I Solved Three $100,000,000 Business Problems

Video

Summary

• When businesses think they need more customers, often the problem is retaining the customers they already have.
• At Acquisition.com, we focus on identifying and addressing the primary constraint of a business to enable growth.
• Improving the step in your business process with the lowest conversion rate offers the most significant growth opportunity.
• Niche down on service delivery to focus on the most profitable customer segments, which could lead to owning a portion of a larger, more valuable business.
• As a business owner, consider partnering with or understanding the businesses you service to tap into their larger revenue streams.
• The fastest way to build a small business may not be the best way to scale to a massive one. The foundation for growth must be appropriate for the size of the business you want to build.
• Focus on owning a larger slice of a bigger pie rather than the shape of the pie slice.
• For a successful influencer, improving content quality beyond a certain point won't necessarily translate to increased revenue.
• Monetization strategies should shift from reliance on sponsorships and ad revenue to owning products or services with a higher profit margin.
• Consider negotiating equity in a business within your influential range or creating and selling your products or services.
• Developing new skill sets is critical for pursuing new opportunities, but weigh the operational risks and benefits when venturing into unfamiliar business areas.
• If content creation is a passion, transform it into a service by creating viral content for other brands, leveraging the potential to reach a much wider audience with ad spend.
• Analyze problems with the intent to maximize long-term revenue, considering the time horizon and comparing immediate benefits to future gains.
• Select problems to solve based on your skills, resources, experience, and the control it grants in achieving the desired outcome.

How To Take Action

I would suggest focusing on the most significant constraints in your business process. Look at the steps in your process and identify where the drop-offs are. If there's a step where only a few people get through, work on that first. Making it better will have a big impact. Remember, sometimes the biggest issue isn't needing more customers; it's keeping the ones you've got.

A good way of doing this is by zeroing in on the customers that bring in the most money and sticking with them. If you're really good with a certain type of customer, think about only working with them. They'll probably stick around longer and tell others about you.

It's smart to think about pairing up with businesses you're already helping. You could learn how things work on their side, or even better, get a part of their business. When you join forces, you might give up some control, but it can help you grow faster.

If you make money through videos or social media, think about making your own products instead of just using ads or sponsors. Making and selling your own stuff or getting a share in a business that fits your brand could make a lot more money than just getting paid for your content.

Lastly, always aim to solve problems with the long term in mind. Compare what you can gain now to what you could gain later. Pick problems that fit your skills, what you have, what you know, and that gives you control over the outcome. That will set the direction for your growth, whether it's in a small business, as an entrepreneur, or for personal growth.

Quotes by Alex Hormozi

"A business will grow up to its constraint and then it will grow no longer"

– Alex Hormozi

"The fastest way to build a 10 million dollar business is often not the fastest way to build a hundred million dollar business"

– Alex Hormozi

"It's the size of the slice of the pie that matters, not the shape of the slice of the pie"

– Alex Hormozi

"The more people you make money, the more money you also make"

– Alex Hormozi

"You have to answer that for you given your skill set, your resources, and your experience"

– Alex Hormozi

Full Transcript

problems that gonna take you from 10 to 100 million dollars and at the end I'm going to walk you through the framework so that you can apply this to your business your work or your personal brand I recently spoke an event it had a q a section and there were three different business owners that presented with different problems one was an employment setting business and they knew how to set appointments and build outbound teams for agencies coaches Consultants whatever the second business was a marketing agency for HVAC business owners the third was actually a very big influencer 30 to 40 million subscribers across all platforms with the objective of making more money so each of them had very differently phrased questions but they were all suffering from the same constraint and it wasn't what they thought it was so the first business that asked a question was an employment setting business and he was saying that his problem was that he needed to get more customers which by the way most the time that's not the problem it's usually because the customers you have keep leaving and that's the real problem and when we look at businesses to invest in at acquisition.com we operate off of a singular concept which is the theory of constraints a business will grow up to its constraint and then it will grow no longer most entrepreneurs continue to work on the things that they enjoy rather than the things that the business needs usually because they haven't actually identified the correct constraint for example if you have a three-step sales process and you get 50 to go through step one five percent to go through step two and then fifty percent to go through step three you could improve each of them by ten percent but which of them makes the biggest difference in your business going from 5 to 15 triples the business whereas the other ones only incrementally improve it by twenty percent he had a very low quality of customers the vast majority of customers didn't make enough money they didn't stay long enough they didn't have enough skills Etc that was what he thought he had to solve he said okay of all of the companies that you've ever worked with which of them made the most money off of the appointments that you set right and you had a very specific answer of what type of Avatar he did best with and so there's two directions for that business one is you Niche down on your service delivery and say these are the only types of businesses I'm going to take because they're going to be worth more stay longer referrer Etc that is probably the easy easiest next step for that business if I were gonna own this business and I transplanted my brain and my experience with his body that he could own half of a 50 to 100 million dollar business that he grows over the next five to ten years picking the most valuable business that he sets appointments for what would the marketing spend be of a business that's doing 50 million dollars a year realistically probably somewhere in the neighbor of five to ten million dollars a year so he could either partner with that business or spend a year or two learning how that business works so that then he owns both sides of it if you partner you can usually go faster but you give up some of the upside because you slice the pie it's up to you because most business owners the reason they don't create valuable businesses is because they have to keep doing the same work over and over again and they don't get credit for it basically sentenced to this terrible atlas-like existence of rolling the boulder up the hill and then rolling it back down every every month but if the team that he built was 50 outbound guys this month and then next month he starts at 50 because it's all within the same company and then does another 50 and then another 50 D six months later he's got 300 outbound guys that are all still working for him all generating Revenue that he is owning a slice of all of it business number two was the HVAC agency this is a business that markets for HVAC companies 850 or so clients in that Niche and their running campaigns across 50 different local markets if he's able to generate leads and fill up 50 different HVAC Services pipelines because of his marketing prowess he probably has the marketing skill of a 50 to 100 million dollar HVAC business if you have a five million dollar marketing agency then it's reasonable that some of the clients that you serve are making 50 million dollars in Revenue off the services you're generating and you're getting none of that you're only capturing the service fee the more steps you take towards owning the result the more you're basically just doing the business for them but at a certain point you are the business and so it makes sense for you to own the economics of the business either you've got to learn the HVAC business or you partner with some someone who already knows it or you could buy one and with your marketing prowess you juice the hell out of it most people will try and buy it but then also try and keep this agency thing going but sometimes you got to take a half step back so you can take 20 steps forward the fastest way to build a 10 million dollar business is often not the fastest way to build a hundred million dollar business if you wanted to build a building that was 10 stories tall you would start with a very different Foundation now imagine you built a 10 story building and then said okay I want to build 100 story building using the same Foundation you wouldn't be able to but that's exactly what most entrepreneurs do when they're trying to scale and they wonder why they're stuck is because they built it wrong to begin with because they were in the wrong opportunity vehicle one of the big things that took me too long to learn was it's the size of the slice of the pie that matters not the shape of the slice of the pie they obsess about the shape of the slice rather than having a slice that's like this of a much bigger pie the average IPO founder when accompanying IPOs owns 12 and a half percent of the company they found it because the more people you make money the more money you also we make the third business was the big influencer business dude 30 40 million subscribers across all the platforms and they were focusing all of their attention on how do we get more high quality videos out and when I asked them what problem are you trying to solve they said we want to make more money you're seeing your business as this box of media and trying to make more better videos which if you want to do brand and just continue to build a brand before making us that would be the right problem to solve but they were at 97 out of 100. they're a point zero zero zero zero zero one percent Creator so do we really think that they're constraint of their business is that they aren't good enough at marketing no probably not you guys are trying to take your 97 out of 100 Media company to a 99 out of 100 Media Company when the objective you said was to make more money and you have no product that you sell so all of your monetization relies on sponsorships and AD and AD Revenue which is typically the least efficient way to monetize because anyone who pays you for a sponsorship is making a huge Arbitrage on your brand and your value given the amount of Impressions that these guys were getting which when they don't make videos we're getting 100 million views a month when they don't post anything new that kind of thing is a company that's 100 million plus in Revenue so they have the marketing department but what they don't have is a sales department they don't have a product department they don't have customer success they have none of these other departments they're 0 out of 100 on all these and so the constraint isn't going 97 to 99 it's going from zero to twenty on these ones what are the choices I have here version one is if I've got an average consistently comes to me I may be able to negotiate some sort of equity getting even 10 of a company that's worth 100 million dollars and then you put all of your effort behind it and make it a two or three hundred million dollar company that's a significantly better outcome for many of them than what they're currently getting paid just video to paycheck right the second option is to say okay is there a category of products that continue to pay me the most out of all the advertisers just do what Amazon does see what's already selling and then clone it and make it your own and put your name on it and make your version yours and better if you do that then you own the entirety of that thing but in order to do that you probably if it were me I would go snipe some of the topics act that some of those companies and say hey you're currently an executive here would you like to own a slice of my thing I'm happy to own 70 and get three of the best guys over have them build their boxes behind my thing that's the fastest and easiest way the longer maybe bigger money way is if you do it all yourself but that's always the trade that you have to make as an entrepreneurs how many new skills do I have to to have in order to pursue this new opportunity versus the ones I currently have the third opportunity for them is probably the least operational risk for accepting the fact that they just like doing media and that's what they jam on and they don't want to touch either these other business components ending themselves as a creative shop that knows how to make viral videos that they can transform into ads and that's where you go from being a really good Creator to being a Madison Avenue agency that makes ads that Crush most influencers are getting paid based on the Impressions that they are getting the brand for free based on their audience but where the real money is made is where you take that Tick Tock video that YouTube short that Instagram video that number it is and then they put a million dollars of AD spend behind it when it's already shown as a winner and then it goes from being shown to 5 million people in your audience to a hundred million people that it converts from cold ad spend has no limit on reach as long as it's profitable so they can always expand beyond your existing audience which means that you get to capture all of the upside based on how skilled you are as an Advertiser so those would be the three paths for that particular type of business it's not like okay well I'm not one of these three businesses now what I should do but it's actually the framework that we approach the problem with which is one what problem are we trying to solve in each of these businesses they wanted to make more money the next one is over what time Horizon if you want to make more money tomorrow the number of things you can do is very limited if you want to make more money in 10 years you take a very different play if the amount of time it might take to build 100 story buildings Foundation might take the same time it takes to build the entirety of a 10-floor building above the surface somebody else building a 10-floor building might happen way faster than you because as yours is just continuing to build this base before you start building up the next question which problem would we prefer solving or which problem do we feel like we're more equipped to solve or which problem is easier because if you start framing it in terms of the problem that you're gonna have to solve to be successful it actually makes it much more controllable for you I would say well which of these do we feel more equipped to do now at acquisitions.com we are really good at recruiting which is how we scale all the companies we have recruit Talent we've already been there done that and so we'd probably say hey we feel really confident that we could recruit somebody in and put seed capital in to get it going then we'd own the whole pie so for us that would be a problem that we feel very confident in solving and gives us the most upside you have to answer that for you given your skill set your resources and your experience