3 Steps to Fixing A Friend's Business
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Back in July, I had a 1:1 consulting call with a client of mine who has become a pretty close friend over the last year or so.
Jake (not his real name) runs a 6-figure coaching business, that is set to do about $350,000 in revenue this year.
He runs a 4-month cohort-based coaching program for small business owners who need help scaling up their business, for a total cost of $9,000 per customer.
Here’s how his business model works:
- Client acquisition strategy:
- LinkedIn content: 30,000 followers
- Weekly newsletter: 4,000 subs
- Webinar funnel: 200 enrollees per month
He moves all prospects to a sales call, where he qualifies and closes them.
- Coaching program model:
- Initial audit call: 1 hour per customer
- Group coaching calls: 2 hour-long group calls per week
- 1:1 coaching calls: 1 hour-long call per month, per customer
After running several cohorts, 3 major challenges began to emerge in his business.
Here’s what they were, and how we fixed them together.
Challenge 1: The Business Was Unscalable
Jake’s business had one major problem that made it unscalable:
Each new client required four (4) 1:1 coaching calls over the course of 4 months. This part of his business model killed his ability to scale.
While he might be able to do ten 1:1 coaching calls per month, he simply couldn’t go any higher without sacrificing another part of his business or customer acquisition strategy.
He was his own bottleneck.
Solution 1: Remove All 1:1 Coaching
Jake and I worked together to hypothesize what a coaching program would look like that didn’t require any 1:1 coaching.
After reviewing his client notes, he agreed that he could deliver the necessary information and coaching through the group sessions alone.
And the group sessions scale because it’s “one to many” rather than “one to one”.
With ~10 new customers in each cohort, eliminating one-on-one coaching meant getting 15-20 hours (meeting & prep time) of his time back each month.
Challenge 2: He Was Missing Revenue Opportunities
Since we were able to find 15-20 hours of new time, I wanted to continue to dig in to understand where else Jake was spending his time and not benefitting.
Next, we dove into understanding his funnel.
Jake’s funnel worked by moving people from his LinkedIn content or webinar onto his email list. Each week he sent out an email to 4,000 people and booked 4 sales calls to pitch his program, which is a 0.1% conversion rate.
From those 4 calls, he typically closed 1 customer into his program.
When I asked Jake why the other 3 didn’t join, the answer was that a large number of the people he spoke to simply weren’t far along enough in their business to get value from his program. Jake refused to bring underqualified prospects into the program because they wouldn’t see the benefit.
That meant for 3 hours each week, Jake was spending his time talking to prospects, but not getting paid for the time.
Solution 2: Add A Lower-Cost Information Product
We went to work on fixing this process by doing 2 things:
First, we installed a better qualification process that allowed him to pre-disqualify prospects that were a poor fit, without having a lengthy Zoom meeting.
Next, we set up email automation to push unqualified prospects to a lower-cost information product that:
- Helps them build their business
- Earns Jake some extra income where there was none
- Positions the client to be a better fit for Jake’s coaching program in the future
Jake created a lightweight version of his coaching program as an information product and priced it at $1,000.
Now, each week, Jake could downsell 1-2 unqualified prospects to his information product to net an additional $4,000 to $8,000 per month AND build a better pipeline for the future of his coaching business.
Challenge 3: Lack of Diversified Income Streams
By the time we had dissected Jake’s first two challenges, we had some pretty compelling outcomes.
First, Jake now had 15-20 hours of his time back each month. Second, he could potentially pull in an extra $4,000 to $8,000 per month downselling poor-fit prospects to his information product.
The last thing I wanted to accomplish was to find income opportunities in things that Jake was already doing each week.
Solution 3: Get Paid For What He’s Already Doing
I turned my attention to his newsletter and found that Jake wasn’t leveraging sponsors.
Given that Jake has 4,000 subscribers, he could likely charge about $250 per issue for a sponsorship (5% to 7% of the subscriber total) or roughly $1,000 per month.
While this isn’t a huge revenue stream for Jake at the moment, he was already writing it, so it made sense to get paid for it.
By leveraging the 15-20 extra hours Jake has available, he can now spend his time doubling down on newsletter growth.
And with every 4,000 additional subscribers, Jake can effectively add $1,000 monthly to his sponsorship revenue but also expect to find 1 new client each week if his conversion rates stay the same. That's another $36k per quarter in coaching revenue.
At the conclusion of our consulting call, Jake had a scalable business model, a lower-cost information product concept that was more passive, and a third revenue stream that scales without extra effort.
See you again next week.
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