Read time: 1 min, 59 secs
Today’s issue is quick & in the weeds. Dive in if you love business.

Hey there - it's Brian 👋

I obsess over leverage.

Your business is a money printing machine. But each money printer has a different multiple.

If you put $1,000 in, do you know how much money the machine spits out?

In this version of our staffing business we’re sitting around 12x our money.

(🧔🏻‍♂️ Business nerds:
That’s LTGP to CAC ratio. “Lifetime Gross Profit to Customer Acquisition Cost”)

I track the money printing multiple across each version of the business. It helps us decide what to prioritize.

Here’s the 3 versions of the business:

➟ Version 1: 3x
No renewals. High CAC.
➟ Version 2: 8x
No renewals. Lower CAC.
➟ Version 3: 12x
Renewals. Lower CAC.

Crazy how just 1 or 2 simple tweaks multiplies the money you get out of your business!

I’ll show you how to figure it out for yourself in a sec.

Plus a quick insight on our plan to break past 12x our money:

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Back to it.

Here’s the hack:

It’s much more expensive to acquire a customer for a high-ticket marketing consulting service.

But if we already spent the money to acquire a pool of business owners, we don’t need to spend it again.

So:

Cross-sells.

Anyway.

So do you know how much money your machine prints?

You need to know how much money your machine prints.

Just doing the exercise lets you figure out which levers impact your money printer the most and help you figure out what to prioritize.

So how do you do it?

🚨 Nerd alert.

Now we’re getting INTO it.

LTGP to CAC ratio (lifetime gross profit to customer acquisition cost):

Typically business owners focus on LTV (lifetime value).

That’s just how much revenue a customer gives you before they leave you.

But that doesn’t tell you how well you print money because it costs you money to deliver each unit.

You need to know:
If you spend money to acquire a customer, how much do you get back?

So here’s how:

In other words:
Lifetime Gross Profit (LTGP) / Customer acquisition cost (CAC)

Quick tip:
LTGP (Lifetime Gross Profit) is easier to calculate for a product business than a service business.

In our case, our costs to deliver are both Talent Acquisition Costs and cost of our Account Managers who deliver.

If you have a service business, take how much you pay your people to deliver to the client and divide it by the number of clients they work on.

That gives you your cost per client.

Woah. That was a nerd rant.

Good news. The math took me 10 min at most.

But the exercise helped me figure out which levers to pull to multiply the money I get out of my business.

Do it right and you build a money printing machine.

See you next Thursday 👋

Brian
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P.S. Want a free FAQ session?

If you have questions about your business I’ll answer them live on a call!

Submit them here.

If we get enough questions I’ll host the call.

See you soon!

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