The Entrepreneurial Journey Ep 296

Alex Hormozi dissects the challenging evolution of entrepreneurship, emphasizing the necessity for identity and control shifts as a business scales. Hormozi, with over $110 million in sales across three companies, shares insights on the 'buyback principle,' where entrepreneurs must progressively relinquish control and delegate tasks to grow effectively. He discusses the transition from doing basic tasks to outsourcing complex roles like sales and leadership, highlighting the importance of knowing 'where the bodies are buried' to maintain sufficient oversight without micromanaging. Hormozi's key message is that trust and the ability to let go of control are critical for scaling a business beyond personal limitations.

• Entrepreneurship demands personal change, affecting identity and values.
• Entrepreneurs must adapt their worldview and operational approach.
• Growth in entrepreneurship requires altering one's sense of control.

"The reason entrepreneurship is so difficult is because it forces you to change who you are, your identity, the values that you supposedly have as you continue to grow."

This quote emphasizes the personal transformation required in entrepreneurship, which extends beyond core values like honesty to encompass shifts in worldview and business operations.

• Entrepreneurship involves transitioning from limited control to complete control over outcomes.
• Initial leap to full control is crucial but can become a growth barrier.
• The concept of "buyback principle" involves reinvesting in the business to reclaim personal time.

"And so at the end, so what I'm going to do here is I'm going to explain kind of how control shifts throughout the entrepreneurial journey where people get stuck."

Alex Ramoza introduces the topic of control in the entrepreneurial journey, indicating that he will discuss how control dynamics evolve and where entrepreneurs commonly face obstacles.

• Entrepreneurs initially reclaim time by delegating lower-skilled support tasks.
• As the business grows, higher-level tasks like billing and collections are delegated.
• The principle involves a progressive reinvestment in the business to free up the entrepreneur's time.

"And so what that leads to is kind of this buyback. And I think the first time I heard this recently was Dan Martell is talking about buyback principle."

Alex Ramoza references Dan Martell's "buyback principle," which describes the process of entrepreneurs buying back their time by delegating tasks within their business.

• Alex Ramoza hints at sharing a valuable rule of thumb learned from scaling multiple companies.
• The rule is implied to be related to managing control and delegation effectively.

"And at the very end of the video, I'll tell you basically the most valuable rule of thumb that I've learned in scaling our companies."

This quote teases the sharing of a key lesson Alex Ramoza has learned about scaling companies, which is likely a strategic insight into managing control and delegation.

• Entrepreneurs struggle with relinquishing control in various aspects of their business.
• Delegating tasks is necessary to buy back time and grow the business.
• Each level of entrepreneurship presents discomfort as it requires giving up control over a familiar task.
• Identifying too closely with certain roles can hinder the delegation process.
• Outsourcing is essential for tasks that are not the most financially rewarding for the entrepreneur's time.

"No one can sell like me. No one gets it. Like, I get it. People just don't relate to my customers."

This quote highlights a common belief among entrepreneurs that they possess unique abilities that can't be replicated by others, particularly in sales.

"And the thing is that every time you add someone in and you buy back more of your time, you relinquish control."

Alex Ramoza emphasizes the trade-off between gaining time and losing control when delegating tasks to others.

"So that's the first level of fulfillment. First level of delivery is training."

Training is identified as the initial task that entrepreneurs should consider outsourcing.

"Well, if you have work that pays you $100 an hour, then you should be doing the $100 an hour and not the $15 an hour work."

Alex Ramoza explains the economic rationale for delegation, suggesting entrepreneurs should focus on higher-value work.

"And then after that, usually the business owner will do contracts, billing, and they're usually not that good at it anyways because they're entrepreneurs."

The quote suggests that entrepreneurs may not be the best at tasks like contracts and billing, hinting at the importance of delegating these tasks to more capable individuals.

"Well I used to say the same thing until I had someone who was better at tracking the money than I am."

Alex Ramoza shares his personal experience of overcoming the reluctance to delegate financial oversight by finding someone more skilled in that area.

"But then eventually there's too many consultations that have to happen and I still have to run the business, right."

The quote addresses the scalability issue in sales, where the entrepreneur's time becomes a bottleneck, necessitating the delegation of sales roles.

• Entrepreneurs can personally handle sales up to a certain revenue threshold.
• Beyond a certain point, such as a million dollars in annual revenue, it becomes impractical for a single individual to manage all sales.
• Delegating sales to others is a significant hurdle but is necessary for further growth.

"But once you cross a million it's usually difficult to be doing the selling yourself."

Alex Ramoza states a common milestone at which entrepreneurs need to start delegating sales tasks to continue scaling their business.

• Scaling sales involves transitioning from personal control to teaching a group how to sell.
• Managing a sales team requires recruitment, hiring, training, compensation, and relinquishing certain levels of control.
• Growth beyond $10 million in revenue necessitates further relinquishing control, particularly in leadership.
• Effective leadership at this stage means leading a small group who then lead others, maintaining control over the company culture.
• The challenge is to identify what aspects of control one is trying to maintain and what part of their identity is tied to that control.
• The business model should not rely solely on the founder's level of sales; it should work even when others sell at half the founder's rate.
• The goal is to eventually have salespeople who can outperform the founder, as their sole focus is on selling.
• Relinquishing control is necessary, but the founder must still take full accountability for the results.

You have to give that control up, right? The next level after doing control of the sales is now you have to teach other people in a group, not just one person but a group of people how to sales.

This quote emphasizes the shift from individual control over sales to teaching and leading a group to sell, which is a necessary step in scaling a business.

Because there's too many departments, too many people. You can't lead everyone, right? So you have to lead a small group of people and get them to lead the people who are underneath of them.

This quote highlights the complexity of leadership as a company grows and the need to delegate leadership to others in order to effectively manage a larger organization.

What am I trying to control? And I think if you think about that, and then rather, what part of my identity am I giving up by giving up this control?

This quote reflects the introspection required when a founder gives up control, questioning both the practical and personal implications of this change.

You be able to have people who close half as many as you and still make the model work.

This quote underlines the importance of a robust business model that can sustain sales even when individual performance is lower than the founder's.

How far away do you get when you relinquish control? Because the thing is, you relinquish control, but you still take full accountability and responsibility for the results.

This quote introduces the concept of maintaining accountability for outcomes even after control is delegated, which is critical for successful leadership and business growth.

• The speaker promotes their book, "100 million dollar offers," available on Amazon for $0.99 on Kindle.
• The book is described as a gift to the community, with the ulterior motive of fostering future business partnerships.
• The speaker has invested significant time in writing the book, suggesting it contains valuable insights.

On Amazon, it's called 100 million dollar offers that over 8005 star reviews. It has almost a perfect score. You can get it for $0.99 on Kindle.

This quote serves as a promotional message, highlighting the book's high rating and low cost as incentives for potential readers.

I put over 1000 hours into writing that book and it's my biggest gift to our community.

The speaker emphasizes the effort and dedication that went into writing the book, framing it as a substantial contribution to their audience.

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.

This quote reveals the speaker's strategic intent behind the book promotion: to build rapport with the audience and lay the groundwork for future business collaborations.

• Recognizing the problems within each department is crucial for effective leadership.
• Awareness of issues indicates a leader's appropriate involvement in departmental operations.
• Not knowing the problems equates to being too detached from the department.

"Know where the bodies are buried. And so what I mean by that is, if I don't know where the flaws are in a department, I'm too far away."

This quote emphasizes the importance of being aware of the internal problems within a department to maintain sufficient oversight without being overly controlling.

• Transparency within departments is necessary for a leader to be effectively informed.
• Paying attention to areas with issues is part of a leader's responsibility.
• Positive-only feedback from a department could indicate a lack of transparency or attention from leadership.

"It's just I need more transparency. I need to be paying more attention to that area."

Alex Ramoza points out the need for increased transparency and attention when a leader is unaware of departmental problems, suggesting that without this, they might be too removed from essential operational details.

• Trusting others is a critical component of building a successful venture.
• Personal issues, like trust problems, can hinder a leader's ability to delegate and grow a business.
• Taking responsibility for one's own actions is essential to overcome personal barriers and regain control of outcomes.

"Well, get over it, because you're not going to build something great without trusting other people."

The speaker highlights the necessity of overcoming trust issues to succeed in entrepreneurship, implying that trust is a cornerstone of effective leadership and business growth.

• The entrepreneurial journey involves a cycle of gaining and relinquishing control.
• Progression in a business requires the ability to delegate tasks across various operational levels.
• Leaders must learn to balance the act of buying back and relinquishing control to grow their businesses.

"I can go through this process and continue to buy back and relinquish control. Buyback and relinquish control. Buyback and relinquish control."

Alex Ramoza describes the ongoing process of managing control within a business, indicating that a successful entrepreneur must be flexible with the levels of control they exert over different aspects of their company.

• There is a paradox between controlling everything and achieving freedom.
• Excessive control can be counterproductive to the goal of being free.

"How can you be free if you control everything?"

The speaker questions the concept of freedom in relation to control, suggesting that true freedom might be incompatible with the need to control every aspect of a business or situation.