In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley explores why businesses hit growth plateaus, identifying two key factors: execution and market size. Drawing from his experience scaling an ecommerce brand to eight figures, Josh emphasizes that even skilled operators are limited by their total addressable market (TAM). He advises entrepreneurs to evaluate their market’s size and growth trajectory, warning against shrinking niches like keto snacks. Josh recommends pivoting to adjacent or larger markets when growth stalls, citing Simple Modern as a success story, and encourages choosing markets with strong tailwinds to maximize business potential.

Bullet Points:

Timestamps:

00:00:00 Introduction: Two Reasons for Stalled Growth
The host introduces the two main reasons for stalled business growth: execution and the size of the total addressable market.

00:01:00 The Importance of Market Size
Your business goals must match the size of the market you’re in. The total addressable market is a key predictor of success.

00:03:32 Good Operators in Bad Markets
Even the best operators with great teams and processes will be limited by the size of the market they serve.

00:06:19 Understanding the True Total Addressable Market
Entrepreneurs should analyze specific, fast-growing niches within a larger market, not just the overall industry data, for maximum growth potential.

00:08:37 Aligning Your Goals with Your Market
Choose a market size that matches your ambitions, whether you want a $100 million brand or a smaller lifestyle business.

00:10:55 A Personal Example: Recipe Cards
The host shares his experience starting in the declining recipe card market, highlighting the importance of avoiding stagnant or shrinking markets.

00:12:04 What to Do If You’re in a Stagnant Market
Instead of exiting, analyze your market’s growth rate. If operations are solid, the market itself may be limiting your growth.

00:13:17 Pivoting to Adjacent Categories
The host uses Simple Modern as an example of a brand that expanded into adjacent categories to continue growing after its primary market plateaued.

00:15:48 Final Advice and Conclusion
To achieve ambitious growth, focus on large, fast-growing markets, as even average operators can succeed with strong market tailwinds.

Links & Mentions:

Med Spa Space: “00:03:32”
Creatine and Electrolytes: “00:07:26”
Gummies: “00:08:37”
Poppi Soda: “00:08:37”
Grüns: “00:08:37”
Total Addressable Market (TAM): “00:09:38”
Simple Modern: “00:13:17”
ChatGPT: “00:15:48”

Transcript:

Josh Hadley 00:00:00  Today, I want to dive into a massive mindset shift that I have had when it comes to stalled growth in a business. Typically, it boils down to two major reasons. Number one is going to be execution, and number two is going to be the size of the market. Today I want to unpack why your brand might not be growing to the level that you want it to be, and how I’ve seen that happen in my own business. Welcome to the Ecomm 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. My name is Josh Hadley. First and foremost, I am a man of faith. I am a husband to a beautiful wife and the father of four children. I’ve been playing in the e-commerce space for over a decade, doing over $20 million in annual revenue in multi-million on sales channels such as Amazon, TikTok, Shop and Shopify.

Josh Hadley 00:01:00  And last but not least, I am also the host of the number one Business strategy podcast for eCommerce entrepreneurs, and that is E-com breakthrough. Today, I want to unpack something extremely important that honestly took me way too long to discover and actually understand. And it is this sometimes the goals and passions that you have, and the size of business that you want to create does not match the size of market that you are you are currently playing in. And the example is this. Let’s say you want to have a $100 million brand before you can say, yeah, I’ll be able to create $100 million brand. Even the best operator may not be able to create a $100 million brand. If they pick the wrong drumroll, please mark it. At the end of the day, the total addressable market is one of the number one things that will predict the success and the future growth in your brand More than anything else, I have seen this time and time again, and the lesson comes from this as I continue to go to ecommerce events and different mastermind groups, oftentimes I’ve been sitting next to an operator that, honestly speaking, I’m not overly impressed with.

Josh Hadley 00:02:19  They kind of seem pretty lazy, and they don’t really run a very good team, and they might be fairly unethical. Yet guess what I hear? Oh yeah, I’m running this million dollar brand. And guess what? The underlying reason as to why they’re running a $100 million brand is they are riding the coattails of a massive trend and a massive opportunity that is growing over 20% annually year after year. The market is growing in a massively meaningful way, and so they only need 0.5% of the market. And honestly, they don’t even need to be that good of an operator because like the market’s just so hungry for what it is that they are offering. Alex Ramos talks a lot about that today. Right now, which is like the med spa space is just like a massive opportunity. It is growing year over year, month over month. It is a hot space. And honestly, there’s a lot of like fairly poor operators that are succeeding massively well in the med spa space just because like it is such a hot and attractive and growing market right now.

Josh Hadley 00:03:32  And so the lesson is this you might be one of the best operators that is out there, meaning you’re a great leader, you have a great team behind you, you have the right processes, you have the right playbook. But guess what? If you’re in the wrong market, you’re only going to rise to the size of market that you can actually conquer and however big that market is. So let’s take this as an example. Let’s say there’s a particular market for we’ll talk about a specific supplement. Right now let’s talk about, like, the Cato market. Okay. So in the Cato market, or let’s call it the snack market, not necessarily supplements. Okay. Cato was on a tear, you know, five years ago or so. But Cato as a whole is actually seeing declines year over year now. So now is not the best time to be in the Cato market. And if you’re in the Cato market and let’s say you have 10% market share of, you know, the stats, the Cato snack market right now and it’s declining year over year, well, guess what? It’s going to be extremely difficult for you to be able to continue to grow in that market because you’re in a declining market.

Josh Hadley 00:04:50  Number one, you’re going to experience declining sales year over year, even if you maintain your existing market share. And so in a declining market, you have to steal sales from other established Competitors. That’s really challenging. And number one, it is very expensive to do. And so oftentimes one of the biggest lessons that I’ve learned is that you could have a really good operator in a really bad total addressable market. And if that’s the case, guess what happens? You are only going to rise to the level of the total addressable market. So which means if you’re a really good operator, the vehicle that you choose and the market that you choose to enter in is going to predicate your success more than anything else. I’m a big fan of hiring leaders and bringing in the right people on the team, having documented processes, knowing the playbook. But all of those things mean absolutely nothing if you’re just going into this like teeny tiny market and it may be like, let’s call it, you know, keto drinks or something like that, where like the market is just so small or it’s just declining, but because it’s your passion project You really want to be in that, then you just need to go in with that with your eyes wide open, that, frankly speaking, it’s going to be a bloodbath to be able to grow in any declining or stagnant market.

Josh Hadley 00:06:19  So that is lesson number one. So let’s dive into lesson number two. Lesson number two is like truly understanding what is the true total addressable market. There’s a lot of people that have been in the supplement space that you know the overall health category continues to grow year over year. While that may be true, guess what? There are certain tailwinds or niches with inside of that health category or supplement space that are going to be more hot than others. There’s always going to be declining markets inside a bigger market, and there’s always going to be really fast moving growth niches with inside of a market. And so don’t just look at this at high level data and say, oh, hey, overall, the supplement in the health space, I see that as a massive multibillion dollar industry. Yes, that may be true. But if you choose to go into a, you know, a specific niche with inside that market that’s fairly small or not growing or actually declining, like you’re going to run up against walls right there.

Josh Hadley 00:07:26  So one of the most dramatic like increases in the supplement space right now, like a growing niche and market, has been creatine and electrolytes. Creatine is definitely like one of the more recent ones. Electrolytes are probably, I would say, almost about to hit their peak stage. But like all markets are going to experience that. And so Grüns they just had $1 billion exit. The reason why Grüns was able to do everything that they did and hit, you know, 100 plus million dollars so quickly was because they rode on the coattails of gummies, being one of the fastest growing form factors for supplements and vitamins, period. That’s it. They chose a space that was hot. They chose a space that was growing year over year. And so they just rode the tailwinds of growth. Yes, they were good operators. Did they have good people and did they have a good strategy? Of course they did. But a good operator with the tailwinds of a market can do massively enormous things. And that is where you see outsized returns.

Josh Hadley 00:08:37  So when we look at like a poppi soda getting acquired for over $1 billion, when you look at Group as a supplement company, getting acquired for over $1 billion, it’s because they they chose specifically to go into markets where it was a massively rising tide. And so that’s my encouragement to you, is if you are at a crossroads right now, or maybe you’re hitting a different growth plateaus with inside your business. The first thing I would look at is what niche inside of the market are you going to be targeting and how big is it? Ideally, if you want to have $100 million brand, you need to be playing in a total addressable market that has at least $1 billion in revenue at a minimum. And so that’s the level of market that you need to be looking into. And then on the flip side, if you are the lifestyle entrepreneur that just wants to be able to, you know, say, hey, I’m fine just taking home a million bucks, I don’t need to grow beyond that.

Josh Hadley 00:09:38  I’m fine. If I have a $10 million brand and it’s spitting out $1 million for me to live on every year. Great. If that’s the case, then you could go into a market where maybe it only has, you know, let’s call it half $1 billion. So $500 million is the total market. It’s relatively small, but you can grab, you know, just 10 million of that. And it’s not growing, but you can stay, you know, at that rate fairly consistently. That’s a good spot to be in. So just know who you are and like what your goals and ambitions are. Because if you have very big goals and ambitions, if you want to create a true empire and lasting generational wealth and do something big in the world, then you need to go into the market where things are moving. Things are growing rapidly because a good operator can crush it. When you have those tailwinds at your back. And then the flip side is also true. A very good operator, but in a declining market is very limited, and even a bad operator in a massively increasing in growth trajectory, market can succeed very well.

Josh Hadley 00:10:55  And ultimately, that’s been my the lesson learned here for me is so many times I have sat next to entrepreneurs where I’m like, your processes aren’t even as good as mine yet you already have a $100 million brand. And so that’s been one of the biggest mindset shifts. And that’s also been the journey of our brand. Frankly speaking, one of the first products that we came out with ten years ago was recipe cards. And so ask yourself this question are recipe cards a increasing market year over year, or are they a mature or even declining market year over year? And honestly, I would say like it’s a declining market because so many people are using their phones, the iPad, etc. to pull up recipes like recipe cards are more of like a sentimental thing. It’s not like they’ve gone completely extinct, but like there’s a massive ceiling and I don’t have tailwinds at my back. And so that was a big reason as to why we were able to, number one, kind of move on past that market and move on to other markets, because at the end of the day, you do not want to be in a declining market.

Josh Hadley 00:12:04  The best operators will still get killed and find growth very expensive and hard to come by in declining or plateaued Markets. So get out of those markets. So you’re probably asking yourself this question like, what if I am in one of those maybe stagnant or non growing markets. Do I just need to like exit my business and and move on. No, quite the contrary. What you need to do is like see it for what it’s worth. See it for what it is right now. And understand maybe one of the biggest challenges that you’re facing today is like, hey, I’m so frustrated. Like, I want to grow. I want to get to $100 million. And I keep hearing other people get 200, 300% gains year over year. What’s wrong with me? Why can’t I do that? And the first question needs to be what market do you serve and what’s the total addressable market there, and what’s the annual growth rate of that market. And that will tell you probably 90% of the story. Because if you’re already a good operator and you would, you would say, hey, honestly, my PPC best practices are some of the best there is out there, or we’re working with some of the best partners, like I.

Josh Hadley 00:13:17  I feel like we’re doing everything right and we’ve got good team members. If you’re checking all of the operational boxes, it may be the actual market that is limiting you and not your actual execution within that market. So understand that. Then what you do is you look to move into adjacent categories or adjacent markets. And so you will often see this with very established brands where they begin to experiment into brand new niches. So a good example of this is simple modern simple modern really like they grew their rise to fame happen during kind of those Covid years because they were in a prime position when the Stanley mug went viral and everybody needed every woman needed one of those Stanley Cups, then guess what? Simple modern was there. And when Stanley went out of stock, simple modern took market share. and so they rode the coattails of just a massive growth opportunity and virality. Now it didn’t remain. It’s we’re not seeing that same growth for, you know, drinks year over year. However, for them to continue to grow their business, they have had to enter adjacent categories.

Josh Hadley 00:14:34  And that’s why simple modern now has kids drinks and kids tumblers. And they also do lunchboxes. So you can see how they’re like moving into a adjacent categories. Right. Because the woman, you know, tumbler drink market was, you know, kind of hit its plateau. And they knew that they had already captured what market share was going to be fairly easy to come by for them. Any additional incremental market share that they were going to obtain would be stealing it from Stanley or Yeti or many of the other established tumbler companies. And guess what? That was going to be extremely expensive. So for them, they made the smart decision to say, hey, where’s the next? Not necessarily blue ocean, but where’s the next categories where we already kind of have some expertise. Our customer is still aligned in these adjacent categories. So we’re still going to serve our core avatar, but we’re going to go into other markets and areas where there’s a massive total addressable market, large Tam, because if you can go into a large Tam and even get a half, a percent, 1%, that can still be a massive business.

Josh Hadley 00:15:48  And that’s what Simple modern is doing. And so that’s my advice to you. Sometimes if you’re the person who says, hey, I’m a really good operator, I’ve got the right team. But man, I’m really frustrated why my business isn’t growing. Sometimes it’s the market that you’re actually in. And so ask yourself that question do I need to pivot into an adjacent market? And your best friend right now is going to be a clod or a ChatGPT and just riff off of, hey, this is the market I’m currently in. What’s the annual growth rate look like here? What are some adjacent categories that are maybe more faster growing, or have the potential to grow or have a bigger total addressable market? If that’s you, that’s where I start pointing my time and energy, and then your product development gets served more towards those bigger total addressable markets. That’s how you’re going to keep growing. So if you have big ambitions just like me, that note to myself is go compete and the larger total addressable markets.

Josh Hadley 00:16:47  And ideally go find one of those addressable markets that has the highest annual growth rate that you can possibly find. Because even bad operators, when they have the tailwinds of the market at their back, create massive businesses. So that’s my words of encouragement for you. If there’s an operator that needs to hear this same message, please share this with them. And if you like what you heard today, make sure you leave me a review. Find us on YouTube. Leave me some comments there. That way I know there’s actual humans actually listening to me. Until next time, good luck out there.