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The Tale of Two Businesses

By September 18, 2023Consulting

Let’s Get Ready to Rumble

Ever wondered why some businesses dance through the marketplace like a smooth waltz, while others stumble around in a chaotic tango?

In this article, we compare ‘Business A’ against ‘Business B’ in a battle of strategies and numbers. Get ready to uncover the tactics, the triumphs, and the takeaways that could transform your business game.

BUSINESS A VERSUS BUSINESS B

Diversification of monetization requires you to create multiple ways people can give you money. We’re not going to get into that here, not yet anyways… examples:

  • Products that are “one-time” payments
  • Products/memberships that are “recurring” payments
  • Money taken over the phone • Money taken online
  • Products for the “front end” (aka less trusting buyers and investors)
  • Products for the “back end” (aka people who already know you and trust you)

Imagine the difference between the following businesses:

BUSINESS A:

  • One funnel, a “VSL” that people watch then book a call
  • One product, an $8k product that people buy over the phone

BUSINESS B:

  • 1,000 leads a month through “VSL,” 500 leads a month buy a book and then book a call after they read it, 1,000 leads a month join a free resource group and consume content every week (and book a call when or IF they need it)
  • $75,000 a month from front end books and misc products, $350k a month from back end programs, $180k a month from recurring membership product.

WHICH BUSINESS IS HEALTHIER?

Don’t compare the numbers right now, compare the WAY the numbers are generated. In 2024, this business will do $35M and we will only accept ~40 clients a month. Why so few clients? Because we will guarantee experience & outcome, and you cannot do that with

400 clients a month… it is quite literally impossible unless you have a giant team sprawling the globe.

If you are advanced in your business prowess, you’re no doubt trying to connect the dots on how a company can do $35M with only 480 clients a year (no, we aren’t charging $73k per client). That’s because of the *MODEL (diversified at all levels).

*Quick warning: you’re welcome to try this on your own, but we’ve quite literally pioneered it and can help you do it effortlessly. It will speed you up by at least a decade if we build it together.

OTHER MISC “RULES”

We’ve told people to NEVER, EVER trust someone who is not willing to share with you their failures, about a few of these metrics and they’ve asked, “Uh… are y’all teaching this?” We’re going to briefly recount the convo here because they could change your business. At The Wealthy Consultant, we have KPIs that THROTTLE our revenue to fit inside certain ‘limits.’ Here are a few:

  • Only 50% of revenue can be from “paid” traffic
  • 50% of revenue must be recurring
  • Burn is capped at 80% of recurring revenue
  • Burn is capped at 80% of weekly collected revenue
  • Target of $400k in revenue per team member

We’ll explain what these mean…

BURN BURN BURN

To cap 50% of revenue from paid, we must have other sources of acquisition in place. Partnerships & JVs. CONTENT (think inbound content marketing). Outbound sales. Etc. There are many different sources.

To require 50% of revenue to be recurring, we must have a model that supports MRR & monthly billing. In any given month, let’s say the brand generates $500k in revenue — what this means is ~$250k of that is going to be from a recurring source.

Burn is everything fixed and non-variable. Ads are not included, and revenue producing commissions not included. Everything else is considered burn, and we limit this to 80% of either weekly collected or recurring (whichever is lowest).

Show Me the Money

If you take a business with $4M in annual revenues, and 8 staff — that produces a “revenue per team member” of $500,000. The reason this number is there is a flipped version of “labor efficiency ratio.” If you go into legitimate business finance and accounting, labor efficiency is something you’ll have to study — but for consulting businesses it’s not an accurate metric to run a business on.

The Revenue per Team Member will tell you how full your staff is of A-player talent. If you’re at $150k per team member, you have an inefficient team or your model is broken. But likely, if you’ve been getting these memos for a bit and followed my work, it’s going to be a team efficiency thing not a model thing.

Ya’ll have no idea how safe we are making this brand. We want this to be a 10 yr+ brand that we can take into schools later once our frameworks have saturated the consulting market. We can discuss these numbers and constraints in more detail during the memos. Check them out below.

To the next one,
-The Wealthy Consultant

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