#125: Scaling Fails: How Financial Blind Spots Cost Him Big

I took too long to make the decisions that I know I needed to do. It's because I kept thinking, like, it doesn't matter.
Like, we're growing, right? The revenue is, you know, increasing. But it doesn't work like that.
Like, you can grow. Are you struggling to scale to the next level? In this episode, we are with Mr.
Ulysses. This guy has been just an absolute PR savant, been with, worked with so many of the big names.
And he breaks down and gets super vulnerable where we talk about his financial situation, what's working, what's not working, how we break it out from a breakeven analysis. Last year, he scaled too fast, too quick, left to just some terrible feelings of fear and everything else.
And so he's retracted and how we have worked through in this episode to get him to the point where he's going to take the next level of risk, pull some levers, make it happen on this episode. Ulysses, dude, so what's going on right now? Give us like up to date.
You've been running this PR firm for how many years now? Like seven. Seven.
Yeah. Yeah yeah yeah dude i mean you you've gotten in with some pretty big names right yeah give me some examples um recently we're working with cody sanchez so she just uh it's cool yeah she invested into like resi brands so we did the pr for that um and then she has another business that's coming out like this week didn't she do like pinky something it was like a it like a window washing company or something.
That's the one. Resi Brands is like, yeah, they have a franchise of like this window cleaning.
And it's like it's a bunch of home service type businesses. Yeah.
Yeah. I mean, we know a few things about home services.
A lot of things. Yeah.
That's good. That's good.
So you're working with Cody. What else you got going on um we did work with Brandon Dawson um you know Gary Brecca things like that so I think like that's like the the the big stuff um you know for the people that we work with but yeah for a long time it's just been PR just kind of honing that in um and been doing it for a long time at first we're doing it for the wrong reasons got a slap on the wrist uh you know which I was grateful for because what were the wrong reasons the wrong reasons i wanted to make a lot of money i want to be famous um and that was like the easiest way to make money at the time for me because i did websites before that but the thing with websites like i mean somebody doesn't like the font the the color the size of something it's like you gotta you know edit that um for like a little bit of money and for pr it's like i mean if you want to get introduced to somebody else It's like, you got to, you know, edit that, um, for like a little bit of money.
And for PR, it's like, I mean, if you want to get introduced to somebody else, it's like the easiest money I could do just email introduction and like, I'm done, you know, like the services is there. So, so let me just ask you clarify, what is PR? Like what, what value are you giving to these customers? So it depends like for the higher people, um's more so connections because they can get it themselves.

But it's just speed for them. And then for people that are not like a Cody Sanchez, it's more so exposure because for them, it's like getting on podcast like this or speaking on stage.
Like any one of those things could lead to a sale or could lead to business that they didn't have access to before. So different things for different people.
But primarily what we do is we help people get booked on stages, get them booked for podcasts, articles and publications, and then TV. Like that's pretty much it.
Love it. Love it.
Love it. So let's break down like what – so you've been doing this business six, seven years.
Yeah. Right? Initially, so you did for the wrong reasons.
Like,

what are the right reasons? The right reasons is like to grow a business. And for me, it's to have this be the vehicle for my life.
Before that, it was my life. So like now that I'm a dad, I don't care too much about like, you know, speaking on stage or the limelight anymore.
I used to like only care about getting women um you know smoking drinking like and all that cool stuff officially um but now i don't i don't see it like that and now my like my clients represent something different than who i was like representing before i can always remember you sharing this this was what six years ago last time we met yeah um and you were talking about how when you were uh you're wanting to to like find women you you threw out ads yeah that would just talk it's crazy that you remember that dude oh yeah that's great dude i remember that's like dude it's like instagram ads like look at this guy he just made this much money or whatever else but you're able to target the crowd you wanted to date that That's so embarrassing. Yeah.
Yep, yep. I mean, to me, it's like, it's pretty brilliant.
You used your skills to like. I wanted to do it, but hey, get you the DMs.
Fascinating. That was pretty best.
I got a lot of DMs when I did that. That's awesome.
You're how old now? I'm 27. 27 years old.
You know, it's funny.

When I was 27 years old, right before my 27th birthday, I was filing bankruptcy, right?

$2.2 million.

So it was like filed in January, turned 27.

So like you're in my life, like if I'm comparing myself against Ulysses, it's like, man, you're just still starting out, right?

So like you've got a head start on us start on us oh dude I want to have Europe you guys yeah you guys have crushed it since then since the last time we spoke I mean you guys were already crushing it when I first met you guys but I mean from what you guys did in six years is is is not something that like most people accomplish when even if they get a head start you know right so well you know it's uh as we talk about right like the the whole premise of our show is that success is a trajectory right like as long as you're on the trajectory you know hopefully you can change the trajectory and go a little bit faster or whatnot but as long as you're there figuring out where the next level is so for you right now like what are the, um, so you've been in business six years. Can you give us like a brief, like, what is the revenue been in this business over the last six years? Yeah.
So I know my first year, um, my first year was like 200,000. Cool.
Um, and then from then on it's like plateaued and then, or it stayed around, like it grew, but, and then last year we did 1 did 1.1. So we did pretty well, but you know, I didn't understand salary cap.
I didn't understand margins. So I was growing broke last year.
I made a ton of money. But the good thing is like my tax bill is not going to be that high.
So, but everything else was not that great. So give me, give me a little more detail.
So you did 1.1 million. What kind of expenses did you have associated with that? So the issue was like a quarter of our business came from referrals.
And I was giving out like high. Referral bonuses.
Yeah. Like.
Affiliate commissions. Yeah.
Like it was 30%. And then I was giving high commissions to our sales reps.
It's like, you know, he was helping us a lot. So I was like, all right, I'm gonna give you 20%.
Right off the gate, it's like 50% out the back, you know, just straight from there. It doesn't, there's no cost of goods associated with that.
There's no, you know, nothing. Because it's all info, right? It's relationships, information.
Well, we still have to, we do have to pay for a lot of cost of goods. So I do a lot of paid placements as well.
Oh, you do? Yeah. So the margins were like minimum.
And then when you have a lot of clientele, you still got to pay for payroll. And they don't just off-board.
So it's like you've got to continue hiring. Anyways, structurally and operationally, I wasn't doing a great job.
We were crushing it on the PR side. Thankfully, that's why we continued to get a lot of business.
But I had a course correct a lot this year. So this year, we're doing pretty similar numbers.
I know the last three months, we probably won't hit a million. We'll probably hit like 600, 700 maybe.
But the margins are a lot higher. I've been paying off a lot of last year.
It's like I'm averaging like 10 to 12,000 a month that I'm paying off in debt. So like, but that means I'm making.
That's a tough lesson to learn. Yeah, yeah.
And the thing is, it took me too long to learn. It sucked because when things were not going good, when we're making, you know, 80 grand or whatever, like last year each each month when things are not going good um you can't just like fire the people that you you currently have you still gotta have them so it's like if you have a bad month or whatever uh it doesn't necessarily matter like it just comes straight out of the bank yep um and i took too long to make the decisions that i know i needed to do yep it's because i kept thinking like it doesn't matter like.
Like we're growing, right? The revenue's, you know, increasing, but it doesn't work like that. Like you can grow, grow.
Yeah. There's, there's actually quite a few people we come across who are like, they made a ton of money when they were small and then they're four or five times the size and they're broke.
Yeah. Making less money.
Making a lot less money. So I think with us, it's interesting because, you know, know we had significant growth really quickly and so a lot of those issues you come across um they hit us pretty fast and we had to adjust quickly so we were going to learn without like the consequences but it's something we teach a lot of people just how like you have to look at your business like five years in the future if it's you know beyond what you expect how would you set it up today right that it can accomplish what you need today and what you need in the future yeah and that's a hard it's a hard thing to go through but it's the most powerful exercise for a business that goes through growth yeah i mean frankly i mean revenue growth is like only one indication of how well the business is doing.

And usually it doesn't say any, like you can have a hundred million in revenue and 110 million in expenses and you lost 10 million bucks.

Right.

Like, so it really doesn't matter.

Right.

Like revenue, revenue at the end of the day, it doesn't matter.

It's how much you put in the bank.

But I think where a lot of people get it wrong, which you kind of brought up, is they don't build to scale. They don't look at it from a standpoint of percentage of revenue that's associated.
So what you brought up was like, hey, I still have these employees and I got to pay them whether it's a good or bad month. And from a business standpoint is okay.
I got to understand my fixed costs, right? Fixed costs are there regardless. And you got to be very meticulous when you bring on a fixed cost.
Like you got to understand the risk associated with every fixed costs that you bring on. Because when you hire an employee, it's like signing a lease.
Basically. Yeah.
Right. Right.
I am, I am paying and it's a minimum lease, right? Like there's a good chance that you're going to have to give them a raise and you're going to, they're going to be other costs associated with this person, right? You're going to have to pay for occasional meals and benefits and every, everything else. Right.
And so like that fixed cost, right? The thing that we always talk about is a break-even analysis. Have you ran a break-even analysis on your business? I think we did so earlier in the year because we needed to.
Yep. So yes, but I don't know off the top of my head.
Okay. So first of all, what is an average customer worth to you? Like $15,000, $25,000.
$15,000 to $25,000? Yes. Okay.
That's a big range. Yeah, it is.
It's because, yeah, well, it'll probably be on the $15,000 side. Okay.
So first of all, that's an important thing to understand, right? Like you don't want to, you need to know this is my average customer. Yeah.
Like if my average customer is 15,

sure, you can make it 25,000,

but you can also probably make a five or $10,000 customer.

Do you have those type of packages?

Not on the 5,000 or 10,000 side.

So it's like 15 is our lowest.

15 is your minimum.

Yeah.

Okay.

Yeah.

So if I'm looking at your business,

I'd probably be analyzing it from just straight 15

and anything above that is butter, right? Like just- So like fixed costs at 15. Is that what you're saying? Well, no.
So let me back into this. So 15 grand, what cost of goods do you, if you bring on a $15,000 customer, not talking about your employees, anything else, what is your cost of goods to fulfill on $15,000? It's like four grand.
Four thousand bucks. Yeah, now it is, thank God.
Okay, okay. So four grand, what's the breakdown on that $4,000? So it'll be like TV spots, so we pay for TV spots.
It'll be paid placements, paid article placements, and then any barters that we end end up doing that we have to pay fulfillment costs. Okay.
So do you, do you understand a gross margin? No. Okay.
This is great. This is exactly what, why we want to break this down.
Okay. So gross margin is the amount of money you make before you pay your fixed costs.
Okay. Yeah.
So when, when you break this down, if you're getting $15,000, your gross margin per deal is 11,000 bucks or essentially about 70% is what that 11 out of 15 would be about 70%, Okay. So if you're operating on a 70% gross margin,

then you need to look at that number and how that pays towards fixed costs. So, but you also, I'm not sure if you're accounting for like affiliate marketing.
Oh yeah. Yeah.
We'll break that down as well. So that's your standard gross margin.
Now are your costs of acquisition, like your affiliate marketing or sales, is it directly tied to getting that customer? Yeah, I have some. Yeah.
Okay. And but is it the same regardless? Is it always a percentage? No.
Okay. What's your average cost of acquisition? That I don't know.
I can tell you how much I pay per month. Okay.
But I don't much it is. Okay.
So let's, let's talk about that. How much is that? So I pay, so based off of the software's software is probably around like maybe 600 bucks.
Okay. And then the VA that I had to run it, um, is two, four, six, eight is like another $800.
Okay. So that's about it that I pay.
So you pay $1,400 to acquire new customers every month? Yes. To acquire customers.
Yes. And do you acquire about the same amount of customers? Yep.
Okay. So how many, how many customers with $1,400 are you able to acquire? Like four to five.
Okay. Let's call it four.
Okay. Okay.
So if you're, you said we're 1800 or 1400, 1400, sorry. I'm jumping around numbers.
1400 divided by four. Okay.
Which would be $350. Okay.
So that would be what you'd call your cost of acquisition. Okay.
So it's directly attributed to like, this is how much I spend. And it's pretty steady that way.
It is. Cause that's a, yeah.
So if you went and you spent 2,800 and maybe you duplicated exactly what you're doing, would you be able to bring in eight customers? I don't know because it's not paid advertising. It's like cold, like LinkedIn outreach.
Okay. So unless I, yeah, double maybe the accounts or something.
But I mean, but what they're doing is very measurable, right? They're doing a certain amount of cold outreaches, which gives a certain amount of leads, which gives a certain amount of... Yeah.
So it probably scales. Probably.
I mean, that would be safe to say? Yeah. Okay.
Yeah. Okay.
So to Daryl's point, so do you understand a P&L at all?

Yes, because we have to do them, but not really in depth.

And that's what we're trying to help with.

Yeah.

This is good. Because I would say most business owners are exactly where you're at.

They account based on how much money's in the bank account, right? And then they'll look at

balance sheets or whatever else afterwards and be like, yeah, I guess I kind of understand this. Okay? So on a typical P&L, you have your revenue at top, you minus your cost of goods sold, and that gives you a gross margin.
Yeah. Okay? So $15,000, we're breaking this down by one account.
Okay. $15,000 minus $4,000 gives me $11,000 margin.
Yeah. Right? Now, if you can directly tie your sales and marketing to like, hey, if I continue to scale this up, it's going to always be $350, then you're going to also add that in and say, this is what I call my CEO gross margin.
Okay. And so what I would look at is your gross margin is 11 grand minus 350.
You're going to be at 10,650 bucks gross margin. Yeah.
Okay. That, and now from there, we're going to go and we're going to apply it towards our break even.
What are your fixed costs? What do you spend money on no matter what, whether you get clients or not? So payroll. Payroll.
Yeah. What does that look like? Payroll is like $1,600 a week.
Okay. So I don't know what that is.
Okay. So $1,600 a week, that would be $7,000 a seven thousand dollars a month yeah yep yep that's just payroll and then subscriptions it's like another 2 000 3 000 okay let's call that's a big range uh i think it's like closer to like 2 500 okay so so this is good because i think for anybody that's watching this show like or listening to this this podcast, you need to understand these things meticulously.
Yeah. Right? Because when you say, oh, it's 2,000 to 3,000, the difference between 2,000 and 3,000 is 50%.
Yeah, yeah. Right? That is a big range.
We're not saying 99 or 100,000. We're saying 2,000 to 3,000 that it's a big jump okay so like understanding

that let's let's call it 2500 yeah okay so i got 7 000 fixed payroll 2500 in subscriptions that's 9500 what else you got um do you have any leases business wise got leases got payments that i rent but that's not part of it.

Yeah.

That's.

So. business-wise, got leases, got payments that I rent, but that's not, that's not part of it.
Yeah. So I'm pretty sure I have something else.
Insurance, business. I do pay insurance.
Yep. I pay admin, anything else that's yeah.
$300. Uh, bookkeeping, bookkeeping.
Yep. 350.
Okay. Damn.
I should have been prepared for this. No, this is good.
This is good. This is good.
Yeah, so bookkeeping I pay for, $350,000, and then insurance I pay for. $300,000.
Yep, $300,000. Okay.
Okay, so look, this is what we're going to do. We're going to break out our calculators.
Okay, so I have, so it's $7,000 a month. Okay.
On payroll. Yeah.
Plus $2,500 in subscriptions, software, different things like that. Plus $650 for insurance and bookkeeping.
Yep. What else we got? Taxes.
Nope. So taxes, don't worry about taxes.
Taxes are what you pay. Unless B&O taxes, do you pay B&O taxes? I'm not sure what that is.
Okay. B&O taxes is like here in the state of Washington is like a percentage of your revenue.
It's usually like 1%. Uh, sales tax is no tax.
No. Do you have any, do you have any payroll taxes or anything associated? No.
Okay. All right.
So let's just say that's everything.

Okay. So we're at, for those that are looking on the cameras, we're at 10,150.

What was our, do you remember what our gross margin was? 11,000. Okay.
So it was, yeah,

it was 11,000 minus, what did we say? 350 of acquisition? 10,750. So 10,650.
So what does

that mean? What does it take to break even in your business? One client. One client.
Okay. Yeah.
So, and what that means is every additional client is worth how much to you? $10,650. $10,650.
Exactly. So, and this is a very simplified version for, there's a lot more complex businesses out there, right? Like, like that require more than one client to break even.
Like, first of all, congratulations to be able to set it up where it's that simple, right? It's probably works great for a lifestyle business and everything else, right? You know, when, like, for example, when we're running our solar business, there was a point in time where, okay, it took 65 clients or installs to be able to break even.

And then our break even, as we added fixed costs, it became 100.

And then we break it.

But what's so important as a business owner is that you always are tracking that break-even analysis.

Because now I know that is the point that I have to get to every single month regardless like that is my you know die but then I can make better decisions based on acquiring these new customers right and what I mean by better decisions so what is your what is your average you're you're acquiring how many customers a month right now? Like four. I mean, I want to say, I want to give a range, but let's just go.
Let's go with four. Yeah.
Okay. So based on our break-even analysis, how much profit should you be making on four customers? I should be making 10,650 times three.
Exactly. Okay.
So now we're on the same page, right? So now we're at $32,000 in profit. Okay.
Now here's the question. Does your current staff, your fixed costs, right? Your capital expenditures down there, whether you have an office space or support staff or whatnot, can they handle more than four clients a month? Yep.
How much, what is your maximum capacity that that current staff can? So I know one client manager can handle 10 accounts. Okay.
So I don't need, and right now, because we have an overload from last year, we have about four client managers. Oh.
So, yeah. Well, yeah, we had, because year but i mean yeah so it took a time it took some time but okay yeah so okay if i'm hearing you right every every client manager can handle up to 10 accounts a month yep that's right yep and you have four client managers yep okay so what's your maximum capacity I don't know Okay Four times 40

10

Yep

Exactly four client managers yep okay so what's your maximum capacity i don't know okay four times 40 10 yep exactly yeah okay so now now let's let's look at this i have 40 i have 40 uh capacity and what's your current what how much of the capacity are you using um we're using i think all of it right now how are you using all of it um because we stopped clients from last year okay yeah okay so you have 40 clients yeah yeah so you're a little bit more so you don't have because because this is where i'm trying to get to okay so right now you're bringing on four clients right okay yep how long does a client stay on with you when you acquire it depends what package

but it could be uh you know a month okay how much is a $15,000 package it they'll stay with us for like 60 to 90 days okay so they're with you for 90 days yeah okay yeah so over three months that would be 12 clients

okay

so and one of those

people So over three months, that would be 12 clients.

Okay.

Yeah.

So, and one of those people, could they manage all 12 of those new clients or would you need

one and a half of those people?

They could manage those 12, but probably not with like the best quality.

So what I'm trying to get back here, so clearly you're doing some previous work or whatever

else, but what you have to look at is, is okay what are my fixed costs capable of doing yeah okay if if they're able to do 40 customers at once and a client stays on for three months you want to take the 40 and you want to divide it by three right yeah because it's so that's kind of your maximum capacity that you can bring on every single month. Okay, that makes sense.
Does that make sense? Yeah, yeah. Okay, because if they're staying on 90 days.
Right. Right? And so I bring that down so I can acquire 13 new customers a month.
And if your people aren't able to do that right now, one, maybe their capacity isn't 10 or two, they're not performing properly. Yeah.
Right? Yeah. Or maybe you have like this customer issue or whatever, but you got to get that cleaned up.
Yeah. Well, it's because part of like, so the way that we like work is we normally work Mondays through Thursdays.
Yep. And we only work five hours a day.
Okay. So it's like 7 a.m.
to noon. Okay.
And like, that's it and like that's it if they had a full you know eight hours we definitely could but i'm assuming that could be part of the reason why it's like limited time uh because they also don't do anything fridays okay are you paying them full time um no these are a lot of these so i pay people from poland and i also pay people overseas okay um and a lot of our stuff is like i mean by now 60 years it you know we have our sops down already so right yeah so if so right now you would say you're netting about 32 000 a month and it does sound accurate because uh i'm uh on debt that i'm paying off from last year right it's like 10 grand right and then i know i need like seven to ten just to live um and then yeah so it does sound about right yeah okay okay so we're we're in the we're in the right numbers okay so what you have to look at is like if my current team has capacity to do 13 and i'm only doing four yeah you have to scale to hit capacity right and do how do you based on what you're telling me, you could go, because each of these virtual assistants, they're about 200 a month? No, I wish. No, I'm saying the people that are doing the LinkedIn.
Oh, yes. They're $800 a month.
So I pay them $200 a week. Okay.
Yeah. And I only have one guy doing that because a lot of it is automated.
Right. So he's doing, he's $800 a month.
And then what was the other $600 associated with that? The software associated with that. Okay.
Is that software, would you need to buy another $600 software to be able to add one more person? Yeah. Okay.
So it's going to cost you $1,400 to be able to get four more clients. Yeah.
Okay. Based off of what I'm hearing, you should be spending $2,800 more a month on two more assistants and two more software packages.
To hit capacity. To hit capacity.
And so what that's going to do for you is this, okay? So because it's not going to increase your fixed costs at all. Right, right.
And it's also not going to reduce your margin at all. That's true.
Because that cost is associated with acquiring a customer. Yep.
Right? So it's going to yield. Now fixed costs, you always got to look at like fixed costs doesn't give me a return, but it takes care of the return I'm already getting.
Yeah. Does that make sense? Yeah.
Right? For variable costs, stuff that's associated with acquiring a customer, cost of goods sold, right? Like that you really only pay if you get something in return. Yeah.
And if getting something in return, you got to cut it quick, right? And so what I'm hearing is if you hired two more virtual assistants plus the software, you'd spend $2,800, but you wouldn't even look at that as a line item on your expense because it's going to be associated with your cost of goods sold. Does that make sense? Yep.
Okay. You following me? Yep.
Okay. And you're going to get how many more clients? I will get eight.
Eight more clients? Yeah. Eight more clients a month.
Yeah. Which would be how much money? Fuck.
I don't know. I'm not a fan.
No? on you go let's go back to how what's our gross

margin it's uh 11 000 no no 10 650 10 650 times times eight times eight yeah yeah so dude think about this like with the amount like what your staff is already in place yeah 10 going eight times 10,650, right? We're talking about an extra $85,000 net. Yeah.
Just if I focus on the marketing acquisition portion. That's it.
Yeah. Right.
Because you already have the staff that can fulfill this. Right.
You already have the process that this can get done. Yep.
You already have like everything in place. This requires no more effort besides taking a little risk.
Yeah. That's true.
And so how much risk are you taking to get this much? Like 2,800. 2,800 bucks.
Yeah. Would you spend $2,800 to get $85,000? Yeah.
A month A month. Yep.
So, so like this is like that. Oh, it went dark on me.
Uh, you know, 20, 2800 bucks. Now here's the cool thing.
You don't even have to do that. Like go and add one more.
Yeah. And test it and test it.
Yeah. Right.
Like, because like too often like, business owners, they're so scared of risk, and they don't even know what lever they're supposed to pull. Yeah.
Right? Because you're basing things off of, like, well, last year I took, I went too much action, and it caused me to pay this much in debt. Yeah.
Right? Is that, those are the feelings? 100%. I'm, like, doing the complete opposite of what did last year so tell me tell me the feelings that are going on in your brain that have caused you not to take more risk right now uh what are the thoughts that go through well last year was very hectic i didn't have a lot of time to myself and i didn't have a lot of time for like family so the i'm afraid if i do that again and i don't do it correctly is is the same thing's going to happen.
And then I also have to like spend a year this year fixing what I did last year instead of like, you know, on the trajectory going upwards. So it's like, I just want like what I, ideally what I would like to do now is right now we're doing really great.
Like this entire year, cause I've margin finally. And it's like, all right, just work with this just work with this you know um because i i feel like finally it's like the the business model is kind of built better yep um to sustain more of like my lifestyle so it's like i like that i only work five hours a day and then you know four days out of the week so i like that now you know so here's here's the cool thing Ulysses is like this would require no more work.

Yeah. you know four days out of the week so i like that now you know so here's here's the cool thing ulysses is like this would require no more work yeah like because if if i'm understanding your business correctly you're once you land a client who's selling these clients um so right now we have one sale fret okay next week we week, we won't.
It'll be me. Okay.
Yeah. So you're getting rid of your sales rep.
For more margin, yeah. You want more margin.
Yeah. Why? Because I already don't work a lot.
Okay. You know, so to get that extra 15%, 20%, I think would be worth it.
Okay. So you're contradicting yourself though, right? Because you're saying, I like this lifestyle where I don't work a lot.
Yep. And now you're saying, I don't work enough.
I need to work more. So there's almost like a...
Well, I feel like they don't work enough. But we don't have that many calls to close four clients.
It doesn't take that many. um opening up a few more hours in a day i don't think would so what if what if you were spending 2800 more dollars and you were getting enough leads to close 200 more right go from going from four to 12 yeah right you had to work another eight hours a week deal but but the sales rep like not you yeah you kept your sales rep on yeah and he went and did that right would you would that keep him busy yeah okay so so i i just want to identify like the just like strategy where flaw right right because so i guess really understand like what do you want at your business you want time freedom yep yep i i uh like peace overall yep um that's probably the the main thing Yep.
So usually that piece comes from time freedom and working on your business rather than in it. Yep.
Right. I'm sure you probably like the sales side too, right? It's fun to get on with clients and close deals or whatever else.
Yeah. But you probably wouldn't want to do that 10 hours a day.
No. Okay.
Yeah. If it became 10 hours a day, a hundred percent, I would bring

back a sales rep immediately. Okay.
Yeah. Okay.
So can I give you some suggestions? A hundred percent. All right.
So what if instead of getting on the phone and being the sales rep again, right, you work on your business, you pull these levers that are going to help you get the additional clients that's going to keep that sales rep busy, which is going to in turn make you freer. But you're still going to spend time working on the business.
It's just not going to be on the phones with clients. It's going to be, okay, going and hiring a new sales rep or figuring out a new acquisition strategy or making sure that you hire the right VA that's going to go and fulfill on this SOP to be able to go and do the cold reach outs on LinkedIn.
You're just looking at it strategically. So my question is, who's coaching you on this right now you well right now yes is it but like in in in real life or you no one okay no one okay yeah i did have uh when i was struggling with the the finances thing i did hire somebody to like just you know consulting be like look what like what am i doing wrong you know um and i was like there's just yeah i couldn't figure out how to profit from like the business that i had um i mean but once i got solved thankfully it's like yeah i'm in a good spot now there's really not too many core things that i'm focusing on i also don't work too much in the business like i'm on those five hours but i'm not directly communicating with clients um i'm really just managing the team that is but now you're But now you're getting rid of the sales rep, so you're getting ready to dive back in.
Yeah, yeah, and speak to prospects. Okay, which I think if I'm in your shoes is a, like, you don't want to do that.
Not that you're not willing to get back in, right? Like, you should always be willing to get back in the game. Like, no business owner should ever be high and, you know, haughty enough where he's not willing to get back in right like you should always be willing to get back in the game yeah like no no business owner should ever be high and uh you know haughty enough where he's not willing to make the sacrifices when necessary right right right but fundamentally dude you can keep the sales guy on just give him more opportunities yeah to be able to go and close and not only him more opportunities like figure out how you can take this thing dude you've got a model that works like if i'm fundamentally looking at your model and knowing that i have a just on a per account gross margin of 10,650 yeah okay but it does sound like you're paying a commission on these deals too no I mean

um account gross margin of 10,650. Yeah.
Okay. But it does sound like you're paying a commission on

these deals too. No.
I mean, yeah, with the sales rep that I have, yes. Okay.
But like,

I don't have what I had last year where I'm paying like 30, 50. What is your commission

with your current sales rep? So it depends. If they bring a client in, it's 20.
If they don't

bring a client in, it ranges from like 10 to 15%. okay so let's call it 15 yeah 15 of 15 000 is how much like 1500 or 2 250 got it okay i'm not that good in that that's fine that's fine that's why i'm in the position it's like i wasn't good at math this is good this is good so if if it's 2250 like because you really should be asking yourself how can i scale what i currently have not get rid of sales reps and take more margin yeah right yeah because like taking more margin like 100 of one dollar is not a lot of money yeah sure right Sure.
Right? How do you scale profits? How do I scale? Yeah. Yes.
And so now let's go back to our original math. $10,650 is our gross margin, but now we're going to subtract what we're paying a sales rep.
Okay. Because fundamentally you need a sales rep.
Yeah. You shouldn't be the sales guy.
Okay. Got it.
All right.

Let's not do that.

That's a mistake.

Okay.

So we're going to go $2,250.

Okay.

Now we're at $8,400.

Yep.

So what was our fixed cost again?

Fixed costs.

What's the nut we have to cover every single month?

It was like $10,250. My question is.
Oh,'s a break even Do you have the sales commission in this? I just took out $250 Now it does This is actually representative of your real gross margin I know where your mind was You're like, oh I getting rid of him, so I don't have to calculate that anymore. Right, right.
Okay? But let's not go there. Let's go here.
Okay? So I'm $8,400, which means I need one and a quarter clients to break even. Yep.
Okay? So if I need one and a quarter clients to break even and I go and I sell 12 clients, okay, 12 clients minus one and a quarter clients is how much? 10, 10 and a half. So 10 and three quarters.
Okay. And I'm going to times that by my gross margin.
Yeah. Okay.
Because that cause one, cause one and a quarter is to break even

10 and three quarters is to make money. So now my real, if I continue, so 10.75, if I continue to pay a sales rep and I max out everybody to their capacity, you're going to go from working in the business, making $33,000 to working on the business and making $90,000 every month.
So now basically what's going on here, right? Chris is creating a formula to apply. Yeah.
As you apply the formula, you're going to be like, wait, that didn't equate, right? And you'll start to tweak and you'll start to learn assumptions that you were making that aren't true. Right.
You also

identify other opportunities that you didn't realize. And so this is where, when you can

understand these numbers, when we understood our numbers, like, and we knew how we could,

it was, it was how high can we go. Yeah.
Right. And then that's where we could scale at 300%

and not be like, not sink the ship. Yeah.
What people often do is they have some success and they're like, let's just scale this without knowing their numbers. Well, now those numbers all change because they're not even aware of where they're at.
And they don't track them. And they don't track them.
And so things start to get misaligned and you don't realize it till, hey, the money's gone. And then you get in the scarcity mindset of, Oh crap, I need to back up.
Like, I don't want to lose my lifestyle. I liked having what I had.
I got to pay all this debt back that I buried myself in a hole doing $1.1 million. So then you go to back to retreat.
Right. And then you just stay hunkered down.
Yeah. And that's, and we see, this is a very, very common.
Yeah. I mean, that's where's where i'm at it's like and that's why i was thinking first it's like well just make more margin because if everything stays the same and i just make more margin you know then it's even it's better than what i have now you know but that makes a lot of sense because i'm i'm really only spending 2800 to like test and it doesn't even have to be 2800 could be 1400 yeah it'd be 1400 to add one more one more person and so let's let's say that you you decide to do that right you spend the 800 bucks plus the 600 dollars of software yeah and it does contribute four more clients right how much is four more clients worth to you now uh 16 like 32, like 32,000 something.
Yes, exactly. 8,400 times, uh, times, uh, four.
Yeah. Right.
Yeah. So it's 33,600.
Right. So now you're like, holy crap, this works.
Let's get one more on there. Let's get to max capacity.
Yeah. Now, now here's where it gets fun.
Okay. So now you get to max capacity max capacity right you have all your fixed costs being fully utilized right your client managers is that what you're calling them your client managers are fully utilized and everything else and you're like hey let's grow this thing what's it gonna now once you're fully maxed out what's it gonna take to grow your business I hire? I hire a new client manager.
Yes. So I hire a new client manager, which is capable of bringing on how many customers? I think he's at 12, 13.
So no, 10, but 10 is divided by, because a client stays on with how long? 90 days. So you got to divide it by three.
Okay. Okay.
So one client manager can handle how many new clients a month? I don't know. 10 divided by three.
3.3. 3.3.
Yeah. Okay.
Now what we've realized is there's a ratio. For every client, a client manager can essentially do what an acquisition, your $800 acquisition, right? Because they're bringing on four a month and this person can do about 3.3.
Okay. So that's pretty dang close.
Hopefully you can increase the efficiency of a client manager where they can take on four new clients a month. Right.
And so essentially manage 12 over a period of 90 days. Okay.
You following me? Yep. Okay.
So if you can get that on a one-to-one ratio, then this becomes a very easy game. Literally is hire a client manager, go and get an acquisition person, spend the money, get the new clients, do it again.
Now, along the way, you're going to max out this sales rep. He's going to be busy.
Right now, you've gone the opposite way.

You've gone into where he's so not busy that you're considering letting him go and stepping in and doing the jobs yourself. So one day you're going to come, you're going to walk in and you're going to be like, dude, we had all these leads and you didn't close all these deals.
You're not being able to keep up. Oh, I need to go and hire another sales rep.
Okay. So I got my client manager, I got my acquisition manager.
And then once I max the sales rep out, I bring on another sales rep, which means I need to do another client manager, another acquisition manager until I get him to capacity. Along the way, the only time, where am I adding fixed costs? When it gets to the client manager portion? That is the only time I'm adding fixed costs.
Okay. Because my sales rep is purely commission, right? Yep.
And my acquisition manager should be able to be directly tied essentially the same as a sales rep, right? As a variable cost rather than a fixed cost, right? So I am just stair-stepping up my breakeven analysis. Today, my breakeven analysis says I need 1.125 customers, right? And so if I add another client manager, how much do you pay a client manager? I pay them around the same, $200 a week.
$200 a week. Yeah.
So 800 bucks, okay? $800 would take your breakeven analysis from like 1.25 to like 1.35. Yeah.
All right. So literally.

Like almost no difference.

But how much is a client manager worth to you?

I don't know.

A lot of money.

So let's back it.

How much, what can a client manager do?

How many clients?

You said three a week?

3.3 a month.

3.3 a month, yeah. Right.
But we said we could probably get them up to four yeah capacity yeah how much is four clients worth to you um 15 60 60 no that's 60 in revenue remember we don't okay yeah yeah so ever think in revenue yeah so that's like the 33 000 i000 I think it was. Yeah.
Dude, $33,600.

So literally every time you bring on $800 in monthly expense, you're getting $33,600 in profit as long as you're utilizing them. Right.
Right? That's the key. The key is how much capacity you have.
Are you getting max capacity? and then once you

charge up your mark how much capacity you have are you getting max capacity what you and then and once you

charge up your marketing and sales enough to get to max capacity then you grow that again and so dude literally you have a business here that could be made like you you got to think bigger bro yeah like like dude i'm sure you know your quarter million dollars a year that you're

making Like, you got to think bigger, bro. Yeah.
Like, dude, I'm sure, you know, your quarter million dollars a year that you're making in Tri-Cities is cool. Right? Like, that's awesome.
You pay the bills. But, dude, it's 2024.
Biden economics are kicking us in the freaking teeth. Yeah.
Right? Like, quarter million isn't what a quarter million used to be that's true so like we got to think about this like how big can we we go and do so currently you have how many client managers four yes okay so you have four client managers for every for five six whatever dude we're talking about literally every client manager you add on is going to net you 360 000 more a year yeah yeah sure dude that's pretty wild that is pretty good that is pretty wild and like bro like the last thing you should be doing is retracting yep well i'm definitely gonna i'm definitely gonna try out the marketing portion, you know, see how that ends up going. Because it does make sense.
You just do exactly what you're doing already, add another account, and then just run it. Yeah.
Yeah. You know, it's funny.
I think a lot of times business owners don't realize how much of a science business is, right? Like we up in the feels the emotions the fear the retraction the excitement of of it all the what's in the bank account or whatnot instead of just thinking okay logically let's just dial this back and let's see what we have and like if you can understand that game and dude what i I would recommend to you is get somebody in your corner because you have a unique talent to be able to go. You've built an awesome personal brand.
People know you as the PR guy. You've got that down.
Now go capitalize on it yeah like go make real money not just appear to make real money not the rented lambos or the rented mansions or the fake girls that you picked up on instagram or whatever else but like you've got something that you can build off that is is like literally all it takes is just oh plug and play yeah input and which lever to put to pull yep what are we gonna say i was gonna say yeah it's a mat just measuring your inputs and outputs um but i think what you got to realize is like what you've gone through is like what most people go through yeah right it's really common thing to break that ceiling it's really understanding the game the science of what business is and then just apply yeah apply tweak measure yeah dude it's and and what i what i to daryl's point like don't beat yourself up. Don't be like, oh man, what have I done? I have this great thing and I haven't utilized.
Don't beat yourself up about that. Like, get somebody in your corner, like hire a mentor, hire a coach, hire somebody that can actually push you and hold you accountable because it's costing you severely in a financially in a lot of ways by just not understanding these levers to pull yeah because dude i would i would say you know we talked about earlier like hey the last time we met was six years ago right and like you you saw what we've done in six years yeah and the large reason for that is because we spent a lot of money to have people in our corner and so daryl and i have so personally i've spent over a million bucks coaches consultants masterminds and not just to look good but actually to have guys in my corner that actually help me understand these things so i know the levers to pull yeah right like i mean i still go back to like holding the mastermind up in my my lake house i got russell brunson there.
I got Alex Ramosi there. And Alex is like,

dude, you need to run a process. But before you run a process, you need to hire a CFO,

right? That's what Alex told us. We went back and made some big adjustments to our business

based off of that conversation. And it helped us understand where we need to do to be able to run

a process, which is the process of

selling your business. And it's because I was in the room spending the money to be with the right people.
That is just one small instance that I can even think back. I'll give you another one for me.
An aha moment was I went to a business conference and the reason I went was because I felt like I didn't know how to run a business.

Like every time I turn around, there's another set of problems. And I'm thinking like, maybe I'm just not meant to do this.
I'm just struggling. The biggest thing I learned from that conference was that every business has problems at every stage of, and they just change, right? So your strengths and weaknesses are always changing as the business grows, but they never go away.
You always have problems, right? Always. And so what's really the next level formula, right? Like the fact that no matter where you're at, there's always a next level, there's always a new set of problems.
And then once I did that, I was like, okay, cool. Stop beating myself up, realize what my set of problems are, solve those so I can get ready for the next set of problems.
Yeah. Right.
And, and so then all of a sudden I was like, okay, I understand it's a game where before that it was like all like inwardly, like I'm not good enough. I can't figure this out.
I'm not gonna, I'm not gonna succeed. Like it all felt like fires.
Oh yeah. It all felt like fires.
Like what am I doing this for? When reality is like is like no this is what businesses go through to like scale up in fact i remember when you came home from that conference right like there was this pdf sheet that you had and it was like this cycle of business and it showed like infant right like a toddler it mimicked the life cycle of a human yeah and it said like at each stage of your business these are the problems that you will face so predictable wow it's it's it was wild it was like the fact that it was that predictable and the fact that it was so obvious where we were at and it's so obvious what we just went through and what we will go through uh at the time was like it blew my mind i'm like all right settle down let's go yeah yeah let's get some let's get to work what what do you what are you hearing for yourself man um i think i resonate with that a lot you know because i think at first um my the first issue i had was i just didn't know how to like i had to do everything myself so then i had to learn how to hire a team that was like the first issue that i had then i had too many clients i didn't know how to service them correctly then that was the that was the second issue I had. Then I had a team.
Remember when I had that, like the team, but they were all commission based. So it's like, honestly, these are all the things that listed.
It was like one man show. Then it was like managed by crisis.
Yeah. I mean, you're, you're just going through the stages, but keep going.
And so I had that team, but I mean, nobody was on payroll. So it was like chaotic the entire time, you know, I didn't handle that well um so it's just like yeah they're just cycles and this last cycle i'm probably the most grateful for because it's like it's a the finance thing you know and i feel like all right um i'm just i'm grateful right now that i'm able to like pay off the debt and i have like left over and i'm not worried you know so i feel like i got that part down, so I, like I'm in a place now where I'm comfortable enough to like take those risks.
I can spend the 2,400 a month, you know, tests and things like that. So, um, yeah, that's where I'm at, you know, that cycle.
I love it. Yeah, man.
Uh, like I said, I think there's, there's just so much power having the right people that are, are in in your corner working with you like not being afraid to ask right like like i would recommend like dude if you got questions don't don't be afraid to like come and come and ask us like hey this is what i'm thinking about doing or whatever else so yeah you know the uh the the local trisidians we gotta we gotta stick together you know yep yep good stuff

sweetly ulysses man i appreciate you being willing to be vulnerable opening up and like just discussing like these things because i think there are so many people that are listening to this that are going through the exact same things that are trying to scale that are trying to make the right moves that are either, you know, starting out for the first time or they went too fast and now they're retracting and they're scared and whatever else, right? Like there's a lot that can be related to it. So I appreciate you opening up and being vulnerable.
I do. Thank you.
I appreciate it. I appreciate the help.
Awesome. Awesome.
So if any of our listeners are wanting PR services or they want to follow Ulysses and

what you got going on, what's the best channels to do so?

Yeah, they can follow me on Instagram or like any social media at Ulysses and they can talk

to me there.

Awesome.

Awesome.

Appreciate it so much.

Until next time.