Building a $2,500,000 Business for a Stranger in 36 Minutes

• Channel: Alex Hormozi
• Video: Watch on YouTube
• Tags: hormozi 2 5 million business stranger

Overview

Alex Hormozi breaks down a $2.5M HVAC business — real numbers, real tactics, and how to build a profitable business from scratch.

Key Takeaways

• This is corey. currents an hvac business with his wife, jr., 1.2 million per year in revenue. but, number one, that 1.3 million isn’t all profit. number two, he has $60,000 in debt that he wants to get rid of.
• And so first, we’re going to deep dive into business and then we’re going to break down all the tactics that he and you can use to scale. and at the end, we’re going to check in with corey one
• My wife, nicole. we are an hvac cleaning and network repair company, but we’re probably trying to solve. so, right now, we’re allocating about 10% of our profit going towards paying off some of our debt. how much debt have
• With our booking process. i think that we can streamline it a little bit better, make it easier on them, and then also not lose out on the possibilities of upsells or anything like that throughout that process. why is
• Really share that goal. makes our life a lot easier. that’s why it’s important to us so we can help more people and then also grow our business. all right. awesome. okay. so, how do you make money? this is
• Free guarantee. what that is is when we come out, we make sure that we’re disinfecting, that that we’re properly killing any kind of bacterial growth. so, clients love having that guarantee in place so that they don’t have to
• Absolutely. so, actually, we have a customer profile so they can access any point in time so if they want to sell their home, they can use it as an advantage for them. i like that. where do you get
• Is very new for us. we just started the last two weeks and then 15% of our job flow comes from a local seo, which is a third party company and then affiliates and referrals are a very big portion
• That with our other partners. so, what’s the advantage to that affiliate sending you the 30,000 month? we actually send them back roughly 4,000 to 45,000 because they have higher ticket items so when they go in their doing full
• Limits his own services so that he doesn’t compete with other businesses in his quote space. so, he refers them the high ticket business but then they were for him some percentage of their business but the beauty of this
• Know. our number is right now 1.25 million over the last 12 months, profit on that is 49,000. our net margin is 38%. so, our marketing spend right now is just under 7200 as far as our marketing strategy altogether.
• Of the business, can you handle that? yes, so actually we just hired on two more employees and we just got a third ban. right off the bat in every business i think the first problem i try to delineate

Transcript

This is Corey. Currents an HVAC business with his wife, Jr., 1.2 million per year in revenue. But, number one, that 1.3 million isn’t all profit. Number two, he has 60,000 in debt that he wants to get rid of. I'm Alex Shmozi. I own acquisition.com, which portfolio companies that did over 250 million last year in aggregate revenue. We have several service-made businesses in our portfolio, so I’ve done a lot of thinking about the problem we’re dealing with. And so first, we’re going to deep dive into business and then we’re going to break down all the tactics that he and you can use to scale. And at the end, we’re going to check in with Corey one year later, originally, we’re doing about 1.25 million in sales. Currently, see if the tactics actually help him scale his business. So let's meet Corey. What's going on, Alex? My name's Corey. What's up? I own pro-shime professional clean with my wife, Nicole. We are an HVAC cleaning and network repair company, but we're probably trying to solve. So, right now, we're allocating about 10% of our profit going towards paying off some of our debt. How much debt have you got? It's about 60,000. Okay. And then, lead generation. We’re trying to get higher quantity of leads, also leads that are higher value clients. On the bottom of that, it’s just our right to really just help our client with our booking process. I think that we can streamline it a little bit better, make it easier on them, and then also not lose out on the possibilities of upsells or anything like that throughout that process. Why is solving this important? What happens if you don’t fix this? First and foremost, where people company, so we really go out in the community and just do the right thing. And I’m grateful to have guys on my team that really share that goal. Makes our life a lot easier. That’s why it’s important to us so we can help more people and then also grow our business. All right. Awesome. Okay. So, how do you make money? This is actually where a approach has a little bit unique. For our eight-track cleaning, full-end price for us is 1575 per each-track unit. Okay. Each house we do has about two units. So, with that 1575, we have a two-year growth free guarantee. What that is is when we come out, we make sure that we’re disinfecting, that that we’re properly killing any kind of bacterial growth. So, clients love having that guarantee in place so that they don’t have to worry about in the future. And then we have Ducor-Cree wrapping, which is pretty much replacing the old installation and then also our drive-in cleaning, which is 175. Do you show customers pictures of the inside of their beds? Yeah. Absolutely. So, actually, we have a customer profile so they can access any point in time so if they want to sell their home, they can use it as an advantage for them. I like that. Where do you get your customers? All right. So, we have a couple of different channels. 60% come from paydeds, 3,000 a month, go from Google. We actually just up that a couple days ago to 5,000 and then also $650 from Facebook. Facebook is very new for us. We just started the last two weeks and then 15% of our job flow comes from a local SEO, which is a third party company and then affiliates and referrals are a very big portion for us because we are partnered with a lot of HR companies in our area. One of them actually sends us about 30K a month so we really just want to replicate what they have going on and then share that with our other partners. So, what’s the advantage to that affiliate sending you the 30,000 month? We actually send them back roughly 4,000 to 45,000 because they have higher ticket items so when they go in their doing full replacements where we’re doing some patchwork and some cleaning, say they send us 20 leads, we’ll send them maybe 4,500 but they make double what we would send. So, Corey has a unique affiliate strategy which is that he purposely limits his own services so that he doesn’t compete with other businesses in his quote space. So, he refers them the high ticket business but then they were for him some percentage of their business but the beauty of this model is that he’s able to do this with tons of high ticket providers so that he has almost limitless lead flow of people coming towards him basically for free. So, give me whatever other numbers you think I should know. Our number is right now 1.25 million over the last 12 months, profit on that is 49,000. Our net margin is 38%. So, our marketing spend right now is just under 7200 as far as our marketing strategy altogether. Our show rate actually funny enough is 99% because it’s the 1% that the client just happens to not be home where they freak out about our appointment and then our closure is 82%. If we double the lead flow of the business, can you handle that? Yes, so actually we just hired on two more employees and we just got a third ban. Right off the bat in every business I think the first problem I try to delineate is this this ply constraint business or demand constraint business meaning if we can double the lead flow and they can handle it then it’s a demand constraint business. If we double lead flow and they can handle it then it means that we got to go build the resources and infrastructure to be able to handle a double and lead flow in the future. And I think this is such a common thing that I see with business owners they’re trying to fix a problem that’s already a problem that if you fix it make sure existing problem worse. I got an advantage. I think we may be able to help you get more people more impact and more clean air. I’m talking about. All right, let’s do this. There’s nothing majorly wrong and so that’s the good news obviously you have 30 percent margins you’re growing. The last thing I want to do is like break something. And so I think this is a me a game of incremental improvement like no hell areas if this is just consistent yardage. Press the process right? Yeah. Number one, I think that there’s actually still some more room for pricing. Number two, we let’s talk about the debt number three, talk about the affiliate piece. Four, we’ll go funnel conversion optimization. Then five we’ll go at six reactivation emails. Corizet stage five on the hundred million dollar scaling roadmap, he’s at productized. So he’s got 10 to 19 people who work in the business. She’s got maybe two or three people in the business that are kind of like manager leaders that are running this thing. Now some of the issues that he’s dealing with is that customers are having nothing else to buy and turn. We have to figure out how we can get more repeat business for the business. His qualified leads are too expensive and capability to advertise. And so what we’re doing is we’re trying to improve the throughput on his existing advertising process so that he can get more leads because he can handle more leads. We’re creating more sales materials, tweaking pricing, sales process, creating a CS playbook, all of this stuff is the things that happen all the time at the productized stage. And so if you’re like shoot, that’s almost exactly what he’s going through. That’s because businesses behave in patterns. And so if you’re not sure what stage of business you’re at, this kind of roadmap is 100% free. You can go and get it at axles.com for slash road map and put in your business details. And on the thank you page, if you would like our help actually helping you debug out the next these things, kind of like what I’m doing with core here in person at my headquarters. On the thank you page, just schedule a call, my team would love to have a conversation with you. Worst case scenario, we provide value. Best case. We’ll see you out here in Vegas. So first things first, the price. So you did a 23% pricing increase after the first time we talk to you. And so that resulted in a higher close rate and more money, wonderful. So core had actually come to one of our workshops at acquisition.com earlier. And we had made this first initial suggestion, which is like, hey, bump your prices. And he obviously saw a big improvement, right? He was able to charge more and close more. And the reason we made that recommendations, because we looked at businesses in that space and we were like, we think you’re mispriced. Some people might be like, how could you raise prices and close more? Well, let me explain. There’s two scenarios where this could be true. One is something called a vebblin’ good, which in economic terms is usually like a high-end luxury item. So like a Rolex, sometimes if something goes up in price, it becomes more sought after. That’s not what happens for Corey, because he’s in the other pocket, right? No one’s like bragging at their rotary club about how much they spend on their HVAC. So instead what happens is that if you have what I would consider a normal business providing a normal service or product, if you raise your prices, what sometimes happens is that the conviction of the customer that you can actually deliver on the promise you’re making goes up. And so on the value equation, which I’ll talk about in this book, it actually increases the perceived likelihood of achievement. So by raising the price, we actually increase the value. And this is why I talk about charging premium prices. Page 48 in the offers book, I talk about the virtuous cycle of pricing. And so what happens is if you raise your price, you increase the emotional investment, you increase the price value, you increase the results, and you decrease the demandingness of the customer, you get more money to actually deliver. And so what happens is a lot of times people will just try and like, they’re so afraid of charging money that they actually sell themselves out of a sale, because it’s so low price that they’re like, gosh, this guy seems like I’m running, you know, super CD duct tape operation. Right? And so many of you, especially newer business owners, I’d say like sub call it three, sometimes five million in revenue, some of the biggest levers that exist in the business is simply charging more because people actually believe you can deliver the service now. So whenever I hear 80% or over 80% of close rates, I usually know that there’s room and so basically what I penciled out was a 10% price raise. This is more asking than telling. We would have to believe that we’re not going to drop to 65%. As long as we close more than 65% we may have more money. Thing is, is that 10% price raise for you equals roughly a 25% increase in that profit. So that’d be roughly 100 plus a thousand a year. And that’s at last year’s volume in profit. So that’s number one. Does that sound something like something that you could stomach or no? Yeah. So the second thing is, how fast you plan on paying off the 60K debt that you have? We are planned to pay off completely in the next four to five

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