From: alexhormozi
This guide outlines a framework for starting a business, focusing on identifying your “what” (business idea), “who” (target audience), and “how” (solution delivery and messaging) to effectively serve your first customers [00:00:00]. The process aims to help you find your “best bad idea” quickly, allowing for iteration and refinement over time [00:04:16].
The “What”: Identifying Your Business Idea
Businesses are often born from one of three “Ps” [00:00:43]:
- Pain: Something you personally experienced and overcame [00:00:49]. An example is a mother of nine who developed a system for preparing daily lunches [00:01:06].
- Profession: Your current or past day job skills [00:01:30]. A registered dietitian, for instance, learned to quickly bill insurance at a hospital and then taught others how to do it [00:01:42]. Solving one very specific problem can form the basis of a business [00:02:10]. Any professional skill can be leveraged for consulting or teaching [00:02:39].
- Passion: Topics you are inherently interested in, such as articles you read or podcasts you listen to in your spare time [00:02:54]. The speaker’s personal interest in fitness led to friends suggesting he start a gym [00:03:09].
It’s important not to worry about picking the perfect idea on the first try [00:03:51]. The act of picking a “best bad idea” begins the iteration process through customer feedback [00:04:06].
The “Who”: Defining Your Target Audience
Once you have a “what,” the next step is defining your “who” [00:04:45]. There are three categories for identifying your target audience:
- People Like You: Those who share a problem you have overcome [00:05:25]. This approach often leads to “missionary” businesses, where you genuinely care about delivering an exceptional product because you understand their pain [00:07:31].
- People You’ve Helped Before: This could be for money or as a favor [00:05:50]. The speaker’s first paid interaction was helping a gym acquaintance with her food [00:06:06].
- Underserved Markets: Identifying growing markets with unmet demand [00:07:07]. While more formal, most heart- and mind-driven businesses stem from the first two categories [00:05:07].
Narrowing Down Your Avatar
To get really clear on your target audience, think of it as having five frames to narrow down your “avatar” [00:08:18]:
- Age [00:08:26]
- Gender [00:08:26]
- Profession [00:08:26]
- Problems/Pains [00:08:30]
- Interests/Passions [00:08:34]
You should pick at least three of these to create a specific enough description [00:08:42]. For example, “35-year-old male accountants who are bored at their jobs” [00:09:03]. The goal is to describe the person so precisely that they know you’re talking to them [00:09:49].
The Power of Specificity
It’s a common misconception that narrowing your niche limits your earning potential [00:09:54]. In reality, the more specific you get, the more you can charge [00:10:00].
For instance, a broad “time management” product might sell for 199 [00:10:22], and “the entire outbound time management system for garden and power tools” could command $10,000 [00:10:41]. When you are the best and only solution for a highly specific niche, you operate in a “blue ocean” with minimal competition, allowing you to set premium prices [00:11:00].
The “How”: Describing Your Solution
The “how” involves two parts:
How Part One: The Upside (Good Stuff)
Describe all the positive outcomes and experiences your solution helps them achieve [00:12:01]. Consider:
- How much easier their lives will be [00:12:13].
- How guaranteed the outcome is [00:12:18].
- How much faster they will get what they want [00:12:24].
- How it would feel to experience their dream scenario [00:12:28]. These four elements constitute the value equation, written positively [00:12:35].
How Part Two: The Downside (Bad Stuff)
Describe the negative things your solution helps them avoid [00:13:34]. This is the inverse of the upside, focusing on:
- Risks you help them avoid [00:14:56].
- Slowness they won’t experience [00:15:04].
- Pain, sacrifice, and suffering they avoid [00:15:11].
A compelling message effectively describes both what the customer will gain and what they will avoid [00:14:03]. The more specific you are about their pain, the more they will believe you [00:14:21].
Gathering “How” Information
If your target audience is not “you,” gather information by “asking people” through interviews [00:16:51]. Ask 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 [00:17:18].
- What good things do you normally have to give up? [00:17:21]
- What bad things do you normally have to start doing? [00:17:25]
The answers to these questions will inform “how part one” (good stuff) and “how part two” (bad stuff) [00:17:39].
Putting It All Together: Your Core Message
Combine all elements into a simple sentence: “I help [WHO] get [GOOD STUFF] without [BAD STUFF] through [UNIQUE MECHANISM (optional)]” [00:18:02].
Examples:
- “I help 35-year-old male accountants get a new income stream without losing their current stability” [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].
This specific phrasing makes the person feel like you are directly addressing them [00:19:22].
Bonus: The Unique Mechanism
A unique mechanism differentiates your solution from competitors, even within a narrow niche [00:19:49]. It’s your “special sauce” or proprietary process that makes prospects feel like they’ve found the missing piece to their success [00:20:27].
Your unique mechanism can be:
- A list of things someone has to do to achieve a result [00:21:10].
- A series of steps to follow in sequence [00:21:26].
Naming this proprietary process makes it your unique mechanism [00:21:48]. Examples include P90X’s “muscle confusion” or Weight Watchers’ “point system” [00:22:15]. This mechanism acts as the “vehicle” to take clients from their current state to their desired outcome [00:22:43].
Getting Your First Five Customers
To get your first five customers, use this simple warm outreach system [00:23:41]:
- Greet someone [00:23:48].
- Mention something specific about them as a compliment [00:23:50].
- Insert the unique sentence you crafted (“I help who get good stuff without bad stuff…“) [00:23:52].
- Ask if they know anyone who could benefit from that [00:23:56].
Perform this process for four hours a day or until you reach 100 people [00:24:04]. Consistently applying this method will help you secure your initial customers [00:24:13].