From: alexhormozi
This article outlines a five-part framework for identifying your business idea, defining your target audience, crafting your service approach, and developing a compelling message to acquire your first customers [00:00:25]. This process has proven effective, with over one out of two people starting a paid community on School.com making their first dollar [00:00:19].
Part 1: The “What” - Your Business Idea
The first step is to determine what your business will be about [00:00:36]. This can be identified using the “Three P’s Framework” [00:00:39]:
The Three P’s Framework
Most businesses originate from one of these three categories [00:00:43]:
- Pain [00:00:49]: Something you personally experienced and had to overcome [00:00:52].
- Example: A friend’s wife developed a system for efficiently preparing lunch for nine children, turning a personal struggle into a business idea [00:00:59].
- Profession [00:01:30]: What you do or have done for a day job [00:01:33]. Any professional skill for which people exchange money can be the basis for a consulting or independent contractor business, or for teaching others in that profession [00:02:33].
- Example: A registered dietitian learned a complex insurance billing system due to long hospital hours and then taught other dietitians how to bill insurance, generating significant income from a niche skill [00:01:37].
- Passion [00:02:54]: Topics you’re inherently interested in, that you consume content about in your spare time [00:02:57].
- Example: The speaker’s obsession with fitness led friends to encourage and even offer to fund his gym, demonstrating how a strong passion can naturally lead to a business idea [00:03:09].
Embracing the “Best Bad Idea”
It’s crucial to understand that your first business idea doesn’t need to be perfect [00:03:53]. Picking anything is the vital first step, as it initiates the iteration process of gathering feedback and making improvements [00:04:06]. The goal is to reach your “best bad idea” as quickly as possible, allowing you to refine it over time until it becomes a good idea [00:04:17].
Part 2: The “Who” - Identifying Your Audience
Once you have your “what,” the next step is to define “who” you will serve [00:04:45]. Your target audience will fall into one of three categories:
- People Like You [00:04:55]: These are individuals facing similar challenges or having similar aspirations to your own [00:05:25].
- Example: Sarah Blakely created Spanx to solve a personal problem with existing underwear, leading to a billion-dollar business by serving “people like her” [00:05:31]. Mark Zuckerberg started Facebook to connect college students, a demographic he was part of [00:05:52].
- People You’ve Helped Before [00:04:57]: This could be for money or as a favor [00:04:57].
- Example: The speaker’s first dollar came from a woman at the gym who sought his help with food, demonstrating that informal assistance can reveal a viable business opportunity [00:06:01].
- People Who Are Underserved [00:05:07]: This involves identifying growing markets with high demand and unmet needs [00:05:09].
Missionaries vs. Mercenaries
Businesses started by helping “people like you” often create “missionaries” – founders who deeply care about the product and customer experience because they understand the pain firsthand [00:07:31]. This contrasts with “mercenaries” who start businesses purely based on market analysis and trends, primarily driven by money [00:07:39]. Focusing on a problem you’ve overcome fosters a commitment to an exceptional product and customer experience [00:07:47].
Defining Your Avatar
To get clear on your target audience, think about them using “five frames” and aim to pick at least three to define them [00:08:18]:
- Age [00:08:26]
- Gender [00:08:26]
- Profession [00:08:26]
- Problems/Pains [00:08:32]
- Interests/Passions [00:08:34]
Example: “35-year-old male accountants who are bored at their jobs” [00:09:03]. The goal is to be narrow enough that your audience knows you’re talking to them [00:09:49].
A common misconception is that getting very specific with your target audience will limit your income [00:09:54]. The opposite is true: the more specific you get, the more you can charge [00:10:00].
Example:
- “Time management” (broad): ~$19 [00:10:09]
- “Time management for salespeople”: ~$199 [00:10:20]
- “Time management for outbound salespeople”: ~$1999 [00:10:30]
- “Outbound time management system for garden and power tools sales”: ~$10,000 [00:10:41]
By becoming the best in a highly specific niche, you operate in a “blue ocean” with few competitors, allowing you to charge premium prices [00:11:15]. This highlights the importance of targeting the right audience and the role of ad targeting in business success.
Part 3: The “How” - Serving Your Audience
This section covers how you will help your target audience, focusing on both the positive outcomes you deliver and the negative experiences you help them avoid.
How Part 1: The Upside (Good Stuff)
Describe all the positive achievements and experiences your customers will gain by using your product or service [00:12:04]. Focus on:
- How much easier their lives will be [00:12:13].
- How guaranteed the outcome is [00:12:18].
- How much faster they will achieve their goals [00:12:24].
- How it would feel to experience their dream scenario [00:12:28].
These elements are the positive inverse of the value equation: an ideal offer is incredibly easy, guaranteed, immediate, and exactly what the customer wants, delivered exactly how they want it [00:12:39].
How Part 2: The Downside (Bad Stuff to Avoid)
To motivate people, you can either offer good things or help them avoid bad things [00:13:41]. Focus on the inverse of the upside, describing the risks, slowness, pain, sacrifice, and suffering your product helps them avoid [00:14:51].
- Risks: What negative outcomes will they avoid? [00:14:59]
- Slowness: How will your solution prevent delays and inefficiency? [00:15:04]
- Pain/Sacrifice: What difficult or unwanted actions will they not have to take? [00:15:11] This includes things they normally have to give up but no longer will, and bad things they would normally have to start doing but won’t with your product [00:15:40].
Specificity is Key
The more specific you are about both the pain and the benefit, the more likely your audience is to believe you and feel you understand them [00:14:21]. Example: Instead of “lose weight fast,” say “stop feeling your thighs chafing when you’re out in the sun” [00:14:14]. This level of detail bypasses “banner blindness” because it resonates deeply with personal pain [00:14:39].
Gathering Information: The “Ask” Method
If you’re serving people unlike yourself, the best way to understand their upsides and downsides is to “ask” [00:16:51]. Conduct interviews by asking questions like:
- What problems are you struggling with? [00:17:10]
- How long have you struggled with them? [00:17:11]
- What makes it painful? [00:17:12]
- Describe your ideal experience if it were done the right way [00:17:18].
- What things do you have to stop doing that you like doing? [00:17:21]
- What things have you had to start doing that you hate doing? [00:17:25]
The answers to these questions will form the basis of the “good stuff” you help them get and the “bad stuff” you help them avoid [00:17:39].
Part 4: Putting It All Together - The Message
This is the “Mr. Miyagi moment” where everything comes together [00:17:53]. Use the “Osim Money Mad Lib” formula to craft your core message:
I help [WHO] get [GOOD STUFF] without [BAD STUFF] (through [UNIQUE MECHANISM - optional]) [00:18:02]
- WHO: Your narrow target audience (from Part 2, combining “what” and “who”) [00:18:07].
- GOOD STUFF: The upside and desired outcomes (from How Part 1) [00:18:19].
- BAD STUFF: The pains and sacrifices they avoid (from How Part 2) [00:18:23].
- (through UNIQUE MECHANISM): Your proprietary process or methodology (covered in Bonus 1) [00:18:28]. This part is optional, especially if you’re just starting and don’t yet have a unique process [00:18:44].
Examples:
- “I help 35-year-old male accountants get a new income stream without being bored at their jobs.” [00:18:13]
- “I help 45-year-old women who just had kids get back into their high school jeans without giving up time with their family.” [00:18:54]
- “I help non-fiction business authors get on the Wall Street Journal bestseller list without looking cringe.” [00:19:04]
The goal is to nail the message so precisely that the person thinks, “Shoot, that’s me!” and acknowledges it’s exactly what they’re struggling with and what they want [00:19:23]. This is critical for branding and audience engagement.
Bonus 1: The Unique Mechanism
A unique mechanism is something that differentiates your solution from others in the market [00:19:49]. It’s your “special sauce” that makes prospects feel that your process is the missing piece they needed for success [00:20:27].
Your unique mechanism can be:
- A list or checklist of things someone must do to achieve a result [00:21:10].
- A series of steps that must be followed in sequence [00:21:13].
Once you have this process, you wrap it up and give it a unique name. This becomes your proprietary process and your unique mechanism [00:21:40].
Examples of Unique Mechanisms:
- P90X’s “muscle confusion” [00:22:15]
- Weight Watchers’ “point system” [00:22:31]
Think of your unique mechanism as the “vehicle” that transports your customers from their current state to their desired outcome [00:22:43].
Bonus 2: Getting Your First Five Customers
This simple system leverages your newly crafted message:
- Greet Someone: Say hello [00:23:48].
- Compliment Them: Mention something specific and positive about them [00:23:50].
- Insert Your Message: State the clear “I help WHO get GOOD STUFF without BAD STUFF” sentence you developed [00:23:54].
- Ask for Referrals: Ask if they know anyone who could benefit from what you offer [00:23:57].
Perform this outreach for four hours per day or until you reach 100 people [00:24:04]. Consistently applying this process is designed to help you acquire your first five customers [00:24:13]. This strategy is also known as “warm outreach” and is a key tactic for producing targeted content for business owners and building a brand from zero audience.