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

Join Alex Hormozi At The Live Scaling Workshop in Las Vegas: https://www.acquisition.com/o-vegas Scaling any business requires a clear input-output equation that defines core actions to drive revenue growth. In this episode, Alex Hormozi (whose service companies generate over $30M annually) advises five entrepreneurs on how to scale their stagnant service businesses. To achieve success in entrepreneurship, you have to make consistent trade-offs between ambition, family time, distractions, and hiring top talent to run the business. In this episode 00:00 Scaling a chiropractor stuck at $2.4M revenue 06:41 Pricing strategies for SMB marketing to minimize churn 11:52 Handling AI threats to a website as a service (WaaS) business 17:14 Overcoming supply constraints to scale a CFO advisory company 25:39 Trade-offs to scale a roofing business from $6M to $100M More Value: Download your free personalized $100M scaling roadmap in under 30 seconds: https://www.acquisition.com/roadmap?el=yt-alex-486r&htrafficsource=youtube Join The Live Scaling Workshop In Las Vegas: https://www.acquisition.com/o-vegas Discover The Easiest Business I Can Help You Start (Free Trial): https://www.skool.com/hormozi Free Books and Video Courses: https://www.acquisition.com/training Get the $100M Book Bundle: https://shop.acquisition.com/pages/100m-book-bundle Follow Alex Hormozi’s Socials: ⁠⁠LinkedIn ⁠⁠ | ⁠⁠Instagram⁠⁠ | ⁠⁠Facebook⁠⁠ | ⁠⁠YouTube ⁠⁠ | ⁠⁠Twitter⁠⁠ | ⁠⁠Acquisition ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Hormozi?

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

• 0:21Speaker 01

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

• 0:30Alex Hormozi?

  Stuck or growing over five years?

• 0:32Speaker 01

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

• 0:38Alex Hormozi?

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

• 0:42Speaker 01

  Yes, sir.

• 0:43Alex Hormozi?

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

• 0:53Speaker 01

  100%.

• 0:53Alex Hormozi?

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

• 1:00Speaker 01

  No, I want to, I want to grow a main big location and, you know, create a space for family to eventually, I mean, growing there. If they're, if they don't want to do that, then that would probably change my goal to be in an exit standpoint.

• 1:15Alex Hormozi?

  What's your square footage?

• 1:17Speaker 01

  Right now, we have 7,700.

• 1:19Alex Hormozi?

  Okay, so decently large.

• 1:20Speaker 01

  Yeah, we occupy about 4,700 of it.

• 1:24Alex Hormozi?

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

• 1:28Speaker 01

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

• 1:32Alex Hormozi?

  Oh, great.

• 1:32Speaker 01

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

• 1:37Alex Hormozi?

  So how do you get customers now?

• 1:40Speaker 01

  We, our highest is referral. Then we get about, the next has to be paid ads through Facebook.

• 1:47Alex Hormozi?

  What percentage are ads?

• 1:48Speaker 01

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

• 1:56Alex Hormozi?

  Okay, so you separate Met Ads from Google Ads when you talk about ads?

• 1:59Speaker 01

  Yep.

• 2:00Alex Hormozi?

  Okay, got it.

• 2:01Speaker 01

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

• 2:05Alex Hormozi?

  Heard. Got it. Which I would probably see as word of mouth, like I Googled you or Googled somebody here. It's probably SEO, something like that. But, okay, so two and a half million, like what stops you from just spending more money on Met Ads?

• 2:19Speaker 01

  Trust that we're doing it right. I mean, I just.

• 2:21Alex Hormozi?

  Are you making more money than you put in?

• 2:22Speaker 01

  Yeah.

• 2:24Alex Hormozi?

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

• 3:08Alex Hormozi?

  And so, right now, do you make content?

• 3:11Speaker 01

  Yes, sir.

• 3:12Alex Hormozi?

  Okay, what percentage comes from that?

• 3:14Speaker 01

  We just started it about two months ago.

• 3:18Alex Hormozi?

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

• 3:22Speaker 01

  We do four videos that gets created into short and long.

• 3:25Alex Hormozi?

  Per week?

• 3:27Speaker 01

  Four videos for the month.

• 3:28Alex Hormozi?

  Heard, okay, got it.

• 3:31Speaker 01

  Chopped up.

• 3:32Alex Hormozi?

  Okay, got it. Okay, so you've got four longs, and you chop those into little shorts and things like that. Okay, got it. All right. So, short-term, long-term. Short-term, we've got to get the data tracking in place. Second step is going to be putting the ads funnel in place and kind of like what the sales motion is behind that. For local, the good news is that it's easy to do, because there's already so much trust locally that you don't need to have nearly the complexity of kind of like the funnels and indoctrination and education prior to someone making a purchasing decision. You can pretty much just like, one call close, two, two conversation close, anybody. Even at very high-ticket numbers, which is one of the benefits of local. The downside of local is that you've got a market that's this big. That's the downside, right? So if you don't want to expand markets, then

• 4:15Alex Hormozi?

  you need to dominate the market you're in. And so it's going to be a multi-pronged approach. And it's kind of like I was saying earlier, like, we're going to start with ads, because that'll just get you more in. Because I'm guessing right now, if you have a good reputation and good brand, then the ads will actually help you more than they would help somebody who doesn't have that footprint. But then we're going to start probably layering in the, the content as the Second, kind of the well that needs to continue to get dug. Again, this is going to be long term and so you're going to want to be a thought leader. And then what happens is that if you can, if you can succeed at building the brand long term, and it sounds like you're more long-term guy, so I'll speak in these terms. What happens is your radius actually continues to expand. And so if you take it to the natural extreme, you can go to the Amen Clinic in New York because they have a national reputation, but people fly there. And so that's how, that's what it looks like as you continue to expand the brand.

• 5:00Alex Hormozi?

  Because people will just be more willing to travel to you and pay premium prices. Which I'm sure if we looked under the hood, the prices probably get tweaked too. But like, those are some things. And if you're in the swamp, cash flow is actually the biggest thing that you need. And so again, the pricing and packaging is probably like, again, if I was to do order of operations, pricing and packaging will probably be number one. So we could free up cash flow, the freed up cash flow, we'd then funnel into the ads so that we could get data attribution, then we'd put the ads in place, start flowing, putting flow through there. And then the baseline that happens after that is we're just going to increase the cadence on the, on the content that demonstrates thought leadership. That's the path.

• 5:35Speaker 01

  That makes sense. Thank you. How do you, we're having trouble also hiring good, high-quality doctors in Wyoming.

• 5:45Alex Hormozi?

  It's actually ladders up to the first problem, cash flow.

• 5:47Speaker 01

  Okay.

• 5:48Alex Hormozi?

  We need to fix the pricing so that we can generate more cash flow, so that we can pay doctors, so that we can actually get the business to not rely on you as much.

• 5:56Speaker 01

  Boom.

• 5:57Alex Hormozi?

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

• 6:41Speaker 02

  I sell basically complete digital marketing services to service-based businesses in Australia.

• 6:46Alex Hormozi?

  SMBs?

• 6:47Speaker 02

  Like cleaning companies, stuff like that, cleaning, yard work.

• 6:50Alex Hormozi?

  Average revenue for them?

• 6:51Speaker 02

  Average revenue for a company is anywhere between half a million to 2.5.

• 6:55Alex Hormozi?

  Tough.

• 6:56Speaker 02

  The ones I sell. I pivoted, the company's gone from zero to 500K in the last four months. I pivoted from fitness, it just happened, so it worked out well. So they've all been wound down, getting other people to operate. I'd like to ideally get to eight figures. In terms of what's stopping me, I spent the whole 28 hours here going through every framework I could to figure out what was wrong. I just want to figure out.

• 7:20Alex Hormozi?

  Can I tell you what it is?

• 7:22Speaker 02

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

• 7:30Alex Hormozi?

  Three, 10 will suck.

• 7:32Speaker 02

  Yep.

• 7:32Alex Hormozi?

  Yeah, that's what's gonna happen.

• 7:33Speaker 02

  Yep.

• 7:34Alex Hormozi?

  So you're four, four months in, so you're, it's, it's brand new.

• 7:37Speaker 02

  It's very new.

• 7:38Alex Hormozi?

  And you haven't seen all the shit that's about to happen. So what's gonna happen is because you're, because you're servicing SMBs.

• 7:44Speaker 02

  Yep.

• 7:45Alex Hormozi?

  Their volatility will translate over to your volatility. And independent of how well you do, they will start churning. And you have probably mastered the sales function, which is why you're growing quickly.

• 7:54Speaker 02

  Yep.

• 7:54Alex Hormozi?

  But you also will have, like, CAC will never be cheaper than it is today.

• 7:59Speaker 02

  Yeah.

• 7:59Alex Hormozi?

  So CAC will always go up and churn is gonna start eating into the business because SMB suck. And so what's going to happen is that your margins will continue to compress and compress and compress. And you'll have to spend more and more. CAC will go up. You'll have to hire more people because of churn. And that's what you're gonna think you're gonna have to do in order to fix the churn, but it's not. But whatever, let's go to it. And so you're gonna keep going, keep going, keep going. And so revenue keep going up, but the margin gets small and small until eventually you're just like, I feel like I'm running a nonprofit. And I have to just keep selling stuff and I don't even feel confident about it because I got all these people complaining, but it's really because they're the business owners who suck. And then you think, maybe I should take more responsibility for the business owners. I'm gonna start maybe doing some sort of sales motion, some sort of, you know, nurture motion because they suck at sales. They don't know how to run their business and that's why they can't market with me. But I'm gonna do this because I want to take, you know, responsibility of this and all of that is just wrong.

• 8:42Speaker 02

  Yeah.

• 8:43Alex Hormozi?

  And so if you want to get to 3 million bucks a year, you can just do what you're currently doing.

• 8:47Speaker 02

  Yeah.

• 8:47Alex Hormozi?

  You'll just sell more and LTV will probably be, what's your price point?

• 8:51Speaker 02

  450 dollars a week.

• 8:53Alex Hormozi?

  A week. Okay, so you're 2K a month-ish.

• 8:55Speaker 02

  Yeah.

• 8:55Alex Hormozi?

  So you're right in the sweet spot of churn. Like that, like if you, like. 1500 to 3K a month for an SMB, average stick is going to be four to six months. And so you can back of napkin, how many are you selling a month right now?

• 9:09Speaker 02

  I'm selling about 10 a month at the moment.

• 9:11Alex Hormozi?

  Cool.

• 9:13Alex Hormozi?

  So if you're selling 10 per month, right? And you said 2K was your price point, right? So let's say that we have five turns on that on average, 10K, right? And 10 per month. All right. So you're going to get to 100K ish per month and then you will stall.

• 9:34Alex Hormozi?

  And so at that point, you'll either have to increase units sold or increase LTV. And then you'll keep thinking, man, if I could just get this to go up, it'd be amazing, but you won't be able to.

• 9:44Alex Hormozi?

  And so the only way to really make SMB work is to go the opposite end is to go super, super cheap.

• 9:49Speaker 02

  Yeah.

• 9:49Alex Hormozi?

  And then build something that costs you nothing.

• 9:51Speaker 02

  So nothing to deliver.

• 9:53Alex Hormozi?

  Yeah. So it's like $400 a month or less for an SMB. If it's a nuisance style. So I'll give you some examples. If you were like, I can get you ranked on first three of maps in your local area and I charge 400, $500 a month. They'll do it because they can see it.

• 10:11Speaker 02

  Yeah.

• 10:12Alex Hormozi?

  And they'll pay for that. Review management and SEO stuff, they will pay 300 or 400 a month and they will stick on that. You'll get like 30 to 40 month stick rates on that, but you'll close way more sales velocity. So LTV is actually similar to this, but CAC stays super low. As a result. But I know you just got out of fitness, which you probably got out because it was terrible and hard. You might need to just go and get to there and then you'll feel good about things. Like you might need to walk this path rather than believe me, but that's probably, that's what's going to happen. So what do you want to have happen?

• 10:44Speaker 02

  Not walk, to not have to walk the path in the first place.

• 10:46Alex Hormozi?

  Okay.

• 10:49Speaker 02

  Get less amount.

• 10:49Alex Hormozi?

  So this is like, this is me just being real, like marketing, there's so, I mean, obviously a lot of marketers follow my stuff. And so I get a disproportionate amount of marketing agencies and I've seen every model under the sun. SMBs suck as customers. And so you have, you have to do this, one or the other. You have to go out market, you have to go down market. And you guys go really cheap and it's something that's super automated. Or you do truly do more of these high tech services, but you do with a business that actually knows their metrics, actually has a sales process, already has a proven model. Rather than all of them just like wanting to change their stuff all the time, not knowing what they're doing to begin with. Cause like they're expecting you to figure out something that they haven't figured out themselves. So like your price either goes up. And you serve a higher level avatar or it goes down and you serve the one you are now, but you make sure that your delivery is almost nothing.

• 11:35Speaker 02

  Yeah.

• 11:35Alex Hormozi?

  And then it becomes a CAC issue because you have to offset CAC. And so then it becomes big head, long tail, one time setup into very small recurring monthly high gross margin.

• 11:42Speaker 02

  Understood.

• 11:43Alex Hormozi?

  Those are the two models that work for what you want to do.

• 11:45Speaker 02

  So drop low, go high. And in the middle is just a dead zone.

• 11:48Alex Hormozi?

  Where everyone dies.

• 11:50Speaker 02

  Cool. Makes sense. Thank you.

• 11:52Speaker 03

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

• 12:07Alex Hormozi?

  Okay.

• 12:07Speaker 03

  It's a subscription based company. And, uh, yeah, we're at 20 million, uh, bucks in revenue and.

• 12:13Alex Hormozi?

  Notice, example, right price. Really small, you price it super low and it works. All right, go ahead.

• 12:19Speaker 03

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

• 12:24Alex Hormozi?

  Okay.

• 12:24Speaker 03

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

• 12:47Alex Hormozi?

  Love it.

• 12:47Speaker 03

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

• 12:53Alex Hormozi?

  You say the industry is decaying.

• 12:54Speaker 03

  Yeah.

• 12:55Alex Hormozi?

  What do you mean by that churn is going up?

• 12:57Speaker 03

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

• 13:12Alex Hormozi?

  They just found out about ChatGPT, so.

• 13:16Speaker 03

  Yeah, exactly. So we have time, but.

• 13:18Alex Hormozi?

  Some of you guys still fax, so I think you got time.

• 13:21Speaker 03

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

• 13:38Alex Hormozi?

  So this is, this is really, really good. I love that you asked this. So I wanted this long rant the other day about this particular topic, which is solving problems that don't exist.

• 13:47Speaker 03

  Okay.

• 13:48Alex Hormozi?

  So unless, cause like you have a narrative, you have a story around AI is decaying the business. But all I hear is that you have customers and your job just got way easier.

• 14:00Speaker 03

  Explain.

• 14:02Alex Hormozi?

  So, you know, I mean, like, if you were like, our churn is escalating by 10% per month, I'd be like, we have a problem. We need to change something. But if it's not really showing up in any meaningful way in terms of the business itself. I think there's plenty of people who will just be super laggards on this and are not going to be replit vibe coding. They never bought your shit to begin with.

• 14:22Speaker 03

  Yeah.

• 14:23Alex Hormozi?

  Like the person who is super into AI right now wasn't hiring WASS anyways. They built their own website before AI made it quote easy. Cause I mean, to be fair, website building software, not that complicated.

• 14:35Speaker 03

  No.

• 14:36Alex Hormozi?

  So you said there's two paths. So one is, you know, change the product around. My opinion, I wouldn't, that's probably wouldn't be where I'm focused unless I had some business metric that was way off that, that I'm not seeing. I would be doubling down on the acquisition side. What's your, what's your number of months average stick?

• 14:55Speaker 03

  So it's 29 months.

• 14:56Alex Hormozi?

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

• 15:19Speaker 03

  Paid ads, yeah.

• 15:20Alex Hormozi?

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

• 15:24Speaker 03

  Okay. On that subject, if you don't mind, in terms of prepaying for the quarter, you know, again, our customers are pretty price sensitive. There's people that are cheaper than us, obviously, if you've seen before. My fear is the amount of churn that will generate some, you know, we, we bill 90% of our customers on credit cards. And we hold on to 10% that pays through like pad and through checks and that kind of shit. It's all, it's awful, but you know, we're going to experience churn if we're like, hey, you need to, you know, prepay us up, upfront. You'd still.

• 15:53Alex Hormozi?

  We would churn just close fewer, right?

• 15:56Speaker 03

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

• 16:00Alex Hormozi?

  Why would the people who are with you leave you for how you treat your new customers?

• 16:04Speaker 03

  Sorry? People that are with us would leave.

• 16:06Alex Hormozi?

  I don't think you change your billing process for existing customers.

• 16:09Speaker 03

  Gotcha.

• 16:10Alex Hormozi?

  I'm saying if you're doubling down on inbound, what will go up is CAC because you'll have media spend in addition to the sales commission. And so to offset that from a cash flow, how cash flow positive are you right now?

• 16:19Speaker 03

  So we did 3.6 in EBITDA last year, generated about.

• 16:23Alex Hormozi?

  Interesting. That's lowish.

• 16:26Speaker 03

  It's lowish.

• 16:27Alex Hormozi?

  Yeah, I'm curious.

• 16:27Speaker 03

  We're heavy on people.

• 16:30Alex Hormozi?

  Dude, AI.

• 16:31Speaker 03

  I know. I know.

• 16:34Alex Hormozi?

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

• 16:38Speaker 03

  Correct.

• 16:42Alex Hormozi?

  So like, okay, so this is what I would actually do. I would probably spend the next six months reorganizing the workflow, probably reduce headcount by 50%, using AI workflows in order to actually do the same thing, increase the margin from 3.6 to like seven or more with the added cash flow. You wouldn't have to change the price on the front end. You'd be willing to go negative for a quarter in the acquisition, knowing you're going to get 29 on the back.

• 17:09Alex Hormozi?

  That's how I'd actually fix it.

• 17:10Speaker 03

  Okay. Makes sense.

• 17:12Alex Hormozi?

  Chill, right?

• 17:12Speaker 03

  Cool.

• 17:14Alex Hormozi?

  Easy.

• 17:14Speaker 04

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

• 17:19Alex Hormozi?

  Amazing.

• 17:20Speaker 04

  I would love to be at like 20 million.

• 17:23Alex Hormozi?

  Okay.

• 17:24Speaker 04

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

• 17:40Alex Hormozi?

  Well, you're doing 3 million a year.

• 17:41Speaker 04

  All organic.

• 17:42Alex Hormozi?

  Yeah, I mean, you're obviously not marketing shitty. So you've got all this stuff, right? You got these books. You got these courses. You make content?

• 17:52Speaker 04

  Yes.

• 17:52Alex Hormozi?

  Okay, so you are marketing.

• 17:54Speaker 04

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

• 17:58Alex Hormozi?

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

• 18:12Speaker 04

  Yep.

• 18:13Alex Hormozi?

  And so people come in and buy your tax accounting shit, right? And you're trying to get to 20?

• 18:18Speaker 04

  Yeah.

• 18:19Alex Hormozi?

  Do people churn out?

• 18:21Speaker 04

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

• 18:24Alex Hormozi?

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

• 18:35Speaker 04

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

• 18:43Alex Hormozi?

  Okay, but you're local?

• 18:45Speaker 04

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

• 18:52Alex Hormozi?

  Okay, hurt. Okay, so they're coming from the content. They call up, you guys sell them.

• 18:55Speaker 04

  Referrals, yeah.

• 18:56Alex Hormozi?

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

• 18:59Speaker 04

  What am I what?

• 19:00Alex Hormozi?

  Growing at annually?

• 19:02Speaker 04

  Last year I was 2.2.

• 19:03Alex Hormozi?

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

• 19:14Speaker 04

  Yeah.

• 19:15Alex Hormozi?

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

• 19:23Speaker 04

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

• 19:28Alex Hormozi?

  What's the, um, this will be fun for you.

• 19:30Speaker 04

  Okay.

• 19:31Alex Hormozi?

  So what's the, I'll give you like some, some business accounting. What's sales velocity right now?

• 19:36Speaker 04

  I don't know what.

• 19:37Alex Hormozi?

  How many units a month do you sell?

• 19:39Speaker 04

  On the monthly reoccurring?

• 19:40Alex Hormozi?

  Yeah.

• 19:41Speaker 04

  There's probably about 190 clients.

• 19:43Alex Hormozi?

  Now, how many do you sell every month?

• 19:44Speaker 04

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

• 19:52Alex Hormozi?

  Well, that will not grow the business. That's for sure.

• 19:56Alex Hormozi?

  There's my, yeah, I'll be here all day, guys.

• 20:01Alex Hormozi?

  Okay, so, so you have a goose egg there. Okay. But, okay, you have this other stuff. Why do we care?

• 20:10Speaker 04

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

• 20:16Alex Hormozi?

  Okay.

• 20:18Alex Hormozi?

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

• 20:21Speaker 04

  It's fucking hard, that's why. It's no like to fulfill on it and

• 20:27Alex Hormozi?

  You could always just start a business where you sell everybody else's stuff.

• 20:30Speaker 04

  Well, like

• 20:31Alex Hormozi?

  You didn't even get my joke, you missed it, okay.

• 20:32Speaker 04

  And what I'm trying to get to now, like AI, what you were saying is gonna completely obliterate our industry, which I'm really excited about.

• 20:38Alex Hormozi?

  Yes.

• 20:39Speaker 04

  Because I wanna dive into it. I wanna leverage AI tools and even overseas partners doing low-level stuff.

• 20:45Alex Hormozi?

  Okay.

• 20:46Speaker 04

  Because people in our industry are really slow and outdated.

• 20:50Alex Hormozi?

  Okay.

• 20:51Speaker 04

  Yeah.

• 20:52Alex Hormozi?

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

• 20:59Speaker 04

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

• 21:03Alex Hormozi?

  You have a valuable business right now.

• 21:05Speaker 04

  No, I do, yeah.

• 21:07Alex Hormozi?

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

• 21:09Speaker 04

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

• 21:15Alex Hormozi?

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

• 21:32Speaker 04

  That's great advice.

• 21:34Alex Hormozi?

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

• 21:50Speaker 04

  No, they're not.

• 21:51Alex Hormozi?

  Yeah.

• 21:51Speaker 04

  I mean, some, but they're pretty sticky.

• 21:53Alex Hormozi?

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

• 22:18Speaker 04

  About 20, 25%.

• 22:20Alex Hormozi?

  Okay. So if we said, okay, let's see if we can find offshore talent that can give your existing team 2 or 3x leverage. So you don't have to increase internal headcount, you can increase external headcount. And then when AI comes in, you can basically wipe those guys off the map and then fine, right?

• 22:36Speaker 04

  Yeah.

• 22:37Alex Hormozi?

  So it's like, yeah, they don't have jobs or families.

• 22:42Alex Hormozi?

  They're overseas, they're not real. I'm kidding. So I know half you guys are overseas, that was a joke. But yeah, so I think that we need to create operating leverage. We have to look at basically how the services are being delivered so that we can figure out how to get each person two or three more, you know, X in terms of their ability to deal with customers. Probably there's a little bit of tech that's missing because this is for everybody. Everybody, every entrepreneur I talk to is like, I want to be AI first, right? And then you're like using Jeff GP for emails. Like, that's not how you're AI first. The first thing that you have to do in order to have an AI first company is you have to be a data first company. Because AI works with data. If you don't have data, then there's no fucking AI. So you have to have complete data first from your approach and have an architecture in place so that you know all the elements of the business from data.

• 23:27Alex Hormozi?

  And then we can put the AI layer on top to put reinforcement training in place in order to actually train it to do stuff. So if that's where you want to go, which does have tremendous operating leverage, and like just for everybody, this is the once in a generation move right now. So 25 years ago, cloud computing came out and then, you know, software went from CDs to cloud and that. And then all of the software companies and all that boom was the last 25 years and all the billionaires were made. The next boom is this, right? And so we're early and so the hard of this is like, well, the pieces don't all fit together perfectly yet. And it's like, well, that's the figure out that we make lots of money from, right? So I don't think the solution is you selling a course because you just happen to have recorded it. I think that we need to fix the supply constraint first and then you'll use all those things

• 24:09Alex Hormozi?

  as marketing assets to increase demand when the time comes. So save those in your back pocket, there's nothing wrong with them. But I want to look at the model, increase operating leverage, that'll probably also increase margin. Start making this number more than zero.

• 24:24Speaker 04

  Okay.

• 24:24Alex Hormozi?

  Which I promise, you can take this to the bank, if you make that not zero, you will grow faster. You'll make more money if you sell people. And then I think from there, so it's like, increase operating leverage through offshoring, add in data layer. Once the data layer is there, then we can add in the AI component that further increases operating leverage. Once you put the remote team in, you'll then be able to sell again.

• 24:45Speaker 04

  Turn it on.

• 24:45Alex Hormozi?

  If you get to the point where you're like, I've now reached my new two or three X capacity without even marketing, then great. If you do need to market more, then use the assets that are in your back pockets to go do more delete, Jen.

• 24:58Alex Hormozi?

  It was like four or five steps, but that's how I think through it.

• 25:00Speaker 04

  Thank you.

• 25:01Alex Hormozi?

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

• 25:39Speaker 05

  I sell roofing and exterior remodeling.

• 25:41Alex Hormozi?

  Sweet.

• 25:42Speaker 05

  We do close to 6 million this year.

• 25:44Alex Hormozi?

  Amazing.

• 25:46Speaker 05

  I would like to be at 100 million.

• 25:48Alex Hormozi?

  Okay.

• 25:48Speaker 05

  So what's stopping me, and I'll be a little bit vulnerable, I would say it's comfort, distractions, and fear.

• 25:57Alex Hormozi?

  And food?

• 25:57Speaker 05

  Fear.

• 25:58Alex Hormozi?

  Oh, sorry. I was like, all right, good to know.

• 26:04Alex Hormozi?

  Sometimes I feel that way, too.

• 26:06Speaker 05

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

• 26:15Alex Hormozi?

  Okay.

• 26:15Speaker 05

  Fear, I would say the fear of losing family time, the work-life balance.

• 26:21Alex Hormozi?

  Sure.

• 26:22Speaker 05

  And the distractions are my other, I've got another business, drunk removal business. I've got real estate. I've got just all kinds of little.

• 26:32Alex Hormozi?

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

• 26:36Speaker 05

  So, so I know I need to go all in again.

• 26:39Alex Hormozi?

  Okay.

• 26:39Speaker 05

  And I did that the first five years that I.

• 26:41Alex Hormozi?

  And that worked out.

• 26:42Speaker 05

  Business. And it worked out great. Went through COVID. I got, you know, kept the business going really well. And I worked myself out of a job, got comfortable.

• 26:53Alex Hormozi?

  Okay.

• 26:54Speaker 05

  So.

• 26:57Speaker 05

  I don't know what I'm looking for you to tell me to do.

• 26:59Alex Hormozi?

  Well, I'll say, I'll say this differently. I think regrets come when we imagine the upside that we don't have without taking into account the cost that we didn't suffer.

• 27:11Alex Hormozi?

  And so.

• 27:14Alex Hormozi?

  Sure. I think, I think we regret when we imagine the upside that we didn't get without also considering the downside that we didn't suffer to get it. And so I think that's where a lot of regret comes from because it's not, it's not real. So it's like, maybe there's some girl that got away or some business opportunity that got away and we just imagine this amazing thing, but not the trade off that we would have to do in order to get it. We just imagine the upside without downside. And so I would say a couple of things. So one is, I think that there are, there are trade offs that we always have to make. And I don't, I don't think they're right or wrong. I think they're just their preference. There's no right answer to how much work, life balance you want to have. It's right for you. And so.

• 27:58Alex Hormozi?

  Said differently, if I like cookies and I'm good with that, and I also want a six pack, I just prefer cookies to a six pack. It's just that's the trade. And I think the dissatisfaction comes from wanting both.

• 28:10Speaker 05

  Right.

• 28:11Alex Hormozi?

  Right. And so either want less or trade more.

• 28:19Speaker 05

  Okay.

• 28:20Alex Hormozi?

  And I think that's really what it comes down to in terms of like, is there a path where I can work no more than I currently am to go from six to a hundred? There probably is. It depends on how much you're willing to pay other people. And so you might have to take a short term hit in terms of profitability to bring in the level of talent that you want to expand the business on your behalf to where you want it to go. And so as long as you were the type of person, character wise, that they would want to follow and believe in your vision and you can make your vision big enough that they think that their aspirations can fit within it, you can get that type of person.

• 28:48Alex Hormozi?

  But like it's it's 100% like you're you're graduating right now into the who game. Yeah. But there's levels of who's, you know, like I remember. The first time I hired a $50,000 per year employee and I was like, this is the shit. This is what I'm talking about. You know what I mean? Like I went from minimum wage, you know, labor to 50,000 like this, they're they can read, they can write like let's. Let's go, you know what I mean? And then I hired my first six figure employee and I was like, oh, what was I talking about? Like this is what's going on. And then I have my first 250, first 500, first million, first multimillion dollar per year employee. And it's just levels. And so Sharon, who's our president, said this to me years ago, but I always remember he said the best, the best talent's always in the future. So whatever we have today, the best people are always ahead of you, not behind you.

• 29:30Alex Hormozi?

  And so I think for you, if we, if you really do want to accomplish it without making the trade, you will make a trade because if you change nothing, nothing will change, right? So we have to change some, some component of your life. And so the question is, which thing do you value the least? Do you value having more profit or more time with your family in the short term? In the long term, you can make it up. You won't make up family time in the long term. You can't make the profit up in the long term. Right. So if you're willing to give up short term profit, you can bring in high level talent and then they can lead the growth. In terms of the, the fear stuff, I mean, I would just say like, just hold, hold the line. If you're like, I'm afraid of losing time with the family, it's like, just don't. Like I, you know, and then in terms of the real estate thing, I see real estate because I know a bunch of entrepreneurs. I have a ton of real estate.

• 30:15Alex Hormozi?

  I don't like, as long as you're not like actively running it. Like that's why I'm a fan of like REITs and funds. Because you have, if you have, you know, good partners in that stuff, they can just run it. You can make better than the market and then. But it's not, it doesn't change anything about what I do. Like me putting in the S and P or me buying another big building changes nothing about my life. And so it's not a distraction unless you're like, you know, if we could add a gazebo and what if we added a different roof because I'm a roofer and what if I combined what I'm really, and you're like, dude, stop. Just like, let the real estate be the real estate, let the business be the business and just keep them apart. As long as you're good there, because I think he's a distraction. Actually, let me double check in that real quick, which is when you said your, the distraction thing that you're afraid of. Why are you afraid of that?

• 30:57Speaker 05

  I'm not afraid of it.

• 30:57Alex Hormozi?

  Okay.

• 30:58Speaker 05

  I'm just, I've got ADHD and I, I, I collect gold and silver. I buy houses, I buy buildings. I mean, it's just.

• 31:06Alex Hormozi?

  Yeah.

• 31:06Speaker 05

  A little bit of the red dress.

• 31:08Alex Hormozi?

  Well, as long as it doesn't change anything about what you do, I don't care. But if it's like, no, I check this stuff all the time and it like eats up my days, then yeah, I would say that's a problem. And it's only a problem if you decide it's a problem. Like you might just like that stuff. It's just like, I sacrificed my goals because I enjoy this ADD.

• 31:25Alex Hormozi?

  You know what I mean? Like the cost of the big thing is the new stuff that you have to give up to keep it going.

• 31:30Speaker 05

  Yeah.

• 31:31Alex Hormozi?

  Thank you. I feel like there's some amens. This is great. This is like a good meal, right? Yeah. I appreciate it.

• 31:39Alex Hormozi?

  But yeah, that's like the cost of the big thing is all the new stuff you have to give up that you don't get to pursue. All the exciting things that you will no longer participate in because you want to do one thing big.

• 31:48Speaker 05

  Okay.

• 31:48Alex Hormozi?

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

• 32:32Alex Hormozi?

  big, it's going to take a long time, then it means we can't do that many things.

• 32:38Alex Hormozi?

  So hopefully that helps.

• 32:39Speaker 05

  I appreciate that answer because I thought you were going to say sell everything and.

• 32:43Alex Hormozi?

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

• 33:07Speaker 05

  Thank you.

• 33:08Alex Hormozi?

  Appreciate you.