The Game with Alex Hormozi - Simple Operational Framework | Ep 212

Episode Date: June 5, 2020

Is your team really providing value to the business? Today, Alex (@AlexHormozi) talks about the key to scaling, some guide questions you can think about when you’re assessing the workflow in operations, and making sure that your employees are really working at their optimal degree.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:(1:52) - List outcomes, treat business as pipeline, use 4-step process.(3:06) - Identify outcomes, list activities, create supporting roles.(5:14) - Streamline role responsibilities, avoid overload, satisfy client needs.(7:50) - Guide scaling, manage expectations, expand capacity.(10:29) - Guide employees, provide value, clarify tasks.(11:53) - Do boring work, improve team performance, propel company.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

I think the easiest way to structure operations is first list out the things, the desired outcomes that need to happen. Welcome to the Jim Secrets podcast where you talk about how to get more customers, how to make more per customer and how to keep them longer, and the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe. Happy Thursday. Hope things are going well for you wherever you are at or whenever you're listening to this. I don't get a lot of questions about operations. they just become obvious that they are a problem within a lot of the people that we help serve. And so it's interesting because now that we work on the Allen side with resellers,

it's very clear who is good at operations and who is not. And that is typically based on the size of the business. The people who are better at operating are the ones who make more money. And this is kind of one of the unspoken secrets of the entrepreneurial world, especially within the internet space that we live in now. It appears to be all about marketing and sales. and lead gen and acquisition. And although those are very important things

and you have to start there, it becomes very clear that typically the entrepreneur has that promotion type of character traits and doesn't dedicate the time to study the operational components of the business, which typically are the reasons that someone is or is not successful. And so I wanted to give you at least

my simple mental framework for how I think about operations in general. and scaling operations. And so for the vast majority of people listening here, you're probably under eight figures, some are under seven, but most people are listening to this are probably business owners in the multiple 100,000 a year to several million a year.

And so for that, so this is who I'm talking to within that context. I think the easiest way to structure operations is first list out the things, the desired outcomes that need to have. happen. All right. And I think of business very much as a pipeline, which is from click to close to resell, right? And resell within different businesses can be retaining them so that they pay again, or it could be a variation of a sentient. But when I say click, it means how do I get someone to click?

And that's just within the internet environment. Click to opt in, to schedule, to show, to buy, to then ultimately want to buy it again. And so if you have, like with our gyms, a four-step sales, process or three-step sales process that's happening, there are clear activities that need to happen, right? And so in the beginning, you will have your front-end sales. And so you need to list that as one of the activities, right? Because the objective would be to sell them. The activity is to take the call. Next, you'd have the nutrition orientation, which be the next time you'd meet with them. So then you need to allocate how many of those you're going to need based on your current inflow. And so the nice thing is, is that there's a ratio of for every 10 customers, we need to do four of these, two of these,

two of these, and one of these, right? And so what you can do is once you realize what the outcomes are, you can list out all of the activities that are required. So for a typical client, we might know that it takes about two minutes per client per day. And if we know that a coach has three hours, like we want to say one or cap a coach at 100, then we know that that coach is going to be able to do that within X amount of time, right? And so then we book that time on that person's day. And so what happens is what you should do when you're creating your company is when you're creating each of the roles that are going to support you, you need to look at a calendar and look at what the times of day that this person is going to be working and what they're going to be doing

with each hour of their day. And so you simply take the activities and the allocated time that they need to work and place those on their calendar. And that's honestly all there is to it. All right. So I'm going to give you an example that hopefully flesh this out a little bit. But within an online fitness business, which many of you guys are operating right now, there's really for, if demand gen is being taken care of, right? So if lead gen is being taken care of and lead nurturers being taken care of, and I'm saying that because it'll make the example simpler, but also because that's what we do in our company for gyms, is if those two things are taken care of, then there's really not. a lot that needs to happen right so first you need to have first sales calls right to get new customers

talking to prospects then you need an onboarding all right that onboarding is to be typically a nutrition orientation and also walking through the app and the tech and the things that need to happen and and that's it right the third thing that will need to occur will be some sort of ascension conversation which is going to sell them into continuity all right so that's number three now every customer is going to have one of these things right and so if you're selling here it is you're selling 10 people a week then you need 10 if you're going to if you're going to maintain that flow then if you know that your front-in sale is 30 minutes your nutrition appointment is 30 minutes and then your ascension is 30 minutes then for every client that you're

bringing in you have an hour and a half per week that's going to be allocated right now you can divide that up between different people but the keys to scaling is that eventually it becomes too much for one person to do all of those activities and then you start blocking entire pieces of that type of activity to the next person, right? And so I'm going to continue with the example. After that, the only other activity that's going to be there would be either recruiting coaches, right, and obviously the fulfillment. And so let's say that the average customer is going to take five minutes a day. I said two earlier, but let's just say it's five minutes a day, right? And somebody has, whatever it is, five minutes is a lot. Let's say, say two for math sake.

So 200 minutes, if you had 100 clients per day, is what's going to be allocated. So that's whatever this, three hours and 20 minutes. So you look at someone's schedule. Now, that's obviously in a perfect scenario. But I'd look at one of my coaches' schedules and say, okay, we're going to do 90 minutes in the morning and we're going to do 90 minutes in the afternoon and we're going to block those times out. So just like that, we have eight hours a day. Now I have five hours left. What else do I want this person to do?

Well, I probably want them to take the onboarding conversations with. the new customers who are coming in, right? This is a coach. And I know that if we generate 10 new customers a week on average, then that's going to take five hours per week, which means I can block one to two hours a day for that and be totally fine. Right. So I might block, now this is where availability becomes interesting because if you just do it at noon every day, the new customers might not be able to make that time. Right. And so I might have, you know, slots on Monday, Wednesdays, and Fridays at one time and then Tuesdays and Thursdays at another time and that way it gives them some different times to select from right but again we have our

daily activities now that you know for that coach is going to be the fulfillment that's ongoing we might also have them do the nutrition orientation which would be an hour or two hours per day right so if we have an hour we'll say an hour per day so now we've got four of their eight hours that have been taken now we've got four more hours that can be used by this person hey guys real quick if you're new to the podcast. I have a book on Amazon. It's called $100 million offers that over 8,000 five-star reviews and it has almost a perfect score. You can get it for 99 cents on Kindle. The reason I bring it up is that I put over a thousand hours into writing that book. And it's my biggest gift to our community. So it's my very shameless way of trying to get you to like me more

and ultimately make more dollars so that later on in your business career, I can potentially partner with you. So that's my give. Go check it out, Amazon, and back to the show. So now we have options do we want this person to create content do we want this person to do outreach do we want this person to uh gosh i mean whatever i mean do we want to expand this person's capacity right so there's or we would know that this person's currently at 50 percent utilization now if you flip that and then think well maybe this person can take some of the exit meetings right so this is maybe this person can take some of the content now this is strategic questions not operational questions but i'm saying this is how you structure it operationally it's like okay if we're selling 10 people a

week then we need to have uh 10 halfway conversations uh where we're going to send them into continuity and then we'll also maybe have transformation meeting which is the end where we take the pictures and all that kind of stuff and so if we know each of those meetings takes another 30 minutes each each per customer if we know that we know that we get 10 new customers per week then we know that's going to be another hour so 10 hours per week uh total so that's another two hours per day assuming that they're working five hours a week and so now we're at six hours per day of work all right now that's if someone's being perfectly efficient i would still expect people to be perfectly efficient because i think you don't you get what you tolerate um and so that would be six hours a day for a coach now at

that point this coach is handling uh basically everything post the initial sale right they're managing the ongoing fulfillment they're managing the onboarding activities for these new customers and they're managing the back-end meetings with them uh to convert the them into continuity, right? And so all of these things put together would create a role within the business. And so my ask or my recommendation for you is if you haven't done this activity, it provides you immense clarity in understanding what are the different activities that need to occur in the business to make more money. And then once you have the list of the activities, then you know how long each of the activities could take. And then the only variable that will dictate

how many of them you have is what your inflow is, right? And so if you know what your inflow is and you know what your base of customers is and your attrition, you can very accurately back into what an ideal day looks like for each of the roles within your business. Also, the bigger you get, the more you will find inefficiencies where you're starting these partial roles, they're getting full-time pay for half-time work. And so this allows you to be more efficient because you can say, hey, I know you're only at 40% utilization why are you telling me that you're too busy right now why are you telling me that need to hire another coach what else are you doing that is not within these parameters now if someone

then says well i'm doing this this and this and it's like oh now either they'll be founded at things like things that are useful and you know value producing or they won't be many times they're not but that's not because the person who's your employee is doing this out of you know nefarious intentions they're not trying to be malicious they're not trying to hurt your business it's simply because a lot of people just don't even know it's valuable right and so they they're they're trying to work they're trying to provide value but a lot of times they just don't get how like they just a lot of times they don't understand the bigger picture or why you're not having someone do something right but if the thing that

they're doing is is a core activity like I got to check in on these people I got to add them to this it takes this long to get the documents back or you know sometimes we have these past password issues then you can see is this something that we can fix operation within an additional process or is it something that we can either throw out and then get this person to refocus and then increase how much work they're doing by adding more clients to their roster, et cetera. And so all this to say, this is how I've thought about operations, is just in terms of activities and units of time, and then expect it inflow.

And so based on those three variables of this is how many people are coming in, these are the activities they need to happen, and this is how long they should take, then it allows you to account for all the things that need to happen in the business and will ultimately allow to have a more efficiently run shot. Now, I guarantee you that because of the headline that I had, Operations for Dummies, this will be one of the least listened to podcasts out there. But it is the reason that the people who make the most money make the most money. And I just cannot tell you, like, the amount of people who have access, who have tried to copy our stuff at Jim Lunch and our one-tenth, one-twentieth the size of what we are.

And guys who, just like, it's the boring work. It's the rolling your sleeves up. It's the repetitive work. It's the meetings and training your team on improving how good they are doing the things. That is ultimately the thing that's going to propel a company. And those things are based on culture and tolerance of the leader. And so I just want to leave you with that. So if you feel like you're constantly overwhelmed and you don't feel like you have transparency

into what your people are doing, you're like, what are they doing all day? This is the activity that you can do that will give you immense clarity and transparency to what their actions are. So you can also structure the business to make the most money. and also find inefficiencies or additional tasks that you're not accounting for that they are doing, which are either revenue generating or requirements or they're totally worthless activities that they're simply doing because they just don't know any better. And so highly recommend doing it. And if you don't know where to start, the easiest thing to do is have your employees take a time study.

So a time study is very simple. You have an Excel sheet. You have every 15 minutes of the day. And you just have them write down what they did for each of those 15 minutes. Now, they're going to think that's going to take a lot of time. You are never more efficient than when you do a time study. Every time I do one, I tell myself I'm going to do it again forever and then I don't. But you will literally be more efficient in your work than you ever will because you know that you're being held accountable to it.

All right. So it's like whenever Layla and I need to go and take a close to good apartment, the first thing we do, like these numbers aren't adding up. This feels weird. This feels heavier. This feels light. Whatever it is, we go. We ask them to do time today for a week and then we look at their activities. You can also very quickly see where there's bullshit, right?

people are like uh responding to emails i'm like why do you have three hours of emails is there something i don't know about how long does it take to reply to an email how many emails are you getting every day and so that's how you can start peeling the layers back and seeing if someone's being dishonest which happens right and that they're doing it because they want to keep their job and i get that but that being said it's not useful for the business and so um that is how if you want to get a baseline of like okay well now i know what all the activities are you can deem whether they're valuable and you can deem whether you want them to keep doing it or whether they're expanding their time, sorry, expanding their activities to meet the amount of time that they're

supposed to be working. All right. So that is my, my quick, that's kind of my mental framework for how I look at operations and how to structure them for different roles within the company, is first look at the outcomes that you want, the activities you need to generate that, that outcome, how long does activities take per customer, per unit, and then you can extrapolate out based on the volume, based on the inflow, what each role needs to do, and then at what points you will have breaking points where somebody will become overwhelmed and you need to create a new role. All right. So anyways, I hope that was valuable for you.

Hope that made sense. Otherwise, have a happy Thursday. Happy Corona. Happy quarantine. And I hope you are adapting because you have no choice but to do so otherwise. All right, lots of love. Kids, guys soon. Bye.