit, they have great energy, they're super upbeat and positive, but they just don't quite meet the standards. And oftentimes those are the people that are going to kill your business the most is because your business is going to be a reflection of what you're willing to tolerate. And it's really hard to not try to invest in someone when they just can't figure out how to like hit the standard. But they're just perfect at everything else. And so like, that's a lesson that I just learned over and over and over and over and over again. As well as raising standard on, raising standards on people that you're paying, vendors, video editors, bookkeeping companies, tax planners, whatever, software companies, like, all those things have to change and level up. Because usually the game of business is a game of subtraction, not addition. But people get it twisted and they think that they have to add more because they make more. They make, they see that you, when you make more money, it typically looks like you have to do more. But in reality, you just have to do a very few things very, very well and you'll create more value that way. And the standards is the biggest one. Like the longer you tolerate. We tolerated some really underperforming things in our client success department for a while last year. And that was a big mistake that we made. And we ended up making like multiple six figures in profit in the second half of the year just by leveling that department up a little bit, which that also saved our business in Q4 last year. And it was literally just like the only thing that changed was standards. And then the people that came in and met those standards and we keep raising those standards to make sure that we can continue on that trajectory and ultimately get more profit and help more people.
100% agree. And this is something that's always changing, like the better and bigger your business gets you just raise your standards more.
And more every day.
To recap the four biggest things here, simplifying your offer, setting a salary cap and a budget cap for each individual department. Like, you need to literally say, hey, I want to have a 50 margin. Okay, cool. Everything else needs to fall within that 50 and do the math. Like, most people do not do this. And then they wonder why their margin is not where they want it to be. And I'm speaking to me a year ago because I did this exact same thing. Hire A players. Do not tolerate B player activity on your team. 1 A player can do the output of 5B players. You will hire so many more people than you need. You will invest in so many more softwares than you need simply because you're hiring the wrong people. And then lastly, just raising your standards overall for yourself, for vendors that you work with, for softwares that you're working with. Like a software is. If a software's not cut it, but not cutting it, just cancel the software, right? Like, so many people just have so much tolerance. Like, everyone pushes be tolerant, but that is the complete opposite of what you need to do if you want to be successful. It's not about being tolerant and being patient with other people. It's about setting an extremely high standard, being ruthless, and just cutting anything else that does not meet that standard. That's really what it comes down to. Anything you want to add here, Julian?
No, I think the, the most, the best business people in the world that are the most respected or feared or whatever you want to call it, the best conquerors in the world, they just have the highest standards. Like, imagine if the Roman Empire was like, nah, dude, I know that guy can't run a mile in an hour and a half. So let's, but let's put, let's make him the general then. Let's make, let's let him, let's let him be the general of the front lines of conquering, you know, Europe. Let's, let's put him out there. Hey, I know this, this cohort, you know, they couldn't do 20 push ups in a row. These are the guys that we need in, in our government. Like, we need these guys leading us from the front. Like, imagine if that's how it was, right? It sounds stupid when you say that, but it's like for years that's what we tolerated. They couldn't do 20 push ups and we were like, that's all right. Maybe they need to promote, maybe we need to pay them more. We need to promote them Maybe that'll solve the problem. Like no, if some like past performance is the best indicator of future performance. And right now, if you're, if you're on the fence, if you're looking at somebody on your team and it's like they're almost there, they're a great culture fit there. And it's been like months, years, weeks, however long. It's like at some point you just have to accept that past performance indicates future performance and what you see is what you get. And you can either continue to accept that and you can continue to get the results that you're getting, or you can change it and make hard decisions, have hard conversations and keep it moving. But at the end of the day, that's what being a leader is. It's making hard calls and then standing by them even if you're wrong.
So 100. Awesome. I see we got a couple questions here in the chat. I'd be curious on what the new niche was if you guys didn't pursue the opportunity. Our friend is running this business so I don't want to send a bunch of people to that industry out of respect for him. But watch my niche video, it's one of the ones on there. Are you trying to scale insurance to 1mil a month or do you think there are diminishing returns and it's easier to take three offers? No, we'll scale insurance to a million a month. We just bought a domain for $24,000. So we're going to be doing some pretty interesting stuff in insurance but also in other industries as well. But I mean we can get to multi millions a month and what we're doing now before we'll have to branch out. So the thing is, when you have a good offer and you're doing things properly, the cap is only self defined. Like a million a month is not that much in the grand scheme of things realistically. So yeah, that's what I would say to that. What's considered good churn percentage on an agency model? I don't know. I think it really depends on the agency and who you're serving. I don't know. Some people say like 3% a month, but I've personally never seen churn that low. Like if you're serving established businesses like super high ticket B2B then that makes sense. But if you're selling to like smaller businesses, you're going to have higher churn.
Yeah, this one is definitely a loaded question because it depends on if you're like business to consumer business to small business. Or business to big business. If you're dealing with small businesses and consumers, your term will be higher. But a lot of that also comes down to these standards that you're like the standards that you hold with the clients that you bring in. So, like, if you're, if somebody jumps on and they're like, not qualified at all, and you're like, you know, I should just close them and, you know, get this five GS or whatever, that's going to be also dragging down your churn because you're allowing anyone into the offer itself. So you have to be aware of who you're serving, but also what you're willing to accept in terms of your standards on who you're serving. Because, like, you could be in, let's say, the big business niche, for example, like serving Fortune 500 companies and you're helping them with, you know, whatever, and they never churn. But then, like, because you know, there's not that many Fortune 500 companies. There's only 500. Maybe anytime a business owner that has an idea that want. That they want to start a new business, you're accepting them too. And it's like, okay, cool, maybe your churn is 70% because you're accepting all these new business people, but your big businesses only have 10% churn. And so there's like, you have to.
There.
There's multiple factors that go into that churn question. So I would say the higher, the.
Higher transaction, higher transaction volume you're doing, the higher your churn is going to be if you're doing like. And the higher it can be. Like, if you can. If you're onboarding 60 clients a month and they're smaller, you're probably going to have more churn than if you're onboarding like five a month. But they're big, established businesses. So it really just depends. Like, there's no. At least in my experience, maybe this is just because we haven't had, like, with our market, we haven't had like the best churn in the world because a large portion of our market leaves the industry. But for me, it. I think it depends a lot on your money model and what you're doing. But yeah, I don't know that there's like a standard benchmark for everything. I think that's like saying, how much should your services cost? It's like, dude, just so many factors. It's like, you'd have to give me a specific situation and we'd have to do the math. Another question from Kelvin. Let's See, separate from client acquisition, what did your ops teams cost specifically? Do you understand this question?
What did your op slash team cost look like specifically? Your lead handling and pre qualification workflow? No, this doesn't make any sense to me.
I'll just tell you the way that we structured everything with our budget caps. We said 35 can go to marketing, 15 can go to sales payroll, 5% can go to overhead, and 10 can go to fulfillment. But you need to run the math for yourself. Ours will be different now with the new model that we're doing because we're absorbing some of their marketing costs. So the numbers will have to change. I'll update you guys when we do a new budget cap for that. All right, let's see. If you're starting a new niche, how does your campaign structure look? Like, how many ad sets, how many ad creatives? So this changes all the time based off of meta. The biggest rule of thumb now is have a lot more ads, like make have like 20 or 30 different ad creatives. So what I would do is I would do like probably like 500 a day. I'd probably have like two ad sets with different audiences, and then like 30, 20 to 30 individual unique ads inside of each and then just let it.
Run and so see what performs the best.
Okay, let's see. I can do a video on that. Why do people consider real estate a bad niche and how can it be the best niche out there? Assuming if someone is serving the top 5% of realtors. Do you want to answer this one?
Yeah, it's the same reason why.
Similar to our niche.
Yeah, it's the same reason why everybody considers insurance a terrible niche. It's just because, like, in real estate and insurance, you're basically working with. It's basically a biz op. So you're working with people who are thinking about starting a new business but don't have the skills typically to run them. And so your churn is just unbelievable. And a lot of the times they're very limited on their on and constrained with their capital, which is why we always say on these lives, like, we, you know, we wouldn't pick this niche if we had to start over. But, you know, even if you were serving the top 5% of realtors, most of them are not even making that much money. It's usually like they're only making maybe a couple hundred grand a year, which, like, isn't bad, but. But like, for the top 5% of realtors that are already crushing it, like, are they really going to come in and use your systems instead of what they're already doing that's working. You know, it's like, does that even make sense? So like you'd be better off just serving like maybe real estate brokerages or something like that where there's more stability or you know, maybe you're, you know what I mean? Like you're better off going up, up market in those types of niches. But yeah, that's something that I would definitely, I would definitely.
I mean you're not going to make crazy money and you're not going to have a great business but you can make money in it, you know. Huh.
Yeah, like you'll make money.
It's a beginner friendly. You could get to 100k a month in it for sure. But you're gonna have the same problems that we kind of had. No, but we've still made money, you know.
Yep. Marco, what up? Hey Tim and Julian, what's up? I'm very pro. This, we talked about this the other day on our coaching call. I think this makes a ton of sense. As long as you know your numbers and the more performance based you can make it, the better off the close rate will be. Typically as long as your, your lead qualification system is dialed in. Because like you know if you're just telling people that I know you're a niche and everything, like if you were telling people who are starting from scratch that they needed to pay you on a performance based model and pay you everything up front, for example, like that's not going to go as well. Versus if you find people who are fully established, maybe they have a couple locations or whatever and you're doing like big packages with performance basis like that's probably going to be more, more valuable to them and so you'll be able to, you'll be able to charge way more and that's something that would definitely help you out a ton. I, I think I actually recommended this on our coaching call specifically. So yeah, great question.
Yeah, this has been huge for us. My niche is completely different but was interested in how you guys pre qualified your leads for insurance agents. You send them to a form and have. Yeah, pretty much. I mean we, you know, you just ask questions that would determine if they're qualified or not and then based off of the answers to those questions you have the lead count as qualified or not qualified. So you basically just need to figure out cool. These people that I'm selling to, what makes a qualified lead, what makes an unqualified lead. Ask those questions directly and then don't send the unqualified people through. Send the qualified people through and send that. Send the qualified data back to the Pixel and don't send the unqualified data back. And then over time, your ads just get better and better and more dialed in at who you want them to target. Does that make sense?
Yep. I think we got time for one more. We can wrap it up here because we've got to go run the business that we're reporting back to you guys on. We'll take one more. If you guys have any final questions. While you're thinking up your questions and throwing them in the chat. If you guys want to see more videos like this, definitely subscribe. Turn on those notifications for Tim and I's channel. We're both putting out unbelievable amounts of game. We just brought on a new agency to kind of help us out with making these videos as well. So we should be able to get more coming out here soon. So that, that's something that we're constantly working on. And as we continue to improve this business, we'll keep reporting back to you guys what's. What's actually working. So let's see, we got one last question here. Tim, you want to knock that one out of the park and then we can, we can close it out here.
I noticed you don't suggest a VSL when going into a new niche. When would you add a vsl? When you have proof, et cetera? I would add a VSL once your offer is validated. And the reason why is because most, most people don't know how to make a good vsl. And it takes a lot of time and a lot of effort. And I think you can make it work without a vsl, and a VSL would just make it better. But a VSL will not be the difference between your offer working and not working. If you need a VSL to explain your offer, your offer is not simple enough. So you should literally be able to sell whatever you're trying to sell with just a. Like, I should be able to take out a sticky note and write on it what the offer is and then just literally take a photo of me like holding the sticky note up to the camera and that's enough. If you can't do that, you need to rework your offer. And then once you have that dialed, then you can make a vsl. But a VSL takes a lot of time. It takes a lot of skill, and most people don't have that. So that, that would be why, what is the niche and model that could have taken you to 10 million per year. Now if you would have chosen that. I don't know. What do you think, William? I don't know.
We're doing a BONUS Question here. Mr. Abe, you threw us on the spot. Let's see. It's a good question. I would. Yeah, it's a great question. I probably would have picked like business owners in some capacity or niche down to like a specific industry of business owner. And I would have tried to have found people who are probably in like the 1 to 3 million a year range or more if possible. Typically if they're like at 1 to 3 million it seems like a lot of their. They have a lot figured out but they also have so much waste in their business like we did last year. And so it's like you can, you can add a lot of value pretty quickly if you have any level of business experience at all to those people because they just don't have time to do it. Typically a lot of them are solo founders. But I would say businesses doing 1 to 3 million a year niche doesn't really matter that much as long as it's like something that's a little higher ticket. So maybe home improvement, legal, just I mean anything like that. Like I wouldn't serve car wash telemedicine. Yeah, telemedicine. You know, I wouldn't do like car washes or something where it's like you know, 20 bucks a transaction or some like I would try to get into the thousands of dollars.
I would say high volume and high ticket. Yeah, for sure. Cool. Alrighty.
Last. Last one.
From Marco.
Yeah. Sales perspective, would you recommend align prospects to book an intro call first and then scheduling a demo separately or would you go bypass that and do going shoes for where you're at? I would go straight to a sales call. I would, I would actually do like a two call close probably if I'm you right now. Just because I know with your situation specifically you've been looking at trying to figure things out and I think you'll probably have a better time with handling the pressure of the sales calls that you have coming in. If you're doing an intro discovery call and then the second call is like a presentation that you can prepare for and customize for the client on the call to call close is significantly easier if you're less experienced in sales. If you are more experienced in sales, like for me I'll just take anything straight to the calendar when I'm validating an offer or doing something because I've Just had so many interaction. I've had over 10,000 sales interactions one on one. So I'm like totally ready to just do that at any point in time. Like I'm, I'm cool to just take anything. But for you and for anyone that's watching this that's newer, I would definitely start off with two call close. It's just so much easier.
Holy. On's actually had 100 billion one on one sales interactions.
No, I have not had that many. That's a lot. But I have had a lot.
100 million.
Definitely not that many either, but it has been a lot. Cool. Awesome. Alrighty. All right, well, I think you wanna, you wanna close.
I will post the slides of everything we went over inside of school. So if you're not already there, join. We got some fire stuff coming. Really fire stuff coming. Stay tuned. And we're gonna be scaling to.
A.
Few million a month this year. So strap in, tune in. We're gonna give you guys the sauce again. We just bought a 24000 domain so there's some crazy coming I can't tell you guys about yet, but just know just not yet.
Awesome. All right, ladies, gents, good luck. If you need anything, feel free to throw comments in the group. If you want to work with us one on one, feel free to reach out to us directly as well. We do take on a few people a month to do some private coaching with. It's not a big thing that we do just because our time is so limited. But if you'd like to apply, you can reach out to us individually and good for that as well. Other than that guys, God bless America and let's go get it. I'll catch you guys in the next one. See ya.
Peace.
