In this episode, the host and entrepreneur, Speaker A, demystifies the process of making a million dollars by breaking down the math required to achieve this financial goal. He emphasizes the importance of understanding the difference between revenue and net income, setting precise targets, and knowing the lifetime value (LTV) of a customer. Speaker A advocates for starting with premium offerings to provide significant value without the need for extensive operational skills. He also suggests that high-paying jobs can be a more realistic path to a six-figure income than entrepreneurship, given the risks involved. The conversation concludes with advice on scaling sales efforts and the necessity of high LTV for sustainable customer acquisition. Speaker D reinforces the value of word-of-mouth promotion for the podcast's growth.
"It's easier to just over deliver like crazy for a client rather than trying to think about, like, how do I make this scalable? It's like, you don't need to worry about that yet. Like, you need to just start making money."
This quote emphasizes the importance of prioritizing client satisfaction and income generation over the complexities of scaling a business in the early stages.
"Welcome to the game, where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe."
This quote serves as an introduction to the podcast and outlines the topics and value the podcast aims to provide to its listeners.
"And so the number one way that I know that someone has no chance in actually doing this is they don't even know the math behind how to accomplish their goals."
This quote underscores that a fundamental lack of understanding of the financial calculations necessary to reach a goal is often a predictor of failure to achieve that goal.
"And so let's say you have a business that run 40% net margins, which, mind you, is very good if you run 40% net margins. That means if you made a million dollars in revenue, you would make $400,000 a year in net profit."
This quote explains the concept of net margins and how they impact the actual take-home income from a business's revenue, using 40% net margins as an example of a successful business metric.
"Which is why, by the way, I think that having a job that pays well is very underrated. I think it's just, if I'm being realistic, if you're looking at the odds, I think it's far, far more likely that you can achieve a six figure or multi six figure income fast by having a really high paying job because you've acquired a skill than trying to learn basically all the skills and own your own business."
This quote presents an argument that securing a high-paying job may be a more viable and less risky path to financial success than entrepreneurship for most people.
"But let's get to the meat and the potatoes, right? So a lot of times people haven't even figured out their price points on things yet. And so the easiest way to understand this is that if you have a million dollars a year, which is what you want to make, then you want to break this down. Right? A million dollars a year is going to be eighty three k per month."
This quote highlights the need to understand and break down financial goals into manageable parts, such as monthly and daily revenue targets, to make a million dollars a year. It also points out a common oversight in not determining product price points.
"Fuzzy targets don't get hit."
This quote highlights the concept that vague or imprecise goals are unlikely to be reached, stressing the importance of having clear and specific targets.
"So we need to make this a very precise, clean, pristine target."
The speaker is emphasizing the necessity of having a well-defined and unambiguous goal to increase the chances of success.
"So we got a million dollars a year breaks down to month. Twenty one k per week. Excuse me? Twenty one k per week. And then from there, seven days would be about three k plus per day."
This quote demonstrates the process of breaking down an annual revenue goal into smaller, more manageable weekly and daily targets.
"The thing is, we just have to know what the lifetime value of our customer is."
This quote points out the importance of understanding the total revenue a customer is expected to generate over the course of their relationship with a business.
"If I have to get to a million dollars, then I need to sell 21 units per week, right? And so that would be 21 divided by 1000, which is 21, right, units per week to hit our goal."
Here, the speaker calculates the number of units needed to be sold on a weekly basis to reach the annual revenue target, assuming an LTV of $1,000 per customer.
"So I got to sell five deals a day, right? And if I have five deals a day, and the nice thing is, with this process that I'm walking you through right now, you can add as many zeros as you want. It works the same way, right? You can add zeros to your product, zeros to your goal. Everything works the same way."
This quote explains the scalability of the goal-setting process and how the same principles apply regardless of the size of the goal or the cost of the product.
"I may know my math, right, and know that five deals a day, we close, let's say one out of three phone calls, which means I'm going to need 15 phone calls."
The speaker is calculating the number of phone calls needed to achieve the daily sales target, based on a conversion rate of one sale per three calls.
"The only way this grows is through word of mouth."
This quote emphasizes that the podcast's audience expansion is solely dependent on listeners sharing it with others.
"And so I don't run ads, I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about."
Here, the host clarifies that they rely on organic growth rather than paid promotions, and they request listeners to keep the sharing cycle going as a form of support.
"So if I have like a 1% conversion on my store, an ecommerce store, for example, then I would need 100 times the amount of sales I need, right?"
This quote explains that with a 1% conversion rate, the host would need to multiply their sales target by 100 to determine the necessary clicks to achieve their sales goals.
"And let's say that I know my show up rate on these calls is 66%, so I'd have 22 set appointments per day."
The speaker calculates the number of appointments needed based on the expected show-up rate to achieve the desired number of sales.
"And the thing is, I know that based on my either outreach efforts, it takes, let's say, 50 outreach efforts to get one appointment. I need 1000 outreach efforts a day right."
This quote reveals the speaker's understanding of the ratio of outreach efforts to appointments and the high volume of outreach needed for a single deal.
"Now, mind you, $1,000 deal would not be worth any kind of effort like that because this is way too low to have kind of like a hand to hand combat sale type system."
The speaker indicates that the effort required for a $1,000 deal is not justifiable, suggesting that higher-value deals are more efficient.
"You could either sell 910k deals per month and have a million dollar business. Wow."
This quote provides an example of how selling a small number of high-value deals can lead to significant revenue.
"You could sell 100k deal per month to have a million dollar business. That sounds pretty chill."
The speaker contrasts the effort of selling one high-value deal per month with selling multiple smaller deals to achieve the same revenue goal.
"And honestly, it's hard to sell 83 things a month. Selling nine easier."
Here, the speaker reflects on personal experience, stating that selling fewer high-value items is more manageable than selling a large number of low-value items.
"Rather than trying to think about like, how do I make this scalable? It's like, you don't need to worry about that yet. You need to just start making money, right?"
This quote stresses the importance of prioritizing income generation over scalability when starting a business.
"How can I find a sweet spot in here, right? This like 5000, 10,000, $15,000 mark."
The speaker suggests targeting a price range that balances value with manageable operational demands.
"You have to be able to support so much volume that you're very good with people."
At lower price points, operations become complex due to the volume, necessitating strong people management skills.
"Acquiring customers is just too difficult to not have a high LTV."
This quote highlights the challenge of customer acquisition and the importance of maximizing customer lifetime value.
"You have to find ways to make customers worth more, right? Unique, expensive, sticky air, if you remember that from before, habit forming, something that they're going to continue to come back again and again and again."
The speaker advises on creating products or services that encourage repeat business, thereby increasing LTV.
"How to make a million dollars? I think most people do not do this math on this, which is you got to make $21,000 a week."
The speaker breaks down the weekly income target necessary to achieve a million-dollar annual income.
"So if you want to make a million dollars yield as a salesperson, then you're going to need to sell, let's say you get $1,000 commission, then you need to sell 83 units a month of your thing, right?"
This quote translates the weekly revenue target into a tangible sales goal for a salesperson based on commission.
"And so anywho, reverse the math on your own business and your own products that you're selling. And a lot of times this will help you get your goals a lot faster."
The speaker suggests working backward from income goals to determine the necessary actions and time investment needed to achieve them.
"There's only 24 hours in a day."
This quote acknowledges the finite nature of time, emphasizing the need for efficient time management in relation to income goals.