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Entrepreneurship and selling strategies

5 min read

From: alexhormozi

Aspiring entrepreneurs often ask, “What should I sell?” [00:00:09] The universe of things that can be sold is surprisingly limited, consisting of seven core categories, each available in digital and physical formats, totaling 14 potential offerings [00:00:15]. Understanding these categories is foundational for entrepreneurial success and developing effective selling skills [00:00:11].

Core Categories of Things to Sell

  1. Products [00:00:34]
    • Physical: Tangible items like water bottles [00:00:36].
    • Digital: Intangible items such as a PDF [00:00:38].
  2. Services [00:00:42]
    • Physical: Actions performed for others, like a massage, lawn mowing, or car repair [00:00:44].
    • Digital: Services delivered in the digital space, such as an ad agency creating ads or buying media [00:00:51].
  3. Access [00:01:06]
    • Physical: Leasing a building provides physical access [00:01:08].
    • Digital: Gaining access to a digital content library, similar to Netflix [00:01:11].
  4. Attention [00:01:16]
    • Physical: A billboard captures physical attention as cars drive past [00:01:19].
    • Digital: Platforms like Facebook and Google sell the digital attention (eyeballs) of their audience [00:01:25].
  5. Risk [00:01:32]
    • Physical: Selling insurance for a building [00:01:35].
    • Digital: Insuring against a cyber threat [00:01:39]. Businesses can also sell the risk associated with their products by charging for guarantees, like AppleCare [00:01:41].
  6. Money [00:01:57]
    • Physical: Actual US dollars [00:02:07].
    • Digital: Digital forms of money, such as cryptocurrency [00:02:10]. The banking industry is built on buying and selling money, with interest as the charge [00:01:59].
  7. Endorsement or Brand [00:02:15]
    • Physical: Allowing use of a logo on a shirt for a percentage of sales [00:02:17].
    • Digital: Selling a verified checkmark on Instagram, which represents an endorsement or status, for a fee [00:02:23].

It’s common for offerings to be a combination of these categories; for instance, a rock concert sells access to an experience, but also sells physical products like drinks and t-shirts, and potentially digital recordings [00:02:35].

Choosing What to Sell

The decision of what to sell primarily depends on two factors [00:02:50]:

  1. Available Resources: Consider the capital and tools at your disposal [00:02:53]. For example, with only $100 to start, physical products or complex software might be out of reach [00:03:50].
  2. Skills, Value, and Experience: Even first-time entrepreneurs possess valuable, often overlooked, experience [00:02:54]. This can come from:
    • Osmosis: Knowledge gained from being around parents, guardians, or acquaintances in their professions (e.g., knowing about eyes if a parent is an eye surgeon, or carburetors if a parent is a mechanic) [00:03:03].
    • Past Jobs: Experiences from odd jobs, even those in high school, provide unique insights [00:03:26].

The key is to identify which category you already have experience with and which problem you can solve most effectively given your resources [00:03:37]. For those with limited starting capital, selling time through services is often a viable initial approach [00:04:00]. The ideal offering is where you provide the most value to the client for the least amount of cost to yourself [00:04:04].

The Delivery Cube: Enhancing Value and Profitability

Once an offering is established, the “Delivery Cube” provides a framework for enhancing its value and profitability [00:04:13]. It consists of six key dimensions:

  1. Delivery Format:
    • One-to-One: Personalized delivery [00:04:25].
    • Small Group: Semi-private settings with a few individuals [00:04:26].
    • One-to-Many: Scaled delivery, like a webinar to a thousand people [00:04:27]. Each offers different value propositions [00:04:28].
  2. Level of Involvement:
    • Do-It-Yourself (DIY): Clients perform the work themselves [00:04:46]. This is highly scalable but typically lower in value [00:05:00].
    • Done-With-You (DWY): You guide clients through the process [00:04:49]. This sits between DIY and DFY in terms of scale and value [00:05:04].
    • Done-For-You (DFY): You complete all the work and deliver a final product or outcome [00:04:53]. This is often the most expensive and sometimes easiest to sell, but hardest to deliver [00:05:08].
  3. Level and Medium of Support:
    • Support can be offered via chat, email, phone call, or Zoom call [00:05:15]. Email support is more scalable but less valuable than real-time Zoom call support [00:05:29].
  4. Consumption Method:
    • How clients consume the offering (visually, audio, live, recorded, text) impacts perceived value and scalability [00:05:40]. Live and in-person consumption is typically perceived as most valuable but least scalable [00:05:53]. Recorded digital content is most scalable but usually least valuable [00:06:01].
  5. Speed and Convenience:
    • This involves factors like 24/7 availability versus 9-to-5, days per week, and response time (e.g., 24-hour guarantee versus 3-minute response) [00:06:07]. Businesses can choose to either overstaff for customer convenience (incurring inefficiency) or maximize staff utilization, making customers wait (incurring customer inefficiency) [00:06:34].
  6. The 10x to 1/10th Test:
    • 10x Test: If you charged 10 times more for your current offering, what would you change to justify the price increase and provide significantly more value? [00:06:50] This strategy for increasing business value encourages thinking about much larger value propositions [00:07:02].
    • 1/10th Test: If you had to deliver the same or more value but could only charge one-tenth of the price, what low-cost, high-perceived-value changes would you implement? [00:07:18] This test helps identify scalable solutions that maintain value while reducing costs, crucial for business growth and scaling strategies [00:07:30].

By applying these strategies for entrepreneurial success, entrepreneurs can not only determine what to sell initially but also how to effectively scale and increase the profitability and value of their offerings to consumers [00:07:37].

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