The Game with Alex Hormozi - Flows & Bottlenecks...💦💦💦 Do you know your cash flow pipeline --How to never hit the brakes on growth | Ep 115

Episode Date: March 21, 2019

By having all attention allocated to the biggest bottleneck, the business can grow faster. Today, Alex (@AlexHormozi) discusses the importance of identifying and addressing bottlenecks in a business in order to maximize growth. He emphasizes the need to focus on the five core functions of a business, allocate and prioritize resources, and deliver more value to customers than expected.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:(0:55) - Maximizing growth by allocating and prioritizing resources(2:45) - Identifying and executing core business functions(4:11) - Overcoming bottlenecks for business growth(8:10) - Improving retention rates through effective problem-solving(9:27) - Creating permanent solutions and scaling your business using the three P's(11:34) - Resolving business bottlenecks for sustainable growthFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

What's going on, everyone? So I hope you guys have an amazing day. I wanted to make this piece of content to you, for you, by you, at you. I'm calling this flows and bottlenecks because I was feeling the flow, and I'm showing you my flow. But actually, because I wanted to talk about one of the things that I think has been key to our continued rapid growth, and it is identifying bottlenecks and only focusing on those things. So for those of you new to this, there are five core functions of every business. And if you are not rating yourself on them, then it is very difficult for you to improve on them.

And so if you think about every business is allocated the same initial resources, which is time, right? And so I feel like I'm making this half as a spoof, because for those of you don't know, there is a spoof piece of content that all the gym lords made that we released that they made as a joke for me, making fun of me, which was awesome. But I'm going to be covering some of those things of how we, we went from zero to like, I mean, now we're at like a $50 million run rate in just under two years, right? And so how do we do that? And if every other competitor in the space has access to the same workforce, right, they have access to the same things to advertise on in order to get talent, and they have access to the same information because it's the internet, and they have access to the same amount of time per day, how can one business move faster than another, right?

And it's by allocating and prioritizing the things that you're going to work on and making sure that the things that you are working on are not just things that you should be doing, but are the one thing that is going to move the ball forward. And so if all of your attention is allocated towards just the biggest bottleneck or the only bottleneck, then you will be able to grow faster. So think about it just like a flow, right? So the business flows first from lead generation, right? Like getting inquiries about people who want to work, want your service, right? The second thing is lead nurture. So how do we get these inquiries? How do we turn them into people who are ready, willing, able, and likely to purchase services

from us, right? And that comes to two components. One is scheduling. The other is showing. And the third is kind of a soft component of that, which is how do we get them to show up with intention to buy, right? Which is warming up a prospect. The third thing is sales.

How do we convert that person from a prospect to a customer? Once we have converted the prospect, then we have fulfillment. So how do we deliver on the promise? that we made, but not only deliver, deliver in such a way that is so much above what we promised that they're blown away with the abundant exchange that we've provided, meaning they gave us $200, but we've provided $1,000 for the value, which is a very fun experiment if you ever want to get into that, like getting into it with your coaches or trainers and say, like, how can we, so everyone pays us $200 a month.

What would we provide for $1,000 a month, everything that we would do? What would we provide if they were paying us $1,000 a month? and then make a huge list and then cross off only the things that have absolute hard costs and then try and do the rest of those things. And if you do those things consistently, people will start feeling like you're delivering so much more value than you're providing. And that's when referrals kick in, that's when retention kicks in, et cetera. And then the last piece is how to like, so you have lead generation, lead nurture,

sales, fulfillment. And the last one is retention slash ascension, meaning how do we get them to buy again? again and again, or ascension, how do we get them to upgrade to a higher level of service, right? And so there's the five core functions. A lot of you guys have heard me say this. There's two other functions over here, which are HR and finance, which for most brick and mortar smaller businesses you don't need to concern yourself with, but they are functions of the business that need to be mentioned.

So how do you identify which of these things you need to work on and then disregard everything else? And so Reed Hoffman, who's the founder of LinkedIn, talks about how sometimes, being a lazy CEO is actually really good. Because if you're a lazy CEO, then what you do is you try and delegate everything and really try and do as little as humanly possible in order to get the job done,

which in some ways can actually be a huge blessing because you're like, man, all that stuff sounds like a lot of work. What is the one thing I should really do? And so what we do every single quarter, which I'd highly recommend you do right now, if you have it, is look at that flow and figure out where the bottleneck is. So right now, if you're growing, right? Or rather, how about this?

If you're not growing, then one of these five things is your bottleneck. Straight up. One of them is your bottleneck. Typically in the beginning, most people think their bottleneck is lead generation, because that's the beginning of the pipeline. And sometimes that's true, right? Like you don't get enough inquiries, right? But there's multiple reasons you might not be getting enough inquiries.

You might have really shit fulfillment, which is why no one's asking or no one's sending their friends because they're kind of half embarrassed that they even pay you, right? That could be the issue. The issue might not be lead generation. Maybe you suck at sales. If you get 10 people walk in the door and you're only closing two of them, you suck at sales, right? You don't need more lead to.

Right. And so once you identify which one of those things is the bottleneck, right? Then all you need to do is literally disregard everything else in your life, disregard every other guru, every, like, every motivational manifesto, whatever it is. and then the fix for it is one of three things it's either a person a process or a project and i'll cover each one of those so at some point you will get good enough at this thing that you will be able to have a person do it for you for less if you are able to teach them right training is a classic example in the beginning you started training and then very quickly you are able to train someone else to train at as high

higher of a level for your clients than you were. And so you were able to teach them how to be a great trainer. And then you got that time back in exchange for $15. And as long as you are able to make more money with that same amount of time because you have a more valuable skill set, then you will make money. You're getting a positive ROI on the time. Because ultimately, as a business owner, all we ever do is continue to trade up on our time. Hey, if you're a return listener and you have not rated or reviewed the show, I want you to know that you should feel absolutely terrible about yourself and everything else in the world. I'm kidding.

But it would mean the absolute word to me if you guys would go ahead and do that. You don't even have to pause the show. You can keep listening and you can just do it with your thumb right now. It'll take you less than 60 seconds. And like I said, the only way that podcast grows through word of mouth and this is you joining hands with me and helping as many entrepreneurs as we possibly can because no one is coming to save us. It's just us. All right. So please go do that now.

And let's get back to the show. Right? Because like right now, like right now, what is the act? Like I don't do any of our sales. I don't sell launching. I don't sell legacy. I don't run our traffic. I don't.

Like, I really, you know what I mean? So the skill set that I have to have now that's higher is literally just like making strategic decisions, looking at the entire landscape of the marketplace and saying like, this is where we're going to allocate all of our resources for the next nine months and we're going to do nothing else. That's what I have to do, right? And that's a very valuable skill. It doesn't take a time of time, though.

Be really honestly. But it's a really valuable skill set. And so the rest of my time, I'm able to buy. back by spending money that I otherwise make if I were taking sales calls so that I can do the one thing that matters most. So to go back, right now, one of those things is your bottleneck. It does not serve you. In fact, it actually hurts your business to do anything but work on your bottom back. I'll say it again. If you were doing anything but working on the one thing that is holding you back, you're wasting your time. If you're working on retaining your

your customers better, right? And I'm going to use lead generation because it's an obvious one and this is easy. And that's what everyone thinks. So I'll go with it. But I'm not saying this is you, but I'm saying I'm just going to go with it for this case of the example. If your retention right now is at 3% month over month, like churn. So you keep 97% of your clients month one, month two, month three, right? Then you should not be focusing your time on going from 3% to 1.5% because your effort will be better allocated on generating more inquiries. Fulfilement's not your problem right now. So you basically need to go create something that's going to create the problem again

because ultimately all we're ever doing is solving problems. And so maybe you have a 3% month-over-month churn when you only have two new customers in because you can give all of them backgrubs and you can sing to all of them and text them all every day smiley faces because you don't have a ton of inquiries, right? But if all of a sudden you're signing up 30 new clients a month, right, on EFT, then all of a sudden you're attrition spikes. Why? Because now that becomes the biggest bottom. And so the difficulty that, like, here's the fundamental thing that all business owners have to do is fix your one problem, see what next breaks in this pipeline. Maybe lead generation gets fixed and then no one schedules and no one shows. Okay. That's where our attention needs to be.

But when you put your attention here, you need to maintain your performance here. And that is literally the secret. That is it, is can you put the person processor project in place after you have figured out the bottleneck and opened it up as a flow? Can you keep it open while you move down the pipeline to the next piece? And that is ultimately how you're able to scale each piece of your business and continue to rise the whole thing rather than saying, here's the five things that are going on in the business.

I fixed lead gen, and then lead nurture was a problem. And then you go to lead nurture, but then your lead gen stops. is a problem. And then finally, someday you get lead gen and lead nurture to work. And then you're like, ah, but I can't sell. And so you keep bouncing and juggling back and forth

because you don't actually fix the problem, right? And so when you are fixing the problem, use the three peas and figure out what is there is a person who needs to be there, a process that needs to get fixed or a project. And project is a special one because most times it's you as the business owner. The project may be I need to go acquire the skill,

right? I need to acquire the skill of training a salesperson. I need to acquire the skill of learning to generate leads. I need to acquire the skill to learn how to make an automated lead nurture process. That's like project and processes together, right? I need to acquire the skill of creating a system to retain customers. And so if you think about things in terms of like the skills that you lack or the deficits that you lack, you will be able to identify the bottlenecks and then put one of those three pieces in place and then put the skill set on yourself of managing it. So if you put a salesperson in place, you'd be like, well, that salesperson sucks, he's not consistent. Or, which you can't control, right? Or is that you lack the skill set to create a sales environment

that is consistent. And when you reframe all of your problems is, what deficit do I have to fix this bottleneck and turn it into a flow? Then you'll be able to fix things at a much faster rate. And you'll only need to focus on that one thing. And then you'll create permanent solutions, which will allow you. You'll grow all five. First, you'll fix your lead and you'll nurture yourselves fulfillment, reselling ascension. And then you go back to the front again. And then you're like, okay, so I've got lead gen on point. How do I do more?

How do I do more? And then as soon as you do more in lead gen, lead nurture breaks again. Because it's like, well, make the old system I had could work up to this amount. But then after that, it breaks again. Sales, I had one person, but I have so many people coming in the door. I need two or three salespeople, right? And those are the problems that will continue to happen. And if you're wishing that you don't have problems, you should not be a business worker.

because they will always be there, but that's good. Growth problems are still problems, but they're much better than bankruptcy problems. So anyways, flows a bottlenecks, look at your five-four functions, figure out which one of those things is your bottleneck, disregard everything else in your life, and fix it with a person, a project, or a process.

And if it is a project, frame it in the terms of what skill set do I lack in order to make this work or make it work consistently, even when I am not there so I can put my attention on the next bottleneck without this one going down. So I don't have to play whack them with my business, but instead I'm able to consistently work my way down the pipeline,

increase it, and then start back at the beginning. Lots of love, but you can drop a like or a comment or anything. I will always do my best respond. Bye.