Strategic Business Advice That Applies To Every Business | Ep 820

Summary

Podcast Summary: Strategic Business Advice That Applies To Every Business | Ep 840

Podcast Information:

• Title: The Game with Alex Hormozi
• Host: Alex Hormozi
• Episode: Strategic Business Advice That Applies To Every Business | Ep 840
• Release Date: February 21, 2025
• Description: Entrepreneur Alex Hormozi shares insights on customer acquisition, profit maximization, customer retention, and lessons from his journey from $100M to $1B in net worth. This episode focuses on strategic advice applicable to a wide range of businesses, featuring interactive Q&A sessions with business owners.

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Introduction

In Episode 840 of The Game with Alex Hormozi, host Alex Hormozi delves into strategic business advice that is universally applicable. Responding to listener feedback, Alex emphasizes interactive and real business content, moving beyond theoretical frameworks to actionable tactics. The episode primarily features a series of Q&A sessions where Alex addresses specific challenges faced by various business owners.

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Alex's Framework for Prioritization and Strategy

Key Concepts: Alex introduces a simple yet effective framework for prioritizing limited resources—time, money, and personnel—against unlimited potential actions. He emphasizes that strategic prioritization leads to higher returns and greater business leverage.

Notable Quote:

"If you think about strategy as prioritizing limited resources, time, money, you to unlimited potential actions, then the better we do that, the higher the return we get on what we have and what we put in."
— Alex Hormozi [02:00]

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Cost of Change in Business Operations

Key Insights: Alex discusses the inherent costs associated with changing business processes. He illustrates that altering elements like the sales process can initially decrease performance (e.g., a 20% drop) due to the learning curve. Therefore, any proposed change must yield a significant improvement (ideally over 20%) to justify the temporary setback.

Notable Quote:

"If it's not going to improve the process or the overall business by over 20%, I'm not willing to take a guaranteed 20% cut."
— Alex Hormozi [05:10]

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Q&A Highlights

1. Zion: Balancing Multiple Customer Avatars (12:10)

• Business Context: Zion runs a business offering support and accommodation for children from challenging backgrounds. He also rents to working professionals.
• Challenges: Deciding between two distinct customer avatars—working professionals and children in care. After a partnership scandal affecting the children’s program, Zion relies on the professionals' rentals for cash flow but feels emotionally detached from this segment.
• Alex's Advice:
  • Prioritize Cash Flow: Continue renting to professionals to maintain cash flow.
  • Transition Focus: Gradually shift focus back to the children’s program once stability is achieved.
  • Documentation: "Prioritization tells you what you're going to do with what you have."

Notable Quotes:

"Sometimes you have to do what you don't want to do to get to what you do want to do."
— Alex Hormozi [16:28]

2. Charlie Johnson: Scaling Online Training with High Churn (21:23)

• Business Context: Charlie manages an online training business for personal trainers with $3.3M in revenue and $1.3M in profits.
• Challenges: High churn rate (13%), reliance on Meta ads with a ROAS of 2:1, and determining whether to focus on paid or organic growth.
• Alex's Advice:
  • Extend Customer Lifetime Value (LTV): Focus on reducing churn below 3% to enable sustainable growth.
  • Optimize Pricing and Offers: Implement tiered pricing and provide clear value propositions.
  • Customer Segmentation: Refine marketing to target customers likely to remain longer.

Notable Quotes:

"Churn averages of 13% is way too high. You’ve got to cut it by three-quarters."
— Alex Hormozi [27:07]

3. Joel McDonald: Diversifying Advertising Channels (29:10)

• Business Context: Joel runs a travel coaching program generating $180K/month from 6,000 members.
• Challenges: Heavy reliance (95%) on Meta advertising, risking volatility if ad platforms change policies.
• Alex's Advice:
  • Diversify Acquisition Channels: Transition from Meta ads to YouTube ads before exploring affiliates.
  • Focus on Stability: Building multiple revenue streams enhances business resilience.

Notable Quotes:

"You have to keep customers. Everything else is window dressing."
— Alex Hormozi [31:30]

4. Mauricio Palas: Transitioning from Project-Based to Subscription Model (32:46)

• Business Context: Mauricio offers corporate soft skills training with $1.3M in revenue, aiming for a $100M subscription-based model.
• Challenges: Difficulty in shifting from lucrative project-based contracts to subscription models; dependency on high-value clients (whales).
• Alex's Advice:
  • Enhance Recruitment: Improve hiring processes to scale outbound sales efforts.
  • Simplify Operations: Focus on scaling existing high-performing areas before diversifying.

Notable Quotes:

"You're in charge of it, so you're CEO of this. Basically, it's just like you need to eat, breathe and sleep this stuff."
— Alex Hormozi [36:38]

5. Don: Increasing Perceived Value to Raise Prices (37:01)

• Business Context: Don sells Christmas light installations, aiming to increase revenue from $450K to $2M by raising prices.
• Challenges: Fear of losing customers due to price hikes; managing perceived value.
• Alex's Advice:
  • Gradual Price Increases: Implement incremental price raises while rewarding existing customers to smooth the transition.
  • Communicate Value: Clearly explain the increased value clients receive at higher price points.

Notable Quotes:

"The simplest thing to do is just raise the price and see if this works."
— Alex Hormozi [38:00]

6. Julie Tiefteller: Adding New Offers While Optimizing Existing Ones (45:45)

• Business Context: Julie runs a travel coaching business contemplating adding a high-ticket B2B concierge offer.
• Challenges: Deciding when to introduce new offers without distracting from current optimization efforts.
• Alex's Advice:
  • Focus on Proven Models: Prioritize scaling existing successful offerings before diversifying.
  • Maintain Focus: "Focus is the quality and quantity of things that I say no to."

Notable Quotes:

"I define focus as the quality and quantity of things that I say no to."
— Alex Hormozi [47:37]

7. Joshua: Reducing Churn in a Chiropractic Practice (71:31)

• Business Context: Joshua runs a chiropractic center with $750K in revenue, aiming to scale to $2.3M.
• Challenges: High customer churn (47% gross, 74% net), balancing operational roles, and expanding without compromising quality.
• Alex's Advice:
  • Enhance Customer Retention: Implement higher-ticket offerings and niche down service segments.
  • Increase LTV: Introduce additional products like home-use equipment or supplements to boost revenue per customer.

Notable Quotes:

"You need to fix that. It sounds like it's a model issue."
— Alex Hormozi [74:43]

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Overarching Themes and Key Takeaways

1. Prioritization and Focus:

   • Essential for Growth: Allocating resources to high-impact areas ensures maximum returns.
   • Saying No: Eliminating low-return tasks enhances strategic focus.

2. Customer Lifetime Value (LTV):

   • Retention Over Acquisition: Improving retention rates can exponentially increase business growth.
   • Strategies to Boost LTV: Implement tiered pricing, upsell premium services, and enhance customer experience.

3. Scaling Strategies:

   • Diversification of Channels: While expanding acquisition channels is crucial, prioritizing stable and high-return channels is more effective.
   • Specialization: Niching down allows businesses to cater to specific segments, enabling higher pricing and better retention.

4. Revenue Optimization:

   • Pricing Adjustments: Gradual and strategic price increases can enhance profitability without alienating customers.
   • Value Communication: Clearly articulating the added value justifies higher prices and maintains customer trust.

5. Team and Operational Management:

   • Efficient Hiring: Building competent teams accelerates scaling without compromising business integrity.
   • Operational Overheads: Streamlining operations ensures profitability even as the business expands.

6. Adaptability and Continuous Improvement:

   • Embrace Change: Implementing strategic changes requires balancing short-term setbacks with long-term gains.
   • Iterative Processes: Continuously refining strategies based on performance feedback leads to sustained growth.

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Conclusion

In this episode, Alex Hormozi underscores the paramount importance of strategic prioritization, focusing on high-impact areas, and optimizing customer lifetime value to drive business growth. Through interactive Q&A sessions, he provides tailored advice to entrepreneurs grappling with diverse challenges—from pricing strategies to reducing churn and scaling operations. The key takeaway is that businesses must continuously evaluate and prioritize actions that yield the highest returns, ensuring sustainable and scalable growth.

Special Offer: At the end of the episode, Alex promotes a free scaling roadmap developed with his partner Laila. This roadmap breaks down scaling into 10 stages across eight business functions, identifying problems and solutions at each growth level. Entrepreneurs can access this personalized guide by visiting acquisition.com/roadmap.

Notable Promotion:

"You can go to acquisition.com roadmap and on the thank you page... book a call. We'd love to meet you."
— Alex Hormozi [Final Segment]

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This comprehensive summary encapsulates the core lessons and actionable strategies presented by Alex Hormozi in Episode 840, providing valuable insights for business owners seeking to enhance their strategic approach and achieve scalable growth.

Transcript

[Alex Hormozi]

Hey, guys. Welcome back to the game. I have been getting your feedback, and y'all have been saying you like the more interactive content, you like the more real business content, which hallelujah, so do I. I prefer actually talking about business rather than not. And so I'm stoked about it. And I'm going to keep doing more of this because I love it. And so this is full of business owners who ask me questions in person about their particular businesses. What's really nice about this is that there were so many common through lines that applied to every business in the room. Okay, I've got this other opportunity. Should I pursue that or should I keep the one I'm on? I've got multiple customers that I'm serving. Which one should I switch? One's easy to get, one's harder to get. The other one that's harder to get is more profitable. The market's getting hard right now. How do I continue to scale despite that? And a few more questions that affect just about every business owner. Enjoy. Okay. Q and A stuff. So, typically, I have a longer preamble that I'll do going into this, but before I do, do you guys enjoy this morning? Yes. Okay, awesome. It was cool to meet other people from the portfolio. Okay. Yeah. So those are the people who actually do the stuff that we do kind of every day. And hopefully I kind of fulfilled on the promise that I made yesterday that yesterday was all kind of, like, theoretical. This is kind of the framework that we think about great creating value. Today. It was all about kind of tactics and actually making sure that you're asking the right questions to move your company forward the fastest. So the big thing, hopefully, that I would like for you to get out of this is making sure that you're prioritizing the right things. And so I have had the fortune or misfortune, depending on how you see it, of sitting on a lot of quarterly meetings and annual planning. And so I have a very simple framework that I walk through for when we are figuring out what matters most. And if we think about strategy as prioritizing limited resources, time, money, you to unlimited potential actions, then the better we do that, the higher the return we get on what we have and what we put in. And so fundamentally, that is leverage, getting more for what you put in. So every task that you have, because right now you probably have this big list of to dos, right? You have this list of a hundred different notes that you're thinking about for the cleaning business, and you're like, okay, which one am I going to start with first. And when you get on the plane tomorrow, you'll have your empty page and you'll have like, okay, what am I actually going to do? Right. So this is how I think through it. And I would teach this to your teams because they will come to you with ideas all the time and being able to say no. And here's why I think helps a lot. So number one is every single goal that you have in the business or any action that you're going to take has to increase the number of customers that you're going to get, increase the lifetime gross profit per customer, or decrease the risk associated with making action one or action two. And so when someone comes with some sort of proposal of like, hey, I would like to use some of our limited resources to do something, you say, great, which one of these things is it going to do? Is this thing that you want to do going to increase the number of customers we're going to get? Is it going to increase how much they're worth or is it going to decrease our risk as a business, AKA increasing the likelihood that these two continue to occur? And if they can't clearly draw a line to how what they want to do changes these things, you should probably not do it. So I'll walk you through an example. So let's say Sharon comes up to us and says, hey, I think we should redesign the site. And you're like, okay, why? Well, I mean, I think it just looks a little outdated. Right. And you say, okay, understood. Well, how much do you think that's going to cost money wise? And she might say something like, well, I think, you know, get a firm in maybe like 25 grand or something like that to like do a full rehaul. You're like, all right, got it. How long? About eight weeks. Okay, what internal resource do you need? Probably need to take Tom and Bill and put them on it full time. Okay, great. And what do you expect is going to increase throughput for the business? I don't know. I guess, you know, opt in rate could go up by 10%. She probably wouldn't say that, but let's just say she did say that. I think we could get a site wide opt in increase by 10%. Okay, great. Is there anything else that we can do for $25,000 and eight weeks and two of our people full time that can get us more than 10%? And if the answer is yes, then we shouldn't do that idea, that Sharon's idea, we should do the other one instead. And so fundamentally, the thing is that there's lots of very logical reasons of things that can increase the business. The question isn't whether it's going to work. It's. But to what degree will it work, how much is it going to work? And fundamentally, the best entrepreneurs get the highest returns for the things they put in. That's the game. And so I think about this all the time because the highest leverage moves are oftentimes moves that are off the board. The they're moves that you don't see. And that's where sometimes you meet somebody who's in your industry and all of a sudden they change your paradigm and they show you a different move that you get 10 times more for what you put in rather than continue to play the kind of incremental game that you're on. Now, that being said, you know what, I'm going to explain this. I think it's really worth it. So one of the biggest breakthroughs that I had as an entrepreneur was my understanding of change and cost of change. So I'm going to show a little visual here. Let's say this is normal business function. Your business is moving, everything's fine. Okay? Now let's say that you change something in your sales process because you think it's going to get better. Well, this is what's going to immediately happen, which is that you're going to go down by about 20%. This is just from pattern recognition, from doing this for a decent amount of time, you change stuff. Basically your team has to relearn a new process. Customer success, marketing, onboarding, content, whatever. You're going to go down by 20% because they just don't know what they're doing. Okay? So if they're down by 20% and you thought you were going to get a 5% improvement from this thing, if it worked, is it really worth the bet? No. Now this is where it gets really hairy because some people are like, well, you know what? It'll improve by 5% a month. And by month six, I'll be plus 5%. But let's be real. Month two, you're going to think of something else and you're going to be here again. And so what this has translated into for me is two things. One, and I'm going to be crude on purpose here. Some shit stays fucked. And so what I mean by that is that there are things that are in your business that are wrong. And that you're like, this drives me nuts. And that's okay. And there's tons of things there's literally, I have a list. It's Alex's big list of ideas. It's six pages long of things that I think we should do [e-mail] and whenever I get up and I see people breathe for a moment, I'm like, I'm gonna pull another one off the list. I'm gonna mess their days up. It's gonna be great. But the thing is that I appraise those things that can get better by can it at least improve this process or the overall business by over 20%? And so that's my rule of thumb. If it's not going to. If I know I have strong confidence that this will have a more than 20% lift. I'm not willing to take a guaranteed 20% cut because what you'll find is that if you actually do none of these things, this is what happens in reality. People just get better at doing their jobs. People just get more efficient. Humans don't want to work as hard. They find better ways. And so not changing things in and of itself oftentimes does result in improvement. And so if I know I have a guaranteed cost of 20% and basically a fixed improvement of 5 to 10% that I'm going to get from doing nothing, I now have a 30% spread for change. You've got to be really sure that it's worth the bet. So this is like. This took me, like, way too long to really understand. And so I would encourage you, if you have this big list of things coming from here, pick the three that you think are absolutely. There's no question in your mind, are going to increase the business and cost you the least amount of operational risk in order to implement. Okay, so going back to this. And now I'll go choose a name. Let's say that we say, all right, we want to increase number of customers. Great. So let's say to do that, we want to double our sales team. Okay. So when we do that, we have three options for any strategy. If you followed my stuff, hopefully this should look familiar. But either we're going to do more what we're already doing, we're going to do what we're doing better, or we're going to do something brand new. So if you're sub 1 million, you almost always have to do more, period. You're just pretty much like, there's a math explanation behind it. But basically, if you're closing at 25%, your sales guys are, and you're like, okay, I could spend my time trying to get the sales Guy better. And maybe I could go from 25% to 35%. Okay, that would be material. Or I could just hire another salesperson and double the business. Well, you should probably just hire the second salesperson and double the business. When you get bigger, when you have 20 salespeople. If you wanted to have, let's say you're closing the same percentage, 25% close rate. If you wanted to go from 25 to, say, 35, in order for you to make that same increase, you'd have to get like eight more sales guys. So at that point, it's like, well, maybe it makes more sense for us to kind of retrain the team. And. And that would be a better rather than a more. And so, math wise, you can just math out which one of these actually makes more sense based on the risk and the cost associated with basically doing whatever path you're choosing to take. Does that make sense? Okay, so we wanted to get more customers. We said, okay, could we improve our close rate or should we get more sales guys? We said, we're gonna get more sales guys. And then if I see quarter over quarter that I have the same objective and it hasn't happened, I usually have a who issue. And so one of the things that I made a lot of mistakes with this early on, and I would say even midway on, maybe even three quarters of the way on too, was that I would come up with a plan. I would check this out. I think it's good return, I think it's low risk. And then two quarters in a row, it hasn't happened yet. And so then my immediate assumption was I must have done something wrong. This is a bad plan. More times than not, the plan is not that bad. You just have a bad person doing it or somebody who's incompetent. And I used to have a lot more like, you know, what last two quarters, I know Sharon's going to turn it around. I think this is going to be her quarter. And I just don't have enough time for that anymore. I just want things to improve. We're on a mission to do what we want to do, and I just really need competence. And so at the end of the day, I think we do Sharon a disservice because there's a company that has mediocre standards that she will be welcomed to in open arms and feel at home and find her brethren, be able to move up in that company because everyone there sucks and she's mediocre. And so imagine the fulfillment that Sharon could get in that company compared to yours. And I feel like I owe it to her to release her to that. And so I want to release it a free agency. Okay? So jokes aside, let's get into Q and A. I just like this as a backdrop for when you're making. Okay, which thing am I going to be focused on? So that's going to move my company forward the most in the shortest period of time. So, guys, what you're listening to is one very minuscule sliver of the scaling workshop that we run [e-mail] in Vegas at our headquarters. If you want to be in the room and figure out exactly what you need to do to scale, then come check it out. Obviously you gotta be a legit business owner, gotta have employees, gotta have revenue, all that kind of good stuff. I think the room that this was, I think the average is over 3 million in terms of business size. So pretty legit businesses. And if you want the easiest link in the world, acq.com go.

[Zion]

Hello, my name is Zion. We do 1.1 to 1.2 million in revenue a year.

[Alex Hormozi]

Which one is it?

[Zion]

1.1.

[Alex Hormozi]

Cool.

[Zion]

I would like to be at 10 million in revenue.

[Alex Hormozi]

I make 1 to 100 million a year in there. You're good.

[Zion]

This is what's stopping me. I believe focus, skill deficiency and belief.

[Alex Hormozi]

Right.

[Zion]

I have two avatars, which is working professionals and local government. And yeah, I need to, I, I believe I need to choose between the two avatars.

[Alex Hormozi]

What do you sell again?

[Zion]

So, support and accommodation. So basically, children who come from challenge backgrounds who have been in care, come to us. We basically help them build their semi independent living skills. So we built. We help them build their independent skills so when they reach a certain age, they can then move on to their own accommodation and live independently. So these are kids in the system, right?

[Alex Hormozi]

So like cooking skills, balancing a budget.

[Zion]

Yeah. Personal development work. Yeah, yeah. Cool. Now the issue I have is how.

[Alex Hormozi]

Do you make money? Huh? How do you make money?

[Zion]

So we make money from our support services and our accommodation. So basically we rent properties from landlords who have real estate and then we sublet the rooms and then we charge the government a support package for supporting the young people. And then obviously there's a risk premium because these are challenged kids. And then, yeah, we just make the spread, basically.

[Alex Hormozi]

Okay, so the government is your. Is your customer. Yeah, okay, got it. Okay, so the issue is focus and avatar. Why is that a problem?

[Zion]

Okay, so basically because we, so we have. So we have two avatars. So obviously the asset, the Asset we have control of is obviously the property. So we can use that for different services. So we can either rent out to professionals who need rooms on a short term basis, which we do, or we can rent out rooms to kids in care who need support and accommodation. My issue is, which one do I pick? I don't know if that makes.

[Alex Hormozi]

Okay, say the two people that you're running it out to is the differential.

[Zion]

Okay, so. So working. Working professionals is one.

[Alex Hormozi]

Okay.

[Zion]

The second is kids in care.

[Alex Hormozi]

The kids, yeah. What's the revenue split now?

[Zion]

Right now, just working professionals.

[Alex Hormozi]

So the whole kids thing doesn't exist right now?

[Zion]

Not at the moment, no. But.

[Alex Hormozi]

But wait.

[Zion]

But wait. But I'll tell you why. I tell you why. I tell you why. So we were doing it.

[Alex Hormozi]

We were doing it like this guy's doing the Lord's work. I am. He's like, for now, I'm just a landlord.

[Zion]

So. So. So we actually. So I actually scaled it from one to six, Right. And my business partner had an inappropriate relationship with one of the kids in care, and it completely Me. And we were doing.

[Alex Hormozi]

Really. Technically, he fucked her.

[Zion]

Yeah, well. Well, we don't know if he fucked her, but it was inappropriate. It was. It was inappropriate.

[Alex Hormozi]

The highest Q and A I've had to date. For sure. All right, keep going.

[Zion]

And it's like, it really ruined the brand and we were doing really, really well. And it's like, obviously due to safeguarding and risk, we kind of started losing all our contracts and they took all their kids out. I've got empty properties, so I just went to the professionals just to keep obviously paying my bills.

[Alex Hormozi]

Got it. Okay. That helps a lot more context wise. Just thought you'd sneak that by me. I'm kidding. That's what your partner did. Anyways. Okay, so how quickly are you able to fill it up with a professionals thing?

[Zion]

One day.

[Alex Hormozi]

Wait, no. So you can fill up all your properties using the professionals?

[Zion]

Yeah, within seven days.

[Alex Hormozi]

Okay, so is it just that your heart's not in it with the professionals and you're gonna be able to.

[Zion]

Yeah, my heart's not in it.

[Alex Hormozi]

Okay, cool. Well, first off, kudos. How difficult is it? How quickly can you fill it up with kids? Okay, so longer.

[Zion]

Three to six? Yeah, longer. Three to six months.

[Alex Hormozi]

Yeah. I'm guessing you have a cash flow issue in the meantime.

[Zion]

Yeah, yeah. So obviously the professionals used to generate the cash flow to.

[Alex Hormozi]

Yeah, I think you got to bridge the gap to where you want to go.

[Zion]

Okay.

[Alex Hormozi]

So, like, basically, sometimes you got to do what you don't want to do to get to what you do want to do. You know, like as much as I could be like, you should only serve the one person. Like, I think that you have the properties you already have leases on. You have the commitments that you have to stick with. Fill up the properties with the working professionals so that you can create cash flow. I would consider just rebranding the old one given your partner, and then just kind of relaunching if you can, bandwidth wise in parallel. But just knowing that this is going to be basically an asset that you're going to sunset. Is there a huge amount of operational resources after it gets filled up that you have to deploy to manage it or. No.

[Zion]

The kids in camp.

[Alex Hormozi]

Professional. Professional.

[Zion]

No. Easy.

[Alex Hormozi]

Okay, yeah. I will say this as a side note. Notice how easy it is to make money in this other thing versus the hard thing in general. If you weren't like, I really want to help the kids, I'd be like, dude, just do the really easy one. You're like, it takes nothing. I could fill it up in a day. Cash flows, whatever. Like do more of that. If the goal was money. Yeah, if the goal, like, okay, well.

[Zion]

The goal, the goal. The goal is money. I mean, but I can, I can, I can feel for professionals, we can fit houses within seven days. And what I put out, my build out, I get back within seven days and I just keep doing that. And the constraint is obviously finding the leases.

[Alex Hormozi]

Right.

[Zion]

So my plan was to build it out, do as many as we can, use the cash flow to, then obviously open up the kids home. And it may be conversing.

[Alex Hormozi]

You want to do that, not because. All right, so you have your conflicting priorities. Okay, that's the issue. And so it's like, I think so it's like it's a sequence thing, right? Like you have a thing that you're good at making money on and then you have a thing that you want to give back on. I would imagine the professionals one makes you more money than the kids one does. It doesn't know, man, this thing, kids.

[Zion]

Is that free time? Kids, kids. Is that three times, maybe four times. So I would make. So let's say, for example, what I make from five properties, I can make from one kid home.

[Alex Hormozi]

Okay. So I stand by my original thing. Bridge this for the cash flow and then switch to the kids professionals. Fill up your existing ones so that you don't. You're not going into debt and you're not going negative. And then basically the rest of your priorities Going forward, you sunset that. It's like that was our legacy model. Now we do kids.

[Zion]

When you mean sunset, please elaborate what you're talking about.

[Alex Hormozi]

What do you mean don't keep, don't keep growing that side of the business.

[Zion]

The professionals, right?

[Alex Hormozi]

Fill up the ones you have because you have all these vacancies because you had to get the kids out, Fill that up really quickly, get the cash flow back up and then if you can make more money with the kids thing and that's what you, you want to do it and you make more money, do that. But you got to get to there. Yeah, that's my two cents.

[Zion]

Thank you. Can I offer one more? One more?

[Alex Hormozi]

Okay.

[Zion]

So in terms of, so in terms of like your top five meta.

[Alex Hormozi]

Skills, like left field. Okay, got it.

[Zion]

So what are your top five meta skills you would learn that give the highest projected output in terms of increasing business value? I know. Leadership is one of them.

[Alex Hormozi]

Yeah. I mean, I really think prioritization is the most important skill. Thank you, sir. Everyone here is limited. So it's what you do with the limit.

[Zion]

Thank you.

[Alex Hormozi]

You bet. Thank you, man. Kudos to the kids. The next set of kids, not the old ones. So as I was picking through avatars and he was saying he has the kids thing and then he's got the professionals thing, I'm thinking like, how easy is it for him to get customers? What's the gross margin per customer and are there lots of them? Right? So it's like if you have a lot of people that you can get really easy really quickly and make a lot of money, that's a good path. Right? And so when he immediately said that he could do, you know, professionals really fast and easily, I was like, and that's obviously a lot of them. I was like, okay, this sounds like the right path. And so then I just asked that one last question which was like, I'm assuming you make more money on the professional. He's like, oh, no, not at all. So that's what then basically redirected my attention to like, okay, well maybe this other path is okay and is the better long term play, but we have to get there and if we don't get to the future, then it's never going to happen. And so then it just became a short term cash flow bridge that he needed to create, which he could either get, you know, you get somebody to lend him money or things like that, which I don't prefer to do, but given the fact that it was real estate and he could just fill up apartment buildings and just kind of like move on and then just restart with new leases. For the government program that he was placing children into, that felt like the best kind of two step play. It's common that entrepreneurs will try and use one business to fund another business. It's often not a good idea and it's usually just a massive distraction. And then the problem is that they can never turn off the thing that's funding it. And I'll say from my experience, the vast majority of the time the thing that's funding it is the real business. And the other thing is some hobby that they think in their mind some way someday might work. But the thing that just pays their bills. If they just focus on that one thing, it could be 10 times bigger. I mean fundamentally prioritization tells you what you're going to do with what you have. And so I can't think of something that's more important than that.

[Charlie Johnson]

It's going to be hard one to follow. My name is Charlie. I don't even follow that. To be fair, you set the bar, but won't be quite as humorous. My name is Charlie Johnson. I help online trainers and personal trainers scale online. We do around $3.3 million at the moment. Top line revenue, profits $1.3 million based in Dubai, so we also don't pay tax.

[Alex Hormozi]

Cool.

[Charlie Johnson]

Our bottleneck at the moment is traffic and brand awareness. I don't know whether we focus more on on scaling from a paid ads perspective or focusing more on organic. We're really trying to hammer organic at the moment of building a media team around me with YouTube, podcasts and the other platforms. I've done over 7,000 posts on Instagram running like incredibly consistent on social media. So that's not an issue from a workflow point of view. And if it's an ad strategy, what's the best type of strategy you see to scale these types of businesses? Is it a VSL or. What we currently do is we run ads to a lead magnet funnel where we dial them and then cover up back end.

[Alex Hormozi]

What's the issue with doing more of that?

[Charlie Johnson]

The ROAS at the moment is only like two to one, so I need to try and optimize. 1400 LTV is like four and a half.

[Alex Hormozi]

You just have to make more. Yeah, I don't think there's anything wrong with your existing. So this is a good meta one. So we, you know, fortunately, unfortunately we look at a lot of different businesses and like we know the numbers for a lot of different industries and you'd be surprised at how similar CAC is between industries. And so as much as people will generally obsess about like I just need to get more leads, I just need to get cheaper leads. It's almost never really the solution. Once you have some working way to acquire customers, which you obviously do, it's usually about extending ltv. And that's where you see the huge disparity between businesses. Like I think I made a short about this, but like Starbucks LTV is $14,000 per customer. And so like the coffee guy down the street's like, I just need cheaper leads. It's like, dude, Starbucks is making 14 grand. They spend whatever they want. And so the companies that make just tons and tons of money just find ways to get customers to never leave. And then they just basically keep printing money as soon as they acquire them. And so what the game really then becomes a cash flow management game so that you can spend as aggressively as you want to get customers that will never leave. And so that's why you hear in the software world like six month, three month payback periods, things like that. And it probably doesn't resonate as much because you're like, Well, I make 4,500 and I spend 1,400. It's because people keep leaving out the back. And so from a solve perspective there's a couple kind of, couple ways to look at it. Are you charging $4,500 up front?

[Charlie Johnson]

No, we have three tiers of program essentially. So we have a higher ticket one that's 35k, our mid ticket one's 16 and then a low ticket one that's four.

[Alex Hormozi]

Yeah. And so front end is four. And then they get ascended.

[Charlie Johnson]

Yeah, we're not probably at the moment, we're not ascending them through from the 4K one, which I think is what's screwing the LTV.

[Alex Hormozi]

Yeah, so I don't think so. This is a great example. It's like as much as this was like should I do more organic or should I do more paid? I don't think that's the issue. I think basically figuring out the ascension links between each of the phases. But the real, I mean that would be like first thing to do. But the second thing that I would do, which is like the long term fix for the business is we have to get the price, basically we have to get churn below 3% per month. And you can do it, you 100% can. So if you're below 3% per month, this business will just continue to grow. And so I Would basically put all of my effort into doing that. Because you will never outsell bad churn. You will always feel this crippling anxiety of what happens if my ad account gets shut down. What if this happens because you never feel like you're really building a permanent asset because you're like six months away from no customers. And so it's worth taking the time to solve that problem. In the beginning, especially to be fair, the smaller you are, the easier it is to solve. The bigger you are, the harder it is. So it's like solve it now, get it right, and then it'll just keep stacking. From a churn perspective, it's usually going to be around pricing. And so what I found in that space is that the price points that have the lowest churn are between 600 and 1200amonth for fitness trainers, et cetera. And there's usually some component of two times a year, three times a year, they get to meet up. And beyond that, I don't think you need a huge amount more delivery besides whatever kind of one to many thing that you're doing. If they have at $600 a month, it's not that hard to justify. But that's what continues to stack.

[Charlie Johnson]

Would you almost look to reduce the price point at a certain point once they're in the programs, like the way we structure at the moment, I'll go.

[Alex Hormozi]

Big head, long tail. So like 3k down 600 dol bucks a month after that?

[Zion]

Yes.

[Charlie Johnson]

We do something similar. We do like an accelerator for like three, four months where they pay upfront like a big chunk and then like.

[Alex Hormozi]

A lower price point. I prefer pay and then pay immediately. Okay, so it's like rather than, you know, like 5K, I'd rather get, as crazy as it sounds, I'd rather get 3500 and then have them pay 500 three times in a row. Whatever. The math works out. Yeah, that works out to 5k. I would rather that because I don't want to have a second sale for ascension because then I'll lose whatever conversion percentage. So I'd rather just get like 3,500. You're invested now we start at $500 a month. Does that make sense?

[Charlie Johnson]

Yeah, that's sort of what we do with our high stick program.

[Alex Hormozi]

Great. Does that churn less than the other ones?

[Charlie Johnson]

Yes, 95% retention, like year on year. But then I think that's also the caliber of person we're dealing with. Has less of a financial obligation when.

[Alex Hormozi]

You pay 3500, the 600 doesn't seem that bad. That's what I would do. I think you're doing fine on the advertising side. 1400 CAC fine. If anything, it's good. So I don't think you should obsess on that.

[Charlie Johnson]

So literally just trying pull. I churn averages. Think like 13% last few months, which.

[Alex Hormozi]

Is way too high. You got to cut it by 3/4. That's where you attack. Part of it is going to be a pricing thing. Part of it's going to be expectation setting on the onboarding call. And sometimes a little bit of is the marketing and how they're getting sold.

[Charlie Johnson]

As in like overselling.

[Alex Hormozi]

Yeah. And also probably just customer avatar, like making sure that you're not taking people who want to start, you know, fitness training businesses, but people who already have training businesses.

[Charlie Johnson]

So that's the challenge we found is that a lot of say from the ad traffic comes through from the beginners rather than. We had a lot of people at the beginning who were advanced, who came from my organic, warm audience.

[Alex Hormozi]

Yeah.

[Charlie Johnson]

And they were the better saturated that.

[Alex Hormozi]

Yeah. So you disqualify customers. So it just means that you don't take some people's money. Cool. And if you tweak the marketing so that the messaging is clearer, you will attract more of those people. Just being like, this is only for people who. And then you keep going into the ad, you'll get more of those.

[Charlie Johnson]

So be more clear in the ad narrative in terms of that you must.

[Alex Hormozi]

Have these things in order to do it. If not, watch my free show. Cool. Awesome.

[Charlie Johnson]

Thank you.

[Alex Hormozi]

Yeah, you bet. Rock and roll. You know, this is a business that is very sales and marketing driven. But if you want to get really big in that world or really any world, you have to keep customers. And so that business, you can either sell more customers year over year over year, knowing that they're going to fall out the back, or just take the extra year or two and fix the churn in the core thing. Now, my caveat is that will you ever eliminate churn in that business? No. But you can dramatically reduce it. It's not going to be the same as a CRM business. Right. It'll just be worse than that, but better than what he's got. Right. And so that by fixing it for a year would then allow him year over year over year to have consistent growth rather than always having to be worried about where his, you know, his next ad campaign is going to be. Doing it gives more stability in the business, increases cash flow, increases margins, and fundamentally Just makes it a more enjoyable business.

[Joel McDonald]

Hey, Alex, thank you. This is, this is an amazing couple days.

[Alex Hormozi]

Awesome. Thank you. Thank you, guys.

[Joel McDonald]

My name is Joel McDonald. We sell a travel coaching program. We help travelers.

[Alex Hormozi]

I don't know, 40 sales a month. You did 150 sales in December and had a record month using the Black Friday play. Doing a giveaway.

[Joel McDonald]

Yes.

[Alex Hormozi]

Yeah, that was. You got the bigger group that's happier revenue, doing $180,000 a month. 6,000 members at 30.

[Joel McDonald]

Right, exactly.

[Alex Hormozi]

And then you have your higher ticket. Okay. Yeah.

[Joel McDonald]

So that we feel very good about, especially now. We've got a lot more clarity. We're on trajectory to hit 10 and actually a lot of clarity to hit 15 million this year.

[Alex Hormozi]

Cool.

[Joel McDonald]

The biggest thing, and it's not necessarily what's stopping us, but what has us really nervous is we've kind of got a. We've got all of our eggs in one basket and that's our, you know, we're 95% dependent on Meta advertising, which works great. We've got it pretty under control, but that could disappear at any moment. My thought is diversification. I mean, we could do other paid channels. Those are a lot more expensive. I'd like to diversify a little more with affiliates. That represents about. We've got an aggressive program. It pays 5 to $7 per click, but it's like 1% of our revenue. What you've. You've done reels and topics on, you know, creative ways to do affiliates. A, do you think that's a best way to diversify? And B, if so, what are some out of the box strategies to kickstart that.

[Alex Hormozi]

Big picture? You'll never feel like the business is solid until you find out how to get people to not leave. Everything else is window dressing. In terms of acquisition. I would rather you go from paid meta ads to adding in paid YouTube ads than trying to go a whole new method for affiliates or a whole new method for content as like your primary kind of like new investment. And so I would probably just go YouTube ads as my kind of like, next thing and you're knocking on the door of a million a month. So you're. It's about that time. Does that make sense? Cool. That's what I would do.

[Joel McDonald]

All right, thank you.

[Alex Hormozi]

Easy peasy. So this gentleman trying to go from, you know, 6 million to over a million dollars a month. So he's right here. Right. And he. His current constraint is that lead flow is volatile because he only has one way to get customers. And so to graduate, he has to fund his second acquisition channel with for what I like doing. And he actually just ran the play. And so when I started this, I was like, you just ran this referral process play which he had just done to generate more cash flow and then segment long term lead nurture by lead scoring and then pick the most similar platform which in this instance was go from paid ads on meta to go to paid ads on YouTube. And so that was the most similar thing that he could do to get more customers. And so fundamentally that's all I did was basically walk him through what his current constraint was, how to graduate for it at this level. And if you want a personalized version of this to know exactly where you're at and know what constraints you have and how to graduate this scaling reps absolutely free, just go to acquisition.com roadmap and on the thank you page if you're. If you'd like to have my team tell you where you're at and kind of apply this to the business rather than having just kind of like the automated thing, then book a call. We'd love to, love to meet you. Otherwise, enjoy.

[Mauricio]

Hi, I'm Mauricio. I sell corporate training, focus on soft skills to large companies through who owns.

[Alex Hormozi]

Soft skills, what you help, who do.

[Mauricio]

Soft skills, which I train companies in soft skills.

[Alex Hormozi]

Okay, got it.

[Mauricio]

Coaching, et cetera. We do 1.3 millions in revenue on a project based model. I would like to be at 100 million subscription based model. And what's stopping me is project based model is more lucrative. So I feel like stuck with these whales that doesn't want the subscription model.

[Alex Hormozi]

So project based isn't bad, you just need to demonstrate. So this is the concept of recurring versus reoccurring. And so if you go project to project, there's nothing wrong with that as long as you can demonstrate that you have a high renewal rate between those things. And so in general I do like having kind of project based stuff because typically you can price two to three times higher than you can for a subscription. And so you have usually way better cash flow because people are willing to commit to a certain amount for this period of time versus this forever, which is what a subscription feels like, even though realistically we know that it's not that case. So you want to get to $100 million subscription business, you have a $1.3 million non subscription business. I would say I don't think the limiter to your business is that. So we'd have to dive a level deeper and say what's stopping you from getting to 10 million with your current model?

[Mauricio]

Yes. We are now aiming to smaller companies on the subscription base and the whales are staying the same, basically. So that's our strategy to like this year we're aiming for a 40% of subscription based model from all the revenue.

[Alex Hormozi]

40, 40%?

[Charlie Johnson]

Yes.

[Alex Hormozi]

Is subscription already or that's the goal?

[Mauricio]

No, it's the aim of this.

[Alex Hormozi]

Okay, got it. And you said you have whales.

[Mauricio]

Yes.

[Alex Hormozi]

And you have small companies.

[Mauricio]

Smaller.

[Alex Hormozi]

What percentage of companies are in either.

[Mauricio]

Bucket revenue wise nowadays it's like 80, 20. So the whales have. Are almost everyone just do more whales.

[Alex Hormozi]

Okay. I'm serious. So how do you get whales?

[Mauricio]

We have an outbound sales team.

[Alex Hormozi]

Okay.

[Mauricio]

And we are pretty good at it. So we, we get into a whale and then sell it.

[Alex Hormozi]

Of course.

[Mauricio]

More. More departments.

[Alex Hormozi]

Yeah, of course. So what stops. So what's the limiter on your outbound team, people? Okay. Hr.

[Mauricio]

Hr. Is that what.

[Alex Hormozi]

So recruiting. Yeah. Okay, got it. So if you had twice the outbound team you have now with equal skill, would your business double?

[Mauricio]

Yes.

[Alex Hormozi]

Great. So what stops you from doing that? You don't have a recruiter.

[Mauricio]

Yes. But it doesn't work.

[Alex Hormozi]

Okay, so you have a bad recruiter.

[Mauricio]

Yes.

[Alex Hormozi]

Okay. So hopefully this line of reasoning was fun for everyone, but that's what we have to work on. The rest of the stuff that we talked about is basically irrelevant. You need to go get another recruiter who's good and can get you outbound guys, basically. And you will. My advice is to continue increasing the outbound team until you can't handle the sales anymore. That's it. Whales, fundamentally, it's not uncommon for them to work on projects for. Just extend the terms. So if you, if you sign, you know they're currently doing six month engagements. Try to go for 12 or 18 month engagements. Okay. Does that make sense? Yes. Yeah. And that's. That, that's just as valuable. Like if you have like a five year contract with a Fortune 500, it's recurring as far as like an investor would be concerned. It's the same thing. Make sense?

[Mauricio]

Yes.

[Alex Hormozi]

All right. Hopefully it's simpler. Hey guys, real quick. This podcast only grows from word of mouth, quite literally. There's no other way to grow podcasts than word of mouth. If there's some element of this that you think somebody else should or it'd be relevant to them, it would mean the world to me. If you shared this via text, via Instagram, via dm, via whatever way you like to share stuff with People you love. Thank you. Yes, sir.

[Don]

Hi, Alex.

[Alex Hormozi]

Hello.

[Don]

My name is Don. I sell Christmas light installation to home and business owners.

[Alex Hormozi]

Love it.

[Don]

Last year we did 450k.

[Alex Hormozi]

Sweet.

[Don]

And this year I'd like to be at 2 million.

[Alex Hormozi]

Awesome.

[Don]

What's stopping me is that I still have prices when I started the business two years ago for some businesses or for some clients. So I'd like to know how can I increase the perceived value so that I could increase my prices while still doing the same thing?

[Alex Hormozi]

Can you just say a higher number when you get to the asking for money part?

[Don]

So, for example, if I've been charging a house $1,000 for an install and takedown.

[Alex Hormozi]

No, I understand, I understand. I'm saying, like, what stops you from just changing? Nothing and just saying a higher price.

[Don]

Like this year it'll be 2000. Yeah, I guess nothing but the perceived value.

[Alex Hormozi]

That feels like the easiest thing to do.

[Don]

Yeah. So I wanted to know, like, if there's a script or anything. How.

[Alex Hormozi]

Okay, so a couple things. So one is that it feels like you need to be sold more than anything, which, like, great. But are you good at it?

[Don]

Good at sales?

[Alex Hormozi]

No, no. Christmas tree lights.

[Don]

Oh, yeah.

[Alex Hormozi]

Okay, good.

[Don]

The best.

[Alex Hormozi]

So great. So then you can, you can charge whatever you want in terms of has the business all come from referrals from.

[Don]

Google leads and referrals.

[Alex Hormozi]

Okay, got it. So you want to get to 2 million, you raising your prices. What percentage do you want to raise them?

[Don]

Probably 50%.

[Alex Hormozi]

Okay, got it. So the thing is, like, if you want to raise them 50%, I'll bet you got so much more room than that because you seem not as convicted. So I'll bet you there's like a ton of room. Okay, so you're charging. Okay, let's just, let's start with 50 and then bump it again another 50. If basically you have no change in close rates. And I would like you to keep bumping it by 50% until you see that you're making less money. Got it? That sound okay?

[Don]

It's that simple.

[Alex Hormozi]

Okay, that sounds great. I love this. Was that as good for you as it was for me? I'm kidding. That's what your partner said. There you go. Thank you. That's also what she said. So the. Okay, so I'll give you a little script for the people who are old that are going to come back, because I know some of them are going to recur, is that I would give them a heads up ahead of time and say, hey, just so you know, we're raising prices on all these new crazy people who are trying to give us money. But since you're an old og, if you want to reward you for being a previous customer, I'll honor your old price as long as you buy now for Christmas, otherwise you'll get the new price. So it's like, I'm giving you the love now because I'm like, hey, I'm letting you in. But then you can front forward, you can pull cash flow forward. That makes sense.

[Don]

Perfect.

[Alex Hormozi]

And then everybody else just raised the price and you'll feel okay about it because you'll have a full bank account. Right.

[Don]

Okay, thank you.

[Alex Hormozi]

So pricing is one of those weird, dogmatic things that founders have these like deep seated beliefs about it. And I think there's cause there's a lot of fear, right? No one wants rejection. Everyone fears that their business is going to go away. And it's usually because you think that like, oh, if I change a price to one customer, everything's going to change. It's like, well, if you aren't selling, then you can just change the price back next week. But the risk of not testing your pricing is so much greater than the risk of keeping it the same. Like, think about it at its absolute extreme. If you kept your business prices the same forever, you would eventually go out of business. Think about how crazy it is because over time prices inflate, right? Costs go up. And so you have to be able to adjust prices. If you haven't adjusted your price in the last four years, you're making 30%, 40% less profit for sure, bar none in terms on a per unit basis. So like, why wouldn't you do that? And so with this particular guy, he wanted some like, strategy to get his head around, you know, I want to charge more and so how do we increase the value? But he's closing a ton of people and he's obviously doing a good job. And so the easiest way to price higher is to just raise the price. And I just gave him a little tactic which is you want to reward existing customers, but the thing is you can reward them whatever you want. So you can reward them by giving them early ability to pay you. You can give them a discount for three months if it's a recurring membership. So it's like, hey, I'm changing the prices, you know, today, effective now, but I'm grandfathering you in for three months. Right. Rather than forever. Right. So as long as you give them some consideration, it kind of like smooths things out and it's easier for a discount to go away than a price to go up. And so increase the price, give them the discount, say you grandfather discount for three months or six months, and then the price goes up. So what Don was struggling with is an issue that I cover in $100 million offers book. So he was dealing with a virtuous versus vicious cycle of price. And so there's always this fear of, like, okay, well, if I decrease my price, maybe I'll make more money. But when you decrease your price, you decrease your client's emotional investments, you decrease their perceived value, you decrease the results they get. You decrease. You increase their demandingness towards you. They're more of a pain. You decrease your revenue per customer, so you have less money to actually, like, do the thing that you delivered. You have less profit, less value for yourself, less perception of impact, lower service levels and your whole sales team, which sometimes when you start, it's just you. Your personal conviction drops. So wouldn't it be so much better to increase their emotional investment, increase results, increase demanding this. Increase the revenue for fulfillment so you can get better talent and have more profit, increase your own perception of self, increase the service levels you have, increase the impact and increase your own conviction? Yeah, probably. And so the thing is, is that changing your prices is the single easiest thing that you can do operationally that can make you more money. And you should always exhaust that as fast as you can before thinking about other things. Because literally the only thing you need to do when you raise your prices is just when you get to the end of the sale, say a different number.

[Don]

Alex. My name is Alex.

[Alex Hormozi]

What's up?

[Don]

Yeah, we sell residential window replacements to homeowners.

[Alex Hormozi]

Okay.

[Don]

We did 84 million in revenue last year.

[Alex Hormozi]

Residential windows. To homeowners.

[Don]

To homeowners.

[Alex Hormozi]

Okay, got it. 84. Okay. Yep.

[Don]

Today we have had a Google Sheets empire and.

[Alex Hormozi]

A what empire?

[Don]

A Google Sheets empire. And we're starting to build out a HubSpot. We spent the last few months building up the frameworks of our HubSpot.

[Alex Hormozi]

Are you involved in it?

[Don]

Very involved.

[Alex Hormozi]

Okay, good. That's just like biggest mistakes.

[Don]

So that's what I wanted to ask you about, because I know you just moved all your portfolio companies to HubSpot.

[Alex Hormozi]

Who said that?

[Don]

You.

[Alex Hormozi]

When?

[Don]

On one of your podcasts.

[Alex Hormozi]

Jesus. It's like every. It's like I say it on one podcast, like four years ago. It's like everyone. It was like the best HubSpot endorsement ever. Anyways, keep going.

[Don]

Yeah, the question I have. So we're Going to roll this out across 16 offices. Hopefully a hard launch March 1st. I don't want to pay the ignorance tax if I don't have to. So what advice would you have?

[Alex Hormozi]

Basically you just need like you're CEO of it for basically this whole quarter. The easiest way to say it. And so I would have really rapid feedback loops with each of the department heads if you have functional heads at the holding company. And then you'd want to have basically separate lines of communication for all the location heads. So I think about. Do you use Slack or something like that?

[Don]

Just Voxer?

[Alex Hormozi]

Yeah.

[Zion]

Really?

[Alex Hormozi]

Yeah. Okay. Yeah. So I'd want to have basically different threads by function. So one is the actual function. So people who are handling sales, people handing marketing. And I'd have the leaders there. And then I still want like you basically want the different slices, basically lines of communication in the different slices of the org so that you can get as much transparency top down into how it's working for them and making their life easier. And then that way you can triage, basically, which, because you have limited resources in terms of which of these bugs are we going to fix which process flow sucks. And then you can basically stack order which of these things has the highest driver for revenue. But you can't really do it appropriately unless you basically can drink in all that, all that information. And as. Are you CEO?

[Don]

No, I'm fine.

[Alex Hormozi]

But you're in charge of it, so you're CEO of this. Basically it's just like you need to eat, breathe and sleep this stuff.

[Don]

Yeah, that's helpful. Thank you.

[Alex Hormozi]

Yeah, just like it's okay that it is unscalable. Got it. But you have to do that in order to make it scalable. Yeah.

[Don]

Thank you.

[Alex Hormozi]

Yeah, you bet.

[Julie Tiefteller]

Hi, my name is Julie Tiefteller and we sell travel coaching to people who want to travel more frequently or more luxuriously for free or almost free. You already know all our business stuff. So my question is kind of piggybacking on what you were talking about earlier with your six pages of ideas. We're in a room full of people that are always trying to optimize as well as always has new ideas. We had an idea for a B2B offer for adding a 50k concierge offer for businesses that are already spending half a million or more on travel annually. So when is it appropriate to add a new offer while you're already like still working and optimizing your other ones?

[Alex Hormozi]

Sorry, I just wouldn't.

[Julie Tiefteller]

You would.

[Alex Hormozi]

I wouldn't do it. Okay. You're gonna go from 6 to 15 this year. Do that.

[Heather]

Okay.

[Alex Hormozi]

Like, I'm not, I'm not trying to be like short to like, like, these are, these are the mistakes that we make. There will literally always be money on the table. Like, you can't sell everything as much as you want to. You just can't. And the thing is said differently, if this company can go from 6 to 15 and the next year goes from 15 to 30 and the next year goes from 30 to 60, if you hit the same numbers and have two different product lines versus one, which would you rather have one? Right? And I'll also tell you that if you just do it with one, you'll increase the likelihood, not decrease the likelihood that that occurs. And so that's the focus and discipline stuff that you hear all the Steve Jobs and all that. He called it the quantity of unbelievable ideas that, you know you could crush, that you say no to. That's what focuses.

[Julie Tiefteller]

So how do you discern when to pursue something off of that six page list?

[Alex Hormozi]

When we have bandwidth, which if you're continually, like, if you're basically doubling every year, your bandwidth is getting eating up by doubling. So just double. Basically, it's like, why would we do it? Okay, thank you. Yeah, but if it's like, I want to grow, why would I? Like, why? Like, then let's just grow with the thing that already is working and is really profitable and we know everything about it. Rather than this crazy girl in the red dress that, like, walking by and like, has a crazy boyfriend, has crabs, you're like, what's going on? You know, so like, why bother? It's like, we have this girl, she loves us, she knows me, I know her. Let's go. I define focus as the quality and quantity of things that I say no to. And so if you think about commitment, the ultimate commitment is the elimination of alternatives. You have nothing that you can do besides that one thing that is the ultimate. Like, the perfectly focused person who plays video games would do nothing but play video games. Everything that is not that decreases his focus. And so focus isn't like, are you focused or not? But how focused are you? Right? And so the idea is, the more things we eliminate, the more focused we are. And so that is always my constant reminder, especially the Steve Jobs quote, because he's like, it has to be something that you want to do in your core. You know, you could crush and you still have to say no. Yes, sir.

[Mauricio]

Hey, Alex.

[Alex Hormozi]

Okay. The coaching federation. Internationally, you have the certification 18 people is the Cap, how do we get around it? Let's go.

[Mauricio]

So first of all, thank you, you and your team for the things that you are doing.

[Alex Hormozi]

No, you bet.

[Mauricio]

Yeah, my name is Palas. This is what I'm doing that you said already and for the, I guess three, four years. Seems like I just kind of lost something like why or stuff like this because two and a half maybe already three years ago, we plan to go from what. What I have right now because it's a one man company, just few team, team members. Now it's 460 in revenue the last year and the goal was 2.3 mil. Maybe this is the why. I, I lost this on the way. So I just wanted to know what's your why, why you are doing what you are doing.

[Alex Hormozi]

I like working. I'm dead. Like I spent a year thinking about that question when I had enough money to do whatever I wanted and just like could just live on treasury bills for the rest of my life. When I looked back on the days that I enjoyed most, they had three things in common. I worked out, I ate with people that I liked and I worked hard and had something to show for it and had nothing left in the tank. And so once I realized that those were the days that I enjoyed the most, then I made it my goal to live as many of those days in a row as I could. And the way that I live my life bothers a lot of people and that's okay. And so I think, I mean, I got that advice when I was 22 years old from, I'll just whatever from a person in my past. And I'd had a good weekend and I started work and she said, you're in a good mood. And I was like, yeah, just had a good weekend. She was like, I'm pretty sure the secret to happiness is living as many days in a row like that as you can. And that was like the closest to operationalizing kind of joy that I'd ever heard. And so I have just stuck with that. And I think that the things that bring you joy will change over time. But I think that structure of just trying to find what that perfect day is and living it as many days in a row as you can is kind of the way to do it. That's how I do it. You can do whatever you want.

[Mauricio]

Fine.

[Alex Hormozi]

Yeah.

[Mauricio]

Thank you.

[Alex Hormozi]

As a side note, for those of you who feel like you have lost your passion for your prospect, and I'll give you a simple example. Like I used to sell weight loss to women between the age of 25 and 55. And at a certain point, I just really stopped caring. They were like, oh, my God, my life changed forever. And I was like, no, you had a calorie deficit and you moved. Like, yes, that's how that works. And I would have to kind of, like, fake myself into feeling excited about it. And it really bothered me because I was like, I quit my job to do something that I loved, and I don't really care about this. I ended up loving business more than I loved working weight loss. And then I fell into that. But I had a friend who was a personal trainer who quit being a personal trainer and started a cookie business. Brick and mortar, big cookie store. Like, did it right. And I remember being like, are you passionate about cookies? And he was like, not really. And I was like, but he crushed it. He did a really good job. Everything was, like, really tight. And what I realized was that he was passionate about doing things well rather than the cookie business. And once I realized that, I was like, oh, I don't have to be passionate about weight loss, but I can be passionate about being good and just saying, like, when I do things, I will do them well. And I think that has been something that has helped me stay motivated in times when I feel less so. Paul had kind of fallen out of love a little bit with his business, which is. I just want to say, if you're an entrepreneur, I get it, and you're not alone. All right? Like, it's. It's very common. You've been, you know, you get beat up for two years, three years, five years, you're trying to support your family, and, you know, at some point, you just feel like it's just the amount of crap that you have to deal with on a regular basis. You almost just, like, it's no longer romantic anymore. But the thing that really changed my perspective on this was leveling up the ideal that I wanted to be loyal to, right? So originally it was like, I want to be loyal to my interest in weight loss or my passion weight loss and fitness. But over time, I just found new interests. And for me, from a forever perspective, I always want to be excellent. And so that becomes a hypothetical ideal that I can always chase and never achieve. So, like, I want to be great at what I do and do excellent work. And so every day, I can improve towards that ideal, independent of whether I'm baking cookies or selling weight loss or doing IT services or cybersecurity or coding for software or sweeping floors. Like, it's a very Trite statement of how you do one thing is how you do everything. Because I don't necessarily agree with that, but how you do the things you care about is how you do the things you care about.

[Heather]

Hey, Alex. Hello, My name is Heather. I own a consulting firm called Channel Maven.

[Alex Hormozi]

Okay.

[Heather]

We help large IT companies sell better through and with their partners. Okay. I revenue was 3.6 million. I sold it in 2021. Thanks. Ran marketing for the company that acquired us. They called it an Aquahire and convinced the board six months ago that I was done and they should give me the name back. So got the name, got the ip. I get to start over, not make the mistakes I made before the market has shrunk. So that channel role is being pushed out. And when I started it, there were five consulting companies I competed with. Now there are probably 200. Do I focus more like channel marketing is probably what I'm best known for. Do I focus more on that in this industry or do I go just B2B and like help kitchen and bath companies sell through dealers or automotive.

[Alex Hormozi]

When you say channel, explain, dial into the channel. Channel sales that you're talking about.

[Heather]

Yeah. So a large IT company sells direct, but they also sell through hundreds of thousands of mom and pop channel partners or Accenture or now Marketplace.

[Alex Hormozi]

So like affiliates. Yeah, got it. Okay. So you're an affiliate expert for big IT companies and you have a network of people that can do basically sell their services for them with a markup.

[Heather]

Yeah, I mean I basically made an announcement on LinkedIn that I was back and did 360k in 4 months.

[Alex Hormozi]

That's awesome.

[Heather]

Yeah, thanks.

[Alex Hormozi]

So the question is. Well, I mean it sounds like you did okay with your announcement. Why do you feel like you can't out compete the other people?

[Heather]

I just feel like my champions. The 14,000 people that follow me on LinkedIn are starting to phase out a bit and it's just gotten super crowded.

[Alex Hormozi]

And this is the channel part. So the crowded part doesn't bother me at all. Yeah, because that just means that there's lots of demand.

[Heather]

My clients are the tech companies, so HP, Google.

[Alex Hormozi]

Yeah. So the 14,000 people, you have a lot of high up people in those companies who follow you. Yeah, I mean you could do either path, but I mean, it's a good question. I think it's more the statements that would initially jar me of like it's saturated, I think it's going away, things like that. Because my big questions are always logic, evidence, utility. So what does that mean? Define that for me. How do you know that? And so what? Logic. Evidence, Utility. So when I asked channel partners, Please define that for me, it's like, okay, that's affiliates. How do you know that they are going down? How do you know that?

[Heather]

They're all calling me, asking if I know of jobs. And I'm tracking how long they're on the market, and on average, it's about 11 months.

[Alex Hormozi]

Who's on the market for let go?

[Heather]

They call it a channel chief. So it's like chief partner officer.

[Alex Hormozi]

Okay. And those people are looking for jobs.

[Heather]

Yeah. Because they're all. They're all getting let go. So then the VP of channel sales reports to the cso, the VP of Channel marketing reports to the cmo. Like, that level is just getting.

[Alex Hormozi]

And when you say a lot of people reached out to you, like, how.

[Heather]

Many is that in the last year? Yeah, because I was still in the channel when the company acquired us. I'd say probably 40 people.

[Alex Hormozi]

Okay. The big conflicting data point I have is that you, like, made a post and made 360 grand. Yeah. Yeah. So just shut up and focus. Yeah. No, I mean, it's real, though. But I think I'll tell you what I like, if I'm in your shoes, I get excited by this stuff. Maybe because I'm broken on the inside. Who knows? But, like, I am you. I work.

[Heather]

I have little kids. 50% of the time. I work nonstop when they're not with me.

[Alex Hormozi]

Yeah. And, like, I see everyone bleeding and I'm like, let's. Let's finish them off. You know what I mean? Like, they didn't deserve to be in business to begin with. And I will make sure that everyone knows. And so if you have this in and you're better and you're seen as a market leader, if things are consolidating, for example, then it means that, like, as long as. If the industry isn't going away, but it's consolidating, that it means a winner take all. So it just means the stakes got higher.

[Heather]

Yeah.

[Alex Hormozi]

Which if you're better, that's a good thing.

[Charlie Johnson]

Awesome.

[Heather]

Thank you.

[Alex Hormozi]

No, you bet. What Heather presented with is super important because a lot of businesses deal with this same issue, which is the perception that the market's getting harder and the perception that saturation has gone up. And those both may be true. And so what? Right. And so the thing is, is that, like, business pretty much always gets harder. And in the opportunities where you have, in the sectors where there's opportunity, more fish are going to come Right. More sharks are going to enter. But like that's not always a reason to not pursue it. It just means that you have more competition, you have to be better. And so in some ways I can see lots of demand as a big market to go after. And if you're good, there's just more for you. Now I want to be clear. There's a difference between consolidation and degradation. So a degrading industry be like newspapers, right? They're getting smaller and smaller every year. But a consolidating industry is when the same amount of demands there, it's just aggregating into fewer, fewer customers. And so given the fact that Heather is better at high level deals with these bigger companies, it felt like a good, a good risk adjusted move for her to go after that kind of big pie. Because she already had a company, she'd already sold it, she had good connections there. She immediately made a post and made, you know, three, $400,000. To me it's like she's got a good reputation obviously. Like it seems as though she's doing a good job. And so I have a hard time telling someone to start brand new in totally different industries, totally different spaces where they don't know the devil that's going to come. Whereas here it's the devil she knows because she gets to harness. The compounding benefit of being in industry for a long time is that you know how it works and you know how the game is played. And so if you look at some of the richest people in the world as people have just been in the same industry for their whole careers. And so it's really hard for me to give someone advice to be like, yeah, just change it.

[Chris]

Hey Alex, my name is Chris and I have a question about the business I'm starting soon. So I have no numbers right now for my background. I'm a physiotherapist and chiropractor have a academy where I teach medical professionals in my own concept called crack a move. And I'm doing social media.

[Alex Hormozi]

Okay.

[Chris]

And I invented a tool where you can crack yourself your back like self.

[Alex Hormozi]

Crack if you've crack.

[Chris]

Yeah, more like black Rolf posture role but really intense and good. And you can use it as a customer for your own, for your better posture and pain relief. But also the professional for especially some small women have with some techniques problems you can go, you're a big guy. So when I want to correct you, I have to need a. I'm small guy. So sometimes it's really hard and I would like to know would you focus on one group for selling B2C for example, just a customer for the problem solve of cracking themselves and with a posture program and everything or just the medicals. And I have the medicals also my academy with affiliate or both.

[Alex Hormozi]

So you are a chiropractor?

[Chris]

Yeah.

[Alex Hormozi]

And you no longer have your practice?

[Chris]

I can if I want, I have a waiting list and.

[Alex Hormozi]

But you have a practice.

[Chris]

Yeah, I have.

[Alex Hormozi]

And then you also have an academy where you train other chiropractors?

[Chris]

Yes, in my concept.

[Alex Hormozi]

Yes. And you also want to start a physical products business.

[Chris]

Yeah. Because of scaling you don't want to.

[Alex Hormozi]

Leave money on the table. So okay, what's revenue right now with.

[Chris]

My Academy I started one year ago and we have 500k.

[Alex Hormozi]

So you just started it a year ago? Yeah. Why are you starting another business?

[Chris]

Because it solves some problems and I found out because I have.

[Alex Hormozi]

Why not sell newspapers? You know what I mean? Sell orange juice. People are thirsty.

[Chris]

I could, right?

[Alex Hormozi]

No, I'm being.

[Chris]

Because I'm maybe a social media. I have an audience, I have customers who are a waiting list. I have the problem that many people want the treatment I can't give them. So I built some specialists in them businesses. Yeah.

[Alex Hormozi]

And you would have a third business and it's a physical product. It's a totally different business.

[Chris]

Yeah, but I have some partners in it. So I just have to do the marketing and the development of the tool itself. And we already did it so it's ready to launch. But the problem. Yeah, it's maybe, you know, sometimes it's boring just to do one thing at once but in business wise maybe it's better.

[Alex Hormozi]

What's your goal?

[Chris]

Good question. Of course I want to make money, but of course I want to do very nice products who have a nice impact of the.

[Alex Hormozi]

Yeah, but what do you want to have happen from that?

[Chris]

I think the focus. So that's the problem.

[Alex Hormozi]

You want focus, you want to do that by doing more things. Yeah.

[Chris]

The problem is that so combined to my brand. So I have the problem that I have so many customers I can't offer them anything. So I have limited time with my own treatments so I need time to develop some.

[Alex Hormozi]

We have the academy. Sorry, you have the academy though.

[Chris]

Yeah, but it's very hard to teach them my concept because it takes half a year so they can implement it in their own office. So I tried to reduce this as a hybrid model with online and everything. But it takes time because of the brand protection quality because I send to my customers and when my customers go to them, I want that a high treatment, high end treatment. And the problem is that the onboarding takes so long that the customers want a treatment and I have no time. My. The people I'm teaching need time to learn it and get expert and it.

[Alex Hormozi]

Takes time to build a big business. Yeah, yeah, I believe you. Yeah.

[Chris]

But the problem is the social media makes all the followers just.

[Alex Hormozi]

Yeah, let me go through it. Let me, let me help for a second.

[Chris]

So sorry.

[Alex Hormozi]

You're good, man. You're also like probably, you know, everyone's laughing but like you're probably one out of four. One out of three of you here is in this exact same boat. So hope. So here's the thing. The opportunity will only get bigger, not smaller. So the rush that you have is a rush to do a smaller version of what you want. Because if you get bigger on social media, you will have more customers who want to buy your thing. Right? Yeah.

[Chris]

The problem is that the customers are now a little bit sad because I have no offer for them.

[Alex Hormozi]

Oh no.

[Chris]

I have no.

[Alex Hormozi]

I had nothing to sell anyone for years. Okay. So point being, thing is, I don't, I don't actually think I'm going to convince you. I think you're going to do it. No, I'm serious. So I don't even know if there's a point. You want to sell your thing, you want to sell your widget. Yeah. So what am I going to do?

[Chris]

More like an advice of focusing on just the professional.

[Alex Hormozi]

You want me to tell you how to focus? How would, how would.

[Chris]

You're doing several things at once, right?

[Alex Hormozi]

What?

[Chris]

No, you're also doing something.

[Alex Hormozi]

I have acquisition.com?

[Chris]

Yeah. Yeah, just have all the. So just build a team.

[Alex Hormozi]

I have one business. Yeah, you want to be CEO of multiple. There's a difference between ownership. I also own stocks and zillions of companies.

[Chris]

Are these different businesses at all?

[Alex Hormozi]

What?

[Chris]

Okay. Product. So your book is also different?

[Alex Hormozi]

No. So no, you have no. This is important. This is good.

[Chris]

It's just for money.

[Alex Hormozi]

So for everybody. There's difference between owning something and being CEO and operator. You can only really operate one thing. That's it. If I buy stock and Apple, I'm an owner. I don't do anything, but I'm an owner. Does that make. Do you get the difference here? Yeah. You're like, well, I'm going to be so like the where you would get me if you wanted to was school. I'm the face of. But when I did that deal, I Said I will change nothing about what I do. So my regular day must remain the same in order for me to do this deal. I'm going to continue to make content, I'm going to continue to record stuff, and then all I'm going to do is point in a different direction. That's it. So the pointing is a copy paste on a link. Everything else remains the same. So I boil this down to what does this change about what I do? And so the reason that this is very difficult is that you're going to start another business and it's going to change what you do.

[Chris]

Okay. So outsourcing the things I'm not doing in my daily business, when I'm starting a different business, for example, the product, I'm just doing my marketing. The development I'm doing also I did it and everything else. So, like targeting the group and strategies. I don't have any clue. Oh, I should not. So I'm here just. I'm taking the question.

[Alex Hormozi]

All right. I don't know what your question is anymore.

[Chris]

It's more like medical. What you focus on in this part.

[Alex Hormozi]

When you have a selling group, I would take your 500 medical people and be like, how do I go from 500,000 in my first year to 5 million? That's what I would do. You already have something that works. You already have a following of people who have this thing. If you want, you can sell through them as an affiliate base. Then you have one business.

[Chris]

Okay, that's a good answer.

[Alex Hormozi]

Great.

[Chris]

Thanks a lot.

[Alex Hormozi]

Yeah. I had no idea where this was going to go, but it seemed like this guy had a lot of stuff going on. This. This was a classic, like, entrepreneur add rush issue. And so fundamentally, I think the reason that entrepreneurs end up opening up multiple things is because we're all in a rush. We all think that, like, somehow an opportunity can disappear. So there's two things. Number one is that opportunities do disappear, but then other opportunities come. So there will not be a shortage of opportunities. If you know how, if you are. The better you understand the game of business, the more opportunities will come your way that you'll have to learn how to say no to. There will always be opportunities. That is a promise. I don't promise often. You can take that to the bank. There will always be opportunities. The next issue is the timing around this, which is some opportunities actually just get better with time. And so I'll give you a perfect example. So if I say no to people introducing me to people today, and the reason they're introducing me is because I have a big business. If I continue to grow my business, the people who wanted to introduce me to these other people today will want to still introduce me to those people tomorrow. But I'll also unlock the people that, now that my business is bigger, will want to also introduce me to even more people. So the opportunity grows by me not taking up the opportunity. And so the thing is, is that he's got this brand, he's grown it a little bit, and so he wants to basically monetize it because he's like, some people want to buy something from me. Well, welcome to advertising. Right. But the point is, is that those people aren't going to go anywhere. And maybe if, even if those specific people go somewhere, if the brand doubles, he'll have more people that'll come up. That's the new opportunities will present themselves. But the thing is, is that you have limited resources and bandwidth. And so we have to allocate that to the highest return opportunity. And if he, in the first year of a new business, does $500,000, probably very profitably, I would have a hard time being like, yeah, now a year later, let's start another business. And I only say that because I've only done it every other time in my career and made a terrible mistake. And it's just like, I'm so vehement about this particular mistake because I have. I have done it so many times. Can you hire a CEO for a business? Yes, but unlikely for a couple of reasons. So, number one, he had a very small business. So the likely. The thing about, the thing about, from numbers standpoint, right? So let's say that he's got a business that does $500,000 a year, and let's say he's profiting $200,000. Okay, so it's $200,000 in profit. What is he going to pay a CEO to go, like, run this business? It's not even going to be a CEO. It's going to be like a manager kind of. And so it's like, okay, maybe you can pay $100,000 a year for someone to do that, but then there's $100,000 a year. That's. That's left over in profit. But that assumes that that person's going to run it as well as he does as the founder. And that's unlikely. And so it's a lot. It's likely to have, like, a decrement in performance. So, like, would it be fair to say a 20% decrease in performance? Yeah, that's fair. And guess what? Now it's break even. You make some money. So, like, it's so small that unless you have a manager model that like, is really built for that, like brick and mortar stores can sometimes work for things like that. It's unlikely to be able to find somebody who can take over, like, his influencer business. But can bigger businesses hire CEOs? Sure. But if you also look at the biggest businesses in the world, almost all of them are still founder led. And I think that there's a little bit of a pendulum right now that's kind of swinging from like professional managers to the people who are like the heart and soul of the business. Because the one advantage that you have as a founder is that you wrote the rules so you know why they exist and you know how to break them and when to break them. And so when somebody else takes over, they're like, well, these are the rules, but they never derive them from zero. And so if you know how the infrastructure is built, you know how to navigate it without messing up the business overall while still accomplishing the objective. So fundamentally, you make the system more adaptive because of your knowledge of it.

[Joshua]

Hey, sir, my name is Joshua. I'm actually a chiropractor as well, like Chris.

[Alex Hormozi]

I have a great product that I would love to tell you about. Self cracking. Yeah, yeah, yeah, that's funny.

[Joshua]

Yeah. So me and my wife, we run a family chiropractic center in the UK.

[Alex Hormozi]

Cool.

[Joshua]

And our current revenue is around 750. We'd like to get it 2.3. Perfect the model and then scale.

[Alex Hormozi]

Okay.

[Joshua]

This is what is currently my predicament. So we averaged 48 new clients per month last year, consistently from two main. Two main channels, referral and Facebook meta.

[Alex Hormozi]

Okay. What was the split?

[Joshua]

So it's 35% referrals, 65% ads.

[Alex Hormozi]

Got it.

[Charlie Johnson]

Yeah.

[Joshua]

And excuse me. So I'm a bit nervous.

[Alex Hormozi]

Thanks. You're 3565 referral versus meta. You did 48 customers per month. Yeah. The issue that you have, 750. Want to get to 2.3. Yeah.

[Joshua]

So my question, and I think what's stopping me is determining where I should be focusing because we get great results for clients like they get. But, you know, even if they have an amazing result, like a lot of those clients leave.

[Alex Hormozi]

Yeah.

[Joshua]

Which is fine. And then come back when they need us. It's terrible.

[Alex Hormozi]

Yeah.

[Joshua]

And I'd love to have more clients that stay with us longer term from like a membership perspective. And when I looked at our Churn retention rates. Our gross retention rate is 47%, and then our net retention rate is 74%. So once we've done expansions, upsells, and everything else, it brings it up. But we still lose a lot of. We leave a lot of money on the table.

[Alex Hormozi]

On the.

[Joshua]

Because we're losing.

[Alex Hormozi]

You lose half your customers.

[Joshua]

Correct.

[Alex Hormozi]

You keep a little bit more revenues. You're talking revenue retention versus.

[Joel McDonald]

Yeah.

[Joshua]

So I'm like, which one do I focus on? Do we expand the marketing and just keep pumping the machine? Because I literally feel like you. I've got to a stage in my business where I'm still in the clinic, I'm still serving patients. I love my clients.

[Alex Hormozi]

Yeah.

[Joshua]

But like, you know, even if they've had an amazing change in their life, like, it's like you with the weight loss. Like, I've got to the point now where I'm like, man, like, this doesn't excite me anymore. Like, I know I can help serve more people if I can just become more of the owner rather than the operator. I've stepped my shifts down from five days a week to two now.

[Alex Hormozi]

And if you made more money, you'd definitely be happier. Not necessarily. That was a joke. Okay, so you have a location. You're doing 750. What does it cost to open a location?

[Joshua]

We own the building.

[Alex Hormozi]

Well, outside of real estate, what's it cost to outfit the location?

[Joshua]

Oh, outfit it. So we. So we're pretty lean. Like, we outfit. Outfitted our current one. It was a hundred thousand.

[Alex Hormozi]

Okay, got it. What's profit?

[Joshua]

We kind of keep it. We've kept it low the last few years, but we. Yeah, it's like. It's like 13.

[Alex Hormozi]

Okay. 1050. Yeah. So you need to fix that.

[Joshua]

Yeah.

[Alex Hormozi]

Okay, so it sounds like it's a.

[Joshua]

Lot of, like, raw, you know, owner's earnings and stuff.

[Alex Hormozi]

Well, what's sd? So seller discretionary earnings. So what do you make plus the profit of the business?

[Joshua]

So me and my wife, we draw 100k each.

[Alex Hormozi]

No total. Yeah. And you have 13% on 75. So another 100. So 200k on 750. Yeah. Okay, got it. So whatever. That's 20. 30. 30%. Ish. Margins. Okay, so you want to get to 2.3. Why 2.3?

[Joshua]

Because this is what we worked out for our build, like our practice. We could if we were at capacity.

[Alex Hormozi]

Okay. So that LOC do 2.3 million. Okay. So the issue is we have to solve retaining customers. Now, if you keep 50% of customers, like if let's say you lose half your customers year one, but then after that they stay forever, that's fine. Next year you'll double. If that isn't the case then. And you lose half of those customers the next year and then half of those the next year kind of thing, I would see what we could do to improve that. That being said, you're in a business that traditionally is marketing heavy. It's kind of like weight loss, because people get fixed and then they're like deuces. So the strategy that I've seen that has worked really well in the Cairo space is basically going significantly higher. Ticket number one and number two, niching down in terms of the different problems you solve. So this is like neuropathy, diabetes stuff, those types of segments, and having more targeted advertising for those avatars and selling significantly higher price packages. And that's typically how those businesses will get to a few hundred thousand dollars a month just with one very small store. And so typically that model is a. You run ads for some sort of free workshop, free dinners, free whatever.

[Joshua]

That's pretty much how we built our business so far.

[Alex Hormozi]

Like, because we realize what's the ticket price that you're charging?

[Joshua]

It's different based on the.

[Alex Hormozi]

Well, you sell 50 customers a month and you're doing 60k. So the.

[Joshua]

The average is around, like, it depends because every plan is different for the client. So we don't just give like a. Here's your plan.

[Alex Hormozi]

No, I know, but if I just did simple Math, I'd say $60,000 a month, 50 new customers, average customer is 1200 bucks.

[Joshua]

Yeah.

[Alex Hormozi]

Okay, so it's not the same model because I'm talking $10,000.

[Joshua]

Right.

[Alex Hormozi]

Does that make sense? Yeah. More. Yeah. So I think you have to get niche down in terms of. So, like, if you're doing all those things, I think you probably should need to add a zero to your price tag.

[Joshua]

We're already the most premium in our light area.

[Alex Hormozi]

Like, well, then it won't change. You'll still be the most premium.

[Joshua]

Okay, and which one would you focus on then? Would you just focus on, like, just filling the front end, or would you try and fix the. Cause you talked about? Like, fix the chair and like, get it to lesson three. Like, or would you double down on both? Like, would that be the.

[Alex Hormozi]

Well, if you keep half your customers, you're pretty close to three.

[Joshua]

Say again?

[Alex Hormozi]

You're pretty close to three if you keep half your customers.

[Joshua]

Right. When we track it, it varies between 3 and 7 depending on the month.

[Alex Hormozi]

I Mean, are there things that you could do to improve it? Sure. I think you have more of a model issue. Okay. Like, you obviously can acquire customers and you're doing a decent enough job keeping them. If we need to improve how much money this thing makes, it's either a pricing thing. Basically it's an offer and pricing thing is that you need to charge more so that you can make more money. And then once you have the cash flow, then the expansion becomes pretty straightforward. That goes for basically everyone. A lot of times it's like we're doing 20% and you have what I would consider is a normal business. It makes money, we work hard, but there's no, like, you never feel like you really can, like, get ahead. It's usually because there's some significant hole in the business and you're decent at both sides. And I think that the issue is that you just need to be making way more money. Okay. Which is I think you need to add more. Do you sell physical products and consumables?

[Joshua]

Not really.

[Alex Hormozi]

Do you sell, like, braces and orthotics.

[Joshua]

In a care plan? It will be based on, like. Yeah, we do adjustments, massage. It might be like, traction, whatever.

[Alex Hormozi]

Yeah. So the key is there's two models that have worked really well. One is where you basically upsell them some sort of machine that they can take home and do other work, and there's a big markup on that. And the other is supplements, because you can sell a year's worth of supplements or six months worth of supplements upfront, make a really good bit there. And it doesn't increase your operational drag at all because you just make the sale, give them the product. Okay, that makes sense. Yeah. But that's what I would add in to justify the higher price so that you could make more money per customer, which will then make you more money overall, which then fixes the model, which then allows you to scale. Gotcha. That makes sense. Yeah. Cool. Thank you. Rock and roll. All right. Thank you. So he's kind of at the 5, getting to 10 employees. So he's at stage 4. And so if you look at his product, he said yes to anyone who would pay. And because he's getting feedback from so many different customers, he has creates too many different products and services. There's basically too many different things. And so what I wanted him to do was get really clear on a higher level avatar. So specialized product and price to serve niche down customer. So I talk about the neuropathy and diabetes and kind of like thyroid. These are all like kind of sub segments that allow a chiropractor to charge much higher rates. And so we had to reconfigure the offer and the avatar to charge more and then ultimately make significantly more profit for the business. Now, he had a decent, you know, marketing and sales machine, and I would say he had a decent delivery machine and as a result had decent margins. And so all we need to do is just change the offer, and we could probably double or triple the business from that one move alone, which then opens up cash flow to then hire the people he needs to then be able to expand. Because at his current profitability, 13% margins. After you have a manager, essentially, you know, it's not a. It's not a compelling model, and that's with him running it. So, you know, if you spend $100,000 and you make something that makes $90,000 with you running it in profit, not including the manager pay, which he was taking personally, it's not a super compelling model. And so we had, like, what you'd want is, like, you pay 100 and then it makes like 400 or 500, and you're like, this is a model. And that kind of cash flow allows you to scale. So that's what I wanted to get to. And I think honestly, if he just does that one thing, he could easily add 250, $500,000 to the business with maybe half that drop into the bottom line. Now you have a much more interesting business real quick. Guys, I have a special, special gift for you for being loyal listeners of the podcast. Laila and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got it. You've 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. It's all free and you can get it personalized to you. So it's about 30ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com roadmap R O A D map roadmap.