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No hype and no theory – just facts.
Alex Hormozi does $200 million per year between 10 companies. And yet, he started with nothing. Do you think he might have something to say about how to become wealthy in 2024?
You bet he does. This is the exact same blueprint Alex and many others have used to build their fortunes.
The only question is, will you use it?
The Fundamentals of Wealth Creation
Here’s what you MUST know if you’re going to be successful.
1: Understanding What It Means to Be a Millionaire
A millionaire is someone whose net worth, excluding their primary residence, exceeds one million dollars. To calculate net worth, subtract liabilities from assets.
For example, if you own a $1 million house and owe $500,000 on it, and you have no other savings, your net worth would be $500,000. In this case, you wouldn’t be a millionaire. However, if you owned a $1 million house outright with no mortgage, your net worth would be $1 million, making you a millionaire.
Liquid Net Worth vs. Net Worth
It’s important to distinguish between liquid net worth and overall net worth. Liquid net worth consists of assets that can be easily traded or converted to cash. For instance, having $1 million in cash in your bank account is considered a liquid net worth. In contrast, owning assets worth $1 million that aren’t easily liquidated (like property or investments) represents a different form of net worth.
2: Building Equity
There are two main paths to becoming a millionaire: Earning your way there or owning your way there. The faster route is typically through ownership, and I’ll explain both approaches.
Earning Your Way to a Million
To earn your way to a million dollars, you need to accumulate $2 million over a certain period, considering taxes will take about half. For instance, if you earn $200,000 annually and save 100% of your income, it would take you 10 years to reach $1 million in liquid net worth.
Owning Your Way to a Million
The alternative, often quicker, route is owning assets, such as businesses or real estate. As an entrepreneur, you’re investing heavily in your own venture. Let’s say you build a business that generates $250,000 in annual profit. If this business is well-automated and runs without your daily involvement, you could potentially sell it for a four times multiple of its profit, which would be $1 million.
Comparison of Earning vs. Owning
Earning your way involves consistent income over a long period, with taxes and living expenses gradually reducing your savings. Conversely, owning assets allows you to leverage time and multiply your wealth without the same ongoing expenses. For instance, once your business reaches $250,000 in annual profit, you could immediately sell it for $1 million, achieving your net worth goal much faster than earning and saving over a decade.
3: Focus Over Diversification
The Case Against Diversification
“Diversification is for weenies,” as Warren Buffett famously said. It’s a hedge against ignorance, only necessary when you don’t know what you’re doing. The more you know, the less risky focused investments become. Instead of diversifying, let’s concentrate on a single, high-impact investment. When you’re starting out, your most valuable resources aren’t money—they’re time and attention.
Allocating Your Time and Attention
Imagine allocating your time and attention to various investments like crypto, day trading, forex, real estate, and more. You think you need seven income streams because the average millionaire has seven, so you spread yourself thin. But in reality, you’re multitasking, trying to see which one takes off.
The truth is, any of these investments could work if you put in the effort. The key is to reach a critical mass where your efforts overflow into success. If you focus on one thing, you’re much more likely to reach that point than if you split your attention among several ventures.
The Fallacy of Multiple Income Streams
Wealthy people indeed have multiple income streams, but they didn’t start that way. They concentrated on one primary income source until it overflowed, then diversified. The focus brings disproportionate returns. It’s naive to think that spreading 10% of your attention across several ventures will compete with someone dedicating all their effort to one.
The Journey of Focus
Most people think they’ll try various ventures to see which one works. However, all of them could work, or none could, depending on where you direct your efforts. The goal is to transition quickly from the “I have no idea what I’m doing” phase to the “I know what I’m doing” phase, which is why focusing on one thing yields outsized returns.
The Five Stages of Entrepreneurship
Uninformed Optimism: You’re excited about the opportunity, seeing only the potential gains.
Informed Pessimism: Realization sets in that it’s harder than expected, and there are unforeseen challenges.
Valley of Despair: This is where most people quit. They abandon the current venture and start something new, only to repeat the cycle.
Informed Optimism: You’ve learned the ropes and understand the pathway to success. Although you haven’t succeeded yet, you see how to get there.
Achievement: You finally reach your goal and succeed.
Most beginners get stuck in the Valley of Despair, starting over repeatedly without making progress. The magic happens when you push through to Informed Optimism, where you understand the process and the math of achieving your goals.
Achieving Focused Success
By focusing on one thing, you expedite your journey through the stages of entrepreneurship. You move from uninformed optimism to informed pessimism, then through the Valley of Despair to informed optimism, and finally to achievement. Once you achieve success, you naturally diversify to maintain wealth, but you built your wealth through focus.
Resetting your target after reaching your goal allows you to repeat the process with greater understanding and resilience. You know there will be tough phases, but you also know how to push through to success.
4: The Long Game
Imagine if you had 10 seconds to build the tallest tower possible. You’d probably start stacking whatever you could find as quickly as possible, right? But the result would be unstable and flimsy.
Now, what if you had 10 days to build the tallest structure you could? You’d approach it differently. You’d likely start with a solid foundation, using stable materials, and build methodically from the ground up. After 10 days, you might have a sturdy five-story building.
This example highlights an essential mindset shift. When you’re in a rush, you build differently. If you aim to build a tall structure quickly, you might stack things haphazardly.
However, if you aim to build something enduring, you start with a solid foundation and build incrementally.
Building for the Long Term
People often get stuck because they rush to build something quickly and end up with an unstable structure. This is why some businesses struggle to grow beyond a certain point.
They reach a plateau because their foundation is weak. The fastest way to a sustainable $10 million business might require starting over and building it correctly from the ground up.
You want to work the long game and build things the right way because a weak foundation won’t support long-term growth. In the beginning, you need a valuable product or service.
Then, you need to market it effectively. Initial sales might tempt you to ramp up marketing and sales further. But if your product isn’t strong, increased exposure will only amplify its flaws.
Creating a Solid Foundation
Instead, focus on improving your product until your customers are genuinely satisfied and eager to recommend it.
This organic growth builds a solid foundation. Happy customers become your advocates, spreading positive word-of-mouth, which supports sustainable growth.
This approach allows you to continue building on a strong base, unlike the vertical tower that quickly reaches its limit.
Building the Right Team
Similarly, when building your team, don’t just fill positions with warm bodies. Seek out talented individuals who are a good fit for your vision.
It might mean interviewing 20 candidates for one role, but the right person will contribute to the long-term success of your business.
Reassessing and Rebuilding
If you feel stuck, it’s often because your initial foundation is weak. Go back to the basics and rebuild with a solid foundation. This approach ensures that your business can support future growth.
With this strong foundation, you’ve set the stage for lasting success.
The Tactics to Make Your First Million
The next stage in our journey to becoming a millionaire focuses on actionable strategies, starting with finding a hungry crowd.
5: The Hungry Crowd
Let’s illustrate with a story: A man wanted to start a food truck business selling gourmet tacos. He was granted one wish by a business tycoon to gain a competitive advantage. Initially, he thought about making his tacos cheaper, but the tycoon said no. He considered making them tastier or cooking them faster, but again, the tycoon advised against it.
Finally, the tycoon revealed the secret: “Place your food truck in front of a stadium after the game ends. It’s not about the tacos; it’s about having a hungry crowd. If you park where thousands of hungry fans exit, you’ll sell out every time.”
Key Concepts in Finding a Hungry Crowd
Market Demand: The strength of the market is the most crucial factor in determining how much money you can make.
Think about selling umbrellas during a sudden rainstorm; the demand is immediate and urgent, making your product indispensable.
Similarly, during a crisis like a fuel shortage, gas stations can sell out regardless of their pricing or service quality. The right market will drive your success.
Compelling Offers: Once you’ve identified a hungry crowd, your next lever is your offer. A superior offer in a competitive market can set you apart.
For instance, a car dealership offering “buy now, pay later” deals will attract more customers than one demanding immediate full payment.
The better your offer, the more appealing you become to potential buyers.
Persuasion: Lastly, your ability to persuade plays a crucial role. Even with a fantastic offer, how you present it matters. If you can’t communicate the value of your product or service effectively, you’ll struggle to convert prospects into customers.
Ideally, you should aim for a big market, with an irresistible offer and excellent persuasion skills.
6: Essential Market Characteristics
When evaluating potential markets, look for these four critical factors:
Pain Points: The market must have a pressing need. For example, a service that provides emergency plumbing repairs addresses a critical need—people with flooded bathrooms need immediate help.
Ability to Buy: Your target market must have the financial capacity to purchase your product or service. A friend once ran a business helping recent graduates manage student loan debt, which had high demand but limited profitability because many graduates couldn’t afford his services.
Ease of Targeting: Even if there’s high demand and purchasing power, you need to be able to reach your audience easily. For example, marketing a fitness program to office workers is easier than targeting extreme sports enthusiasts living off the grid.
Growth Potential: Ensure your market is expanding. A friend once had a business providing services to DVD rental stores. Despite his excellent offer and persuasive skills, his business struggled because the market was rapidly shrinking due to the rise of streaming services.
In summary, to successfully make your first million, focus on identifying a hungry crowd with a strong market demand, create compelling offers, hone your persuasion skills, and ensure your market is easy to target and growing. These strategies will set you on the right path toward achieving your financial goals.
7: Simplifying Your Path to a Million Dollars
When deciding what to sell, start by identifying who you want to sell to. Once you’ve pinpointed your hungry crowd, the next steps are straightforward: Focus on one avatar, one product, and one channel.
This simple formula can lead you to a million-dollar business and beyond.
Step 1: One Avatar
The first step is to identify a very specific person you want to help—your avatar.
For example, let’s say you’re passionate about fitness and decide to target busy professionals who want to stay in shape but struggle to find time. This specific group becomes your focus.
Step 2: One Product
Next, offer one product tailored to your avatar’s needs. Many entrepreneurs make the mistake of trying to sell multiple products too early, thinking it will boost their revenue. However, if you’re under a million dollars in revenue, this usually adds unnecessary complexity.
Instead, focus on selling one product exceptionally well. For instance, create a streamlined fitness program specifically designed for busy professionals, and concentrate on selling that program.
The goal is to find ways to reach more people who fit your avatar profile and sell them the same product.
Step 3: One Channel
Finally, focus on one marketing channel to reach your customers. You can achieve over a million dollars in revenue by mastering a single channel. Here are a few examples:
Cold Outreach: If your strategy is cold emails or LinkedIn messages, scale your efforts by increasing the volume and improving your outreach techniques.
Content Marketing: If you’re using social media, focus on one platform like Instagram or LinkedIn. Post more frequently and enhance the quality of your content to attract more followers and convert them into customers.
Paid Advertising: If you’re running ads, optimize your campaigns and increase your ad spend profitably. If you’re generating $500,000 a year through Facebook ads, double down on your ad strategy rather than jumping to Google ads or another platform prematurely.
The key is to avoid spreading yourself too thin by trying to master multiple channels at once. Instead, refine and perfect your approach on one channel until it consistently delivers the results you need.
The Importance of Focus
You might be wondering about the need for diversification in customer acquisition. While it’s true that diversifying can reduce risk, it’s not necessary when you’re still growing to your first million. At this stage, it’s more effective to become excellent at one thing rather than mediocre at many.
Building the Foundation
The fastest way to reach a million dollars is to build your business correctly from the beginning. By focusing on one avatar, one product, and one channel, you create a strong foundation that can support future growth.
Avoid the temptation to overcomplicate your business early on, and instead, hone your skills and processes around these three pillars. This approach will set you on a clear and manageable path to achieving your financial goals.
8: Crafting the Perfect Offer to Make Your First Million
Now let’s dive into the tactics for building your first million-dollar business. It’s all about your offer—what you’re supposed to sell, or the value equation. You’ve likely heard the phrase “provide value” repeatedly, but what does value really mean? Here are the four key variables:
Variable 1: The Dream Outcome
The first variable is the dream outcome—what your prospect most desires. Compare two different dream outcomes by considering how much more valuable one is perceived to be over another.
For instance, if you were to offer a 40-year-old professional the chance to retire 10 years early versus the chance to become a fitness model, most would value early retirement more.
Let’s take another example. Imagine you have two offers for pet owners: one is a basic pet care ebook for $20, and the other is a premium pet training course for $1,000. Both aim to improve the life of their pets, but the premium course is perceived as more valuable because it promises a more significant transformation.
Variable 2: Perceived Likelihood of Achievement
The next variable is the perceived likelihood of achievement. This refers to how likely the prospect believes they will achieve their dream outcome by purchasing your product.
For example, that $20 pet care ebook might offer good advice, but most pet owners won’t expect a dramatic change. On the other hand, the $1,000 premium pet training course with live sessions and guaranteed results has a higher perceived likelihood of achievement.
Both the dream outcome and perceived likelihood of achievement are aspects you want to enhance in your communication with prospects. You need to convince them that your product will deliver the significant outcome they desire, with a high likelihood of success.
Variable 3: Time
Time is the next variable and includes both micro and macro elements. Micro time is the daily time commitment required, while macro time is the total duration needed to achieve the result.
For example, if you offer an online course on mastering guitar, the micro time might be an hour of practice daily, while the macro time could be six months to play competently.
The goal is to minimize both, making the path to the dream outcome as short and easy as possible.
Variable 4: Effort and Sacrifice
Effort and sacrifice are what prospects must give up or endure to achieve the dream outcome.
Effort is the new actions they must take that they might not enjoy, while sacrifice involves giving up something they like.
For instance, someone taking your fitness course may have to sacrifice weekend leisure activities and exert effort in regular workouts.
Reducing these hidden costs can significantly increase your offer’s perceived value.
Hypothetical Extreme Value
Imagine the perfect offer: The most compelling dream outcome, guaranteed achievement, instant results, and no effort or sacrifice.
If you had a button on your website that, when clicked, instantly gave someone a 30-pound fat loss, it would be incredibly valuable.
However, achieving that dream through personal training and dieting over 12 months significantly reduces the perceived value due to the associated time and effort.
Applying the Value Equation
Understanding these variables is crucial for crafting offers that convert. Often, the most expensive part of an offer isn’t the price tag, but the hidden costs—time, effort, and sacrifice.
For example, if you run a marketing agency offering content creation, compare an offer that requires 60 days of ramp-up with weekly calls and travel to your studio, versus an offer where the client does nothing, and you start delivering results immediately.
The latter is far more valuable, even if the core service remains the same.
Strategic Offers and Business Impact
Offers are a significant lever in any business because they impact all aspects of the operation. A compelling offer changes your marketing strategy, sales scripts, and delivery processes.
By ensuring your product is as valuable as possible, you set a strong foundation for reaching your first million dollars and beyond.
In summary, by focusing on these four variables—dream outcome, perceived likelihood of achievement, time, and effort/sacrifice—you can create irresistible offers that lead to rapid business growth and help you achieve your financial goals.
Marketing and Sales
Next on our journey to wealth, success, and status is marketing and sales. If you think about it sequentially, you first need to create the product, then promote it. Creating the product is about having a great offer—what you should sell.
The next step is determining who to sell it to and generating leads, which involves advertising. Then, you convert those leads into sales.
People often make the mistake of thinking they should just keep repeating this cycle, creating and selling new products. However, after promoting your product and generating sales, you should go back and improve the product.
This creates a virtuous cycle: improve the product, promote it, sell it, and then improve it again.
9: Understanding Advertising
To understand marketing and sales, you need to grasp advertising. There are eight primary methods to advertise, divided into two categories: those you can do yourself and those others can do for you.
DIY Advertising Methods:
Warm Outreach: Reaching out one-on-one to people you know.
Posting Content: Sharing content with people who already follow you.
Paid Ads: Advertising to strangers through platforms like Google or Facebook.
Cold Outreach: Reaching out one-on-one to strangers, such as through cold emails or calls.
If you’re struggling to make sales, it’s likely you’re not doing enough of these core four methods.
Advertising Methods Others Can Do for You:
Referrals: Getting leads from satisfied customers.
Employees: Having your team handle the core four methods.
Agencies: Hiring agencies to manage your advertising efforts.
Affiliates: Partnering with influencers or businesses who promote your product to their audience.
Begin with One Method
When you’re starting out, focus on one advertising method. Suppose you choose to post content. As you create engaging content, people will comment, like, and message you, expressing interest in your offerings. This is where sales come into play.
Improve your business with this single method and master it.
10: The Role of Founders in Sales and Marketing
It’s crucial for founders to be deeply involved in both marketing and sales initially. Here’s why:
Cost-Effectiveness: It’s cheaper, especially when funds are limited.
Skill Development: You’ll need these skills long-term, and understanding them at a tactical level is essential for training future employees or partners.
When you understand these processes, you can better guide and manage those who will eventually take over these roles.
Choreographing the Sales Process
You need a well-defined sales process, knowing each step from initial interest to closing the sale. Early on, you’ll experiment a lot, testing different approaches to see what works.
For example, you might find that starting a sales conversation with a personal success story followed by a detailed explanation of your product’s benefits leads to higher conversions.
Documenting and Refining Your Process
As you discover what works, document each step. This allows you to create a repeatable process that can be handed off to others. Depending on what you sell, it might look like this:
Initial contact: Respond to comments and messages.
Qualify leads: Ask key questions to understand their needs.
Present the offer: Tailor your pitch to their specific situation.
Close the sale: Use proven closing techniques to seal the deal.
Preparing for Scale
Eventually, as you scale, you’ll need to teach someone else to sell. The founder’s conviction and charisma are hard to match, so having a structured process is essential to maintain sales effectiveness. Ensure your team follows a script to maximize their chances of success.
By understanding and mastering these principles, you can build a robust marketing and sales system that propels you toward your first million and beyond.
11: Setting Goals Effectively
This topic often gets misunderstood, with many people thinking they need SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound).
However, we suggest focusing on activities rather than outcomes.
Activity-Based Goals
Instead of setting goals based on outcomes, set them based on activities.
Here’s an example of doing it wrong: Someone makes $10K, $20K, and then $30K a month but then falls off after hitting these goals. When you ask him why, he says he eased off once he hit his goals. The problem was that he defined his goals by the outcomes, not the activities.
Instead of making the goal about the money, make it about the activities that generate the money. So, at the end of the day, you’ll measure success by whether you’ve completed your planned activities, not by the money made.
The Rule of 100
A practical method to implement this is the “Rule of 100,” which states that if you do 100 primary actions over 100 days, you’ll typically achieve your desired result. The key is focusing on the activities. Here’s how you can apply this:
Outreach: Reach out to 100 friends or prospects a day.
Content Creation: Produce 100 minutes of content daily.
Advertising: Spend $100 on ads each day.
These are quantifiable actions that drive your desired outcomes. By making these activities your goal, you can objectively measure your success daily, regardless of immediate sales.
12: Strive for Continuous Improvement
Now that you understand the proven system for building wealth, your focus should be on two key principles:
- Follow the System: Stick to the process that works.
- Strive for Daily Improvement: Constantly seek ways to enhance every aspect of your business.
What does daily improvement entail? It varies depending on your business, but let’s consider using advertising to capture leads and funnel them into sales.
- Refine Your Targeting: Ensure your ads reach the right audience.
- Optimize Your Advertising: Continuously test and tweak your ad copy and visuals.
- Enhance Your Squeeze Page: Make your landing page compelling and user-friendly.
- Improve Your Lead Magnet Offer: Provide valuable incentives that attract quality leads.
- Upgrade Your Content: Deliver high-quality content that engages and converts.
- Elevate Your Product or Service: Focus on innovation and quality to stand out.
- Improve Your Offer: Find ways to make it completely irresistible.
- Streamline Your Sales Method: Optimize your sales process to increase conversions.
Examine each component of your business and find ways to improve and streamline it for higher efficiency and better results. Most importantly, prioritize continually enhancing your product. Aim to be so exceptional that you eliminate the competition, making your product the only viable solution in your niche.
When your product stands in a class of its own, word-of-mouth from satisfied customers will drive more sales than any advertising could.
Achieving this level of excellence is the ultimate goal, positioning your product as the unparalleled choice in the market.
Conclusion
There will be people who read this and say this is nothing new, and they’re right. To those people I would ask, “Are you doing these things yet? Why not?” Entrepreneurs have been actively using this system for decades to become wealthy. But notice the word, “actively.” That’s the key, isn’t it?
Others will think it’s too simple or complain that they’re not being told exactly what to sell and who to sell it to and how to sell it.
All I can tell you is that this system works, if you work the system. You’ll have to find your own market, your own product and build your own business.
The only question is, will you?