Hidden Veins Of Gold In Your Business

Lauren: Welcome to The Biz Doctor Podcast, my love letter to business owners the world over. I’m your host Lauren Goldstein, award-winning business consultant and advisor fondly nicknamed The Biz Doctor by my clients. I help business owners who are burning the candle at both ends, diagnose what is actually keeping them buried in the day-to-day busy work, and then formulate a treatment plan to adjust their business and team to fit them so they can take a breath and a vacation and have more fun making a bigger impact than ever.

So grab your favorite beverage and your earbuds and let’s dive into our latest episode.

I was catching up with a friend the other day and we were swapping war stories about this company. We were both familiar with me from a front end as a  customer, her from the back end as someone that was working with them as a partner. And we were specifically discussing a common challenge that a large number of businesses have, which is revenue.

Well, let me be more specific, profitability. Revenue, of course, is what comes in the door. Profitability is what’s left after overhead. Now, we were talking about how this particular company, whom we’ve both unfortunately parted ways from, is really struggling with consistent revenue. Now we had a chuckle because this two COOs, we can immediately see the symptoms that is causing this disease of inconsistent revenue.

And it’s something that I see a lot of businesses do, unfortunately, which is why I wanna talk about it today. So instead of doing the smart thing and investing in the customers that this company already has, and trust me, it’s in the thousands, if I mean candid, they have a pretty underwhelming customer journey.

So they spend tens of thousands of dollars a month in customer acquisition, but have a churn rate of, I would guess, probably 80%. I know that is shocking, right? But here’s the sad thing. I was thinking about this, and I think that if most businesses sat down to look at their own churn rate, it might be really close to 82.

Think about it this way. How many of your customers or clients continue to buy from you after you’ve delivered on their initial purchase? If you’re like most, the answer would be somewhere in the, I would guess, one out of every five. Now if you think about how much it costs to get that one person who stayed for a tiny moment in time, is it any wonder why businesses are not more profitable or are lacking in consistent revenue?

This is a subject that I get really fired up about, and this is something that I spend a large portion of my time with clients on to help them find the hidden gold veins or assets. In plain sight that are in their business. And more than that, what we really look at is profitability, concentrated risks, and revenue cliffs, which are the three things I want to dive into more today.

The first place I wanna start is with profitability. I know it’s a buzzword, yet I think it’s one of the most misunderstood parts of business. Sure. At the surface, it’s simply your revenue minus expenses, and that’s your profits. But I wanna talk about entrepreneurial profitability. This is the amount that continues to pay you after you’ve delivered your service.

Now, I  don’t think you’ll find this in any financial book, but it’s something that I like to talk about with my clients. It goes back to the lifetime value of a customer. See, when you sell a service to a customer and deliver it, you’re making profits in revenue initially, but what we forget about is the lifetime profitability of that client.

Let me suss this out with a made up example scenario with simple numbers. Let’s say Jessica buys a product for a thousand dollars, but that’s the only product she buys. It costs you $300 to deliver the product, so your profitability is 700. That’s a great profit margin. Now, let’s say that because you know it’s about the backend revenue just as much as the front end, and honestly, I think backend revenue is more valuable than front end, but I’ll save that for a different episode.

You delivered outstanding service to Jessica, and although she churned, she referred a client to you that also bought the a thousand dollars product. Woohoo, like, let’s celebrate that. The difference here is that it only costs you $200 to deliver because you didn’t have the marketing spend. So this customer actually was an $800 profit, and crazy enough, when you do the math, that means your first client, Jessica, has now become almost a hundred percent profitable.

Now, math majors don’t come after me. I’m making a larger point here. The point here I’m making is that there is a huge gold vein in your business, and it comes in the form of backend revenue, a k a, being able to keep the customers you already have in your ecosystem by having them invest in other products or services that they will continue to need after the initial investment.

By continuing to serve the people you already have, not just set it and forget it. After they say yes, you not only have a bigger impact with them and your bottom line, but you’re having raving customers who love the work you do with them. So you have another stream of income coming in from referrals that they give to you, which makes your job so much easier.

Now this leads me into the second and very related topic of today, revenue Cliffs. A revenue cliff is simply a point in your business where the customer falls off and there’s nothing left for them to invest in. Now, in some businesses, this might seem inevitable, but I like to get creative with my clients and build bridges and parachutes.

So when you look at your customer journey, ask yourself where your cliffs are, those places where there’s nothing to support them after you provide the service they initially bought. Now that you know where the revenue cliffs are, it’s time for a little strategic exercise like playing chess. Take some  time to think about where they will be after you support them and what they will need next.

I’ll give you an example for me and gold and key, after we do a diagnostic with a business owner to show them what is preventing them from really getting out from under their business so they can go from business operator to visionary business owner. We know that more times than not, they will need a team and leadership tune up.

So that means a lot of times they step into Golden Key Advisory so that we can support them with how to hire those key people, how to lead the team without getting sucked back into the trenches, and also help them create another stream of revenue that is not dependent on their time as the primary service provider, the keywords here are we’re helping business owners achieve freedom and leverage, not to mention more profitability.

I will use a real life client example here to really hit this home. I had a client come to me, we’ll call her Alicia. She liked most of my clients, had a seven figure business, but was the primary service provider and was. Tired. She was not only on the verge of burnout, but she was lonely at the top trying to figure out how to grow more without losing her.

Gosh darn mind. So we did, of course, a diagnostic. I went through our signature diagnostic framework of the five Ps people, a, k, a, your team process, a k, a, your operations product, a k, a fulfillment profit, a k, a, financials and promotion, a k a sales and marketing. When we were in her fulfillment and financials, I recognized a revenue cliff.

Once she was aware of it. We took about 45 minutes to brainstorm a few ways for her to serve her clients and mitigate this cliff. While folks, I’m happy to report that she took one of the ideas and ran with it and made $26,785 in revenue in two weeks after this meeting, and now that new arm of her business is consistently bringing in another $250,000 a year.

Wow. I share this, not to brag, but to show you that more often than not, another launcher product won’t always solve a revenue or profitability challenge, but focusing on backend revenue and what you already have generally will, and this is why I call this a hidden gold vein in your business. Chances are it’s hiding in plain sight.

Before we dive into the next bit, I wanna take a second to share with you something that I’ve seen drastically change businesses and teams for the better.  Imagine waking up every morning with a team that knows exactly what is expected of them and how to achieve success without you having to micromanage them.

Imagine how much time and dollars you will save by hiring the right team member from the start. Not to mention getting the most out of every current member of your team. That is what’s possible with our tried and tested tool, the Golden Key Scorecard. The scorecard is a simple, impactful, and fillable tool for managing your team.

Ditching and efficiency and I guarantee will help you  stop playing whack-A-mole chasing team docks all over the place. It’s as easy as filling out a form. If you wanna get out from under your business, shifting from business operator to business owner and take your business to the next level while reclaiming your time, then our golden key scorecard is just the ticket.

Our scorecard provides the time-tested framework and process to get you and your team out of the weeds and into a well-oiled machine that can scale without you. It’s time for you to run your business instead of the other way around. Become an expert in this critical piece of the foundation to creating a high performing team.

Download the Golden Key Scorecard for free at goldenkeypartnership.com/scorecard/. Now back to the show.

So now I wanna close this out with something I alluded to earlier. Concentrated risk. This is also one of my favorite things to check for during my diagnostics. They are sneaky, and if you don’t know where they are, they will a hundred percent come back to bite you in the butt. The easiest concentrated risk to see is when you have the lion’s share of your revenue coming from one big client.

This happens a lot with the businesses that I serve, who tend to be very heavy with client portfolios or as agencies with clients, et cetera. But the one I mostly focus on with my clients is this one. You being the only service provider I know, I know. I can feel you rolling your eyes or slapping your forehead, so just stay with me.

I know that as a business owner, we are the tip of the spear. We are the experts. I also know that you cannot stay in that place forever. It isn’t sustainable and it actually makes you a slave to your business because if you’re not working, there isn’t money coming in. Sound familiar? That is why, as I mentioned a little bit ago, it is important to create leverage and diversify away from your time being the only thing that brings in the box.

I work with a lot of financial advisors, lawyers, other consultants, wealth managers, all highly specialized service-based businesses that start out being dependent on the expertise of the business. Or practice owner, which makes you the biggest concentrated risk to your business. If you haven’t started thinking about what would happen if you stepped out of your business for two weeks and if it would thrive or catch on fire, then my friends.

Here is your sign. Go back and listen to season one, episode 19, the best stress test for your business, and really take an hour out of your busy day to work backwards. I know you don’t wanna be stuck in your business day-to-day forever, so there’s no better time than now to start thinking about how you can get out from under it by creating leverage and freedom.

If you’re not sure where to start, a great place is asking yourself, what are the three things I enjoy the most in my business that only I can do? I know a lot of us are Chief everything officers, and we’re very talented, which means we can do a lot of different things, but just cuz you can do it doesn’t mean you should be doing it.

So once [00:12:00] you answer this question, the next question is, who can take on the rest and then make a plan to transition? It’s not rocket science, but it will take commitment and consistency. So if you need support, I’m just a message away. So to bring it all in conclusion, if your business is looking to be more profitable, if you’re looking to have more consistency in your revenue, if you’re looking to get out from under your business, the place to start is looking behind the scenes, seeing what hidden gold veins you have in.

Your revenue, cliffs in your backend revenue, in your services, and of course, removing yourself as a concentrated risk. All right, that’s it for this week’s episode. Thank you so much for listening in. If anything I shared sparks something in you, I’d love to hear from you. So let’s connect. Tag me on Instagram at it’s Lauren Goldstein or LinkedIn or wherever you hang out on the interwebs.

Also, please don’t forget to subscribe. So you’re the first to get notified when our next episode is live and ready for your ears. Thanks so much for listening. Until next,

thank you for listening to The Biz Doctor Podcast. Now I like to say that friends, don’t let friends WebMD your business. So if you’re wondering what your next steps could be, here are some options for you no matter what. Head to the show notes or to my website, goldenkeypartnership.com for some impactful resources to support you getting out from under your business.

That’s also where you’ll find the links to learn more about our services and how we support business owners. Just like you who are ready to make the successful jump from business operator in the trenches to visionary business owner with more freedom and flexibility. All of that info is on our website, so pop on over to learn more or get in touch.

Golden key partnership.com. Finally, if you love The Biz Doctor podcast, I’d be so grateful if you would share it with your friends and network and give us a five star rating or review wherever you listen to your podcast. 

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