TMBA 418: The Services Problem

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Last week, Dan and Ian spoke to Greg Gerber on this podcast.

During that conversation, Greg mentioned that he had recently interacted with many listeners of this show, and that a large portion of them owned services businesses.

He also spoke about how he believed that those entrepreneurs were struggling to take the next step in their business.

This insight into the audience of the show got our hosts thinking. What if they could help those entrepreneurs take that next step?

On this week’s episode, Dan and Ian will be talking at great length about what “The Services Problem” is, as well as sharing three strategies that entrepreneurs with these types of businesses can employ in order to solve it.


Listen to this week’s show and learn:

  • What the “Services Problem” is. (1:56)
  • Why the problem doesn’t disappear when you scale. (11:08)
  • One strategy that services entrepreneurs can use to productize their businesses. (16:51)
  • The natural evolution of a service-based business. (18:29)
  • Why it might make sense not to scale your services business. (24:42)

Mentioned in the episode:

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This week’s episode is brought to you by Ahrefs. Ahrefs offers unbelievable tools to help you grow your search traffic, research your competitors, and monitor your niche. Best of all, they are offering one lucky TropicalMBA listener a chance to win a free annual subscription valued at almost $2000. Enter to win by sharing this episode on your Facebook page and letting us know in the comments below.

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Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST. Cheers, Dan & Ian

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Published on 12.07.17
  • This is spot on! Probably resonated with me more than any other episode this year! (Not that every episode is not a great listen of course guys). It is.

    Such a susynced way of clarifying a problem I myself have been deliberating over for more than a year now. And whilst I’m thankful to report I have already been taking action to avoid this long term trap. It’s not been until now that it’s been summarised to me in such a clear way with so many valid points. Time to take more action. Thanks Dan & Ian!


  • cheers Barney good to hear that. Good luck with the biz!

  • Speculation, inferences, unfounded conclusions.


  • Matthew Newton

    I was thinking about your name yesterday. Lifestyle Business Podcast for me was the perfect choice and am still surprised that you dropped it.

    Regarding the episode, yeh I’ve had all this pain. At TT I’ve changed tack again and again to try and chase the $ and it’s been tough. We’re closing on 3 years now and the business is low-ish 6 figures annualised and will probably be approaching mid 6 figs by end of 2018. Not yet really profitable but gradually becoming more so because we do have a productized element with our website builder and also our MRR has a very healthy gross margin and it’s obvious that at 5x the customer base, the profits will be there and very healthy. Also, churn is really low, SUPER low for a services biz (less than 10% annual).

    The good news is that I’ve more or less got the roles filled and am spending little time on the business. Good for me because it turned into more of an agency than I would have liked and I don’t really enjoy it. The team is doing all marketing, sales, onboarding and service and I kind of just monitor it (it’s legit turned into a 4 hour work week business.) Next steps are to fix our terrible financial processes and start building towards the inevitable exit in 5 years or so.

    So much so that I’m thinking of my next steps and starting a business I actually enjoy, based on what I have enjoyed in my current biz.

  • yeah I really liked the LBP name

  • Product Patey agrees :) It’s taken me 8 years to go from freelancer > services biz > productized SEO / funnels > building authority sites and only now do I feel ready to launch my own course which will hopefully enable people to reach the same point in a lot less time (1000 days or less ha).

  • could be the tagline of the site!

  • :D It’s a common move, you can even breakdown the steps further as there’s different levels of leverage within products. Have an episode in early January coming down the pike about stairstepping / 1,000 day principle. (Follow up to this story:

  • maybe that’s the move?

  • I agree it’s better than TMBA. I think at the time I couldn’t reconcile how blog posts could go at a domain like LBP so that in part motivated the move over here.

    I feel your pain: the one thing you said that we used to say all the time in that original services business was that “we’ve got all of our fixed costs in place and they can scale to double or triple our revenue.” AFAIK that never happened, something to keep an eye on as you scale weather or not that hypothesis is true.

    Another interesting thought experiment: what would TT look like if it was the business you enjoyed? Often there’s good ideas to be had when you chase fun.

  • Totally agree Barney! Spoke to me more than any other episode this year.

  • Yes that is what I want my life to look like and yes that is decent $.

  • Cool I enjoyed that episode with David “back in the day” ha. Look forward future eps.

  • cheers nice to hear that!

  • Matthew Newton

    Thanks man.

    In terms of the biz, it is somewhat product oriented so that if you look at the revenue v expenses, while linked, they are not tightly coupled. Also – the new pricing only applies to the last 30% of customers. If we extrapolate that same pricing to the next 100 clients (no reason why not) the business becomes super healthy (margins on the recurring are amazing!) Growth isn’t crazy but should have first 7 figure year by 2020. Nothing to sneeze at.

    But back to that idea of fun. I hear what you mean. There are some opportunities in tours&activities that are big but just not fun and while theres a lot of opportunity, if you’re forcing yourself to do it from day one… Its a bad idea

    Am going to do some consulting for the moment and see what happens.

  • ryannagy

    Isn’t your podcast very much like a service-based business? You guys have to show up and do it every week. What happens when you want to take a break? How would you sell or step away when so much of what you are doing is based on the two of you as the hosts and personalities behind it?

    This is not a criticism, just an observation. And something that has been on my mind as I have considered jumping back into podcasting and YouTube.

  • in that sense a bit yeah… that’s a real constraint/commitment/downside of starting a show or media brand, it’s not quite a trading dollars for your time scenario but you do need to show up if you set that expectation. most successful media companies are not contingent on one important personality so you could avoid that in your particular case if that’s a concern. I suspect that many people doing shows successfully long term enjoy doing them, that’s basically the case with us.

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