In this episode of the Thoughtful Entrepreneur, your host Josh Elledge talks with the co-owner of The Prepared Group, Ken Cook.
The Prepared Group licenses intellectual property around marketing strategies to other marketing agencies. The reality is that most agencies aren’t profitable and they work tireless hours every month for only a few thousand in revenue. They need better strategies to scale and become profitable.
As a business owner, you have to both morally and legally make sure your profit margins are healthy. Agencies that want to make an impact and get visibility tend to price their offerings very low. Ken shares that when his group used a high price model and offered higher-ticket services, they were able to tangibly give back to both their team and their community. He explains that because they had healthy profit margins, they were able to work with nonprofits pro bono.
Ken offers some candid advice; you can’t make an impact if you’re broke. You have to have the means financially to make an actual impact. If you want to see change in the world, you have to have the wealth to make those changes.
Josh and Ken explore how to start increasing your profit margins. First of all, don’t start over and try to find another product. You can grow in many ways, he shares. The number one way to increase your revenue? Adjust your pricing, first and foremost. Ken shares his calculations; you can lose 30% of your customers but increase your profit by 50%, based on the scenario Ken explores. In such a model, you are earning higher ticket prices for your offerings. The reality is that you’ve probably underpriced what you offer to begin with. That’s why this is always step one.
Next, Ken says your product should be something you yourself use as a business. In other words, eat your own dog food. If it really works, you won’t feel the need to change it, so naturally you’d use your own product.
Change what you’re selling fundamentally to align with your ideal prospect. You need to frame your value proposition to meet what they’re looking for. It’s all about how you relay the solution you offer – and who you talk to. As Ken puts it, a prescription without a diagnosis is malpractice. You can’t tell your prospects what the solution is before you’ve even diagnosed the problem. With a clear, repeatable, and proven diagnosis and a clear solution that only you offer, you’ll attract prospects who believe in their investment fully.