Podcast Summary: Helping a Failing Business Owner Fix His Business | Ep 870
Title: Helping A Failing Business Owner Fix His Business
Host: Alex Hormozi
Release Date: April 14, 2025
Podcast: The Game with Alex Hormozi
Introduction: Understanding the Crisis
In Episode 870 of The Game with Alex Hormozi, host Alex Ramosi engages in a candid conversation with Alexio Mar, a legal attorney specializing in services for musicians. Alexio faces significant financial challenges, currently losing $100,000 with only six months of cash reserves remaining before his business potentially folds.
Notable Quote:
[00:25] Alexio Mar: "Our revenue for the last 12 months has been 300,000 profit negative. So we're losing money."
Current Business Overview
Alexio outlines the structure of his business, which comprises three main units:
- Services: The profitable segment, generating $131,000 in revenue with a $10,000 profit.
- Education: Matching the services' revenue at $131,000, but contributing to the overall loss when combined.
- Software: Contributing approximately $40,000 in revenue but adding to the financial strain.
Key Insights:
- The business is currently operating at a net loss of $100,000.
- The Services and Education units are underperforming when combined with the Software segment.
Notable Quote:
[00:38] Alex Ramosi: "You're like, I could have done nothing and I would have just had zero at the end of the year instead of working all year and then being worse off."
Customer Acquisition Strategies
Alexio explains his current methods for attracting customers:
- YouTube Content: With 90,000 subscribers, YouTube serves as the primary platform, driving most of the traffic.
- Instagram Engagement: Many YouTube viewers transition to Instagram, leading to direct messages (DMs) that convert into sales.
- Website Traffic: Approximately 7,000 visitors generate around 150 leads monthly through free course sign-ups.
Notable Quotes:
[02:08] Alexio Mar: "Yeah."
[02:58] Alexio Mar: "So we don't have that number. We know that from the website. We generate about 7,000 visitors."
Sales Process Breakdown
The sales funnel operates as follows:
- Content Creation: Engaging YouTube videos attract subscribers.
- Lead Generation: Visitors opt-in for free courses via the website.
- Nurturing: Subscribers receive emails aimed at converting them into paying customers.
- Sales Conversion: About 5.4% conversion rate, translating to 9 out of 150 leads purchasing the main course at $500 with an additional $500 upsell for monthly Q&A sessions.
Notable Quote:
[17:17] Alex Ramosi: "I'm going to give you a hint. It's more than 250. So hopefully the price is right with what you're going to charge."
Challenges with the Software Unit
The Software segment is a significant concern:
- Revenue: Generates $40,000 annually.
- Costs: Operating at $7,000 monthly due to staffing cuts.
- Value Proposition Issues: Customers often download contracts and leave, leading to high churn rates.
- Potential VC Interest: Some B2B traction, but uncertainty remains about scalability and profitability.
Notable Quote:
[06:25] Alexio Mar: "It's a VC story. So if you want a horror story."
Strategic Recommendations for Business Optimization
Alex Ramosi proposes a comprehensive strategy to pivot the business towards profitability:
-
Focus on Services:
- Shift all customer acquisition efforts through Instagram DMs.
- Eliminate reliance on the website for sales, redirecting traffic to direct messaging.
- Qualify leads based on income, need, and urgency before scheduling sales calls.
-
Revamp Pricing Strategy:
- Transition from hourly rates to outcome-based pricing to align incentives.
- Increase the basic service package to $5,800 with an optional percentage commission on deals closed.
-
Enhance Sales Funnel:
- Embed multiple Calls to Action (CTAs) within YouTube content to drive traffic to Instagram.
- Implement automated DM responses to qualify and convert leads efficiently.
- Develop a Video Sales Letter (VSL) to prepare leads before the sales call, ensuring better conversion rates.
-
Streamline Operations:
- Potentially discontinue the Software unit to cut losses.
- Allocate resources to scale the Services unit, leveraging existing demand.
Notable Quote:
[11:28] Alex Ramosi: "If you lose a negative, it's a positive. So, okay, so in a world hypothetically where you just ended the software tomorrow and then you have the education and services, what is required for you to maintain the education work wise per week?"
Implementing the New Strategy
The conversation details actionable steps to implement the recommended strategy:
- Redirect All CTAs: Pin CTAs on YouTube videos to direct users to Instagram DMs.
- Automate Lead Qualification: Prompt new Instagram followers with questions to identify potential leads.
- Upgrade Pricing Models: Introduce higher-priced packages to ensure profitability with each sale.
- Utilize Existing Resources: Leverage the current followers and community for sustained growth without additional marketing expenditures.
Notable Quote:
[27:06] Alex Ramosi: "We're going from spraying the traffic all over place into places that lose money, to pointing three different places to the one place that makes money and doing more of what already works."
Identifying and Addressing Business Mistakes
Alex Ramosi highlights six common mistakes that Alexio's business is currently making, categorizing most in red as critical issues:
- Overexpansion: Managing multiple business units without adequate focus.
- Underpricing: Misaligned pricing strategies leading to insufficient revenue.
- Single Product Focus: Lack of a clear, dominant product offering.
- Compensation Issues: Potential mismanagement of compensation structures.
- Lack of Focus on Profitability: Neglecting to prioritize profitable segments over less profitable ones.
Notable Quote:
[31:07] Alexio Mar: "So we're getting Spanish for lawyer. Yeah, you're doing it right. So I'm giving you a little Puerto Rican Spanish there."
Scaling and Future Growth
To ensure sustainable growth, the following steps are emphasized:
- Focus on Core Services: Prioritize the profitable services unit to stabilize finances.
- Team Expansion: Hire additional lawyers and support staff to handle increased demand.
- Maximize Revenue Streams: Increase client acquisition and conversion rates to generate substantial monthly revenue.
- Long-Term Investments: Utilize profits to reinvest in marketing and operational efficiencies.
Notable Quote:
[35:37] Alex Ramosi: "People say that, but let's imagine we have $100 of revenue, all right? To keep this simple, if you have a 20% gross. Sorry, 20% cost, but 80% gross margin business, then it's like, cool."
Conclusion: Turning the Tide
The episode concludes on a positive note, with Alex Ramosi instilling confidence that by restructuring and focusing on profitable segments, Alexio can not only save his business but also set it on a path to multi-million dollar revenues. The key lies in optimizing current operations, eliminating unprofitable ventures, and leveraging existing customer bases effectively.
Final Takeaway:
[37:52] Alex Ramosi: "You absolutely can be at multiple millions a year. Like no question. Given the fact that you have a 90,000 YouTube following, you have a 23,000 person Instagram following, you have a community of people who love you and are raving fans, you have all of the foundation. So the good news is that all the work that you spent doing over the last however many years was not wasted. You just didn't monetize it well."
Closing Remarks and Special Offer
Alex Hormozi wraps up the episode by offering listeners a special gift: a Scaling Roadmap that breaks down scaling into ten stages across eight business functions. This comprehensive guide is available for free and can be personalized by visiting acquisition.com/roadmap.
Notable Quote:
[35:55] Alex Ramosi: "So you've got marketing, you've got sales, you got product, you got customer success, you've got it. You got recruiting, HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level."
End of Summary