Practical Ways To Grow Your Business | Ep 821
The Game w/ Alex Hormozi
Deep Dive
What are the two main problems with scaling a coaching business?
The two main problems are revenue retention and scalability issues due to reliance on coaches. Coaching doesn't scale well beyond $20-30 million annually because it's difficult to replicate the expertise of the founder, and revenue retention becomes challenging as churn increases.
Why does Alex Hormozi compare scaling a coaching business to diluting a glass of milk?
He uses the analogy to explain two scaling approaches: one where the value is concentrated (like a shot glass of milk) and another where it's diluted (like adding water to milk). Businesses often perform better by offering concentrated value rather than diluting their core offering, as customers prefer quality over quantity.
What is the third and most effective scaling model for knowledge businesses?
The third model involves creating a firm with a career path, similar to Ernst & Young or McKinsey. This model is supply-constrained but scalable by hiring intelligent people and offering them a long-term career trajectory. It allows for building a large, enduring firm with high earning potential for employees.
What is the key to revenue retention in a business like Gym Launch?
Revenue retention is achieved by focusing on products or tools that customers consistently use, such as SaaS or hardware. For Gym Launch, transitioning to a platform like gymowners.com helps retain customers by providing ongoing value, which in turn builds enterprise value.
How does Alex Hormozi suggest leveraging Amazon for a publishing business?
He recommends maximizing distribution by listing books on Amazon, as it is the largest platform for book sales. Additionally, expanding into multiple formats (e.g., audio, digital, hardback) and languages can significantly increase revenue. Amazon also serves as a traffic source, as readers who discover books there may later engage with the author's other content.
What is the best way to scale a hair extension business according to Alex Hormozi?
The best approach is to focus on getting as many people as possible to sell the product (hair extensions) by lowering the barrier to entry for education. The majority of enterprise value comes from the product side, so the goal should be to maximize the number of sellers rather than prioritizing education revenue.
Why does Alex Hormozi recommend adding an anchor product in a business?
An anchor product creates a high-value reference point, making other offerings seem more affordable. By presenting a premium option first (e.g., a $100,000 product), customers are more likely to purchase a lower-priced but still profitable alternative (e.g., a $5,000 product). This strategy leverages primary and secondary features to deliver perceived value at a lower cost.
What is the purpose of the Scaling Roadmap offered by Alex Hormozi?
The Scaling Roadmap breaks down business growth into 10 stages across eight functions (e.g., marketing, sales, HR). It identifies problems at each stage and provides actionable steps to progress. The roadmap is personalized, helping businesses focus on the specific areas they need to improve to scale effectively.
- Coaching doesn't scale beyond a certain point.
- Three scaling models are discussed: 1. Fractionalized access, 2. Supply-constrained firms, 3. Many-to-one expert models.
- Revenue retention is key for long-term success.
- Products or SaaS can be crucial for revenue retention.
Shownotes Transcript