The Founders Club Letter

100 NE 5 Ave. Suite B-2

Delray Beach, FL 33483
(954) 429-3114

From: Todd Brown

Founders Club Headquarters

May 2010

Dear Fellow Founder,

Over the many years of being in business for myself, Ive sought-out and received lots of
business, marketing, and financial advice and feedback from a small cadre of successful entrepreneurs
and investors.

Much of the advice - if Im being completely honest - Id credit with nominal results. A tiny bit
of the advice I can actually say, today, was worthless. But, a few pieces of advice over the years have
been the direct catalyst behind several very significant business and financial growth-spurts in my
entrepreneurial career.

Business Advice
That Can Change Your Life!

In this months issue of your Founders Club Letter Im going to pass on a couple of the most
impactful pieces of advice to you. My hope is that youll grasp their profound power, take action on them
like I did, and experience one (or more) very similar and large business and financial breakthroughs of
your own.

(Later in this issue I share one single book recommendation that has been worth hundreds and
hundreds of thousands of dollars to me. It should absolutely be on your must read list, if you havent
read it already. Be sure to make a note.)

Lets get started with a focus-altering piece of business advice I was given about 3 years ago by
none other than our very own Guru to the Gurus, Rich Schefren.

He and I were meeting/working over some coffee at a local Barnes and Noble. This was prior to
having my personal companies fully systemized, and was therefore, prior to my partnership at Strategic
Profits. Rich was there to get some work done. I was there to lend a helping hand and pick his brain if
time permitted.
 About 30 minutes or so into our coffee time, I took out my little Moleskin notebook, flipped to
the page with some pre-written questions, and proceeded to go down my list firing one at a time at
Rich.

The exact questions asked are insignificant. What is significant, though, is something Rich
shared with me in the middle of our discussion about product launches and joint ventures. Ill never
forget it. He said it with such passion, belief, and vigor. Heres what he said

Todd, until you can buy media, you dont have a business.

WHAM!... it hit me right between the eyes (as it should you).

Now, for quick clarification: what Rich meant was that unless you are able, and can afford, to
spend money to acquire new customers via some paid channel (i.e. PPC, banners, direct mail, small space
advertising, etc.) you dont really have a true business. All you really have, if youre reliant solely on
joint ventures and product launches, is a good marketing promotion.

In other words, if you cant spend money on media-buys to acquire new customers all you have
right now is a great promotion that requires and relies on joint venture partners and regular product
launches. A reliable, consistent, predictable business, on the other hand, only comes when youre able
pay for media to acquire your new customers.

I sat there for a minute to let Richs statement sink in. Then I sat there for another minute. And,
another. Finally, I said, Okay, I get it. But what does it take to be able to buy media so a marketer is not
reliant on partners, launches, or anything else for that matter?

Where Does True Business Leverage

Come From?

His response is one hes shared many times before and one Ive since shared every opportunity
afforded me.

In order to be able to buy media you need to have a killer front-end offer that allows you to
affordably acquire new customers for your business. Once you have an effective front-end offer, you can
buy more and more media and really ratchet-up the growth of your company. And thats where real
marketing leverage comes from!

Nothing incredibly sexy or earth shattering on the surface. But, when you dig deep and compare
that piece of wisdom to what most online marketers do and/or are teaching, you should immediately see
where many go wrong.

Listen: your first and primary responsibility as an online entrepreneur is to make sure your
company creates and maintains at least one marketing offer at all times that allows you to affordably
buy new customers. And, its the leverage that the ability to buy new customers gives you that allows
you to scale-up the growth of your business without being reliant on partners or launches.

In other words and as plainly as I can say it (in this context)

Its NOT just about having an offer that works to your house-list or to joint venture lists. Its
about having an offer you can present to cold traffic (prospects who dont know you) that converts those
prospects to customers at break-even or better for you.
 This is why monster companies like Agora a 300 million-dollar a year info-publishing
behemoth - dont do many launches. Because they dont have to. They know what a customer is worth to
them, they have at least one or more front-end offers that convert, and they know where to buy profitable
traffic to acquire those new customers. And thats the foundation of a solid business!

Once I absorbed everything Rich was sharing with me, I immediately realized what the focus of
my companies needed to be going forward. We needed to stay intimately in-tune with our marketplace so
we could continually create front-end offers that convert via media-buys. The same holds true for you.

You need to be an on-going student of your marketplace (i.e. your prospects problems, wants,
desires, feelings, and emotions, as well as competitors offers, their USP, their positioning, etc.) so you
have an idea of what types of ideas and offers your prospects will respond to.

Then, you need to continually test and find new front-end offers that allow you to continue to buy
new customers.

Keep in mind: every offer has a lifecycle. Meaning, no offer will work forever. Some offers will
convert at a reasonable cost for weeks. Others years. Most for a few months. And, because every offer
has a lifecycle, you need to continually test and find new ones so youre never left without an effective
front-end offer out there acquiring new customers for you.

A little exercise that can help is - at least once a month, ask yourself and your team, Whats the
best way for us to acquire a new customer?(A question Rich suggested during our meeting.)

Be prepared to test many offers before you find/create one that converts for you at a reasonable
cost. Its not uncommon or rare to go through seven or eight tests before you find one offer you can run
with.

Advice From
A Real Business Sage

When I asked Michael Masterson the mastermind behind Agora how often they create new
front-end offers, his response was quite revealing.

Were always creating new offers, he said. We never stop.

And neither should you.

And theres something else you should never stop which, conveniently, leads me to the next
big piece of advice I got years ago also from Rich Schefren.

We were discussing the advice most gurus teach to aspiring online entrepreneurs about how
the money is in the backend of the business and about how marketers should spend a majority of their
time creating backend offers.

And, in so many words, Rich said, Thats not entirely accurate.

Sure, the PROFIT comes from the backend of the business. But BUT the growth and long-
term stability of a business comes from having a solid and reliable front-end. If you take your eyes off of
the front-end its only a matter of time before your business begins to shrink.
 Once again, for clarification: what Rich meant was that even though backend sales produce most
of the profit in a business (if not all), the profit will eventually often quickly dry-up if you dont
maintain a front-end that continually brings new customers into your business.

So, its a balancing act balancing your continued focus on your front-end customer-acquisition,
while extracting maximum profit from regular backend offers. The key, though, lies in the continued
maintenance of a front-end that works, while extracting maximum profit from the backend.

Point is: theres almost never a time when you should take your eye permanently off of the front-
end in favor of the backend.

This is why many of the biggest direct marketing companies permanently divide their staff
between front-end and backend marketing. They have some team members focused on crafting backend
offers to existing customers, while other team members are focused on creating front-end offers to acquire
new customers.

Can you guess which area they assign their best, most skilled copywriters and marketers the
front-end or the backend?

If you guessed the front-end, youre correct.

Why is that, you may be wondering? Why do they put their best copywriters and marketers to
work crafting front-end offers when all of the profit is on the backend?

Because the most important and difficult sale to make is to a new customer. And, so, they put
their most skilled marketers to work creating those front-end offers.

Overall, today, I like to think of it this way:

You will almost never go out of business by focusing solely on the front-end of your business.
Sure, youll never come close to maximizing profit that way. But, youll never go out of business
focusing on the front-end.

On the flip-side, if you focus solely on the backend of your business you WILL eventually go out
of business. Because every business experiences customer attrition of some level. And, its only a matter
of time before your backend offers are no longer producing enough profit because the size of your
customer list has decreased from lack of replenishment on the front-end.

Of course, Im not advocating you focus solely on either the front-end or the backend. Im simply
trying to illustrate how a lack of focus on the front-end will slow the growth of your business and make it
a lot less stable long-term.

Instead, what you need to do is exactly what Ive already said: maintain a continued focus on
your front-end customer-acquisition, while extracting maximum profit from regular backend offers. And
never take your eye off of your front-end for any significant length of time.

As a side-note: when youre first starting out, you should focus almost entirely on new customer
acquisition. And, only once youve reached a critical mass of active customers should you begin to
introduce backend offers. According to Michael Masterson, for some companies this can be in the range
of 5,000 active customers. For you it may be quite less.
 Point is, its not worth investing your time on backend offers until youve got the front-end nailed
and you have enough existing customers to make it worthwhile.

Get it?

Good.

Then lets move on the next piece of transformational advice I received years ago.

The BIG Money-Making Habit

Of A 60-Year Old Health Club Owner
& Self-Made Multi-Millionaire

As most of our Founders Club Members already know, I spent most of my pre-entrepreneurial
time working for an extremely successful gentleman who owned 10 upscale health clubs in Central New
Jersey.

I started in my early twenties as an $8/hr. employee. Over the course of about 12 years I worked
my way up to Vice President with over 80 employees, a department responsible for generating in excess
of 3 million dollars of revenue a year, and a hefty six-figure personal income.

Throughout my later years with that company I was fortunate to get to spend a significant amount
of time brainstorming, meeting, and talking shop with the owner. He imparted many words of wisdom
over the years. I not only learned a lot from the many bits of advice I got from him; I also learned a
tremendous amount by watching what, when, and how he did things.

For example:

Even though he was already 60 years old and worth multiple millions by the time I came to work
for him, he continued to arrive in the office by 7AM far earlier than everybody else and stayed until
about 7PM far later than most of the corporate team. (A display of his work ethic.)

He arose everyday by about 5AM, and - regardless of rain, snow, sleet, or hail - 6 days a week
went for a multi-mile run on one of the Jersey Shore boardwalks. (A display of his self-discipline.)

As the company leader, he personally set an extremely high bar with performance. And, it was
his personal commitment to performance that allowed him to easily have the tough conversations with
team members when necessary. He said what needed to be said, when it needed to be said. (A display of
his willingness to do what was necessary to succeed.)

Frankly, I could go on and on with examples of lessons I learned from watching this gentleman in
action. He was a ferocious negotiator, strict time-manger, aggressive sales advocate, and motivated
entrepreneur. Not too mention great father, fantastic husband, and humble, down-to-earth dude.

Every Founder
Should Be Doing This Daily!

But, it was his daily discipline of measuring company performance that left the most lasting
impact on me.

Not a day went by 7 days a week without the numbers being looked at.
 Every day, from every one of the health clubs the company owned, the managers were required to
enter certain prospecting, marketing, and sales numbers into a web-based database application. And,
every day, the owner would review the month-to-date sales numbers and compare them to the month-to-
date goals. Based on where each of the numbers were, hed either ask for an explanation or pass on a
praise.

The reason (and lesson) he drilled into us with this approach to the numbers: if you only check
your numbers once a week, you only have 4 times a month to make adjustments. If you check the
numbers everyday, you have 30 opportunities to make adjustments to make sure you hit your monthly
goal.

And, so, for years I tracked daily revenue and compared it to a daily and month-to-date revenue
goal. I continue to do the same thing in my companies to this very day. And I advise you do the same.

First, assuming you have an annual revenue goal for your business, you should break that goal
down into 12 individual monthly revenue goals. Then, at the start of each month, you break down the
total monthly revenue goal into daily revenue goals with a running month-to-date goal. This way, every
day you know how much revenue your business needs to generate. And, you know how much revenue
your business should generate by different dates throughout the month.

Then, every morning have your bookkeeper send you a spreadsheet (or do it yourself) that shows
the actual revenue for the prior day, the daily revenue goal, the month-to-date actual revenue, the month-
to-date revenue goal, and whether youre plus or minus where you should be for the month (and by how
much).

Armed with this information each morning, you always know where your business stands, and
how much needs to be done for you to get back on track or stay on pace to achieve your goal.

This is a discipline I believe every Founder should develop. I check more than just the sales and
revenue numbers daily, as did my prior boss. But, at a bare minimum, you should at least review your
sales and revenue numbers every day. Every day, being the key.

Next piece of advice

How Winning A Simple Contest

Led To A Monstrous Growth In Profits

Its about mid-2006 or so, and I was still working my full-time job, getting ready to make the
transition to full-time entrepreneur. I had spent most of the prior years online learning and mastering
various marketing tactics. I was now ready to finally learn the skills of a true entrepreneur. I heard about
Rich Schefren and his Business Growth System and it seemed perfect for what I needed.

So, I went ahead and submitted an entry into a BGS Pre-Launch Case Study contest. And
wouldnt you know it I won! My prize: a 60-minute, private one-on-one phone consultation with Rich.

Once on the phone, the ideas, tips, and instruction immediately came flying. Rich literally
handed me more impactful advice and guidance in the first 15 minutes of that consultation than almost
anyone had before.
 But, it wasnt until about the end of our time together that Rich handed me, what later turned out
to be, a piece of advice that, alone, became worth hundreds and hundreds of thousands of dollars for me.

The One Business Book

That Changed It All!

Oddly enough, it was a book recommendation and quick discussion about its contents.

For what youre doing Todd, I highly recommend you grab a copy of the book Blue Ocean
Strategy, Rich said.

Its all about escaping the bloody Red Ocean of competition and creating your own competition-
free Blue Ocean where you offer more value at a lower price-point yet with higher profit margins for
your company.

I was fully intrigued.

At the time I owned and operated a company that provided chiropractors with a fully done-for-
them offline marketing system. We used direct mail, DVDs, physical birthday cards, etc., to generate new
patients for them and grow their practice cash flow.

Doctors paid us between $600 and $1000 a month depending on the level of service they
wanted.

In turn, we coordinated with several vendors and made sure the juggling of services were
properly fulfilled. To say this was slightly a labor and resource intensive business model would be like
saying Tiger Woods and Jesse James only dabble in infidelity. Not too mention between all of the
vendors and physical mailings, our profit margin sucked.

So, I took Richs advice. I bought Blue Ocean Strategy. And I devoured it the same day I bought
it. And, over the next 90 days I orchestrated a massive shift in my company to its business model to
its product offering to its value proposition to its USP and to its overall marketplace strategy and
positioning.

Heres what I did:

I trashed the whole offline done-for-them approach. And, instead, I had a programming team
design from scratch an online done-for-them system that did everything the offline system was doing
and a whole lot more.

We created patient-attraction systems that used online video, audio, email, and web pages to
attract new patients for the doctors. We incorporated things into the online system that we never could
have done offline (i.e. viral tell-a-friend systems, audio postcards, deep analytics, etc.).

Best part of all, because it was all online, there was virtually zero work for my team. Not too
mention, there was minimal cost of fulfillment for our company because everything was now being
delivered digitally.

This allowed us to reduce the price from $600 to $1000 a month all the way down to just $199 a
month. And, because we were now doing more for our clients with the new online system than we were
doing before offline, we were actually giving greater value at a lower price-point all at a much higher
profit margin for my company. Thats the essence of a Blue Ocean Strategy.

And, that one book recommendation from Rich, and its impact on my thinking and business
model, has easily been worth in the hundreds and hundreds of thousands of dollars, if not more.

For you, I certainly recommend you get a copy of the book and read it cover to cover. While
doing so, ask yourself: how can my company provide much more value to our customers at the same or
lower price point at a higher margin and with greater profits for my company.

Make sense?

Good.

Lets finish up this months issue with one more monumental piece of advice I received from
Rich Schefren.

Why You Must

STOP Trying To Just Be Better

I cant recall where we were when he first shared this with me but I can tell you hes
drilled this into me many times since.

In the internet marketing community an environment where its often very difficult to stand
out from the crowd copycat marketing is common-place.

Usually, when a big-name marketer does something new or different, its only a matter of time
before scores of average marketers follow suit. Before you know it, everybody is doing the same thing
and it becomes virtually impossible to tell marketers, companies, and product offers apart.

The result for most of these follow the herd marketers is that their companies, offers, and
products get lost in the crowd. And, because they never differentiate themselves, they never experience
the sales, income, or business growth they hope for.

This is the complete antithesis of what Rich taught me early on.

Right from the start Rich said, Todd, differentiation is key! Its better for you to be different than
it is for you to be better.

WOW! Pretty profound, if you think about it.

When I went back to my office and compared what I was actually doing in terms of marketing
with what my competitors were doing, I quickly realized I wasnt differentiating at all. I was simply
trying to do what they were doing better or faster a surefire recipe for mundane results.

I immediately made a commitment to myself that I was not only going to do better marketing I
was also going to make sure that my marketing stood-out by being totally different from my competitors.
I advise you to make the same commitment right now.

How To Make Sure You

Stand-Out From The Crowd!
 To start; pay attention to what your competitors are doing and how theyre doing it.

Then, be sure youre not only differentiating your marketing message (i.e. claims, big promise,
benefits, features, offer, etc.) but also be sure youre differentiating how youre delivering that
message.

For example:

If your competitors are all using camtasia-style videos, consider using on-screen video instead.

If your competitors are all using text email, consider using HTML.

If your competitors are all using teleseminars, consider using webinars.

And so on.

But, frankly, thats just the beginning of how you need to view differentiation.

As Rich and I recently discussed one evening over a couple of Dominican cigars

You also need to be different in the way you apply the common marketing triggers such as:
scarcity, reciprocity, social proof, commitment and consistency, etc. As Rich put it this is the main
difference between the average marketers and the marketing pros.

The Fundamental Difference

Between Average Marketers And
The True Marketing Pros!

The average marketers simply reuse and recycle the same approaches to those marketing
triggers the way everyone else in their market is applying them.

Lets take scarcity, for example.

The average marketer will simply use one of the common seen-it-before approaches to applying
scarcity by using a standard limited quantity ploy. Theyll say something like, Get your home study
course now, since weve only printed 500 copies.

Of course, weve all seen this used many times before. In the rare few virgin markets this may
still work like gangbusters. But, in most sophisticated markets that common approach to applying scarcity
is no longer nearly as effective as it once was. Hence, your need to think out-of-the-box when it comes to
how you can employ scarcity differently with your offers.

As Rich went on to explain, The marketing pros apply the marketing triggers in a new way.
They dont just reuse the same approach to scarcity, social proof, and so on. They come up with new and
different ways.

What this means for you is pretty simple. Not necessarily easy. But, simple.

Once again it starts with you reviewing how your competitors are applying and using the
common marketing triggers with their offers.
 Then, you need to spend time thinking about how you can apply those same proven marketing
triggers in a unique and different way than the market has seen before or become accustomed to.

This will not only differentiate you, your products, and your offers. It will add credibility to your
marketing because your message wont come across as the same old rehashed hype and sales-lingo
theyve seen before. Again, this is what the marketing pros do, as Rich said.

And there you have it

A few pieces of business and marketing advice Ive been given over the years that have not only
impacted the essence of the way I approach business theyve been the direct force behind some major
entrepreneurial breakthroughs in my life.

How To Have Your Own

Monumental Business & Financial Breakthrough

The key in using these bits of wisdom to experience your own major breakthroughs is in your
attitude towards the advice and the actions that follow.

Dont make the mistake of breezing over the power of anything Ive shared in this issue. Even the
seemingly small recommendations and feedback, if implemented, can have a massive, massive impact on
your business, income, and lifestyle.

If there were things you may have heard before dont chalk them up to stuff you already
know.
Instead, ask yourself, Am I doing this now?

If not, get busy.

I think it was Michael Masterson in one of his many best-selling books who said it best

Its not what you know that determines your success. Its what you do that counts.

Truer words have never been spoken.

Why Positive Thinking Alone

Is Worthless!

At the end of the day, what ultimately determines the value of any advice youre given is the
action you take on it.

Behaviors, not thoughts or feelings, are what determine outcomes.

Habits are a lot more revealing as a predictor of success than just about anything else.

And habits are what shape Founders.

Talk to you in your next Founders Club Letter. Until then