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What we're going to do today is I'm going to share with you a framework for actual consulting. So JIRF is going to distribute to all of you right now the guide that I've used for years to go into an engagement exactly like this with my clients. And I'm going to touch on how I use this and the way I use it.

My reasoning for introducing this to all of you today is to demonstrate to you iterative thinking versus linear thinking. You'll recall when I introduced the concept of iterative thinking, I introduced it as a process of continuous improvement. So we try something, essentially it's a test, if it does not work out we make an adjustment and then we go back and we improve on what we already did.

Linear thinking is a thought process where we start from zero and we move to one and if that process doesn't work we go back to zero and we start again. This framework that I've shared with you, which is my guide to improving profit, contains 15 points. And these 15 points are designed to help improve the profitability of any company in any industry at any size revenue.

And for me, the way that I would position this when I would go in, if I'm going into a fortune 500 company, I would set a very low initial engagement fee and always offer to take a piece of the action on the back end. So in other words, I would say you're going to pay us a one million dollar flat fee to start this, if you're a fortune 500 company that's nothing, you're going to pay us a one million dollar flat fee to start this and then you're going to pay us two percent of the additional money we take to the bottom line over the course of the next three years or over the course of the next five years. Almost always they would blink at that and then I would charge them like five million dollars or ten million dollars and they would not have a problem paying it because I was willing to put some skin in the game.

I tell you that because if you are working with a company now, regardless of if you're an estate planning attorney or an intellectual property attorney, and a company comes to you and they say to you, I don't have the budget to work with you, you say what if I can find you the budget to work with me and you can roll this out and you can find them money. This works better in a terrible economy, okay? And I'm going to say that again, this works better in a bad economy because you're out there helping them find money. It works great in a good economy.

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My experience is most people are not looking for more profit in a good economy. The profit just shows up. Although savvy businesses, businesses with shareholders that are sophisticated, this engagement will work well in a good economy or in a bad economy.

Why this is important for you is because this is your point of entry into any client because you are going to help them find the money to pay for you, whether you're an intellectual property attorney or you're providing any other service. And if you own a business, you should look at this at least once a quarter and figure out what you can implement at least once a quarter in order to improve the profitability of your own business. So let's start with something that's not on the sheet that Jeff handed out to you.

Let's start by looking at both ends of the problem when it comes to profit, okay? And with all due respect to the accounting profession, you cannot cut your way to success if there isn't enough revenue, okay? So the first end of the problem is the money coming in. If you don't have enough money coming in, there ain't going to be nothing at the bottom line. You just can't.

You can cut down to the last person, but that last person is going to have to go sell something to somebody. So the money coming in is always my bias. It's always the first place that I look.

There are three ways to improve efficiency on this list of 15 things. And of those three ways to improve efficiency, there are subcategories, dozens of subcategories under there. But there are at least 10, arguably 12 ways to increase revenue.

And if you increase revenue, it becomes easier to create more efficiency and drag more to the bottom line. The first thing we look at is pricing strategy. So optimizing your pricing structure to maximize both your revenue and your profitability.

If you have a framework where people are currently paying for your services in a way that has your service pegged as a commodity, reframing the way you price your services so that they are no longer considered a commodity is a great strategy for increasing the perception of value and taking advantage of some elasticity that may exist in the pricing model. So optimizing your pricing structure to maximize revenue and profitability is the very first thing we look at. In any business, there are certain services or if you're in a product-based business, there are certain products where there is price elasticity that you're not taking advantage of.

And by price elasticity, I mean simply raising your fees. If you raise your rates by $10 and your cost of goods stays the same, you can take that $10 right to the bottom line and increase profit. How do you determine whether or not you can do that? You just have to do it and see what the resistance is.

You can do it in a test market. You can do it in a way where you test the price elasticity. But that's rule number one.

If you're looking to increase your profit, first start with your pricing strategy and determine where there's elasticity and where there's opportunity in the market for you to test new pricing or create a new perception for your pricing. In some cases, you can simply go in and I've had every hotel that I've ever taken over, the first thing I do is I raise the prices by 10% and see what happens, see if demand falls off. And a 10% price increase is almost never met, at least in the hotel industry I can tell you, is almost never met by a significant decrease in demand.

Because of the nature of the hotel business, because people aren't staying at that hotel on a consistent basis, you can almost always get a 10% premium for your product without having to do anything else. And that immediately falls to the bottom line. Lawyer is a client of mine, Nicola and I went to lunch with him, now it's two years ago, and Gibson Dunn doesn't have an office in the Miami area.

So those of you who are in other parts of the country may be familiar with Gibson Dunn, a large national, international law firm. And one of my clients worked at Gibson Dunn and he asked me for a connection to a law firm to handle a specific type of matter here. And the matter was for a Fortune 500 company.

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And he said, don't give me a big firm, I don't want to worry about the client being stolen. He said, give me people with big firm experience who've gone out on their own. And I had these two guys who are great.

So I connect the guy from Gibson Dunn with these two guys who are great. And the first matter they get, they do a tremendous job. And the general counsel of this Fortune 500 company passes word to the two of them that through the counsel in this specific practice area that he's thrilled with them, they're going to get all the work in the South Florida region that comes through for their client.

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Again, like Fortune 500 client, big, big client for this small firm, significant client. They work with them for a year and they get an email directly from the general counsel. I'd like to take the two of you to lunch.

Are you free on this day at this time? And they say, of course, they've never dealt with the general counsel. They deal with like person who's one person removed or two people removed from the general counsel. General counsel flies into Miami for other business, invites them to lunch.

As he's picking up the check, he says, I have a favor to ask of you. I need you to increase your rates. I'm having a hard time justifying using other firms in other cities because you are half the price of the firms we use in other cities.

So can you please raise your rates by at least 25 to 30 percent? And these guys were charging the highest rates they had ever charged. They were charging like 750 an hour and they were at 50 percent of what Gibson Dunn was charging in LA, in New York. So they had to raise their rates in order to keep the business.

People believe that you get what you pay for in consulting. I've never had an accounts receivable function. I get paid in advance or that person cannot be my client.

Now, I will tell you that I always offer three models when I'm doing consulting. Everything Nicole and I do now is under one of three rubrics. We get paid in advance for value we're going to create.

So it's a flat fee. You know, here's the value we're going to create. Here's what you will pay us and you will pay us in advance and then we will go create the value.

Second option is you can pay us in advance basically to get started and then there'll be a success fee on the back end. But I tell the client you're never going to be happy with a success fee because you never bet enough money on a winning horse. I wouldn't offer you a success fee unless I knew I was going to be successful.

So I did a success fee with a large law firm and within six months of doing the success fee they renegotiated and agreed to pay me the entire value-based fee that I wanted up front because they were just going to realize so much value that they wanted to keep it for themselves. If you want to really push your chips all in and you want me to go on a total contingency model then that success fee is going to look absolutely massive. I've never had anybody take me up on the 100% contingency because the fear that they will be giving me two-thirds of their upside is just phenomenal.

But the fact that I would offer that gets me an engagement every time when I'm up against the competitor. So I would encourage you to experiment with whatever billing model you're using now. Whatever you know will land you the client and then have two other alternatives that are degrees of the opposite of that billing model.

So have a 100% up front model and then a little bit up front and hourly in billing if that's what you're currently doing now and then have a middle option. Most of the people will take the middle option and you'll still be getting more money up front than you're getting now. So the deal is you have to have a clearly measurable outcome right and you have to trust that they're going to pay you on the clearly measurable outcome.

But if you offer that and they say no you have enormous credibility because nobody else is offering that. Because think about it these knuckleheads have to perform. If you're willing to bet on yourself like that it's really hard for the client not to say wow this is this is incredible.

Let's look at number two number three and number four because they're kind of closely related. Think about the value of that to a client regardless of the industry that you're in and that's why we're doing this exercise that's why this is so important for you. All right number two is increasing dollars per transaction which is encouraging customers to spend more on each purchase through bundling.

So bundling two services together doing an upfront diagnostic engagement that you get paid for and then doing the fixed program on the back end that's bundling. Number three develop a subscription or recurring revenue model. We talk about that extensively and then number four upsell or cross sell either through the creation of new products or selling existing products that the client didn't know existed.

My mantra has always been make the third sale first. The day that you're engaged and retained is the day you can ask any question of that client. You can ask them to look in their underwear drawer if you want and because you're brand new they will let you do it.

Tell them that's what you need to get a 360 overview to get comprehensive insight into your personal finances and your personal situation. I need to understand all of your vulnerabilities. I need to understand your priorities.

I need to have a comprehensive understanding of the nature of your business and your personal finances. You can ask any question when the engagement starts. I call that the onboarding process but it's essentially an upfront diagnostic.

You are doing a physical exam you know the physical exam before starting the engagement. That's where you figure out what your second sale your third sale and your fourth sale is going to be but you don't bring it up in the beginning. In the beginning you only solve the problem that they bring you to solve in the beginning okay and they're never going to bring you the actual problem.

You all know this. I've taught you this already. What they're bringing you is symptoms of a problem okay.

They're bringing you the cough. They're bringing you the runny nose and they're bringing you the high fever and what they've got is the flu. You're not going to treat the cough the runny nose and the fever or maybe you're going to mitigate those symptoms but you're treating the underlying infection.

So what they're bringing you is problem one. You know what problem two three and four are. When you get to 80 percent of having solved problem one you pull a Colombo.

Oh you know I was thinking about it and after talking to these three people I uncovered these two problems. What do you think about them? Oh they're killing us. Would you like some help solving those? Well what would that look like? As soon as they say what would that look like that's a buying question.

You make a recommendation and you send it to them. Nicola will tell you from experience and working with me that I send over I'll send over a recommendation and I'll say if we were to work together this is what the scope of the engagement would look like and this is what we would charge. I don't know if it's a fit or not and then people are like giddy.

They're like oh my god I would love I would love to do that. When do we start? And it wasn't even I didn't even send over an engagement. I sent over solutions to the problem that that we just surfaced.

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The increase in dollars through bundling finding the after work is something that you do up front but you don't have to necessarily pitch it until the trust is established and you get 80 percent of the way through solving the first problem. Recurring revenue we've covered ad nauseam so we're not going to spend a lot of time working on that today. Upselling or cross-selling we have a lot of material on upselling and cross-selling including scripts.

We will get into that down the road so we're not going to spend a lot of time on that right now. Increasing transaction frequency by driving repeat purchases so this is different than recurring revenue this is repeat business. So it's selling something to the same client but that's a different product line sort of along the lines that we were just talking about increasing the frequency at which people buy.

By the way there's three very common levers in the b2b in the b2c space business to consumer space that just about every growth consultant will recommend. They'll either talk about increasing dollars per transaction transactions per hour or frequency of purchase so repeat purchase frequency of purchase among people. Expanding your customer base this is what everybody thinks about right this is lead generation 101 acquire new customers within your current market.

Number seven is different market expansion so entering a new geographic market or targeting a different customer. So if somebody says they want to grow their sales and you've looked at everything else this is when you look at market expansion. There are six other strategies that I look at before I look at expanding the market.

When we're talking about market expansion we can talk about markets being geographic markets being industry specific. Number eight we've talked about a little bit strategic partnerships either alliances or joint ventures. This is a no-brainer.

If you want to grow and you want to do it in the most cost efficient way possible strategic alliances or joint ventures are great and I would look at a non-competitor but someone who's serving the same client. So for a strategic alliance that's your criteria. Somebody who's servicing your client but is not providing a competitive product or service to them but they're servicing your client in some way or someone who needs your service or product in order to make their service or product more effective more efficient.

Okay a great example is something that Nicola set up for us here in South Florida. Nicola set up a strategic alliance for us with a bank here in South Florida and we did a great event where we presented to the bankers and think about the opportunity there. So we could do presentations that would bring business owners into the bankers offices so the bankers could present their services to those business owners and we were the attraction.

Now what's the benefit to us? Well the bank is also inviting their clients as a value add so we get exposure to the bank's clients the bank gets exposure to our clients we promote the bank in our presentation so we add credibility to the bank. The bank offering us to their clients increases our credibility as well. Next up is distribution partnerships.

Those of you who are familiar with what Pete is doing with his new product line that's exactly the recommendation that we made to Pete. Pete sells gourmet meat he sells wholesale to restaurants sells retail to consumers off his website but he's got a new product line where he's selling toppers for pet food and the recommendation that we made to Pete was to distribute them through vets which is a great distribution partnership because the vets already have a problem that they're solving that Pete's product can solve and the vets don't have anybody to recommend they can recommend Pete's toppers for pets who have allergies in a specific area. It's giving access to your customers to someone else or you getting access to your customers through someone else.

The next one number 10 I find this to be probably the most overlooked of all of the strategies yet just about every business has an opportunity to do this in some way and I'm not necessarily talking about franchising I hate franchising but I love licensing. Scaling your business by allowing others to operate under your brand or license your intellectual property is a fantastic opportunity for just about any business. It is one of my favorite strategies because it's almost free and it's a way for us to grow the profitability and the revenue.

Okay M&A mergers and acquisitions acquiring competitors to increase market share or integrate suppliers and distributors for growth and increased efficiency. I would encourage you to keep an open mind and remember we've done a lot of work with you here in exit success lab to talk about what a good business looks like. If there's a business that is struggling but they have one aspect of the business that works really really well for you.

So let's say that business owner doesn't know how to price his or her services but they have a fantastic customer list and they're overwhelmed they just want to get out of the business. You have the opportunity to buy that business what you're really buying then is the customer list. A hundred years ago I worked with a fence company and the fence company wanted to grow they were number two in the market the company that was just below them was in bankruptcy and I said are there any assets that this company has that you find might be valuable and they said well people are going to you know build a fence they're only going to build a fence one time and then the guy said wait a minute every one of their fences has a sign on it with a phone number he said the reason they were going out of business is because they were the lowest priced provider and that's a race to the bottom they they went out of business because they did a ton of volume and no margin.

He said I wonder if I could buy that phone number and sure enough he bought the phone number out of bankruptcy and the phone number led to a substantial amount of leads every month so even if you think that an acquisition strategy isn't for you or an acquisition strategy could never work keep in mind that there are many different ways to skin the cat when it comes to M&A when it comes to mergers and acquisitions it could be you buying somebody's phone number and one phone call into your office recoups the entire investment. E-commerce and digital marketing expansion there are infinite possibilities I mean infinite possibilities there are a number of opportunities to use online assets to test messaging to target different audiences and determine whether different audiences are receptive to your message looking at your online activities and determining if you can in a cost-efficient way pursue an online strategy to complement your offline strategy is a significant opportunity to make sure that you're acquiring your clients in a way that is most effective and most efficient and e-commerce can be a great way to do that now you don't have to be an e-commerce expert to take advantage of an e-commerce strategy you just have to have an expert that you can call on and that's one of the key elements of this realize that e-commerce is simply a different distribution method it's simply a different way to get your message in front of the ideal client at the right time 13 14 and 15 this is what everybody thinks of if I say you need more profit automation and technology integration so implement automation software ai solutions to streamline operations and improve the customer experience increase efficiency reduce costs cut cut cut boost profit margins through better systems and processes I want to highlight and we can talk about anything specific specifically related to 13 14 and 15 I want to highlight there are arguably 10 maybe even 12 other ways to improve profitability that involve working on the other end the revenue side of the equation the reason I share this with you and these 15 points is because is this is the best way to start a conversation with a prospective client you start a conversation with a prospective client by asking them how are you going to improve your overall profitability this year the ceo of any business should have at least one or two ideas for improving their overall profitability this year I can guarantee you the ceo of the business that you're talking to doesn't have 15 I know because I use this list in having that conversation and that's how I get invited into the room these strategies are a way for you to have conversations with people that will lead to you being viewed as an expert being viewed as a trusted advisor Nicole and I use these as a way to do the work that we do and I'm not the magician revealing the trick here if I'm the magician that makes the assistant disappear in that box you know with the curtain I can show you how the trick is done and you're still not going to be able to do it because you haven't spent 30 years making the assistant disappear I've spent 30 years making the assistant disappear so I can show you how the trick is done here and your goal is to just bring the box into the room and show them that the woman will disappear and then they go how did you do that trick and you say this is why I'm here because I'm gonna help you do this trick over and over and over again and that's how you start the conversation I want you to be familiar with these 15 things so that you can have the conversation with them and dovetail what you do into improving the overall profit of their business