The Method Episode #1
Know Your Numbers
The three spokes on the business flywheel that you must know
By and large there’s only a few universal numbers that you could hand on heart say matter for any business.
If you can calculate them, understand them and make decisions based on them you’re off to the races.
CAC, LTV and CHURN can tell you in three seconds everything that’s right and wrong about your side hustle, your fortune 500 stock investment and your untie’s market stall.
Here’s what I mean.
Cost of new customer = $1
That customer visits the shop for a year
That customer spends $10 at the shop during the year.
Cost of new customer = $100
That customer visits the shop once
That customer spends $1 at the shop
In the first example, they spent $1 on sales and marketing to generate $10 in revenue.
In the second example, they spent $100 on sales and marketing to generate $1 in revenue.
In the first example, they managed to keep their customer for a year.
In the second example, the customer never came back.
Who’s winning, who’s losing?
The more dollars you can earn from a customer for every dollar you spend on sales and marketing, the more you win.
The profit you make per customer is ultimately only dependent on two points. How much you spend to find them and how long you can keep them.
And there goes a semester’s worth of university classes in 200 words. Just jokes.
For the operators here though, If you want to learn about the fly-hweel that’s driving your PnL and you’re done ‘winging it’ dive in here.
What’s Going On
Wisp, a New Zealand startup is reinventing the hairdressing busyness. Would you let a robot cut your hair? #Tech
Apparently, a community is no longer a busyness, nice to have. So what is a business community #Community
Is productivity tools and life hacks or science and biology. Dan Shipper takes a deeper look. #Productivity
Big Bucks Curating News | The $20 Million Newsletter
Lessons learned from building a $20 million newsletter
Sam Parr is not your conventional entrepreneur you might even call him a rebel. From living on the streets to multiple arrests and problems with alcohol addiction. Building and exiting an 8 figure company is not something his former associates thought likely.
The most important skill Sam learned to build that company was how to write. How to get your attention, make you care and persuade you to take action.
Here are 3 tips from Sam to help you do the same;
1. Copywriting is persuasion and the best book you can read to learn this subject is ‘Influence by Robert Cialdini.
2. Learn the A.I.D.A framework. Sam employs the AIDA framework in virtually every piece of copy he’s ever written. The reason is, to persuade someone to take action, you have to convince them to read what you’ve written. AIDA is a way to lure people down the page so you can start persuading.
3. Care way more about your headline. Almost everyone decides what they’re going to read by the headline. That can be an email subject line, the first line of a FB message or the slogan on your business card.
“On average, five times as many people read the headline as read the body copy. When you have written your headline, you have spent eighty cents out of your dollar.” – David Ogilvy
Sam shared many more valuable insights when he appeared on the Creator Labs podcast and we took notes so you don’t have to read. Read the rest of Sams insights here.
Who would have thought “money is only useful when you get rid of it”
The Business Advice Guy Industry
Like this newsletter and our blog, most ‘business advice guy’ content tells you what to do rather than what-not-do-do.
That’s a problem because many of the ‘what-to-do stuff is either untested, meaning it only works in theory. Or it was tested by someone else under a unique set of conditions, not applicable to you.
That ‘advice’ achieved a result. That could be more to do with dumb luck than anything replicable on average or, worst yet, by you.
Nassim Taleb, a grumpy but wise Lebanese former options trader, would say what-to-do advice is fragile.
Instead, I think the ‘business advice guy’ industry (ourselves included) needs to lean towards robust advice. Resistant to stress tests and living to tell its story.
Like that urge, you get to grab a child climbing up a kitchen stool. Your child or not, you ‘know’ there’s a good chance it doesn’t end well for the child (physical pain) or you (guilt). That urge is robust; it’s a chemical representation of past mistakes, i.e. what-not-to-do.
What-not-to-do is learned more often than theorized. In-grained from repeated infringements by you or martyrs before you. It undoubtedly increases your chances of surviving and others when you pass it on.
History tells us, the next time you get a chance to learn from someone else, your ‘business advice gal’. If you want to increase your chances of survival, start with where they went wrong, not what they got right.
Not ‘how did you get a million followers on Instagram’ but ‘why don’t you use Facebook?’ Not ‘how did you grow?’ but ‘where did you fall?’
As Charlie says, it’s easier to not be a fool than it is to be cool.