Bedros Keuilian Podcast Show - 078. 7 Ways to Scale ANY Business

Episode Date: March 26, 2024

In this episode of the Bedros Keuilian Show, I share how to scale your business no matter the industry. And which actionable strategies you can plug and play into your business Today's episode will help you see how you can scale your business and impact, so bring a pen and paper to take notes. EARLY BIRD TICKETS ON SALE NOW | BK LIVE 2024 Join me September, 13-14 in Scottsdale, Arizona for the Self-Mastery & Business Event of THE YEAR https://live.bedroskeuilian.com/bk-live-2024 REGISTER FOR THE LEGACY TRIBE Get the Life, Money, Meaning & Impact You Deserve https://bedroskeuilian.com/legacytribe SUBSCRIBE TO DOMINATION DOWNLOAD A Weekly Newsletter to Help You Dominate in Business & Life https://bedroskeuilian.com/ JOIN MY FREE 6-WEEK CHALLENGE: Transform into a Purpose-Driven Man https://bedroskeuilian.com/challenge TruLean Supplements | https://www.trulean.com/pages/bedros Get 50% Off Trulean Subscribe & Save Bundle Use Code: BEDROS Few Will Hunt Apparel | https://fewwillhunt.com/ Get 20% Off Your Entire Order Use Code: BEDROS BECOME A MODERN DAY KNIGHT: Join the MDK Project https://www.themdkproject.com/ PODCAST EPISODES: https://bedroskeuilian.com/podcast/ STAY CONNECTED: Website | https://bedroskeuilian.com/ Instagram | https://www.instagram.com/bedroskeuilian/ LinkedIn | https://www.linkedin.com/in/bedroskeuilian Twitter | https://twitter.com/bedroskeuilian

If you could retain a client longer, you were scaling your business faster. Welcome to the Bedros, Koolian Show. Back with Q was rolling with Lorenzo and a Benzo, I was banging with a gang of instrumental. Hey friends, welcome to the Bedrose Kulian show. I'm Bedros Kulian, and today's show is for all my entrepreneur, viewers, and listeners out there. So if you've got a business, you're an entrepreneur and you're thinking about scaling your business, this is the episode that you want to pay close attention to.

you want to take notes from because it is going to be massively transformational in terms of money and growth of your business. In fact, I titled it, how to scale any business. And you can look at it another way, which is how to dominate in any industry. It doesn't matter the industry that you're in. You do these things that I'm going to talk to you about. You are able to scale your business. And scaling a business is very important.

And people always go, well, why do I need to scale a business? I'm making good money. Well, that's cool. you're making good money, but imagine just three years ago. The money that you were making was serving you well, giving you better than average lifestyle. It was giving you the kind of lifestyle that you could buy some cool cars, maybe have a nice place, go on some cool vacations and stuff. And then homie Biden decided that he's going to help increase inflation. Gas prices are going to go up because that pipeline out there. And where was that? Somewhere in Europe

exploded. We don't know how it exploded. It certainly wasn't any of the NATO countries that did that, but it just exploded. And so gas prices went up, food prices went up, inflation went up, interest rates on your credit card went up. And that money that you were making quickly diminished and took you from a high quality life to a average quality of life. So if you're not always scaling your business, you're missing out on two things. A crap ton of money and the opportunity to one day exit, sell your business and move. on. So let's start talking about how you can scale any business. Now, listen, you have to understand something that the formula, like if you just look at scale, like what does scale mean? Well,

customers in versus customers out is basically the byproduct, right? Scaling is a byproduct of customers in versus customers out. I want more customers in my business than are leaving my business. And anytime I can get more customers into my business than who are leaving my business, my business is going to scale, assuming that my payroll and operational costs aren't eating up all the money that I'm making. Because that then is a whole different topic, a whole different conversation, a whole different podcast about how to price your products and programs, right? So for a hypothetical, let's use a coaching business. Like for our case study here, let's use a coaching business. Maybe you're going to, maybe you're a mindset coach.

maybe you're a money coach, real estate coach, nutrition and fitness coach. It doesn't really matter what kind of, maybe you're a dating coach. Whatever kind of coach you are, as long as you offer a service, this works for you. And by the way, this is also what we use for trueling. So if you're like, hey, does it also work for products? Yep. The systems that we talk about here, the scale systems I'm going to share with you here, apply to truling supplements, right, which are supplements, apply to fuel hunt apparel

and apparel line. So don't think it's only for services. It's just a case study that I'm going to use just for congruency throughout this episode is, let's say it's going to be for a coaching business of some kind, right? And let's say this coaching business, oh, you know, charges $500 a month, right, for the service. So you're charging $500 a month for your service. So what is the scale principle number one? Well, it is retention rate.

If you could retain a client longer, you were. scaling your business faster. Right? Think about this. So if you're getting $500 a month from each client and you are retaining a client for an average of six months, well, guess what? Your retention rate then is six months. And this is on average, right?

Well, what does that tell us? That tells us that if we can retain a client longer or if we can charge a client more, we're able to scale our business. So there's never just one lever to pull when you're trying to scale your business. Like, for example, as we started growing fit body boot camp, we realized that if we sell an MOA multi-outlet agreement, when someone comes to us and says, hey, man, I want to open up a fit body boot camp location here in my town. Well, okay, if you want to open up one fit body boot camp location, it's going to cost you $55,000

buy-in fee, right? Now, if you want to open up a second one, that's another $55,000 buy-in fee. But if you do three locations, you buy a three-pack, an MOA multi-outlet agreement with us. The first two are $55,000. And then the third one is half off. Right. So what did we just do? We increased the average order value, right?

And you could do that in your business as well. You could, as long as you can charge more and retain clients longer, you are in the process of creating scale in your business. And the more you can scale, the more money you make to be able to put your competition out of business. And if you're like, whoa, whoa, whoa, whoa, whoa, whoa, I'm not looking to put my competition out of business. Yes, you are. I know a lot of tree hugging, sound bowl fucking doing woo woo people tell you that competition is good and it's healthy. It's not. It's not.

Here's why. If I've got a coaching service and I know I'm the best at what I do, then I don't don't want you as a customer or potential client to go to my competitor. I've done you with this service. What if my competitor has a inferior coaching service, but a better marketing strategy, and therefore they take 100 grand from you for a year of coaching and they deliver mediocre coaching to you, which not only slows down your progress, but maybe sets you on a very different trajectory to lose money in the future, right? So if I'm the best at what I do, do, I've got a duty and an obligation to scale my business so fast that I use some of that money

to outmarket you and to suffocate you out of business. I know it sounds harsh, but this is the world that I live in and this is the world that you should want to live in. You don't think McDonald's wants to put all the other fast food locations out of business? Of course they do. That way you could eat more McDonald's and put more chicken nuggets down your gullet and have those gelatinous tithes that you're going to shake around and get that stretch mark around your belly button that feels so good when you're sitting on your mom's basement couch playing your call of duty. You know what I'm saying? But unless McDonald's can put all the other fast food joints out of business, they're not going to be able to have industry dominance.

And so I want to talk to you about scaling a business and creating industry dominance. Now, you may not be able to put everybody out of business, but what you can do is be the number one, right? Possibly number two. Think about Coke and Pepsi and then there's all the other sodas out there, right? Think about, oh, I don't know, McDonald's, and then what's the other fast-growing fast food? Subway, and then there's all the other fast food joints, right? If you can't at least put yourself in a position to be one or two, now you're in the bottom trying to feed off what everyone else is trying to feed off of.

And that is a hard life to live, man. that is a hard life to live. So retention rate, how long you can keep a client is really, really important. And if you can increase retention, your business is scaling. If you can increase what you're charging per month, right? Your business is scaling. Hey guys, quick interruption to the Bedroskoolion show. I want to remind you about the Trulian Wellness Shot. I created the Trulian Wellness Shot because I wanted a product that was going to help you boost our immune system and fight off inflammation in your gut, in your joints, in your body so that you are healthy, you don't get sick, an awesome life. Truly in wellness shots have these nine ingredients that are going to absolutely

help fight off inflammation and boost your immune system. Vitamin C, vitamin D, zinc, ginger, turmeric, echinacea, B12, cayenne pepper, and black pepper. And every single packet is checked for heavy metals because our ingredients are top quality and we use nothing but top quality because we cut no corners. So you can use my name Bedrosse at trulein.com and get 50% off your Truling Tribe subscription. You not only get 50% off your first order, you also get free shipping. You get a 30-day unconditional money-back guarantee so that if you don't like the product for some reason, which we have yet to meet anyone who don't like the product, we will give you your money back, no questions asked, and we will shake hands and part ways as friends. And of course, one dollar of

every order goes to Shriner Children's Hospital, which is a hospital system that I've been helping and supporting for over 12 years. They provide medical procedures, medical services, surgeries to children whose families can't afford these procedures. So go to truling.com, use code word bedros, join the truling tribe. You get 50% off your first order and then 20% off your recurring monthly orders after that. Back to the show. What else? There's another factor and that is lifetime value.

So look at it this way. If we have, let's say, how do we factor lifetime value? Well, pretty simple. We take a period of time. Let's say January 1st, 2024 to December 31st, 2024, a 12-month window. And then we go, all right, in that 12-month window, how many clients did we have? Oh, well, let's use a round number, a hundred clients. Great. And if these hundred clients are paying us $500 a month, we're going to see how many of them

pay what. So let's say for the sake of simplicity, 50 of these hundred clients paid $500 a month and stayed three months, right? Let's say the other 50 paid $500 a month and stayed nine months. Well, what do we do then? We realize then that if we do the math, we now have a six-month retention rate. We keep the average client member, 50 of them of the 100 in that window of time stayed for three months. The other 50 of the 100 stayed for nine months. That averages out to six-month retention rate.

Well, we got that math. And at $500 a month, what does that tell us? That we're averaging $3,000 per client on average. All right. So you multiply that by 100 clients. And you know that year, you're going to make $300,000. But the lifetime value of one client, LTV, is $3,000. So the question then becomes, can I increase

lifetime value. Well, we talked about if you can increase retention, you increase lifetime value, right? You scale your business. If you can increase what you charge per month, you can increase scale and the amount of money that you make. Now, you might be arguing with me right now as you're watching this or listening to this going, whoa, man, if the industry average for a coaching business is $500 a month, how can I charge more? Wouldn't I be pricing myself out of the market. My argument to that is no. See, there's other micro factors that influence scale. Those micro factors are your personal brand. Because if you were to build your personal brand and you take yourself from a generalist. So I want you to imagine like this pyramid. I always draw this

pyramid for my coaching clients. And I go in the very bottom of the pyramid is where everybody is. They're competing. It is like dog eat dog. Those are all the generalists, right? Above that are the specialists. Above the specialists are the experts. Above the experts, you have authority and then above the authority, you have celebrities, industry celebrities. If you can elevate yourself up that pyramid, going from generalists to specialist to expert to authority celebrity, you have now developed a bigger personal brand. You are seen as a authority and a celebrity in your industry. And if you're seen as an authority and a celebrity in your industry, you can now charge more for the same service that your competitors are charging. So don't think for a moment that raising your prices

automatically puts you out of the industry norm. It only does that when you haven't raised yourself to authority celebrity status. Now again, there's a whole different episode we got to do about building your personal brand. And in fact, by the way, if you're watching this and you want to come out to the scale day that Dan Fleischman and I are holding on April 18th, then you are going to want to click the link in the description or in the bio of these episodes. And you can come to scale day where we talk about building your personal brand and all the different things that I'm listing off here, right? But it's important for you to understand that you can charge more and you won't price

yourself out of the market if you are able to raise an element. your personal brand and that's a byproduct of you know the network that you're connected to the stages that you speak from the podcasts that you end up on the podcast that you do um the youtube show that you do the book that you write like think about what do industry experts do there's like a list of things that i just listed off there right who they're connected to the stages they speak from the podcast the shows that they're on that they run the books that they've written and all of a sudden they're like oh shoot that guy or gal is a industry authority or celebrity that they're Therefore, I'm willing to pay more, right?

So now if we know that for those hundred clients over that one year period, if they're paying $500 a month, the average client is staying six months, the lifetime value, LTV, is $3,000. So those hundred clients paying me an average of $3,000 each for that 12-month period, I can now estimate that my business is going to make $300,000 a year, right? But there's also the third factor, and that is controlling your exit rate, the rate at which people leave. Remember, in the beginning of this, I said, scaling is a byproduct of customers in versus customers out, right?

If I have customers coming in, but zero customers leaving, my business is going to continue to scale indefinitely. Now, there's no business out there that doesn't have a certain level of churn rate, and that's what that's called, right? Customers leaving is called churn rate. There's no business out there, but what if you can actually manage your churn rate? So think about this. The number of clients that you gain each month versus the number of clients that you lose each month, that is your return rate. And so if we have those hundred clients, right, it's December 31st, 2024.

And now let's say January of 2025, we gained 10 more clients. However, in the process of gaining 10 clients, we lost three clients, right? What does that tell us? Well, that tells us that we have a 2.7% churn rate, right? Because we went from 100 to 110 clients, but we lost three new clients, or not new clients, but just three clients that we've had. And so we have a 2.7% churn rate. Now, remember that 2.7%, if that stays static, consistent, the more clients you get,

the higher the number of people that you lose, right? You're with me on that. And that's important for you to know. So if we know that that's the fact, how do we control our churn rate? Well, churn rate can be fixed or at least managed. We can't eliminate churn rate, but we can manage churn rate by creating a referral system. When your clients and customers start referring new business to you, there is no additional cost of marketing.

So think about this. If let's say, you know, we know that you're making $3,000 per client that stays on board with you, right? In this coaching program, this case study coaching program that we have. And the average client stays six months and they're paying you $500 a month. Well, maybe as you're running ads and stuff, you're willing to spend up to $500, $800 to acquire a new customer. Well, all right, cool. If you get a referral, there is no cost of acquisition for that referral, for that lead. And that lead comes to you warm. Like, pre-indocrinated to buy because they come from an existing client who's already working with you,

believes in you, and is getting results from you, right? And so when I talk about referrals, referrals are a byproduct of results and also creating a condition of doing business with, right? So if you want to retain a client so that you can get referrals from them, then you better start generating results. that's the formula. But if you're promising a unicorn and delivering a donkey, then you are not meeting their

expectation. And therefore, you're not going to have retention. And any business that doesn't have retention usually isn't able to deliver results to the clients, which means those clients aren't going to give you referrals. You see how it works backwards as well, right? And so knowing that, if I want to scale my business, but I don't want any additional cost of marketing so that I could negate that churn rate, like, What if we can take that 2.7% churn rate and bring it down to 1.34, 1.35.

Cut it in half, right? 1.35% churn rate because now we're getting referrals from existing clients. Why are we getting referrals? Well, we're giving them the results that they expected. We're exceeding their expectations. We're making sure they get results as expected. Number one. Number two, we've created a condition of doing business with them.

We've said, when the client came on board, I said, hey, Mr. Jones, as I'm able to help you achieve your results through this coaching program, can I count on you to help me achieve my personal goals, which is to impact the lives of 10,000 people over the next two years through my coaching program? And they're going to say yes, great. So as I help you make more monies, buy more real estate,

whatever, lose weight, get fit, you know, find the next Mrs. Wright. Then can I count on you to refer a friend, family, coworker to me? They're going to say yes. Then guess what you do next? you start making sure that they get their results. And when they do, you go, hey, look, you're making more money. Or, hey, look, you lost weight.

Hey, look, you're more fit. Hey, look, you got more dates. Remember when I said, as I help you get your goals, you'll help me achieve my goals? Yes. So can you make a text introduction to two, three, four people who I can offer the same service to? And now they're going to do some kind of a text introduction. But if you don't set the expectations on day one when they're buying your service or product from you, Then it's pretty difficult to go back to them later and go, hey, now that you're getting results,

can I count on you to refer people to me? They're going to be like, yeah, I'll let you know if I can think of anyone. But, of course, they're not going to think of anyone because you never made it a condition of doing business with, right? So how do we increase customer retention? Well, we make sure, one, we give them the results that they want. And then how do we increase customer or client referrals? We make sure that they get results. and we set a condition of doing business with, right?

I hope this is starting to make sense. So we're managing our churn because now we have existing clients giving us referrals that don't cost us any marketing dollars whatsoever. And they come predisposed to buy from us because they are a lead who already knows likes and trusts your client. And when your client refers you, that lead is a warm lead. They are predisposed to buy. They come with less skepticism.

They're going to have less objection. and likely they're going to stay just as long as your client who referred them. So you see the beautiful thing about that, right? So let's move on to the next thing. MRR, monthly recurring revenue. I want you guys to focus on building your monthly recurring revenue if you are interested in scaling your business. Now, remember, we talked about a client that stays on board for six months and pays $500 a month. That's cool, right?

But that means you have a basically every six months, you're getting new clients on board. And so what's the importance of creating MRR, monthly recurring revenue? Well, I don't know about you, but I can tell you that it feels good to come up to the first of every month and know that across all my businesses, we've got millions of dollars scheduled to come in that month from clients who are paying us royalties or they're on subscription or they're paying us a software fee or they're having. have a membership fee of the legacy tribe, right? We have all these different monthly recurring revenue streams that come into HQ. So you might be starting the month off at zero dollars. I'm starting the month off at millions of dollars scheduled to come in, which means I sleep better because I don't start every month at zero dollars and go, oh, fuck, what do I do to get new

clients and customers? I've got MRR scheduled, monthly recurring revenue scheduled to come in across all my businesses and brands, most of my businesses and brands, right? And if you're like, well, it doesn't work for some businesses. Yes, it does. Yes, it does. Because even on the apparel side, fuel hunt, we have a $29 a month membership program for the community who wants higher level coaching, who wants access. Remember, fuel hunt is an apparel company, right? However, some people also want to pay an additional $29 to get a special discount code to get some a better discount every month. They get early notification when a new new gear drops.

And on top of that, they get access to guest speakers via Zoom, live guest speakers, some of the best in the world, thought leaders, entrepreneurs, authors, pro athletes. And so this community that Fewell Hunt has created at $29 a month, creates recurring income even for an apparel company. We do this for Truling supplements. You know, if you buy the Truling supplements, right, the wellness shot especially, what do we say? Well, look, use the code Baygros,

get 50% off your subscribe and save, and use the product for 30 days. If you don't like it, let us know, we'll give you a full refund. If you do like it, stay on board on the Truling Club. And we will give you another 20% off each month and free shipping. And we've got clients, our customers stay on board,

an average of nine months on the Trulein subscription club, right? So you could do this with supplements. So don't for a moment think that MRR, monthly recurring revenue is only for some kind of a membership site or a SaaS program, which is software as a service, right, where it's like a fee that you pay. It literally can, if you are creative, you can come up with enough value ad

and an irresistible offer to influence your customers who are going to want to do business with you every month in some fashion and therefore allow you to take money from them in exchange for 5, 10, 15, 20x the value that you're going to deliver. So let's talk about another thing. We talked about, well, what if the average client stays for six months and they're paying $500 a month? Well, we know that we're getting $3,000. from each client.

Now, what if you can do a pith? What is a pith? A paid in full. And now you're going to be like, B, this literally goes against what you just taught, monthly reoccurring revenue. Yes, I did. Sometimes you can scale your business,

but it's going to be at the cost of diminishing your monthly recurring revenue. And there's times that you want to do that. In the beginning phases, if your retention rate is low, like let's say six months at $500 a month from each client, and you're like, man, I can't get it to increase to seven months or eight months. Then I might do something like, all right, what if I can say, look, you could do a month to month program at $500 a month when you sign up for my coaching program.

Or if you pay for nine months up front, it'll cost you $4,050, which is $450 a month. So you're saving $50 a month if you commit for nine months paid in full, Mr. and Mrs. Jones, right? So what did we just do? We took the lifetime value of $3,000 per client and we stretched it out to $4,050, right? But we got a PIF paid in full, which means we now eroded our reoccurring revenue. There's a time to do that, and it's usually in the beginning phases when you need a lot of money up front and you want to increase average order value. You want to increase how much money you take in and you're going to try and give a discount

count if they do a paid in full, a PIF. But the benefit of ultimately going to monthly reoccurring revenue, and by the way, you might have a hybrid of both. You might say, look, you can pay $500 a month. And at that point, maybe you figured out all the different strategies to have the average client stay, nine, 10, 11, 12 months, right? So you can pay, hey, $500 a month. Or if you pay $450 times 15 months, a paid in full, then, you know, you save $50 per month times 15 months, right? But there is a big benefit to building up your monthly recurring revenue. And that big benefit is, like I said, you start the month with scheduled money ready to come in. And that's a damn good feeling. But number two, you increase your business's valuation. So if you have

intentions in the future to sell your business, guess what? Creating monthly recurring revenue means you can sell your business for more. So if a business brings in, let's say, a million dollars a year. right? In gross revenue. And let's say EBITA is, oh, $300,000 is what you keep after paying taxes and employees and overhead and operational cost and all that, right? $300,000 of that million is yours. But those are all off one-off transactional sales, no monthly recurring revenue, right? So that million dollars of gross revenue or $300,000 of EBITA, you might get a valuation from a private equity that says, hey, we'll give you 3x your Ibetta or 5x your Ivita for this company, right? Now, let's say you bring in the same million dollars in revenue, but your monthly MRR,

all that revenue, the million dollars a year that's coming in is all off of monthly reoccurring revenue. And you still have the same $300,000 in Ibetta. Guess what? Private equity comes in and says, hey, we think we want to buy your business. Oh, that money is guaranteed to come in every. every month as long as we deliver the product or the service. Yes, it is. Well, shit, we'll pay you seven, eight, nine X your EBITA instead of just three, four, five X. Does that make sense?

So the same $300,000 a year EBITA is worth more in valuation when it's recurring revenue versus one-off transactional sales. That is the beauty of MRR. And so with that said, you know, there's other factors, right? in scaling a business. But when you just take these five things that I shared with you, like some of the other factors, like I said, are building your personal brand. Some of the other factors are when you start narrow and deep,

you eventually can get so good at what you do that you can start going shallow and wide, covering more industries, more customers, getting your arms around more customers, right? But it's always easiest to start narrow and deep. And then as you build your brand, you build your reach, you get more testimonials, you get more reviews, then you can go shallow and wide and get your arms around more people,

a bigger market space, right? So there's definitely other levers to pull when you are trying to build your business, especially scale. But understand that scale must be a formula that you install in your company. You can't just be like, hey, every year we make a million. If every year you make a million dollars, believe it or not, every year your take home is less because life continues to get more expensive. payroll gets more expensive, software gets more expensive, marketing gets more expensive, salespeople

want hired commissions, inflation, interest rates, the dollar is worth less. So you have to keep scaling your business. One, to keep making more money. Two, to keep crushing your competitors. And three, to put yourself in a position to ultimately sell one day. Because think about this. I'm going to leave you with this, how important scaling a business is. If you can't show a track record to private equity who's trying to buy you, that yeah, year after year, we've been growing, we've been experiencing growth, even if it's 10% growth, 15% growth, year after year, then they're going to go, dude, you've just been stagnated the last three years, which means you've actually been losing money because the cost of living continues to go up. Cost of operations go up. Therefore,

your valuation is going to be lower. But if you can show a track record of a constant growth because you are focused on scaling your business, now when the time is right for you to sale, you can get more money for your company. And that's what it's really about is having the control of how you end up parting with your business. And make no mistake about it, guys and gals, when I'm coaching up my domination of your coaching clients, one of the first things I say during their half day is, hey, what is?

the 10-year goal with your business. More often than not, they go, I don't know. I go, do you think you'll be running it 10 years from now? They go, I don't know. Maybe my kids will. I go, have you talked to your kids about running it? No, I haven't. What if your kids don't want to run it?

Well, shoot, I don't know. Have you ever thought about selling it? No, I haven't. So half of my coaching clients in the beginning during day one of their domination year have no idea what their business is going to look like 10 years from now. You should have the option of what you want to do. keep it, pass it along to the next generation, or sell it for a valuation that you want versus having to be forced to take whatever they give you because you didn't show a level of

scale, you didn't have monthly reoccurring revenue, and you didn't track these metrics like retention, lifetime value, average order value, churn rate, right? All these things matter. You didn't create a condition of doing business with them for referral generation. And all those things are levers that will help you scale your business. So I hope you got a lot of value from this masterclass on how to scale your business. If you did, do me a favor and subscribe if you're on YouTube and leave a comment, like. If you're on all the other platforms like Spotify and iTunes, please do me a favor and leave me a five-star review. Give me a thumbs up. Take a screenshot, share this on social media. Guys, it wouldn't mean a lot to me if you did. That's the reason this

podcast, the show grows is because of you. And that's never lost on me. And I'm massively grateful and appreciative for that. So with that said, always remember this, that average is the enemy, that success is your responsibility, and change will take place in an instant if you are willing to flip the switch. I'll see you next time.