Here’s the question every business owner avoids.
If you stepped away tomorrow — vacation, illness, family emergency, whatever it is — would your business survive?
Sit with it for a second. Most owners have never honestly answered. They’ve assumed the answer is yes. They’ve never tested it.
I owned a small business for 16 years. I’m here to tell you the answer for me, for most of those years, was no. And I’m going to tell you why that mattered more than I thought it did at the time.
16 years at Friendship Fitness
Friendship Fitness opened in 2008. I was the head coach. I was the closer. I was the customer service manager. I was the schedule fixer, the dispute mediator, the website creator, the event coordinator. The gym worked because I worked.
That was a feature when I was 30. It was a problem by the time I was 40.
What I sacrificed in those 16 years and didn’t know I was sacrificing: time with family and friends, trips and travel, financial decisions that always came from gym security first and me second. Mornings I missed. Bedtimes I missed. Weekends I told myself I’d take but never quite did.
If I were building that business today, the hardware on my desk would do most of what I used to wake up early to do.
The book worth reading
There is a book worth reading on this. Built to Sell by John Warrillow.
The thesis is simple and it stings. Most service businesses are built around the founder, run by the founder, and kept alive by the founder. They don’t sell because they can’t. The founder is the product. Pull the founder out and the lights go off.
Warrillow lays out three structural truths a service business has to satisfy to be valuable to anyone but the owner.
The work has to be teachable and repeatable.
Operations have to run without daily founder input.
The system that delivers the work has to be documented well enough that someone else could step in.
Number three is where everybody gets stuck. You can have a great service. You can have a loyal customer base. You can have a strong brand. None of that matters at exit if the institutional knowledge lives in your head.
Key-man risk
“Key-man risk” is the technical term for “the business dies without you.” Buyers see it instantly. Bankers see it. Investors see it. Even your spouse sees it on the days you’re sick and the phone won’t stop ringing.
Most AI consulting frames AI as a way to save time. That framing is too small.
What AI agents do, when they’re built right, is reduce key-man risk. The system absorbs the work. The work absorbs the institutional knowledge. The knowledge stops being trapped in your head.
That is a fundamentally different kind of result than “saved you four hours this week.”
Three examples from real builds
I’ll keep these anonymized — same bar I set in this week’s newsletter post. No names, no industries that point to a specific company, no specific dollar amounts.
Example one — proposal generation. One owner had been writing every proposal himself for years. The entire process lived in his head. Every estimate had a hundred small judgment calls he’d never written down. Built him an agent that read his closed proposals and learned his voice. First-pass drafts now happen in minutes instead of hours. He reviews, edits, ships. The work that used to keep him up at night happens before his second cup of coffee.
The side-effect win matters more than the time saved. There is now a written record of how he prices, what he includes, what he excludes, and why. That record didn’t exist before. If something happened to him, his team had nothing. Now they have everything.
Example two — pipeline standup. Another owner had a quiet pipeline of stuck deals. Customers who’d asked for a quote, gotten one, and gone silent. He used to scroll through his CRM on Sunday nights and forward emails to his salespeople. Now an agent does it before Monday standup. Every stuck deal gets a recommended next move, drafted in his voice, ready to send.
The owner doesn’t have to remember anymore. The system remembers.
Example three — post-close communication. A third owner had a post-close communication problem. Customers signed, and then disappeared from the company’s view. The team meant to send follow-up notes. The work always lost to whatever urgent thing happened that day. We built a sequence of touchpoints that goes out automatically, in the right voice, with the right details pulled from the customer record.
The team didn’t get more disciplined. The system got disciplined for them.
The pattern in all three cases: the owner used to be the bottleneck. Now the system is the operator and the owner reviews. Same output. Less founder dependency.
The insight I didn’t see coming
The part I didn’t see coming until we started building this stuff: the same agent system that runs the business day-to-day can also write its own onboarding for the next owner.
If you sell, the buyer doesn’t inherit a stack of paper SOPs nobody reads. They get a working system that already knows how the business operates, plus an agent that can produce a custom training program for whoever takes over. The new owner learns by doing, with the system as a coach, in the actual environment they’ll be running.
That has never been possible before. SOPs go stale. Training videos rot. Documentation projects never finish. An agent system doesn’t go stale because it IS the system.
I think about what this would have been worth at Friendship Fitness. A buyer walking in could have run the gym in weeks instead of months. The valuation conversation would have been different. The buyer pool would have been different. My options at exit would have been different.
The three returns
Three returns operating at three timeframes, compounding.
Return one — immediate margin. The agent absorbs work you used to pay for. Proposals, follow-ups, pipeline standups, post-close communications, content drafts, daily briefings. All inside your existing AI subscription. Hours come back. For most owners I work with, the math closes inside the first 90 days.
Return two — stack collapse. Most service businesses run 10 to 15 subscriptions to do work an agent system handles natively. Marketing automation. Proposal software. Follow-up sequencer. Reporting dashboard. None of those are wrong tools. They’re stacked because nothing else could do the job. When an agent can, the stack collapses on itself. The savings aren’t the goal. They fall out as a side effect.
Return three — the asset on the way out. This is the largest of the three, and the one nobody sees on the way in. A service business with a documented, transferable, agent-run operating layer is a fundamentally different kind of sale than a service business that lives in the founder’s head. Bankers price it differently. Buyers see it differently. The pool of people who could plausibly run the company expands. None of this matters if you’re selling next quarter. All of it matters if you’re selling in five or ten years.
Three returns. One investment. Different timeframes. All real.
Even if you never sell
The honest reason to do this work isn’t the sale. Most owners don’t have a sale in their five-year plan. They want to keep operating. That’s fine.
But the same structural choices that make a business sellable also make it livable.
The owner who can step away for two weeks without the company faltering is the owner whose marriage doesn’t fray, whose kids see them at dinner, whose blood pressure goes down 20 points in the second year of the build.
You don’t have to be planning an exit to want that. You just have to be tired.
I was tired. For most of the 16 years I owned that gym, I was tired in a way I’d convinced myself was the cost of the work. It wasn’t. It was the cost of building a business that couldn’t run without me.
If I were doing it today, I’d build something that could.
Build the asset
Build the asset. Even if you never sell it.
The full reflection on this is up on the newsletter — link below. If this episode hit close to home and you want to talk about how it maps to your business, there’s a free 30-minute strategy call on the site.
Pairs with this week’s newsletter post: What I Would Do Differently As A Business Owner if I Had AI
Talk soon.
— Jeff
Full transcript
Auto-generated via faster-whisper (base, int8). Lightly cleaned for readability. Timestamps approximate.
All right, guys, what’s going on? We’re going to talk today about assets in your business and really just some long-term, small business strategy. You know, I’ve been very lucky when I started my first small business. I was 25, extremely confident, I guess you would say, in myself, and I knew nothing, right? I knew nothing about business, knew nothing about gyms or running gyms, or anything like that. I didn’t have entrepreneurs in my family. I didn’t have real estate people in my family. I didn’t have anyone who had sold businesses, anything along those lines, right? No experience, no exposure.
But what I did know is that if I really committed to something, whether it be learning or learning about the business, learning about the industry, whatever it might be, if I surrounded myself with the right people, read the right books, studied and worked hard, that it would work itself out. I think a lot of entrepreneurs have that exact same thing where you take maybe a leap of faith. You have a little bit of imposter syndrome. You maybe think, you know, I think I can do this and you have trust in faith in yourself, but you also know that there’s going to be a little bit of figuring it out along the way.
Now, as I started to go through that journey, you know, I read a lot of books, all different kinds of books. And a lot of those books were, you know, brought to me or were, I found for specific situations, right? So now I was trying to work on building a team and creating a cohesive unit across multiple locations from a meeting cadence perspective. I read traction and I started to install that system, right? And, you know, then you’re trying to learn about different business systems. And I read there’s like six or seven different great books on, you know, how to run a gym business. And so you kind of put yourself into these,
into these different educational opportunities. And so I always think as we start talking about this, right? Your number one asset is always going to be your own brain, your own ability to learn, adapt and change. And what we’re gonna be talking about today is change, right? It’s adaptation to a changing world, a changing industry. And making sure that we keep that muscle flexing. And this is the unique thing about entrepreneurs different than employees, right? Why entrepreneurs have to be wired a little bit different, think different and be on top of this kind of stuff is we have to stay moldable.
You might have employees right now that are saying something along the lines of like, well, I don’t wanna work with AI or I don’t wanna install AI or I don’t believe in it or whatever they’re saying. They might be scared of it. You have other ones that embrace it and they’re working with it and they’re excited about it too. You have maybe a bunch of people that are really just like in a scarcity mindset and they’re just worried about like, oh, I’m just worried, I’m gonna lose my job. So a bunch of different people on that spectrum. What we need to think about as employers and entrepreneurs and people who have the livelihoods of others in our care is we need to be making sure
that we’re doing everything possible to keep those people paid well, keep our business in business and continue to build our own long-term value in wealth as we grow. Entrepreneurs are kind of put into this weird space especially small businesses are put into this weird space of like we don’t really have 401Ks that our company is gonna match, like we’re the match, right? We don’t have healthcare benefits unless we buy our own healthcare benefits. So some of these things that give other people safety and security are actually just like added costs and taking things off of our own bottom line. And so we need to be thinking about how we build these assets up so that we can eventually one day retire we can eventually have a succession plan for our business and what those things look like because you’re gonna come the time is inevitable you will have a moment where you have to figure out what you’re gonna do with your business, right?
And I just experienced this and if you guys haven’t experienced this before you will sometime in the future and even if that’s 10 or 15 years off that might feel like a long way off but it’s really not and we can start taking steps today to ensure that we are prepared for that inevitability because really it comes down to like three choices, right? You can pass it down to somebody else so you can build a succession plan and you can train somebody for that and you can hand it off to them or sell it to them. You can sell it out, right? Those are all kind of same things so transfer of ownership, keep the business running.
You can just flat out close it say hey, that’s it, fold up shop but still a lot of times you have all these assets and stuff that you have to figure out what to do with. What are you gonna do with everything that you own for the business? All the computers, all the desks, all the hardware all that stuff, like what are you gonna do with it, right? So that’s not always just as cut and dry as you say, I’m just gonna close the doors, right? And then your third option is to like downsize into something that fits you for retirement, right? So, you know, going from, you know, let’s say you’re running a gym, right?
Instead of running a huge gym, you know, with 500 clients and 10 coaches, maybe I switched down to a small personal training studio that I run myself with 15 clients, right? And I’m still working, I’m still helping people, I’m still doing something in retirement but I’ve taken my business and I’ve kind of downsized it to fit me for my retirement. And then when I die, that’s when it closes, right? It just ends with me. So, that’s really the three lifetimes or the three potential ends for businesses. So, as we think about that, I want us to start kind of staying in that mindset, right? What we’re gonna talk about today is how we prepare for these eventualities and how AI I think can help us and get us into kind of a different frame of reference for it.
All right, so our first one, right? This is our key man problem and this is the first thing when I started to get to a point where, you know, for us it was expansion first, right? But then also when you start looking at potential selling of your gym, if I stepped away tomorrow, what would happen, right? The test that a lot of gym mentors would always put on us is, you know, I want you to take like two weeks in Europe, right? For me, I did this with like 10 days in Aruba, right? Where you actively take steps to tell your team, I will not be available for context. You cannot reach out to me. There’s no email, there’s no text.
And, you know, the world we live in doesn’t really, that’s like not ever really true unless maybe you’re going to like Antarctica or something. But you’re putting it on your team to say, I want to see if you can close deals, if you can take a lead and close a sale and grow the business and continue on if I’m not here.
And a lot of times that’s a scary proposition for small business owners, right? We wear a lot more hats and we continue to retain a lot more control than we should have, right? And the longer that you let this go, the more this key man problem becomes to, it grows and it becomes this burden on your business long term when we start thinking about what are the next steps, right? So all of those eventualities that I talked about, the only one where key man allows you is if you choose to downsize into retirement and continue operating as the only key man where it’s like you are the only employee or you do downsize to a level where it doesn’t require any other employees or any other help.
That’s the only situation where key man is acceptable in any of the others, right? It becomes a bit of an issue. So as we start thinking about this, right? I spent a lot of time in my gym building the wrong asset. So building everything around me as this central information point, right? Everybody had to check, right? But with Jeff before they did anything, right? Or they had to run things by me or they weren’t sure. They were not empowered to make the right decisions. They weren’t trained in systems to be able to follow the structure and the system that I had created to thrive without me, which is a huge problem, right?
Especially when it’s like the livelihood for your family. You know, if you get hit by a bus or if you become incapacitated in some way and your entire family’s livelihood what pays for your health insurance can no longer function without you there. You’ve now compounded an already bad situation and made it a lot more stressful for your family, for your spouse, for your kids, for everything. So we want to be kind of thinking about this. The best business to run is also a business that’s always ready to sell. And so I was building this where I was the key man problem. When we started to look for expansion for multiple locations, that becomes a problem.
I can’t be in two locations at once, right? Managing two full teams and two full gyms where you’re the key man and everything’s got to run past you, that’s not two times as much work. That’s like five times as much work. So we become sort of the bottleneck then. And the businesses get held back a little bit by these key man’s if you’re looking for expansion or growth. So we have to start thinking about how are we going to build the asset to thrive without me and how are we going to build this asset to also be in that same vein, a sellable asset, right? Because that’s ultimately the dream, right?
For however any business ends, that’s ultimately where we would prefer to take it. So this is a good book. Got it right here. Show it to you. Oh, why did I make it fuzzy? All right. This is a book actually gifted to me by a friend and it was while I was kind of talking through COVID, what we were going to do with our second location and some of those things. And it really helped reframe for me the concept of businesses that are built properly that run the right way are also businesses that are ready to sell at any point. And as I’ve sold my business now and as I’ve looked at potentially purchasing other gyms or other businesses, one of the things I found is I find myself constantly saying, I don’t want to buy, that’s a good business, but I don’t want to buy that business because the owner is doing everything.
The owner is the key linchpin for all of this stuff and they’re still heavily working a job of manager or sales or whatever it might be. They’re doing all of that. And when we lose them, that business isn’t guaranteed to still be able to continue to operate at the same level because we’re losing the best employee, the one who’s the most bought in, the one who knows all the systems, the one who retains all of this information in their head that everyone else trusts. And so I started kind of thinking about this as a concept and how much I was holding things back by continuing to be a naive, young business owner and not move things forward.
So, really good book. It’s a quick read too. I mean, I think you can probably read that in like a weekend or a couple of days. If you guys are listening to the audio book, it’s probably less than a couple of hours.
All right, so what makes a service business sellable? All right, first we have to systemize, right? This is where AI can thrive. And we’ll talk about this more how AI kind of helps these, not just these three factors, but just helps us in our general business structure anyway. But the work is teachable and repeatable, right? How do we teach and repeat that? How do we log all of our processes? And this was the big thing when I did start gain rate itself was like, okay, I have to think about every little thing. Like, not just like, oh, I’m gonna write a little SOP and put it in a handbook and a binder as a piece of paper of how to like open the gym and disarm the security code.
But like for me, I was like, okay, that’s gotta be a video. If we need to have a part-time person in an emergency coming open to the location, they need to be able to know where to find the information of how to open and close the business, where to watch that video and how to do it. And then obviously they need a key. So then we had to start thinking about, okay, like, well, if we’re not there, do we have like a high to key somewhere, right? And then what’s the high to key code? And how does that fit in? So we start thinking about all these little things as they trickle down. What’s our sales process, right?
Can that become an actual system in a process that you can teach and train? And if not, that’s something that we have to really work on building because sales is a huge bottleneck where owners put themselves in there. So that’s the first thing. Is it teachable and if it’s repeatable? And if it’s not teachable and it’s not repeatable, then you likely are number one, like not operating a business in the sense of like a true business, right? You’re kind of working or you’ve created a job network, right? And you’re requiring yourself to be extremely,
not just like knowledgeable, but like this knowledge hub, right? And I think a lot of leaders are really good at the job. So there might be business owners that you know that are really, really good at sales. And they love sales and they wanna keep doing sales. But that’s very different than somebody who can train somebody else to sell. So a sales teacher, okay? It’s kind of like looking at it as an athlete, right? Just because you play in the NFL doesn’t mean that you’re gonna be a good football coach. And just because you understand or maybe intuitively are a really good athlete doesn’t mean that you understand the true X’s and O’s of how to teach somebody football, how to go down to the youth boosters and teach kids how to take a hand off and teach offensive linemen where the holes are and like actually teach the game in a repeatable way.
And if you guys have ever met a great coach, like I’m lucky to know some great coaches and you watch them coach, you’re like wow, they approach that totally differently than how I would. And it’s such a great learning opportunity when you’re watching people teach and teach kids and like teaching a kid golf, like watching somebody do that process, that’s crazy because it requires such a different skill set than like being a good golfer. So don’t confuse the two. Being good at the job doesn’t mean that you’re a good leader or a good business owner and making sure your systems are teachable and reputable making sure you know how to do that is actually your highest level job when you run a business, okay?
So if you’re not teaching and you’re not building it into a repeatable process, then you’re not actually running a business. You’re actually just doing one of the jobs in the business from a day to day perspective. All right, second, operations run without daily founder input. So this is like our where we wanna get to. You may not be here, this may not be something that’s viable for you in the next year, but this is where we want to get to, is that our team is fully trained, we’ve taught them so we’ve done step one, it’s teachable and repeatable, buy people that we hire, teach and train, and then the business can run, and this is the key factor, be as profitable or more profitable than if you were doing your daily input.
So if you were still in there, if we take sales as the continuing theme here, if you were still in there doing sales, this is where I got the company to in sales. But now when I’ve completely handed off sales, right? So for us at the gym, if you guys know the people, when Andy and Shelby were running all of the sales, if the gym continues to do as good or better, then awesome, that is like the key operation, that’s kind of the last operation that I handed off. And when we had a full year of that down, it was like cool, operations are running without my daily founder input, we’ve kind of knocked number two out.
All right, and the number three is documented well enough that someone else could step in. And so again, this is the hit by a bus thing. This is something that me and my cone are talked about all the time, is can we get to a point where like if I get hit by a bus, or if I go down or if I leave, that everything is in one place well enough that it could be done without me, right? And you have to kind of test this, right? And one of the best ways to test it is to travel or go out of town or be in Communicado for a few days. And then when you come back, sit down with your key leadership, or even sit down with your lowest level team and ask like, what didn’t go well when I was here?
What were the things that you found that you wanted to text me, you wanted to email me, you needed to put on my plate? Because those are actually the teaching things for you, where you need to go and start to get in and fix and document and teach right away, right? Because those are the things where people actually haven’t found that there’s another point of contact in there, or it’s not documented well enough for them to understand it when you weren’t there. So these are the three things that make a service business sellable, but also the three things that make us service business operate and run like a machine, like a business, not where it’s like, hey, the owners, or the owners ship level, actually is just like, we’re doing three jobs, right?
And like, one of the guys does sales and one of the guys does operations and we’re actually just like, we’re just in there and without us, there is no business, right? That’s not like, it’s weird because technically that isn’t business, but like in reality, that is, it’s really just like hiring or creating a spot for you to have your own job input. So that’s not what I think of as business anymore and it’s important that we start to kind of switch that. So we already talked about key man risk a little bit, but this is where we’re gonna start thinking about how AI can step in and we can start to download your brain and upload it to the AI and start to train it to reduce key man risk.
So all the ideas, all the stuff that you have in your head, it’s sometimes hard to teach that to just like all of it to one person, right? We might teach our sales team about sales. We might teach our operations team about operations. We might teach our hiring and firing manager about employment and you start thinking about like, we’ve got these little aspects of our business and we might teach those people individual components of it, but there may not be one central source of information for it and that’s where the AI can come in and really help. So we start thinking about just a couple of examples that I’ve seen here is a lot of businesses think about things that we’re going through a sales process and I ask people all the time, like, where’s that documented, right?
So let’s say we’re trying to train an AI to build proposals for us or to build a quote system, okay? And I ask them, great, where’s that documented? And they’re like, oh, it’s just kind of in my head. It’s like, okay, is it like a dollar per hour thing? Is it like a dollar per square foot thing? Is it an ever-changing, evolving pricing system because materials and material costs? If material costs are a part of that, where do we go to find where the new material costs are? How often do we update that? Is there a central source of information? So this is a key thing for us to start to think about one layer deeper and when I start working with people with AI, it’s great.
It’s very, it’s illuminating to the business owners because they have to start asking themselves these questions for maybe the first time where I say, great, where does that live, right? It shows us a couple of things. Like, one, have you ever even documented it? Is there actually a system? Or am I just like so good at the job, so good at understanding my business head to toe that I’m like licking my finger, sticking it up to the wind and coming up with a pricing mechanism. And I’ve just gotten so good at it that I’m able to do it. Like awesome, that’s great, you’re that good. But what happens when you need to sell the business?
Again, it’s a totally non-sellable asset. If everybody in the business knows that without your head being able to price stuff, nothing can get priced, nothing can get sold. No proposals, no quotes can be given, okay? And then the second tier is like, okay, if we have that kind of documented somewhere, how much, like for me, I know nothing about your business, if I’m going to start to work for you, maybe I do, maybe I don’t, right? But let’s say I don’t know anything. And so one of the first questions is I’m going to have for you is like, great, where’s that document? And it’s so funny when I ask that question because some people are like, it’s organized perfectly in our cloud sharing.
Here’s where it is. It’s in our proposals folder, quotes. And then it’s organized by price per square foot. How much a plumber costs, how much a lawnmower costs, how much a mulcher costs, how much a personal trainer costs, like it’s line items, exactly how we pay people, exactly how much it costs us, and then exactly what we have to charge the customer to make sure our profit margins are right. Some people are just hyper organized and all of that information lives in a very easy for me to understand and then thus a very easy for the AI to understand exactly where to go to get that information so that it can pull those things out and give a quote or a proposal for whatever we’re doing.
And I think that that’s been very illuminating. Number one to see if it’s all just in my head. And number two, if we do have a document of process, how organized is it? How quickly can you point me directly to where that is? And the businesses that are absolutely fine and thriving with AI are the ones who are that second. They’re like, yep, it lives right here. Here’s the folder set and it’s like take some 15 seconds to copy and paste to me at over. I take that, I copy and paste it into the AI. And then I’m running. Now I’m cooking, right? I’m off with fire and the AI is like, cool, got it. Awesome.
Now I can finish out my proposal. That also shows me that not only that business owner is on top of that business owner is building an asset. Now the AI is going to be this massive asset that’s really able to help them. And without those things, these are some of the questions you have to start asking yourself as a business owner. Now next we kind of start thinking about stuck deals, right? And this is a big one for people is maybe we have plenty of business, so our marketing and our sales and all that stuff, like it’s going really, really well. The thing, actual bottleneck for us is like completing the job or getting things done.
And so we have stuck deals or maybe at a gym, this is something like everything is kind of full and wait listed. So we have some of these issues. When we start looking at where things might get stuck in our business, we need information and data. Again, when we start thinking about we have to make the best decision for the business. We need some degree of data aggregation and one dashboard or one singular piece of truth
and information that feeds us that. Right, so let’s say I’ve got seven deals closed right now and we’re all bottlenecked on getting the contract signed. But I don’t have any actual system to feed me the information of who’s where, right? So we’re like doing these team meetings and I’m asking my people like, hey, where are we out with the Johnson deal? Where are we out with the, you know, with the Weisman proposal, right? And we’re trying to come up with these things and like we’re getting this like manual input. And so we have to call meetings and we have to, you know, have our people relay that information with words and so we need now we need to have these people are documenting in their own way and then they’re telling me and then maybe I’m retaining that information.
I’m giving them some feedback but there’s not like this one central source. As opposed to if we think about how that might work in an AI system, right? We have the team is updating one singular document or one singular CRM, one singular source of truth. That CRM is aggregating all of that data and it’s feeding it to us in a daily report that gets emailed to us at 7 a.m. Or a daily dashboard that I can pull up in two seconds on my phone when I’m laying a bed in the morning, check it real quick, see if there’s anything that I need to get done to unblock our bottleneck to get things moving forward.
Things that used to be this require a meeting, all hands, everyone’s gotta be there. We waste an hour and a half, nobody’s driving profit or a revenue, nobody’s moving the business where we’re all just like getting status updates. Again, these are things that slow businesses down that we just don’t need anymore that you can train in AI for.
And then the third one is follow ups, right? So a couple of things that I’ve seen here. As we move forward, one of the things I’m talking with all of my customers about is best practices on the internet and best practices specifically for how AI is going to learn about you and learn about your business, okay? This is extremely important for us long term to be doing best practices from a business perspective. So let’s talk about what that looks like, right? We sign the customer up, okay? And we can use gyms, we can use landscaping companies, we can use construction, we can use big business, whatever it might be, right?
You have a potential lead, lead signs up, lead experiences product, after lead experiences product, we should have some sort of a task that we do for follow up to make sure that they are happy with the product, that they give us referrals if they were happy with the product or we ask for referrals and that they review our product, right, publicly, okay? So that should all be a system, right? We should have numbers on that. From our leads, how many of those leads went to a quote or a proposal or showed up to the gym for a sales meeting? Of those people, how many signed up and became actual clients of ours?
Of the clients, how many of them gave us reviews, gave us referrals and we’re happy with the product, right? Gave us a rating in some capacity. Then to take that a step further, those reviews should be collected, those should be posted across the internet, they should be put onto our website for people to read, we should be trying to get a review for I would say probably nine out of 10 clients who complete our product, we should be trying to get Google reviews, stuff on LinkedIn, stuff on Clutch, whatever it might be for you. Different businesses have different areas where they look for reviews, but for the most part like Google Maps, Google reviews is a generally good area for us to focus on.
That shows web authority. Web authority then drives more people to our website which gives us more leads, which gives us more potential clients, which gives us more potential reviews and referrals and that’s the kind of engine we want to create. But what I find is a lot of people like they do a great job on the front end, right? They get the lead, they turn them into a client, great job, like that’s awesome. But then after the job’s done, they kind of forget about them. And maybe that person has a lot of reviews that they has a great raving review that they want to write, right? And they just don’t have your link, or they forgot about it, they don’t have time.
Or whatever the situation may be, you just never asked for it so they don’t care, right? Maybe they had some referrals, people who are really interested in your service or maybe they know a guy or actually I was having a conversation yesterday on the golf course you should reach out to this person, right? That kind of stuff, when you ask, when you’re prompted for it, when you tell them, like, hey, one of the best ways our business grows is referrals. So we love, you were a great client, we loved working with you. If you have anybody else who needs our services, please give them our contact information, I’d love to help them out.
And I find one of the best ways when things for networking, generally in the entire world is to give your friends a great recommendation, right? So if somebody says, hey, me and my wife are looking for a date spot, does anybody have a new restaurant or something that they’ve tried lately that they love? And somebody gives you a referral and then you go there for dinner and you have an amazing time and you text that person back and just like, we just went to that restaurant, it was so good. Thank you so much for the recommendation. We had such a great date night. Your friend just did you a solid.
Now that friend gave you something as a friend, there’s more value to the friendship. You’re helping each other in your lives, that’s what friendship is kind of all about. And the same is true when it comes to business, right? If you were looking for somebody to clean your house or make your landscaping, like for us, for like house cleaners, when we were just pregnant, we were like looking for a house cleaning, you got two young kids, you got a pregnant wife, it’s summer, you got all these things going on. And you know, Maria’s like she’s, we’re not gonna say a clean freak, right? But she’s definitely neat.
And you start to look at that, it’s like, okay, well, let’s hire a clean person. But it’s freaky having your little kids in the house and having a pregnant wife and bringing strangers into your home to go through your closet and be in intimate areas of your home without trust. So we got a recommendation, that recommendation was from somebody that we trusted a friend, that recommendation then had the people come in clean or house, they’ve done a great job, it’s been a great addition for us. Thank you, that’s amazing, right? That’s something that our network gave to us. So we have to build this into our system.
This builds long term, but again, these are things that now AI can help bolt on if we’re doing the front end right. If we’re already bringing people from, you know, lead to sale, to close, to client and we are giving a great product and we do an awesome job and we believe that we’re doing a great job and we believe that we are a great referral for people. Sometimes all we have to do is set up a system to ask. And AI can make sure that you never forget that. So this is kind of what I think about this. The, you know, agentex systems that we build for business. As we start looking at it, like, those are all things that can do tactically in the business.
But when we’re actually looking at what we’re building as a founder, if I was thinking about how it was gonna sell friendship again, you know, my last business I sold, if I was thinking about how I’d do that again, now what I would do is I would build out agents for every system we have. I would train the agents rather than having kind of these like SOPs and things that live in this weird area around the internet and trying to organize those as best I could, I would, you know, create an agent for everything, a programming agent, a sales agent, you know, what’s our sales, you know, what do our sales phone calls look like?
And an agent can pull up a script for me and I can be, you know, training new people and I can actually train the agent. I can give it a hundred of our sales calls and say, okay, I want to do some training weekly with my sales team. You’re going to act as the customer and I’m going to act as the sales representative and I want you to roleplay, right? Give me objections and help me overcome them. Help me handle these difficult cases and tough calls and you can start to train it with it. So I would systemize all of it, but within the AI, then the next owner or a potential salesperson, like a part of my sales process I would have them sit down and interface with the AI and I would tell the new potential owner, ask it anything about the business.
Ask it about financials, ask it about our sales sequence, our sales system, ask it about our programming system, ask them about how we do schedules, how we do coverages, ask them what our long term, you know, viability in terms of like client retention is, you know, what are, where are reviews at? How do we ask for reviews? What’s our system for that? Like ask it anything, right? Anything about our business, I try to download my whole brain. And then the AI can train the new owner and if the new owner has a question, it doesn’t always have to come back to me, the old owner, it can actually work within its own agentic system to learn and grow.
And I think it’s true for employees just as it’s true for owners. You can train, just like if I created those sales agent, if I want to train my sales team and work with my sales team, I would pull up my sales agent and I would start to roleplay with my team, right? Using that sales agent. So two things are happening then. One, my sales team’s getting sales training, which is awesome. Two, my sales agent is getting smarter because it’s helping my sales team learn where they’re each individually weak and we grow better and the AI grow stronger. So the whole system becomes better over time. I think a lot of businesses are still stuck in the, I’ve got paper, I’ve got a binder, that’s like an employee handbook.
Maybe some of them have gone further and made videos. Maybe some of them have those things like just kind of loosely sitting around in a Google drive that nobody’s opened in forever, right? I know this is true for us, right? We’ve been through all of those iterations and I think this is much cooler because it’s interactive by nature, but also it’s putting you on the cutting edge of what is actually available to train your team. And so I just think the possibilities that are so cool. So when I think about this, right? I think about like, again, what are we doing when we’re putting AI onto a business?
All right, the first thing we think about is like we’re gonna improve margin, right? So you’re not gonna need as many subscription services. Eventually you can change your website to where the AI runs your website. The AI creates your own website, runs your website, integrates everything for you and that’s done. So you can take all your web costs off. If you’re paying a local SEO person or you’re paying a marketing agency or an ad agency, that’s all gone. AI’s better than all of that, right? So that’s about tens of thousands, potentially, of dollars back in your pocket every single month.
Just trying to think about it like other things that you can start to kind of cut down on. Anything that you’re doing that’s like data aggregation, any services you’re paying for that, even eventually CRM’s like I’m a big believer now that everybody’s just gonna start to create their own CRM’s that do exactly what they need and nothing else. That don’t have all these bells and whistles because some of these CRMs like on the fitness side of things, they’re a thousand dollars a month, right? For us to have pushpress and to have a branded app and to have all this, it’s a thousand dollars each a month, right?
Close to it. And so pretty confident now that most of that I could create by myself and have my own full ownership, my own all of it. And if I wanna make any changes or updates or any improvements or anything like that, I don’t have to go to a help desk. I don’t have to struggle if the software’s capable of it. I just work with my AI and I keep building it. And again, I build an asset when I do that. That becomes more valuable in the sale. But it also shaves off margin immediately. So I save a thousand dollars a month today, right away. So I think that’s the first area where it helps you is it gives you margin back right away.
The second thing that it starts to give you is as we start to stack some of these things on it, we start to get this ability for us to drive extra outputs, right? So if we find bottlenecks in our business, we can start thinking about, okay, my tech stack now used to be the bottleneck or like we used to bounce back and forth between struggling to reach out to clients or struggling to get proposals out the door or struggling from proposal to get assigned contract or after the signed contract’s done to get the work done, we’re struggling in these bottlenecks. But as we start to build out this tech stack, all those things become faster.
So now we can get more jobs done in less time, we can do more business globally. So now we’ve cut down and increased the profit margin because we’ve taken unnecessary expenses out. And we are able to do and drive more top line revenue because we’re able to do more jobs, right? Because there’s less bottlenecks. And then the third one I think about is building the actual asset of the AI, right? If I think about buying a business right now, I look at it one of two ways. I can get a business at a huge discount because they’re still working old school pen and paper, Excel spreadsheets, bare bones like old business, and I know that I can come in, bolt on the AI and drive massive value, you know, 10X the company.
So I might be able to buy a company at a discount and then come in and plug AI in and take it to the moon, okay? Or I can buy a business that maybe sells for a premium but is already completely AI native. And I know that I’m gonna have to pay a little bit more for that, but I also know that I’m already operating at higher margins, at lower expenses, at, you know, a better business. And if the company’s already AI native, I already know where ahead of everybody else in the industry and I can start to, you know, separate a little bit and beat my competitors.
All right, so as we think about this, you know, all of this stuff is great in terms of making a sellable asset but that’s not everybody’s goal immediately. Well, we also think about this guys as more than anything is this reduces burnout, right? It makes the actual business itself more livable, right? In the most beautiful way to think about this is, if your business is ready to sell at any time, that also means that there’s probably very little headaches for you. The business is often running on its own, it’s not stressing you out, there’s not things that need to be done, there’s not things waiting on you.
We’ve built systems and the AI is helping our team implement those systems and then it becomes a choice, right? You’re like, I’m not burned out, I feel great. I love doing this, I could do this the rest of my life. And that’s like a huge asset for you, right? You can sell it at any time because it’s only a sellable but it doesn’t necessarily, like, you’re not selling it at burnout, right? You’re not selling it because you can’t do it anymore because you’re exhausted and you’re so tired because I see a lot of gyms right now, especially trying to sell that are in that boat. The owner is burned out their toast, they have no more energy left.
Because of that, their business has started to suffer. So then when I’m looking at the financials, it was like, oh, they had a really good year in 2022 and then 23 was yours, 24 was worth, 25 was bad and now 26 is like, they’re below 100 members and now they’re just trying to fire sell and get something out of it, anything that they possibly can’t out of it because they’re toast. And the company is effectively dead, right? It’s a zombie company and this person’s just trying to get out. And unfortunately in the gym industry, this happens a lot. I’ve actually bought equipment from businesses that this exact thing happened to and this will continue to happen to businesses because they don’t take these steps, right?
So we wanna think about building these things on an upswing and when we’re building them and we get there, if we wanna make the choice to sell the company, we have that choice in any time and when it does sell, it’s attractive. It’s not like somebody’s not gonna look at that and be like, oh, yeah, look, you want a million dollars, I’m gonna give you 240,000 because that’s my valuation, that’s what it’s worth to me. And then you’re like, oh, well, that’s, I mean, that sucks, that’s not that much money and this is what happens with every gym sale I’ve talked to is, you know, you talk to them, they’re like, oh, well, I’m asking $200,000 and then you do the numbers on the business and it’s like, I’ll give you $18,000 for the equipment.
And that’s a weird moment, I can tell you cause I’ve had that exact conversation with those exact numbers. It’s a very uncomfortable conversation to have with people but it is required because people need to know that like your business isn’t worth anything because you’re doing everything. The profit margin, if I had to pay somebody to do your jobs is gone, right? It would actually lose $2,000 a month. So why would I pay you $200,000 to have a $2,000 monthly expense on my plate? That makes no sense, right? And so it’s a tough realization for a lot of business owners and I wish I knew this earlier and I wish I could have trained more people on this early as what I’m trying to do as a consultant now is teach people these things, right?
As you’re building your companies, keep these things in mind because they are important and you don’t know, you know, when your kids are gonna get sick or when something’s gonna happen and you’re gonna get burned out tomorrow and you’re gonna wanna sell your company right away and oh, hey by the way, the company’s not sellable at all because you haven’t done these things and it’s a really, really bad spot to be in. So I hope to protect you all from that and hope you never have to deal with it. So, yep, even if you never sell it, that’s the idea, right? So that’s it for us today, guys. I hope you enjoyed this episode.
Thanks so much for listening. Talk to you soon.
