From: alexhormozi
Achieving financial growth, such as making a first million dollars, relies on a blueprint that begins with understanding who you are and progressively building essential business skills [00:00:01].
Fundamentals: Building Blocks for Growth
The foundation of wealth creation starts with an individual’s knowledge, skills, motivation, and environment [00:00:23].
Essential Skills
Skills are the actions an individual knows how to perform [00:02:39]. Often, seemingly inherent traits like confidence or charisma are bundles of underlying skills [00:02:55].
The skill of sales is a fundamental capability that can alone lead to millionaire status [00:03:33]. Sub-skills of sales include:
- Active listening [00:03:06]
- Repeating back what someone says [00:03:09]
- Maintaining eye contact and nodding [00:03:10]
- Firm handshakes [00:03:13]
- Projecting one’s voice in a room [00:03:14]
- Reasoned argumentation to overcome fallacies [00:03:19]
Building upon sales, marketing is essentially sales performed “one to many” [00:03:42]. Marketing skills include:
- Understanding media channels [00:03:55]
- Crafting effective headlines [00:04:01]
- Web page design [00:04:06]
- Conversion optimization [00:04:08]
Possessing both sales and marketing skills enables customer acquisition, which is a foundational capability for business growth [00:04:17]. The more skills acquired, the more valuable previous skills become [00:04:25]. It’s crucial to orient effort towards high-return skills like sales rather than low-return ones [00:04:59].
Level 2: Getting Customers to Buy
Find Out: Advertising and Lead Generation
Getting customers to buy involves two primary steps: first, they must find out about the product or service, and second, they must decide to purchase [00:21:41].
There are eight methods to let people know about your offerings [00:22:02]:
The Core Four (Done by You)
- Warm Outreach: Informing people who already know you about your offering [00:22:30].
- Cold Outreach: Informing strangers about your offering [00:22:32].
- Content: Informing people who know you, but on a one-to-many basis (e.g., social media posts) [00:22:36].
- Paid Ads: Informing strangers, but on a one-to-many basis [00:22:43].
The Four Lead Getters (Done on Your Behalf)
These methods leverage others to perform the “Core Four” on your behalf [00:23:03].
- Customers: Existing customers can promote your business through reviews, word-of-mouth, or content [00:23:07].
- Employees: Your employees perform the Core Four on your behalf [00:23:28].
- Affiliates: Businesses with existing customer bases that align with yours can refer clients in exchange for reciprocal referrals or compensation [00:23:43].
- Agencies: Specialized businesses that focus on one of the Core Four methods, such as content, paid ads, or outbound agencies [00:24:11].
For beginners, warm outreach and content are the easiest and most cost-effective ways to start generating leads [00:24:48]. A simple initial offer is to provide free service for a few hours in exchange for the opportunity to present a paid offer later [00:24:55].
Get Them to Buy: The CLOSER Sales Framework
After potential customers know about the offering, the next step is to close the sale [00:26:48]. The CLOSER framework provides a repeatable process for sales [00:27:28]:
- C - Clarify why they are there: Understand why the prospect has engaged with you [00:27:46].
- L - Label them with the problem: Articulate their current situation, their desired situation, and the gap or obstacle between them [00:28:24]. The business positions itself as the solution to this “monster” obstacle [00:28:52].
- O - Overview past pain: Explore their previous attempts to solve the problem, highlighting why they didn’t work and how your solution is different [00:29:35]. This step amplifies their motivation by reminding them of their deprivation [00:29:46].
- S - Sell the vacation: Focus on the desired outcome and benefits, not the intricate details of the product or service [00:30:44]. Use a three-pillar pitch, with each pillar explained through analogies or metaphors that relate to what the prospect understands [00:30:56].
- E - Explain away their concerns: Address objections, which typically fall into categories of circumstances (time, money), blaming others (decision-makers, past experiences with other products), or avoiding decisions [00:33:07].
- R - Reinforce the decision: Post-purchase, immediately set expectations and fulfill promises to prevent buyer’s remorse and ensure a smooth onboarding process [00:34:27]. This includes booking subsequent meetings and passing notes between teams so customers don’t have to repeat themselves [00:35:14].
Get Them to Buy More Times: Increasing Customer Value
To maximize financial growth, focus on increasing the value of each customer [00:36:50]. There are eight specific ways to do this:
- Increase the price: Charge more for the same product or service [00:37:10]. A beginner strategy is the “five to five to five model,” where the price is bumped by 20% after every five sales [00:41:03].
- Decrease costs: Lower the cost of production or delivery while maintaining the same price, increasing profit margins [00:37:24].
- Get them to buy more times (Subscription): Implement recurring purchases or subscriptions [00:37:41].
- Sell something else (New/Different): Offer complementary or new products/services (e.g., fries with a burger, phone case with an iPhone) [00:37:53].
- Increase quantity: Encourage bulk purchases or higher volumes of the existing product [00:38:20].
- Increase quality: Offer a premium version of the product or service at a higher price point (e.g., sirloin burger instead of mystery meat, priority support for services) [00:38:41].
- Decrease quantity (Downsell): Offer smaller, more affordable options to convert “no” into a “small yes” and build towards future larger sales [00:39:33].
- Decrease quality (Economy version): Provide a lower-cost, reduced-feature version of the product or service to capture a wider market segment [00:40:02].
For beginners, focusing on raising prices, encouraging repeat purchases, and increasing purchase quantity are the easiest and most impactful strategies [00:42:24].
Level 3: Sustaining and Enhancing Growth
Keeping Your Advantage: Leveraging Efforts
As a business grows, maintaining an advantage requires leveraging efforts [00:56:44]. Leverage means getting more output for what is put in [00:57:01]. Forms of leverage in business growth include:
- Brand/Reputation: A strong brand leads to higher click-through rates, higher conversion rates, and the ability to charge higher prices for the same product [00:57:51].
- People: Hiring employees extends the business’s capacity and expertise beyond one individual’s lifespan and experience [00:58:27].
- Code/Products: Creating something once (e.g., software, a book) that can be used or sold millions of times without further effort [00:59:22].
- Skill: Developing expertise allows for greater efficiency and results per unit of effort [00:59:58].
The relationship between work, volume, and leverage is critical: Work = Volume x Leverage [01:00:10]. In the beginning, with low leverage, individuals must compensate with high volume to build skill, which in turn increases leverage [01:00:41].
Sticking with It: The Power of Compounding and Focus
Sustained financial growth requires uninterrupted compounding [01:02:07]. This means ruthlessly focusing for long periods and saying “no” to distractions and new, seemingly attractive opportunities that can disrupt current progress [01:02:37]. The path to success often involves:
- Uninformed Optimism: Initial excitement about an idea [01:04:38].
- Informed Pessimism: Realization that the endeavor is harder than initially thought [01:04:47].
- Valley of Despair: The point where most people give up due to difficulties [01:05:02].
- Informed Optimism: Understanding what it takes to succeed and seeing a path to victory [01:05:17].
- Achievement of Goal: Realizing the set objective [01:05:30].
Many entrepreneurs restart at step one, chasing new “quick and easy” opportunities, which ultimately disrupts their compounding growth [01:05:42]. True wealth is often built by concentrating all efforts into one area before diversifying [01:06:50].
Getting Better: Continuous Learning and Feedback Loops
Continuous improvement is essential for sustained growth [01:09:44]. This involves:
- Volume and Data: Generating a high volume of output (e.g., content, sales calls) to collect data on what works and what doesn’t [01:10:01].
- Common Factors Analysis: Comparing top-performing efforts with bottom-performing ones to identify discrepancies and “golden nuggets” for improvement [01:10:06]. This applies to content, ads, sales scripts, and even understanding customer avatars [01:11:48].
- Feedback Loop: Establishing a continuous loop of taking action, observing results, and making improvements to gain skills [01:12:20].
For entrepreneurs, personal growth and business growth are intertwined; when one struggles, the other tends to grow through the painful learning process [01:15:57]. The objective of business is not to “win,” but to stay in business indefinitely, playing an “infinite game” of continuous improvement and becoming the person capable of achieving ever-larger goals [01:17:02].