Three Numbers That Took a Two-Man Electrical Company to $32 Million

Mike Agugliaro started an electrical company in New Jersey in 1994. Two guys, one van. For twelve years he stayed stuck somewhere between $700,000 and a million dollars in revenue. He worked seven days a week. He couldn't figure out why the business wouldn't grow.

Then he sat down and calculated three numbers that most of us have never calculated.

Number one: What a customer is worth

Not this job. Not this invoice. Over their entire lifetime as your customer.

A pool maintenance customer paying $300 a month who stays four years is worth $14,400. A pest control customer on a $150 quarterly contract who renews for five years is worth $3,000. A commercial cleaning client paying $2,000 a month who stays three years is worth $72,000.

If you haven't done this before, try it with your five longest-standing customers. How long have they been with you? What do they pay per visit, per month, or per quarter? Multiply it out. Write that number down. That's your customer lifetime value.

Number two: What it costs to get one

Add up what you spent on marketing last month. All of it. The ad spend, the flyers, the door hangers, the referral gift cards. Now divide by the number of new customers you got. That's your acquisition cost.

Number three: The ratio

Divide Number One by Number Two. If a customer is worth $3,000 and costs you $100 to acquire, you're getting a 30 to 1 return. If a customer is worth $3,000 and costs you $3,000 to acquire, you're working for free.

Mike knew his numbers. He went from $700,000 to $32 million. He sold the company in 2017.

You can do this maths tonight at the kitchen table with a calculator and a bank statement. The number you find is the foundation for every decision in the rest of your business.

Here's to one more client this week.

R.J.