Picking Your Niche Ep 375



In this episode, Alex from ownacquisition.com delves into the common pitfalls of choosing a business niche, emphasizing the importance of industry experience and understanding over seeking novelty. He critiques the tendency to pursue 'higher leverage opportunities' without foundational knowledge, citing Y Combinator's preference for entrepreneurs with relevant background experience. Alex shares anecdotes to illustrate his point, including the story of an agency owner who lacked real estate knowledge, ultimately advising him to gain direct experience before teaching others. He also stresses the value of solving problems effectively in business and the patience required for true mastery, suggesting that success often takes years, not days. Alex concludes by encouraging entrepreneurs to start and persist in their chosen fields, learning through experience rather than rushing for quick success.

Summary Notes

Importance of Business Familiarity

  • New businesses often iterate on existing concepts rather than being entirely novel.
  • Understanding the niche is crucial; lack of knowledge can lead to failure.
  • Past experience in an industry is highly valued, as seen with Y Combinator's investment criteria.
  • Excellence in execution within a known space can be a winning strategy.
  • Providing superior value to customers is more important than innovating a new industry.

"A lot of times new businesses are not actually really new. They're slight iterations on things that are old."

This quote emphasizes that innovation in business often comes from making improvements to existing ideas rather than creating something entirely new. The significance lies in recognizing that success can be achieved by refining and enhancing what already exists.

Undervaluing Improvement and Execution

  • Many entrepreneurs underestimate the potential of simply doing things better.
  • Success can come from excelling in basic aspects of business, like customer service.
  • The focus should be on outperforming competitors in delivering value, not necessarily in inventing something new.

"I don't even do anything new. I just try and do stuff better which people somehow poo poo on."

The speaker shares their personal approach to business, which involves improving existing services rather than inventing new ones. It highlights the misconception that only new ideas are valuable and counters it by stressing the importance of execution quality.

The Value Equation in Business Strategy

  • The value equation is a concept from the speaker's book about providing more value than competitors.
  • The industry itself doesn't need to be new, but the service or value provided should be superior.
  • Service quality, like "service with a smile," is underrated but can be a significant differentiator.

"How am I going to use the value equation in the book how am I going to provide more value to my customers than anyone else can?"

This quote refers to a strategic approach detailed in the speaker's book, focusing on delivering superior value to customers. It's relevant because it frames the business strategy around customer value, not industry novelty.

Real-World Business Experience

  • Lack of real-world experience can hinder an entrepreneur's ability to deliver results.
  • The speaker advised an agency owner to gain firsthand experience before teaching others.
  • Successful application of knowledge in a real setting is a prerequisite to guiding others in that niche.

"You don't know what you're doing, which is why your clients aren't getting results, period."

The speaker confronts an agency owner with the truth about their lack of expertise, which is directly impacting their clients' lack of success. This quote is critical as it underscores the importance of deep understanding and experience in one's field of business.

Transitioning from Theory to Practice

  • The speaker suggests that practical experience is essential before starting a business that advises others.
  • Gaining experience by working directly in an industry can provide insights that are not apparent from the outside.
  • The story of the agency owner serves as a cautionary tale about prematurely launching a service business.

"I think that if you know how to get real estate leads, then you should go get your realtor's license, go generate your own leads, and go build a real estate business and learn it."

This quote is the speaker's advice to an underperforming agency owner, emphasizing the need to acquire practical experience before attempting to lead others in the same field. It's relevant as it illustrates the transition from theory to practice as a foundation for credible business advice.

Experience and Expertise in Business Niches

  • Authentic experience in a niche is crucial for success.
  • Understanding a niche means knowing the jargon, the customer avatar, and the specific problems within that industry.
  • Real experience allows for the identification of opportunities and the creation of effective solutions.
  • Business fundamentally involves solving problems and ensuring the financials make sense.

"And the problem is, too many of the people who are watching this right now, y'all are on the sidelines and have always been on the sidelines and are trying to pick a niche to get into, to sell. How to do the niche. Well, that's dumb. You've never done it."

This quote emphasizes the mistake of attempting to enter a niche without prior experience, highlighting the importance of firsthand knowledge before trying to sell expertise or solutions.

"We'd love to see that you have experience in the payment space because there's so much stuff that you don't know that, you know."

The speaker stresses the value of having industry-specific experience, as it equips one with the necessary insights and understanding that can't be easily acquired otherwise.

The Simplicity of Business

  • Business is about identifying problems, gauging their significance, and finding profitable solutions.
  • The effectiveness of a solution influences the business's growth through word-of-mouth and potential virality.
  • Making a compelling offer is the first step in building a business.

"And fundamentally, business is just solving problems that exist and making sure the math makes sense. That's literally it."

This quote breaks down the essence of business to its core components: problem-solving and financial viability.

"Really how well you solve the problem is going to dictate how much virality your business has."

The speaker indicates that the quality of the solution provided by a business will determine its success and organic growth.

Mastery and Teaching

  • Achieving mastery requires enduring a period of being inadequate.
  • One must accept the learning curve and put in the necessary work to improve.
  • After gaining expertise, the decision to teach others or to expand one's own business arises.

"You have to do the rocky cutscene, you have to eat the shit for a period of time so that you can get the reps in, so you can put your time under the bar in, so that you can actually get good."

This quote metaphorically describes the hard work and perseverance needed to achieve proficiency in a given field.

"And then at that point, then you'll actually have a real decision to make, which is, I'm actually really good at this thing. Now that I've learned, do I want to teach it to other people."

After gaining expertise, an individual faces the choice of whether to teach their skills or to continue focusing on their own business growth.

Growth Through Word of Mouth

  • The speaker's podcast relies on organic growth through listener recommendations.
  • The speaker encourages listeners to share the podcast in the same way they discovered it.
  • This approach to growth is based on creating value that listeners will naturally want to share.

"The only way this grows is through word of mouth. And so I don't run ads, I don't do sponsorships, I don't sell anything."

The quote explains the podcast's growth strategy, which relies solely on the value provided to listeners and their subsequent recommendations.

"My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast, that you do the exact same thing."

The speaker requests listeners to share the podcast, perpetuating the organic growth cycle and fostering a community of entrepreneurs.

Addressing Listener Questions

  • The speaker engages with the audience by addressing questions received through social media.
  • Listener interaction is a key aspect of the podcast's format.
  • Addressing real questions helps provide tailored advice and maintains listener engagement.

"And so this is kind of where I think the problem is that I had another question that was sent to me on Instagram, which is like, hey, how do I soft churn?"

This quote indicates that the speaker actively interacts with the audience by addressing specific inquiries, which keeps the content relevant and practical.

Importance of Skill and Quality over Quick Financial Goals

  • The client's focus on scaling to $100,000 a month is misguided without having the necessary skills and quality service.
  • Lack of testimonials indicates a lack of proficiency in their service.
  • The goal should be to improve the quality of service, not just to increase income.
  • Rushing to achieve financial goals without the requisite skill is counterproductive.

"You're not good at the thing that you're supposed to be good at, which is why you don't have testimonials, is why you're not going $100,000 a month."

This quote emphasizes the importance of being skilled in your field as a prerequisite for financial success and the acquisition of testimonials.

The Process of Learning and Starting from the Bottom

  • Starting at the bottom is crucial for understanding the entire pathway of a client or industry journey.
  • Depth of experience and trench knowledge are gained from working up from the bottom.
  • This comprehensive understanding allows for more effective application of skills.

"The best ways to learn stuff is starting at the bottom... you will have more trench knowledge, more depth of experience that you will be then able to apply."

The quote highlights the value of beginning at the foundational level to gain in-depth knowledge and experience that is applicable later on.

Building a Solid Foundation for Your Career

  • Careers should be built like pyramids, with a strong foundation supporting the peak.
  • The work you do contributes to your development as much as you contribute to the work.
  • Struggle does not equate to failure; it is part of the process of improving and building a foundation.

"Buildings are built with foundations and your career is a pyramid. And the peak of that pyramid is based least on the depth of the foundation that you build."

This quote draws a parallel between building structures and careers, emphasizing the necessity of a strong foundation for long-term success.

The Inevitability of Success with Time and Effort

  • Continuous improvement leads to progress and eventual success.
  • Dedication over a long period, such as ten years, will result in proficiency.
  • Enjoyment of work comes with being good at it, which leads to business success.

"If you put enough time in, period. I promise you that if you don't stop doing something for ten years, you'll be really good at it."

The quote assures that persistence over a significant amount of time will inevitably lead to mastery of a skill.

Unrealistic Expectations and Time Horizons

  • Many entrepreneurs have unrealistic expectations of becoming successful in a very short time.
  • A typical time frame for success is around five years of consistent effort.
  • Success requires learning a wide range of skills and aspects of business operations.

"Every entrepreneur that I know of puts five years in before anything really happens."

This quote sets realistic expectations for new entrepreneurs, indicating that significant success usually requires several years of dedicated work.

The Learning Curve in Entrepreneurship

  • Entrepreneurship involves learning various skills from lead generation to payroll.
  • The complexity and breadth of required knowledge make quick success unlikely.
  • Entrepreneurs must be prepared for a substantial period of learning before achieving success.

"There's a lot of stuff you got to learn. And so to think that it's somehow going to take 90 days, it's like, why do you think..."

The quote underscores the extensive learning process involved in entrepreneurship and challenges the notion of rapid success.

Respecting the Game

  • Understanding the depth of any field requires time, similar to getting a degree in chemistry.
  • Mastery in entrepreneurship, like any other discipline, cannot be achieved in an overly short period such as 90 days.
  • Experience is crucial, and one must respect the time it takes to build expertise.

You have to respect the game. Like, a lot of people have been playing this for 40 years.

This quote emphasizes the importance of acknowledging the time and effort that experts have invested in their fields, which cannot be bypassed quickly.

Starting Young and the Value of Time

  • Starting early in entrepreneurship provides a longer time horizon to gain experience.
  • The speaker began their entrepreneurial journey at 23 years old.
  • There is an analogy made between physical training and business experience; both require consistent effort over time to see results.

I started when I was 23. The only thing I could have done before that without doing that is just start instead of going to college.

The speaker reflects on their own start in entrepreneurship and the notion that earlier is better, suggesting that the traditional path of college might be bypassed for direct industry experience.

The Necessity of Volume and Loving the Boring Work

  • Repetition and volume of work lead to a deeper understanding that cannot be rushed.
  • Loving the process, even the monotonous aspects, is key to long-term success.
  • One should not be discouraged by self-imposed timelines.

You got to do the boring work, and you got to love the boring work.

This quote highlights the importance of embracing all aspects of work, including the repetitive and less exciting tasks, as they are fundamental to achieving mastery.

Starting a Business and Picking a Niche

  • To pick a niche, one should start with any area that is not repellent and where others make money.
  • Starting a business requires basic steps like setting up a bank account and an LLC.
  • Industry experience is often a prerequisite for success and securing resources like loans.

How do you pick the niche? How do you know where to start? You don't know where to start. You just start.

The speaker advises that the best way to find one's niche is to begin somewhere and learn through the process rather than waiting for the perfect starting point.

The Role of Industry Experience

  • Banks prefer lending to individuals with relevant industry experience.
  • Working in the industry before starting a business can be invaluable, as shown by the gym owner's story.
  • Prerequisites exist for a reason, and skipping steps can lead to failure.

So what he did was he went to Bally's and worked at Bally's for like three or four years and worked his way up to becoming the personal training manager, and then at that point started his gym...

This anecdote serves as an example of how gaining industry experience can be more beneficial than immediate entrepreneurship, providing practical knowledge and financial stability.

Introduction and Farewell

  • The speaker introduces themselves as Alex from ownacquisition.com.
  • They mention their business's annual revenue to establish credibility.
  • Alex welcomes new viewers to the community and signs off.

So, anyways, if you're new, I don't know if I said in the beginning, but my name is Alex from ownacquisition.com, about $85 million a year.

This introduction is used to establish the speaker's authority and experience in the field of entrepreneurship, setting the stage for the advice given in the video.

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