Welcome to The Game w/ Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Wanna scale your business? Click here.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode:Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap
Chapter 1: How can I scale my financial planning business?
Hey, Ox. Hello. My name is Rick, and I sell financial planning services to young big tech employees, W2 employees. We do about half a million in revenue. I'd love to be at five million within the next three years or so.
And what's currently stopping me is just a time resource management issue where I'm currently doing the fulfillment of meeting with our clients and I hired a new full-time associate planner to start to take over those relationships. And so I think my current constraint is figuring out how to replicate teams as I continue to grow the business.
We're doing, relatively, we're just doing organic marketing content, mostly on LinkedIn, and write a daily blog, which I post to the website, and an email list, a small email list.
How many sales a month did you do?
About two.
Two sales a month, and is the model like 1% assets under management?
No, and that was another question that I wanted to get your thoughts on was, One of the big swings that I took about four or five years ago is to change the traditional financial planning model. So instead of charging the 1% AUM fee, we charge a 25 basis point AUM fee and then a monthly subscription, which is 275. So it nets out to be about 5,000 per client per year on an annual basis.
And then obviously bigger clients pay more on the AUM.
Interesting. Okay, got it. Okay, so typically with your type of business, they're usually demand constrained, not supply constrained. Like managing lots of people and lots of money usually doesn't actually take too many resources relative to how much they make you. And so I think that the big issue is probably just acquisition. So getting two sales a month is probably the big bottleneck.
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Chapter 2: What are the challenges in customer acquisition?
It's good business, right? Just keep it easy. Yeah, I would rather you keep it easy.
Long term, if you were like, hey, I've got 15 trucks for the city or whatever, and I've got 15 teams that are out doing it, then I'd be like, yeah, I think having a canvassed top of funnel kind of awareness, stuff that generates leads in a centralized phone team that can then also proactively send trucks out to people that you already sold over the phone, I think that makes sense.
But given the fact you already know the script, you already know the process, I'd rather you just stack some of the recurring so you have the cash flow bring the new guy in. That being said, If you get a little bit more generous on the commissions, you could probably get someone to pay work commission only. So then you wouldn't have to take the risk on. So I revised my original answer. Do that.
Thank you. Yes, sir.
How you doing? Carter Cofield. We sell tax and financial services to high-income entrepreneurs. We do about $9 million in revenue. I would like to be at $25 million by the end of this year. What's stopping us? I know the constraint is people. We need more advisors to service our clients. We need a faster onboarding process to do more five-day virtual events.
I don't think it takes the whole company to fix that constraint. I think it's HR, CSMs. Is it okay to have the rest of the company focus on a different constraint or would that like kill team morale? How do you balance constraints across departments?
That's a really good question. I've gone back and forth on this, so maybe there isn't a right answer. But I would say that in the season that I'm currently in, I believe that there is one constraint, and if we solve that constraint, the business will grow. And so I want everybody to know that this is what we're working on.
And what ends up happening is that you see the other fires that are burning, and then that actually creates more urgency to fix the first one. when you try and fix them in parallel, it ends up taking longer to do both than to do one and then the other, because the whole team knows. It's like, but there's this other fire burning, and you're like, right, then fix the fucking first one.
And so then it just orients the whole team. And then also that means that if something has to happen, the whole team is greasing the tracks to make sure that this objective gets pushed forward. Because there's so many supporting and ancillary things to get some big thing done that if they're like, well, we have our priority, I think that's what gets in the way.
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Chapter 3: How to effectively manage client relationships?
We briefly mentioned distribution in our conversation yesterday. So as I look at like our number one priority for growth has always been do more of what's worked, which has been launch products to serve whatever crap people are looking for on Amazon. But I also have these things that are boiling up that I'm like, man, I think this can really help things.
TikTok actually is supporting all of our Amazon, increasing organic rankings just because people will search and buy it, right? Yeah. So how do I communicate that to the team? Because it's like, we still got to keep doing research and development. Yeah, so that's the silent sixth.
That's the silent sixth, right? So we're going to continue to make the sausage. We're going to continue to do the proven winning strategy. And that's the core. That's the base. We're not going to threaten the base to try and pursue the new thing.
But if you do see one of those writing on the walls type situations where you're like, my margins are going to compress, et cetera, et cetera, then it makes sense to make your one big bet of the year. Let's say it's TikTok. And I mean, to be fair, it's not that much more work to just take the same ads and then run them on Shopify.
And then that becomes the objective of the year, which I would probably just put into owned customer list is probably how I would just categorize that for the team. I feel like that's it. So what was the actual question?
Yeah, I mean that, so you talked about that being like, hey, this is the one thing we're doing, right? Because we've got 25 team members already. They're all serving that one thing, which is finding and launching new products.
It can be you and a small team.
And I've got a small other team. My follow-up question to this has been, because I was talking earlier about go hire a director of marketing that can go run this whole TikTok side, all of the Shopify stuff that we want to do. I've been doing a lot of it myself, and almost my reluctance to go hire somebody is like, well, then what else do I do in the business? You know what I mean?
I'll make you a promise, and I don't make promises often. I promise that if you replace what you were doing, you will find something else to do.
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