Supply vs. Demand: Stop Focusing On The Wrong Problems | Ep 899

In this episode, Alex Hormozi addresses a critical question for business owners: is your business supply constrained or demand constrained? He explains that recognizing which problem you face is crucial to effectively grow your business. A supply constraint means you have customers but not enough capacity to serve them, while a demand constraint indicates you have capacity but not enough customers. Hormozi presents several scenarios, using examples of a consultant, a software company, a restaurant, and an online fitness equipment store to illustrate how misdiagnosing the problem can lead to ineffective strategies.

For instance, a fully booked consultant may feel the need to attract more clients when in reality, he should focus on raising prices or scaling his offerings. In contrast, a software company may be great in product quality but lacks customers due to insufficient marketing investment, thus indicating a demand issue. Hormozi emphasizes the importance of adjusting strategies based on your business's current constraints and reassures that this understanding can lead to significant increases in both revenue and customer satisfaction. He provides a checklist to help owners identify their business constraints and prioritize actions for growth. Throughout the episode, he encourages revisiting assumptions and continuously adapting to changing business dynamics.