The Game with Alex Hormozi - Finding Constrictions In Your Business Will Lead To Growth | Ep 547

Episode Date: June 8, 2023

Watch the YouTube video of this episode HEREMake the most of your time (and your money). Today, Alex (@AlexHormozi) talks about the mistake he’s been doing with his company for two years that made him lose millions of dollars, how he was able to spot the problem, and how taking a step back to find the problem will help you see if your system is maximized to its fullest potential.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:(2:19) - Entrepreneurs add potential to business, not solve constraints.(4:56) - HR tasks too time-consuming, system flawed.(6:01) - Use Quad Marketing Calendar to get new talents efficiently.(7:30) - Ascend and resell customers, manage employees.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition(This episode is a re-run. Original airdate was November 23, 2021)

And so the reason I tell the story is because I just missed out on a bunch of revenue that I should have been able to make because we were solving the wrong problem. 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. I was sitting in my quarterly leadership meeting where everyone had flown into Vegas for two days, talk about the next quarter and our goals for the company. And I stood there and I was listening to what they were saying and I wanted to light my head on fire. What transpired next was a problem

solving process that I want to share with you because it's unlocked $10 million to $12 million in annual revenue for us that we had not been able to unlock for two quarters because of one simple misdiagnosed problem. And so the purpose of this is to hopefully get you to one, avoid making that mistake, but to be able to use this framework. so that you can solve the right problems in your business. So inside of our quarterly meeting, for two quarters in a row, my sales manager set the goal that they wanted to add

six more outbound rooms. Two quarters in a row. Quarter came, quarter left. Quarter came, quarter left. This is the third time that I'd been hearing them make this goal. And everyone was nodding their heads and writing them down and it seemed like everything was hunky dory. And I stopped and I was like,

guys, we've had this goal for two quarters. Why do we expect it to be any different this time? To set the same goal and nothing's going to happen. And for context, the reason I said 10 to 12 million is because every outbound rep generates about $2 million a year in revenue for my business. And so for me to have six more reps is about $12 million. So I'm not just pulling that out of nowhere. That's where it comes from. Back to the story.

I asked him, I was like, why weren't you able to do this? It's like, well, you know, we lost a couple reps this last quarter, even though we hired some new ones. And we pretty much have the same amount as we had four. And I was like, and is that what happened the quarter before that too? He was like, well, yeah. I was like, then how are you going to solve this problem? It's like, I don't know. And then it hit me.

I had been driving this guy and putting my pressure on this guy when he was not the constraint of the system. Let me explain. In every system, you have potential and you have constraints. Most entrepreneurs spend all their time trying to add potential to their business thinking that they are solving the constraint. But we will always grow, any system will grow, up to its constraint and no further. And so right now, your business has a constraint. You have to identify it. And what makes macro speed

happen is not is not the frenziness and the frenetic energy. It's knowing which problems to solve in what order. And the example I'm going to give you is showing you exactly why that didn't happen for one of my companies for this specific channel we were marketing on, which is outbound. Had we identified this problem two quarters ago, we would have added 10 million to our top line for this year, which we won't have. So instead, we're going to get one quarters worth of that. So maybe add 10. million or two and a half million to top on when we should have added 10 or 12 because of this one problem. And from the outside, people are going to say, oh, well, it's because of X, Y, and Z, but they didn't diagnose the root problem. Do you know what it was? I'll tell you. So I then

turned to my HR director and I said, how many, how many people are you sending the sales manager per week? She was like, well, I sent him about one qualified candidate a week. And I was like, okay, how many interviews does it take you to send one qualified candidate? She says it takes five. I was like, okay, manager. How many of these final interviews is it take for you to get one person hired? And he was like, four. I was like, so it takes us 20 people that we got to get through to get one new outbound group. He was like, yeah.

It's like, okay. Now, given the churn that we had in the last quarter and two quarters, because just FYI for everybody, frontline positions in general tend to turn more than manager and leadership positions, just just name of the game. And it was like, okay, so what is our churn in that position? He was like, it's about 20% a quarter. I was like, okay, understood. Now, simple math here, if we have 10 people who are working outbound, that's not the number,

but let's just say it's 10, and we lose 20%, that it means we're losing two people a quarter. If right now the process that you have gets us one new outbound rep per month and we're losing two a quarter, that means we would net one new person per quarter. That is going to be very short of our goal of six. So what do we need to do? We need to fix the actual hiring process in order to meet the goal. Mosy Nation, real quick, if you are a business owner that has a big old business, and wants to get to a much bigger business, going to $50, $100 million plus.

We would love to talk to you. And if you like that, we would like to hear more about it, go to acquisition.com. You can apply anywhere on the page and talk to one of our team and see if we can help you get there. And so what we did was we actually asked the HR director. I said, why are we doing these one-on-one? She's like, well, I thought we had to do that. Miscommunication, right? That's all it was.

It was a miscommunication. So we don't need that for this position. What she now did, the solution to this problem was that she's setting up. She's still running the ads. She's still organizing the interviews. But she set them all up for the sales manager to do group interviews. And now he can do five group interviews for one hour per week. And now he can pick one or two of those people and get them onboarded quickly.

And he can start hiring. He will be able to hit his goal in that way. And so the reason I tell the story is because I just missed out on a bunch of revenue that I should have been able to make. Because we were solving the wrong problem. all of the focus was on the sales manager and who he was bringing in and how he was training them rather than, because that wasn't the constraint of the system, rather than what is the acquisition process for talent? And so I'll give you a framework that I wrote down somewhere that I'll probably share in another, but it's something called the quad marketing calendar. Most people have

no marketing calendar. Smart people have one or two marketing calendars. So the first marketing calendar, and you can draw this, you know what, I'll do it for you right now. All right. So the Quad Marketing Calendar looks like this. Here you've got internal and you've got external. So here you have employees and you've got prospects. Internally, which is this way, you should be marketing to your employees so that you tell them about the vision and about the mission, about why you do what you do. This has to happen all the time so that people continue to want to work for you. Internally to your prospects, which are now customers over here, you need to continue need to market them to get them to buy again and again, right? We need to keep them to keep buying.

Over here, in external, for prospects, you need to get people to become customers. So we're marketing externally. Most people understand this one. This is the one that most people do. Most people don't do this one. Most people definitely don't do this one. And I'll tell you the one that people miss the most. This one is that they don't have an acquisition process for getting new talent. So just like you, you run ads, generate leads, nurture leads, set appointments, sell, fulfill. You should be able to run ads for new employees. You should be generating leads. You should be working those leads. You should be setting interviews, which are sales. You make job offers, just like you make normal offers. And then the onboarding experience that you have for a customer is the onboarding

experience that you have in parallel with an employee. And then just like you continue to ascend and resell your customers, you ascend and continue to manage your employees. These are parallel processes that happen in every business and most people don't know about it. And you heard about it here first at the world's best YouTube channel in the world, the handsomest and most sickly now Rona Ridden YouTuber out there. And this is called the Quad Marketing Calendar, and it was because we were missing this framework, my HR director did not understand this framework that we lost out on $10 to $12 million revenue. And I don't want you to do that. All right.

And so the reason I made this is so that you can recognize which of these four in the Quad Marketing Calendar you are not using so that you can shore up that part of your business and ultimately scale it and make all of your wildest dreams come true.