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Brutally Honest: 3 Steps to Fix Your Money-Losing Business
75 Plays3 days ago
Stop complaining about low profits. If your ecommerce business is bleeding money, here’s exactly how to fix it — proven by two $100M+ businesses I run.
3 steps. No fluff. Do this now.
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Transcript
Introduction to Business Profitability Strategies
00:00:00
Speaker
Here's how to fix your broke money losing business. I'm Matt Clark, founder of amazing.com and I own two businesses that have each done over a hundred million dollars in sales. And here's what I've learned about fixing broke businesses.
00:00:12
Speaker
The normal cycle of business is to grow. Then you add a bunch of nonsense in your business. You don't need. Then at some point you stop making money. You trim all that stuff out and then you're finally profitable again.
00:00:24
Speaker
So if you've been in business for any period of time, You've got a lot of stuff in your company that you can cut out immediately. I've seen it time and time again. People are
Cutting Unnecessary Expenses
00:00:33
Speaker
paying subscriptions and they're paying agencies and they're paying people all kinds of money they don't need to be paying and they wonder where's all my profit going. It's going to all those other people.
00:00:42
Speaker
you're basically in business right now to just fund other people's lifestyles. It's time to take back control of your business and actually start putting money in your pocket again. Now that means you're gonna have to make some hard decisions.
00:00:54
Speaker
The easy stuff is, is if you export all of your expenses, literally line by line, your credit card statements, Go through the subscriptions and expenses and stuff that you can just cut immediately, literally in seconds. If you do that one day, that one activity will likely save you thousands of dollars a year. I almost guarantee it.
Optimizing Resources: In-house vs. Outsourcing
00:01:12
Speaker
Now, the harder decisions going up in level of difficulty, the next one is going to be agencies and partners that you don't need. I've seen people that are in business, they own a business that's only doing say $2 million dollars a year in revenue, but they're paying agencies to do literally everything in their business, from sending emails, to writing ads, to managing Amazon, to creating landing pages.
00:01:30
Speaker
It's crazy. You can instead either do that stuff yourself or hire a hourly worker on Upwork to do that stuff as needed, paying them hourly rather than a required monthly retainer to an agency that's probably not doing that good of a job anyways.
00:01:44
Speaker
Now some of those people may be partners in your business that you've worked with for a long period of time. So those are a little bit harder to cut than some random subscription you no longer need. But you still have to cut them if they're no longer serving your business or if you're not at the level of profit you want.
00:01:59
Speaker
Now the most difficult thing to do in business is to fire people, especially good people that aren't doing anything wrong. But it's a necessary part of business. At some point, you may have people that once served a purpose at a different stage of your business, but no longer are needed.
00:02:14
Speaker
It's not good for you and it's not good for them to keep them around if they're not serving a core function of your business. So at some point, you may have to make some hard decisions and cut some key people out to allow your business to flourish again and be profitable again.
00:02:29
Speaker
But the solution is not to do nothing. You have to do something and you need to do it right now if you want to build a healthy company. The fastest way to grow profits in your business is to cut out the stuff that you don't need right
Maximizing Customer Value
00:02:41
Speaker
now.
00:02:41
Speaker
Now, the best way to make more sales and profits immediately is to sell more to existing customers. It's hard and expensive to go out there and get new customers, especially doing so in a way that doesn't cost you money up front.
00:02:55
Speaker
The goal of a lot of advertising is to break even up front, but it's hard to do, especially if you don't have a lot of experience in that area of business. The easy thing, though, is to sell more stuff to the existing customers you already have.
00:03:07
Speaker
I've seen businesses, e-commerce businesses, that have you know maybe a couple million dollars a year in revenue. They've got a customer list of 40,000 people that they never email. And I've even seen one of these businesses that was bought by a private equity company that supposedly is sophisticated, but they're not using that customer list. It's insane.
00:03:24
Speaker
That's the easiest way to make more money. My opinion is that if you don't have customers that you can actually reach, then you don't actually have a business. You need a way to remarket to all those customers that you fought tooth and nail to get so that you can make more money without having to spend more money to get new customers.
00:03:43
Speaker
And so you need to be able to reach customers in multiple ways. Email, SMS, social media. and also paid ads retargeting. And ideally, if it's an e-commerce business, do physical mail with postcards.
00:03:55
Speaker
The more ways you can reach customers, the better. Because you may have some of the best customers on the planet that just get tired of receiving emails. And if email is the only way you can reach them, you're going to miss putting stuff in front of those customers that they probably actually want to buy. They just hate getting a lot of emails, kind of like me.
00:04:11
Speaker
And so you need multiple ways to reach those people. So if you want to increase sales and profits, make sure to start emailing. emailing, SMS, messaging, posting on social media, running retargeting ads immediately and to all
Enhancing Profitability through Pricing and Packaging
00:04:23
Speaker
your existing customers. and You can literally double profits in the next 30 days.
00:04:26
Speaker
The best way to scale paid ads is to be able to spend more to acquire a customer up front. If you make $100 when you get a customer, but all your competitors only make $50, it's game over. You can basically win the game of paid advertising because you can outspend all of your competitors and take all of the customers in the market.
00:04:47
Speaker
The easiest way to get customers to buy more upfront and to increase your profits in literally five minutes is to raise your prices. Warren Buffett bought C's Candies in 1972.
00:04:59
Speaker
Now he's known for wanting basically nothing to do with his operating businesses. He buys these good companies run by good people and he leaves them alone. With C's, things were a little bit different. He did one activity in that business.
00:05:10
Speaker
At the end of every year before the start of the next year, he would basically get a list of all of the products and their prices. And he would one by one make changes to the pricing for the next year for every single box of chocolate that they sold.
00:05:23
Speaker
Basically, what he was doing was increasing prices somewhere between 5% and 10% for every single product across the board year after year after year, which is above the rate of inflation. That's how today, Seize doesn't really sell that many more pounds of chocolate than when Buffett bought it in 1972, but its profits have skyrocketed because he incrementally raised prices every single year.
00:05:46
Speaker
So if you haven't raised prices, at least in the last year, you're missing out on massive opportunity to grow profits in your business. So if you wanna make more money, raise your prices today.
00:05:57
Speaker
The way to get customers to buy more upfront is to offer multi-packs of your main product. Never let a customer buy just one unit. So if you sell toothbrushes, for example, don't just sell one toothbrush.
00:06:11
Speaker
Sell packs of two, three, four, five toothbrushes. People will buy multiple of almost anything, even mattresses. With toothbrushes, though, people will buy them for their home, for their travel bag, for their friends and for their family, and for when people visit their house.
00:06:27
Speaker
There's no reason why people won't buy multiple toothbrushes, and that likely applies no matter what product you're selling. Then you want to default toothbrushes. to a multi-pack wherever you sell your product. If somebody visits a product page on your website, don't default to a single unit.
00:06:42
Speaker
Default to two, three, four, five units. We do this all the time when we sell bags of coffee. We default to three bags. And lo and behold, our average order value is a bit more than three bags. I guarantee you that if we defaulted to a single bag purchase, our average order value would be half of what it is today, and our business would be less than half of the size it is today.
00:07:03
Speaker
Then bundle multiple products into a single unit that people can buy all at once. This is why Amazon introduced bundles a long time ago because they know the power of this. If you can get somebody to buy a toothbrush, a pack of floss, a thing of toothpaste all at once, some percentage of people will do that.
00:07:20
Speaker
And that'll increase your sales and average order value and allow you to spend more to acquire a customer because you're making more money off of every single customer that buys from you. And that's how you can basically 10x your business in a single year.
00:07:32
Speaker
One of the biggest missed opportunities i see in most businesses is not offering a premium version of their main product. Vitamix, for example, sells blenders all the way from $120 $850. They power of selling premium versions products.
00:07:48
Speaker
they know the power of selling premium versions of products So the easiest way for you to go out there and make more money over the next six months because it takes time to get a new product live is to sell all of the customers who bought the product that you already sell ah more premium version of it. This strategy is perfect for people that are in businesses that aren't necessarily consumable or repeat purchase. For example, blenders. I mean, I have a Vitamix blender that's lasted 10 years, but I would gladly go buy a more expensive version if they made me the right kind of offer.
00:08:19
Speaker
So you may have a product that ah people don't need multiple of these, but they will upgrade. So if you go back to all of the customers who have ever bought your main product and offer them a more premium, more expensive version of that product, some percentage of people will buy that and it'll be a very high margin sale for you.
00:08:36
Speaker
And the cool thing is, is that now every time some customer buys that original product, Going forward in the future, you now have this more expensive thing to sell them in the future, which means your overall money that you make per customer increases, which allows you to spend more on ads to acquire customers, which allows you to scale your sales very faster, which gives you this flywheel effect of huge sales and huge profits.
Conclusion and Further Learning
00:08:58
Speaker
Use these three strategies to turn around your money-losing or low-profit business in 30 days or less. To learn more about how to grow your sales and increase your profits, subscribe to my channel.