The Only 2 Real Things Restraining Business Growth Ep 326

Alex Ramosi, host of the game-themed podcast, discusses the common entrepreneurial trap of starting new ventures instead of scaling existing successful ones. He recounts interactions with business owners, including one earning $550,000 a month from telehealth clinics considering a new venture to help physicians, and another with a $4 million info product business looking to expand into apparel and supplements. Ramosi emphasizes the importance of focusing on removing the single biggest constraint to growth, rather than diversifying or starting new projects, citing the Theory of Constraints. He advises entrepreneurs to ask what's stopping their business from scaling and to concentrate efforts on that specific problem, thereby effectively growing their companies.

• Speaker A emphasizes the significance of being reminded of what we already know rather than always seeking new teachings.
• The saying "We need to be reminded more than we need to be taught" is a recurring theme and a mantra in Speaker A's world.
• This concept is tied to the idea of focusing on refining and repeating successful actions rather than constantly looking for new ventures or solutions.

"We need to be reminded more than we need to be taught. That is a saying that we have in my world."

This quote introduces the theme and sets the stage for the conversation's focus on revisiting and reinforcing successful strategies over seeking new instruction.

• Speaker A discusses a business owner's success in growing their business to $550,000 a month and the desire to start a new venture.
• The business owner transitioned their clinics to telehealth during Covid, which resulted in increased profits.
• Despite the success, the business owner is considering starting a new business to help physicians improve their medical practices, inspired by Speaker A's licensing model with gym owners.

"I had a business owner reach out yesterday who was doing about $550,000 a month... We took everything to telehealth, and then our profit exploded."

This quote describes the business owner's current success and the significant pivot to telehealth that boosted their profits.

• Speaker A expresses disinterest in the business owner's new venture proposal due to several red flags.
• The concerns include entering an established, saturated market with a non-unique value proposition and lack of extensive personal experience.
• Speaker A challenges the business owner to focus on scaling their current successful business instead of diverting to a new, uncertain one.

"First off, you want to enter a new market... It's also not that unique. There's plenty of other people who do this same thing."

Speaker A outlines their reasons for not wanting to engage with the business owner's proposed new venture, highlighting the lack of uniqueness and the competitive nature of the market.

• The business owner admits to being stuck and unsure of how to further grow their successful business.
• Speaker A prompts the business owner to consider the potential of tripling their customer base and significantly increasing their monthly revenue.
• The discussion leads to the realization that the desire to start a new business stemmed from a lack of clear strategy to scale the existing one.

"Why don't you want to take the thing that's making you $550,000 a month that you grew in two years, and just take that to 5 million a month? Why aren't you doing that?"

Speaker A questions the business owner's rationale for seeking a new business instead of focusing on expanding their current successful operation.

• Speaker A critiques the flawed reasoning pattern of starting a new business as a solution to feeling stuck in an existing one.
• The conversation reflects a common tendency among smart individuals to divert attention to new projects rather than solving problems within their current ventures.
• Speaker A reiterates the need to focus on repetitive but successful actions, aligning with the theme of reminders over new lessons.

"Because you got stuck in this existing business, you thought the solution would be, I will start another business. Not a good deductive reasoning pattern, right?"

This quote highlights the illogical decision-making process that the business owner exhibited, which Speaker A identifies as a common issue among entrepreneurs.

• Plateauing occurs when a business can no longer grow due to reaching the total addressable market.
• A business may plateau if it has saturated the market, such as achieving a 70% market share of poodle food sales.
• The only rational reason for plateauing outside of one's control is a change in market size or conditions.
• Diversifying or changing verticals is a strategy to avoid plateauing when the market is saturated.
• A shrinking market can cause a business to plateau, as seen in the newspaper advertising industry.

"The only reason a business should plateau, that is reasonable. That is not your fault, is that you have reached the total addressable market, as in, you have saturated the total market of that thing."

This quote emphasizes that plateauing is acceptable when a business has completely saturated its market, meaning there are no more customers left to acquire within that niche.

"So a different example is a friend of mine owns a company that does newspaper advertising... And he could not grow his business because newspapers have shrunk by 25% year over year... And so he got to a point where he couldn't grow any more than just basically servicing the ones that are still alive."

This quote illustrates how external market conditions, such as the decline of the newspaper industry, can lead to a business plateauing despite the owner's efforts.

• Business owners often look to expand into new areas instead of maximizing the potential of their current successful products or services.
• A lack of knowledge on how to grow the existing business is a common reason for seeking expansion.
• The focus should be on understanding and overcoming the constraints that prevent further growth of the current business.

"And I just kind of sat there and I was like, well, I think that's a terrible idea... Why don't you just take the thing that's making you $4 million and make it make you $10 million? Why don't you do that? And the answer is the same as the first answer. I just don't know how."

This quote expresses the speaker's belief that a business owner should focus on scaling their current successful product rather than diversifying into new, unproven areas due to a lack of knowledge on how to grow.

• The theory of constraints posits that a system will grow until it encounters a limiting factor.
• Once the limiting factor is addressed, the system can resume growth until it meets the next constraint.
• Understanding and addressing constraints is crucial for continuous business growth and success.

"I'm a big believer in theory of constraints, which means that a system will grow until it is constrained, right? It has a constraint, and then once you remove the constraint, it'll continue to grow until it reaches another constraint."

This quote summarizes the theory of constraints, highlighting the importance of identifying and solving the bottlenecks that prevent a business from growing. The speaker advocates for focusing on these constraints to facilitate sustained growth.

• Identifying the primary constraint is crucial to business growth.
• There's typically only one main issue hindering growth at a time.
• Once the primary constraint is addressed, another may emerge, but it's not the immediate concern.
• Prioritization helps focus efforts on what truly matters for growth.

"And I think that one of the things that we have done well is prioritizing what problems to solve, and that is understanding the prioritization of problems and realizing that there is really only typically one or two things that are constraining our growth."

This quote emphasizes the importance of identifying and focusing on the key constraints that limit growth, suggesting that successful problem-solving begins with proper prioritization.

• The podcast relies on word of mouth for growth, not ads or sponsorships.
• The host asks listeners to share the podcast as others did for them.
• Sharing is a way to support the podcast and help other entrepreneurs.

"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. 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."

This quote explains the podcast's growth strategy, which is solely based on listeners sharing it with others, and it serves as a request from the host for listeners to continue this trend.

• A young business owner's main issue was the inability to scale a sales team.
• Despite other possible improvements, scaling the sales team was the critical constraint.
• Reinforcing the message that nothing else matters until the sales team is scaled was necessary.
• Phrasing deficiencies as questions can help in finding solutions.

"And so we ended up circling back two weeks later, and he was like, hey, I want to know how I can get the most out of this phone call with you? And I was like, well, have you scale the sales team yet? He was like, no. And I was like, well, then we don't really have anything to talk about, because there's nothing else that matters right now besides this."

The relevance of this quote is to demonstrate the necessity of addressing the most critical issue—in this case, scaling a sales team—before anything else in the business.

• Businesses grow to the level of the entrepreneur's competence.
• Starting a new business is not a solution if the underlying issues are not addressed.
• Entrepreneurs must overcome their limitations to scale their businesses beyond a certain point.

"But the reality is, and this is what I have found over and over again, is that the businesses will grow to the level of incompetence of the entrepreneur."

This quote highlights a pattern observed by the host, where a business's growth potential is capped by the entrepreneur's ability to manage and grow the business effectively.

• The speaker emphasizes that an individual's level or skill set in business is determined by their beliefs, traits, and skills.
• It is highlighted that to achieve growth in a business, one must change one of these elements.
• The speaker points out the rarity of CEOs managing multiple publicly traded companies, with Elon Musk being a unique exception.
• The challenge of running a single business is stressed, and the speaker advises against complicating it by trying to manage multiple ventures.
• The speaker suggests that entrepreneurs should focus on identifying and addressing the single most significant constraint that prevents their business from scaling.
• The process of scaling a company is described as appearing fast from the outside but feeling manageable and clear from the inside due to a focus on solving one problem at a time.
• A step-by-step approach to solving problems such as improving a sales team, training, and lead generation is recommended.
• The speaker warns entrepreneurs against starting new businesses or product lines as a solution to stagnation in their current business.
• Alex Ramosi introduces himself, mentions his website acquisition.com, and invites listeners to access free trainings and subscribe for more content.

"Your level, that is your skill set, right? That is dictated or predicated by your beliefs, your traits and your skills."

This quote sets the stage for the discussion on personal growth and business development, suggesting that an individual's business acumen is shaped by their beliefs, personality traits, and skills.

"And unless you change one of those things when you start the next business, you will be capped at that."

The speaker implies that without changing one's beliefs, traits, or skills, there is a limit to how much they can grow in their next business venture.

"Elon Musk is the only exception. But he's the founder. He's not the one who's running. He's not the operator of those companies."

This quote highlights Elon Musk as an outlier in his ability to manage multiple companies, noting that his role is more of a founder than an operator.

"And so the point of this is that you can't be CEO of two things. It's hard enough to be in one business."

The speaker stresses the difficulty of successfully running even a single business, let alone multiple, reinforcing the need for focus.

"What's stopping us from being at 5 million a month? What's stopping us? And until we can clearly answer that question, there's nothing else we need to do."

This quote illustrates the importance of identifying the key obstacle to business growth and concentrating efforts on overcoming it.

"And that, in my opinion, is how you scale companies quickly, is it appears fast from the outside, but from the inside, it feels manageable and clear."

The speaker describes the perception of rapid scaling versus the reality of deliberate, focused problem-solving within the company.

"And I will tell you that there are a lot of entrepreneurs who are listening to this. You right now, it might be you. So I might be talking to you right now, is that you think that you need to start another business or another product line because you are stuck at a current level and somehow think that this new product line or new business is going to solve the problem, and it is not."

This quote warns entrepreneurs against the misconception that diversifying into new businesses or product lines is the solution to stagnation, emphasizing the need to address existing constraints.

"So if you like this Mosey nation, my name is Alex Ramosi. I own acquisition.com."

Alex Ramosi introduces himself and his business, positioning himself as an authority on the subject and offering further resources to the listeners.