Dan Martell - January 22, 2018


5 Areas of Business SaaS Founders Should Master

Topics
marketing sales profit
Hosted by
Dan Martell
Mentioned
Mark
Episode #7 Role-Playing Your Webinarsw⧸ Marcel Petitpas, CoFounder⧸CEO Parakeeto Episode #8 How to deal with ADHD and still be Productive ⧸ w Jordan Kalev Kalevtech.com

Episode Stats


Length

12 minutes

Words per minute

200.06

Word count

2,549

Sentence count

116


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

So maybe you re new to business or you feel like an imposter in your own company, or you can t figure out how to grow the business? In today s video, I m going to walk you through exactly the key areas of your business, how to invest in them, and how to get them to grow so that you can build something incredible.

Transcript

Transcript generated with Whisper (turbo).
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 Hi there.
00:00:00.500 I'm Dan Martell, serial entrepreneur, investor,
00:00:02.340 and creator of SAS Academy.
00:00:04.260 And today, I'm going to teach you
00:00:05.260 how to think about your business at a high level
00:00:07.760 so that you can build something incredible.
00:00:09.680 And be sure to stay till the end where
00:00:11.560 I'm going to share you two other video resources
00:00:13.920 to help you go even deeper.
00:00:30.000 So maybe you're new to business or you feel like an imposter
00:00:34.080 in your own company or you can't figure out how to grow
00:00:37.300 the business.
00:00:38.140 In today's video, I'm gonna walk you through exactly the key
00:00:41.420 areas of your business, how to invest in them properly to get
00:00:44.940 them to grow.
00:00:46.040 These are the five steps that you're gonna need to understand
00:00:48.720 to get clarity in your company.
00:00:51.060 Step one, marketing.
00:00:52.660 What does it take to generate a lead for your business?
00:00:55.160 Now I know my first company, MaritimeVacation.ca.
00:00:58.720 Yes, it was a .ca, I'm Canadian.
00:01:01.180 I thought, I'm just gonna build this site
00:01:03.500 for other vacation rental owners to add their listing.
00:01:05.960 This is 97, and I built it.
00:01:08.500 I actually convinced my dad to pay me a bit of money
00:01:10.700 so they covered the server costs,
00:01:12.100 and I actually coded the thing up and launched it,
00:01:14.240 and nobody came running.
00:01:15.980 There wasn't like 50 people that said,
00:01:17.840 oh my god, finally, a way to build,
00:01:20.480 or a way to publish our listing on a website.
00:01:23.080 I mean, at the end of the day,
00:01:25.220 just because you built something
00:01:26.280 doesn't mean anybody's gonna show up.
00:01:27.840 So what marketing is is the mechanism, the process,
00:01:31.180 understanding what it takes to actually generate a lead
00:01:34.480 in your business and that's not a customer.
00:01:35.980 That's just awareness.
00:01:37.580 So what I did is I decided to figure out where do people,
00:01:41.680 like my dad, that's the key is, you know,
00:01:43.480 once you have a target customer, right,
00:01:45.520 because I think of marketing as putting a message in a market.
00:01:48.960 Well, you need to figure out what that message is
00:01:50.560 and who that market is.
00:01:51.900 Once I figured out who that was,
00:01:53.460 people that own cottages or bed and breakfasts,
00:01:55.400 Then I had to ask myself where do those people
00:01:58.000 list themselves, where can I get a directory or a full listing
00:02:00.940 of all those kind of people and I found it in the tourism
00:02:04.180 guide for my province.
00:02:06.140 So what I did is I created a mail merge.
00:02:08.040 Yes, this is back in the day before these companies
00:02:11.980 were even on email and I sent a blast out in the mail,
00:02:16.720 physical mail, direct mail as it's known and asked them if
00:02:20.620 they wanted to be on the internet to just fill out a form
00:02:23.760 and get people to send checks in the mail,
00:02:26.860 or money in the mail.
00:02:27.860 I couldn't believe the fact that people actually did this,
00:02:30.160 but that was the first exposure I had,
00:02:33.300 being somebody that had built stuff before
00:02:35.400 but never really understood the marketing side.
00:02:37.500 The first time I had people show me
00:02:40.240 that if I presented a solution to a pain
00:02:43.140 that was painful enough for them,
00:02:45.080 that they wanted to be part of that,
00:02:46.420 they were willing to throw money in an envelope
00:02:48.980 to a stranger to have their listing created.
00:02:52.080 And I remember the day my dad came home
00:02:54.220 with a handful of envelopes saying,
00:02:55.880 what did you do?
00:02:57.620 Because he couldn't believe,
00:02:58.860 like there was all these messages to me
00:03:00.760 and he's like, I'm opening up
00:03:01.960 and all of a sudden there's cash in those envelopes.
00:03:04.060 And that to me was the first time
00:03:05.260 I ever made a dollar on the internet.
00:03:06.520 So if you have ever launched anything on the internet
00:03:09.160 and made your first dollar,
00:03:10.000 it wasn't from your cousin, your uncle, your best friend,
00:03:12.360 then you've gone pro.
00:03:14.200 And that is the first step,
00:03:15.300 is understanding how do you generate leads?
00:03:18.400 What does it take to generate leads for your business?
00:03:21.540 Step number two, sales.
00:03:23.540 What does it take to turn those leads into customers?
00:03:27.380 What does it take to actually generate a sale?
00:03:30.180 And it's more than just having somebody come to your website
00:03:34.380 and sign up for something or come to your e-commerce site
00:03:36.960 and buy something or walk into your store
00:03:38.760 and purchase whatever's on the shelf.
00:03:41.000 There's a process to selling.
00:03:42.860 There's a process to merchandising,
00:03:45.600 a process to presenting the information,
00:03:47.940 the right way to present it,
00:03:49.660 and actually bring the customer through a journey
00:03:53.100 to the point where they're gonna buy from you.
00:03:55.300 And for me, it was really about,
00:03:57.940 you know, when I built my company, NB Host,
00:04:00.380 it was a hosting company, but I had to go get customers.
00:04:03.240 And one of the sales processes that we needed to figure out
00:04:05.740 was how do we do in-person meetings
00:04:07.980 with small business owners that had websites
00:04:10.280 they were already paying to be hosted
00:04:12.020 and get them to decide to move
00:04:13.680 from their current hosting to with us.
00:04:15.820 So it's not even just about understanding
00:04:17.920 the marketing message and what makes you different
00:04:19.780 and unique and competitive,
00:04:21.360 but it's also the buying process of a potential prospect
00:04:25.160 and what are the things that they need to hear
00:04:27.460 for you to build trust, credibility,
00:04:29.860 proof that you can deliver.
00:04:31.500 Maybe it's reference accounts.
00:04:32.900 There's a bunch of different things
00:04:34.140 that a potential buyer's gonna need to see, hear,
00:04:36.340 and feel for them to feel comfortable
00:04:40.100 moving forward with your company.
00:04:41.640 So that's the second thing,
00:04:43.040 is really figuring out what is the process
00:04:46.320 to convert a lead into a customer,
00:04:48.460 and that's the sales step.
00:04:50.420 Step three is product.
00:04:53.000 What does it take to turn a customer, a new customer,
00:04:57.040 into, my favorite word, a frickin' raven fan?
00:05:01.700 Somebody that is so excited to work with you
00:05:04.140 that they can't help but tell everybody they know,
00:05:06.780 maybe even grabbing them by the arm
00:05:08.600 and walking them into your business.
00:05:10.380 This actually happened to me yesterday
00:05:11.820 when I was talking to a potential customer,
00:05:14.120 and I said, you know, I'm just curious.
00:05:15.480 What did you hear about me?
00:05:16.720 Or things that you saw online, et cetera.
00:05:18.680 And he mentioned, I was talking to Mark.
00:05:20.920 I know he's working with you.
00:05:22.580 And he said some really incredible things
00:05:24.160 and I figured I might as well follow up
00:05:25.420 and see if you can serve me as well.
00:05:27.360 There is nothing better in the world of sales and marketing
00:05:31.020 than getting a warm referral lead.
00:05:33.340 However, that is not a repeatable, scalable process.
00:05:37.500 So what you wanna do in the product side
00:05:39.680 is figure out what can I do to deliver value to my customer.
00:05:43.600 They eventually invest in your product,
00:05:45.240 your solution and they want the value.
00:05:47.740 But the key to turning somebody that's just signed up
00:05:50.980 or become a customer into a raving fan
00:05:52.740 is actually a very detailed and ideally systematic process.
00:05:57.060 In the software world we call that customer success
00:05:59.480 but it's the idea of saying okay, over the next 90 days,
00:06:03.700 what are the activities that we could monitor,
00:06:08.000 ensure our customers receive value on,
00:06:10.300 that we could follow up and ensure
00:06:11.900 that we engage our customer and at the right moment
00:06:15.240 actually ask them for a referral
00:06:17.980 and make that seeded at the beginning
00:06:19.780 in a process that's very deliberate,
00:06:21.820 systematized, and expected.
00:06:23.820 So every time, and this is great about, you know,
00:06:25.820 products that have a freemium and a viral coefficient,
00:06:28.820 you know, they grow virally,
00:06:30.760 or if you have a tool that's on an app store
00:06:33.200 and you wanna get reviews written about it,
00:06:35.400 or if you have an e-commerce company,
00:06:36.660 same thing, you want reviews.
00:06:37.900 There's a way for you to ask successful customers,
00:06:40.840 customers that you've really focused on,
00:06:42.540 gotten results for, created raving fans,
00:06:44.800 to amplify their excitement and energy within your business.
00:06:48.300 And that is such an important step in really understanding how
00:06:51.740 to think about your business, the product side.
00:06:54.240 What do you do, how do you do it, and how do you ensure that
00:06:56.840 every new customer you get gets the value that you promised
00:07:00.280 and then convert that into excitement in the marketplace
00:07:04.060 that drives more customers for your business.
00:07:06.560 Number four, overhead.
00:07:09.020 What does it take to run the business?
00:07:12.160 You know, I think entrepreneurs, when they first start off,
00:07:15.120 they start making sales, right?
00:07:16.640 They might make $100, they might make $1,000,
00:07:19.020 they might make $10,000.
00:07:20.400 And the way they think about it,
00:07:21.520 because if you've come from an employee background
00:07:23.380 or a traditional job, you've always just made money
00:07:26.460 and it was yours to keep.
00:07:27.820 What happens when you have a business
00:07:29.300 is you start to have things like expenses and cost of goods.
00:07:33.720 And really, these are the overhead areas of your business,
00:07:36.440 things like finance, operations, you know, accounting,
00:07:41.060 investing in things that actually don't deliver value
00:07:44.500 to the customers, don't directly have to be associated
00:07:48.900 to a sale, so that's the cost of sale,
00:07:50.940 or you know, improving the product,
00:07:54.380 but it's just part of running the business,
00:07:56.740 the management costs or the overhead.
00:07:58.080 I mean, it's rent, it's, you know, death by SaaS.
00:08:01.180 I don't know if you have any subscription tools
00:08:02.920 and you've got like a hundred of them
00:08:04.680 and every month you write these little checks
00:08:06.920 or they hit your credit card for all these different tools.
00:08:09.780 But at the end of the day, understanding what it costs you
00:08:12.020 to run into the business, that area will help you think more
00:08:16.180 about what's left over after the fact.
00:08:18.520 So as a great entrepreneur, you want to understand the overhead
00:08:22.400 of your business and that's really the fourth step because
00:08:24.700 you know, you might do the other things right.
00:08:26.300 Get leads, convert them into sales and really make sure you
00:08:28.840 create a raving fan through your product but if you don't
00:08:31.500 understand the cost structure of delivering that value,
00:08:34.380 you can actually grow yourself out of business.
00:08:36.880 It sounds crazy but it happens because if your cost
00:08:39.600 to deliver the value.
00:08:41.500 Fully loaded is more than the revenue and the profits
00:08:44.080 that you make than you're upside down in your business.
00:08:46.140 So that's the fourth area you really need to understand
00:08:48.900 to grow an incredible company.
00:08:50.340 The fifth step is profit.
00:08:52.580 Profit is what's left over after you get money
00:08:54.980 from your customer and you deliver the value
00:08:57.720 and kind of cover all your overhead,
00:08:59.360 whatever's left over.
00:09:01.220 And ideally, what you pay yourself a salary.
00:09:03.560 I think one of the biggest challenges
00:09:05.860 that entrepreneurs need to think about,
00:09:07.020 and I was, you know, I made this mistake for a long time,
00:09:09.460 is I didn't pay myself market salary,
00:09:12.460 and I think people almost take it as a badge of honor.
00:09:14.360 You know, I was meeting with the founder the other day,
00:09:17.240 and you know, he ran a business, half a million in revenue,
00:09:20.220 and I was looking at the economics and the overhead,
00:09:23.120 and they were somewhat profitable,
00:09:25.380 around 15% net operating income,
00:09:28.360 and one thing told me that he wasn't,
00:09:30.740 because I could just figure out in my head
00:09:32.140 all the math and the cost and the overhead and the sales,
00:09:34.400 that they weren't paying themselves,
00:09:35.620 and it turned out they were paying themselves
00:09:36.780 28,000 a year, they were two co-founders.
00:09:39.540 And you know, on a half million in revenue,
00:09:42.460 you should be paying yourself at least 60.
00:09:45.460 And if you can't do that, then you really have to
00:09:47.320 investigate the economics and the operating model
00:09:50.020 of the business.
00:09:51.020 So to me, the fifth step is really understanding the profit.
00:09:53.800 What's left over after?
00:09:55.060 What should it be for your industry?
00:09:57.560 And there's a thing called baselining,
00:09:58.940 where you actually can get research on different
00:10:01.440 categories of businesses, figure out which one you fit
00:10:03.700 into and get kind of the blended averages,
00:10:07.040 kind of the low, medium, and high.
00:10:08.940 What's that average for your type of business?
00:10:11.440 Is it 15%, is it 30%?
00:10:13.600 Some businesses, the average, like software,
00:10:16.080 can be as high as 40 and 50% if they're not investing heavily
00:10:19.220 in acquiring new customers.
00:10:21.280 They're high gross margin businesses,
00:10:23.580 which means that if you can operate them efficiently,
00:10:25.720 they leave a lot of profit left over.
00:10:28.500 And the way I think about any business,
00:10:30.700 if you're struggling, if you're frustrated,
00:10:32.960 if you feel like you can't really grow,
00:10:34.960 you gotta go back to profit,
00:10:36.560 because at the end of the day, profit solves all problems.
00:10:39.300 So it's what's left over at the end of the business.
00:10:41.660 I shared that with this entrepreneur
00:10:43.060 that he had to kind of figure out
00:10:44.640 how he could get himself to be paid at least 60,000 a year.
00:10:47.700 And what's awesome is that he automatically went
00:10:51.520 to the products that he could sell
00:10:54.720 at a direct-to-consumer at a higher margin
00:10:57.420 and a higher volume that would hit the bottom line of profit,
00:11:00.660 which means they could take that in the overhead
00:11:02.320 from their salary position and get themselves there.
00:11:04.680 So it's almost like by understanding your numbers
00:11:06.920 relative to the industry, it forces you to get to a place
00:11:11.120 where you start making decisions to drive towards that
00:11:14.440 versus just thinking that's the norm
00:11:16.300 and that's what I'm supposed to do
00:11:17.460 and I'm just starting off.
00:11:18.600 But when a company's been in business for five years
00:11:20.580 and you're paying yourself $28,000 a year,
00:11:22.280 there's something fundamentally wrong about the business.
00:11:25.340 So those are the five key areas of the business.
00:11:27.340 Marketing, what does it take to generate a lead?
00:11:30.180 Sales, what does it take to convert that lead into a
00:11:33.280 customer product?
00:11:35.080 How do I take a customer and turn them into a raving fan?
00:11:38.380 Four, overhead, what does it cost me to run this business?
00:11:42.600 And then finally, five is profit.
00:11:45.220 What's left over to allow me to actually prove that I've
00:11:48.460 created an economic engine?
00:11:50.460 As I mentioned at the beginning, I want to share two
00:11:52.460 other video resources to help you go even deeper.
00:11:55.240 The first one is a video I did on CrossFit for business.
00:11:58.600 If you don't know this about me,
00:11:59.740 I definitely like to CrossFit.
00:12:01.100 I'm one of those guys that can't shut up about it.
00:12:03.380 I just love it and I decided one day to kind of reverse
00:12:06.640 engineer the training methodology and how CrossFit works
00:12:09.780 which things like compete every day and skills and drills
00:12:13.220 and say what would the equivalent be for business.
00:12:15.320 So I have a video on that link below that you can check out
00:12:17.620 and the second thing is if you want to nerd out a bit more
00:12:20.900 on the financial models, we talked about it lightly.
00:12:23.740 I actually have a training that I did at my Idea to Exit live
00:12:27.660 event called the Five Financial Models.
00:12:29.720 It's a private video shared exclusively for you,
00:12:31.940 so click below, check that out.
00:12:33.660 If you like this video, be sure to click the like button below,
00:12:36.200 share it with your friends, and be sure to subscribe.
00:12:38.480 As per usual, I wanna challenge you to live a bigger life
00:12:40.680 and a bigger business.
00:12:41.740 Thanks for watchin', and I'll see you in the next video.