Build It Like You’ll Sell It | John Doherty

PROFITABLE TALKS...

In this episode of The Profitable Creative, host Christian Brim interviews John Doherty, a successful entrepreneur and coach, who shares his journey from digital marketing to building and selling agencies. John discusses the importance of understanding business numbers, the impact of pricing strategies on profitability, and how to decouple personal identity from business success. He emphasizes the significance of building a business that is attractive for sale and navigating the challenges posed by AI in the industry. The conversation also touches on the influence of the book 'Profit First' and the necessity of knowing key performance indicators to drive business growth.

PROFITABLE TAKEAWAYS...

• John Doherty has built agencies generating over $50 million.
• Understanding your business numbers is crucial for success.
• Decoupling your identity from your business can lead to better decisions.
• Pricing strategies can significantly impact profitability.
• Building a business with the intention to sell can create value.
• AI is changing the landscape of business and marketing.
• Labor efficiency is a key metric for service businesses.
• Profit First provides a framework for running a profitable business.
• You can often double your pricing without losing clients.
• Confidence in pricing comes from understanding your value.

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Chapters

• 40:12 [Ad] Make your podcast work for your business - Listen to Podcasting Amplified
• 40:56 (Cont.) Build It Like You’ll Sell It | John Doherty

Transcript

Christian Brim (00:01.309)
Welcome to another episode of the profitable creative the only place on the interwebs where you will learn how to turn your passion into profit I am your host Christian Brim Special shout out to our one listener in Kent, Washington When I visited your fair state, I must have missed him standing on the side of the road in any case Thank you for listening joining me today John F. Daugherty of John F. Daugherty coaching John welcome to the show

John Doherty (00:30.126)
Thanks Christian, great to be here man, thanks for having me on.

Christian Brim (00:32.361)
Absolutely. And before we lose our listeners, I want to clarify that you are a or a previous creative agency owner. we didn't bring you on just to talk about coaching. We want to pick your brain about your experience around agencies building businesses, making money. So give us the brief history of your entrepreneurial journey.

John Doherty (00:58.702)
Yeah. So my background is in digital marketing. So I started off, uh, I actually started in college doing web development and learning about SEO, building Joomla websites. Um, and then I, basically long story short, I built a career in digital marketing. Uh, my very first foray into entrepreneurship was I helped run a book publishing company from a tiny dairy village in Switzerland for a year. Um, and then I went in, then I worked in digital marketing in, uh, Philadelphia, New York city. So, uh, very different. I went from 150 person dairy village, Switzerland to.

Brooklyn in eight months. so that was, that was fun. and, yeah, so worked for a couple of agencies and then I got a job in house with Zillow worked for them for two years running SEO, digital marketing and growth for a couple of their nationwide, rentals businesses. And then I got laid off. and I actually started, my first agency. So it was a lead generation agency. I also did a bunch of SEO consulting on the side to kind of make ends meet while I got the agency off the ground, went full time on that agency.

and then I ended up selling that seven years to the day of getting laid off. so I sold that to private equity. and I had started another agency called editor Ninja, which is basically modeled after design pickle, the like subscription, you know, design, service. but for content editing, so editing, like blog articles and that sort of stuff. and I built that full time for almost three years. And I actually was fortunate enough to exit that, to sell that, about a month ago to our largest competitor approved. and so now I'm full time focused on coaching, but I've, I've.

Made agencies over $50 million, probably closer to 60 to $70 million now. Generate over $5 million in revenue for myself and my companies. And yeah, love, love business and building businesses. And now I get to work with entrepreneurs that are, you know, maybe for the first time building an agency or a service business. And it's really like fulfilling and fun to help them out and to help them avoid some of the pitfalls that both that I made, and then also ones that I had my own coaches help me avoid. So that's where we are.

Christian Brim (02:56.263)
Okay, I got to start with the obvious question. What were you doing in a dairy town in Switzerland?

John Doherty (03:02.67)
Yeah, there was a, there was a commune in a little village there that was started in the mid fifties by an American pastor. And my dad actually went there in the mid seventies for a summer. And then I kind of reached a point during college where I was like, I need some time off. I don't know who I am. I don't really know what I believe anymore. And so actually dropped out of college for a semester and went for three months and then came back and finished my degree.

Went back for eight months, came back and worked for a software company, went back for a year to help run that book publishing company. So, um, yeah, just kind of, you know, fortuitous. I'm not in the like church, whatever world anymore, but, um, yeah, it was a, it was a phenomenal time. I mean, you know, if anyone's listening to this and they're 19, 20, 21 years old and you're thinking about quitting your life and moving to Europe for a couple of years, I highly recommend it. It was a ton of fun. Um, very much like, you know, kind of changed my thinking a lot is very formative time. So, um,

Christian Brim (03:57.808)
I can imagine so. you participate in the milking of any cows while you were there?

John Doherty (04:02.018)
I did not participate in the milking of any cows, but I did get to see, have you ever seen that viral video of cows being let out in the spring from their barn where they like go out and they're like frolicking and jumping around in the fields and that sort of stuff? I did get to see that kind of thing. I drank a lot of wine. Switzerland actually has a, a very healthy wine industry, but they don't export any of it, but their white wines are like world-class and phenomenal. So yeah, got to ski a lot, which we were just talking about before we went live. So got to ski a lot of powder and I speak French.

Christian Brim (04:12.733)
Yes.

Christian Brim (04:21.661)
Hmm.

John Doherty (04:31.662)
So I was in the French speaking part of Switzerland, so that helped. It was an English speaking community, but yeah, anyways, it was a great time. I really learned a lot, learned a lot about myself, which I think has helped me out a lot as I've built my own companies and built a life. I live in Colorado, been married for maybe 12 years here in a couple of weeks and I have two young kids. yeah, so it really just kind of made me who I am today in a lot of ways.

Christian Brim (04:32.531)
That helps.

Christian Brim (04:54.505)
I love that. I don't know that I heard where you were from originally. Not that it matters, I'm just curious.

John Doherty (05:01.314)
Yeah, I'm from the East coast originally. So I grew up in Virginia, in the Shenandoah Valley. so a couple hours like, Southwest of Washington, DC.

Christian Brim (05:09.745)
Nice. Okay. Back to your, your, the Intrepid Heroes story. Did you, the first agency that you started, did you build that or start that with the intention of selling it? mean, seven years is not a long time. But was that your intent when you started?

John Doherty (05:32.59)
Uh, yes, I think, um, it was always kind of in the back of my mind. Um, you know, I mean, there's, there's definitely something to selling a business and like, it's, it's not something that most people have done and you learn a lot about yourself and you kind of have to build. You have to build the business very differently than if you're the one that's like delivering the whole service and you never plan to, you know, retire from it. I couldn't see myself doing that for the rest of my career. mean, I'm 41, but.

I couldn't see myself doing that for the rest of my career. Um, but it was like, uh, it was kind of a, it was a good business of like happenstance and that, I already had it going as a side project when I got laid off and was like, I can go and do this. And pretty quickly I went from $80 in revenue in September of 2015. When I got laid off to that December, we did like 5,500, something like that. Um, and then it kind of like tapered off for a little bit. And then I hired a coach and, or, or talk to a guy that ended up becoming my coach. So a mentor in front of mine, um, who like,

told me I was doing everything wrong and told me what to do. And I changed and we went to from 2000 to 18,000 in 10 months. And then we doubled again in the next year. Um, and so yeah, I, but yeah, I, I built it so that ultimately, you know, built a small team around it and built it. So it was something of value that someone wanted to buy.

Christian Brim (06:48.029)
Yeah, and that's, I think that's very unusual for most business owners, especially in the creative space of building a business that is saleable as opposed to, I don't mean this to sound demeaning in any way, but as opposed to creating a job, which there's nothing wrong with it, but the pathways are distinctly different.

It is unusual that you did that one, not once, but twice. So I'm assuming the second time you definitely had intention of selling it when you started it.

John Doherty (07:29.686)
I figured it would be. Buyable. I didn't have, I didn't think it would happen nearly as fast as it did. Let me put it that way. but I knew it would be viable. I knew it would be valuable to someone. I knew I wanted to build it so that if, and when I wanted to sell it, I could. and I'm really glad that I did that because then like the opportunity came up, or the desire came up really, and I was able to do it pretty quickly, to be honest with you. like.

Christian Brim (07:37.865)
Okay.

John Doherty (07:58.03)
I mean, profit first definitely had a big impact on like how I run my businesses profitably. but like built to sell by John Warlow, was like hugely impactful to me at that and the email three visited, right? Michael Gerber, you know, kind of the, the, the entrepreneur's Bible at this point and in some ways, yeah. So, but, but yeah, I did like, I did build it so that I could sell it if I wanted to, but it could also have the optionality to not. And that's what I also talk a lot with my coaching clients with about.

Christian Brim (08:04.796)
Mm-hmm.

John Doherty (08:27.054)
too, because they're like, why don't they ever want to sell it? I'm like, that's totally fine. Like, if you don't want to sell it, that's fine. But a business that someone wants to buy is the best business to run.

Christian Brim (08:35.849)
Well, it's a hundred percent because you talk about built to sell that's The point is is that even if you don't sell it you have a better business and you make more money You spend less time on it if you build it to sell it So it doesn't mean you have to sell it. It just means that you have a better business and and I think the the the key points around that are Systems and processes which I know a lot of creatives don't like to hear

John Doherty (08:53.844)
Exactly. Yeah.

Christian Brim (09:04.415)
it's, it's around things like profitability. It's around things like recurring revenue. so, so going back to your, if my math is right, you started editor Ninja right before LLMs made their, appearance. Yeah.

John Doherty (09:24.622)
Yeah. So I formed editor Ninja at the very end of 2021 launched it early January of 2022. So it was a side project. kind of launched it to see if I would prefer running that over running the Legion agency. The answer was yes. And so I sold that I sold the Legion agency, um, September 28th of 2022. I didn't realize how burned out I was. And so I actually ended up taking a lot of that next quarter off and just kind of had editor Ninja on maintenance mode.

Christian Brim (09:38.621)
Mm-hmm.

John Doherty (09:53.454)
just, I was literally working four to six hours a week. I just couldn't do anymore. and in November, early November of 2022, chat GPT launched and just like changed the game. it's both a blessing and a curse like over the, my time running, editor Ninja. but yeah, it was like, sold the business two months later that launched two months later. I started working on it full time. I was just like, what do we even do here? But, I launched, I don't know if we were first, I can't necessarily claim first, honestly, but like we were one of the first.

companies to have like a landing page about like, know what to do with AI content and we'll edit AI content. that, that served us very well. But yeah, it was an interesting time for sure. And there was a little bit of the like, I mean, that's something that people don't really think about when they sell a business, like you kind of lose your identity in some ways. And it's like, there's not quite the like, it's kind of like quitting your job just to start working for yourself. Right. Even though you're like, when you sell a company, you're more experienced working for yourself than if you just quit a job, but it's very similar in some ways as well. And there was definitely some,

some, some worries keeping me up at night when chat GPT launched. Then when I moved on to a full time, I'm like, did I make a big mistake? I didn't, but the thoughts were there for sure.

Christian Brim (10:56.367)
I would imagine.

Christian Brim (11:01.693)
Yeah. Well, I think what, you, you mentioned being, emotionally, tied in or identify with ownership of the business. think that's part of the reason why so many people have, trouble thinking about selling a business is because they're not really sure what they're, what they're going to be or what they're going to do when they're not doing this. Right. I assume you had

John Doherty (11:29.272)
Totally.

Christian Brim (11:30.823)
That's what you're describing.

John Doherty (11:32.684)
Yeah. And you know, there's some ways to like get around that as well. I mean, what I did was I started editor Ninja before I sold credo and I started coaching before I sold editor Ninja. Like, I like to know what the next thing is that I'm moving on to, right? My identity can like, can, has been able to shift pretty quickly onto that because I learned to build businesses that aren't tied up with my ego or my identity. it's ultimately like, if you want to sell, that's great. And then also like, even just thinking about like a business that's best to run, the more you can decouple your own.

Christian Brim (11:45.49)
Right.

Christian Brim (11:54.045)
Hmm.

John Doherty (12:02.006)
emotions, your own psychology, your own success from a business, the better you're going to do as an entrepreneur, because you're not like, you're not coming from a place of scarcity. You're not coming from a place of like fear and being scared. Like we make terrible decisions or we make no decisions at all decisions that we should make when we're scared and when we're just trying to protect ourselves versus if it's like, I am solid and who I am. my finances are solid, like, which, which, you know, obviously is a big struggle, you know, for people. like your finances aren't solid. Like everything's harder, but.

Christian Brim (12:12.978)
Mm-hmm.

Christian Brim (12:21.511)
Mm-hmm.

John Doherty (12:32.172)
The more you can decouple yourself and your own identity from your business, the better your business is going to do and the better decisions you're going to make for it, both like strategically, but also like financially.

Christian Brim (12:43.055)
Yes, yes, yes, yes, yes. 100 times. So you mentioned Prophet first. I find I had him on the show a couple of months ago and he retold his story. And what was what was interesting was because like, OK, Mike, know I know your story. Retail it for the audience that haven't heard it. And he did.

He got to the end of it and he goes, yeah, I, I always rush through. feel like I'm rushing through that story because it's very emotional and I, I get, you know, teary eyed telling the story. So here's the hook. If you haven't, I'm not going to tell you the story. You can go back and listen to the podcast episode, or you can buy his book because it's worth buying his book just to hear his story.

I wonder what attracted you to Profit First.

John Doherty (13:46.542)
Um, I think what attracted me to profit first was like, I like to tell people now Christian that like, was the expert solopreneur who could charge, you know, good dollars per hour for my work. You know, I was in demand for people to work with me, you know, charging a hundred dollars an hour for SEO consulting, working with some of the biggest brands in the world. I mean, New York times, IHG, TravelX, Zillow, pretty much any real estate company you can imagine. Um, you know, some others I'm not allowed to talk about like.

huge companies, super in demand. But I knew that that was not what I wanted. I didn't want to do that long-term in 30 years. was like, I don't even know if SEO is going to be around, but also like, I don't want to be the SEO guy 30 years from now. Like that just doesn't, that's just not what I want from my life. And that's like not saying anything about someone else wanting that from their life. If they want that fricking awesome, honestly, I'm stoked for them because it's hard to like be the person that's always like trying to do the next thing, you know?

Christian Brim (14:27.657)
Mm-hmm.

Christian Brim (14:35.785)
Mm-hmm.

John Doherty (14:43.842)
But I basically realized I needed to learn how to run a business. So profit first and simple numbers and now simple numbers 2.0 are really where I learned how to run a profitable company and actually like get a lot of those numbers. I've since learned a lot about like, you know, lifetime gross profit and CAC and like that sort of stuff from like Alex Hormozi and people like that. But those were the two and gosh, I probably read profit first back in 20.

Christian Brim (14:47.592)
Hmm.

John Doherty (15:08.014)
17, 18, something like that 19, something like that. Probably 17, 18. think I was reading it. I'm picturing. think I was reading it when I was at our first house here in Denver, like eight, nine years ago. Um, it's just, it's one of those that like, I just always go back to it. Um, and it really like, it really just helped me understand, okay, how do I actually think about like, how do I actually build a business and know what I can pay people? And how do I like budget for paying people? How do I make sure I'm paying my taxes on time? I'm not being able to surprise like all of that stuff. I just knew that I didn't know it.

And people were talking about it. And I was like, like, I don't have a business background. have a, like, basically I have a BA, like I was a web developer and a, technical and creative writer. Like I'm pretty good at num, I'm good at numbers, really good at numbers. My dad was a statistician. My younger brother is a data scientist, but like, I didn't think about myself as like, I didn't know business. didn't think about my, about myself as a numbers person. And then once I started getting into it, people were talking about it. I don't know that I need to at least like get, you know, if not fluent, at least like I could at least talk about it. And then.

I started to, and then I realized that I really love it actually. And I'm actually really good at it. and so, yeah, it was, it was more out of like, I re I was, it was brought to my attention that I didn't know what I didn't know. And then I knew what I didn't know. And then I got to know it and it just kind of completely changed the game. Cause it let me hire, let me build teams and orgs that someone else would want to buy. So it just like, honestly, it just completely changed like my mentality around building companies. So those two for the numbers and then, you know, built to sell, EMTH revisited.

for that side.

Christian Brim (16:39.441)
Yeah, I think, think profit first, most people, most business owners, especially creatives, but, but most business owners don't have a background in business and certainly not in finance or accounting. And so there's a gap there. Like everybody knows that, but I find it interesting. use the word fluent because

I equate accounting and finance to it's more akin to a language than it is math. In that you do have to know enough to you don't have to be the expert in accounting and finance, but you do need to know enough to keep yourself out of trouble and to hire and manage others that might be doing that work for you.

John Doherty (17:33.422)
Well, and the thing is when you know your numbers, yeah. And I think you're absolutely right. I completely agree with that. And I love the way you put it. And it's more like, it's more akin to like translation where it's like, okay, you know, these two like languages and like, can translate English to French or French to English, easily. because I know French, but, you know, it's, it's the same thing where like, you know, you see, you're not like, see someone's, profit and loss statement, right? They're P and L or like, when I kick off with a coaching client, actually before I even signed someone into it, being a coaching client.

Christian Brim (17:42.473)
Mmm.

Christian Brim (17:57.214)
Mm-hmm. Mm-hmm.

John Doherty (18:03.136)
I get their numbers, I get their leads, I get their sales, get new revenue, I get churn, I get all that stuff. And I can go through and in 30 minutes, I can basically diagnose why their company isn't growing or that like that and, the next steps that they need to take in order to get to their goals. Because I've learned to read the language of finance, you know, and I'm going to finance a business, you know.

Christian Brim (18:16.882)
Mm-hmm.

Christian Brim (18:21.789)
Yeah, it is the language and that you're exactly right. A competent person can take that financial statement and tell you what's going on in your business, your troubles are. And it's important for a business owner to be able to do that for themselves. You know, I think Profit First, you mentioned

You mentioned simple numbers, which Greg Crabtree and I, when he first, he presented at the EO, the Entrepreneurs Organization Accelerator chapter here in Oklahoma City. He was the facilitator for a year and I'd been running the accelerator program. That was my fourth year. And he started with the cash day. And so I'm sitting there thinking,

You know, I could teach this material. know this material. But I took the the beginner's mindset and I sat down and because I did not know Greg and folksy as he described self described chicken farmer from Alabama, I believe. Yes. And he does. and what I took more notes from that session.

John Doherty (19:37.484)
Yeah, something like that. He's got a great accent, great Southern drawl.

Christian Brim (19:48.2)
Than from any EO learning event I had in several years. And it was me being able to set aside my ego and say, okay, let's hear what he has to say. And the thing that I loved about. Crab tree is he, he has a way of simplifying things. So, so McCallowich is not an accountant, right? And he wrote profit first from a completely different standpoint, but

Crabtree knows accounting, but he has a very good way of simplifying it for the business owners. Although I told him afterwards, I said, you know, this is a great book. I'd highly recommend it, but your title is wrong because it's not simple. I would not, I would not start with that book. If I, if in the audience, I would not start there because it's got some meaty subjects. And if you're, if you're intimidated by

John Doherty (20:35.446)
Yeah.

Christian Brim (20:46.841)
Accounting terminology and numbers in general, it will probably overwhelm you. But one of the things he talks about that I took away from there that, you know, it's just information with a shift. So it wasn't something that was new to me. But the way he talked about it was different. Was this idea of direct labor efficiency. And yes, yes.

John Doherty (21:12.142)
Yep. Labor efficiency ratio. Yep. Yep.

Christian Brim (21:16.349)
and how critical that is to 90 % of the businesses out there. Because his statement, and I think this is very true, if you think about owning and running a business, the majority of your decisions are going to involve people. And so, you know, if you have a paradigm in which to process those questions, which labor efficiency gives you,

It's a very powerful tool. So I'm to put you on the spot. How did you use that in your agencies and or how do you use it in your coaching?

John Doherty (21:58.284)
Yeah. So in my coaching, mean, a lot of my coaching clients, it's like very small agencies or like solopreneurs that might have like a contractor or something like that. So we don't have to get into it too much, but really the thing I bring it bring up is, okay, you're a solopreneur, you're making 25 K a month. have no help, right? You're drowning in 300 K 300 K is where I see, I mean, businesses grow in three and tens in threes and tens.

300K like give that first 100K is a big mark. And then 300K is where everything starts breaking, you need to bring in some help. And so that's the point where you actually have to start like kind of, you know, pulling stuff out into line items and actually budgeting and in a service business, becomes, people are a hundred percent the largest, the largest expense, right? And so really what we have to do, but that's also, it's, it's, it's obvious, but it's also the hardest thing about a service business and not just because of people problems.

Christian Brim (22:40.338)
Mm-hmm.

John Doherty (22:52.206)
But because your margins can get very skinny, very fast. and so like, and, and, and, I mean, mentioned chat GPT and in the age of AI these days, um, it's been going this way for awhile, but AI is just like dragged it forward by my decade plus implementation is implementation is, is commodified now. think that's the word commoditized, commoditized. Um, I don't know what it's a commodity now.

Christian Brim (22:55.616)
Mm-hmm.

Christian Brim (23:18.235)
We can make up words, that's fine.

John Doherty (23:19.566)
Yeah, yeah, yeah. It's, it's a commodity now. And like, it's so much easier to implement than it's ever been, especially, know, even with like designing that sort of stuff. And yes, you can argue that like, it's not nearly as good as hiring someone and all of that, but that's kind of my point. Because the thing is if we can be experts, then we can charge a lot more, right. For the same work, because people, because the work is that much better and people are going to see that, that, that much better of results.

Then, you know, just use it, just using whatever chat, GPT to spit them out some, you know, logo ideas and like that sort of stuff. Um, but yeah, so like the, mean that, that number and just like that, and that type of number drives like all decision-making within, within a service business. And it really happens like the first time a solopreneur, an entrepreneur, uh, you know, an expert creative, whatever you want to call them has to deal with that kind of thing is somewhere between 250 and $350,000.

And if you can unlock that, then you can go double or more that. then once you get above a million, then other issues like come up and you know, kind of get into the swamp. but like, if you can really start solving those issues earlier on, it's going to make all the other later on issues, profitability, et cetera, et cetera, a lot easier. Because you're going to be, because you're to have more profit in the business. So can hire more, you can hire more and better people to help you with growing the business and so quality doesn't slip. So.

And that's if you want to, right? Otherwise it's like, if you're just an expert creative and you're making 250 K a year and you're happy, great. Just make sure you're saving for taxes and all of that and go enjoy your lifestyle. know, like it's not, it's not that complicated, but like it still helps to kind of grok these ideas. And one other thing, if I may Christian, I love listening to Alex Hormozi. went to like one of their scaling workshops, like last year, last April in, in Vegas. And, he's one of my, favorite like business minds.

Christian Brim (24:40.531)
Yeah, right.

Christian Brim (24:52.649)
100%.

John Doherty (25:06.99)
I was listening to a podcast episode of his today about like 20, 26, like a five hour long thing. And one of the things he likes to say that I love is, um, you can become good enough at anything in about 20 hours of focus time, focus study, but people spend years putting off that 20 hours. So like, yeah, simple numbers is not simple, but if you're smart, you can, you can figure it out. Right. But you're not going to figure it out in 30 minutes.

It's going to take you, you're going to have to study it. Right. Like I think about that kind of book, like built to sell is like, it's a good story. Right. I, I, not to knock it at all. Like I love that book. It's one of my favorite business books, but like simple numbers, private first, like it's like a textbook. You have to study it. Right. And just like when you're learning a language, yes, you have to go and practice, right. Speaking, but like, you got to study the conjugations. You got to study all that stuff. So, but like, if you've been putting it off for years,

Christian Brim (25:35.953)
No.

Christian Brim (25:43.175)
Right.

Christian Brim (25:51.463)
Yes.

John Doherty (26:02.936)
You've been putting off 20 hours of work for years and it's hurting your business. like, highly encourage people like go and go and at least get literate, you know, in, those numbers.

Christian Brim (26:11.449)
Yes, a hundred percent. think so what what I've seen and I think about a client that I'm coaching and we're so some some of some of our clients I do one-on-one coaching with and and I'm having a follow-up meeting with one tomorrow and One of the things I did was because he does have employees

But, and he's been successful for a long time, but now there's been kind of a slowdown and a hitch. You know, 25 wasn't great. And now he's having to put money back into the business, personal money into the business. Cause he doesn't really, cause he doesn't really want to fire anybody, blah, blah, blah. And where I went was immediately to that labor efficiency. And I computed it on a trailing month.

John Doherty (26:54.316)
No fun.

Christian Brim (27:07.645)
And it was somewhere in the 1.5, 1.6 range. And so just for audience education here, the labor efficiency is essentially, you're trying to determine how much revenue you generate from every dollar you spend on your labor. And that does have an application for the solopreneur, but

John Doherty (27:13.614)
Mmm.

Christian Brim (27:36.67)
I'm talking about specifically a company that has employees. Well, the problem that I saw there stood out like a sore thumb. That number is too low. Even before he hit the downturn in 25, the number is too low because in a professional services business, whether it's accounting or engineering or architecture or, you know, marketing, it doesn't matter. It needs to be above two. And if

If you're at one. Well, I think, yeah, I mean, but at at two, it's it's it depends on the size of the business. Fair enough. But like two is absolutely like if you're not getting two to one, you need to trim the fat. You've got you've got some inefficiency in your organization, right? But that kind of goes to what you're talking about is being literate enough to know where to look for the problems, not that you can't hire

John Doherty (28:07.2)
I'd say above three minimum.

Christian Brim (28:36.817)
a professional to help you with those things, but you need to be understanding what exactly he or she is talking about to have the conversation in a meaningful way.

John Doherty (28:47.682)
Yeah. And, and, you know, I'd also say Christian, the supply is like across the business, right? Like I see, I mean, I worked with lot of marketing agencies, but I've also worked with creative agencies, design agencies, dev agencies, et cetera, like digital service business businesses. And when I get people to pull those numbers for me, it's so interesting that like, then they come back and they're like, wow. I didn't realize my leads were that low. I didn't realize my close rate was that low, that kind of thing. but really it's like, you know, you need.

Christian Brim (29:09.416)
Hmm.

John Doherty (29:16.142)
You then need kind of a translator to help you out with that, right? Like, okay, but what do these numbers mean? It's like, can look at it and they'll look at it be like, oh, my leads are way too low. And I'm like, your leads are way too low because of X, Y, and Z. It's not like, Hey, how do I go get more leads? It's like, how do we fix these five other things? And leads are an output of doing all these other things, you know? And so like it works for finances. works for just like all your business, like numbers. And yeah, LER is a great one for service businesses as well, but like it just.

Christian Brim (29:19.112)
Mm-hmm.

Christian Brim (29:32.094)
Mm-hmm.

John Doherty (29:44.269)
It's not just like that part of the business. It's like all the way across, you know, how are we growing? How are we selling? Like, you know, if you can double your close rate, you need fewer leads. you know, it's way easier to double your close rate on six leads to go from like, you know, one to three, that's triple than it is to grow from six to 18 leads in order to sign the same number of clients. Like it's way cheaper to do that too, you know? So you have to kind of see and kind of see like how the dominoes fall. And that's just the language of business.

Christian Brim (30:11.131)
Yeah. What you're referencing are, are most people call it key performance indicators, KPIs metrics of some sort. The, the, the danger in, in, you know, measuring numbers is not measuring the right number. And in that, you know, leads is a great example, right? Okay. How do you, how do you get another lead? Right.

You have to be very careful when you're looking at metrics and know is that number controllable or not, right? If you're managing, say, your profit, that's within your purview. You can make decisions to increase your profit. Leads, you can't just say, okay, I'm going to have more leads. To your point, there's four or five other things, other behaviors, other activities beneath that.

So it's not to say no, don't track leads, but make sure you're asking the second and third questions to get down to, what do I need to change to make that number higher?

John Doherty (31:21.57)
Right. Well, I mean, it's, I think this is maybe what you're saying, Christian, but like same thing with profit, where it's like, can't just say like, I want that number to be higher. And then all of sudden, boom, it's higher. It's like, then you have like, okay, how do we make it higher? our labor efficiency ratio is off. This is off. You know, we're paying crazy interest on this loan that I never should have taken out. Like let's, you know, let's knock that out. All of those sorts of things. It's the same thing with these other numbers around like, why am I sales low? Well, let's like dig into that. And usually it's kind of a, it's an input and activity issue.

because like, can't just say, you know, I, I need more leads. mean, you can say that, but then it's like, okay, but how are we going and getting those? Well, how much have you spent on ads? How many like conversations have you had? How many blog articles have you written in the last month? Right. Like that, or six months or that kind of thing. how many, you know, conferences have you gone to? Like, you know, it's, it's not the, like, it's good to know. Like these final metrics, but they're like, they're all, all the metrics we usually measure in a business are lagging indicators.

Christian Brim (32:18.878)
Mm-hmm.

John Doherty (32:19.766)
Revenue is a lagging indicator of stuff that you did over the last months. Right. So if we want to change that number for three months from now, we need to know what the actions are that we did, and then probably do more of them. Some of them we need to change, right? We probably don't need to do anything new. We just need to do more of what's worked, which people are always looking for something new. But it's like, actually, if you just posted that same thing again, you would get another like three clients, right? Like, let's just keep it simple. so yeah, anyways, I think we're, we're, we're talking, speaking the same, the same language here.

Christian Brim (32:22.717)
Mm-hmm.

John Doherty (32:46.414)
Yeah, and this is the thing about like, you know, we kind of start with the problem of like, I don't have enough profit. Cool. How do we get down to that? And that's where, you know, books like this are very, very useful books like this coaches, et cetera, very, you know, very, very useful to do it.

Christian Brim (32:58.407)
Yeah. When you when you talk about, you know, increasing your profit, I think one of the things that is often overlooked, and I've overlooked it myself and my own business that because we are looking for something new. One of the most powerful things that you can do is capture your customer's wallet share.

And you know that that's something that is is easier in some ways because you already have the relationship they already know like and trust you they're already spending money with you is there anything additional that you could do for them to make money within your business like you don't want to go off a left field and do something that you're you don't do but you already have the relationship have you maximized it and

You know revisiting pricing because I think pricing I Dedicated a whole chapter of it in my book Because I think it is so powerful What what has been your experience with pricing as a lever for profitability?

John Doherty (34:16.85)
Biggest lever almost everyone has. I'm going to, I'm going to say something that you may disagree with that. may agree. Um, cause you've, you've seen a lot of these businesses, just like I have most service businesses and agencies can double their pricing. They would lose clients, but they would end up making a lot more money and do, and be doing better work for the ones that they have. And they're going to assign better clients moving forward. Pricing is the largest.

Christian Brim (34:19.229)
Mm-hmm.

Christian Brim (34:38.844)
I would agree with that 100%.

John Doherty (34:42.232)
The largest lever that most people have, like I was talking to this, this, this new client of mine, this new coaching client of mine. they just committed literally right before this call. And, I need to send him a contract here in a minute, but, he, he was, was telling me about like this audit that he does for everyone, like upfront, right? Like it's a paid audit to then set the strategy for like moving forward. So he pitches them on the right thing. Phenomenal. That's exactly what I teach people. But I looked at the number and I was like,

And who are you working with? How big are these businesses? They're like multiple seven to low eight figures. Most of them, one of them is like nine figures in revenue. I was like, you need to double, if not triple your price on this. He's like, have it. Some people say, no, I'm like, that's kind of the point because they self-select out. Right. And like the ones that sell selected out, are they this kind of, they your ideal client? No. Okay. Like, so yeah, I think pricing, pricing is absolutely the biggest lever. And I think when you can go from.

Christian Brim (35:17.32)
Mm-hmm.

Christian Brim (35:21.721)
Mm-hmm.

John Doherty (35:32.271)
putting some arbitrary like number on your hour on like how much your hour is worth to actually looking at how much your work is worth to the client. And then basing your pricing off of that. That's where everything unlocks and that's how you can charge five times more than somebody else for quote unquote the same work, but the client sees the value of it. Right? Like if I tell you, Hey, my hourly coaching rate is anywhere between $625 and a thousand dollars an hour.

People are going to be like, that's insane. I would never pay that. like, yeah, but what if I told you that by paying me for six months that right. And like, have packages for it. You can double your agency in the next year. They're like, Oh, all of a sudden it makes sense. know? Um, so it's not just like, what is your price, but how do you put your pricing together and message it in such a way that the client sees the value and they're happy to pay your rate, even though it is significantly higher and you still believe that your work is worth it.

Christian Brim (36:17.703)
Yes.

Christian Brim (36:32.295)
Yes, I mean, going back to your statement of doubling your prices, here's the reality. And this is true of every business that's listening out there. It's true of my business and probably was true of John's businesses before he sold them. Your profitability by client, unless you just own a complete SaaS play, like it's a complete software thing, if there's a service component to what you do.

you all of your, all of your customers, are not equally profitable. Right. some take, some take more time and, and some are more pains in the ass, cetera. And you can do a whole deep dive analysis and try and figure out what your profitability by customer is and blah, blah, blah. And that's fine. But the simple solution that you mentioned.

John Doherty (37:09.646)
100%.

Christian Brim (37:30.019)
of, you know, we're just going to double the price and then they'll self select out. And if you end up still with one of those pain in the ass clients, after you've raised their prices, you take that one and you double their price again. And eventually you're going to get to the point where the time it's worth it to keep them or they'll go away. But I see where most people.

You tell them that and I think why you were kind of hedging when you before you said it is because most people are like, well, I can't do that. And I'm like, no, but you can you're you're just operating from a fear. Exactly. You're operating from a fear. You're you're like, well, if I double my prices, half my customers won't will go away. No, they won't.

John Doherty (38:06.328)
You're just not brave enough to. Yeah. Yeah. Yeah. Yeah.

Yeah, yeah. Well, I won't be able to help my brother-in-law anymore. Well, your brother-in-law is a cheapskate and he runs a different business from who you ideally help. You're not even doing great work for him anyways. It's actually going to help your relationship by sending him to someone who's going to get him better results, but people don't see it that way.

Christian Brim (38:23.164)
Exactly.

Christian Brim (38:26.865)
Well, and it and and it forces you to delivering the value, right? Like automatically, you're like, well, I am charging this. I've got to deliver.

John Doherty (38:31.182)
100%.

John Doherty (38:36.654)
Yep. Yep. Totally. Yeah. I mean, it's, if I can tell a personal story real quick. So last, uh, about pricing and also the thing about pricing is if you're pricing too low, um, you're either one or two things is going to happen. One is you're either going to attract pain in the butt clients, right? Who are like, they, they, there's the old adage of like, you know, $500 a month client, like, I need X, Y, Z. And the other thing, if you don't deliver, I'm going to lose my house, et cetera. $50,000 clients like wire sent. Thanks. Talk to you next week. Right.

Christian Brim (39:05.243)
Mm-hmm.

John Doherty (39:05.326)
Um, like it's so true, but so last fall I was charging lower rates and I was just getting started on coaching. was charging lower rates because my own psychology was like, well, I'm not like, I'm not, uh, I'm not qualified yet. Right. Even I have 10 years of running profitable like agencies and growing them year, know, doubling them year on year, tripling some of them year on year. I still didn't believe that I was, that I was worth it. And I'm a good salesperson, Christian. I'm good at sales. I sold cutco knives in college and like, I'm a good salesperson. I worked at a ski shop, like that sort of stuff. Like I'm a good salesperson.

Christian Brim (39:26.515)
Hmm.

Christian Brim (39:30.578)
Nice.

John Doherty (39:35.535)
I went over 12 with potential coaching clients and some of them that I was like, know I can help them, but like what they're not signing on, like what is going on? And the day I sold, I signed the contract to sell editor Ninja. I increased my coaching prices by 85%. Um, and I went to only, yeah, I basically doubled it, not quite doubled it though with the most recent one where I need to bump it up again. Cause I'm getting too many yeses now. I'm bumping it up again. It will be double over double.

Christian Brim (39:53.051)
Let's just round it and say doubled. It just sounds better.

John Doherty (40:04.334)
Um, I went from closing zero of 12 to closing a four or five. I thought it was almost five or five. had a verbal from the fifth one and then he ghosted me. So I'm like, all right, not my ideal client. If he's not willing to communicate, et cetera, et cetera. But I closed four or five, you know, so like, and getting paid upfront. So my cashflow just like went through the roof, you know, but two things happen when you're pricing too low, you either sign no one or you sign too many of the wrong ones versus when your price goes up, you sign fewer. But.

you're making more and they're all better to work with. Like it's just a win across the board. And then a lot of these questions of like, how do I eke out an extra like percentage of profit? I'm not interested in an extra percentage of profit, unless you're like a billion dollar company and a percentage matters. Sure. But like, if you're making 250 K a year, the best thing you can do is you can make more money from each client.

Christian Brim (40:53.693)
Yes, yes, yes. So how much of that do you think, admitting that it was in your own head, how much of the pricing change was the perceived value and how much of it was the shift and what energy and intent you brought to the sales conversation?

John Doherty (40:55.448)
Hands down.

John Doherty (41:15.406)
Hmm. It was both. It was both for sure, but there's definitely the like belief, you know, kind of struggling with my own, limiting beliefs around, um, you know, how good I am at what I do and like all of those things, but then like selling the second agency was just like instantly a boost of confidence. Like, know what I was telling friends, like I texted my best friend and he was like, dude, congratulations. I was like, I think I'm finally starting to believe that I'm actually pretty good at this 10 years in, right.

Christian Brim (41:29.756)
Mm-hmm

Christian Brim (41:41.373)
Yeah.

John Doherty (41:41.627)
and, and that's just been like a journey of my own, just kind of, you know, coming to know my worth, but also like having the proof, like, you know, her Mosley talks about, like, you don't go tell yourself like to be more confident. You go and get irrefutable proof that you can do it. And then the confidence comes like I got the irrefutable proof. so, and I think a lot of us, we need to take a step back and actually look at like, okay, I'm telling myself I'm not good enough, but let me actually look at the numbers. Let me actually look at my experience and like, am I actually really good at what I do? Right.

Christian Brim (41:54.867)
Mm-hmm. Mm-hmm.

Christian Brim (42:10.109)
Mm-hmm.

John Doherty (42:10.21)
And then looking at it from the business side, especially like with creatives, you you like to be creative. like to, you know, do the, do the creative work, you know, leave me alone. Let me do my process, et cetera. But like, if you're selling, I don't know, brand like style systems. first of all, like you, if you can get numbers on like, okay, we implemented, I designed the style system for this client and they for X their conversion rate.

Christian Brim (42:35.838)
Mm-hmm.

John Doherty (42:37.038)
You can talk about that and it doesn't matter. And you're to get paid better by the ones that like, they're already making $10 million and you for X their conversion rate and they go to 30 in the next year. But like someone who's making a hundred thousand and you for X their conversion rate and they go to 400 in the next year. Like that's still worth a lot to them. You know, it's just the bigger one pays better. But like, if we can start actually looking at these, at these numbers, not just like, do I, you know, think I'm good by looking at my work compared to somebody else's work, but like, do the business numbers actually show that I'm that what I do brings value.

Christian Brim (43:06.696)
Yes.

John Doherty (43:07.288)
And then doing it enough times that like, you can't deny that you're good. And also more importantly, prospects can't deny that you're good. Cause you have all of these stories to tell them about this client and that client and that client and that client and that client. They're like, okay, I get it. Take my money.

Christian Brim (43:23.027)
Yes. Well, that's exactly what I discuss in that chapter of pricing is starting with the problem and solution and having a very clear idea of what problem you are solving for the customer and the value to them. Because then your pricing is not an issue. But most people don't do that work of really trying to figure out and understanding what problem are you solving?

John Doherty (43:51.961)
Yeah. Yeah. Totally. Totally. And then there's some interesting, so, I mean, the psychology, I love pricing is one of my favorite topics. I gotta be honest. Like I just, I love it. It's so fascinating. There's so many levers you can pull. And if you can stack it with like, you know, you're going to make a company, an extra million dollars in the next year. And so like the offer that they should sign with you is, you know, say cost a hundred K, which to you is a lot of money, but put yourself in their shoes and like, you know,

Christian Brim (44:15.006)
Mm-hmm.

John Doherty (44:19.342)
If you can make them an extra million dollars, like they're already a good size and like that's not, it's kind of chump change to them, right? $8,300 a month, like chump change to them. Let's be honest. Um, but then you can stack it against like a big offer. That's like $300,000 to do the same work, but faster. And then there's another one that's smaller that they're like, the budget's better because it costs less, but I'm not going to get everything I need. I'm not going to hit my goals. All of sudden we start getting into these sorts of like, uh, frameworks around pricing and sales.

Christian Brim (44:45.213)
Mm-hmm.

John Doherty (44:46.58)
And everything just unlocks. And then we don't have this question about how do we get another 2 % in profit? It's like, Whoa, I just six X to my profit. Like very, very different game. we're not going to get, you know, different results by playing the same game. Sometimes we have to change the game.

Christian Brim (44:54.695)
Yes.

Christian Brim (45:01.565)
Well, yeah, and to your point, like if it's if it's a million dollar value and you say 100,000, that's that's a great ratio. You know, even 300,000 is a good ratio. Right. That's three X roughly. If if if you come in at 50, you're going to start reaching a point where they're not going to believe it. Like I can't I if I spend only that much, you can't deliver that value. So you can actually screw yourself.

John Doherty (45:12.952)
Yeah. Yep.

John Doherty (45:29.149)
Yep. Yep. Let me tell you another quick story. Uh, we have a, uh, my wife and I live in Denver and we're very fortunate to have a second home up in the mountains, um, uh, about 20 minutes south of the ski resort up there. And we have a hot tub up there, which was my dream for my whole life to own a hot tub. so like when I sold the first agency, we spent some of that money on the hot tub up there and we put it on the deck. Um, it's like a, you know, three bed, bath house up there. We have a big deck looking over the mountains and, uh, we put the hot tub on the deck.

And last year, a contractor came up, we're getting to look at something else. And he was like, Ooh, like this thing's not holding the weight of the hot tub. Well, like I'm actually concerned this thing's going to collapse. So we drained it, winterized it, and it's just sat there all last winter, you know, empty. And then this summer I was getting quotes for moving it. And they, the first guy came in at like 5k or something like that. Second guy came in at like 1500 bucks. He's like, we just need to like sister these four boards underneath of it. And you're going to be good to go. And I was like, and then.

The last person came in at like 11,000 total. Um, and we actually ended up going with them because it was like, they were, I trusted they were going to do it right. But the guy that quoted me 1500, when I already gotten a 500, a 5,000 quote, I was just like, I literally do not trust you. Like I do not trust that this thing is not going to collapse with me and my six year old and my two year old in it this winter with snow also on the deck. If we have, if we had any snow this winter, which we don't, but, um, but yeah, like it's, you can be so low that people just don't trust you. So like, if you're having issues closing clients,

Christian Brim (46:39.55)
Brand.

John Doherty (46:54.318)
And you're like, I know that I can help you. Yes. There are like probably positioning and those sorts of like issues, like experiment with just quoting double the price and see what happens. And they will probably say yes. And you will be like, holy crap. This is amazing. And yes, that is, and guess what? That is now your new floor.

Christian Brim (47:12.093)
That is that's sage advice. John, how do people reach you if they want to learn more about your coaching?

John Doherty (47:19.446)
Yeah. So John F dirty D O H E R T Y.com slash coaching, just search John Doherty coaching, or I believe you search like agency coach on my like first page of Google. did SEO for a long time, so I should be there. ask your favorite LLM I'll be in there as well. and then, best place to engage with me to, to social places, LinkedIn, just look me up, John Doherty and,

Instagram Instagram com slash dirty JF. I'm doing a lot of content there reels and you know, I'm doing some stuff on YouTube as well But doing a lot more video just like short stuff that that should help people, you know Raise their rates tell better clients retain their clients better all the things that we're all you know, always thinking about So those are the places to find me

Christian Brim (48:01.546)
Perfect. Thank you very, much for your time. Listeners will have those links in the show notes. If you like what you heard, please rate the podcast, share the podcast, subscribe to the podcast. If you don't like what you've heard, and I don't know why you wouldn't shoot us a message, tell us who you want to hear and we'll get rid of John. Until then, ta ta for now.

John Doherty (48:21.038)
Just blame me, it's fine.