Who To Hire First Ep 370

Alex Hormozi, the host of a business strategy show, delves into the critical decision-making process of hiring when scaling a business. He emphasizes that entrepreneurs often don't know the perfect timing or who to hire first, suggesting they assess tasks by the percentage of time spent and cost-effectiveness. Hormozi advises focusing on activities that maximize time and revenue, recommending administrative or fulfillment assistance as initial hires. He also touches on the importance of productizing services for consistent customer outcomes and teases an unreleased chapter from his book to help segment customers for increased profitability.

• The uncertainty of knowing the right time to hire is a common challenge for business owners.
• Alex Romosia introduces a tool for thinking through time allocation in a business day.
• The tool involves assessing the greatest percentage of time spent and the lowest cost activity.
• Assigning value to different tasks is crucial, with a preference for activities that generate the most money.

"So number one question I get all the time is when should I hire? Who do I hire? At what point do I know it's right? And the first secret to this is that you're never going to know."

This quote emphasizes the inherent uncertainty in making hiring decisions when scaling a business.

"The way that you determine which of these things you hire next is you look at two factors. Number one is what is the greatest percentage of your time? Like where is the greatest percentage of your time that you are spending? Number two is what is the cost? That's the lowest cost activity. That is the highest percentage of time."

Alex explains the two factors to consider when deciding who to hire next: the task that takes up the most time and the task that is the lowest cost activity.

"Now, you can look at market value or what I prefer to do is which of these things is making me the most money."

Alex suggests that while market value is a consideration, the focus should be on tasks that generate the most revenue when assigning value for hiring decisions.

• Time is segmented into various activities such as admin work, sales, marketing, billing, and customer-facing tasks.
• Business owners should evaluate which activities consume the most time and have the lowest associated costs.
• The value of activities should be determined based on their revenue-generating potential.

"All right, so let's say that this is all of the time that you have in your day, right? And let's say you spend a certain amount of time doing admin work. And then you do some sales and you do some marketing and you do some, let's say, billing. And then you do some customer facing stuff, right?"

Alex breaks down a business owner's day into various activities to illustrate how time is allocated among different tasks.

"And so what you want to look at here is ascribe a value to each of these types of things."

This quote highlights the importance of assigning value to different business activities when considering which roles to hire for.

• Starting business owners often lack clarity on what they are doing, which is considered normal.
• Alex Romosia shares insights from his experience with a portfolio of companies generating $85 million a year.

"So one of the biggest issues is when you're starting as a business owner, is that you don't know what the hell you're doing, right? And that's okay."

Alex acknowledges the common challenge of business owners not fully understanding their roles initially, reassuring that this uncertainty is acceptable.

• Alex Romosia introduces himself and his credentials, including his ownership of a portfolio of companies.
• He provides context for his expertise in advising on hiring and scaling businesses.

"By the way, my name is Alex Romosia. On acquisition.com. We own a portfolio of companies, $85 million a year."

Alex introduces himself and establishes credibility by mentioning his successful business portfolio, which sets the stage for his advice on hiring and scaling.

• Outsourcing is a strategic decision, especially for early-stage businesses.
• Non-essential functions like admin and billing are typically outsourced first.
• Outsourcing less crucial functions early on minimizes the negative impact on the business.

"And so we're not going to outsource something that's crucial to the business at this early stage when we have something, let's say, admin and billing, that we can outsource earlier on that have a lower likelihood of impacting your business in a negative way."

This quote emphasizes the importance of cautiously selecting business functions for outsourcing to avoid adverse effects on core operations.

• Understanding the problem to solve is crucial in entrepreneurship.
• Hiring should aim to give entrepreneurs more time by taking over lower-level tasks.
• The goal is to gain time for the least amount of money, freeing up entrepreneurs for higher revenue activities.
• Ultimately, entrepreneurship is about buying back time and increasing skill levels.
• The highest level of entrepreneurship involves decision-making and providing a vision for the organization.

"So we're really trying to play defense here when we're looking at how we're going to hire and the objective, and this is the main thing here, because understanding what problem we are solving is one of the most important aspects of entrepreneurship, is picking the problem that we're truly solving."

This quote highlights the defensive strategy in hiring, emphasizing the importance of understanding and solving real problems within the business.

"And so the objective of the hire should be to give you time, right? It should be to give you time back."

This quote explains that the primary purpose of hiring is to reclaim time for the entrepreneur, allowing them to focus on more strategic tasks.

"The process of entrepreneurship is just buying back time and increasing your level of skill so that you can do higher and higher revenue activities, right to the point where the only thing, and I'll tell you where, the final place that you'll have is that you'll just be making decisions."

The quote outlines the entrepreneurial journey as a process of gaining time and improving skills, culminating in a role focused on decision-making and strategic vision.

• The first hires in a startup are typically administrative help or a first follower.
• These initial hires support the entrepreneur and believe in the vision of the business.
• Early hires are crucial in shaping the direction and capacity of the startup.

"Now, when you're starting out, most times what you will need to end up doing one of your first two hires will be one of these two things. A, it will be some sort of administrative help or some sort of first follower who will help you, who believes in the vision."

This quote discusses the likely roles of the first hires in a startup, focusing on administrative support and someone who shares the entrepreneur's vision.

• Spouses or partners are often the first hire in a new business due to their personal investment.
• The initial hire is typically someone who can perform a variety of administrative tasks or assist with customer fulfillment.
• The first hire is a crucial step in scaling the business as it allows the founder to focus more on running the business rather than just providing the service or product.

"And this is why spouses, a lot of times end up being that first hire, right? That girlfriend or whatever, who ends up believing in you and quitting their job so that they can support you."

This quote highlights the personal nature of early business hires, where trust and belief in the vision are paramount, often leading to a spouse or partner being the first hire.

"The first type of hire is kind of a jack of all trades admin help person."

This quote emphasizes the versatility needed in the first hire, who often handles multiple administrative tasks to support the business founder.

"The other type of hire that I see, so it's usually one of these two, is the first hire is somebody who can assist with the fulfillment."

This quote identifies the second common type of first hire, someone who is focused on customer fulfillment, which is crucial for product or service delivery.

• Productizing a service involves creating a replicable process to deliver consistent outcomes to customers.
• Narrowing down the customer type and service outcome is essential for scalability and training new hires.
• Founders often work overtime in the early stages to establish the business infrastructure.
• The process of productizing allows the founder to delegate tasks and focus on business development.

"So if you have productized your service, which is going to be one of the first things you need to do is figure out how you can reliably replicate the same outcome among customers."

This quote explains the importance of creating a standardized service model to ensure consistent quality and to facilitate scalability.

"So that you can focus on running the business and not actually doing the thing you are selling."

This quote underscores the goal of productizing services, which is to allow the founder to shift from service delivery to business management.

"And so that means that in the beginning you'll need to always work overtime because you're basically working one and a half or double."

This quote acknowledges the hard work and extra hours required in the early stages of a business to establish the necessary systems and processes.

• Building the business infrastructure is a time-consuming but essential task for business growth.
• The founder needs to work on both the business operations and the foundational systems simultaneously.
• Proper infrastructure enables the business to operate efficiently and supports future expansion.

"So you're working on doing the business things while also building the infrastructure or foundation so that other people can work within this model."

This quote points out the dual focus of early-stage founders: running the business day-to-day and creating a sustainable model for others to follow.

• Visual aids can help conceptualize the business structure and the roles needed.
• Writing down the business model and roles can clarify the hiring process and business operations.

"I'll write this down for you so that you can have a visual for it."

This quote suggests the use of visual tools to aid in understanding and planning the business's operational structure.

• Releasing additional content, such as a "lost chapter," can generate hype for upcoming products or services.
• Transparency in promotional tactics can foster goodwill and engagement with the audience.

"I'm releasing it now transparently. I'm doing that to build hype for 100 million dollar leads."

This quote reveals the strategic use of unreleased content to create anticipation and excitement for new offerings, in this case, "100 million dollar leads."

• Alex Romosia discusses a resource for understanding customer segmentation and its importance in maximizing profits.
• The resource is available for free in exchange for an email, which allows Alex to notify users about future launches.
• Customer segmentation is implied as a strategic tool for businesses, particularly those without funding.

You can get it by going to acquisition.com leads. It's for free in exchange for your email so that I can email you when we launch 100 million dollar leads and so that you cannot miss out on it.

This quote highlights the offer of a free resource on customer segmentation in exchange for an email subscription, which serves as a marketing strategy for future product launches.

• Alex emphasizes the typical hiring priorities for founder-owned, bootstrapped businesses.
• The first hires are generally based on tasks that are time-consuming but add little value, allowing the founder to focus on more valuable activities.

Those are typically one of the first two hires you will have. And this is obviously with a broad generalization based on a founder owned bootstrap business that doesn't have funding, which 99% of businesses fall in that category.

The quote indicates that the initial hiring recommendations are tailored to the majority of businesses that are self-funded and require strategic hiring to manage time and resources effectively.

• Alex notes that venture capital (VC) backed startups with multiple founders may have different hiring strategies from bootstrapped businesses.
• The hiring schema for VC-backed startups might be more expansive from the outset due to available funding.

Now if you're a three founder, VC backed startup, then obviously you might have different hiring schema right off the bat.

This quote contrasts the hiring approach of VC-backed startups with that of bootstrapped businesses, acknowledging that access to funding can change hiring timelines and priorities.

• Alex introduces the concept of a value ladder to prioritize business activities and hiring.
• The goal is to spend time on activities that generate the most money in the least amount of time, outsourcing less valuable tasks.
• Alex suggests using this strategy to determine what tasks to outsource and what roles to hire for next.

So that you continue to work your way up this value ladder...they should be the things that take you, that bring the most amount of money and the least amount of time.

The quote explains the value ladder concept, where the focus is on maximizing revenue while minimizing time spent on individual tasks, guiding outsourcing and hiring decisions.

• Alex expresses a desire to help others avoid business failure and succeed in scaling their businesses.
• The motivation behind sharing the video content is to provide value without selling anything.
• Alex invites feedback on whether the advice in the video has been helpful.

Amozi nation make these videos because a lot of people are broken. I want you to be one of them. I want you to scale the crap out of your business, and I'd love to know that this video helped you.

The quote reveals Alex's altruistic intent behind creating and sharing the video, aiming to assist viewers in growing their businesses and seeking confirmation of the video's impact.