Podcast Summary
Ecommerce Specialist Agency: Bringing in external expertise from an ecommerce specialist agency can help businesses in low-margin industries increase their average order value and improve return on ad spend.
Even if you have an in-house marketing team, it's worth considering working with a specialized agency to improve your return on ad spend, especially in the ecommerce space. The story shared on this podcast is of a business owner who, despite having a large in-house marketing team, decided to bring in an ecommerce specialist agency to help boost their ROAS. The business, Party Pieces, was doing well but wanted to increase their ROAS from 2.5 to 5 times. They had tried working with a broad-spectrum PPC agency, but the results weren't as expected. The ecommerce specialist agency was able to provide better results due to their expertise in the niche. The challenge for the business was that they were in a low-margin industry, and it was difficult to make their ad spend back in the short term. However, by focusing on upselling, downselling, and side selling through their ecommerce site, they were able to increase their average order value and make up for the initial ad spend. The business also diversified by buying another company and adding it to their Shopify platform. While the birthday cards didn't make any profit on their own, they were used to attract customers to the site and add on other higher-margin items. The key takeaway is that even if you have a capable in-house team, bringing in external expertise can help you achieve better results, especially in specialized areas like ecommerce.
Deskilling kitchens: Costa Coffee and other successful businesses use combination ovens and microwave oven combi machines to deskill their kitchens, reducing the need for skilled labor and lowering costs, particularly effective for businesses with lower sales volumes.
Successful businesses, such as Costa Coffee, have managed to deskill their kitchens by using combination ovens or microwave oven combi machines, which allow for quick cooking without the need for skilled labor. This model is being adopted more frequently due to the increasing difficulty of finding and retaining staff in the food industry and the higher salaries they command. The profit and loss of running a kitchen with higher salaries does not align. This model is particularly effective for establishments with lower sales volumes, as they can store pre-cooked, vacuum-packed food ambient and sell it quickly. However, for businesses with higher sales volumes, over £1,000,000, traditional kitchens with skilled labor may still be necessary. Additionally, Google AdWords can be an effective marketing tool for businesses with high average order values, such as wholesalers, as long as they can effectively reach their customers.
Selling mindset for business growth: Adopting a selling mindset, even if not planning to sell, can lead to better business decisions, improved value, and preparedness for opportunities.
Building a business as if you're going to sell it, even if you have no intention to do so, can help you create a better business. Sinclair emphasized that this discipline helps in making better decisions, improving the business's value, and preparing for potential opportunities. He shared his experience with the Rossi ice cream business, aiming for a 15,000,000 turnover, and how this mindset helped him grow the business. However, he clarified that he had no intention of selling it. Instead, the focus was on building a stronger, more valuable business. The discussion also touched on the importance of having a niche market and the benefits of attending business events to learn and network.
Niching down and expertise: Becoming an expert in a specific niche can lead to significant growth. Brooks Running and AdLab are examples of companies that found success by focusing on their niches and delivering exceptional value to their clients.
Focusing on a specific niche and becoming an expert in it can lead to significant growth. The case in point is Brooks Running, which struggled for years until they decided to abandon their attempts to compete with industry giants like Nike and instead dedicated themselves to being the best running shoe brand. Within three years, their sales skyrocketed and they became the go-to choice for serious runners. Similarly, AdLab started as a Magento agency but expanded to become platform agnostic and now deals with large ecommerce websites and ERP integrations. The key is to find your niche, become an expert, and deliver value to your clients. In the world of ecommerce, Shopify stands out for its ease of use and accessibility, making it a popular choice for small businesses looking to set up shop quickly. However, for larger enterprises with high transaction volumes, more robust ERP systems like OrderWise may be necessary. Overall, the success stories highlight the importance of understanding your market, choosing the right tools, and delivering exceptional value to your customers.
High-performing products in Google Ads: Focusing on high-performing products in a Google Ads campaign can lead to significant returns. Recognize 'nuggets of gold' and dedicate resources to them while considering removing underperforming products. An ecommerce website and selling specific types of products, like construction tools, can also yield good returns.
Identifying and focusing on high-performing products in a Google Ads campaign can lead to significant returns. The speaker emphasized the importance of recognizing "nuggets of gold" products and dedicating resources to them, while also considering removing underperforming products. The discussion also touched upon the potential benefits of having an ecommerce website and selling specific types of products, such as construction tools, for a good return on investment. The speaker shared his belief in the long-term potential of such businesses and the possibility of selling them to interested buyers. Additionally, the conversation touched upon the challenges of selling digital marketing agency businesses and the potential advantages of employee ownership trusts (EOTs) as an exit strategy.
Tax-efficient MBO: A tax-efficient MBO can benefit the business and owner through growth opportunities and personal financial gains. Utilize cash reserves, partnerships, and strategic acquisitions for expansion, while emphasizing content marketing and proactive efforts for growth.
A management buyout, in a tax-efficient way, can benefit both the business and the owner by providing options for business growth and personal financial gains. The speaker shared his experience of growing a business in the digital marketing space and the potential of creating partnerships and utilizing cash reserves to expand the business further. He also emphasized the importance of content marketing for business growth and the potential of acquiring other businesses as a strategy for accelerating growth. However, he cautioned that effort and proactive steps are necessary to find potential acquisitions or new team members. Overall, the discussion highlighted the potential of strategic business decisions and growth strategies for long-term success.
Ecommerce business acquisition: Buying an ecommerce business can lead to higher returns and attractiveness to buyers due to scalability and digital nature. Connect with industry specialists and attend events to find potential opportunities, and consider acquiring freehold, products, and long-term marketing contracts for continued growth.
Expanding a marketing agency can only bring you so far in terms of growth and profitability. Instead, consider buying and growing an ecommerce website business, which could potentially yield higher returns and be more attractive to buyers due to its scalability and digital nature. To find potential businesses to acquire, reach out to industry specialists such as accountancy firms or tax advisors, and attend industry events or seminars to network and learn about potential opportunities. Additionally, consider acquiring the freehold of the commercial space and products, as well as a long-term marketing contract to ensure continued growth and revenue. Overall, acquiring an ecommerce business can provide a more exciting and profitable venture compared to building a marketing agency in a competitive and slowly growing market.
David's success traits: Focus on building strong client relationships, commercial savvy, staying teachable and curious can help individuals set themselves up for success and climb the leaderboard in their industry.
Successful business people exhibit certain traits that help them stand out. One such person is David from AdLab, who has shown a clear ability to start with the end in mind, be passionate about his cause, and master relationships with people. He also demonstrates commercial awareness and a drive to innovate. David's success can be attributed to his focus on building strong client relationships and his commercial savvy. He also stays teachable and curious, constantly seeking new ways to improve. By implementing these traits, individuals can set themselves up for success and climb the leaderboard in their industry. To learn more about growing your business, consider coming on the James Sinclair podcast and sharing your story. Visit jamesinclair.net for more information on the podcast and other events.
Supporting content: Sharing positive reviews, ratings, and subscriptions for content that resonates with you can help expand its reach and impact, benefiting more businesses
Learning from this podcast episode is the importance of supporting and spreading the word about content that resonates with you, especially if it's focused on helping businesses grow. By rating, reviewing, and subscribing to the podcast, you're not only expressing your appreciation for the information shared, but also contributing to the reach and impact of the content. This simple action can help the podcast reach a wider audience, allowing more businesses to benefit from the insights and advice shared. So, if you've gained value from this podcast, consider taking a few moments to leave a review or subscribe to ensure that more people can experience the same growth and success.