The Game with Alex Hormozi - 3 Tactical Ways to Immensely Grow in a Service Business | Ep 426

Episode Date: August 25, 2022

Advance your way to the top with these tactics! Today, Alex (@AlexHormozi) talks about one of the fastest ways to make a tremendous amount of money in a service business by looking into the 3 different categories that fall under this umbrella. He also talks about how looking at your business through this perspective can help you get to the top faster than you think (which has been clearly seen with his portfolio companies’ growth!) Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(2:09) - Sell products/widgets, services, and access in your business.(4:09) - Enhance product value by adding components like services.(5:56) - Explore six categories of diverse business offerings.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

What are the different types of products that we can sell? And I'll show you one of these that's incredibly valuable that if you're ever pressed for cash, it's the easiest thing that you can sell for a ton of money. The wealthiest people in the world see business as a game. This podcast, The Game, is my attempt at documenting the lessons I've learned on my way to building acquisition.com into a billion dollar portfolio. My hope is that you use the lessons to grow your business and maybe someday soon partner with us to get to $100 million and beyond. I hope you share and enjoy. What's going on, everyone?

I want to show you one of the fastest ways to make a tremendous amount of money in a service business. All right. So right now, if you want a service business or any kind of business where you provide stuff, two customers, if you sell stuff, then this is for you. If you don't know me, my name is Alex Ramsey, I Own Acquisition.com. We do about $85 million year in revenue. And this channel is just because a lot of people are broken, I don't want you to be one of them. All right. So I was thinking about the different businesses that we have. We have a publishing business. We have a photography business, which is a chain of brick and mortar. Somebody asked me in one of the comments to name them out. I don't tell you the actual names of

these because part of the deal structure that we have with a lot of these are influencers-based or personality driven brands. And so I don't want it to be like, oh, you're just one of Alex's businesses. All right. So just to be clear for everybody, the reason I don't do that, I'll tell you the ones that I own 100% of, but the ones where I'm a minority partner in, I don't tell you what they are. I'll tell you what categories they're in. So like I said, we've got a publishing business, which is a digital, digital business. We have a brick and mortar chain photography studios. We have a certification business. We also have an online. It's a similar business, but online for trainers. We have, We have our gym licensing business, which is gym launch.

We have our supplement business, which is Prestige Labs. And then we have Allen, which is our software company for agency owners that helps brick and mortar agencies work leads. So you're curious, that's what we do. And we're looking at getting some others. Anyways, so one of the things that I was thinking about within our businesses is like, what are the different categories? And this was kind of a spinoff of the recurring video that I made about cracking Netflix's code, right? Is what are the different types of products that we can sell? And I'll show you one of these that's incredibly valuable.

If you're ever pressed for cash, it's the easiest thing that you can sell for a ton of money. All right? So first, I was like, you've got products, right? You've got widgets. You've got stuff. All right. That's the first category. The second category, let me see if I can draw some nice lines here.

The second category is you've got services, right, where people do stuff for other people. And the third, and this is the one that a lot of people miss out on, is access. All right? So I'm going to go through all three of these in a second. All right. So products, everyone should kind of understand what these are, right? you get these in the mail, and they can also be digital goods. So here's an A, AB version of each of these, right?

So you've got physical, and then you've got digital. So you've got physical product would be getting supplements in the mail. A digital product would be buying Netflix, like, you know, buying a Netflix subscription, right? That's where you're consuming a digital good, right? When you buy media, that is a digital good, right? You're buying eyeballs, right? If you're buying physical services, that would be like buying a massage, right? you've got digital services.

This would be like a marketing agency, right? It would be a digital service. You're not buying something that's going to happen in the rural world. You're buying something that's happening in the digital sphere, right? The third is access, where you've got physical access, which would be like concert tickets, right? You have access like to someone or to an experience of some sort. And then you've got digital access, right? Which would be you buy access either to a virtual event or you have access to me via Slack or something like that, right?

That would be digital access, all right? Hey, Mosin, a quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right, so send me a connection request and note letting me know that you listen to the show and I will accept it. There's anyone you think that we should be connected with, tag them in one of my or layless posts and I will give you all the love in the world. All right. So let's get back to the show. And so when you're thinking about your products and services, right, one of the easiest things to do to make it more valuable is think, how can I add? If you have, let's say, products, how can I add some sort of service component to it to make this more valuable? And we do this so that we cannot be a commodity, right?

The goal is to be so different from everyone else in the marketplace that people have to consider you on their own as your own standalone business so that you can have monopoly prices. All right, despite what the government will tell you in antitrust laws, the goal is to become a monopoly. Like you win the game by being monopoly by being so good that no one else can compete with you, right? And now, because those companies have so much power, they own the government now. Anyway, not getting into that. That's not the point. All right, but the point is you can pair these concepts. So most people just consider themselves, I am just a physical products business.

It's like, okay, well, can we add some sort of digital products, right, to our physical products to enhance the value and differentiate ourselves? If I have a service, I have a physical service, maybe I can add some sort of digital component to it, or maybe I can add some physical products that go with it or digital products, right, they go with it. Or thirdly, is there a way that I can add access, which is probably one of my favorite of the types of businesses, and here's why. check this out. This one has almost 100% margins, right? Digital access is almost 100% margins. Same thing with

digital products, almost have 100% margins, right? Digital services, less so. So services, just so you're wondering, by so many service businesses of a hard time scaling, this is very hard to scale people. It's also hard to scale things that have hard costs, right? And scaling people, you have to scale culture, you have to scale training, it's to scale onboarding. There's a lot of things that have to scale for scaling services, which is why most people don't like buying those types of businesses, which is why if you want to increase your enterprise value, it's trying to figure out how you can add multiple of these things. So I just gave you six different categories here, right, of things, of different types of things that you can have in your business. And so right now,

when you're thinking about how you can add more value, right? And I'll tell you the hack right now. So you guys ready for this in terms of if you needed to make money. The way that you do this, all right, and this is my favorite one that you can use, which is access, is that you sell a more individualized, higher touch version of your own solution. All right? And so what that means is you can say, hey, I can only take five people for a one-on-one, right, or a small group, right, experience for one year for this big outcome that they're all going to want and I'll guarantee that you'll get it or I'll keep working with you

for free until you do, all right? Which means when you buy this thing and when you give me this money right now, it means that you've solved this problem. You can put this money down and it means that outcome is going to happen. I'm going to try and get it to happen 12 months because I don't want to keep working for free, but you know that I will continue to work with you until you achieve it. All right now, if you have a client base and you're like, man, I'm strapped for cash. And the only way that they can do this is if they prepay the entire period of time.

All right. And so the thing is that you don't need to have any kind of discount for an offer that's structured like this. And the reason that they're getting a lot of value is because they're getting access, right? They're getting access in addition to a service. All right. And they're getting some level of expertise on top of it. And so right now, if you need to make an extra $5,000. grand, 10 grand, 20 grand, 50 grand, whatever it is that you have depending on the size of your

business. That is one of the easiest, fastest ways to generate cash flow for your business and use some of the audience while still maintaining good pent-up demand. All right, what I mean by that is that if you sell a hundred of these or you sell out in terms of like you sell out all the demand that's there, you running something else in the future will bomb, right? And so the idea is if you know that you could sell 20 people, sell 5. If you know you could sell 100 people, sell 20, right try and maintain the vast majority 80% of the demand is still there and have it pent up so that when you do another offer like this in the future you'll sell out again and the idea is that as you grow the number of people that you will have in that demand pool will continue to increase and so you will

always be able to sell out but the number of total slots will continue to increase whereas most people always go for the biggest ask they possibly can try and sell out and liquidate all the goodwill they have in their audience all the time which means they're always searching for building up the next demand, which is why they're always poor because it's very hard to do that. All right. It's much easier to maintain goodwill and multiply it and then feed and then just skim a tiny amount off the top and then grow the goodwill of the base to go from, you know, 100 people in your base who want to buy the thing to 200 people in the base and the next time

you go from 20 to 40 rather than going from 20 to 200, right? Because you could do it, but then after that, you're done. Nothing. You got to start from scratching it. And so it's much better to always keep some goodwill kept up. And one of my favorite ways to liquidate that in a very, controlled burn manner is to have access so you can have implied urgency and implied scarcity with a very, very high ticket premium. And you'll probably get some of the best customers

to do this with you. They'll be the least needy, believe it or not. And get some great testimonials and great outcomes as a result of it. So anyways, Mozy Nation. Like I said, my name's Alex for Mozy on Acquisition.com. I would do $85 million a year and I have nothing to sell you. All right. So keep being awesome.