How To Stop Solving Problems That Do Not Exist | Ep 959

Summary

Podcast Summary: The Game with Alex Hormozi

Episode Title: How To Stop Solving Problems That Do Not Exist | Ep 956
Date: April 7, 2026
Host: Alex Hormozi

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Episode Overview

In this episode, Alex Hormozi fields strategic questions from service business owners seeking guidance on scaling, operational constraints, and navigating both emerging threats and internal challenges. Alex applies his signature “brutally tactical” approach, emphasizing data-driven decisions, prioritizing constraints that genuinely affect growth, and cautioning against wasted energy on hypothetical or distant problems. Across multiple business models—chiropractic, digital marketing, SaaS, advisory services, and roofing—Alex unpacks their growth hurdles, spots phantom issues, and gives concrete “what to actually do next” advice.

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Key Discussion Points & Insights

1. Chiropractic Business: Breaking a Growth Plateaus

[00:21–05:57]

• Situation: The chiropractor’s practice has plateaued at $2.4M revenue for five years, with ~30% net margin; now, after hiring another doctor, the constraint has shifted from supply to demand.

• Alex’s Diagnosis:

  • Identify your real bottlenecks (capacity/demand/cash flow).
  • Set up attribution tracking for marketing spend to know ROI:

    “Fundamentally what you lack right now is an input-output equation for the business to grow.” — Alex, [02:24]

  • Don’t overcomplicate local service sales funnels; leverage local trust.
  • Short-term: Implement tracking and refine offer/pricing to free up cash for marketing.
  • Mid-term: Increase paid ads, expand lead-gen activities, up content cadence.
  • Longer-term: Build brand so people are drawn from wider radii (“Amen Clinic” analogy).
  • On hiring and competitive wages: Enable higher salaries with better cash flow, unlocked via pricing.

• Notable Quote:

  “If you are not supply constrained and you're demand constrained, lead generation is the issue. … What are the core actions that I do that increase how much money I make?” — Alex, [02:24]

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2. Digital Marketing Agency: Scaling with Volatile SMB Clients

[06:41–11:51]

• Situation: Agency serving small service businesses; rapid initial growth but concerned about scaling, churn, and best use of founder’s time.
• Alex’s Diagnosis:
  • SMB Clients Are Volatile: Their instability transfers to you.
  • Churn and CAC Will Get Worse:

    “CAC will never be cheaper than it is today… margins will compress…” — Alex, [07:32]

  • Two Working Models:
    • Go upmarket (higher price, more sophisticated clients, less churn).
    • Go down-market, super-cheap, automated (low cost to serve, sticky, e.g. web presence/review mgmt at $400/mo).

    “Drop low, go high, and in the middle is just a dead zone where everyone dies.” — Digital Marketing Owner, [11:45]

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3. Website-as-a-Service Business: AI Threats & Channel Concentration

[11:52–17:14]

• Situation: $20M ARR, low churn, all growth via outbound/cold calling. Worried about AI commoditizing their product, considering product innovation vs. building inbound marketing.
• Alex’s Diagnosis:
  • Don’t Solve for Problems That Haven’t Shown Up:

    “You have a narrative… AI is decaying the business. But all I hear is that you have customers and your job just got way easier… If you were like, our churn is escalating by 10% per month, I'd be like, we have a problem.” — Alex, [13:38]

  • Double Down on Acquisition Now (Inbound/Paid):
  • Pre-Sell Quarters to Offset Marketing CAC: Try for upfront payment if possible.
  • AI Threats:

    “You’re worried about them [clients] doing it. You’re not even doing it [internally].” — Alex, [16:34]
    Reduce headcount 50% via AI workflows and increase margin before product/price changes.

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4. CFO Advisory Business: Leveraging Content, Deconstraining Supply

[17:14–25:00]

• Situation: Advisory business at ~$2.9M, wants $20M, has stopped new sales, has books/courses made but not sold, wants to market.

• Alex’s Diagnosis:

  • You can’t market if you’re supply constrained. Growth stalls when sales are paused—selling needs to restart.
  • Courses/books are nice, but core business with recurring revenue and low churn is more valuable.
  • Leverage through offshore/AI partners to free up existing team capacity, then reintroduce sales.

    “The first thing you have to do in order to have an AI first company is you have to be a data first company.” — Alex, [24:20]

  • Save the books/courses as eventual lead magnets as demand constraints reappear post-supply scaling.

• Notable Quote:

  “You have a service that people aren't churning out of, I'm guessing… So, like, the fact that you're comfortable enough, that you're like, 'Oh, we don't need to take customers for a while.' ... I think we need to create operating leverage.” — Alex, [21:53]

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5. Roofing & Exterior Remodeler: Scaling Past Comfort, Tradeoffs

[25:39–33:07]

• Situation: $6M business, scaled self out of operations; wants $100M but worries about comfort, distractions (other business/investments), and particularly maintaining family time.

• Alex’s Insights:

  • Regret is not seeing full cost:

    “We regret when we imagine the upside we didn’t get without considering the downside we didn’t suffer to get it.” — Alex, [26:57]

  • Decide what you’re willing to trade: time, money, or energy for growth.
  • Hire increasingly high-talent people if you want the business to grow without you sacrificing more time.
  • Investments can be kept passive, but don’t let them become active distractions.
  • The “cost of the big thing is all the new stuff you have to give up”; focus is essential for outsized growth.
  • Warren Buffett punch-card analogy: You only get a handful of “big runs” in your life/business.

• Notable Quote:

  “If we want to build something really big it's going to take a long time, then it means we can't do that many things.” — Alex, [31:48]

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Notable Quotes & Memorable Moments

• On Focusing on Real Problems:

  “Solving problems that don't exist… you have a narrative, you have a story around AI is decaying the business. But all I hear is that you have customers and your job just got way easier.” — Alex, [13:38]

• On Churn in SMB Agency:

  “The only way to really make SMB work is to go… super, super cheap and then build something that costs you nothing to deliver.” — Alex, [09:53]

• On Growth and Trade-Offs:

  “I think regrets come when we imagine the upside that we don't have without taking into account the cost that we didn't suffer.” — Alex, [26:57]

• On AI-first Company:

  “The first thing that you have to do in order to have an AI first company is you have to be a data first company.” — Alex, [24:20] “We have to change some component of your life. So the question is, which thing do you value the least?” — Alex, [28:07]

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Timestamps for Key Segments

• [00:21–05:57] – Chiropractic business: Overcoming plateau, input-output clarity, local marketing tactics
• [06:41–11:51] – Digital agency: The volatile SMB trap, scaling, and the case for price positioning
• [11:52–17:14] – SaaS/Websites: AI fears, channel risk, real growth drivers, margin via automation
• [17:14–25:00] – CFO Advisory: Content leverage, true supply constraints, using offshore/AI for scale
• [25:39–33:07] – Roofer: Balancing comfort, distractions, focus, and regret; employing high-level talent

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Episode Tone

Direct, fast-paced, unsentimental but encouraging. Alex balances tactical direction with broader business philosophy, repeatedly pressing guests to be honest about the actual (not anticipated) constraints in their business and to efficiently focus on what produces growth, rather than distractions or imagined problems.

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Actionable Summary

• Diagnose real business constraints before taking massive action: Is it cashflow, demand, supply, or a phantom issue?
• Implement attribution tracking in all lead-gen spend.
• Avoid over-innovation or overbuilding for threats that “might” disrupt but haven’t shown up in your data yet.
• In saturated/volatile markets (SMBs), either go way upmarket for LTV or downmarket for volume and automation.
• Use AI to increase internal leverage and margin before seeing it solely as an external threat.
• Decide what to trade: time, effort, or profit; know what you actually want.
• Keep wealth vehicles passive unless you truly want to make them a focus. Focus is essential for extraordinary results.

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For Listeners:

This episode is a practical blueprint for founders hitting invisible ceilings or getting anxious about threats (like AI) that aren’t actually impacting their metrics yet. Alex’s advice: Don’t solve problems that aren’t real—fix the ones you can see in your numbers now, double down on what works, and make your next constraint worth actually solving.

Transcript

[Alex Hormozi]

I've been in business for 14 years. I've scaled six brick and mortar gyms. I did 30 plus gym turnarounds across the country and built service companies to over $30 million a year. Today our portfolio at acquisition.com is over 250 million annually. And so in this video, I'm answering your questions about how to scale your service business. And for all these questions, I try to make you know my answers as tactical as humanly possible so that you watching from home can immediately use them. Enjoy.

[Chiropractor Client]

I am a chiropractor. We do right around 2.4. Been stuck there for five years. I'd like to get to 3.6 to

[Alex Hormozi]

get out of the swamp. Stock are growing over five years.

[Chiropractor Client]

We've been at 2.4 for five years. Yep. And so I don't know what's stopping us. I'd like to get out of the swamp.

[Alex Hormozi]

Heard. And then profit margins, you're at 30%, right?

[Chiropractor Client]

Yes, sir.

[Alex Hormozi]

Yeah. Okay. I'm receiving 600,000 as a profit number. I don't know if that's still accurate. Okay, so you have 600,000 in profit and you have. Do you have you and a partner or you're 100%?

[Chiropractor Client]

100%.

[Alex Hormozi]

Okay, well what do you want to. You just want like, what do you want to have happen? Do you want to like, what do you want to do? Do you want to go to many locations?

[Chiropractor Client]

No, I want to grow main big location and you know, create a space for family to eventually, I mean growing there.

[Alex Hormozi]

If they don't want to do that,

[Chiropractor Client]

then I would probably change my goal to be in an exit from a standpoint.

[Alex Hormozi]

What's your square footage?

[Chiropractor Client]

Right now we have 7700.

[Alex Hormozi]

Okay. So decently large.

[Chiropractor Client]

Yeah, we occupy about 4700 of it.

[Alex Hormozi]

Okay, got it. And so are you at capacity within the space right now?

[Chiropractor Client]

No, we used to have a supply issue till about two weeks ago.

[Alex Hormozi]

Oh great.

[Chiropractor Client]

And then we hired another doctor. So now it's become a demand issue and that's where we're at now.

[Alex Hormozi]

So how do you get customers now?

[Chiropractor Client]

We our highest is referral, then we get about. The next highest will be paid ads through Facebook.

[Alex Hormozi]

What percentage are ads?

[Chiropractor Client]

Probably about 20% from ads. About half is from referrals. Another 20% is from Google.

[Alex Hormozi]

Okay, so you separate meta ads from Google Ads when you talk about ads? Yep. Okay, got it.

[Chiropractor Client]

We don't actually currently do Google Ads, but that's where they said they came from.

[Digital Marketing Agency Owner]

Heard.

[Alex Hormozi]

Got it. Which I would probably see as word of Mouth, like I googled you or googled somebody. It's probably SEO, something like that. But okay, so two and a half million, like what stops you from just spending more money on meta ads?

[Chiropractor Client]

Trust that we're doing it right.

[Alex Hormozi]

I mean, I just want to. Are you making more money than you put in?

[Chiropractor Client]

Yeah.

[Alex Hormozi]

Well, so you might have one of these guys, which is that we need attribution tracking so that you can know if you're putting a dollar in and getting $5 or $10 or $20 back out. We have no clue. But as soon as we have the attribution tracking, because fundamentally what you lack right now is an input output equation for the business to grow. And so every business needs to know what are the core actions that I do that increase how much money I make. And if you can't define that for the business, then for sure as shit. Your employees don't know what it is if you don't know what it is. Right. And so for you, if you are not supply constrained and you're demand constrained, that means lead generation is the issue. If lead generation is the issue, what's the activity? The activity is going to either be, I'm going to be making content, I'm going to be getting affiliates that are going to be promoting my shit for me. I'm going to be running paid ads. Right? Those are going to be kind of like the bigger buckets that you're going to be going into. And then you have people who do those things on your behalf. And so right now, do you make content?

[Chiropractor Client]

Yes, sir.

[Alex Hormozi]

Okay. What percentage comes from that?

[Chiropractor Client]

We just started it about two months ago.

[Alex Hormozi]

How much do you do? I'm not going to tell you to do more.

[Chiropractor Client]

I'm just curious. We do four videos that gets created into short and long per week. Four videos for the month, chopped up.

[Alex Hormozi]

Okay, got it. Okay, so you've got four longs and you chop this into little shorts and things like that. Okay, got it. All right. So short term, long term, short term, we got to get the data tracking in place. Second step is going to be putting the ads funnel in place and kind of like what the sales motion is behind that. For local, the good news is that it's easy to do because there's already so much trust locally that you don't need to have nearly the complexity of kind of like the funnels and indoctrination and education prior to someone making a purchasing decision. You can pretty much just like one call closed, two conversation close. Anybody? Even at very high ticket numbers, which Is one of the benefits of local. The downside of local is that you've got a market that's this big. Correct. That's the downside. Right. So if you don't want to expand markets, then you need to dominate the market you're in. And so it's going to be a multi prong approach. And it's kind of like I was saying earlier, like we're going to start with ads because that'll just get you more in because I'm guessing right now if you have a good reputation, a good brand, then the ads will actually help you more than they would help somebody who doesn't have that footprint. But then we're going to start probably layering in the content as the second kind of the. Well, that needs to continue to get dug. Again, this is going to be long term and so you're going to want to be a thought leader. And then what happens is that if you can succeed at building the brand long term, and it sounds like you're more long term guy, so I'll speak in these terms, what happens is your radius actually continues to expand. And so if you take into the natural extreme, you can go to the Amen Clinic in New York because they have a national reputation, but people fly there. And so that's what it looks like as you continue to expand the brand because people will just be more willing to travel to you and, and pay premium prices which I'm sure if we looked under the hood, the prices probably get tweaked too. But like those are some things and if you're in the swamp, cash flow is actually the biggest thing that you need. And so again, the pricing and packaging is probably like again if I was to do order of operations, pricing and packaging would probably be number one. So we could free up cash flow. The freed up cash flow we'd then funnel into the ads so that we could get well data attribution. Then we'd put the ads in place, start flowing, putting flow through there and then the baseline that happens after that is we're just going to increase the cadence on the, on the content that demonstrates thought leadership, leadership. That's the path that makes sense.

[Chiropractor Client]

Thank you. How do you. We're having trouble also hiring good high quality doctors in Wyoming.

[Alex Hormozi]

It's actually ladders up to the first problem, cash flow. Okay, we need to fix the pricing so that we can generate more cash flow so that we can pay doctors so that we can actually get the business to not rely on you as much.

[Chiropractor Client]

Boom.

[Alex Hormozi]

Real quick. If You're a business owner and you are not growing as fast as you'd like. I'd like to give you a free gift. My team and I put together the $100 million scaling roadmap, which is basically 200 hours of US looking over all the portfolio companies we've had and where they got stuck and how they got past it. And so we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at no matter what you're struggling with. Someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free. You go to acquisition.com roadmap plug in your business information and if you want us to actually help you deconstrain the business and you're trying to scale, we'd love to help you out on the thank youk page. You can just book a call with my team and we will look at the business, see if we can help and if we can, we'll invite you out to Vegas and we'll do this in person, live.

[Digital Marketing Agency Owner]

I sell basically complete digital marketing services to service based businesses in Australia. I move SMBs like cleaning companies, stuff like that. Cleaning yard work. Average revenue for that average revenue per company is anywhere between half a million to 2.5.

[Alex Hormozi]

Tough.

[Digital Marketing Agency Owner]

They're the ones I sell. I pivoted. The company's gone from 0 to 500k in the last 4 months. I pivoted from fitness. Just happened. So it worked out well. So they're all being wound down getting other people to operate. I'd like to ideally get to eight figures in terms of what's stopping me. Well, I spent the whole 28 hours here going through every framework I could to figure out what was wrong. I just want to figure out, can

[Alex Hormozi]

I tell you what it is good.

[Digital Marketing Agency Owner]

I also want to figure out where would be besides like getting operations and moving out to other people and making sure I'm not involved in delivery. Where would be the best use of time?

[Alex Hormozi]

You'll get three. Ten will suck.

[Digital Marketing Agency Owner]

Yep.

[Alex Hormozi]

Yeah, that's what's going to. Yeah. So you're four months in. So you're. It's, it's brand new, it's very new and you haven't seen all the shit that's about to happen. So what's going to happen is because you're, because you're servicing SMBs, their volatility will translate over to your volatility and independent of how well you do, they will start churning. And you have probably mastered the sales function, which is why you're growing quickly. But you also will have like, CAC will never be cheaper than it is today. Yeah. So CAC will always go up and Churn is going to start eating into the business because SMB suck. And so what's going to happen is that your margins will continue to compress and compress and compress and you'll have to spend more and more. CAC will go up. You'll have to hire more people because of churn. That's what you're going to think you're going to have to do in order to fix the churn. But it's not. But whatever, let's go to it. And so you're going to keep going, keep going, keep going. And so revenue keep going up, but the margin gets smaller and smaller until eventually you're just like, I feel like I'm running a nonprofit and I have to just keep selling stuff. And I don't even feel confident about it because I got all these people complaining. But it's really because they're the business owners who suck. And then you think, maybe I should take more responsibility for the business owners. I'm going to start maybe doing some sort of sales motion, some sort of, you know, nurture motion, because they suck at sales, they don't know how to run their business, and that's why they can't market with me. But I'm going to do this because I want to take responsibility of this. And all of that is just wrong. And so if you want to get to 3 million bucks a year, you can just do what you're currently doing. You'll just sell more and LTV will probably be. What's your price point?

[Digital Marketing Agency Owner]

$450 a week.

[Alex Hormozi]

A week. Okay, so you're 2K a month. Ish. Yeah. So you're right in the sweet spot of Churn. Like that is like, if you like 1500 to 3K a month for an SMB average stick is going to be 4 to 6 months. And so you can back of napkin. How many are you selling a month right now?

[Digital Marketing Agency Owner]

I'm selling about 10amonth at the moment.

[Alex Hormozi]

Cool. So if you're selling 10 per month. Right. And you said 2k was your price point. Right. So let's say that we have five turns on that on average. 10K. Right. And cent per month. So you're going to get to 100k ish per month. And then you will stall. And so at that point you'll either have to increase units sold or increase ltv. And then you'll keep thinking, man, if I could just get this to go up, it would be amazing. But you won't be able to. And so the only way to really make SMB work is to go the opposite end is to go super, super cheap and then build something that cost

[Digital Marketing Agency Owner]

you nothing, nothing to deliver.

[Alex Hormozi]

Yeah, so it's like $400 a month or less for an SMB if it's a nuisance style. So I'll give you some examples. If you were like, I can get you ranked on first three of maps in your local area and I charge 400, $500 a month. They'll do it because they can see it and they'll pay for that review management and SEO stuff. They will pay 300 to $400 a month and they will stick on that. You'll get like 30 to 40 month stick rates on that, but you'll close way more sales velocity. So LTV is actually similar to this, but CAC stays super low as a result. But I know you got a fitness, which you probably got out because it was terrible and hard. You might need to just go and get to there and then you'll feel good about things. Like you might need to walk this path rather than believe me, but that's probably, that's what's going to happen. So what do you want to have happen?

[Digital Marketing Agency Owner]

Not to not have to walk the path in the first place?

[Alex Hormozi]

Okay, get less amount. So this is like, this is me just being real like marketing. There's so, I mean obviously a lot of marketers follow my stuff and so I get a disproportionate amount of marketing agencies and I've seen every model under the sun. SMBs suck as customers. And so you have, you have to do this one or the other. You have to go up market, you have to go down market and you guys go really cheap and it's something that's super automated. Or you do truly do more of these high touch services, but you do with a business that actually knows their metrics, actually has a sales process, already has a proven model, rather than all of them just like wanting to change their stuff all the time, not knowing what they're doing to begin with because they're expecting you to figure out something that they haven't figured out themselves. So your price either goes up and you serve a higher level avatar or it goes down and you serve the one you are now. But you make sure that your Delivery is almost nothing. And then it becomes a CAC issue because you have to offset CAC and so then become big headlong tail one time setup into very small recurring monthly high gross margin. Those are the two models that work for what you want to do.

[Digital Marketing Agency Owner]

So drop low, go high, and in the middle is just a dead zone where everyone dies.

[Alex Hormozi]

Cool.

[Digital Marketing Agency Owner]

Makes sense.

[Alex Hormozi]

Thank you.

[Website as a Service Company Owner]

We do. We're was so website as a service based company. So we build websites, do digital marketing services, that kind of stuff. We cater to small, medium businesses, small businesses. Average revenue per customer is 450 bucks a month.

[Alex Hormozi]

Okay.

[Website as a Service Company Owner]

Subscription based company.

[Alex Hormozi]

Yeah.

[Website as a Service Company Owner]

And yeah, we're at 20 million bucks in revenue and notice.

[Alex Hormozi]

Example. Right. Price really small, you price it super low. And it works. Go ahead.

[Website as a Service Company Owner]

And we want to get to 80, 80 million bucks of revenue in about three years.

[Alex Hormozi]

Okay.

[Website as a Service Company Owner]

So the question we're asking ourselves is we're in an industry where AI is very disruptive. Every day that goes by, you know, it's constantly degrading and decaying our our product. And at the same time we have kind of this one channel risk that, that we're living with all of our sales. 100% of our growth has been done through outbound. Cold calling.

[Alex Hormozi]

Love it.

[Website as a Service Company Owner]

Yeah, it's great. But again, cold calling is becoming harder and harder and the industry is decaying. So we're constantly, we're trying to figure

[Alex Hormozi]

out industry is decaying. What do you mean by that? Churn is going up.

[Website as a Service Company Owner]

Churn is slightly ticking up. But at the end of the day, you know, AI is making it easier and easier for our customers to be able to build their own websites. Well, yeah, I know we're the type of customer we deal with. They're not usually super sophisticated. So we do have time.

[Alex Hormozi]

Found out about chatgpta, so.

[Chiropractor Client]

So

[Website as a Service Company Owner]

yeah, exactly. So we have time.

[Alex Hormozi]

But some of you guys still facts. So I think you got time.

[Website as a Service Company Owner]

Yeah, but this is the question, right? So do we double down on marketing and create like an inbound channel and really invest hard into that or do we try to innovate on the product and figure out what else they need and like build a revenue engine? Right now we're kind of, we're trying to do both, but it's obviously limiting.

[Alex Hormozi]

So this is really, really good. I love that you asked this. So I went on this long rant the other day about this, this particular topic, which is solving problems that don't exist. Okay. Because you have a narrative, you have a story around AI is decaying the business. But all I hear is that you have customers and your job just got way easier. Explain. So you know what I mean? If you were like, our churn is escalating by 10% per month, I'd be like, we have a problem, we need to change something. But if it's not really showing up in any meaningful way in terms of the business itself, I think there's plenty of people who will just be super laggards on this and are not going to be replit. Vibe coding. They never bought your shit to begin with. The person who is super into AI right now wasn't hiring wass anyways. They built their own website before AI made it quite easy because I mean, to be fair, website building software, not that complicated. So you said there's two paths. So one is change the product around. My opinion, I wouldn't, that's probably wouldn't be where I'm focused unless I had some business metric that was way off that I'm not seeing. I would be doubling down on the acquisition side. What's your number of months? Average stick.

[Website as a Service Company Owner]

So it's 29 months.

[Alex Hormozi]

Yeah, yeah. No, that's the game. It's usually 30 to 40. The highest I've seen was 38 for this type of business. So you're right. You're right in the sweet spot there. You're a little higher priced. I think they were 299. It all works out in the same thing. So yeah, I think you just double down on inbound. So paid ads.

[Website as a Service Company Owner]

Paid ads, yeah.

[Alex Hormozi]

Yeah. And I would just see if you get them to prepay for the quarter so you can offset cac.

[Website as a Service Company Owner]

Okay. On that subject, if you don't mind, in terms of prepaying for the quarter, you know, again, our customers are pretty price sensitive. There's people that are cheaper than us, obviously. Have you seen before? My fear is the amount of churn that will generate some. You know, we bill 90% of our customers on credit cards and we hold on to 10% that pay us through like pad and through checks and that kind of shit.

[Alex Hormozi]

It's.

[Website as a Service Company Owner]

It's awful. But you know, we're going to experience churn. If we're like, hey, you need to, you know, prepay us up upfront, you'd still.

[Alex Hormozi]

We wouldn't churn. Just close fewer, right?

[Website as a Service Company Owner]

Close fewer, absolutely. And I think customers that are with

[Alex Hormozi]

us would leave us. Why would the people who are with you leave you for how you treat new customers? Sorry.

[Website as a Service Company Owner]

People that are with us would leave us.

[Alex Hormozi]

I don't think you change your billing process for existing customers. I'm saying if you're doubling down on inbound, what will go up is CAC because you'll have media spend in addition to the sales commission. And so to offset that from a cash flow or how cash flow positive are you right now?

[Website as a Service Company Owner]

So we did 3.6 in EBITDA last year. Generated.

[Alex Hormozi]

Interesting. Yeah. That's lowish.

[Website as a Service Company Owner]

Slowish.

[Roofing and Exterior Remodeling Business Owner]

Yeah.

[Alex Hormozi]

I'm curious.

[Website as a Service Company Owner]

We're heavy on people, dude.

[Alex Hormozi]

AI.

[Website as a Service Company Owner]

I know, I know.

[Alex Hormozi]

Big thing. I know. It's like you're worried about them doing it. You're not even doing it.

[Website as a Service Company Owner]

Correct.

[Alex Hormozi]

Right, right. Yeah. So like. Okay, so this is what I would actually do. I would probably spend the next six months reorganizing the workflow, probably reduce headcount by 50% using AI workflows in order to actually do the same thing. Increase the margin from 3.6 to like 7 or more. With the added cash flow, you wouldn't have to change the price on the front end. You'd be willing to go negative for a quarter in the acquisition, knowing you're going to get 29 on the back. That's how I'd actually fix it. Okay, Makes sense. Sure. Cool. Yeah.

[CFO Advisory Business Owner]

I sell CFO Advisory. We will do probably about 2.9 this year.

[Alex Hormozi]

Amazing.

[CFO Advisory Business Owner]

I would love to be at like 20 million.

[Alex Hormozi]

Okay.

[CFO Advisory Business Owner]

But what's stopping me? I have. We've made all this stuff. I have two books. I fire my cpa. I have Tax Free Millionaire. I've made all these courses. I don't know what to do with them. I don't know how to market, I don't know how to advertise. I've never done any of this.

[Alex Hormozi]

We're doing 3 million a year, all organic. Yeah. I mean, you're obviously not marketing shitty. So you've got all this stuff, right? You got these books, you got these courses, you make content.

[CFO Advisory Business Owner]

Yes.

[Alex Hormozi]

Okay, so you are marketing.

[CFO Advisory Business Owner]

Well, I've never put them out there. Like, I don't know what to do with it.

[Alex Hormozi]

Wait, huh. Okay, hold on. So you've got all this stuff in your back pocket. So you've got Tax Free Millionaire book and or course, you've got Fire CPA book and. Or course. And you make content about tax accounting. Shit.

[CFO Advisory Business Owner]

Yep.

[Alex Hormozi]

And so people come in and buy your tax accounting. Right. And you're trying to get to 20.

[CFO Advisory Business Owner]

Yeah.

[Alex Hormozi]

Do people churn out?

[CFO Advisory Business Owner]

Well, I've never tried to sell anybody on the stuff that I've made.

[Alex Hormozi]

Well, but we don't need. But like, forget. Let's erase those For a moment. Those are not real things. For the purpose of our conversation. If you didn't have those things, what would you do to grow the business?

[CFO Advisory Business Owner]

People call our office and they come in and I sell them for monthly service and I get referrals for customers in person. In person or virtual?

[Alex Hormozi]

Yeah. Okay, but you're local.

[CFO Advisory Business Owner]

I'm local. We have a bricks and mortar. I have a billboard. But most. I do. Yeah, but most of our clients are not in Texas.

[Alex Hormozi]

Okay, heard. Okay, so they're coming from the content they call up. You guys tell them referrals.

[CFO Advisory Business Owner]

Yeah.

[Alex Hormozi]

Okay, got it. And what are you growing at annually?

[CFO Advisory Business Owner]

What am I what?

[Alex Hormozi]

Growing at annually.

[CFO Advisory Business Owner]

Last year I was 2.2.

[Alex Hormozi]

Okay, that's great. Yeah, super good. Whatever. 30, 35% annual growth. It's awesome. Okay, so you want to get to 20 and I'm guessing you just don't want to wait like seven years to get to 20 at that compound rate.

[CFO Advisory Business Owner]

Yeah.

[Alex Hormozi]

Right. So as long as you're keeping customers. When I said do they churn, that's what I meant. Like are they. Do people stay with you?

[CFO Advisory Business Owner]

The people that are on monthly stay a lot more than the people that come in just for a one time tax plan.

[Alex Hormozi]

What's the. This will be fun for you. Okay, so what's the. I'll give you like some business accounting. What's sales velocity right now?

[CFO Advisory Business Owner]

I don't know.

[Alex Hormozi]

How many units a month do you

[CFO Advisory Business Owner]

sell on the monthly reoccurring? Yeah, there's probably about 190 clients now.

[Alex Hormozi]

How many do you sell every month?

[CFO Advisory Business Owner]

Oh, new ones. We've closed down for new sales. Cause I'm trying to figure everything out. So nothing right now. Nothing.

[Alex Hormozi]

Well, that will not grow the business, that's for sure. There's my. Yeah, I'll be here all day, guys. Okay, so you have a goose egg there. Okay. But okay, you have this other stuff. Why do we care?

[CFO Advisory Business Owner]

Well, that's what I want to do. Like I like the products. I like to educate. I like to be in front of the camera. Like I want to do all that.

[Alex Hormozi]

Okay, well what's wrong with the business that you decided to stop selling stuff for?

[CFO Advisory Business Owner]

It's fucking hard. That's why no like to fulfill on it.

[Alex Hormozi]

And you could always just start a business where you sell everybody else's stuff. Well, you missed it. Okay.

[CFO Advisory Business Owner]

And what I'm trying to get to now, like AI, what you were saying is going to completely obliterate our industry, which I'm really excited about because I want to dive into it. I want to leverage AI tools and even overseas partners doing low level stuff because people in our industry are really slow and outdated.

[Alex Hormozi]

Yeah, but all of these are not things that you would solve with marketing. You're supply constrained. And so you're like, how do I market more? I'm like, you can't even take people.

[CFO Advisory Business Owner]

Well, I wanna market like for courses and to buy my books and things like that.

[Alex Hormozi]

Do you have a valuable business right now?

[CFO Advisory Business Owner]

No, I do.

[Alex Hormozi]

Yeah, I know. Why would we start another business that's not valuable?

[CFO Advisory Business Owner]

That's what Ed told me, but I wanna do that too.

[Alex Hormozi]

Yeah, I mean like I make the content, I continue to repeat and I get my memes made of me. Of like, Alex, just gonna say, shit's hard and hard things are hard and hard, hard, hard. And it's because it just never stops being hard. It just always sucks. Like the course thing will suck too. You just don't know it yet. Ask the course people, they'll tell you it sucks.

[CFO Advisory Business Owner]

That's great advice.

[Alex Hormozi]

Right? They're like, it sucks. Yeah. The customers aren't sticky. They'll expect you to do everything. They're like, I'm not a tax free millionaire already and I bought your $17 course. Like, fuck you. You know, like, like that's, you know, that's what's going to happen. But you have a service that people aren't churning out of, I'm guessing.

[CFO Advisory Business Owner]

No, they're not. Yeah, I mean, some, but they're pretty sticky.

[Alex Hormozi]

Yeah. No one who has bad churn stops selling. I'll say that. So, like the fact that you're comfortable enough, that you're like, oh, we don't need to take customers for a while. Like, I'm sure your stuff is better than you think, but I think that we have to think basically you're a supply constraint. And so we just need to fix the supply constraint of your business. Because if I said, hey, we found a way, what are your margins right now?

[CFO Advisory Business Owner]

About 20, 25%.

[Alex Hormozi]

Okay, so if we said, okay, let's see if we can find offshore talent that can give your existing team 2 or 3x leverage. So you don't have to increase internal headcount, you can increase external headcount and then when AI comes in, you can basically wipe those guys off the map and then, fine. Right. So it's like, yeah, they don't have jobs or families. So they're overseas. They're not real. I'm kidding. So I know half of you guys are overseas. That was a joke. But yeah, so I think that we need to create operating leverage. We have to look at basically how the service are being delivered so that we can figure out how to get each person two or three more X in terms of their ability to deal with customers. Probably there's a little bit of tech that's missing because this is for everybody. Every entrepreneur I talk to is like, I want to be AI first, right? And then you're like using ChatGPT for emails. Like that's not how you're AI first. The first thing that you have to do in order to have an AI first company is you have to be a data first company. Because AI works with data. If you don't have data, then there's no fucking AI. So you have to have complete data first from your approach and have an architecture in place so that you know all the elements of the business from data. And then we can put the AI layer on top to put reinforcement training in place in order to actually train it to do stuff. So if that's where you want to go, which does have tremendous operating leverage. And like just for everybody, this is the once in a generation move right now. So 25 years ago Cloud computing came out and then, you know, Software went from CDs to cloud and that and then all of the software companies and all that boom was the last 25 years and all the billionaires were made. The next boom is this, right? And so we're early and so the hard of this is like, well the pieces don't all fit together perfectly yet. And it's like, well that's the figure out that we make lots of money from, right? So I don't think the solution is you selling a course because you just happen to have recorded it. I think that we need to fix the supply constraint first. And you'll use all those things as marketing assets to increase demand when the time comes. So save those in your back pocket. There's nothing wrong with them. But I want to look at the model. Increase operating leverage. That'll probably also increase margin. Start making this number more than zero, which I promise you can take this to the bank. If you make that not zero, you will grow faster. It will make more money if you sell people. And then I think from there. So it's like increase operating leverage through offshoring. Add in data layer. Once the data layer is there, then we can add in the AI component. That further increases operating leverage. Once you put the remote team in, you'll then be able to sell again. If you get to the point where you're like, I've now reached my new 2 or 3x capacity without even marketing, then great. If you do need to market more, then use the assets that are in your back pocket to go do more. Delete gen. I was like four or five steps, but that's how I think through it.

[CFO Advisory Business Owner]

Thank you.

[Alex Hormozi]

Real quick, I'm going to show you the exact 10 stage roadmap from 0 to to 100 million plus that less than 1% of companies finish. I've now done multiple times. And so I can say with a lot of confidence that these are the stages as headcount increases that you need to get through. And I broke each of these down by eight different functions of the business. What the constraint feels like, like what are the symptoms of it when you're going through it and then what steps we actually took to graduate. And we've done this across software, physical products, service businesses, brick and mortar, all of this. And it works. And it's my gift to you. It's absolutely free. And so the link's in the description but you just go acquisition.com roadmap just enter info and it'll spit it right back to you. All free.

[Roofing and Exterior Remodeling Business Owner]

I sell roofing and exterior remodeling.

[Alex Hormozi]

Sweet.

[Roofing and Exterior Remodeling Business Owner]

We do close to 6 million this year.

[Alex Hormozi]

Amazing.

[Roofing and Exterior Remodeling Business Owner]

I would like to be at 100 million. Okay, so what's stopping me? And I'll be a little bit vulnerable. I would say it's comfort, distractions and

[Alex Hormozi]

fear and food fear. Oh, sorry. I was like, all right, good to know. Sometimes I feel that way too.

[Roofing and Exterior Remodeling Business Owner]

So the comfort is I have built the business. I've replaced myself in every aspect. I can work two to three hours a week and run fine.

[Alex Hormozi]

Okay.

[Roofing and Exterior Remodeling Business Owner]

Fear. I would say the fear of losing family time, the work life balance and the distractions are my other. I've got another business, drunk removal business. I've got real estate. I've got just all kinds of little things.

[Alex Hormozi]

What do you think you should do that you're not doing that you want me to tell you to do.

[Roofing and Exterior Remodeling Business Owner]

So I know I need to go all in again. And I did that the first five years that I own business and it worked out great. Went through Covid. I got. Kept the business going really well and I worked myself out of a job, got comfortable.

[Alex Hormozi]

Okay. So

[Roofing and Exterior Remodeling Business Owner]

I don't know what I'm looking

[Alex Hormozi]

for you to tell me to do. Well, I'll say this differently. I think regrets come when we imagine the upside that we don't have without taking into account the cost that we didn't suffer. And so, sure, I think, I think we regret when we imagine the upside that we didn't get without also considering the downside that we didn't suffer to get it. And so I think that's where a lot of regret comes from because it's not, it's not real. So it's like maybe there's some girl that got away or some business opportunity that got away and we just imagine this amazing thing, but not the trade off that we would have to do in order to get it. We just imagine the upside without downside. And so I would say a couple things. So one is, I think that there are trade offs that we always have to make and I don't think they're right or wrong. I think they're just their preference. There's no right answer to how much work life balance you want to have. It's right for you. And so said differently, if I like cookies and I'm good with that and I also want a six pack, I just prefer cookies to a six pack. It's just, that's the trade. And I think the dissatisfaction comes from wanting both. Right, right. And so either want less or trade more. Okay. And I think that's really what it comes down to in terms of like, is there a path where I can work no more than I currently am to go from 6 to 100? There probably is. It depends on how much you're willing to pay other people. And so you might have to take a short term hit in terms of profitability to bring in the level of talent that you want to expand the business on your behalf to where you want it to go. And so as long as you are the type of person, character wise that they would want to follow and believe in your vision and you can make your vision big enough that they think that their aspirations can fit within it, you can get that type of person. But like it's, it's 100%. Like you're, you're graduating right now into the who game. But there's levels of who's, you know, like I remember the first time I hired a $50,000 year employee and I was like, this is the shit, this is what I'm talking about, you know what I mean? Like, I went from minimum wage labor to 50,000. I was like this, they can read, they can write, like let's go. You know what I mean? And then I hired my first six figure employer and I was like, oh, what was I talking about? Like, this is what's Going on. And then I hired my first 251st, 501st million first multi million dollar per year employee. And it's just levels. And so Sharon, who's our president, said this to me years ago, but I always remembered he said the best talent's always in the future. So whatever we have today, the best people are always ahead of you, not behind you. And so I think for you, if you really do want to accomplish it without making the trade, you will make a trade. Because if you change nothing, nothing will change, right? So we have to change some component of your life. And so the question is, which thing do you value the least? Do you value having more profit or more time with your family in the short term? In the long term, you can make it up. You won't make up family time. In the long term, you can't make the profit up in the long term, right? So if you're willing to give up short term profit, you can bring in high level talent and then they can lead the growth. Okay, in terms of the, the fear stuff, I mean, I would just say, like, just hold the line. If you don't, you're like, I'm afraid of losing time with the family. It's like, just don't like I, you know, and then in terms of the real estate thing, I see real estate because I know a bunch of entrepreneurs. I have a ton of real estate I don't like. As long as you're not like actively running it. Like, that's why I'm a big fan of like REITs and funds. Because if you have good partners in that stuff, they can just run it. You can make better than the market. And then. But it's not, it doesn't change anything about what I do. Like me putting in the S and P or me buying another big building changes nothing about my life. And so it's not a distraction unless you're like, you know, if we could add a gazebo and what if we added a different roof? Because I'm a roofer and what if I combine what I'm really. And you're like, dude, stop. Just like, let the real estate be the real estate. Let the business be the business and just keep them apart as long as you're good there. Cause I think he's a distraction. Actually, let me double check on that real quick. Which is when you said the distraction thing that you're afraid of, why are you afraid of that?

[Roofing and Exterior Remodeling Business Owner]

I'm not afraid of it, okay? I'm just, I've got ADHD and I. I collect gold and silver. I buy houses, I buy buildings. I. I mean, it's just.

[Alex Hormozi]

Yeah.

[Roofing and Exterior Remodeling Business Owner]

Little bit of the red dress.

[Alex Hormozi]

Well, as long as it doesn't change anything about what you do, I don't care. But if it's like, now I check this stuff all the time, and it, like, eats up my days, then, yeah, I would say that it's a problem. And it's only a problem if you decide it's a problem. Like, you might just like that stuff. It's just like, I sacrifice my goals because I enjoy this add. You know what I mean? Like, the cost of the big thing is the new stuff that you have to give up to keep it going.

[Roofing and Exterior Remodeling Business Owner]

Yeah.

[Alex Hormozi]

Thank you. I feel like there's some amens. This is great. Good meal, right? Yeah, I appreciate it. But, yeah, that's like, the cost of the big thing is all the new stuff you have to give up that you don't get to pursue all the exciting things that you will no longer participate in because you want to do one thing big.

[CFO Advisory Business Owner]

Okay.

[Alex Hormozi]

And I think, for me, personally, I had this moment, I think, a while ago, but, like, I had this realization of how long it takes to get good at anything. And then I thought about, oh, I only have, like, 30 or 40 more productive years at most. And so I'm like, I've got, like, four or five big seasons in me left, and so that's it. And so I don't have, like, unlimited shots on goal. I've got four or five big runs in me. And so I think, like, realizing that it's kind of like Warren Buffett talks about, if every person just had a punch card with 20 punches on it, and that's the only thing you could invest in. You could never sell it. You'd make way better investments. I see entrepreneurs the same way in terms of what business opportunities we pursue. Because if we take the hypothetical extreme that if we want to build something really big it's going to take a long time, then it means we can't do that many things. So hopefully that helps.

[Roofing and Exterior Remodeling Business Owner]

I appreciate that answer, because I thought you were gonna say sell everything.

[Alex Hormozi]

And, I mean, they're investments. I mean, I'm not gonna tell you sell your investments. I would say keep passive stuff. Passive. Don't make it active. That's like incurring cost. Because if you're gonna make it active, then make active money. If you're like, I want to take my passive money and then make it cost me more time to get 5% better returns, it's like going to get way better returns on your active income than your passive and just I would just keep active, active, keep passive, passive.

[Roofing and Exterior Remodeling Business Owner]

Thank you.

[Alex Hormozi]

Appreciate you.