I’ve had the opportunity to look at thousands of businesses over the years. And you know what?
Many of them struggle with similar challenges.
It’s frustrating to see, especially when these issues are often avoidable.
But here’s the good news: We can change that trajectory.
Why This Conversion Lab is Different
You’ve probably been to various seminars and workshops promising quick riches.
This isn’t one of those.
We’re going to dig into the real, sometimes unglamorous work that actually moves businesses forward.
We’re talking about the behind-the-scenes details that separate successful businesses from those that struggle to get off the ground.
The Problem with Piecemeal Solutions
One of the biggest issues I see is businesses treating symptoms rather than addressing root causes.
For example:
You fix the landing page, then a few weeks later you can’t spend more than X dollars. You solve that problem, and it seems you’re just working enough to get to the next problem, without strategically looking at what you’re trying to accomplish overall.
It’s time to step back and look at the big picture. We’re not just fixing marketing problems anymore.
We need to consider operations, HR, finance—everything that makes a business tick.
The Unpopular Conjecture
Here’s my unpopular conjecture:
Marketing is really an unsolvable problem.
At some point, through A/B testing or consulting, you’ll find something that works.
However, without appreciation for other parts of the business, marketing can turn into a hammer, and you’ll want to solve every problem with it.
Last year, I launched a one-on-one consulting program called Exit SOS.
We worked with five different businesses of varying sizes and with different sets of issues.
The goal was to create a framework for creating massive value, using “exit” as a metaphor for fixing core business problems.
Through this process, we identified key areas that consistently drove significant improvements across various businesses.
These areas formed the foundation of our framework, which we distilled into six essential categories.
By focusing on these categories, businesses can systematically address their core challenges and create substantial value.
Six Categories of Wins
Based on my experience, here are the six categories of wins that businesses need to focus on:
- Strategy
- Insights (tracking and analytics)
- Operations
- Finance
- Team
- Marketing (offers, copy, funnels, ads, media buying)
We’ll focus mainly on the first five categories, as most of you are already familiar with the marketing aspects.
But also, bottlenecks grow with scale.
What gets you to $1 million won’t get you to $5 million, and what gets you to $5 million won’t get you to $10 million.
Each hurdle needs a different solution, and it’s not always solvable with just media and creative efforts.
In the following sections, we’ll dive deeper into each of these categories and discuss how you can create an effective execution plan.
To illustrate how focusing on these categories can transform a business, let’s look at a real-world example.
Turning a Business Around: How We Achieved a 60% Return on Capital
The Journey from 3% to 60%
Alright, so let’s talk about growing a business where the returns shot up to 60%.
This wasn’t just a small bump – we’re talking about a 60% return on invested capital. Pretty wild, right?
Here’s the breakdown:
- Initial investment: 10 million bucks
- Annual return at the end: about 6 million
- Starting point: a measly 3%
- Time it took: 6 years
I was actually the architect of this turnaround, so I’ve got some real insights to share.
How the Hell Did We Do It?
We didn’t just blindly pump cash into ads. We launched new products strategically, based on some serious number-crunching.
We poured money into:
- Working capital management
- Investment management
- Inventory management
This was crucial because we were dealing with consumer products. You can’t mess around with that stuff.
Making HR Training a Big Deal
We made everyone go through a set number of hours of HR training. No exceptions. Sounds boring, but trust me, it paid off.
Market Research on Steroids
Here’s where it gets interesting. We bought Nielsen’s retail scan data.
If you’re playing in the big leagues, you know this is gold.
Think about it – every time you buy groceries at Walmart or Whole Foods, that data is being collected. And guess what? You can buy that data.
This isn’t your run-of-the-mill online market research. This is the real deal:
- Super complete data
- Almost no guesswork needed
- Clean as a whistle
- Shows you exactly where markets are heading
When you look at this data over 5-7 years, you start seeing patterns. That’s what we used for our product launches.
The Brutal Truth About Business Success
Success in business follows what’s called a fat tail distribution. In plain English:
- A lot of stuff you try won’t work
- A few things will work insanely well
- Being average gets you nowhere
The Problem with Quick Fixes
We all want that magic pill, right? It’s like wanting six-pack abs from a pill instead of hitting the gym for a year. That’s what we’re all selling in this game.
But here’s the kicker – this short-term thinking is a killer when it comes to:
- Investments
- Business growth
- Even your health
Nobody wants to hear “Work hard for 5 years and maybe you’ll see results.” But sometimes, that’s exactly what it takes.
So there you have it. That’s how we turned a 3% return into a money-printing machine at 60%.
It wasn’t quick, it wasn’t easy, but damn, was it worth it.
The $60 Million Day: A Case Study in Extreme Scaling
The Six-Month Grind That Paid Off Big Time
Alright, let’s dive into a case study that’ll blow your mind.
We’re talking about a lead gen company in the finance space that took patience to a whole new level.
The Numbers That’ll Make Your Head Spin
- End Result: 200,000 leads per day
- Peak Performance: $60 million worth of loans closed in a single day
- The Kicker: It all came crashing down due to a lawsuit
Now, here’s the part that most people miss.
See that tiny flat line before the hockey stick growth? That’s six months of pure grinding.
“I don’t know too many people who are going to be testing ads, offers, all sorts of stuff for six months to scale, but that’s the kind of game they were willing to play.”
These guys were tweaking and testing everything for half a year:
- Ads
- Offers
- Landing pages
- You name it, they tested it
The Launch That Broke Records
After dialing everything in to perfection, they hit the launch button. And boy, did it launch:
- Went from zero to 200,000 leads a day
- Closing $60 million in loans daily at their peak
The Lesson: Patience Pays, Big Time
This isn’t your typical “start a $50 campaign and be rich by next Tuesday” BS. This is the real deal.
These guys put in the work, and it paid off in spades.
The Bitter End
Sadly, all good things come to an end.
A lawsuit forced them to shut it all down. But imagine if they could’ve kept going. We might be talking about billions, not millions.
I covered this and more in Finance SOS, for those of you who’ve been through that. It’s a prime example of what’s possible when you’re willing to play the long game.
Remember, folks: In this business, sometimes the biggest paydays come to those who are willing to wait, test, and perfect before they scale.
Strategy: The Art of Winning the Game You Choose to Play
What the Hell is Strategy Anyway?
Strategy isn’t some fancy corporate BS. It’s simple: it’s the choices you make to maximize your odds of winning. Period.
The Million-Dollar Question: What Business Are You Really In?
Here’s the deal: you gotta ask yourself, “Why the hell am I in this game?” And more importantly, “How can I crush it better than everyone else?”
“In what way can I make this thing a little bit better, faster, quicker, cheaper, easier than the next person?”
The Brutal Truth: What Works for Me Might Suck for You
Let’s get real. Just because something’s hot doesn’t mean you should jump on it.
Take my buddy Goah – he’s a beast at affiliate marketing. But he’s got 20 years of experience.
Now let’s say I’ve never done that and I’m not really analytical or I don’t know the media buying side of the game too well.
I’m more, you know, get on the call and close people, then me trying to fit that game means I’m gonna get my ass handed to me.
The 8% Rule: Why Most People Fail
Only about 8% of people really nail this strategy thing. Why? Because you can’t split-test your way to success here. It’s about what YOU bring to the table.
The “All Action, No Strategy” Trap
Picture this: a bus driver buys a $15k course on “internet lifestyle.” Quits his job, signs up for every tool out there.
Result?
Driving a bus to nowhere, but this time online.
“You’re telling me someone has sold you on somehow you were able to do this thing within a few short weeks and literally you’ve come from outside the industry?”
I had to cancel his account and tell him to get a refund.
Harsh? Maybe.
But sometimes you gotta save people from themselves.
The “Hot Offer” Fallacy
Everyone’s always asking, “What’s hot right now?”
Wrong question, folks. The right question is, “Do I have the skills to play that game?”
Take solar. It’s booming, sure.
But the margins are razor-thin, and the spend is massive.
“One of the guys I’m working with right now. They spend a million and a half a month with a 7% net margin. If you have a bad three, four, five days, you’ll wipe out two, three months of profit.”
Unless you’ve got the stomach for that kind of risk, stay the hell away.
The “Money Loves Speed” Myth
We’ve all fallen for this one.
It’s that point in the funnel where you’re supposed to turn off your brain and buy.
But here’s the truth: sometimes you need to slow down and ask, “Does this actually make sense?”
The SEO Company That Almost Blew It
Had an SEO company call me. Doing $10 million a year, crushing it.
But they wanted to jump into pay-per-lead because it was “hot.”
I asked them, “What’s wrong with SEO?” They said, “Nothing.”
So why change? After digging into their data, we found 70% of their revenue was from legal. I told them to double down on that instead.
Result?
They won the SEM Rush Agency Award of the Year in the legal field.
The Art of Strategic Doubling Down: Playing to Your Strengths
Why Chasing New Shiny Objects Will Bite You in the Ass
Look, here’s the deal: strategy isn’t about jumping on every hot new trend.
It’s about looking at what you’re already good at and doubling down on that.
Why?
Because it’s way cheaper, faster, and easier to win a game you already know how to play.
Technical Funnels Aren’t for Everyone
Take Nick, for instance. This guy’s a technical marketing wizard – we’re talking APIs and all that geeky stuff.
His funnels are like a tech lover’s wet dream. But here’s the kicker:
That’s not a game I would recommend you play unless you have his technical skills, right?
Start with Your Strengths
Your strategy should be all about leveraging what you’ve already got:
- Your existing skills
- Your temperament (yeah, that matters)
- Your network (who you know can be gold)
- The capabilities you bring to the table
And frankly, be honest about your weaknesses too.
Hate People? Don’t Start a Customer Service Business
If dealing with people makes you want to punch a wall, don’t go starting a business that’s all about customer interaction.
Either find a partner who loves that or pick a different game altogether.
Find Your Sweet Spot
Success isn’t just about chasing opportunities. It’s about finding the overlap between:
- Your strengths
- The opportunities in the market
That’s your money zone right there.
The Media Buyer’s Advantage: Leveraging Existing Relationships
Let’s say you’re a media buyer with solid connections.
You’ve already got credibility and a network. Use that to your advantage:
- Get better terms
- Ask for early payment (hello, better cash flow!)
- Use your market know-how to hit the ground running
Why Chase New Markets When You’ve Got a Gold Mine?
If you’re already killing it in debt, finance, or personal injury – stick with it!
These markets are like bottomless pits of opportunity. Why the hell would you chase some new, shiny object when you’ve got a proven winner?
Understanding Value Creation: Compensation vs. Business Model
Here’s a quick breakdown:
- Compensation model = How you get paid
- Business model = How the business operates
You need to understand both because they need different skills and have different risks.
The Risk-Reward Spectrum: From Safe to Holy Shit
- Pay for service (Safest bet)
- Pay-per-lead
- Pay-per-call
- Pay-per-appointment
- Pay-per-client
- Revenue share
- Profit share
- Equity (Highest risk, potential to make jack shit)
Each level needs different skills and has different risks. Don’t jump into the deep end if you can’t swim, capisce?
The Pay-Per-Call Trap: It’s Not Just About Leads
Think pay-per-call is just about getting phone calls? Think again.
You’re dealing with:
Got the time and energy for that? If not, stay in your lane.
The Pay-Per-Signed Deal: High Risk, High Reward
This is the big leagues. You’re not just driving traffic; you’re:
- Nurturing leads
- Getting them on calls or webinars
- Closing the damn deal
It’s a whole different ballgame.
Don’t think you can replicate someone else’s success just because the numbers look good.
The Pay-Per-X Trap: When Flat Fees Screw You Over
Last but not least, be careful with pay-per-X models in markets where value isn’t linear. You could be leaving a ton of money on the table.
The Wealth Management Trap
Be careful with flat-fee models in industries where deal values can vary wildly.
In wealth management you get paid on AUM, right? As in, your client gets paid on AUM, which is assets under management.
You might get paid $300 for a lead whether they have $100k or $10 million to invest. That’s leaving money on the table, folks.
The Solution: Get a Piece of the Pie
If you’re dealing with wildly different deal values, you gotta change your game:
You have to move to a percentage of the value that’s being generated.
Yeah, it’s more complicated. But you know what else is complicated? Watching someone else get rich off your hard work.
Here’s a mind-bender for you:
“If you’re getting $1,000 leads and then one $10 million one, well, that $10 million one should be paying for thousands of the thousand ones, right?”
Exactly. Why settle for the same pay when the value is sky-high?
The Bottom Line: Match Your Model to Your Market
This is important.
Be very careful in your market selection and the compensation model that has to match with the market you’ve selected.
Don’t just jump into a market because it sounds sexy. Make sure your compensation model matches the value you’re bringing.
Otherwise, you’re just leaving money on the table for someone else to grab.
From Strategy to Execution: The Brutal Truth About Getting Started
The Guru BS vs. Reality
You’ve all heard the guru pitch:
“Start a $50 campaign, you’ll be making money by next Tuesday.”
Yeah, right. And I’ve got a bridge to sell you in Brooklyn.
The Real Deal: It Depends on What You Bring to the Table
Let’s break this down using a pay-per-lead funnel for debt refi as an example.
To make this work, you need to know:
- Funnel building
- Marketing automations
- Media buying
- Landing page creation
- Copywriting
- Tracking and analytics (both server-side and client-side)
And that’s just the tip of the iceberg. You gotta be able to put all this shit together too.
The J-Curve: Your New Best Friend (or Worst Nightmare)
Here’s the deal: If you’ve already got these skills, your J-curve is gonna be short and sweet. You can go from idea to execution in a few days.
But for most of us? That curve is gonna be deep and long. Why?
“We’re all entering the space or whatever the problem you’re trying to solve or whatever marketing or the business you want to get into with different skill sets.”
The Dip: Where Dreams Go to Die (or Get Reborn)
This is where shit gets real. You’re going negative, folks. You’re either:
- Investing in yourself to learn
- Hiring consultants to buy capability
- Burning money to learn the market
And there’s no shortcut. You gotta pay to play.
Rev Share Models: When Do You Get Paid?
Someone asked about rev share models. Here’s the skinny:
The best setup is a two-step model:
- Upfront payment to cover your costs
- Residual payment later
Why? It’s fair and keeps everyone honest. If you just do backend:
There’s no motivation to actually do something with the lead.
They might just say, ‘Oh well, what do I care, Shahar just send me the leads, I don’t have to do anything because I don’t have to pay him until something happens, and I’ll just tell him the leads were shit.
Always make sure they have skin in the game.
This is where the rubber meets the road. All those grand plans? Time to see if they hold up in the real world.
Remember, execution isn’t about dreaming big. It’s about being realistic, planning for the worst, and being ready to adapt when shit hits the fan.
Revenue Growth: Navigating the Path to Expansion
Where’s Your Growth Coming From?
Let’s get real for a second. You’ve got a business, right?
And you’re not just sitting on your hands – you want that sweet, sweet growth. But here’s the million-dollar question:
“Where is the growth going to come from? Where’s the revenue going to come from?”
This isn’t some rhetorical BS.
You need to get specific, and I mean really specific.
What verticals are you eyeing? Which markets are you gonna dive into?
I’ll be sharing a spreadsheet format soon that’ll help you break this down. But for now, start brainstorming.
The Newness Spectrum: Your Growth Roadmap
You’re looking at a spectrum of choices here:
- Same client, same vertical, same media (The comfort zone)
- New clients, new vertical, new media (The danger zone)
Everything else falls somewhere in between.
And guess what?
Where you land on this spectrum is gonna dictate how deep your J-curve goes.
The J-Curve: Your Financial Rollercoaster
Remember our old friend, the J-curve?
Well, it’s back, and it’s got range:
- Sticking to the same old, same old? Your J-curve is gonna be a gentle dip.
- Going all-in on new stuff? Prepare for a financial bungee jump.
Why the difference? Simple. New = learning costs. And learning ain’t cheap, folks.
Capitalize on Your Moat: Don’t Be an Idiot
Try and see if what you’re currently doing, if there’s some way to do more of it, and that’s usually the best approach—not to start, you know, chasing a rabbit down a hole that you don’t know about.
You’ve built a competitive advantage.
A moat, if you will.
Don’t be so quick to abandon it for the next shiny object.
The Affiliate Marketing Example: Stay in Your Lane
Let’s say you’re killing it with affiliate marketing.
You know Facebook ads like the back of your hand, and Google Ads is your playground.
So why in the name of all that’s holy would you suddenly decide to become a TikTok guru or dive into offline advertising?
“Doing more of that is probably going to be a better outcome than starting to want to sign up clients in a niche, or in running TikTok ads you have no experience in.”
Stick to what you’re good at. Expand there first.
The Blue Ocean Myth: New Isn’t Always Better
Everyone’s talking about “blue oceans” – untapped markets, endless possibilities.
Sounds great, right? Well, here’s what they don’t put in the brochure:
“If you go for new, new, new, yes, blue ocean perhaps, but also a lot of pain.”
New markets mean new problems, new competitors, and a whole lot of learning curve.
Talent and Capability: The Hidden Costs
If you’re venturing into new territory, be prepared to either:
- Shell out cash for new talent
- Invest time (and probably money) in learning new skills
And let me burst your bubble right now: That “learn in two days and make millions” crap? It’s exactly that – crap.
The Bandwidth Problem: You’re Not Superhuman
Here’s something most growth strategies conveniently forget to mention:
“If you’re already working, you know, 14 hours a day, then, like, that bandwidth has to come from somewhere. You have to cut something out, right?”
You’re not magically going to find extra hours in the day.
If you’re maxed out, diving into new ventures isn’t just risky – it might be impossible.
The Bottom Line: Be Realistic, Not Optimistic
Look, I’m not here to rain on your parade or tell you what to do.
But for crying out loud, don’t just look at the potential payday. Ask yourself:
- Do I have the skills to pull this off?
- Do I have the time to learn if I don’t?
- Do I have the energy to take on something new?
- Can my business afford the inevitable dip while I figure things out?
If you’re answering “no” to these, maybe – just maybe – the smart play is to double down on what you’re already good at.
Sometimes, the best growth strategy is just doing more of what already works, but better and at a larger scale.
The Cash Flow Conundrum
The more new you try, the more cash you’re gonna burn. It’s like a law of nature or something.
“Obviously, cash flow—the more new, the more cash you’re going to burn. Uh, and then obviously the dreaded J-curve of growth.”
Show Me the Money!
Before you jump into any new venture, ask yourself:
- What does the current payday look like?
- What’s the expected cost to generate leads?
- Is this thing actually gonna make you any money?
The New Market Guessing Game
Sometimes you won’t know jack about the numbers in a new market.
“You may ask in a Facebook group, and someone might give you some information; it may be totally wrong.”
So what do you do? You gotta run some damn traffic to figure out your numbers. No way around it.
The CPA Network Hack
Here’s a pro tip: Use CPA and affiliate networks as your testing ground.
It’s like Market Research 101, but with real money.
“Go and pick up a solar campaign from a CPA network. Run that to get your cost side done because you know that on the revenue side, you can easily get double or triple that if you go direct to a client.”
Now you’ve got some real data to work with. Boom!
The “Bus Driver” Cautionary Tale
Remember that bus driver I mentioned earlier? Poor bastard got in way over his head.
“They got a check for about $5,000 or $10,000 to supply leads, and the guy calls me in a panic basically and says, hey, I need to deliver these leads by next week.”
So I said I think you’re better off refunding the money ’cause there’s about a probability of 1% that you’re going to be able to do that.
Moral of the story?
Don’t take money for shit you can’t deliver. You’re better off refunding than ruining your reputation.
The Small Market Trap
Here’s where a lot of newbies screw up: they pick markets that are too damn small.
They look at some ClickBank stuff, and they go, you know, I’m going to do half a mil here, and they go pick a market; I don’t know, underwater kickboxing or something along those lines, and there’s just no capacity.
Scale Requires Big Markets
If you want to get to 10 mil, you just have to pick a big market. There’s just not enough money in, I don’t know, numerology on ClickBank.
Because the biggest guy in that space does about three mil a year, and he’s been doing it for 20 years now. And, and you want to beat him? Good luck.
You can’t squeeze blood from a stone, folks.
Exit Strategy: Think Big Ecosystems
You want to go into a business where the ecosystem is big if you plan on exiting.
So if I built a reasonably good solar funnel and let’s say, you know, you’re spending a mil a month, that has value to somebody now.
In a big market, you’ve got options:
- Sell to media buyers
- Sell to agencies
- Sell to installers
- Sell to aggregators
It’s a whole ecosystem of money changing hands.
The Small Market Cash Flow Dilemma
If you do go small, here’s what you gotta do:
You need to make sure that you divert that cash flow into some other asset.
You want to invest that money elsewhere so at some point when the day you want to leave, you might just have to shut it down.
Maybe buy some real estate or something. Because when that small market dries up—and it will—you better have a backup plan.
The Bottom Line
Choose your market wisely, folks.
Big markets give you room to grow and options to exit. Small markets might give you cash flow, but they’re a dead end when it comes to selling your business.
Remember, in this game, it’s not just about making money today.
It’s about building something you can cash out on tomorrow. So think big, plan smart, and for God’s sake, don’t promise leads you can’t deliver!
Finance: Don’t Let Your P&L Fool You
You’re cruising along in Vertical One, making bank.
Then you get the bright idea to jump into Vertical Two. That’s all fine and dandy, but here’s where most people screw the pooch:
You want to make sure that you structure your financials so you don’t make rash decisions.
The P&L Split: Your Financial Lifesaver
If you’re playing in multiple sandboxes, you better keep your toys separate.
You want to ensure that your P&L, whether it be Xero, QuickBooks, whatever you’re using, is split up in such a way where the costs are being tracked with a lot of detail and granular detail rather than being lumped into one kind of final number at the end.
The “Oh Shit” Moment You Want to Avoid
You’re killing it in “Debt for Moms,” but you decide to dip your toes into life insurance and solar.
You’re burning cash to get these new verticals off the ground. Without proper tracking:
You can actually end up thinking like, oh my God, I’m actually losing all this money, but you’re not.
Your primary market is actually still working really well, and this is the required investment or the J-curve that’s needed for you to get these things off the ground.
You will make losses when you first start anything.
So having the splits then allows you to see what’s actually going on.
The Exit Strategy You Didn’t Know You Needed
What if tomorrow you get an offer where someone has run into your debt funnel and they want to acquire it?
If your numbers are all jumbled up, good luck trying to sell just one part of your business.
The Business Manager (BM) Pro Tip
For you Facebook ad junkies out there:
“If I go into debt, I’ll have a different BM to life insurance and solar because the day you want to exit you want to give that BM away and not be stuck with, oh crap, my account is stuck in, is shoved into one place.”
Why This Matters More Than You Think
- Clear Financial Picture: Know exactly what’s making money and what’s not.
- Smart Scaling: Invest in what works, cut what doesn’t.
- Easy Exit Options: Sell off parts of your business without a hassle.
- Avoid Panic Decisions: Don’t freak out over temporary losses in new ventures.
The Segment-Centric Approach: Why It’s Non-Negotiable
When we talk about customer-level analytics, we’re not just throwing around fancy terms to sound smart.
This stuff is crucial, and here’s why:
Customer-level analytics has to be segment-centric.
Let’s break this down.
In your funnel, you’ve got different market segments:
- Some are making you serious cash
- Others are just pumping up your volume
- And then you’ve got those in between
If you’re not tracking the P&L at the segment level, you’re basically flying blind.
Here’s how we do it with our consulting clients:
- Dump all your data into Google Sheets
- Use VLOOKUP to pull in revenue numbers
- Create a pivot table to see which segments are actually profitable
We’ll dump all the data into Google Sheets, we’ll do a VLOOKUP, we’ll bring all the revenue numbers in, and then we’ll do a pivot table and we’ll try and understand which market segments are actually making you money.
The 80/20 Rule on Steroids
You’re going to find this like one sliver of the market that’s giving you like 80% of your revenue, and meanwhile you have 80% of the market that’s actually not making you money.
This isn’t just interesting trivia. This is actionable intel that can revolutionize your business.
The Illusion of Profitability
In the aggregate, when you look at everybody, you’re like, okay, well, I’m spending, you know, half a mil, and I’m making 200,000 on it.
Sounds good, right?
Until you dig into the data:
You’ll realize that you could actually really cut out a lot of fat in your ad spend and still keep the same amount of revenue.
But you can’t do that unless you’re tracking the data properly.
If you’re not doing this level of analysis:
You’ll be unknowingly subsidizing unprofitable market segments.
You’re essentially throwing money down the drain and calling it business.
Why This Matters for Scaling
This isn’t just about looking good on paper. It’s about smart growth:
Scaling becomes easier because your every dollar is bringing many more dollars back than to have a whole bunch of dollars that you don’t know are not bringing any friends back.
Think about it. You could be sitting on a 30% margin when you could have a 300% ROI.
That’s the difference between crawling and sprinting.
The Holy Grail: Return on Capital
Now, let’s talk about the one metric to rule them all:
Only one metric and its eight components that you need to track… If you ever want to run a business, all we want to look at is our return on equity.
Why ROC Trumps LTV
Every guru out there is yapping about Lifetime Value (LTV).
But here’s the truth:
The most important number is return on your capital. You’ve put in a million dollars; what are you getting out of it? That’s it, plain and simple.
LTV is important, sure, but it’s not the whole picture.
ROC factors in everything:
- Low LTV business? Low return on capital.
- High LTV business? High return on capital.
- Marketing costs? Already baked in.
The LeadsHook Example: Setting the Bar High
In our own business:
Inside LeadsHook, we’ve got a 35% return on capital hurdle. If I’m not making that, then I shouldn’t be in business, essentially.
We translate this into actionable metrics like the number of users paying recurring revenue.
It’s not rocket science, but it’s powerful as hell.
Why This Isn’t Just Corporate Bullshit
- It ensures your business has real, tangible value.
- It makes selling your business a breeze.
- It prevents you from destroying value without even knowing it.
If you don’t have this stuff in place, it’s easily 6 to 9 months of pain and suffering to get this in order.
The Cautionary Tale: Don’t Wait Until It’s Too Late
We had a guy in our Finance SOS course who learned this the hard way:
“In order to get this stuff in place so that they could sell, they actually reduced their profitability because the focus of the management team was taken away from running the business to getting all this stuff organized for the sale.”
Result? Lower valuation and a whole lot of headaches.
The $1.8 Million Mistake: How Most Businesses Are Overpaying for Their Leads
I’m about to tell you a story that’ll make you want to slap yourself:
I know someone right now who’s just sold a business.
Their revenue was about 1.5 mil. They netted about 500,000. They got paid three and a half times earnings, so they got about 1.75 million.
Sounds good, right?
Well this guy just left a boatload of cash on the table.
As part of the sales process, they decided to fix their tracking (and I’ve been telling them for five years to go fix your tracking, go fix your tracking)
The “Oh Shit” Moment
They finally fixed the tracking, and he calls me up and he says, ‘I can’t believe that I got a 30 to 40% reduction in my lead cost, and I’ve already signed the contract.’
Let that sink in. A 30-40% reduction in lead costs. AFTER he sold the business.
The Real Cost of Lazy Tracking
Let’s break this down:
- What he got: $1.75 million
- What he could’ve got: $2.4 million
- Money left on the table: $700,000
But wait, it gets worse:
Plus, let’s assume that’s how much the benefit is every year. You can multiply that over five years; that’s almost like a $1.8 million loss.
The Compound Effect You’re Missing
Here’s where it really hurts:
When you have that kind of money available to you in the present, you would have done something else with it.
You would have grown the traffic a bit more, you would have grown the customer base a bit more, you would have invested in more technology.
You’re not just losing money; you’re losing opportunities to make even more money.
What Good Tracking Actually Looks Like
You want to have your client-side and your server-side tracking, throughout every node and every page on your funnel, because there are so many remarketing opportunities available to you that most people aren’t doing that.
And make sure to add deduplication to avoid double counting conversions.
The Ad Network Rewards You’re Missing
He added in client-side, server-side, finally added in enhanced tracking in Google ads, and all of a sudden, Google and Facebook both started rewarding him with a 30-40% discount.
Why? Because better data means better targeting. It’s that simple.
The One-Event Trap
If you’re just going to have a client-side conversion, one event sitting there, you miss out on a lot.
You’re basically telling the ad networks, “Hey, I don’t really care about efficiency. Just throw whatever traffic at me.”
Business Process Maps: The Stuff You Can’t Afford to Ignore Anymore
The “I’ll Do It Later” Trap
This is where you’re like, hey man, I’ll get to this one day. This is that slide, okay?
Don’t, don’t, don’t do that. Please don’t do that.
This isn’t some corporate BS you can brush off.
This is the stuff that separates the pros from the amateurs.
The LeadsHook Accounting Example: Complexity Made Simple
Right now, you might think, uh, yeah, you know what, we just, we just charge a bunch of credit cards, you just pay a bunch of people, it can’t be that hard.
Uh, um, it is, and this is how things get complex as you grow.
We have a bookkeeper that charges us, I think, about 300–400 bucks a month or 200 bucks a month.
Why does he charge us so little?
It’s because as soon as he joined us, he got access to this diagram.
The Domino Effect of Good Documentation
We’ve got it on the onboarding side; we’ve got it on our marketing side; we’ve got it on when you’re leaving Leads Hook; we have a funnel for that—all sorts of stuff we’ve got.
- Onboarding becomes a breeze
- Marketing flows like water
- Even your exit strategy is mapped out
Why Your Brain Can’t Handle It Alone
At some point, your business is going to become so complex that you don’t remember things.
I think we get this annual invoice for something, and I can never freaking work out where that invoice is on their platform.
It’s not that, like, you got to click like five, you know, five clicks to get somewhere, and, uh, and what I’ve, and so every year you go and you spend half an hour trying to find that button, right?
Sound familiar? This is the shit that’s eating your time and sanity.
The AI Revolution You’re Not Ready For
We’ve been playing around with some agents that are automating quite a bit of what we do.
You cannot get an agent to do anything unless you’ve mapped out what the hell you want it to do, right?
This isn’t future talk. It’s happening now
The Money Leak Detector
But here’s the other reason: you can really see where your business is leaking money.
You’ll be like, hang on a second, what’s that employee doing? Why, why is he there?
The No-Bullshit Guide to Building a Killer Team: Advanced Edition
The Golden Rule: Hire for Attitude, Train for Skill
I’ve hired in excess of a thousand people now, and so that, to me, has stood the test of time. Uh, you do want to hire for attitude and you train for skill.
This isn’t just some feel-good HR bullshit.
It’s battle-tested wisdom from someone who’s been in the trenches.
Why does this work? Because you can teach skills, but you can’t teach someone to give a damn.
The Three-Hour Rule: Fire Fast and Furiously
We had a developer join recently, um, really hard to work with.
So I made the call within—and it took us, we spent quite a bit of money to bring him in—but, we let him go within three hours, actually, because it just wasn’t the right fit.
Yeah, you read that right. Three hours. Here’s why this matters:
- It saves you time
- It saves you money in the long run
- It sets a precedent for your team
Don’t let sunk cost fallacy screw you over. If they’re not a fit, cut ’em loose.
The Slippery Slope Policy: Make It Hard to Get In, Easy to Get Out
Make it hard to get in and a very slippery slope to get out.
This ain’t a country club, folks. It’s a business.
The harder it is to get in, the more people will value the position. And once they’re in, they better keep bringing their A-game.
What to Tolerate (and What to Kick to the Curb)
Tolerate:
- Mistakes (we’re human, after all)
Don’t Tolerate:
- Incompetence
- Laziness
- Apathy
You can tolerate mistakes because obviously we all make mistakes—but you should never tolerate incompetence, laziness, or apathy, right?
Mistakes are how people learn. The other three? That’s how businesses die.
Recruiting at Scale: The Leads Hook Method
- Job Description: Be crystal clear about what you need
- Auditioning Plan: How are you going to test them?
- Job Ad: Make it attractive but honest
- Filtering Decision Tree (using Leads Hook)
You send them to Leads Hook first to filter them, and you build, you use basically a decision node, and you kick people out that are not a good fit.
This is genius because it automates the initial screening. You’re not wasting time on people who can’t even follow basic instructions.
The Hiring Funnel: Multi-Stage Elimination
- Initial Filter: Only 3-4 make it through
- Short Call Interview: Quick vibe check
- Second Round of Testing: Dig deeper
- Week One Plan: Hit the ground running
This funnel ensures that by the time someone actually starts working, they’ve already proven themselves multiple times.
The Counterintuitive Trick: Hire More Than You Need
You’re going to hire two or three people. You might say, well, I only need one. Yeah, but you still have two or three.
This isn’t about wasting resources. It’s about hedging your bets. Because…
You’re going to find very soon within a week or two that two out of the three were really not worth hiring or they were not so good.
It’s like A/B testing, but for humans.
The Task-Based Hiring Method: Put Up or Shut Up
- Give a 2-hour task
- Review
- Give a 3-hour task
- Review again
It’s a very, very efficient way of hiring where you don’t even interview, you don’t even care, you just, you just, you just make them go through your tests.
Why this works:
- It shows you what they can actually do, not just what they say they can do
- It weeds out people who aren’t serious
- It gives you concrete work to evaluate, not just interview answers
The Numbers Game: Why Volume Matters
The most we’ve hired at any one time is about 12. And I had a 15-step process to weed them out. By the end, you have like two people remaining.
Typical breakdown:
- Hire 10
- 5 won’t show up (free elimination)
- 4 will drop out after 1-2 rounds
- 1 makes it to the end
This isn’t just a numbers game; it’s a quality filter. The people who make it through this gauntlet are the cream of the crop.
The Future of Hiring: GPT and AI
Alright, um, uh, GPT, yeah, everybody wants to go there.
This is just a teaser, but it’s clear that AI is going to play a huge role in hiring.
Imagine using GPT to create even more sophisticated filtering mechanisms or to analyze responses in real-time.
The Holy Grail: Onboarding and Team Management SOP
Okay, now this is something new which I’ll be sharing, uh, with you in a lot of detail, which is the onboarding and the team management SOP.
This is where the rubber meets the road.
Once you’ve hired these rockstars, how do you keep them performing at their peak?
That’s what this SOP is all about.
Tech That’ll Make or Break Your Business
Zapier Ain’t Gonna Cut It, Chief
So just by shoving things in Zapier is not going to be scalable, right?”
Zapier’s great for small-scale stuff, but when you’re trying to build an empire? It’ll crumble faster than a house of cards in a hurricane.
The Infrastructure Game
You need to set up:
- Paid speed optimizations
- Rock-solid uptime
- Scalable automations that won’t shit the bed when you 10x your traffic
This isn’t just about making your life easier. It’s about making you richer and keeping your customers longer.
Most of you are leaving money on the table because you’re scared of complexity.
So I recognized that when we did Tracking SOS.
I made a course where we think through the problem before we solve it, and there’s a step-by-step process which is called the Techie SOS.
This ain’t your average “how-to” bullshit. We’re talking about solving real problems, like:
- Split testing without relying on off-the-shelf apps
- Building server-side and client-side apps using ChatGPT
All the tech improvements and optimizations we’ve discussed don’t just make your business run smoother—they significantly increase its valuation.
Let’s dive deeper into why this matters and how it works.
Understanding Economic Value Added (EVA)
In our Finance SOS course, we covered a crucial concept called Economic Value Added, or EVA.
This isn’t just some fancy financial term; it’s the key to unlocking your business’s true potential.
Breaking Down the Numbers
Let’s look at a practical example:
- You’ve invested $1 million in your business
- Your goal is a 30% return on that investment
- Currently, you’re only achieving a 15% return
Now, you might be thinking, “15% isn’t bad!” But here’s where it gets interesting.
Identifying the Roadblocks
That gap between your current 15% return and your goal of 30% usually comes down to two main issues:
- Over-capitalization: You’re using too much capital to generate revenue. In other words, you’re throwing money at problems instead of solving them efficiently.
- Wrong Capital Mix: You might be relying too heavily on equity when debt would be more appropriate, or vice versa. This is a common mistake that can seriously drag down your returns.
The Analytics Advantage
Here’s where all that tech stuff we talked about earlier comes into play:
You eliminate spend costs because of the analytics that you want to learn from the analytics, right?
Good analytics don’t just give you pretty charts—they show you exactly where you’re wasting money.
By cutting these unnecessary costs, you directly improve your EVA.
Treat Your Business Like a Case Study
- Start with your required return (in our example, 30%)
- Break down all the components that contribute to that return
- Analyze each component to see where you’re falling short
- Use your analytics to identify specific areas for improvement
By doing this, you’re not just guessing or following general advice.
You’re creating a tailored strategy to maximize your business’s value.
Growth SOS: Your Roadmap to Business Success in 2024
Building on the strategies and categories of wins we’ve discussed, I’m excited to introduce Growth SOS.
This comprehensive course is designed to turn our insights into actionable plans for your business.
What Growth SOS Offers:
- Six-week live course
- In-depth weekly Q&A sessions
- Comprehensive planning across all business areas
- Practical execution strategies
Why It Matters:
Remember our discussions on strategic thinking, financial optimization, and tech infrastructure? Growth SOS ties all these elements together:
- Strategy: Learn to choose the right opportunities and markets
- Finance: Implement EVA (Economic Value Added) principles
- Tech: Scale your operations efficiently
- Team: Build and manage high-performing teams
- Customer Analytics: Make data-driven decisions
Investment:
- Individual course: $299
- Bundle option: Includes Techie, Tracking, and Finance SOS at a discounted rate
Whether you’re aiming for increased revenue, streamlined operations, or preparing for an exit, Growth SOS provides the roadmap you need.
