In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley explores why many e-commerce brands stall between $1 million and $5 million in revenue. He introduces the “inverted pyramid of value” to illustrate how founders often get stuck in low-leverage tasks, and explains that breaking through requires identifying and focusing on the business’s main constraint. Josh shares actionable frameworks and prioritization strategies to help entrepreneurs delegate, systemize, and concentrate on high-impact activities, enabling them to escape the “swamp” and scale their businesses to the next level.

Welcome to the Ecom Breakthrough Podcast! I’m Josh Hadley, sharing my journey scaling an “ecommerce business” from zero to eight figures. This episode details “scaling strategies” and the “business mindset” needed to overcome common “business obstacles” faced by entrepreneurs. Learn how to identify constraints and “grow your business” beyond plateaus with a solid “ecommerce strategy”! 🚀🔥 #EcommerceTips #BusinessGrowth #shorts

Tools and Concepts
“Inverted Pyramid”: “00:05:32”
“AI Tool of Choice”: “00:20:53”
“Pyramid of Value Creation”: “00:42:47”
“Systems and Focus”: “00:04:27”

Books
“$100M Money Models” by Alex Hormozi“: “00:17:26”

Video Content
“Ecomm Breakthrough Podcast YouTube Channel“: “00:05:32”

Key Concepts
“Business Strategy Definition”: “00:18:29”

Questions for Identifying Constraints
“What must be true to grow tenfold in 12 months?”: “00:20:53”
“If I could magically fix only one of these things tomorrow, which one would make all the others easier?”: “00:23:30”
“What measurable number proves that this is the real bottleneck or constraint in your business?”: “00:25:25”

Business Constraints by Revenue Thresholds
“0 to $1 Million: Can we actually generate demand?”: “00:30:22”
“$1 Million to $5 Million: Can we scale profitably?”: “00:31:33”
“$5 Million to $15 Million: Can we execute without the founder?”: “00:34:00”
“$15 Million to $30 Million: Can we build real leadership in the business?”: “00:35:17”
“Above $30 Million: Can we allocate capital strategically?”: “00:36:34”

Action Items
“Identify Constraints”: “00:40:33”
“Kill Distractions”: “00:41:45”

Encouragement
“Leave a Review”: “00:42:47”
“Share the Episode”: “00:42:47”

Chapters:
00:00:00 Introduction & Episode Overview
00:01:05 The Swamp of E-Commerce: Why Growth Stalls at $1M–$5M
00:02:17 Common Reasons for Plateauing
00:03:17 Too Many Initiatives, Not Enough Focus
00:04:27 Motion vs. Progress & Identifying Constraints
00:05:32 The Inverted Pyramid of Value
00:06:45 Levels of the Inverted Pyramid: Admin & Busywork
00:07:53 Levels of the Inverted Pyramid: Operational Optimizations
00:09:00 Levels of the Inverted Pyramid: Growth Engines
00:10:07 Levels of the Inverted Pyramid: Strategic Value Creation
00:11:20 Examples of Admin & Busywork
00:12:27 Examples of Operational Optimization Tasks
00:13:39 Examples of Growth Engine Activities
00:15:05 Examples of Strategic Value Creation
00:16:08 Why Founders Get Stuck & The Need for Strategic Decisions
00:17:26 How to Identify Your Business’s True Constraint
00:18:29 Business Strategy: Prioritizing Limited Resources
00:19:43 Why Focus Fails & The Power of Saying No
00:20:53 Three Questions to Reveal Your Constraint
00:22:16 Question 1: What Must Be True to 10x in 12 Months?
00:23:30 Question 2: If You Could Fix One Thing, What Would It Be?
00:25:25 Question 3: What Measurable Number Proves the Bottleneck?
00:26:44 Assigning Numbers to Constraints & Prioritizing
00:30:22 Common Constraints at Different Revenue Levels
00:30:22 $0–$1M: Generating Demand
00:31:33 $1M–$5M: Scaling Profitably
00:34:00 $5M–$15M: Executing Without the Founder
00:35:17 $15M–$30M: Building Real Leadership & Financial Modeling
00:35:17 $30M+: Capital Allocation & Executive Leadership
00:36:34 Mapping Your Constraint to the Pyramid
00:39:23 Five Action Items for Focus & Scale
00:42:47 Closing & Call to Action

Transcript:
Josh Hadley 00:00:00 Welcome to the E-com Breakthrough podcast, I’m Josh Hadley. I’ve scaled my own ecommerce brand from 0 to 8 figures, and I’m actively building towards nine figures in sales. This podcast is where I document that journey and share the systems, the strategies, and the lessons learned in real time so that you can learn what actually matters and scale your own business. Would you like to know why a lot of Ecom brand owners hit a plateau, and why they get stuck at certain revenue thresholds? Today, I’m going to be sharing the number one bottleneck that holds back most e-commerce businesses, and how you can avoid getting stuck in those same traps. My name is Josh Hadley. I am first and foremost a man of faith. I am a husband and I am also a father of four. I have been an eight figure brand owner and I’ve been in the e-commerce business for over a decade. I am also the host of the number one E-commerce Business Strategy podcast, which is E-com breakthrough. Today we’re going to be diving straight into why most Ecom founders stay stuck.

Josh Hadley 00:01:05  This is the real reason why your growth will stall between that 1 million to $5 million revenue threshold. This is what I term the swamp of e-commerce. This is where it’s like ridiculously hard because one of the most important things that you have to do is just simply work so much harder in the business. Or you could go out and hire a bunch of people, but you don’t really have that amount of profitability yet. In order to go build out the true management or leadership team that you would ideally like. And so either you’re going to need to go get venture funding to be able to afford that type of talent, or that means you’re going to start needing to put in that 40, 60, 80 hour workweeks. That is going to really help you move out of that swamp. So let’s talk about what are the real reasons why growth stalls between million and 5 million. Well, number one, most e-commerce brand owners, they don’t understand the true value levers that sit inside of the business. Okay. And this is just kind of an entrepreneur syndrome at the end of the day, which is shiny shiny object syndrome, right.

Josh Hadley 00:02:17  This is most entrepreneurs deal with this where it’s like, oh great idea. Oh, I heard somebody else’s killing it over here. Oh, that sounds like a great tactic. Maybe that’s what I need for my business. Those might be all great ideas, but it really gets you going in multiple directions, which is actually what’s keeping you stuck. a lot of brand owners, they get stuck doing a lot of admin work. They feel like they’re busy and they may wear a badge of honor saying, yeah, I’m working 60 hour week workweeks. That may be fine, but if you’re just stuck doing 60 hour workweeks, working on admin stuff with inside the business, you’re not actually growing the business, and that’s why you’re stuck inside the swamp. In addition to that, you’re optimizing parts of the business that have low leverage. And it could be something as simple as, you know, spending too much time focused on customer service or trying to refine that overly too much. And then last but not least.

Josh Hadley 00:03:17  I mean, a lot of brand owners sometimes could be working on the right growth initiatives for their business. However, they get stuck because they’re working on so many big growth levers at the same time. They’re not they’re kind of like an inch deep but a mile wide. And if you’re trying to actually grow a certain growth lever in your business, going an inch deep across multiple growth levers is not actually going to produce that level of return to help you get out of the swamp. So what do you do if that’s you? Well, number one, this is my favorite thing that I come back to over and over again that any business owner needs to remind themselves systems and focus scale while distraction kills. And that’s honestly what’s happening inside that swamp. It’s the lack of systems and focus, and it’s the increased amount of distractions that are killing those business owners. And that’s why they’re staying stuck inside that swamp. So what do you do and what are the core mistakes that are being made here in this 1 to 5 million swamp land, as we call it? Well, motion is mistaken for progress.

Josh Hadley 00:04:27  Okay. There’s too many initiatives. There’s too many priorities, or everything feels like a priority. There’s a lot of ideas. In fact, there’s maybe too many new ideas and there’s no clear like, constraint in the business to say, hey, if we unlock this number one thing, this is now going to be that domino that tips over the first one, and all the other dominoes just simply get knocked over because we actually identified the constraint. So as you’re listening to this, how would you like to be able to know, like what the actual number one constraint is that’s holding you back, that one big domino that if you push it over, it’s going to knock out over all the other dominoes and it’s going to make your life ten times easier. I’m going to walk you through the thought process and the framework to help you identify what that number one constraint is for your business. But as we go into that, one of the things that I love to talk about is this pyramid of value. And this helps you identify where are you spending most of your time.

Josh Hadley 00:05:32  This is an inverted pyramid. Those listening to the audio version of this podcast definitely come check us out on YouTube where I actually have a presentation. I’m showing this inverted pyramid. So if you’re just listening to the audio version of this mentally picture an inverted pyramid, basically a pyramid standing on its head, which means the point is at the very, very bottom and that big bass is sitting at the top. So why is this an inverted pyramid? Well, at the very, very top of this pyramid, this is that big giant base. Guess what it’s filled with? It’s filled with a lot of administration in the business and just simply a lot of busy work. You can easily spend 40 hours a week executing tasks in that big bucket because it is foundational. Yes, but guess what? It’s preventing you from doing working on those lower tasks that actually have more value in your business. That’s why it’s that inverted pyramid. And so sometimes people are getting so stuck in the admin work that they’re not able to graduate and move down into actually working on things that provide immediate or outsized returns for the business.

Josh Hadley 00:06:45  Okay. So after we go through this first base of administration, the next kind of like middle chunk here is going to be operational optimizations okay. And these operation optimizations they’re good. They could be things that are saving you money right. It could be lowering your unit economics costs. It’s negotiating with your supplier or your manufacturer to reduce your cost of goods. Could be negotiating, you know, new fulfillment rates with your three PL or something like that. Those are all good things. Can they save the business money? Can they add to your profitability? They certainly can. But by just reducing, you know, my three PL cost, is that going to ten x my business. No not yet. So that’s what then adds into that next lever as we get further down this inverted pyramid, it’s getting skinnier and skinnier, which means these are decisions that will be made in the business that will provide outside returns. So the next layer underneath operational optimizations. These are where the growth engines of the business sit.

Josh Hadley 00:07:53  Okay. These are going to be your new sales channels. These are going to be your new products that you launch. All right. So those are things that like when they come to life, they truly can possibly get to ten x value for the business. Okay. And then last but not least, what is the very, very tip of this pyramid that’s sitting at the bottom because it’s inverted. These are your strategic value creation. Okay. These are decisions that you’re not making these decisions on a daily basis. These are really well thought through strategic decisions that stem from what is your brand story. What is the IP right. The intellectual property that sits behind each of your products that provides that uniqueness and creates that brand moat around you. It could be a channel diversification strategy that you have. But these are the things that actually will provide immense returns for your business. If you ever wanted to exit your business where you want to be, spending most of your time is in making those strategic value creation decisions.

Josh Hadley 00:09:00  So if we were to dive even deeper into this, here are some examples of that admin and busy work. and I think this is really important. As I read through each of these, I want you to ponder, like where am I spending the majority of my time? And guess what? The more you can say that you’re spending most of your time towards the bottom of this inverted pyramid, okay, towards that strategic value creation, it means you have a higher likelihood of being able to grow your business that much faster. But if you can, if, as I read through these, if you find yourself stuck in the the bigger foundational admin busywork or operational tasks inside of your business, then you can now identify This is actually what’s holding you back. So let’s let’s dive into that admin and busy work. What what does that mean. What are some of those things that are being done that are actually stealing your time, keeping you stuck in that swamp even longer, making you frustrated, but also making you feel like you’re working those 40, 50 hours a week.

Josh Hadley 00:10:07  And it feels like a badge of honor. But you don’t know how to get out of this, like hamster wheel of like, hey, why is my business not growing while I continue to put in more and more time and effort? So admin and busy work. This is where most people get stuck. It’s comparing and switching software tools. It’s your email inbox management. Oftentimes as I speak with other entrepreneurs, some of them even say they spend 3 or 4 hours a day just in their email inbox. And I promise you, just replying to emails that’s not going to attend your business anytime soon. Processing payroll or vendor payments. managing receipts, okay, handling customer service issues or. Manually pulling reports or manually making PPC bid adjustments okay. Manually uploading product details into different sales platforms that you might be selling on. could be, working in the back end of different, marketplaces, making sure that you have product compliance or those certifications for your products are all of those things that I just listed off important? Yes, they certainly are important in the business.

Josh Hadley 00:11:20  And there are things that definitely need to get done, but those are not the things for the owner, the founder of the business to work on in order to annex their business. All right, so what if we move even further down this inverted pyramid now? Okay. All right, what if, you listening can say, hey, actually, I’ve done a good job. I have an executive assistant where I have a VA that actually handles my email, and they do a lot of the back end product optimization or product listing details, product compliance policies inside of Amazon or Walmart, whatever platforms you might be selling on. Right. Okay, great. If you’ve already graduated and been able to like, delegate a lot of that admin and it’s off of your plate, guess where the next part is that you might be spending a majority of your time. This is in that operational optimization stage. So what are some of the things that people could get stuck on in that operational stage? Well number one, reducing shipping costs.

Josh Hadley 00:12:27  Really good idea. renegotiating unit costs with your manufacturers. Again, super valuable right. Tightening ad spend efficiency to increase your Roas. I love it. Good. We’re making progress. All of these things are adding to my bottom line, which is great. Profitability is getting better. Automating repetitive back end office tasks, right? Which would be accounting or customer service. So it’s just making it more efficient. It’s automating it. Right. Improving your inventory forecasting. Right. Definitely something to be focused on and definitely something very impactful to the business. And then last but not least, it could be something as simple as like shortening your product development cycle time. Right. How do you just shorten that, make it more efficient so that you can bring even more products to market? So if you’re listening to this and you can say, hey, I feel like I’ve done a good job, I have people on my team that they are responsible for doing all of those things, reducing our Cogs, negotiating with our our three PL, etc..

Josh Hadley 00:13:39  Okay, that’s great. Then what that means is let’s move even further down this inverted pyramid. So the next stage where really this is where you’re going to start hitting the levers that will truly provide the opportunity to tend X your business. So these are the growth engines with inside your ecom brand or any business okay. Scaling paid traffic for proven products or offers okay. focusing on new product launches, how many new products are you launching this month, this year, this quarter, etc.? Adding new sales channels, raising your prices strategically testing that price elasticity. new geographic markets. So entering maybe new international markets that you’ve never been in before. repeat purchase campaign engines. So do you have a back end that sits there in email or SMS marketing to be able to have repeat purchases coming in from your customers. what’s your conversion rate optimization strategies here? Right. Because change that conversion rate. Double your conversion rate, theoretically double your revenue. Okay. And what are you doing with affiliate marketing? What is your moat that you could potentially be creating with people that love your products, your business and won’t stop talking about it? Okay.

Josh Hadley 00:15:05  Those are all good things that can really, like drive the true growth within side of your business. So I hope as you’ve been listening to this and before we get to this final strategic value creation, as you listen to this, I hope you can begin to plot. Like, where am I spending the majority of my time? And what you should be looking for is spending most of your time in the growth engine aspect or into this final bucket, which is the strategic value creation. This is the tip of that inverted pyramid. And this is where we have Brand Story. Are you known for one thing? It’s crafting. It’s refining that brand story. And guess what? Even for our business, we have crafted and refined our brand story probably four different times in the past decade. Okay, so is this something that I have to change every day? Most certainly not. But this is one of those things that’s like you need time and space. And if you make the right decision here, it can ten x your business.

Josh Hadley 00:16:08  That’s why these these decisions here are so critical and so important. Because just one little change can make a massive difference in massive ripple effect. The unfortunate reason why so many people get stuck in the swamp is because they never get to the point of making these conscious decisions, and they have to make these decisions just on the fly because they don’t have enough time. They’re just stuck in the thick of thin things, so to speak. All right. As we continue on that strategic value creation, there’s building a leadership team. These are like true senior leaders in your business. it’s also refining your business model. Those of you who have read Alex or Moses Money Models book, that’s a great book to like, look at your business and say, hey, how can we flip this thing on its head? How could I take maybe a, commodity product, but turn it into a subscription product? All right. That’s the level of thinking that, like, can you change the money model that sits inside of your business and change the business model as a whole so that you’re not just playing the same game everybody else’s? You’re playing at a totally different lever, a level, and that’s what is your business.

Josh Hadley 00:17:26  You could have a unique product differentiation strategy, a distribution strategy. And then last but not least, like what’s your product IP strategy? What’s your intellectual property that actually truly creates a moat? So I hope as we go through this pyramid of value that you understand, like where is a lot of your time going? Now you may be asking, okay, Josh, that’s great. Thanks for going through this value, this pyramid of value. But like, how do I actually understand what is the one thing you said? There was one thing that’s holding back every e-com business owner and that’s true. So that’s what I want to introduce to you next, which is how do you understand what the strategy should be for your business? How do you understand what the true constraint is that’s holding you back from getting outside of that swamp and scaling your business to eight and even to nine figures and beyond. So the next thing, what is the real constraint? What’s it’s not the fact that there’s opportunity, that you don’t have enough opportunities.

Josh Hadley 00:18:29  Opportunities are not the problem. You have unlimited opportunities, but you have limited time. You have limited capital. You have limited team capacity. And you yourself have limited time and attention. All right, so if all of that’s true, how do you ensure that every day you wake up, you are working on the number one thing that is the constraint to the business that once you unlock it will knock over all the other dominoes. This is my favorite understanding of like everybody talks about business strategy, but nobody really says like, oh, this is the definition of business strategy. And this is my favorite definition. Business strategy is nothing more than prioritizing limited resources in a world full of unlimited opportunities. That goes back to what I talked about early on systems and focus scale while distraction kills. So really, what business strategy is, is what’s everything you’re saying no to? I’m less worried about what is it that you’re saying yes to? Because way too many people say yes to almost everything. I’m more interested in the business owner.

Josh Hadley 00:19:43  That can tell me. Why are you saying no to all of these other quote unquote good ideas that everybody else is sharing? That’s what business strategy is. It’s prioritizing those limited resources in a world full of unlimited opportunities. So let’s talk about like, why does focus fail? Because most business owners would say, yeah, I do focus. I do lock in on a on a daily basis, and that’s great. However, most of the time everything feels important. Everything feels like it’s always competing for your attention. You feel like team members are always pulling you in different directions. And ultimately what that means is like execution just simply gets diluted at the end of the day. So then what do we do with that? Here’s where we dive into the constraints. So what I have is I have three specific questions. And these questions are going to help you reveal the true constraint. The number one thing that is holding your business back and not allowing you to graduate and move on to that, that next revenue threshold that you’ve been dying to get to.

Josh Hadley 00:20:53  All right. So question number one for our constraint finder. What must be true to grow ten x in 12 months. All right. Is it. And here’s just a number of things. Just so just that you can get your mind working. Like what does that mean. What must be true to to grow ten x in 12 months? Well, number one, I would definitely go to your AI tool of choice and see like what is it that that gives you an idea, a spark of inspiration that lights your mind and get you moving in the direction you need to? But to give you some ideas. Is it a new product line that outsells everything else in your business? Is a brand moat that competitors cannot copy with cheaper pricing? Is it having systems for admin and ops that run without your direct involvement? Is it? We would need customers searching for our brand by name, not just generic keywords. Could it be having working capital that funds aggressive inventory buys because you keep going out of stock? Could it be something like we need to find a repeatable product launch system with very clear return thresholds to make sure we’re always launching the right product with the highest ROI.

Josh Hadley 00:22:16  Could it be that you’re just simply missing data? And having data visibility will help you drive fast and more confident decisions. Could it be the fact that, like, maybe you’re just getting caught, launching the wrong products. And you need a capital allocation discipline that kills all the mediocre ideas quickly, but allows you to fund the winners aggressively. And could it be something as simple as we just need an A level operator or operators owning each revenue channel end to end? All right. So if you had a ten x your business in 12 months, let’s say hey you have either two options. You can either go all in trying to ten x your business in the next 12 months. Or if you don’t do that your business goes bankrupt. You choose. I want you to think about that and ponder that for one moment. And as you do that, you’re then going to be able to say, oh wow, here are all the things I’m saying yes to. But if my back’s up against a wall and I have to ten x the business, there’s a lot of those yeses that quickly become no’s because you realize these are nice to haves, but they’re not going to help me.

Josh Hadley 00:23:30  Double or triple? Heaven forbid ten x the business. All right. So that’s question number one. Now let’s continue on this path. Hopefully we’re getting a little warmer to in getting closer to understanding what that constraint is for our business. Question number two is this. If I could magically fix only one of these things tomorrow. Right. We talked about a lot of really good ideas and tactics and strategies. Great. But which one of these, if you could only fix one of them, which one would make all the others that much easier? So it goes back to that domino analogy, which is the one of these things, one of these tactics that if I just push this one down, it’s actually going to knock over all these other ones sequentially anyways. Okay. So it could be something as simple as right. If traffic doubled overnight, would your conversion and your AOV matter less if you had one breakout hero product with an IP moat? Would your paid ads, your email, and your affiliates become easier if your inventory forecasting were highly accurate? Would operational stress disappear if customers search for your brand by name? Would your ad efficiency just improve automatically if gross margin improved by ten points? Would cash flow and scaling become that much easier for you if your founder in admin just like busywork tasks disappeared from you tomorrow? Could your revenue grow faster immediately? And if you had one, a level leader fully owning a department would would execution and speed simply increase across the board for you? Now let’s move on to question number three.

Josh Hadley 00:25:25  This is our third and final question that after you have this one actually answered. Should be definitely sending you the right signal as to what constraint you should be working on. Which is this what measurable number proves that this is the real bottleneck or constraint in your business? All right. So what that means is great. All of these sound like really good ideas. Yes I would love 10% added to my gross margin. Okay, great. Sounds good. But it also sounds great to have an A level leader that’s owning a complete department for me. Oh yeah, and by the way, it also sounds really nice if I woke up tomorrow and I never had to do any of the admin or busy work in the business anymore. Okay, great. Well, now how can we quantify that? Okay. So some examples. The monthly traffic is flat while conversion and AOV are strong. So how much traffic do you need in order for that to be able to connect your business? So what you’re going to be able to do as I go through each of these is actually assign a mathematical number to the answer here.

Josh Hadley 00:26:44  And then guess what you’re going to be able to do. You’re going to say which one provides me more EBITDA right. More profit in the business or which one provides me more revenue or which one provides the most savings, dropping more, more profit to my bottom line. Okay, so if that’s true, your monthly traffic is flat. While conversion and AOV are strong, great. If we just dump more traffic on here, could our business ten x? If I just ten x our traffic. Okay. conversion rate. If your conversion rate is below the category benchmark average. Despite having a lot of traffic coming to your listing, could that be the constraint and what happens to your numbers by just simply like doubling your conversion rate? Okay. How much revenue does that bring to the business? If your gross margin is below 40% and paid ads end up breaking or making your business ultimately unprofitable? Okay. How much? How much better would those extra ten percentage points be for your business to be able to allow you to push heavier on marketing? repurchase rate is below 20%.

Josh Hadley 00:27:59  So what does that mean? If you increased your repeat purchase rate, how much additional revenue or profit would that bring to your business? Your revenue per visitor is significantly lower than competitors. Okay. What happens if I change my prices? Yes, that’s going to decrease my conversion rate. But I also anticipate that increasing my revenue and profit? If so, how much? Write a new product line that’s projected to add $1 million in 12 months. Okay, great. Stack that. Amongst everything else, your inventory stock outs are capping your revenue multiple times per quarter. Okay, let’s assume I, I had unlimited amounts of inventory and I could fund it at any given point in time. What is my revenue look like then? Okay. And last but not least, paid spend cannot scale beyond a certain budget without my CCaC customer acquisition cost rising sharply. Okay, well, what does that mean if I if I could just maintain my CCaC at this same rate, I could actually double, triple, quadruple my ad spend, and then that will also increase my revenue.

Josh Hadley 00:29:12  So ultimately what you’re trying to do with all of these things and hopefully you’ve been able to say, hey, here’s a lot of different things that I could work on inside the business, but assign the number to each of these tasks. And what you’re going to want to do is work on and identifying the number one that provides either the most revenue or the most profit to your business. It is as simple as that. And so after going through all three of those questions, you should now be honing in on one single thing that will move and change the direction of your business. So how do you identify the true constraint? It comes down to what opportunity has the highest revenue growth or savings potential that makes other aspects of the business easier at the same time, and it would actually help drive you to ten in your business. Okay. And just as like a quick overall summary, this path is going to be unique to every single business. but I’ve got a little cheat code for you that makes it a lot easier in general.

Josh Hadley 00:30:22  These are the common like constraints that I see at different revenue thresholds. Now. It’s not true. Like it’s not like you pass 5 million and like something magical happens to, you know, like these these revenue bands may ebb and flow. But the the key point is like these constraints are there for every business owner. You will need to tackle each of these constraints. And if you have already crossed the eight figure mark, it means you’ve probably tackled a majority of these constraints. So let’s go through it. It’s a 0 to $1 million mark okay. Your true constraint right there is can we actually generate demand. Right. It’s a product is a constraint. Traffic may be a constraint or it may be the offer okay. In the 1 million to $5 million range. This is where a lot of entrepreneurs sit. This is that swampy area where a lot of people just get stuck. This is where they plateau. This is where they just want to exit their business because they get frustrated, feel like they’re spending so much time in their business, but ultimately in that 1 to 5 million range.

Josh Hadley 00:31:33  Here’s the constraint. Can we scale profitably? There’s a reason why, if you’re watching this on YouTube, that I have this part highlighted in yellow, because I believe in that 1 to 5 million mark. The reason why it’s so swampy and the reason why it’s so easy to get stuck is because at this point, you have the highest number of constraints happening simultaneously in the business, and it’s really hard to distinguish and prioritize the number one constraint. And that’s why most people fail or get stuck or they plateau because it could still be a product problem. Maybe there’s just not enough new products being generated. It could be a unit economics problem. Maybe that’s the constraint. Maybe you have so little gross margin to play with that you don’t have enough ad spend in order to really scale your business. It could be ad spend efficiency. Maybe you just don’t have the right advertising strategies or the right tactics in order to make the ads efficient, to be able to double your ad spend to push yourself outside of that swamp.

Josh Hadley 00:32:46  It could be as simple something as simple as marketplace optimization. Oftentimes, I will hear brand owners that are selling on five, six, seven different marketplaces, or they have a TikTok sales channel, they have a Amazon sales channel, they have their own website that they’re selling on. While those things are good. The challenge is they’re Not the best at any of those because they are spread so thin. So marketplace optimization becomes a constraint. And then the constraint also becomes like somewhat hiring and firing team members and being able to delegate to other team members, because you’re going to need to give off and delegate a lot of that admin and basic customer service, basic email inbox management. Because if you don’t, you’re in that hamster wheel that never ends. All right. So let’s say you cross that. So now you’re in that 5 to $15 million revenue threshold. Now in general. And the higher you get in that revenue threshold now it’s all about can we execute without the founder. Can the business begin making decisions.

Josh Hadley 00:34:00  And does it have the capable team members to be able to make decisions without the founder needing to make all of them? That is the where a lot of the constraint sits in that 5 to $10 million range. So it comes down to systems. What are your systems and operations? What is your delegation? Are you still trying to hold on to everything in your business, or are you allowing people to grow? Make decisions, make mistakes, learn and grow alongside you. And ultimately, again, this is where so many people get tripped up. And this is why, if they’re lower on that revenue threshold, really the constraint is being able to hire team members and being able to manage those team members, being able to know when you have a good team member versus when you have a crappy team member and you need to exit them from the business. Okay. Those are the constraints that sit in that 5 to $10 million range in the 15 to $30 million range. This is can we build real leadership in the business? This is management level leadership we’re not yet talking about, like, you know, C-suite level people, but you’re looking for solid managers that could then lead other people in your business.

Josh Hadley 00:35:17  And then it also comes down to finance. Do you have the correct money model or playbook in order to actually be able to continue to scale efficiently? And are you investing your new product launches, your new sales channels? Are you putting your money in the right places for the highest ROI? Those are where a lot of like there’s that financial modeling actually becomes a big constraint. And then as you grow past 30 million, really it comes down to like, can we allocate capital strategically because opportunity opportunity cost becomes that much more important. It comes down to your executive level leadership okay. It begins beginning to hire for that C-suite okay. And then ultimately channel diversification and IP diversification. Like what makes you uniquely different compared to your competitors. That’s going to allow you to be able to scale to those nine figures. So once you’ve done all of that, you’re going to come back here to that that pyramid and you’re going to place your constraint or that bottleneck here on this pyramid. So if your constraint is, hey, really, I’m just lacking capital.

Josh Hadley 00:36:34  Like if I like truly, I have so many new product ideas. They’re sitting there waiting in the pipeline that I it’s sitting there with my manufacturer. I know they can do it. Like I just need the funds to do it. That means you’re sitting in that operational optimization. Okay. So that means you’re in in part number two of this inverted pyramid okay. Which means you need to continue focusing on that level number two of the pyramid or work on anything below that. So anything, any growth engines or strategic value creation. If you ever find yourself working in level number one, where there’s admin and busy work, that is where you’re wasting your time and vice versa. If you have if you identified your constraint being, hey, it’s actually like coming out with new product launches or new product ideas. That’s where my challenge is. I just can’t get enough ideas out there. I need a new product line, I need a new manufacturer, etc. great. Well then that means your constraint is at level number three, which means any time you spend in level one, which is admin and busywork or operational optimizations, which is, you know, everything that we talked about shipping cost, your ad spend, efficiency, etc. any work that you’re doing there is not helping you grow the business, okay? You’re actually cheating and stealing time from your business and preventing it from growing and keeping it stuck.

Josh Hadley 00:38:11  And that’s why you’re continuing to plateau. And so if you’re at level number three, then you need to work on level number three or level number four tasks. And ultimately when you get to level number four you’re obviously crushing it. Things are working good there. But there’s always going to be a constraint. there are always constraints inside of the business. Your biggest challenge though, as an entrepreneur, is again, being able to identify and prioritize, which comes down to business strategy, where you’re going to spend and invest your time. So after listening to all of this, here are my five action items for you. Because focus creates scale for you in your business. What I want you to do is, number one, write down the constraint of your business. And so go through listen. Follow the instructions in this episode and actually ask yourself those three questions to identify the constraint. Identify where you’re spending your time. Write down that constraint. Number two, you want to assign a clear owner. So if you’re at that $1 million mark, it’s probably just you and maybe a virtual assistant on the team at this point.

Josh Hadley 00:39:23  If you’re a bigger brand owner, then you probably have team members where maybe you are assigning this constraint to a single team member. Okay. Step number three build a quarterly, a monthly, and a weekly action plan. So it’s not just enough to say, hey, this this is my big constraint for the year and I’m just going to go tackle it. Great. That’s a good step. But now I want you to break it down into bite sized chunks. What are you going to do today? What are you going to do this week. What are you going to do this month, and what are you going to do this quarter. And so if you just reverse engineer everything and say, hey, if by the end of this year I want this to be true. Start backwards planning. And then it gets really granular every day. And again, what you need to do is fill the very beginning of your day needs to be filled with the the key priorities of the business. Okay. My favorite analogy is that analogy where if you have a bunch of rocks and sand in a jar, if you fill it with sand first, there’s not enough room for the big rocks.

Josh Hadley 00:40:33  But if you actually take that jar and you put the rocks inside of that jar first, and then you pour the sand on top of it, the sand just fills around all the big rocks, okay? And that is why it is so important to understand what are the true constraints. Because every morning you wake up, you need to say, I’m not going to be done working today until these three things are done. Because these three things are what actually move the business forward because they solve the constraint. Okay. And then let all the other admin busy work and operational tasks consume your time because they still will. But make sure you’re driving that constraint forward. Step number four you want to kill the distractions that compete. Okay, maybe that means don’t show up to another fancy webinar that somebody said they have the secret to, you know, doubling your sales on some other new sales channel that you’ve never been selling on. If your constraint is that you don’t have any new ideas and ways to grow your business, then maybe that sounds like a great webinar for you.

Josh Hadley 00:41:45  But more often than not, you don’t need new ideas. You just need to execute. Which is step number five. Action item here is just simply execute. At this point you’ve identified the constraint. You have your plans. You have a clear owner for who that is. Kill all the other distractions and go execute. It is as simple as that. And as you do those things, that’s where your systems and focus will help you scale. And the distractions that kill your business will be a thing of the past. So my encouragement if you’ve made it all the way through this, I want you to screenshot this cadence, those action plans and go implement it with your team. Number two, if you’d be so kind. Leave me a review. Let me know what your thoughts are. with with this framework, with the pyramid of value creation for your business and those three questions to be able to help you identify what the true constraint is of the business. Okay. And last but not least. Do yourself a favor.

Josh Hadley 00:42:47  Share kindness in the world by taking this episode and sharing it with another business owner that needs to hear it. And so with that, I thank you for your time. Go find the constraint of your business and go crush.