The 3 Constraints Of 7-Figure Businesses (And How To Solve Them) #TheOnePercent

Your employees think you're raking it in and they have no idea that you're barely paying yourself, barely taking money off the table. And that when you go home, you're writing copy and you're paying bills and you're doing legal and you're working with contractors until midnight, and then you're up at seven to do the exact same thing again. It takes one free person to create change. One percent bold enough to bend the rules, curious enough to chart new territory. This is the show for them. While the other 99 watch their best opportunities, their potential, their health, and even their legacy slip away, we are different. We question the system. We create new possibilities, and we pursue the edges of every area of life. My name is Ryan Daniel Moran and I'm an entrepreneur and an investor. I'm an independent, a father, a skeptic. I'm on a journey just like you. Others may watch us, question us, even blame us and tax us, but we press on in a relentless pursuit of freedom. We are the creators of the free world. This is capitalism.com and we are the 1%.

Hey, 1 percenters. This is Ryan Daniel Moran. Welcome to the 1%. On today's episode, we're going to be going through the three major constraints that business owners face until they're past about $5 million in annual revenue. And if they don't clear through these constraints and these hurdles, it's very unlikely that they ever will cross through the $5 million point. These are the things that if you don't get right, you can be somewhat successful. Really. Most people will think you are successful because you'll get to say that you run a multimillion dollar business, but you won't really feel successful because you don't have a scalable and a sellable company. Other people will think you're really hot stuff because you've got a seven figure business. But what they won't see is that your profit margins will be lower than you care to say that you're not taking home as much as you want to be taking home. You're working way too many hours. And even your employees who are like, hey, we're making millions of dollars don't see that you go home at night and work from 7pm till midnight or trying to drum up all of the loose ends in order to fix things. So that's the situation until you clear these three major hurdles and they will keep you under $5 million, for the most part, they'll keep you between 1 and $3 million. And until that's really solved. Unless you have some sort of volume capacity, you're going to stay under $5 million. And I say volume capacity because some companies do just win the pricing game and they just do a massive AM volume. So they might do 10 to 15 million dollars a year, but they still have the same challenges of low profits, working too many hours, having bloated teams and no profitability. Now I have kind of made my career on creating million dollar businesses. I've helped hundreds of entrepreneurs do that. And real fast. I think anybody can have a million dollar business if they just follow the formula of three to five products selling to the same target market. And those three to five products averaging 25 to 35 sales a day, coming from E commerce or coming from ebay, or coming from Amazon or coming from retail at an average price point of $30. That's a million dollar business. Three to five products selling 25 to 35 sales a day at an average price point of $30. That's the math behind a million dollar business. That's really, really simple and easy. Any motivated person can run through those processes. But then you run into constraints, then you run into challenges. In my career, I've worked with a lot of Amazon sellers. So the distribution of 25 to 35 sales a day is pretty easy. Even the product selection process is pretty easy. So getting to $100,000 a month in sales is fairly straightforward. You can do that in six to 12 months. It's once you're at the million dollars that you run into the real and you are stuck in these challenges until you grow to about $5 million. And that's where most people either burn themselves out, quit, or the company implodes unless and until you solve these three major constraints. The first constraint is a constraint of vision. Now I don't mean to insult your intelligence here, but many entrepreneurs kind of guess their way to a million to even 3 or 5 million dollars. It's a process of finding out what's selling, getting it into the marketplace, and doing it better or differently enough than most of your competitors. And this is true with digital products. This is true with physical products. This is true with software as a service. Most entrepreneurs are guessing at the first couple products that they release to the marketplace. One or a few of them hit and they break into seven figures. Hooray, we're a genius. We're brilliant entrepreneurs. But then you run into that vision constraint. What are you really doing in this business? Who do you really serve? Who do you really speak to? If you are unable to Identify that, then you will stay in the guest mode. And guess what? At the beginning of a business, until that million dollar point, you are swinging and missing and hoping to connect. How many of us have run through multiple different business ideas and swung and miss or one of them hit and now we have a million dollar business. Hooray. Good for us. Well, if we don't dial in the vision piece of the business, then we're going to continue to swing and miss rather than putting really good players on the field. The way that I've communicated this to my team is once we had a winner, it was like we had the super bowl, but we were trying to build a business around a Super bowl rather than trying to do the blocking and tackling to have a really great season that would allow us to get into the playoffs. The way that you solve this crisis or this constraint is by dialing in who your ideal customer is and how you speak to them. The reason why, even though it's simple, this is so important, is because it allows you to spend money on media to get more of those ideal customers. At the beginning of a business, it makes sense to be releasing products as quickly as possible in order to find what hits. But. But once you've got a winner, the question is not so much about what product to release, but who that best customer is and why they're willing to pay the most money as possible. That's when you start to make the shift out of that constraint of vision. Another piece that has been really helpful for me and a lot of my clients is Cameron Herald's Vivid Vision. He has a book about the topic. He has also been here on the podcast a couple of times talking about that process of Vivid Vision. So if you just Google Ryan Moran Vivid Vision or Cameron Herald Vivid Vision, plenty will come up about this. The reason this is so important is because you can have a product hit accidentally or you can have a product hit with a target market that you didn't expect to back you. But that doesn't mean that your next at bat is going to be just as successful. An example that I've been following recently is a brand called Cauliflower Foods. This is a company I really like because I buy their pizza crusts. It's a cauliflower pizza crust. I used to make cauliflower pizza crust in my kitchen. Now I just buy theirs. I really like their stuff and if you look at their original branding, it's all about the founder and her challenges with health. I think she had lupus and so she had to follow a very strict diet in order to manage her conditions. And that led her to eating a lot of cauliflower and baking with cauliflower. Now that's a really great story, but that story only resonates with a very small percentage of their audience. So what I have seen in a lot of their branding recently is that the followers that they have been amassing have not been people with health challenges or with lupus as much as it's been the low carbers, which is me, which is a lot of the trend right now. It's been the keto crowd, it's been the paleo crowd. So instead of going after the lupus crowd and even the female crowd, they've been remarketing or repackaging, rebranding to be more of a low carb company with cauliflower as the base of their foods. Why is this? Because that's their best customer. That's who keeps coming back over and over again, and that's who keeps buying more products and recommending those products to others. If they led with what they were used to, which was a story about the founder and and her conditions, they would run into serious vision constraints. The way that you solve your crisis of vision or your constraint of vision is by defining who your best customer is, how you speak to them, and overarching where you want the company to go. By combining those, you will attract better people and better customers and have a much clearer, easier time targeting those people through paid media, through influencers, through your content. Without it, you're just hawking products and you're going to be doing a lot of guessing along the way. The second constraint that million dollar or even multimillion dollar businesses run into is a crisis of people. Because when you cross that seven figure mark, you're working a lot and you need to go get people, but you can't afford the best people people. So you kind of stuck in this hamster wheel of I need really good help in order to cross through this threshold, but I can't afford the best people because all of my money is going into inventory, all my money is going into marketing and I'm barely paying myself, even though everybody thinks I'm running a multimillion dollar business. This is where raising capital can be the cure or the crisis that either makes your business explode or it absolutely cripples it. I have come full circle on debt and raising money for businesses. It's really changed after I spoke with Brian Lee at the last Capitalism conference. He was the co founder of the Honest Company and also legalzoom.com and he talked about raising capital to be able to go much faster. The thing about what he described, though, is he had cleared that first constraint before they ever raised capital. So they had their vision, they had their best people, they had influencers already lined up to hit the go button. Capital just made it easier for them to hit that button. Many entrepreneurs will run into this second constraint where they can't afford the best people, they can't afford the best marketing, they can't afford the best network. So they raise capital to try and clear that constraint, but that doesn't do them any good because they haven't cleared that first constraint. They don't know who they are, they don't know who they're serving, and they don't know where they really want to go. So one of the ways that you can solve this crisis of people is to raise money if you have a clear vision of where you're going, who you serve, and who your best customer is. But if you raise capital at that point without knowing that piece, without having the vision dialed in, you'll crumble because you will start allocating money to supplant your swings and misses, which is just gonna make you swing and miss all that much faster. You're gonna hire the wrong people, which is gonna be more of a demand on your time. You are going to release products that don't actually move the needle. It's my suggestion that you clear the constraint of vision before you try to clear the crisis of people. Because if you know where you want to go, you know the types of people that you need to attract into your network. Now, this is not just team members, although that really helps. The an the primary partner that is running this business with you can make all the difference in the world between a successful company and a business failure. But this is also true with things like influencers. There are entrepreneurs, specifically physical product sellers, who are trying to work with influencers without a real sense of how they want to be represented. This person has a huge following. If they tweet about me or if they post about me, then I'm going to make sales. That is not the case unless that person is bought into who you are and where you're going, which is solved in your constraint of vision. You also have an easier time going out and getting the best people. If you have a very clear idea of where you're going and who your customer is, you can speak to that ideal customer and you can go out and get the marketer who knows what types of Facebook ads to run to get in front of that person. But without it, you are again swinging and missing. A case study that I've been really fascinated with recently has been from my colleague Moise Ali. He spoke at the Brand Builder Summit this past summer and they grew from zero to a hundred million dollar business. They were acquired for $100 million in two years. Now how did they do that? Well, they saw an opportunity in the marketplace. They knew who their ideal customer was because they were listening to them actively through online forums. They released a series of products out to them and then they attracted good people that met their company culture. Then they networked their way to being acquired and that team has networked their way to them being in every target around the country. And they're a really successful business as a result of having the right vision and the right people. Those are the two major constraints that if you solve, will take you past that $5 million point, beyond $10 million and upward.

Hey podcast listeners, real fast. I want to draw your attention to January 21st. The 23rd in Dallas, Texas is the next Capitalism Conference. This event absolutely will sell out. So I want to draw your attention to it. This is the event where you're going to make the connections, you're going to get the insight and you are going to get the strategies that are going to allow you to make more money, invest it well and keep it. We also have some pretty sweet bonuses about finding extra sales and revenue in your business and keeping more of it away from the evil tax man. The event is in January in Dallas. This is the thing I am most proud of that we do here@capitalism.com and rather than bore you by telling you all the amazing keynotes that we have, I just got to tell you it's the most transformative three days that you will spend all year. If you are set on this being your year, on this being your time, this era being your opportunity to set you up for life, you need to be at the Capitalism Conference January 21st through the 23rd. Go over to the capitalismconference.com to reserve your spot. I don't know when you're listening to this, but at certain times we're doing some pretty sweet bonus packages too to help you get some results right now and to make really life changing and business changing connections when you are at the event. So the capitalism conference.com go there and come to the event. I will see you there.

The third constraint that you will run into as a low seven figure business is a crisis of Capital. That's capital in terms of time and money. You are burning the candle at both ends. When you are sub $5 million, your employees think you're raking it in and they have no idea that you're barely paying yourself, barely taking money off the table. And that when you go home, you're writing copy and you're paying bills and you're doing legal and you're working with contractors until midnight and then you're up at 7 to do the exact same thing again at the same time. You're always afraid that you're going to run out of money because one little change in the marketplace can put you and everybody else out of business at the same time. You don't have a way to take money off the table to be able to invest for a long term passive income strategy or a wealth strategy. And you're getting taken to the cleaner with taxes so people think you're raking it in. You're actually paying the government a lot, you're paying your employees, you're paying your outsourcers a lot, you're barely paying yourself. And you don't have the investment plan to be able to really set yourself up for life. And so we're stuck in this chicken egg issue where we need more money in order to grow, but we need to grow in order to get more money. We need better people, but we can't afford better people and we need more people to grow, but we can't grow without people. And so we are stuck in that sub 5 million dollar level again, the first piece is to dial in the vision and looking at who you serve and who your best customer is and where you want the company to go. The second is to network with those best people and those who serve those best people. That's in terms of affiliates, influencers, investors, you know, investors are not created equal. One investor with a lot of money is not the same as the investor who comes with a network that serves your target audience or that has the connections to open up doors to serve your best customers. But how are you gonna know? You don't know who the people are that you serve. So investors are not created equal. Team members are not created equal, influencers are not created equal. But you need those people to speak to your ideal audience. So that's the first two constraints that you solve. The third, that crisis of capital in both time and money is solved when you have predictable sales and marketing strategies. You solve that when you have a clear investment strategy both within your company and for yourself. When you Know who your ideal customer is and you can drop a dollar into advertising to bring back $2 worth of customers. You have solved your crisis of capital, which allows you to hire more help to solve your crisis of time. I want to touch on this for a brief second because I see a lot of business owners and entrepreneurs that don't have the foundational piece of their sales and marketing really dialed in. And that comes in the form of your offer. Do you have a clear offer in the marketplace? Again, I don't mean to insult your intelligence, but if you're doing sub $5 million, it usually means you don't have a clear offer. You have a product, you have some marketing, you have customers. But do you have a clear offer in the marketplace? Do you have a place where people can go and they see your value prop and they're able to buy into your value prop? This might be done in a video sales letter that you're testing over time. It might be a sales funnel, it might be a lead acquisition funnel that you are nurturing and leaning towards a sale. It boggles my mind. Most business owners don't have this because they're living off of some channel. They're living off of Amazon, they're living off of retail, they're living off of Kickstarter. They don't have a clear value prop in the marketplace. And so how are you going to scale that if you don't have the clear offer that speaks to a direct target audience? You are missing most of your opportunity for scale and most of your opportunity for growth. So you solve your crisis of capital in both time and money by having a predictable customer acquisition for funnel, where you can acquire customers at break even or better, and you have a predictable way to build the customer flow and build the business that allows you to bring in better people and it gives you a platform that you can scale over time. So the solution to the crisis of vision is to outline where you want your company to grow over the next few years. And most importantly, you dial in who you serve and how you speak to them. Number two is your crisis of people because you can't afford the best people when you're under $5 million. The way that you solve that is by surrounding yourself with the influencers, the investors, the promoters, and the team members that are also speaking and serving your best target market. The third, the crisis of capital can be solved when you have predictable sales and marketing strategies that your team is running to the ideal person. You can see that these stack on top of one another. When you know who you're serving and how you serve them. You can go out and connect with the influencers and the team members that can serve that best customer. And when you're serving that best customer, you can develop the sales and marketing strategies to go and get more of them. I know that that's a lot. And we basically just covered like two years of work in 20 minutes.

So let's go through some action items that you can start to implement. Number one, do you have a clear vision for the company? Do you have a two to three page written document that outlines where you want to go? And could you identify who your ideal person is that you are serving? Number two, are you able to communicate that to influencers, affiliates, investors, and other people in your network? And are you actively building that network? Do you have an idea of where.

You want to go?

And are you able to communicate that to the people in your network that can help support you? One other thing here is that when you're. You're really clear on where you want to go, you need a new network because you outgrow the people that you've been spending time with, and you need others who can support you on your path, which means that oftentimes you need a new friend group and you need a new peer group. And then number three, do you have a predictable sales and marketing strategy that puts you in control and allows you to acquire customers at break even or better so that you have the capital and you have the scalability to be able to afford the type of people that you want to hire, so that you have the ability to take money off the table, so that you can put things on more predictable models, so that you can actually live a real life. There's actually three trainings that I would recommend that you go through, and I think two of them here have been on the podcast. One of them is a keynote Q and A that I did with Gary Vaynerchuk back at the first Capitalism conference where he talked about going from $1 million to $100 million. And it was all about dialing in your vision and your people. And in this talk, he goes through how to start to plan out that process of making that pivot, because he did it at vaynermedia. And so that is both entertaining and very valuable. And he talks about a lot of things that are different than what he talks about in his keynotes today. So that that's the first one that I would go through. The next is a keynote that I did with Jeff Hoffman. Jeff Hoffman talks about assembling your New England Patriots. He talks about assembling the team of people that can help take you to the promised land, create that perennial winner who are driving the company forward. And then the third is the keynote from last year's Capitalism Conference with Russell Brunson, where he talks about developing sales and marketing strategies that are predictable and scalable and allow you to acquire customers profitably. We have just put together a PDF that summarizes these three and also has links and clips to those full keynotes. And you can get those over at the website that we put together for our year end event, which is the Capitalism Conference. So if you go to the capitalismconference.com, you can get the PDF and the links to those three keynotes that will help you go through these top three constraints that you might be dealing with if you're running a one to five or one to $10 million company. So you can clear these constraints and you can also, if you come to the event, you'll be surrounded with people who are at or above your level who are going through this process together. I want to give a quick plug for the Capitalism Conference because it's a thing I'm most proud of that we do here@capitalism.com and we work for six months to ensure that it's the best in class event this year. We've invited Michael Dubin, he's the founder of Dollar Shave Club. He was acquired for $1 billion by Unilever. And we'll go through his entire business model of how they went into a competitive space and dominated. We invited AJ Vaynerchuk, who's gonna give us the back scenes of how they built VaynerMedia into a about a $200 million agency, starting with about $80,000. We invited Stephanie McMahon. Yes, that Stephanie McMahon from World Wrestling Entertainment. And she's gonna be talking through how.

They rebranded WWE when they were going.

Through a bit of an identity crisis. So you'll get to benefit how they reshaped their vision and how they started communicating with their best customers as well. We invited Alex Charfen, who works with entrepreneurs who are at least at that million dollar level, to help them create a plan that takes them to 10 and then 50 and beyond. I've invited Bedros Kuhlian, who runs a hundred million dollar company that and still has a life where he writes books and creates content and goes out with his wife every Wednesday. I've invited one of his mentors, Joel Marion, who's known as the Hundred. I call him 100 million dol dollar man because he, he has built a hundred million dollar company in 12 months. He also has an email list of over 10 million people that profits over a million dollars a month. It's pretty amazing. And those are separate companies by the way. It's pretty fantastic what he does. We've also brought in Craig Valentine who is some of the, he's actually one of the mentors of, of some of the others who are on stage. I met him because some of the other speakers like you should really have Craig come and he works with other entrepreneurs to optimize their day for productivity. So he's gonna be going through his perfect day formula on how to get more done, make more money and still be home by dinner. I've invited David Osborne and Tom wheelwright. David is $100 million real estate investor. He's gonna be talking about investing for passive income. Tom Wheelwright is maybe the best known CPA in the country and he knows the new tax code really well. So he's gonna be talking about opt new the new incentives for entrepreneurs inside of the new tax bill that is officially permanent. Hooray. So as a result you're going to be able, you're going to see how other entrepreneurs have created that vision. So you leave with yours. You're going to be surrounded with people and connections that have resources with influencers and affiliates. So you have new opportunities. You're going to be optimizing your time and your capital with the individuals that you hear from stage and meet with at the event and you're going to leave with the new sales and marketing strategies. They're going to take you to where you want to go. It's three days in Dallas, Texas this year, January 21st through the 23rd. And you can find out more over at the capitalismconference. Com. This is made for entrepreneurs who are they at least have that first million in sight. They're up and moving and they have a business that is growing and you want to grow through these constraints and you have a long term vision of building a real empire that both allows you to live the lifestyle that you want and have a meaningful company that you want to scale and or sell and would love to have you at the capital Conference. We made the difficult decision this year not to increase capacity and we did that because a I don't like having to hawk ticket sales. It's, I think it's the best event in the industry and it stands for itself and I don't want to do the whole like we're going to do a bunch of discounted tickets to try and fill seats. I don't like doing that. So we decided not to increase capacity and also we wanted just to keep the intimacy of the events. We only have a few hundred people in there. You meet everybody that you want to meet. You get to meet all the speakers if you want to, and I don't want to lose that. And so we decided to keep the event fairly small this year. So I imagine that we'll sell out way ahead of advance and you can get your spot at the capitalism conference.com if tickets are sold out by the time you are hearing this, then I would recommend that you download the PDF that we put together and watch the previous keynotes because it will help you clear the bottlenecks that you inevitably run into when you're running a sub 10 million dollar business. So that's, that is actually the hardest period to get through of going from, you know, 1 to 3, you can do, even 1 to 5, you can do kind of doing what you've been doing. Getting to over $10 million requires you to have a clear direction of where you're going, the people around you to be able to support you, and both the balance of time and the capital to be able to scale. And if you don't, if you don't clear those, you'll always be a tiny little business. And this is made to help you clear those. And the Capitalism conference helps you stay ahead of the curve of that so that you're growing the business, the income and the life that you most desire. Hey, thanks so much for listening to the show. If you found value in this, let me know on Instagram. My handle is ryandaniel Moran and I'd love to hear your feedback on today's episode. Thanks for listening and I'll travel this.