← Build with Leila Hormozi
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Today we are going to talk about how to figure out what business to start. This is not something I normally talk about. In fact, I don't usually talk about how to start a business. But I have so many people coming to me with questions of Layla, I have so many opportunities. How do I figure out which one is right for me? What I'm going to share with you today is really the process that Alex and I used to figure out. That acquisition.com was the opportunity we wanted to pursue. There are a million opportunities out there, and our list of opportunities in terms of all the different businesses that we could start was almost unending. If you don't have a framework around figuring it out, it can become very overwhelming. And I completely understand that. And so my goal with this video is that you walk away feeling less overwhelmed than when you started watching the video. So the first point I want to make, when you lack strategy, you have a lot of opportunities. The reason that you're watching this video right now and you're thinking, I need to figure out what opportunity to pursue. The issue is they don't have a strategy. What I want to first help you create is figure out what strategy you're going to pursue and then the constraints around that strategy. Constraints are decision filters. Strategy is a series of constraints that you create or conditions in order to get to a goal. And then those constraints are really decision filters in which you filter all opportunities through those constraints and say, do they pass or do they not pass? If you have good decision filters, most opportunities are good opportunities. They are just not your opportunity. So what I'd like you to do is honestly just do this. Live with me. I really come down to 10 steps to figuring out what business opportunity to pursue. If you have three, four or five opportunities that you're thinking of, what I want you to do is pause this video and write those down, because we're going to go through it line by line. Write down all the opportunities that you have. What are the top five opportunities that are out there in terms of businesses that you could pursue? Step number two is I want you to write down the pros and cons of each. What I want you to think about with pros and cons is what's the market opportunity? If you have Airbnb as one of your opportunities, go Google Airbnb right now and look at the market growth rate. At what rate is the market growing? And then comp that across all the five opportunities you have, would you consider the market opportunity pro or con? Second piece is margin. I want you to take each of those opportunities that you have and Google, what is the typical margin in that industry and then look at them. And in comparison with the margin for Airbnb versus online education business, be a pro or a con, one might be 10%, one might be 50%. Obviously higher margins are better. The third is really the market opportunity. So you might see the growth rate in an industry is high, but is there an opportunity for your business in that market? Is the growth rate the market opportunity and the margin considered a pro or con? I'm not saying this is right or this is the standard. This is just what I used to figure out. Acquisition.com the next step is whatever ones out of those have more cons than pros, toss it immediately. It doesn't matter how you feel about the opportunity. If there are more cons than there are pros, immediately cross it out. So do that. Before going to the next step, I want you to write down your likes and dislikes about each of those opportunities. So say you've got Airbnb and the average margin is going to be all in 30%. It's got a pretty good growth rate, decent opportunity size. What are your likes and dislikes? Do you like real estate? Do you like managing tenants? Do you like managing multiple houses? Or do you dislike those things? Do you want to have a team? Do you want to not have a team? Which businesses would require those things? Write down all the things that you like and don't like about what you currently know about each opportunity. Because here's the thing, you're not going to know everything that goes in every opportunity. But you do know off the bat, do you like it or not like it. And here's where a lot of people make the mistake is they pick something that might be the best opportunity, it might have all the best growth rate, might have the best margins, and they fucking hate it. If you hate it, it's not going to work. Second piece of that is that anything that you dislike more than you like crossed off immediately. It doesn't matter if it's a billion dollar opportunity crossed off right now. The fifth is I want you to write down your strengths and your weaknesses in relation to each opportunity. If I look@accentition.com listen to how me and Alex thought about this. Alex is a fantastic marketer. He's so good at social media and content. All these things. We can put so much content out there. Alex is so good at doing that. Eventually we'll get people that just Google our name and want to invest their businesses with Us and on the other side, I'm very good at operationalizing infrastructure and recruiting, which then we happen to build around acquisition.com's core infrastructure. So the business was built around both of our core strengths. We looked at other businesses such as online weight loss. We were like, we could build the biggest health and fitness online company in the industry because that's something that's a core strength of both of ours. We could be forward facing, we could be in the fitness industry. We have background industry knowledge. Guess what, we both hate that idea. And so though we have more industry knowledge and we had all the market opportunity and everything was in line in our favor, it was not something that we wanted to do. Now that you've identified where you're strong and where you're weak, where your core strengths align with the core needs of the business, any opportunities that you have on there where it does not involve your core strength is cross those out. And now what you're left with are probably the opportunities that have market opportunity, have margin, have a good growth rate you like and you're good at, and that's what you want. And now once you have those, what we're going to do is we're going to create your mission statement. You don't have to have a business before you decide what the mission is. For acquisition.com, we were not 100% sure what the business we wanted to look like, but we knew that we wanted to document and share the best practices of building a world class business. So we started with that mission statement and then we said, what does that company look like? What's your to statement? The purpose of this business is to the purpose that I'm on. The mission I have is two. So like I said, ours is to document and share the best practices of building a world class business. Gym launch. We had gym launch for a very long time. The mission was to bring the industry from its knees to its feet. The gym industry was falling and we wanted to make sure that we could actually bring it back up. And so every business is going to have a different mission, but figuring out what your mission is before you get into all the hairy details is more important. And the mission is your first decision making filter. So every opportunity that you come across, if it doesn't fit with that mission, you're not going to pursue it. So you have to understand that if somebody came to me and said, layla, I want to make a TV show about you guys that sounds terrible and horrible in all many ways, but at the same time is that going to help us document and share the best practices of building world class business? The answer is yes. Why am I making YouTube videos? Why am I making TikToks, why I'm making Twitter? Because the mission is to document and share. We bring all of those things through the decision making filter. Why do we have free courses on acquisition.com to put them through this decision making filter? Because that's the mission. So once you've identified and just get a rough outline, listen, it doesn't need to be perfect. This doesn't need to be something that sounds amazing, like you can figure out the language later. But like ultimately, what do you want to do? Why do you want to do that opportunity? Now you have to say what is required to succeed at that mission? What values must I hold in order to achieve that mission in a way that's authentic to me? And that's the question I ask myself. What values are required of me to achieve this mission that I already hold? That a lot of people think core values. They think, these are things that I want to be, these are things that I should be showing all the time. But the thing is, if you start talking about those core values, you're going to start embodying them more and more. So what you want to do is you want to pick out the values, the top three that are most likely that if you embody them will get you to your mission. The caveat is that you should already have these. You know, for us example, we have competitive greatness as one of our values. If you're not competitively great, if you're just money driven, don't say you're competitively great. But if you are competitively great, but you're like, I haven't honed in on that. It's not in my messaging. I haven't even talked about my companies. That could be something that you're like, but that would be a strategic advantage in accomplishing my mission and building this company. Then it would be your next decision making filter or value. And so if you think about it, now that you've chosen the opportunity and you've put the constraint strategically on what your mission is, the next three constraints are basically the how the values are going to dictate how you're going to get there. This is my mission and every opportunity gets flowed through it. Do these align with the mission and then below it are all the values. There's a million ways to accomplish your mission. But does the way that I'm being presented with or that somebody told me about does it align with the values? Is it going down the path that I've outlined to get to that mission? If the answer is no, then it's not for you. And so now what I want you to do is I want you to take those maybe two opportunities you have left and I want you to say, do they align with the mission and values I put here? Do they flow through those filters? Once you've come up and you've analyzed the business opportunity, you figured out this is my mission statement. You have the values that are going to tell you how you're going to get there. Here's the last thing that you're going to do is you're going to write down, say, the last two businesses that are opportunities for you. And what you're going to say is in the next column you're going to put what is the worst case scenario if this business fails? I'll give you an example. Say you want to start a coffee business and you're like, I want to start a brick and mortar coffee business, but maybe I'll do it online instead. And then you're like, layla, which one should I do? Should I start a brick and mortar coffee store or should I start an online coffee store? I'm going to say this to you. What's the worst case scenario if the brick and mortar store fails? And maybe you say, layla, if the brick and mortar store fails, I've just signed a five year lease which I put all of my money into because the down payment for the lease was like 50 grand, which is all I have saved. And then now I'm going to owe one lease, but I'm not going to have a coffee store because it failed. I'm like, okay, well that sucks. Give me a lot of debt. What about if the online store fails? I only have to invest a couple thousand dollars into maybe like a course on how to build an online store. And then for the inventory for the coffee. Worst case, I'm probably out like 10, 15 grand in my opinion. Choose the one that you can live with the downside more than the other. The best CEOs make decisions based on worst case scenario. Which worst case scenario could you live with? So rather than looking at, oh my God, I could make 100 million or a billion dollars, this guy told me on this ad, what is the worst case scenario you could live with? And pick that one. That's it. Now that you've gone through all the filters, pick the one in which you could live with the worst case scenario if it failed and So I can tell you that we were looking@accentility.com. there's a million other businesses we could have started or ways we could have built. We could have built a real estate portfolio, we could have built a D2C business. We could have done all these things. At the end of the day, it comes down to what is the worst case scenario if it fails. And for us, the worst case scenario of acquisition.com were to fail, we lose very little capital and if anything, we gain a ton of knowledge and insight. So, moral of this framework is that you can't rely on emotions to start a business. People everywhere, everyone's telling you what kind of business to start. They're most likely monetarily incentivized to tell you to start that kind of business. They're like, you have to start Airbnb. It's the best opportunity. No shit. You sell Airbnb as an opportunity. I'm sure it is to you, because you're going to make money from that class. Last thing I'll say is that you cannot rely on how much money an opportunity will potentially make you when you are first starting out. You also have to ask yourself, how much money will I potentially lose if it fails? And can I live with that? So listen, if you've watched this video and you've determined what you want to do, you can also go to my video, zero to one million. And that'll talk about the process of going from zero to a million dollars and what that takes tactically in a business.