Effective business frameworks for growth

From: alexhormozi

This article explores scaling the unscalable and introduces key frameworks for business scaling and success, emphasizing that embracing seemingly non-scalable tasks is crucial for early-stage business growth [00:00:30]. These lessons are drawn from years of experience, including founding and exiting nine businesses and managing a portfolio exceeding $200 million annually [00:00:13].

Embracing the “Unscalable”

Many entrepreneurs miss out on significant earnings by not leveraging their largest competitive advantage: the ability to engage in “unscalable” activities [00:00:05]. What appears unscalable is often a “skill deficiency,” not a physical impossibility [00:01:38]. The inability to scale often stems from a lack of context and resources in the early stages [00:03:00].

For instance, a fitness professional doing $30,000amonthinoutboundsaleshesitatedtoscalebecauseit"requirespeople"<aclass="yt-timestamp"data-t="00:00:50">[00:00:50]</a>.However,servicebusinesseslikefitnesscoachingscalebyhiringandtrainingpeople<aclass="yt-timestamp"data-t="00:01:16">[00:01:16]</a>.Similarly,worryingaboutextremefutureoutcomes(likebecoming"toobulky"infitness)preventstakingthefirststeptowardsgrowth<aclass="yt-timestamp"data-t="00:02:22">[00:02:22]</a>.Businessesoftendiscussscalingto$100 million before even making initial revenue [00:02:41].

The Power of Direct Engagement

In the beginning, engaging in “unscalable” tasks like one-on-one calls with customers or writing handwritten cards is vital [00:04:17]. Andy Forcella, founder of First Form, wrote handwritten cards to every customer when he started, a practice that continues even after achieving hundreds of millions in revenue, albeit with others now writing and him signing [00:03:10]. This demonstrates that an “unscalable” solution can evolve into a scaled version that retains 80% of its initial impact [00:03:45].

Learning Through “Unscalable” Work

Performing tasks like customer calls, even for low-ticket items, is invaluable for learning [00:05:31]. From these interactions, businesses learn:

• Customer pain points [00:05:40].
• Effective messaging and hooks [00:05:42].
• How to improve products and offers for higher conversion [00:05:46].
• What customers value most and least [00:05:51].

Asking customers:

1. “If I were to eliminate all but one feature, what would it be?” [00:05:56]
2. “If I were to eliminate one thing from my feature set and it changed nothing about your life, which one would it be?” [00:06:14]

Paul Graham’s principle suggests that every business problem can be solved by talking to the customer more [00:06:31]. This direct customer onboarding increases retention, referrals, and product improvement [00:06:58].

Progression from “Unscalable” to Scaled Operations

Initial one-on-one interactions can evolve into:

• Semi-private: One-on-six calls, increasing output by 6x [00:07:21].
• Group Onboarding: One-on-twenty or one-on-thirty sessions [00:08:44].
• Training others: Teaching employees to follow the established systems, thereby scaling the unscalable [00:09:41].

This process allows for intensive learning in the beginning, which is then codified into presentations and systems that can be taught and replicated [00:09:14].

The “Swamp” of Business and Management Debt

Early business growth involves a “swamp” where you don’t have enough money to hire extensively, requiring you to work overtime by performing multiple roles [00:10:10]. While venture-backed companies incur financial debt to hire talent, self-funded businesses incur “management debt,” meaning founders must take on the work of two, three, or four people [00:10:33]. This “unscalable” phase is necessary to reach the other side [00:10:56].

A common mistake is projecting future, scaled challenges back to the present, hindering initial action [00:11:01]. Small businesses (under $10 million) have a unique advantage: they can implement highly efficient, personalized processes that large companies cannot [00:14:16]. For example, using iMessage with personalized voice notes or videos from a personal phone for sales outreach, rather than generic chat interfaces, yields higher response rates [00:11:51]. While this might seem “unscalable” without resources, cash generated from these highly effective early efforts can be reinvested to create leverage for scaling [00:14:00].

Frameworks for Business Growth

Two key frameworks for business scaling and success are introduced:

1. The Sales to Fulfillment Continuum

This framework states that for services, the easier something is to sell, the harder it generally is to fulfill [00:15:41]. For example, a “done-for-you” promise is easy to sell but hard to deliver [00:15:55]. Conversely, a “do-it-yourself” offer is hard to sell but easy to fulfill [00:16:05]. Many new businesses mistakenly start with the hardest-to-sell option [00:16:12].

2. The Done For You / Done With You / Do It Yourself Pyramid

This strategy suggests starting at the top of the pyramid with the most expensive, “done-for-you” service [00:16:47].

• Done For You (Top of Pyramid):

  • Description: The most expensive service, where you do everything for the client [00:16:54].
  • Characteristics: Easiest to sell (because it’s comprehensive), hardest to fulfill [00:16:55].
  • Benefits: Maximizes revenue per customer, sets up future products, delivers the best results, and forces the development of Standard Operating Procedures (SOPs) [00:17:02]. These SOPs productize the service for later, lower-tier offerings [00:17:18].
  • Example: An agency offering full-service client management develops SOPs for lead magnets, ads, landing pages, and email follow-ups [00:17:28].

• Done With You (Middle Layer):

  • Description: After establishing the “done-for-you” service and its SOPs, transition to a “done-with-you” consulting model [00:17:49].
  • Characteristics: Typically charged at a fraction of the “done-for-you” price (e.g., one-third to one-fifth) [00:17:53]. Clients do the work, but with your guidance and assistance [00:18:07].
  • Benefits: Allows for serving more clients with less intensive support, leveraging the productized elements from the top tier [00:18:00].

• Do It Yourself (Bottom of Pyramid):

  • Description: The lowest-priced tier, where clients receive all the SOPs and tools to implement the solution entirely on their own [00:19:17].
  • Characteristics: Very low support overhead, accessible to a mass market [00:19:22].
  • Benefits: Achieves maximum scale and reaches the widest audience.

The top-down approach is preferred for brand positioning, establishing premium pricing, and ensuring the highest results with initial customers [00:18:22]. This allows for easier transition downstream to larger customer bases with less operational drag [00:19:46]. As you move down the pyramid, sales become harder, but your sales skills improve from extensive customer interaction [00:19:56].

By embracing “unscalable” work in the beginning and applying these strategies for business growth, entrepreneurs can effectively navigate challenges and achieve sustainable business growth [00:20:09].