Local Takeover 2.0 (Part I )

0-$20k per Month Case Study

Forever on the prowl for investment vehicles, I came across a cool concept a few years ago that I really liked. It was the simple idea of using our digital marketing skill set to build our own businesses, creating systems and hiring managers, and trying to turn it into a passive income stream built on top of assets that we own.

It isn’t anything that groundbreaking but the idea of constantly diversifying while sticking close to our core competencies as digital marketers were definitely attractive. I am going to walk you guys through how we got this model off of the ground, some things to avoid, and some plans of attack we have to take this business to the next level.

Featured Project: Grossing $20k/mo. In the offseason after two months of opening shop.

Choosing your Niche and Location

This is the most important move you will make. This is also the move we misplayed in our first attempt at this business model. I would suggest running through your network of people and seeing who you know and what they know. Launching in a niche you know nothing about and then having to put the management of operations into the hands of a stranger is not conducive to a good investment, in my opinion.

I also suggest launching this in the city and surrounding areas you live in. Somewhere close. You do not want to have to travel multiple hours to put your finger on the pulse of your business, at least not in the infancy of the project.

Keep in mind there are exceptions to every rule. I want something where I can run the digital marketing through my processes and sit back and not worry as much about the day-to-day. Oversight and some micromanagement and assistance might be necessary in the beginning, but aside from company update meetings, I do not want to invest in and build something I have to have my hands in all of the time.

I want a niche where the help we have to hire is easily accessible. We made a grave mistake on our first project by starting a business that required a very specific skill achieved through trade school or a somewhat intensive apprenticeship. This made hiring someone a freaking nightmare. Even when we found someone it was a slew of customer support issues and refunds processed because they were not as competent as they lead us to believe.

Niches not requiring advanced certifications and licenses are the ticket here. Our niche is a bit more advanced but it is still really easy to find people with the ability to do our work well. You will find a lot of times the businesses that perform the best inside of this model are lawn mowers, cleaning services, power washing, etc.

If THE Person (I will explain this more in the next section) is a specialist or has a more advanced skill set then you can make an exception to this rule. For the most part, I would suggest keeping the niche simple enough where you can find workers easily. For the location of the business, keep it close to home.

Key Takeaways:

1. Find a niche that will make hiring easy
2. Keep the operations close to home, at least in its infancy.
3. You should know the basics of the niche or have someone on your team with experience in the space.

DO YOU NEED HELP CHOOSING A NICHE?

Here is a video series on picking a niche. It covers niche selection from the perspective of making a niche specific agency, but the concept can be utilized for selecting a category for your own business as well.

It is a bit wordy with just under an hour worth of videos but it can help you create a really solid understanding of a niche to determine if you want to tackle it and if it makes sense to pursue to accomplish your goals.

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The People and THE Person

(This is an inside joke because the guy we partnered with is bald and we tell him he looks like Tom from Guess Who. This will make the office laugh when they see it published, so sorry, but it was probably worth it)

This is extremely important as well. Maybe the most important piece of the puzzle. We decided instead of just hiring management and trusting them to be passionate about our business growth and uphold our values we were going to instead find THE Person and offer them a salary as well as equity.

It is impossible to find someone that will care for your business more than you so we searched for partnership rather than just an employee.

We ended up hiring and giving some equity to the perfect candidate. They have almost twenty years of experience in the space, they’re intelligent and extremely ethical. Consider us fortunate that we knew this person our entire lives and have a great relationship with them. I am working on an identical deal with someone I do not have as much rapport with and it is forming in the same manner so do not think you need wait for this once in a lifetime person, it just worked out on this one specific deal.

There was a salary negotiated with this person as well. They would handle the entire management of operations from visiting businesses and homeowners and providing them with estimates, follow up, managing the actual projects, accounting on a per job basis, etc. He is truly the managing partner in the business.

Having one of THE Person is not 100% essential but that means you are either hiring someone out of pocket until the business is profitable or you are having a hand in the management. If you are short on capital then the latter is going to be more realistic.

As far as employees, we use subcontractors exclusively. Look at the laws and make sure you are abiding by the rules of subs and not setting yourself up for failure. We did well with finding subcontractors on indeed and local Facebook groups.

My advice from hiring hundreds of employees across multiple businesses and industries, gather as many applicants as possible and put them through a test project. Then you will see the best of the bunch. Always keep the best in your Rolodex as they can make for great fill-in workers in situations where other workers do not show up or their performance starts to suffer. This will happen so prepare accordingly.

Now you have the perfect system for getting some work done. You have your management and the workers. The only thing you need to worry about now is keeping the pipeline full.

Key Takeaways:

1. If you have the capital to invest, hire a manager, if not then you will need to be more hands on until the time comes when you can make that hire and remove yourself from the business.
2. Grab subcontractor employees on 10-99 to avoid workman’s comp, payroll taxes, etc. Check the legalities and guidelines of subcontractors to ensure you above board and not breaking any laws.
3. Always remember that no one will care about your business like you will care about your business. If giving some equity makes sense then give it. There are a lot of ways to structure equity where it gets awarded based on benchmarks and achievements to ensure you are not giving equity to a bum.

Filling the Pipeline

Arguably one of the most important aspects of growing a business, we really went “all out” with a digital strategy. You can check out what we are doing and supplement it with some of your own strategies or dial it back depending on your time and capital you have available to set aside for your projects.

First and foremost, as SEO is one of our core competencies, we started with a basic site and GMB in two of the areas we were going to service. This was more to test the concept and we planned on scaling based on the results from this first step.

If you want to dip your toes in slowly you can build a few properties before scaling up and really trying to monopolize the SERPs in your service area(s). Another benefit of owning the asset you can send the leads to another company and monetize the growth process and get paid to basically create a feedback loop for your concept. Leasing out the site or selling the leads could definitely be a way to fund the initial growth of your new business.

We went with a different monetization route in the first three quarters of 2018, and when that deal did not seem to be working out the way we anticipated, we knew it was time to either go big or go home.

The only unfortunate thing about this is that even though the call flow does not appear to take a hit in December, it is technically the “off-season” and we knew we were going to be launching this in a time when we would not be at peak sales performance.

Even with this being so, we knew the foundation was established enough to break out and start making some of this money direct. The new goal became to dominate.

So, let me breakdown what we really have going on here. We started grabbing a bunch of GMBs in the service areas and attaching them to sites. Yes, multiple GMBs per area and query as well. We currently have rankings in our main city that sit at #1,4, and 7. We blanketed a large area just so.

It is easy to get sucked into focusing on your main city keywords in campaigns. Of course, we need to make sure we are always working toward those rankings but getting visibility in smaller areas can deliver jobs left and right.

Here are two areas we have verified and ranking GMBs and some of the visibility they get from that positioning.

We have so many case studies and free information on ranking sites that I really do not want to extend this post into the 6k+ word realm especially when it was a pretty vanilla campaign, cut and dry.

Our team ranked two main cities from one main branded site and then wired up to other lead gen style sites to some of the GMBs that we have built. The remaining GMBs were left just to age and be optimized to start generating leads for the business as they pop into the three pack.

If you want some more information on ranking and how to do it check out a few of these articles and feel free to ask us questions as they arise.

On-Page Optimization Guide

GMB Ranking Case Study

National Ranking Case Study

Although not a huge performer vis a vis lead generation efforts, Facebook has quickly become a go-to for us for every single one of our projects and every client’s campaign that will dedicate the budget for it. I hope I do not have to make an argument for retargeting to anyone reading this post, but if so, use it. Period.

Above we have cold traffic and the respective cost per click and landing page view and the data from the retargeting campaign as well. The cost per click on these campaigns are a no brainer.

To conclude this summation, we ranked in two cities, dropped a ton of GMBs all over our service areas, and got some basic retargeting and cold ads running on Facebook to bring people into our pipeline. Nothing too insane. Just covering some basic bases to get leads rolling into this new company.

Capital Investment

You know your digital marketing costs. From one person or business to another they can vary dramatically. Because of this, I will go over some hard costs that came with getting the business grown to where it’s at rather than discussing how much each digital marketing activity ran us.

You can attempt to circumvent some of these expenses in the earlier stages but after having the concept proven we wanted to hit the ground running. Our first major expense was a work truck for our manager/partner.

We grabbed this sexy Dodge Ram. Our hard expense was a $10,000 down payment. I wanted to ensure the monthly payments were low so if the next few months of the offseason were slow it would not be an unmanageable expense.

In hindsight, I think it is smarter to lease service vehicles because of the rate in which they depreciate because of the additional wear and tear. I could be wrong, and admittedly did not do my own math on this, but a company I worked with that does around 100m per year in revenue strictly leases.

They have consultants analyzing their expenses all of the time so I have to assume that the leases for the work fleet are done strategically and not just a knee jerk decision from the owner.

A basic expense that every business incurs is the typical LLC filing, insurance, any specific licenses that are required for your business to operate legally, etc. We obviously provided the capital for that to get things rolling.

Another expense was the basic materials needed to do the jobs. We spent some money stocking up on those things. We also had to grab a few basic tools that we would need throughout the life of the company.

The other largest expense aside from the purchase of the truck was covering payroll and materials for jobs. We had to do this until the revenue from the business became enough to sustain the weekly expenses.

Again, I want to stress the fact that there are plenty of ways to bootstrap a startup but wanted to be transparent that we did leverage our ability to pull in capital from ourselves to further along the growth of the business.

The total we borrowed from ourselves was around $23,000. We banked with ourselves in this case and one of our businesses loaned the venture this capital to get started. Do the research into lending your other ventures money from your personal accounts or from your business, and charging them interest. Obviously, you will have to pay taxes on the interest but it’s a cool way to profit from your liquid cash if you decide to invest it. Some people never want to spend their own money but to each their own.

Current Success

Even with the business being started in the offseason we have been doing some respectable revenue for such a new venture. We are averaging around $20,000 per month and the business is sustaining all of its own expenses.

It just bought itself this covered trailer below and has been upgrading its tools and materials as well. The trailer was only like $3,400 or $3,500 but it’s cool to see a startup come into its own and become a self-sufficient, especially at a time of year when everyone else.

We are no longer having to assist the business with cash and the business is already on the way to being a 6 figure operation. Onward and upward from here. I think we can end 2019 in the half a million range and increase in 2020.

Speaking of the rest of the year…

What’s Next?

There is a darn good reason this title eluded to their being a part two to this content. SPOILER ALERT! It is because there will be. Later in the year, I want to update you guys on what the revenue looks like based on some of the additional marketing activities we are going to be doing.

Adwords

I am working on crafting pretty awesome Adwords campaign for the business and I have a lot of work ahead of me. Here is a snap of the ad on mobile, just eating up 90% of that above the fold real estate. The structure of my ads is on point.

The work I want to do is on the actual ads themselves. Below are two of the early campaigns that I set up and started testing. The first is a modified broad match campaign and the second is a SKAG (single keyword ad group) campaign.

I am gathering data on the modified broad and adding to the negative keyword list in hopes that I can essentially mine really cheap leads out of it at its maturation. I am confident the CTR will increase as I weed out more of the queries that are giving us bad clicks.

We are going to expand the SKAG campaigns into a few different service areas and for additional keyword groups. That is my immediate action plan for our Adwords campaign.

Yelp? Mark, are you serious? I am. Dead serious.

I have two locations verified with Yelp and I am going to spend some money with them. I have actually had some success with Yelp with a few clients who used it. I am not using Yelp as a primary point of lead gen but just as a supplemental piece of the puzzle.

I also want to bolster my Yelp profiles and use them as parasites to further increase the real estate monopolized by my assets. Before anyone thinks I am too crazy, Yelp actually generates a lot of traffic direct from its app that is installed on over 30 million devices and can be an ever more important piece of the conversion path because people want to consume reviews before hiring services, especially services that cost thousands of dollars.

It’s a 75% branding and visibility/25% lead gen play. It might crash and burn like Yelp is known to do, but again, a few successes in similar niches have me cautiously optimistic. I will report back with the findings.

More GMB and then some More GMB

We are getting our license to operate in Maryland before spring. This will enable us to essentially double our service area.

We can expand into Carroll, Frederick, and Baltimore counties respectively. I would love to target pieces of Harford as well because that opens up some more affluent areas like Bel Air. In anticipation of getting the licensing in order to officially operate in Maryland, we are verifying another fifty GMBs or so to start aging and generating calls.

This is going to be a massive part of the formula for growth this year.

Some geeky stuff

I love not being inside of certain businesses so I can work on them from the outside. I have two fun projects I am working on that will boost the heck out of our efficiency and profits.

The first is a simple way to gather commercial data so we can bid more commercial jobs in our area. A lot of our work thus far has actually been commercial work landed organically and we have great testimonials and letters of recommendation from large companies in the area. This will be a neat little tool for our estimating squad.

The second tool I am working on is a cell-based interface that populates fields with information based on the location of job sites, predetermined overhead, and expenses, what we charge for specific services etc.

So, once someone enters the location of a job site it calculates expenses down to travel based on average miles per gallon of the vehicles taken to the job site, down to the time it takes to go look at the job and more.

I want to know exactly how much it costs to deliver an estimate in every one of our service areas and how many of those close. I want to know our numbers on a micro level so we can use this data to make macro decisions in the business.

I will share more information on this data helps us make better marketing and business decisions and might even share the tool once it is refined.

I will update you guys with new revenue numbers, wins, and losses later in the year. Until then, adios friends!!