From: alexhormozi

This article outlines one of the fastest ways to generate significant revenue in a service-based business, as well as broader strategies for increasing business value and differentiating offerings [00:00:01].

Business Categories

Businesses can be broadly categorized into three main types of offerings:

  • Products [01:43:00]: Tangible items or digital goods.
    • Physical Product: e.g., supplements received in the mail [02:16:00].
    • Digital Product: e.g., a Netflix subscription or media consumption [02:23:00]. Digital products often have almost 100% margins [04:28:00].
  • Services [01:52:00]: Actions performed by people for others.
    • Physical Service: e.g., a massage [02:32:00].
    • Digital Service: e.g., a marketing agency [02:37:00].
    • Scaling service businesses can be challenging due to the need to scale people, culture, training, and onboarding [04:36:00].
  • Access [01:59:00]: Providing entry to someone or an experience.
    • Physical Access: e.g., concert tickets [02:48:00].
    • Digital Access: e.g., virtual events or direct communication channels like Slack [02:56:00]. Digital access often has almost 100% margins [04:23:00].

Strategies for Increasing Business Value

To make a business more valuable and avoid being a commodity, consider how to integrate multiple categories into your offering [03:13:00]. The goal is to differentiate your business to such an extent that it stands alone in the market, allowing for “monopoly prices” [03:22:00].

  • If you have a physical products business, consider adding digital products to enhance value [03:51:00].
  • For a physical service, incorporate digital components, physical products, or digital products to complement it [03:59:00].
  • A key strategy for increasing enterprise value is to integrate multiple types of offerings into your business [04:51:00].

The “Fastest Way” to Generate Cash Flow: Selling Access

One of the easiest and fastest ways to generate significant cash flow for a service business, especially when pressed for cash, is by selling “Access” [01:37:00].

The Access Model

This strategy involves selling a highly individualized, high-touch version of your solution [05:22:00].

It typically involves:

  • Limited Capacity: Offering a small number of slots (e.g., five people) for one-on-one or small group experiences [05:30:00].
  • Guaranteed Outcome: Promising a specific, desired outcome for the clients [05:40:00].
  • Performance Guarantee: Pledging to continue working for free until the client achieves the outcome [05:48:00].
  • Prepayment: Requiring full prepayment for the entire period to generate immediate cash flow [06:09:00].

This model derives significant value from providing access in addition to a service and expertise [06:18:00]. It’s an effective way to quickly boost cash flow [06:33:00].

Managing Demand and Goodwill

A critical aspect of this strategy is to maintain “pent-up demand” [06:40:00].

  • Limit Sales: If you could sell to 20 people, only sell to 5. If you could sell to 100, sell to 20 [06:52:00].
  • Retain Demand: Aim to maintain 80% of the potential demand [06:57:00]. This ensures that future offers will also sell out [07:03:00].
  • Avoid Liquidating Goodwill: Don’t try to sell out every time and deplete all the goodwill in your audience [07:18:00]. Continuously searching for new demand is difficult [07:22:00].
  • Multiply Goodwill: It’s more effective to maintain and multiply goodwill, skimming a small amount off the top and growing the base of interested customers over time [07:29:00].

This controlled approach to demand creates implied urgency and scarcity for a very high-ticket premium offering [07:55:00]. It also tends to attract ideal clients who are less needy and yield excellent testimonials and outcomes [08:03:00].