Why Agency Owners Get Stuck Between $1M and $10M (And Never Get Out)

Kayvon Kay0:00There's a place between 1,000,000 and 10,000,000 where most agency owners get stuck. Nikovaria calls it the swamp. He's bought and sold seven agencies, and he says the swamp isn't a talent problem or a marketing problem. It's a missing middle problem. The systems, the data, the management layer, nobody signs up to build. Today, he breaks down why up to 65% of middle managers add negative value to a small business. Why the manager you promoted from inside is quietly costing you money, and why lifetime value, not customer acquisition cost, is the number that actually gets you out. If you're an agency owner stuck in the swamp, this episode is your way out. This is The Vault. Let's unlock it.

Kayvon Kay0:58Nick, welcome to the show. Thanks for having me, Kvon. Listen, for anybody that's listening right now, we are gonna be deep diving into the pitfalls of how businesses struggle and they stay between that 1 to 10,000,000, and agency owners, and if you have agencies, how you can get out of the day to day so you can actually be able to enjoy your life, get your time back, and still have the business in front of you. Nick, I know you're an absolute expert in this talking to you before, you've talked about, I think selling multiple businesses, all profitable, but yeah, tell us a little bit more.

Nick Avaria1:37Yeah, so I mean, like, look, I bought and sold seven agencies by this point. Some of them were roll up M and A kind of plays. And I've started or bought aid like other business as well, like pubs, like things in the wedding industry, like used to hold a portfolio of real estate before I sold it recently. Like in all of this, I think that it really comes down to the story that my uncle told me, which was like, and he's a serial entrepreneur, like he owns more businesses than even his wife knows about because he just has that many. And he'd also told me, Nick, you got to be independent. And what you need to realize is that if you're the boss in a business, you're actually not independent because you're beholden ethically to your employees and you owe them something. So the only way out is actually be the owner, not the boss. And so in all of these businesses, my goal is to work myself out of a job and install somebody that actually runs a business so I can be an owner rather than an entrepreneur.

Kayvon Kay2:39Yeah. I love what you just said there, I think it's so important. There's such a nuance there as you just said, work yourself out of a job. And I loved how you said, behold it to your employees. Like, so important that as a business owner, and I think you agree with this, is it is our job, is our duty to make sure that we keep the lights open. I mean, is what being an owner sometimes sucks, right? Being entrepreneur is hard, because it's not just about you and your own personal family, it's everyone that works underneath you and you have the responsibility there. Yeah. I mean, you're you're putting food on the table for other people. Right? Like, it's like their salaries are what pays for their house, their kids, etcetera. Like, and you can't, you cannot take that lightly. I I couldn't agree more. And I love what you just said is, and if you're the one who's being the boss, you're not being the owner, you're being the boss.

Nick Avaria3:31You might as well go work in corporation if you're doing that. I think there's three different roles that entrepreneurs take on that they blend seamlessly, and like this is the actual mistaken thinking. They look at entrepreneurship as being the CEO and being the owner, and I'm like, look. No. No. No. Like, that's not what this is. There's a difference between being a founder versus a CEO. Like, you graduate from founder to CEO, then once you get to CEO, then you can get out of being CEO because you can then actually define what being the CEO at the company is, and then you can replace yourself. Right? But I wanna be very specific about the difference between the founder and the CEO. The founder is a person that figures out product market fit. You're super scrappy. You get your business to, like, a million bucks a year at minimum. Right? Maybe maybe two. The graduation from founder to CEO is can you attract and keep top talent that will actually build the business better than you can because they're smarter than you. If you look around your leadership or executive team and everybody there is not as smart as you, you're still a founder. If everybody is absolutely smarter than you, you're like, look, I could take a vacation for six months. And would we grow? Maybe, maybe not. Would we be slightly misaligned? Maybe. But it would be fine, and we would still, like, organically grow, just maybe not fast. Then you have the makings of like, okay. Yeah. Like, I'm a CEO now because here's the reality. If you wanna track this top leadership talent, like the strong follow the strong. And if you're not strong as a leader, like strong leaders follow a CEO. They don't follow a founder. Right? Because founders are chaotic. They they lack emotional control. They hunt the shiny penny and they don't know how to say no. And therefore, they just swing their companies around from end to end making huge pivots where you can't actually like make forward traction because you're too busy just like taking three steps forward and then three steps back.

Kayvon Kay5:39I couldn't agree with you more. So then the question is, how do you go from founder to business owner and or onboard and

Nick Avaria5:48Yeah. Think like the first step is really like, look, like, the the problem is is when we sign up for entrepreneurship or we we start this business, right, as a founder. We usually start these businesses because we're like, look, there's a gap in the market. I can do this better than other people. Like, I think this thing sucks. I'm gonna just do it better. And so you're very like mission and vision driven. Like, look, I'm gonna make the world better through my service. I don't care if that's like construction or an agency or whatever. You saw a way to make it better. And that works really well because like from a leadership perspective, you're very charismatic. You're very passionate about the thing. You don't need to be charismatic in general. You're just charismatic about like this topic that is your business. And so people are gonna ultimately follow you. Like, this is not the hard part. K? The problem is is that you're probably really good at delivering that thing, that product, that service. The thing that you didn't sign up for as being an entrepreneur founder is figuring out, like, what I kinda called the missing middle. K? So the missing middle is really like that gap between strategy and planning at the top where you're like, this is the mission, vision, values, like your strategy, like, how are you gonna go to market, like, all that stuff. Right? And then day to day delivery. And you're amazing at both by the way, because like day to day delivery means like the product and service is like awesome and like you're passionate about it. And so that works and you train people up to do this stuff and it it works really well. The problem is is that because of your success, that success is gonna lead to failure, and this is the failure that's gonna happen. You're gonna grow because you're really good at the delivery and the planning and the strategy, but you're directly connected to the front line. At some point, you're gonna need middle management. And this happens when you're, like, anywhere between, like, five employees to 10 employees, you're gonna get your first middle manager. And chances are, you're probably going to hire somebody in that position that currently works for you. And this is where the problems actually begin. And to understand what the missing middle actually is, it's actually like behavior change systems that you can deploy for a middle management layer. And the problem is is that as you disconnect from the frontline, you're getting a whole bunch of, like, qualitative data because, like, you know how the thing should work. Now you don't have direct line of sight. So now you need, like, dashboards and data systems to take that frontline stuff and funnel it back up to the top so you can actually understand what's going on. And then you need the behavior change systems and, like, systems in general to give to those middle managers so that they can actually implement the behavior change to the front line without you being present. See, because, like, all entrepreneurs are are the same way and founders are the same way. It's like, if I talk to the front line, I can fix it. And it's like, yes, you can, but that's not the point. Right? If you walk around being the superhero wearing the cape on your back every single day, you are gonna need to bail absolutely everything out. And this is why founders end up working like sixty, eighty hour weeks. Right? Because it's like, you're the hero. It's like, oh, they did this poorly. Let me fix this. Oh, they did this this other way. Let me fix it. And like, you basically let me fix it your way into working insane hours. And then guess what happens? When you're fixing things, you're not moving your business forward anymore, and now you're dead in the water. And this is why people get stuck.

Kayvon Kay9:14And that's why you're kinda stuck in that. I was I was reading a book, I forget what it was, but it was like they called it like between like that, what you're kind of saying like that 2 to like 6,000,000, like you just can't get out of it. And it's the worst parts You of be in don't have enough finances and room to get the big shots in. You're still stuck in the day to day, and you just can't see a way out and it's like, it's painful. And you're shaking your head for those that are just listening. So I want and you're saying and you're shaking ahead with a smile. So I want you to, you know, break that down a little bit. Because you you did say something earlier too before the show I want to bring up, but I want to just finish with that thought. So why why you know, something came up for you there. You smiled and you're Yeah. I was like like it's like it's funny that you mentioned two to six because like the transition between one and ten,

Nick Avaria10:13that's like the swamp. It's like it's the worst of worst. Yeah. Absolute like, it's just like, yes, people get like, look. And I'm not gonna tell you otherwise. Like, people do get stuck at, six, seven, eight, even nine. Like, after 10, by the way, it all becomes a sales and marketing problem. And like and there's reasons for this. Right? So like, when you hear other people give advice and like peep like really big businesses. Right? Like 50,000,000, 100,000,000 plus. The reason that these guys come out and they're like, it's all about people and then your sales and marketing is because once you hit 10,000,000, that's the only problem to solve. There's only two problems. Top lead top line leadership, like your your most senior executive c suite people and sales and marketing. That's your only limiting factor because here's the thing that nobody tells you. The things that you do between one and ten will stick with you forevermore. Like, it that's that's the reality of it. And two to six is like this formative time in a business where this is actually this missing middle idea of like improper data systems, improper behavior systems, improper systems in general, and how we manage through other people to actually get the results that we want. This is the actual problem that we need to fix. And by the way, we never signed up to fix this. Right? Because like we just wanna make a cool product. Right? Middle management, like the numbers out there are like crazy. Up to 65% of middle managers have negative value to the business. Negative. I'm not talking about breakeven value. I'm talking about negative value to the business. For small businesses specifically. That again. In small businesses up to, like, this was a study, up to 65% of middle managers have a negative value to the business. Meaning, like, they're they're not even neutral.

Kayvon Kay12:00What is I hear that. I when you say small business SMBs or what are we talking I'm talking under 10,000,000.

Nick Avaria12:06So think about it. It's like if you have 10 managers in your business, and you don't have these like missing middle systems up to 65% of them are actually dragging you behind. And I want you to think about this through this lens. How many times and like for any of you listening, it's like you've you hired a manager. Okay? And you realized that you like, the manager was supposed to free you up, and it was supposed to give you back your time only for you to actually, like, check over all their work. You're still doing a bunch of their work, And because you're not doing it yourself, you're doing it through them. It's actually taking you more time. So before you were working sixty hours and now you're working seventy hours or eighty hours, even though you have this person in place. And by the way, this happens all the time. And so and then it's like, well, tell me about the ROI of this individual when you're working the same amount, if not more, you're fixing all their work and you maybe even have people complaining that they don't like their new manager.

Kayvon Kay13:13Yeah. Yeah.

Nick Avaria13:16Yeah. By the way, this is this is why it happens. Right? The swamp. It's this 100%. And it's the swamp is because moving even from like zero to a million like, look, I'm not gonna say otherwise. It's hard. It is hard. They say the first million is your hardest. It is. But once you have the first million, it's like you you technically have product market fit. Right? Because like, the market wants what you have. You figured that element out. One to two is actually like pretty simple at that point comparatively, and then you get to this like swamp part. And the reason it's the swamp is because there are so many things that need to be built out between two and six that it's crazy. And, like, the thing about this swamp area of, like, two to six is that some people get stuck at two. Some people get stuck at four. Like, everybody gets stuck in a different place, and it's generally because it's like a combination lock. You need the right combination to get out of this thing. And where people get stuck is because they hit the maybe the first three numbers out of the four number combination, and so they get stuck at a little bit higher. And some people, you know, maybe only get one number right, and they get stuck at like two and a half. And but what I can tell you is that the biggest mistake people make is that when they promote from within, they promote technical experts, you know, into manager roles. Like, this is the number one problem, like, that I've seen in every agency, every business period. Like, I don't care what business it is. And it's because, like, this, you know, individual like, I call frontline people individual contributors. Right? Because they're they work individually. Yeah. They're part of a team, whatever, but they're individual contributors. They take an awesome individual contributor, like 10 out of 10. This person's amazing. You can count on them for everything. And then it's like, hey, this person inevitably says like, look, I know I'm performing well. I need more money. I need a promotion. And in our infinite wisdom is like young founders, we say, great. We'll just make you a manager. And the problem is that a lot of these technical experts should be promoted into a technical expert role. So quite literally, like somebody like, hey, like, I'm the best at meta ads. It's like, great. You're the meta ads lead. You don't need to be the digital director or the digital manager for the team. Right? And so what you end up with is a whole bunch of these technical experts that actually, they end up as managers and what does a technical expert do when something goes wrong? They fix it. And that's you're like, Nick, but isn't it their job to fix it? It's like, no, no, no, no. It's not. It's their job to fix it through others. The key part is the through others The through. The through. And so this is what fortune five hundreds have gotten right every single time, by the way, when you wanna get promoted. What is the last task a fortune five hundred will give you before you get promoted? They're like, great. You're you're hitting all your numbers. You're fantastic. You need to replicate yourself. You need to recreate yourself in somebody else. You need to train your replacement. That is the last task because they know that your job in that promote promoted state of management, whatever layer that is, you gotta be able to replicate your your top performing self multiple times underneath you in that new position. So if you can't do it once, you sure as hell can't do it five other times or 10 other times or whatever is required of you. And so this is why it's the last test. So like the number one fix you can do right now to figure out whether or not somebody should be promoted is like, can you replace can you train your replacement to be autonomous? Because remember, they need to be trained on an ongoing basis, but they must be autonomous. If they're not autonomous, the problem that's gonna happen is that you're gonna end up doing their work for them once you get promoted. And here's the problem. Like, okay. You need to do 10% of this person's job. Does that sound like a problem? It's like, that's sort of low number. It's like, well, what if you have five to seven people? And you're doing 10% of everyone's job. So you're doing 70% of your time on other people's jobs. Your management position is 100%. So you have a 170% work to do. How do you get out of that? Right? So it's like, okay. Well, this is what happens, And this is why the the negative value of managers thing. Right? The manager now has like a 150 to a 170% of work. They're not going to work a sixty or eighty hour day because they're not the owner. So where does the surplus of management work go to? Nowhere. It goes to the owner. That's why they only work sixteen to eighty hours. Yeah. Right? Hundred hours. I've seen people work a hundred hour weeks because they have to because I hired this manager and they're not doing their job and like I'm doing half their job still and they were supposed to give me back time and they don't. Right? And I think that people misunderstand what, like, management actually is. Like, do you need to train people technically? Sure. Like, that's maybe 30% of your job. But the other 70% of your job is, like, completely different. Right? Good managers are about setting expectations and accountability, like what show teaching people what actually drives company results. How to manage time well? Like, it seems like a BS thing, but, like, do people actually know how to manage their time? Because that's the only resource that they really have control over as individual contributors. How do they work well with others? How do they hit objectives? Like, how do they prioritize alignment to culture? Like, this is 70% of a manager's job. Right? It's literally cleaning up the mental models of the frontline and or whoever they manage to be in alignment with what success and performance actually looks like. And so when we talk about performance management, right? Like a lot of companies are like, oh, it's all about performance management. It's performance management and technical proficiency are two totally different things. And the problem is is that most people do the technical training. It's like, yep, I I got my PPC guy up to snuff and, you know, meta ads or SEO or whatever. Like, they're sound. It's like my job's done. It's like, oh, you mean like one quarter of your job is done. Because the other three quarter is can you teach them performance?

Kayvon Kay19:34And manage them. And then actual, managing. Like, manage them and get the most out of them. The reason I say that is I run a sales agency, and I took a chance. I had I had someone I knew that was just a winner. They had the winner's mindset, and they they worked hard. They had no sales experience, never trained a salesman, like never been in sales management, but I watched them for eight years always crush their jobs. And I and I finally reached out and I said, listen, I I can do the sales training. That's not that's the easy part. I was like, it's the day to day management of people that I don't do, that I can't do, that I can't be doing. I need you to do what you're doing over there. It's the same thing. You come over here and just do what you do. Don't worry about not being sales or that. My number one manager by far, my biggest, would you get profitability center in the company by far. I hired from outside, had no sales management experience,

Nick Avaria20:36and the best sales manager I have of all the managers I have. But think about what you just said, right? And and I think this matters a lot. It's like you basically hired and this is why a lot of people say it's like you hire for attitude and like the technical comes later. Well, think about it. It's like what I just said is that a quarter of it's technical, three quarter of it is teaching people how to win. Right? Because, like, I mean, you can translate performance management, like like teaching people how to perform, how to win. Same thing. Technical is only like a quarter of it. Though those things can be taught, but, like, teaching people how to win is its own skill. And like this is, you know and like I think management language on around training that are like change management and this and like all these and they matter by the way. Like these topics do matter, but they dance around the core of what being a manager is. What the the core of being a manager is showing people how to succeed. Not only themselves within the business, but how that success that they themselves can generate for themselves in the business is gonna help the business and the customer all at the same time. Right? And like, I call this like triple net wins. Right? So a triple net win is a win for yourself as the employee, which the manager's training on how to do, a win for the company and a win for the client and or customer. And for a win to be real, it needs to be all three at once. So all three wins need to happen simultaneously, otherwise it doesn't count, Right? Yeah. And what the problem is is that a lot of people don't structure this correctly. And, like, if you're thinking like, oh, like, this is really intangible and, like, rah rah, it's not. It's quite literally how we structure people's jobs. K? So, like, this is very tactical at its core. We need clear objective metrics and KPIs, and this is what I mean by that. You need a role in a business. You need objectives. You need measurements, and you need to then coach people against those measurements. So the role is the job description. Right? It's like all the bullet points that they're gonna do, all the things that they're gonna do. Right? More specifically inside of the job description, there's gonna be some key objectives. And then this is gonna be three to five objectives that is based off of their role. And these are gonna be the objectives are not, hey, this is what your role is and or, like, this is how like, the these are the key items for you to win. These are the key objectives that will generate business and client level wins. K? So like the number one mistake that people make in small businesses is that they tune those key objectives to like things that people have full control over, and those things are very small. Like, it's like, oh, do your work on time and, you know, oh, like, you know, just make sure that, this thing is designed well or whatever else it is. And it's like, okay, but they can do those things and be a detriment to the business. They can do those things and not be profitable. They can do those things without actually doing good work that has a positive effect on the client and the business. So you need objectives that are aligned with business level success that it also dive into, like, client success. Then you need measurements for those objectives. Right? Metrics and KPIs. Metrics are rearview mirror stuff. KPIs are front windshield. Right? So a metric measures money and what happened before. A KPI is a key performance indicator. It's an indicator of performance, but it's not performance in of itself. And then you use those measurements to coach the person and behavior change them to be able to hit those numbers. Right? And so, like, that's why this actually works, like, in a tactical setting. This is what you need to set them up to win because here's the problem. Everybody in their brain has a different definition of what winning actually is. And if you don't align what winning is, it will be misaligned and it will not work. Meaning, you're gonna get stuck in the swamp.

Kayvon Kay24:51Yep. Wow. Okay. So let's let's deep dive in here a little bit because what I I I kind of heard contradiction thoughts here, but I think I'm getting it is, managers, the swamp is the worst place to be as an entrepreneur because you're stuck in the middle of it. What I'm hearing was most of people were stuck in there because they have a management problem because managements are not creating, let alone not even just being neutral or creating profit, they're actually costing money. Yep. But then in the same man you're saying, when you do have the right management with the right KPIs and okay, you never say OKRs, but KPIs, OKRs, all of the all of what of which the understanding where it's going, the definition of winning, all those things, then that's what gets you out of the swamp.

Nick Avaria25:50That's exactly it. So the same The swamp thing is the middle management problem by the way. Like this is why I called it the missing middle. It's not just middle management, it's like, what are the systems? What are the data systems? What are, like, all these other things? That is the swamp. It's like people get stuck because of this missing middle part of their business. They have all the strategy. They have all the frontline delivery, but that middle piece is missing, and that is the swamp. And until you build enough of that middle piece of your business, you will never get out of the swamp. You will just remain stuck there forever. So what I'm hearing from you is your genius,

Kayvon Kay26:25edifying here, is because you did mention before we got on the call, which I thought was great, was you said, you know, business is easy. Like, seeing this is easy, and as you were talking, I was thinking, oh, this guy just looks at checkers, or or chess, I should say. Like, you're looking at business as like a chess game, and you know how to move all the pieces properly. So and then you mentioned and then you kind of mentioned to me, so easy. Anybody can do it. And I was like, no, not necessarily. Not everybody can do this. So what I'm seeing is your genius that you've instilled, think, it sounds like from your uncle and from your past and from all your multiple mergers and exits and in all different industries is that you can walk into a business, look at it like, I'm just going to use example, look at it as like it's a chess game, and then know exactly when to use the move the piece or what pieces need to move to get past that 10,000,000. Because I love what you said. You you said a 10,000,000 plus, it becomes easier. I've heard that multiple times that and I've been in businesses where it's it's beyond 10 and it's so much easier. Like, the the cash flows there, the systems are there, the people are there, you can acquire better people and things just the the the duplication and or the x, like the two x of things happening quicker, faster, results coming in just happens. How do you work with people or when you walk into normal, let's just say agencies and or businesses and you see that they're in the swap, what are some of your KPIs that you're looking for or you're seeing that you know, boom, like change those, changes everything.

Nick Avaria28:10Yeah. I mean, like, let's go super high level. Okay? So when I walk into a business, the first thing I want to understand is what the lifetime value of a customer is. Like, first and foremost. K? And people are like, why? It's like, well, your lifetime value dictates what you can pay for a new customer. Right? It also shows me whether or not the product or service is good enough. Right? So and by the way, this is relative to your type of business. And like, you know, I work with agencies, for example, like, that's kind of exclusively what I do at this point. I've worked with like lawyers and accounts before, but their businesses are different. But ultimately, every type of agency or every type of business has a different best practice lifetime value number. And you need to figure out what that is for your industry like real quick. Okay? And like this is stuff that's carried me even through like the pub time or like, you know, when I own these other types of businesses, the first thing I would do, figure out what lifetime value is. And then figure out, okay, can I measure it? And if I can't, that's a problem in itself that need to go fix. And if I can measure it, great. What is it? And how does it compare to industry best practices for my industry? So, like, if I own, like, a content agency, it might be different from, a design agency, it might be different from a strategy agency, it might be different from a sales agency. All I know is that, like, I do need to beat that average. Because if I beat that average, I can pay more for customer acquisition cost, and if I can pay more for customer acquisition cost, I can beat everybody else, like, at a very high level from the sales and marketing end. Like, that's that side only. The other reason I look at lifetime value is like one of the very first things is because I want to understand if there's a product or service problem. Okay? And those are two different things. I wanna be very clear about this. I assume that if you're over $1,000,000, that you have product market fit and that your product is reasonable. And what I mean by reasonable is that when you're in a sales conversation, you're you're making certain claims or promises that you can do certain things. You can actually do those things. K, reasonably. And, obviously, in service based businesses, it's not like a 100%, but it's like, hey. Can can you do the thing 80 to 90% of the time or more because you understand your clients, and you understand what elements they need to bring to the table for you to be able to render your product or service successfully. By the way, any agency out there that is not full service, like, this is what you need to understand. It's like you need to understand what are the brand elements that they need to bring. Like, if you're a lead gen agency, what's their closing process? Because if they're answering all their leads like three days later, like, it's not gonna help you. You're not gonna help them. Right? Yeah. So you need to go beyond your product or service to understand like what are the success drivers of the client. Because remember, like when you're in kind of like any kind of b two b sale, your goal is to be strategic partner. It's not to be a vendor. And a strategic partner understands the business implications of their service beyond their service. Right? So LTV helps me understand all of this because I'm like, okay. Is this that the product sucks and it just doesn't do what we says it does? And if that isn't true, like meaning, like, we actually do deliver on the thing, then we have a service problem, which is like, okay. Well, the the product in of itself is good, but the packaging sucks. Okay? And, like, what I mean by this is, like, the metaphor I always use is Apple because everybody knows Apple. And I'm like, okay. Does Apple's brand stop when you buy the phone? It's like, no. It doesn't. When you take the phone home in the box, you you cut the little thing. It has a little peel, like, little peel back, like, tie cardboard thingy. And, like, you open the phone and, like, you grab it, and it, like, slowly comes out because it's so perfectly designed that only a certain amount of air gets through it. So, like, the box opens super slow. And then the packaging, how it's laid out in there is crazy, and it has, like it's very simplistic, but you can tell that they spent, like, unbelievable amounts of time designing the box. And then you turn the thing on and it's like, hey. Do you wanna transfer all your data from the other phone? Like, it's they've gone through this trouble to extend the brand experience beyond the sales and marketing aspect. Okay? And what most companies do a incredibly poor job of is onboarding their clients well. Right? Especially in the b two b space. And I've kind of broken down this experiential layer because remember, I assume your if your product's good to go, then it's this there's there's other problems, right, to increase lifetime value. And this is comes down to things like experience. So what is the experience that you're providing? Like, this is the emotional side of the equation. Number two, expectation setting. What work do we do? What do you owe us as the client? So we owe you certain things, but you also owe us certain things. And if you're sitting here thinking like, well, the client doesn't owe us anything, they're the ones paying us. It's like, you are wrong. This is a strategic partnership. And that's why your lifetime value is bad because you're not thinking of it as strategic partnership. And then lastly, is like the layer of like, do we actually generate results? Which is the logic part of the brain. Is there cost benefit to the thing that I'm buying in a business to business setting? Right? And all three things need to be true. Right? Are we giving great emotional experience? Are we setting expect two way expectations? Are we actually delivering the thing? Right? And if you hit all three of those, your lifetime value is gonna go up. Right? Absolutely. I want that lifetime value to be as high as possible because here's the thing. And I've had this conversation more times than I can count with an agency. Hey, Nick. So my customer acquisition cost 5 k. I've talked to a bunch of people. They say that my customer acquisition cost without paying salespeople, just like on media, should be like $2,500. And I'm like, okay. So? They're like, well, it's a problem. I'm like, problem relative to what? And they're like, well, you know, they're they're they're they're paying back their customer acquisition cost in like a month and a half, right, based on their sale. And I'm like, right. So why do okay. If you retain a client for four years, do you care if you pay the first six months of the entire top line of that revenue to customer acquisition cost? No. I don't care. I have clients that are agencies right now that have $40,000 plus customer acquisition costs. And people are like, that's insane. I'm like, yeah. Except that their retainers 8 k a month on the low end, and they retain clients for thirty six to like fifty months. Yeah. It's Like, who cares? It's like, oh, so you're not making profit off that client for the first like four or five. Like, who cares? It's like you're gonna retain that client for like three more years after that. It doesn't matter. Which is only Like, if that company is competing against you and you're like sitting you're out here like, I can only afford like a $4,000 customer acquisition cost. These guys are gonna bury you. Yeah. Because it's like, oh, yeah, like we just spent like, you know, 5 4 or $5,000 getting a lead, let alone a close. Like, they don't care. They can do anything they want. They can pay for $203,105

Kayvon Kay35:23$100 clicks on Google for all they care. Doesn't matter. They're they're like you said, they will like that's a big one is they will bury you. Like I got my competitors. They spend $2,000,000 a month. I like good luck competing against that. If you don't have $2,000,000 a month to spend on ads to go after the same exact client on Facebook, by the way. Right? Yeah. Good

Nick Avaria35:43luck. You gotta Well, here's the thing. Like, look, I've like, I'm not gonna name names, but I've seen under the hood of, like, Google Ads accounts for, like, big holding companies in the marketing space. And, like, they're out here paying, like, a $100 a click. A click. K? They don't they don't give a shit. And they're spending a million plus dollars per month on clicks. Like, no sales costs added yet. No sales process added. Like, nothing. It's just like clicks. So how does the swamp company compete against that? Well, that's the thing. It's like the the the advantage that you have is that because you're not this, like, thousand percent entity or, like, this, like, multiple hundreds of employees entity, you can deliver better service to these clients. Like, you just can't. And so the problem is, and this is why I go to lifetime value first. Your lifetime should be superior to the benchmark. Because if you're telling me that a faceless corporation of like a thousand people who generally pay their people not as well for certain roles, can retain a client for longer than you. It's like, how? Like, why? Like, you should be able to white glove service Yeah. So much better than them that you can retain clients for longer than them. Therefore, you can afford higher customer acquisition costs that they have. This is their version of optimized, by the way. Like, and you're like, oh, that's crazy. Like, that's a crazy cost. It's like, that's their version of optimized. They have to like pick like three quarters of the tree worth of the the fruit to be able to even, like, remain in business. You only need, like, the most bottom part of the tree and pick the fruit to feed your business. They have a monster to feed and you don't, and that gives you flexibility that they they can only dream of. The key is the flexibility.

Kayvon Kay37:42When you move and you can pivot, you're lighter, you're I mean, and with AI, all of that. Now, as we come to an end here, I think this is gold. I think we deserve another episode. So we'll put in the show notes and see what the responses are like. For those though for those that are are into this right now and listening and in the swamp, I mean, I think specifically an agency owner in the swamp, where can they find you?

Nick Avaria38:10You can find me on LinkedIn, Nick Averia, n I c k, last name a v a r I a. Just add me on there, send send me a DM, tell me if you found me on the show. Always happy to chat and hop on a call. My website agencyacquisitions.io. And yeah, like, I mean, out if you have any of these kind of swamp problems. This is exactly what we fix.

Kayvon Kay38:38Nick, thanks so much for stopping by. Appreciate you. And Thank you so much, Keevan. If you're an agency owner, you know, and you're in the swamp, you know what to do.