recording as well. So this this idea of the One Big Dial, I want to spend just 10
or 15 minutes walking us through a practical exercise on how we can do that.
As I was thinking this through I was looking at the idea of if it's the Lord's
One Big Dial then what would that what would that look like? And so there are a
couple of exercises we can do and the training I put together for the team
side of this is talking about this One Big Dial but it doesn't go through the
exercise of it. And the reason is is that look as small business owners you know
we need to identify and then focus on one single metric that transforms the
whole business. When you turn that thing everything moves. Here's the interesting
thing about that dial I think you get it better by revelation than you do by just
hard analysis. Although I think you might have to go through some practical
downstairs steps until you find the one that makes you know like the Lord says
now you've got it there there it is. And I think for many of us that you know we
can think about this. Last year we did an exercise and I asked you this we did
this simple exercise. Let's say it's five years from now and somebody's
come in to buy your business. So just picture that for a second. It's
five years in the future so it's 2030 and you're about to sell your business.
You're sitting in the lawyers offices you're in the closing. And so the
question here is how much are they paying and what exactly are they buying?
And the reason for that exercise was to help you find the One Big Dial. And so as
you're thinking through this you know you've got a couple of key elements of
real value creation. So for instance you know you've got a team of leaders. That's
huge to a buyer because it means they don't have to bring in leadership.
Specifically private equity firms don't like to have to bring in leadership or
bring in management. They love to buy a team that's already highly functional.
And so there are only a couple of categories of buyers if you like. You
know you could sell it to competitor. You could sell it to a private equity group.
Maybe you have a family succession which is effectively selling it to
your kids or you know giving it to your kids. Or you just give it away to you
know like Bill Goff did. You know because he did that thing it's Thursday we're
giving something away. Anyone who knows Bill Goff? And so he had this big
law firm and one Thursday he got the whole staff in and he went to one of the
younger attorneys hand him the keys says now the law firm is yours. So you could
do that. And they said but why? And he says because it's Thursday and I
give away things on Thursdays. That was his reason. So but here's the
interesting thing. It doesn't matter who you're selling it to. Whether you're
selling it to your management team, to your family members or even if you just
literally just gonna shut it down when you're done with it. It doesn't matter.
All the results of that is to help you find what's the big growth potential.
What's that big dial that if I turn that the value goes up. And the last
time we did this several people came back to me and said well you know I'm
not really thinking of selling it so much of the exercise applies to me. I
think I'm just gonna give it to my kids. And my answer is why would you want to
give your kids a low-grade business? If you knew you had to sell it to someone
and they came and said you okay change these few things and that would you know
add a zero to the purchase price. Wouldn't you do it? So why wouldn't you
do that for your kids? You do it for a complete stranger who runs a private
equity firm but not for your kids or not for yourself and not for your yoke in
the Lord. So all that's to say is that there are best practices. There are
things you do in your business that give it value. I have been as a private equity
firm. I've been on both the buyer side and the seller side of the transactions.
And I can tell you there's nothing worse than watching an owner realize in
that moment part of the reason why you as a private equity firm are buying it
is because they miss something. Because there's some dial you can turn that's
gonna pull that whole business up. Now sometimes it's roll-ups and all that
sort of thing and there are other more strategic reasons. But I've seen the case
where they go hang on a second so if a year or two ago I'd made that one small
change this would have been worth twice as much or three times as much. And the
answer is yes it would have been worth two or three times as much. So that's one
exercise we can use to kind of get ourselves to get to think you know to
work on the business and not so much stuck in it. Because when you're in the
day-to-day in the business it's hard to zoom out and see exactly what it is
you're doing. So today I'd love us to take a few minutes and practice do a few
exercises to get us there. Now what's your business
is worth today okay we're gonna sell in five years time I asked you what's the
number it's good you have a sense of what you think that number might be and
then what could make that number bigger is figuring out that one that one big
dial now there are only really three ways to value a business three there's
lots of variants I have a book this thick on my shelf I think it might be
behind me on on business valuation but it comes down to three big categories
the first is what we'd call book value this is the lowest form of valuation
basically this is great if you have a lot of assets like you're in a big
manufacturing facility there's a lot of physical assets but those assets are
depreciating anyway but that is book value in other words what's the value of
the company if you if you take the balance sheet and look at it and some
most business especially service businesses have a very low book value so
that's clearly not a way to value it the other is market comparison
especially in more publicly traded or in an environment where there's a clear
public sector that you can compare it to so the question then is what would a
similar business sell for in your industry and so now we're looking for
and so what every industry has its own kind of multiples like oh they'll sell
two to four times annual profits you see you know as seen on TV on Shark Tank
they just do five times revenue which is hilarious because that's extremely
generous and it's meant for show and and for whatever but it's not reality so for
so you know people say well the business is well you know you for 10% of my
business for a million dollars so you just valued your business at 10 million
dollars and you've got a hundred thousand in revenue you know so you see
a lot of that on Shark Tank but but the way an emerging business a growth
business is valued is on discounted cash flow so we just look at the future
earning potential of the business and then we we attach a risk to that future
and say well we're gonna discount at 7% a year or 10% a year obviously the
further you go out the bigger the discounts and and by the way I've
developed my own model for valuations and blah blah which worked better for me
but the bottom line is it's a black box and every year it's dropping a lump of
cash and over the next five years what would those lumps of cash be and then
discount that down a bit and there's your number and the problem with that of
course it's all based on spreadsheets you know you just take spreadsheets five
years into the future but typically it's based on the five years previous to that
so that so that there's some sort of you know legitimacy to the future claims and
you know like having well-documented assumption I'm assuming based on the
last five years we can do it again for the next five years the following all
that is three boy so we can do one of those three ways the book value market
comparisons or discounted cash flow or DCF as it's known in the industry and so
you end up with these what a lot of people who look at business end up with
what's just a bunch of rule of thumbs you know they're saying well a service
business typically is one to three times annual profits how much did you make
last year well we made a hundred thousand okay it's probably worth
between a hundred and three hundred thousand depending on what its upside
potential could be product businesses tend to be more two to five times
profits but then they are these anything where there's a reoccurring business
where that business you know where the customers are there for a number of
years particularly now we can be anywhere from 5 to 15 times but if you
have something unique something special then there's no limit to that multiple
in other words so I had a friend who came up with a brand new restaurant
category and I think it was called fast casual of fast fine dining or something
like that I forgot an exact category and he sold his for 15 multiple so they
came in wrote a check for 15 X on his profits in tech you get valuations that
are just stupid you know because what there is what they're looking for there
is that the rate of rise so you've got companies with billion-dollar
valuations and they don't even have revenue or very you know minor revenue
pre-revenue is the nice polite term and but you know so in other words the value
of your business is in the eye of the buyer it's what the buyer wants to do
with it could be that the buyer wants to buy it and roll it up with similar
business and then sell it off to another bigger private equity firm and they will
just sell to each other and that's why private equity is a strong case that is
destroying businesses because what it's doing is it's just doing all these
roll-ups and you know and it's become so highly specialized by industry and then
by the level they operate at but whether whatever that view might be the question
is what's your business worth and it's good to have a sense of that today and
you can say well you know we're not making a lot of profit yeah but your
business still has some sort of forward potential so what what is that value and
so I have a very clear thing in my mind that I want to see I want to build
brilliant for instance to a twenty million dollar business I don't mean
that just that it'll be I mean it'll be worth twenty million dollars not that
Nestle have twenty million dollars of revenue so well then I can say well as a
rule of thumb if I'm looking at 5x and I have to be at four million dollars you
know in net profits well if I'm doing four million dollars in net profits and
that's ten percent of my overall revenue then I need forty million dollars so forty
million dollars would give me ten million dollars of net profits and if I
mult sorry I only need sorry I did that wrong way around didn't I so if I wanted
a twenty million dollar business and I'm using 5x I need a four million dollar
run rate or revenue yeah I did that correctly so doing this all live doing
valuations in my head but as we're thinking about that the thing I want you
to get is what is your business worth now and then where you think it's going
to be in five years and then again what's the one dial that you can turn
that makes that move so there so we've talked about the three key drivers right
team of leaders predictive reoccurring revenue and especially if there's a lot
of free cash flow generation that that makes it more valuable Warren Buffett
says when cash is predictable it's valuable and you know so that's why
people who do kind of one-off things that's a lot harder to get a high value
for that but the minute you have got reoccurring all the all the revenues
predictable in some form or another then you have a much higher value business so
here's here's what here's what buyers want right they obviously don't just want
strong financial performance they want to know how can this scale and you know
what's the growth potential here if I because they buying the company they're
usually gonna do something to push that scale up maybe because it fits into their
group and their group can immediately help scale the business or they plan to
put a lot of growth capital into it to take it to the next level they're
planning to scale it in some way they seeing some growth potential and again
the growth potential is tied to that one big dial if you can if you can explain
it to yourself and your team what the one big dial is then you're in a
position where everybody knows exactly what you do okay let's get this let's
get this really practical let me give a couple of quick examples let's say you
in the restaurant business then what would be the you know the one big dial
for the restaurant business you've got fixed cost got range got labor you got
food cost all that what would be the one big dial so I think as an example there
it could be revenue per customer so let's say you knew that your revenue per
customer you look at your total revenue and you divide by the number of
customers over a set period of time let's say monthly and let's say that
number is $40 so you figured out that you on average have $40 revenue per
customer now the question is how can we increase the revenue per customer so
yeah we can negotiate our end get slightly food you know cheaper food
things but what if we then took the entire team focused that and publish
that number it's like watching the ballgame and everybody can see the
scorecard everyone can see the scoreboard right imagine going to a
football game well the scoreboard isn't working are we winning I don't know we
seem to be a lot on this side maybe we're winning you know that would be a
terrible game to watch well do your team know the score so if you knew that
number and you displayed that number so maybe you now start training your staff
on doing you know wine recommendations and pairing or have higher-end you know
dessert options or you know as they're checking out having you know sort of to
go snacks or whatever the whatever the extra things are what you'd be pushing
for is increase the revenue per customer so that means all our training all our
focus or coming up with premium options really enhancing the experience of
being there one group actually did this and what they found they went and took
their top 20 receipts of their customers and they found there were all groups you
know of between I think was between four and six or
six and eight, something in that range,
but they were often family gatherings.
So they made a special program, you know,
for family celebrations.
And, you know, in a six month period,
you could easily double that number,
double the revenue per customer.
Okay, so I'm gonna take a second there
and cycle back to you
and just see what you guys think so far.
Robot waiters, yeah.
I'm not sure robot waiters will do much
for revenue per customer.
I think they'll lower the cost,
but I don't think anything,
unless you make it such a cool experience.
Ray.
Two fun examples is Panera.
You know, Panera has a sip club
and it is, they now have 48 million members
that pay $14.99 a month to get unlimited drinks.
When they went from 10 to 14.99,
they actually increased by a hundred million dollars
because people, when they come in,
they buy other stuff.
And then another one that's really fun,
it's right down the road from me,
is Cooper's Hawk.
And so Cooper's Hawk has a wine club.
They have 600,000 members
that get the wine club shipped, you know, every month.
They have these little wine tastings and everything.
They make so much more money
from the wine club than their food,
which is pretty cool.
So what they've done there is they've found ways
to increase the revenue per customer specifically.
And, but there could be other industries,
like for instance,
what if you're in an e-commerce industry, right?
Then in an e-commerce,
it's about the lifetime value of a customer.
So if your customer comes, spends,
like at Brilliant,
we know that our monthly subscribers
generally stay for, until recently,
but for about 13 months.
If we increase it one month,
that's a huge, huge increase for us, right?
Then if while they're 13 months,
there is an upsell to join the school.
Now we've gone from somebody paying $20 a month
to somebody who's involved in a bigger program,
or maybe they're even enrolling in the $7,000,
you know, school year in the School of Leadership,
or whatever it is.
But now the customer,
so that was one of the big things we started focusing on.
But if you're in a SaaS company,
like let's say what Promforge will be,
and to some degree is what Brilliant is,
a SaaS company where software is a service,
then it's the monthly churn, all right?
So, because if the monthly churn is high,
your acquisition costs for the customers
tend to be fairly stable.
I mean, they might increase because,
you know, the ads got expensive
because, you know, it's an election year or whatever,
but for the most part,
they tend to be somewhat predictable.
And it's a lot easier to keep a customer
than to go and get a new one.
And you watch the telecom companies do this.
They spend thousands of dollars
getting you to come to their deal,
you know, to get on their plan, Verizon or AT&T,
and then the customer service sucks,
and you say, why?
So, you know, Ben, you wanna weigh in?
Yeah, I think that monthly revenue,
recurring revenue is the dream a little bit.
I'm curious with this Brilliant group of people
in a product-based or, you know, construction, roofing,
I've thought often about, you know,
I've thought about how to find some recurring revenue,
what, you know, what service,
what value could we offer that would create that?
And I'm wondering, I guess, off the top of your heads,
any ideas?
Yeah, I can speak to that.
On the commercial side,
I've got some ideas on the residential as well,
but on the commercial, we're definitely doing it
with general maintenance programs.
Yeah.
So that's a big one.
And we come back every year, we perform the maintenance,
we guarantee that roof to be leak-free for the next year.
And then, you know, each time we come out,
we reassess, and then eventually,
they get to the point where there's not enough to work with,
and we need to do a restoration.
You know, full roof replacement
is kind of like the last resort.
We're really trying to push that out as far as possible.
And with modern technology and the coatings and things,
we can do amazing things,
and sometimes indefinitely push that roof replacement out
of the equation with full system warranties,
no dollar limit, full system warranties,
which would be the same as if you were doing
a brand new roof on it, you know?
So there's a lot of really cool options.
It's sustainable, you know, great for the earth,
and, you know, less in the landfills,
but, you know, so there's a lot of side benefits.
On the residential, kind of a similar thing, I've noticed a lot of the home service companies around us, that we've had come out, they get you in a little program where you get some perks, you get a discount, their trip fee gets waived, you get VIP status, they come out, you're at the top of the list, if you need them, and then there's some discounts and different things.
And you just pay monthly for that, either monthly or annually, for that kind of a subscription, if you will, the other sorts, you know.
And put them into those four categories, remember the four squares where you talk about profitability versus effort, right? And then you look for where they are, and you'll find that you'll have a bunch of fours, which is they were high effort and low profitability.
And then there was those were less effort, high profit, I think it will start helping you point to how you start to maximize and then once you're there, then you can start asking, is there some way we can increase the average project size?
And here, you know, niche specialization or packaging helps, like, oh, we're partnered with so and so, we also do whatever air conditioning or whatever, you know, with Jeremy's roofing or whatever, you put a package deal together.
And especially if you can add to that an annual maintenance program that covers multiple areas, because think of the convenience to the customer, I don't have to worry about this, this, this, this and this in my house.
These guys not only built this new part or did this reno for my house, but they also now are taking care of whatever.
So I don't have to, I'm sure you've thought of those sort of things.
But what helps is starting with the data.
You don't want to just do red hat, you know, intuition, you want white hat, you want factual data.
It's really good.
I mean, we are, are, are the buildings we specialize in are low maintenance.
It's just one of the selling points.
Although I think, you know, in the turnkey house thing, there may be some maintenance things we could look at there.
Probably digital products.
Emily, I mean, this is something I have looked at.
I think the, the recurring, I think the nature of our projects, particularly as people are trying to do some of the subcontracting ourselves, that actually is the answer.
It's just been difficult.
I probably need to maybe thin slice it more and just start with something simple rather than trying to boil the ocean with the whole community.
Yeah.
I think what we do is we just get a fuzzy feeling about how all the projects are going and we see them on a list or in a spreadsheet.
And so it doesn't, it doesn't help.
What I do from a kingdom viewpoint, upstairs viewpoint, is I sit down with the Lord and I ask him this question.
Would you help me understand the business the way you understand it?
And that's a big help.
Second thing I ask him, where's the starting point?
Very often it's the four square thing.
That's how I came up with that, by the way, way back when.
Cause he just asked me, well, what is it you want?
And, and I said, well, Lord, I want to do projects that are profitable and that are, you know, highly repeatable.
I, there is a, you know, it's not like there's unknown stress or complexities, but also I want to do stuff that's right.
And that gives us shiny eyes as a team.
So, you know, if somebody said, would you come and be the temporary CEO for three months?
Or actually I think the number was four months recently at a hundred X.
So which turned into 13 months.
That's not my best space.
Right.
And, you know, Pedro was really generous and, you know, he was, he was great to work with.
The, the reality though, is that's not my, that's not my shiny.
I have to be the leader of what I do.
I'm a terrible number two, which I told him on day one.
But it, it is, I think it is, you know, that it, it comes down to those very simple things.
You were sharing a story there, Ray.
Yeah.
Just, you know, Emily's suggesting digital products.
You know, Joe Polish is a pretty famous story.
I don't know how many people know Joe, but, you know, Joe, he built a carpet cleaning company through very unique marketing.
And then he succeeded bitcoin.
He started teaching all the carpet cleaning companies
how to do it, built a humongous event.
He had a thousand carpet cleaning companies
come to his event.
And then he launched the Genius Network,
which is one of the more premier masterminds out there.
Regularly has all the big names at him and everything.
And I was a part of it for a year.
But that's, you know, you just, if you,
you know, if you like the idea of teaching and stuff,
that could be an entire other business.
There are a lot of guys who go.
There are a lot of builders
that would love to know what Ben knows.
Yeah, so that's called going meta, meta meaning above.
So what you do is you look at how it's working for you
and then you go and teach others
to do the same on scale, right?
So that's a great way to shift a whole industry.
Find like, you know, if you have a unique building
or a new technology, there's so much.
I'm very interested in building technology.
I follow several key players, you know,
all the new tech that's out there.
And I've always been thinking,
this seems to me the one industry that hasn't changed forever
and somebody is gonna just turn the whole thing.
Whether it's somebody like Boxabl or whoever,
it's gonna turn this thing on its head.
And I know there's pre-manufacturing
and there's printing of houses going on in Texas and so forth.
I've seen some of the stories and watched some of the things
but none of it strikes me as the game changer thing.
They're still trying to figure out the economics.
They're trying to figure out how to scale this thing.
So I thought I'd just throw in a couple of quick examples
because that might help get the juices going.
So let's take a restaurant business.
It's got 200 customers a day.
Average ticket value is $38.
But there's rising costs, rents are going up,
labor costs are getting more expensive,
food costs are improving.
And now we're at the point of just basically breakeven.
Are we gonna make it?
But when looking at the top 20,
which is another way of saying the four square,
if you're doing the four square analysis,
you can put all your receipts into four squares, right?
And then saying this is our number one, this is our top 20
because 80% of the value of the business is in 20% of it.
We know that 80% of the life of a business
is in 20% of what you do.
That's a big thing to know going into this analysis.
Then we know that we go, oh, hang on,
let's do this family celebration
or family feast for 46 people.
Let's do that.
Let's get better wine,
better help train the servers.
But now everybody's seeing the scoreboard.
So in this case,
where it goes from $38 to $58 in eight months,
suddenly we've increased revenue by 53%.
So in that particular,
we go from breakeven to an 18% profit margin just quickly.
And what did we do there?
We turned one dial,
but more importantly, everybody knew the dial to turn.
So, you know, when I was doing my PhD research,
I came across a fascinating case study.
And what the story was is that 50 CEOs from US and Europe
were doing a worldwide tour
to visit the best run companies in the world.
And they end up in one of their stops is in Malaysia.
And there is a company there owned by a Brit in Malay,
and they'd figured out how to extract lead out of pewter.
And they had all these pewter products.
They had 3000 employees,
one of the fastest growing,
literally just dominating their market.
So they go to the presentation.
They're in this theater.
They're about presentation.
They're expecting the senior management team
and the owners to walk out and do the presentation.
And they are not the ones that can imagine the surprise
when five people in blue overalls walk out.
And these five people in their blue overall,
obviously line workers and shift managers and so on,
present the products, their technology,
their unique positioning in the market,
their marketing strategy,
their capital cost structure.
It just, they just blew out the whole thing.
They knew the business.
So at the end of the thing, you know,
the presentation, one of the CEOs, typical CEOs,
thinking about his own deal, right?
Raises his hand, he says, okay, time for some real talk.
How long did it take for them to train you five guys
to make that presentation?
And they all look kind of confused.
And they go, no, no, no, you don't understand.
We heard you were coming.
So they put up on the notice board in the factory
who would like to make the presentation.
The problem was 3000 people put their name down.
We were just the five lucky ones chosen.
Now that to me, there was the lesson right there.
Forget what they said.
The fact that everybody in the business understood
what the big dial is.
And they knew exactly.
And because of that, all the other components
that make up the business is all dialed into that.
Another quick story is of a consultant
who arrived in a company in Chicago that manufactured.
telecom equipment and so he was hired to come and help them up to us they're
really pretty well-run business and so he did an unorthodox thing he decided to
go to the loading bay instead of to the reception area and he met one of the
one of the people there was packing all this equipment into the back of this
this truck and so he said to the he said guy you know what do you do here he says
well I I pack all the equipment and and then I send it out for the installers to
install and he says well how do you know what you do matters I mean how do you
contribute to the bottom line oh that's easy you guys says last month I increased
I decreased our installation cost by 30% is it really he said yeah but our job is
not just to pack it but we go out with the installers and we watch how they how
they unpack what we packed and we realized we had them all back there to
unpack everything to find all the parts but if we pack them in a certain way now
we've reduced those costs by 30% see there's somebody who gets the point so
the question is does everybody in your team know that does everybody in your
team know how they're contributing to the bottom line and the fastest way I
know to do that is figure out the big dial what is the big dial and if we
manage that one thing by the way there's a whole second part to this which we
only have time to get into today but it's also a key way of how you can do a
whole lot less in your business using what Dan Mattel calls the 1080 10 rule
does anybody know that 1080 10 rule so the 1080 10 rule is that 80% of the work
is done by your team but the first 10% is you doing the design you know I've
just recently done that for brilliant we've just put an 18 month plan together
we worked through all that you do the design then you let your team go and work
and then the last 10% is when you do the refinement the QA you go that's where
your taste comes in I don't like that kind of thing I don't like that wording
we don't say that we don't do this you know whatever you're adding your your
unique touch to it at the end so you touch it in the beginning you set it up
you can set the vision the team executes you come back and polish it up that's the
way by the way you free up 80% of your time you can you can thank Dan
Mattel for that for that for that little treasure trove so whatever it is you're
managing you know if you look at if you look at your business it's a great like
we do you know we did immersion at the inner circle as in time of worshipping
waiting on the Lord in a in a life stuff but you can do exactly the same thing
for the downstairs business stuff that's why we learn that in a life skill so we
can do it with the Lord externally so Lord how do you see this business how do
you see this product how does this fit in and while the Lord may or may not
just speak to directly and say it he often will lead you through a process in
which you discover it right and then you discover you know the reason we're
running a second brilliance event in October is because the Lord reminded me
that was the original plan that we came up with years ago but then due to
various things we just got sidetracked never got to it and so I was thinking
okay and so what I did is I took all our products and I put them in the four
squares and where's the thing where are we seeing the most transformation and
where are we receiving the most dollars now who would plot transformation
against dollars just saying but that's the kind of innovative kingdom thinking
we've got to get past all the nervous oh it's about money that's the evil side
and then I know you guys don't think that so for to me it all of life is holy
exception and Jesus died with that so I've got a great life so here's the
thing where we are is what how do you see the business how to get that one big
deal so let's talk about some steps I put together to help you think this
through they're not they see steps they might be little exercises that will help
you work on the business and get out from being in it firstly I like to ask
the Lord when he wants to do this and because it's my habit every week to say
so so father what are we working on this week you know sometimes I'll ask by the
day but often hours by the week because weeks a nice chunk of time to get
something done and and so the so about eight weeks ago I asked the Lord we're
doing the Lord says we're rethinking the business and I just knew my I got
excited I knew my heart this was gonna be great and I had no idea what I was
gonna do next and how to do that but I knew he I said Lord you know the Holy
Spirit is an absolute genius but I found that when I don't ask I don't get and
Jesus said you don't have because you don't know so ask ask every little
detail ask ask ask ask
What does this number mean?
How do you want me to look at this?
Are there valuations I need to do?
So step one is I think of it from the buyer's perspective.
OK, I'm selling it one day.
What's it worth?
We've been through that exercise.
How can I create equity?
Why?
Because you don't get wealthy from cash flow only.
The fastest way to get wealthy is through equity.
Equity building is your fastest way.
So if I'm going to sell that and I'm
going to somehow monetize that equity at some point
in the future or portion of it, I
have to focus on what's building equity in the business.
Number two, look at the value chain, right?
So here's what it cost me to get a customer.
Here's what it cost me to deliver that customer.
Here was the effort involved.
And now I can put those into a four square
and decide which customers so that I can get rid
of all the fours straight away.
You know, the high effort, low profitable.
Get rid of that business as fast as you can.
When I was doing consulting, I would literally
do the exercise in the morning and then spend the afternoon
on a speakerphone with the CEO cancelling all the fours
that same day.
And they would just, you could see the fear in their faces,
you know, we need the cash.
And I said, no, what you're doing
is you're tying up your resources on stuff
that doesn't produce.
Let's free up all the resources of the organization
to go to the very, very best roses, right?
You know, and so then the third step
is what one might call a constraint test.
Here's the constraint test.
If I can only improve one single aspect of my business by 50%,
which improvement would I make?
That will impact the bottom line.
I can only move one thing by 50%.
And then that's got to have a dramatic effect.
This is such a practical thing to do
because a lot of times we get impressions like,
well, if I have more of those, they'll be good.
But then just take that number.
If you like, you can even double it,
double the number and say, did it make a difference?
And you'll be shocked at where the numbers actually are.
This is what we also call black box modeling.
Just get a rough spreadsheet.
You're not trying to model the business
and you're not being an accountant
and you're not being an economist.
You're just trying to learn where the numbers go.
Oh, so if I double this number,
then what happens?
If I, and just play with the numbers.
And again, asking the Lord to be part of that process
with you, always the obvious big dial
makes itself known quickly.
Third exercise is the time investment audit.
Here's what I've learned from doing this exercise
for many years.
Track where you spend your time versus what drives revenue.
It's amazing how many times, you know,
sometimes our biggest opportunities
are things that we're just not giving attention to,
you know?
And you say, well, of course we give,
no, no, really, we do this.
We all do this.
Anybody know what I'm talking about?
Yeah, I do this all the time.
Where's my biggest, especially me as the leader,
what's, where's my biggest contribution
that moves the needle?
Then try to get every team member to do the same.
Last exercise is start with a full
customer economics review.
Figure out the economics of your different customers.
Again, in the four square,
but this time you're looking for things like
customer acquisition cost.
Knowing what it costs to bring a customer in
is really, really important.
You've got to know what that is.
You say, well, we don't do ads.
You know, we've got a sales team.
Well, that's a cost.
How many, how much do you pay each month
for your sales team?
And on average, how much business do they,
well, there's your customer acquisition cost,
not docket science.
Average transaction value.
Maybe you sell real estate, you know, or something.
Your frequency, how often can you turn the knob?
How often can you crank the handle on this thing?
If you can only crank it once or twice a year,
well, that's a lot harder
than if you can crank it once a week.
So how fast can we crank?
What's the frequency we can drive it at?
And then how long are customers with us?
And what's the overall lifetime value?
Is the value all up at the front
and then you've struggled to get them to do anything else?
Or do you build them up into, you know,
is it Flynn, Ray?
Is his name Flynn?
The guy talked about the perimeter fandom.
Do you know him pretty much?
Yeah, Pat Flynn.
Pat Flynn, yeah.
So Pat Flynn, thanks, Jenny.
Pat Flynn.
I found that very compelling
that we spend way too much time
trying to build just the bottom of the funnel
when we should be spending a good amount of our time
on our raving fans, the top of the pyramid.
The big ticket.
of the pyramid is where, and then let it trickle down.
And I think it's one of the big,
I don't think it's as simple as just focus
on one or the other, but he's talking about
what are you prioritizing, not stop this and do that.
And I know starting with your big ticket item
is you wanna get there as fast as you can
because that's typically where your big contribution
to the world lies.
And if the quicker you can get there, the better.
Ray, I know you have thoughts on this.
So I'm gonna bring you in on it.
We've talked a great deal about this
and I know you train a lot of teams yourself.
Yeah, for sure.
I think a lot of times we have,
I mean, if you're talking about super fans,
a lot of times we have these super fans
and we just aren't offering them enough.
We're not making enough offers.
And so one of my client from a million years ago,
probably almost 20 years ago,
she owned multiple olive oil shops.
And so you would come in, she had all this gourmet olive oil
it was amazing.
And you get a little shop glass
and you could try these different oils
with a little bread and everything.
And she had certain people that would just come in,
just love the stuff.
And I was always encouraging her to offer
what's the next level.
Offer a $30,000 trip to go over and crush some olives.
There are people that want to experience
at the highest level, give them that opportunity.
And I think that a lot of times we don't think about that.
We don't think about, what's his name?
Perry Marshall wrote a great book,
The 80-20 Principle,
which everyone kind of understands that principle.
But he says 80% of your income
will come from 20% of your customers.
And 80% of that income
will come from 20% of those customers.
So there are people that, like in Ben's world,
there may be some collaboration
with certain commercial guys that,
if only that right there was tighter,
that would be $100 million.
And so it's, how do we navigate?
And I've had several clients over the years
that just love my stuff and love my coaching.
And they've dropped over $200,000 to get coached by me.
And then there's other hundreds of thousands of people
on my email list that don't buy anything,
but they see my free stuff and they share it
and someone else sees it.
And so just thinking about,
I mean, you made so many great points there.
You could pick any of those and focus.
But I like the, how do I take someone
who just really loves what it is that I do
or the service that I have or the product,
what kind of collaboration,
what is the next level kind of thing?
What's an out-of-the-box way to work with them?
Yeah, and I think part of when,
even when we put our recent Offer CEO Intensive together
was because we saw the need for people to have the help.
By the way, I'm just dropping in the chat
a whole implementation strategy
because I don't think we're gonna have time to go through it
if you just wanna copy and paste that.
But basically, here's what you need to do.
Identify, week one, see if you can identify the big dial.
Two, create a tracking system.
Let people, let your team see the scoreboard of the game.
And then establish baseline metrics.
Like, okay, we're starting at $28 per revenue per customer.
And then set a 90-day target.
We want that $28 to be $40.
Then get team alignment.
Talk it through with the team
and then help each person understand
how they're gonna contribute to that one metric.
Now, what you've suddenly,
you're focusing all the resource
on the thing that moves the needle.
Then if you have to even adjust incentives,
if you like, recognition,
Sunso made, we do a Tuesday triumph thing
where we call out to each other on who's contributing.
But we could even take that up a notch in our team
and do it specifically how it's contributing
to this, to the main thing.
And then the hard one,
eliminate competing metrics and priorities.
Shoot those in the head.
We don't need to do those.
Back to trimming the bush.
What's dead and needs to go?
You know, what's weak and not getting better?
What's good but not great?
And then we get to the 20%,
where the 80% of the life is.
Your implementation strategies,
what we wanna do is we wanna focus on,
I would suggest at least weekly progress updates
and publish it somewhere,
put it somewhere.
everyone can see it or on an app or send a text, whatever it is, make sure everybody knows what
that number is and let them see the progress. It'd be great if we can see the the movement
up or down, by the way, even the negative thing can be healthy because, hey, what did we do wrong?
What did we where did we misstep? So it doesn't have to be just, you know, onwards and upwards.
But I mean, the quarterly review, you know, is this still our big thing? And when you dial this
I think this is like the number one problem I see in businesses. And so I thought, well,
let me just share a couple of mistakes I've seen made. So here's a couple of again,
because I'm running out of time, I'm just going to drop it here in the chat for you. But
here are a couple of the mistakes I've seen made. You know, try to focus on three to five
critical metrics. Guys, there's one. If you've got three to five, you haven't finished working,
you're still you're still figuring it out. So that's my rule for me. What's the one thing?
Now, what you might find if you have different divisions in the business that that may look a
little different, but you have to choose one. Everything else is secondary. And it's OK to
have such secondary metrics as long as everybody knows they're secondary. And the mistake number,
you know, look at short term focus, you know, optimizing for this month or just this quarter.
But we're not building for the long haul. What's going to build equity? I'm going to sell it in
five years. That's why I give the five year horizon to get your mind off the short term
problem in the cash flow. And I have payroll on Thursday. We know the feeling. I'm just saying
that we will we'll go through that all the time. But I would say ignoring the team alignment,
it's really important that the whole team know. But probably from a kingdom viewpoint, by far,
the biggest mistake of all is not knowing that you're doing this in yoke. You're not on your own.
He said, I will be with you. I'll go with you. I'll help you. Moses said, Lord, if your presence
doesn't go with us, I'm not going. Right. And that's what it is. Not that his presence isn't
with us, but he was Moses in the Old Testament where his presence did come and go, depending
on their behavior. You're one with Christ. You have a far greater kingdom advantage.
So maybe for some of us business wise, time to move out of the shack and into the mansion
and say, Lord, what do you what do you got for me? What is this that, you know, I want to just
not only have fun doing it, but I want to take it to the scale level where it makes a difference,
where we're moving the needle, not just for our business, but for our community, for our people,
for our industry. You know, I want the kingdom to have this level of influence.
Well, there are a couple of amazing things if you pull this off. Right. So clarity emerges.
That's huge. Everybody now every decision is now balanced against that one thing.
Growth accelerates because it's focused. No one's pulling in the same direction,
especially when you feel like that's come straight out of your yoke. If you and Jesus
are pulling in that direction and your team joins, you've got something good going on.
Of course, team performance improves because they know what the priority is and they're all
pulling in the same direction. Your business value is going to increase because you're focusing on
the core building of equity, not just cash flow. And of course, your personal freedom grows,
especially if you're going to use the ten eighty ten to do the ten eighty ten thing.
You've got to start with what's the big thing, because how are you going to manage it remotely
if you don't know if the one big number is moving or not?
If you had access to that one big thing, you could spend your time and other things
and just come back in and look at the dial. Is the dial moving? Is it good? And by the way,
definitely decreases stress and conflict and confusion because everybody knows what we're
trying to do. Cool. Well, since you like the summaries, I'll drop the transformation promise.
Here's the deal, guys. The Lord, by nature,
is into transformation and he wants to be part of yours in your business and how your business
will transform the lives of the people who work in your company, whether they know him or not,
and then your community and maybe even your industry, maybe even the country.
Who knows how far this goes? So I hope that was helpful.