Identifying skills and resources for budding entrepreneurs

From: alexhormozi

When aspiring entrepreneurs consider starting a business, a key question often arises: “What should I sell?” [00:00:09] While it may seem like there are countless options, there are actually a limited number of fundamental things that can be sold [00:00:15]. These can be categorized into seven distinct types, each available in digital and physical formats, totaling 14 potential offerings [00:00:20].

What Can Be Sold?

The seven categories of sellable things are:

1. Products:
   • Physical: Tangible items like water bottles [00:00:36].
   • Digital: Intangible items such as a PDF [00:00:39].
2. Services: Actions performed for others [00:00:42].
   • Physical: Examples include a massage, mowing a lawn, or fixing a car [00:00:47].
   • Digital: Services delivered in a digital space, like an ad agency making ads or buying media [00:00:51].
3. Access:
   • Physical: Leasing a building for use [00:01:09].
   • Digital: Gaining entry to a digital content library, similar to Netflix [00:01:14].
4. Attention:
   • Physical: Selling visibility on a billboard, where cars physically drive past and see it [00:01:19].
   • Digital: Platforms like Facebook and Google sell the “eyeballs” and focus of their audience [00:01:25].
5. Risk:
   • Physical: Selling insurance for a building or product guarantees [00:01:35].
   • Digital: Insuring against cyber threats [00:01:40], or paid guarantees like AppleCare [00:01:54].
6. Money:
   • Physical: Traditional currency like US Dollars [00:02:07]. The entire banking industry is based on buying and selling money, with interest as the charge [00:01:59].
   • Digital: Digital forms of money, including cryptocurrency [00:02:10].
7. Endorsement/Brand:
   • Physical: Allowing another entity to use a logo on a product in exchange for a percentage of sales [00:02:17].
   • Digital: Selling a verified checkmark on Instagram, which confers status and brand association for a fee [00:02:23].

It’s also possible to sell a combination of these categories, such as a rock concert which sells access to an experience, and also physical products like drinks and t-shirts, and later, digital recordings [00:02:35].

How to Choose What to Sell

The choice of what to sell largely depends on two factors: the resources you have and your skills, value, and experience [00:02:52].

Leveraging Existing Skills and Experience

Even if you’re a first-time entrepreneur with limited direct business experience, you likely possess valuable knowledge [00:02:59]. This often comes from:

• Parental or Guardian Influence: Observing what your parents or guardians did [00:03:03]. For example, if your mom was an eye surgeon, you might have knowledge about eyes [00:03:13]. If your dad was a mechanic, you might know about car parts [00:03:20].
• Past Odd Jobs: Experiences from high school or other part-time work can provide unique insights [00:03:25].
• Osmosis: General knowledge absorbed from being around certain environments or industries [00:03:32].

Consider which of the seven categories you have some experience with, and then identify the biggest problem you can solve within that area, given your available resources [00:03:37].

Starting with Limited Resources

For entrepreneurs starting a business with limited resources, such as $100, physical products or complex software might be out of reach [00:03:49]. In such cases, the most common starting point is to sell your time, which often takes the form of services [00:04:00]. The “sweet spot” is providing the most value to a person for the least amount of money for you [00:04:04].

Enhancing Value and Profitability: The Delivery Cube

Once an initial offering is established, entrepreneurs can use “The Delivery Cube” to enhance its value, profitability, or scalability [00:04:13]. This framework consists of six key elements:

1. Delivery Format: How is the service or product delivered?
   • One-to-one: High value, often less scalable [00:04:25].
   • Small group: Such as five people in a semi-private setting [00:04:32].
   • One-to-many: Like a webinar to a thousand people [00:04:38]. Each has a different value proposition [00:04:28].
2. Service Level: How much involvement does the provider have?
   • Do-It-Yourself (DIY): Customers do the work themselves; typically smaller value but unlimited sales potential [00:04:47].
   • Done-With-You (DWY): The provider guides the customer through the process [00:04:50]. This offers an intermediate level of scale [00:05:04].
   • Done-For-You (DFY): The provider does all the work, delivering a final product or outcome [00:04:53]. This is typically the most expensive and sometimes easiest to sell, but hardest to deliver [00:05:08].
3. Support Medium: How is support offered?
   • Via chat [00:05:20], email [00:05:22], phone call [00:05:23], or Zoom call [00:05:24]. Email support is more scalable but less valuable than real-time Zoom calls [00:05:31].
4. Consumption Method: How do customers engage with the offering?
   • Visually, audibly, live, via recording, or visually through text [00:05:41]. Live interaction is generally perceived as more valuable (especially in-person), but less scalable [00:05:53]. Recorded digital content is highly scalable but often less valuable [00:06:01].
5. Speed and Convenience:
   • This involves factors like 24-hour availability versus 9-to-5 [00:06:12], days of the week service is maintained [00:06:17], and guaranteed response times [00:06:21]. Businesses can choose to incur inefficiency to provide customer convenience (overstaffing) or maximize staff utilization by making customers wait [00:06:33].
6. 10x to 1/10th Test: A thought exercise to expand thinking on value and pricing.
   • 10x Test: If you charged 10 times more for your current offering, what would you need to change to justify that price? [00:06:50] This pushes for providing significantly more value [00:07:04].
   • 1/10th Test: If you had to deliver the same or more value at one-tenth the current price, what would you do? [00:07:18] This encourages finding ways to maintain value while drastically reducing costs [00:07:29].

This framework helps entrepreneurs not only pinpoint their initial offering but also strategize how to scale it, increase profitability, and enhance its value to the end consumer, while considering the internal resources needed [00:07:37]. These concepts are crucial for developing an effective entrepreneurial growth mindset and building and selling skills for success.