Your Market is Not Capped Ep 532

Summary Notes


In this episode, the host of "The Game" podcast, who is building a billion-dollar venture with, challenges the common entrepreneurial belief that market saturation limits growth, emphasizing that it's often an entrepreneur's mindset that needs expansion. He illustrates this with stories of business owners who prematurely perceived market saturation, highlighting the vast potential for growth by exploring new methods, platforms, media, and volumes in marketing. He introduces the concept of the "Pyramid of Markets," advising listeners to consider going upmarket, downmarket, adjacent, broader, or narrower to scale their businesses. The host also shares insights from his book "100 Million Dollar Offers," detailing four criteria for selecting a market and the importance of persistence and confronting the work necessary to build a substantial enterprise.

Summary Notes

Niche Marketing and Revenue Potential

  • Focusing on a niche can lead to increased revenue due to untapped methods, platforms, media, and volume.
  • There is a misconception that targeting a niche market limits potential earnings.
  • A niche market is not inherently capped; rather, a business owner's mindset may impose perceived limitations.

"When you do niche down, sometimes you can still make more money because of all the points I said earlier, which is you're not even close to tapping the methods, the platform, the media, or the total amount of volume you need to do to reach all of those people within that niche."

This quote emphasizes that narrowing down to a niche does not necessarily limit revenue. Instead, it suggests that many businesses haven't fully exploited the available channels to reach their target audience.

Mindset Limitations in Business Growth

  • Business owners often prematurely believe they have saturated their market.
  • A capped mindset, rather than market saturation, is usually the barrier to further growth.
  • Examples illustrate how business owners misjudge the saturation of their market based on limited marketing efforts.

"Your market isn't capped. Your mindset is capped."

The quote encapsulates the central idea that perceived market limitations are often a result of a business owner's limited thinking, not the actual potential of the market.

Market Size and Opportunity

  • Business owners should research the actual size of their market to understand the growth potential.
  • The size of the industry can reveal whether a business has truly reached its market capacity.
  • Comparing one's business size to the total market size can help gauge the untapped potential.

"If you're an HVAC and you're making $2 million a year and it's a $50 billion industry, guess what? You're probably not capped."

This quote suggests that by understanding the broader market size, a business owner can realize that their current revenue does not indicate market saturation.

Marketing Framework for Expansion

  • Diversifying methods, platforms, media, and volume can help businesses reach more customers.
  • A systematic approach to marketing can uncover new opportunities within a niche.
  • The framework includes assessing competitors' marketing strategies and expenditures.

"So each of these are levers, and this is just framework number one in terms of how much available is out there, and if you've just done one method on one platform with one medium, and you haven't increased the quantity of that thing, and here's the telltale sign, if there are other people in your market marketing to the same audience."

This quote outlines a framework for expanding marketing efforts and indicates that a singular approach to marketing is often insufficient to fully penetrate a market.

Criteria for Selecting a Market

  • When choosing a market, consider factors such as the presence of pain points, target audience accessibility, and their financial capacity to buy.
  • These criteria are critical for determining the viability of a market and the potential for successful offerings.
  • The market selection process is strategic and should be informed by specific, measurable attributes.

"There's four things I want to look at. Number one, are they in pain? Am I actually solving a problem for someone? Number two, are they easy to find? Because if I can't find them, I can't sell them. Right. Number three, do they have the money to spend in order to buy my thing?"

The quote provides a concise checklist for evaluating a market's potential, focusing on the customers' needs, accessibility, and purchasing power.## Market Selection Criteria

  • Assess if the market has money and willingness to spend.
  • Determine if you can reach the market effectively.
  • Ensure that you are not selling to broke people.
  • Confirm that the market is growing, such as targeting retirees.

"l to broke people, it's probably not going to be a good idea."

This quote emphasizes the impracticality of targeting a market without financial resources, highlighting the importance of selecting a market with spending power.

"I want to be selling to something like old people, that there's more of them every single day that are retiring."

This quote illustrates the strategy of targeting a growing market, using retirees as an example of an expanding demographic.

Market Expansion Strategies

  • Consider new methods and platforms for reaching customers.
  • Expand the type of media used within the current platform.
  • Increase the volume of current marketing efforts.

"Can I do a new method? Can I do it on a new platform?"

This quote suggests exploring innovative approaches and different platforms to attract more customers.

"Can I expand to multiple types of media within the platform I'm currently on?"

The quote implies that diversifying the types of media within an existing platform can help reach a larger audience.

"Can I increase the volume that I'm currently doing in the mediums that I have?"

This quote indicates that increasing the intensity of current marketing tactics could yield more leads and customers.

The Pyramid of Markets

  • There are five directions to expand in any marketplace.
  • Larger markets offer greater revenue potential.
  • Market saturation necessitates expansion.
  • The pyramid model provides a framework for market expansion.

"There are five directions that you can go in any marketplace to expand."

This quote introduces the concept of the pyramid of markets, which outlines five potential paths for market expansion.

"All of them were going after bigger markets than I was."

This quote highlights the importance of targeting larger markets as a key factor in the success of the entrepreneurs in the speaker's story.

Lessons from Successful Entrepreneurs

  • Success often takes time to build.
  • Targeting larger markets can lead to greater financial success.
  • Market saturation requires exploring new market segments.

"Big lesson, big shit takes time."

The quote conveys the lesson that significant achievements in business are not immediate and require patience.

"We'd already spoken with 20,000 of them."

This quote exemplifies market saturation, indicating a need to explore new market opportunities beyond the current niche.

Expanding Market Reach

  • Consider moving upmarket to target higher-value customers.
  • Explore different market segments related to the current niche.
  • Upmarket expansion involves targeting franchise owners or chain owners.

"That's where you go into enterprise sales."

This quote suggests that moving upmarket entails targeting larger businesses or franchises, which can be more lucrative.

"It's bigger stuff. We're talking franchiseors, as in people who have hundreds of locations under one umbrella or multilocation or chain owners that's upmarket for salon owners."

The quote details what it means to go upmarket, specifically for salon owners, by targeting those with multiple locations or franchises.

Audience Engagement and Support

  • The host does not run ads or sell products on the podcast.
  • Listeners are encouraged to spread the word to support entrepreneurs.
  • Reviews and sharing the podcast are requested to help the community grow.

"Real quick, guys, you guys already know that I don't run any ads on this, and I don't sell any anything."

This quote informs the audience that the podcast is ad-free and product-free, relying on listener support.

"And so the only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money."

The quote is a call to action for the audience to help disseminate the podcast's message, which aims to support the entrepreneurial community.## Market Expansion Strategies

  • Discusses five different directions for market expansion: downmarket, hairstylists, adjacent markets, broader markets, and narrower markets.
  • Emphasizes the importance of understanding the size and potential of the market.
  • Highlights the need for specific messaging and offers tailored to the chosen market direction.
  • Suggests that even a smaller, more niche market can be more profitable with the right approach.

"The second direction you can go is you go to hairstylists. You talk about people who are renting chairs and doing hair with their hands full time, not running the business of hair."

This quote identifies a specific subset of the market (hairstylists renting chairs) as a potential area for expansion, emphasizing a hands-on approach rather than business management.

"The third direction you can go is you can go adjacent. So that means like sidestepping."

The quote introduces the concept of targeting adjacent markets, which are similar but not identical to the current market, to expand the customer base.

"The fourth direction you can go is you actually go broader."

This quote suggests expanding the market to include a wider range of services within the same industry, thus increasing the potential customer base.

"The last direction you can go, and this is an interesting point, is the only one that makes your market smaller, but it doesn't necessarily mean you make less money, which is you could become narrower."

The speaker explains that focusing on a narrower market can still be profitable due to less competition and more specialized offers.

Importance of Market Analysis

  • Highlights the need to analyze the market like an investor.
  • Encourages entrepreneurs to recognize the untapped potential of their industry.
  • Suggests that many entrepreneurs underestimate their market share and potential for growth.

"If right now you're not getting as many leads as you want, and you think that your market is saturated because of what you do, and realistically, all you did is you know there's five other competitors, and you think you have 20% of the market, you should be looking the way an investor looks at the marketplace and says, this is a $60 billion industry. I have not even 1% of this industry."

The quote encourages entrepreneurs to reassess their market position and potential for growth, suggesting that they may have a smaller market share than they think and that the industry has more room for expansion.

Leveraging Time and Effort for Growth

  • Discusses the need for patience and effort in growing a business.
  • Mentions a checklist of "should do's" that entrepreneurs often neglect.
  • Stresses the importance of confronting the necessary work to build a larger enterprise.

"Time to build big shit. Usually there's this big checklist that you probably already know as an entrepreneur of what I call the should do's."

This quote emphasizes that significant business growth requires time and dedication to a list of essential tasks that entrepreneurs are often already aware of but may not be implementing.

Choosing a New Vertical

  • Shares personal experience with choosing health clubs as the next move for the speaker's licensing business at gym launch.
  • Implies the decision was based on the principles discussed earlier in the talk.

"The last thing I'll do is I'll tell you the end, why we decided to do health clubs as our next move within the licensing business at gym launch."

The quote indicates that the speaker will explain their own business decision, likely applying the market expansion strategies mentioned earlier, reinforcing the practical application of these concepts.## Market Dynamics in the Fitness Industry

  • The popularity of micro gyms and large group training facilities surged post-2008 due to affordability compared to personal training.
  • Market saturation occurred with too many similar fitness facilities leading to reduced individual business success.
  • CrossFit gyms experienced a significant decline due to over-saturation and resulting business closures.

"All right, they became really popular right after the crash in 2008 because people couldn't afford personal training anymore. And so group training became the more economic option."

This quote explains the rise of micro gyms as an economical alternative to personal training after the 2008 financial crisis.

"CrossFit dropped by 30% because their gyms went out of business, because there were too many of them..."

The quote highlights the decline of CrossFit gyms due to market saturation and the negative impact of too much competition.

Strategic Business Decisions

  • The decision to target health clubs over other markets was based on the potential value provided to these businesses.
  • Health clubs were identified as the segment where immediate and significant financial improvements could be made.
  • The choice was influenced by the business acumen of health club owners compared to micro gym owners.

"The reason we went to health clubs is that I asked our team one question, I said, of these different potential avenues or avatars that we could pursue, who do we provide the most value to by absolute metrics, in terms of dollars made, and it was no contest."

This quote reveals the strategic question that led to focusing on health clubs due to the high value that could be provided to them.

"Health club owners, we are able to immediately make them tens of thousands of dollars within the first month by restructuring some of the things that we could do within their business..."

The quote details the immediate financial benefits that could be provided to health club owners through business restructuring.

Business Owner Mindset and Fit

  • Health club owners tend to be business-oriented, understanding the importance of return on capital.
  • Micro gym owners are often more passionate about fitness than business, requiring mindset shifts regarding sales and business practices.
  • Health club owners are seen as better customers due to their business-first approach and existing investment in their facilities.

"A lot of micro gym owners are fitness passionate first, business second. And so we have to break a lot of beliefs with them..."

This quote contrasts the mindset of micro gym owners with health club owners, indicating the former's need for a shift in business perspective.

"But with the health club owners, they already have ten employees. They've already put $500,000 into the facility. They understand return on capital."

The quote demonstrates health club owners' more advanced business understanding and investment, making them more receptive to business improvements.

Business Model Optimization

  • Choosing the right market segment is crucial for maximizing value and minimizing operational changes.
  • The company conducted a beta test with health clubs that yielded positive results, confirming the market choice.
  • Existing marketing channels and operational systems were already suitable for acquiring health club clients.

"So it was very minimal operational change. We didn't need to learn a lot of new stuff, stuff. We did a beta test with 20 of them. They crushed it."

This quote emphasizes the ease of transitioning to the health club market due to minimal operational changes and successful beta testing.

"And then we used that data to substantiate how we'd market and set expectations for new health clubs that would come in..."

The quote explains how the successful beta test data was used to develop marketing strategies and set expectations for prospective health club clients.

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