5 Businesses. 5 Fixes. One Playbook | Ep 894

In this Q&A episode, Alex (@AlexHormozi) takes real-time questions from entrepreneurs and diagnoses what’s holding their businesses back. From underpriced offers to broken sales processes, he delivers unfiltered, tactical advice for scaling. You’ll hear how he helps founders identify the single constraint that’s stopping them, how to fix it fast, and why focusing on fewer things usually leads to bigger wins. Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth. Wanna scale your business? Click here. Follow Alex Hormozi’s Socials: LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode: Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap

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

• 0:02Alex Hormozi?

  Like as a physical product e-commerce owner, like your core, most important skill is the brand. Like you can't outsource that. It's the most important thing. Like, so you need to learn the skill of branding, which is fundamentally making associations with things that people in your audience find positive.

• 0:28Alex Hormozi?

  How's this morning? Good? Super tactical? Yes, okay, good. I always, I always want to make sure we do that. You might be wondering why we kind of organize things this way. Well, first off, it's because we've just iterated it a bunch of times and it worked out. But basically, we wanted to make sure one key thing happens, which is that you allocate resources towards the thing that gives you the highest return. And so fundamentally, the difference between entrepreneurs who move faster versus the ones who move slower is that they actually physically move faster or slower, so that they choose the right things to do and more importantly, the things not to do. Because it's, we have such limited resources and the smaller your business is, the fewer resources you have. And so you might see Elon and say, hey, how can Elon have nine billion dollar companies? Or whatever it is now. Well, he has like 100 children, so who knows, right? The guy does a lot. But to the same degree,

• 1:12Alex Hormozi?

  you might only have the resources to do like half of one thing. And we get in trouble when we try and do too much because you just can't do that many things well. And what Elon's kind of superstar, superpower is, is more so than anything, obviously, he's a great strategist. He's great at promotion. But he's so good at attracting the top talent because people want to work for, you know, one of the smartest human beings ever from a purely technical perspective. And so like that is how he gets, gets his operating leverage. That being said, this is what I wouldn't want to have happen, which is that you go home and then you say, okay, I'm going to start at the top of this list and start working my way down. Because it means that you didn't hear anything from this entire two days. I'd rather you open up a new page and then have the three things that you think will drive the absolute highest return possible and then forget everything else. And if it really up to me,

• 1:57Alex Hormozi?

  I'd rather you pick one of those three things and then cross out the other two. And so a really wonderful figgy process that I try and exercise a lot because where the role that I have sits within most businesses is that I will get brought in to look at everything and then think, okay, what's our goal? Let's say that we want to triple the business or we believe that we have a triple in us this year. We say, okay, what are the fewest amount of things that would have to happen in order for us to do that? There's of course, a lot of things that could happen. Because as long as you're not supply constrained, then it's like, well, we could increase our sales conversions. We could increase our traffic we could have. Another acquisition channel, we could add more, you know, whatevers, right? In order to increase throughput. But at the end of the day, if there's a way that we can more efficiently do that,

• 2:41Alex Hormozi?

  meaning if there's just one thing that we could do, like if we only did that and that got us our triple, then why are we talking about everything else? Like, why are we talking about it? Why wouldn't we just allocate all of our resources to making sure that one thing actually happened? And I think that is fundamentally why we've been able to move disproportionately quickly with the businesses that we have. And so with that being said, I've had the distinct pleasure of answering a handful of business-related questions. And so what I found interesting is that the places where business owners get stuck is typically not tactical. Sometimes it's tactical, but it's typically strategic, meaning that they get stuck in a decision. And what's really harrowing about that is that decisions can take as long or as little time as you take to make them, which means that some people stay stuck for years and never get past them.

• 3:25Alex Hormozi?

  And so a lot of times it's like you grow, of course, there's a constraint, but usually there's a decision behind that constraint that's actually the thing that's blocking you. And so usually it's when you have to choose between two terrible decisions and they both suck. One just sucks now, the other sucks later. And so the first one that I see is avatar selection, meaning I have, you know, three different avatars that I sell to, I'm doing $3 million a year, and I really do prefer this avatar, but the other two together are 50% of my business. If I stop selling to them, I will go out of business. Right, that's a, that's a bad thing. But if I don't stop selling to them, I will want to kill my business. Also not a good thing, right? And so what do you do, right? So these are kind of the rock and hard place scenarios.

• 4:10Alex Hormozi?

  The next is data. This is the only one that is not necessarily rock and hard place, but it is worth mentioning because it's happened so many times. I get a lot of math questions, which is like, hey, I've got these two product lines. I'm not sure which one to go all in on, and those are questions that get answered with math. But then I say, hey, so what's LTV on this and what's LTV on that? Or what's churn on this and what's churn on that? And then the person might say, I don't know. Well, it's like, well, if that's the one thing that's holding the business back, then you should stop what you're doing and only find out the answer to that question. And sometimes it takes a month, sometimes it takes two months. Okay, fine. But distracting yourself with kind of the urgent but not important things that come out throughout the day still puts your long-term goals on hold. The next is focus, which is typically I have two businesses, which one, you know, and they're both great and I can't stop

• 4:52Alex Hormozi?

  one of them because I would make less money if I had one business instead of two tomorrow. But I guarantee that you'll make less money in five years because you have two businesses instead of one. The next one is over expansion. So I have one location that's working well. And so then I opened up my second location. My first location dropped a little bit. My second location didn't go as high as my first one. And so now I have twice the liability and about the same amount of profit. And I have twice the work and life sucks. And so I think the answer is I should open a third location. Right. Rock and hard place. What do I do? Do I shut down my new location? Or like, how do I fix this? Right? And typically you have this much profit. And so the answer is something really hard, which is either you have to cut down one location, go back, re-forify the base, or you have to give up almost all of your profit to bring someone in on a shot that they're going to be able to help you out who's good enough.

• 5:37Alex Hormozi?

  And because fundamentally, like no business ever over expands, you're just under talent. And it's a great way of thinking about it because you can't do anything about over expansion. You can do something about under talenting. The next one is compensation. So this goes in both directions. Hey, I've got an HVAC business and you know, the phone's ringing off the hook, but I can't take the business anymore. I can't find any dudes to do HVAC stuff, technicians. And then I say, cool. Well, how much are you running good margins? And they're like, yeah. I'm like, okay. Well, what do you pay your guys? X. Okay. Well, why don't you pay your guys more than X? I don't know. It's like, well, you have the cash flow. It's the constraint. What are we talking about? Right? So it could be a competition on the low side, or it could be the other side, which is I had a, our physical therapist came the other day.

• 6:17Alex Hormozi?

  Everything was good, like marketing, sales, everything was working. She was at full capacity, but she was not profitable. And I was like, okay, well, how is this happening? And she said, well, 50% of revenue I give to my therapist. And I was like, well, does that, do they like rent shares from you kind of thing? Kind of like the salon model? She said, no, I do everything. I run all the marketing, I close the deals, I'm the one who fills the toilet paper up. You know, they use my materials and they just show up for work and just have all these full calendars. And I said, it must be nice. And so, rock and hard place. She can either lower her compensation and then potentially lose her team or not do that and never make money. What do you do? Right? The next one is underpriced. I would guess right now, half of you at least are underpriced.

• 6:59Alex Hormozi?

  And I think that's just because of psychology typically like as soon as people start saying no, you back off on pricing. That's usually very far from where the ideal sweet spot on pricing is. And so, a lot of entrepreneurs will stop and it's like, okay, you know, two, two out of three people, you know, one out of three people is saying no. I don't, I don't want to hear any more no's. But usually if you have two out of three people who are saying yes, you probably have a two and a half X in price sitting there to get to where you should be. And at that point, you'd have maybe half the delivery with two and a half times the revenue, you'd make a hell of a lot more profit. And so, super common. And then the last one is what I call just a single product business. And there's nothing wrong with this per se. It's only an issue when you are not profitable as a result.

• 7:41Alex Hormozi?

  So I had an example where I had a guy who taught people to speak English in Latin America. And he sold digital products from a YouTube channel that was had like three million subs. And he was selling like seven, eight hundred people a month on these like 20 to call it a thousand dollar products. And the issue was, or what I asked him to do is I was like, what if we called those people and made them another offer? He said, there's no way, no one will ever spend more than a thousand dollars on language stuff. And what was really great for me in this exact moment is that there was a guy right next to us who was from Latin America, who didn't have English as his first language. And he looked at him, he was like, I mean, would you have paid $5,000 to, to learn English? And the guy just looked at him like very soberly and was like, I would have given everything I had. And I was like, I'm fucking right.

• 8:28Alex Hormozi?

  And of course he didn't listen, so it doesn't matter. He's, he has a social media agency now. So you can't make good decisions for people. So that being, he thought he'd be less competitive. So anyways, these are kind of the seven growth sins. As we go through, I'll try and do one of these because I'll point, because usually they fall into these buckets. With that being said, let's, let's A some Qs. Yes, sir.

• 8:43Speaker 01

  Hi, yeah. My name is Dylan. I do power washing, solar panel cleaning, window cleaning.

• 8:50Alex Hormozi?

  Power washing.

• 8:51Speaker 01

  Solar panel cleaning.

• 8:52Alex Hormozi?

  Solo panel cleaning.

• 8:54Speaker 01

  Solar panel.

• 8:54Alex Hormozi?

  Solar panel cleaning. Okay. God, I was like, were you selling solar and you're doing what? I was like, hold on.

• 8:58Speaker 01

  Yeah, window cleaning. And we do like $500,000 in revenue.

• 9:03Alex Hormozi?

  Amazing.

• 9:04Speaker 01

  I want to be at a million.

• 9:06Alex Hormozi?

  Supreme, right?

• 9:06Speaker 01

  Yeah, supreme power wash. And what I think is stopping me is strategies to attract or reach out to business to business reoccurring clients. And if I should just focus on doing that primarily.

• 9:20Alex Hormozi?

  Okay, so right now you're residential?

• 9:22Speaker 01

  Yeah, door, a lot of door knocking, yeah.

• 9:24Alex Hormozi?

  So what are margins now? Profit?

• 9:28Speaker 01

  Oh, yeah, we're making $500,000 a year.

• 9:31Alex Hormozi?

  Profit?

• 9:32Speaker 01

  Yeah.

• 9:32Alex Hormozi?

  So what's revenue? Top line? Sales? The dollars you collect?

• 9:37Speaker 01

  Uh, 500,000.

• 9:39Alex Hormozi?

  What do you take home?

• 9:40Speaker 01

  Oh, 250.

• 9:41Alex Hormozi?

  Okay, so half?

• 9:42Speaker 01

  Yeah.

• 9:43Alex Hormozi?

  Okay, so, and that's all residential right now?

• 9:46Speaker 01

  Yeah, there's a little bit of like some like apartment complexes or.

• 9:49Alex Hormozi?

  Okay, so what stops you from doing more of that?

• 9:51Speaker 01

  People would just call us on the phone by my, by luck and we get, you know.

• 9:55Alex Hormozi?

  So it's referrals is the primary way of growing the business right now? Okay, so you don't have an acquisition channel? And so the thought process that you have is I'm gonna start an acquisition channel and go after commercial cleaning rather than residential.

• 10:08Speaker 01

  What, what's an acquisition channel?

• 10:10Alex Hormozi?

  So how, the way you get customers. Right now, my phone rings and I'm getting referrals from existing customers who are calling me up and saying, hey, can you clean my stuff? You say yes, but it's very much dependent on that phone ringing, right? Okay, so then you're thinking or you're telling me that what you want to do next is build out a way of getting customers in the door and you want to target commercial.

• 10:33Speaker 01

  Yeah, cuz we have like this one client that just came upon us and I noticed like it's, it's a lot more money and it's a lot more stable.

• 10:41Alex Hormozi?

  Yeah.

• 10:41Speaker 01

  Cuz it's reoccurring on a monthly basis.

• 10:43Alex Hormozi?

  So basically, hopefully you've seen this before, right? You've got OB and then I'll just put affiliates from over here. So you've got four ways that you can get, you can get clients right now besides referrals, which is what you're currently doing. So do you have experience with any of these things? Running ads, posting organic content, cold outreach, or do you have like people who already have a lot of these types of customers already?

• 11:07Speaker 01

  I have like a third party help with the ads.

• 11:10Alex Hormozi?

  How much do you spend a month on, on the ads?

• 11:13Speaker 01

  Two thousand.

• 11:14Alex Hormozi?

  Okay. Do you know if you get anything from it?

• 11:17Speaker 01

  Yeah, um, I would say like we get more like off like door knocking and referrals.

• 11:22Alex Hormozi?

  Okay, so you door knock?

• 11:23Speaker 01

  A lot, yeah. Yeah.

• 11:25Alex Hormozi?

  Okay, so you so you're spending two thousand a month here, you're doing door knocking. So how many how many deals a month you're doing off door knocking?

• 11:31Speaker 01

  Like twenty.

• 11:33Alex Hormozi?

  Okay, twenty here. What's the average deal size?

• 11:37Speaker 01

  Like, uh, three fifty to one thousand eight hundred.

• 11:40Alex Hormozi?

  Okay, so I'll just call five hundred. Okay, so you got ten thousand a month there. That sound right? Okay, the rest is the phone rings or what other percentage is this?

• 11:49Speaker 01

  Uh, like the.

• 11:50Alex Hormozi?

  Does more come from the door knocking or this?

• 11:52Speaker 01

  Uh, probably door knocking.

• 11:54Alex Hormozi?

  Probably.

• 11:54Speaker 01

  Yes, door knocking.

• 11:55Alex Hormozi?

  Okay, so you say like half comes from this compared to door knocking? Okay, what stops you from spending like five times more money here?

• 12:02Speaker 01

  The fear of not getting my money's back on the third party doing its job right.

• 12:06Alex Hormozi?

  I think the first like you need to get this in place. You need the data, meaning you need attribution tracking, which if somebody else is helping you run this, they should do it. If they don't, then you should probably find someone who does know how to give attribution for for the ads that you're doing. I wouldn't say, hey, let's go after a new avatar and build a whole new way of getting customers when you currently have two that are working. Or one that's working, one that we're not sure it's working, but if you're spending two thousand dollars, you're getting more than one deal a week from ads. Well, then it's probably working because you're spending five hundred bucks a week. If the average deal is five hundred and you're getting more than that, then you're probably doing okay. And so you might actually be sitting right now in something that's getting five to one or ten to one, but you're only spending two thousand dollars a month. And so it's like, if we can just bump that to ten, then that would be big. Now you don't have to jump there immediately, like go from two to four, two to six, whatever you feel comfortable with.

• 12:52Alex Hormozi?

  But step one is get the attribution in place. Step two, then increase it, provide the attribution, meaning that we can track what we spend versus what we make is good. Then spend as much as you can there. Once you've tapped that, you'll have a little bit more cash flow. And at that point, we can make the decision of, okay, do we want to open up another paid ads channel? Do we want to spin up more door to door guys? Local is the only exception I have for being willing to have more than one acquisition channel. I'm not against it as hardcore as I am for other businesses because if you're in, you know, bumfuck Kentucky, like there's only fifty thousand people, like you got to reach them as many ways as you can. But right now, attribution, spend more if you can, as long as the attribution is good. I don't think you should change the business model. I think you should just do more of what's already working and you just don't know if what you're doing is working, but I can tell you got fifty percent margins. It's not bad.

• 13:37Speaker 01

  Yes, sir.

• 13:37Alex Hormozi?

  Cool.

• 13:38Speaker 01

  Thank you, Alex.

• 13:39Alex Hormozi?

  Congrats on the business.

• 13:41Speaker 02

  Hello, my name's Jessica. I have a subscription-based.

• 13:45Alex Hormozi?

  Boat rental.

• 13:46Speaker 02

  Yeah.

• 13:46Alex Hormozi?

  Yeah, boat membership.

• 13:47Speaker 02

  Yes, yes, I do. Currently doing two million top line. I'd like to pass the 10 million mark. What's stopping me is a decision. I came here to this workshop because

• 14:04Speaker 02

  I've been doing this 13 years, put in my 10,000 hours, not making enough money. So I came to learn how to scale. I have two options in front of me in the next six months, one to purchase an existing club that would more than double, and another to start a third. I have five locations. This would make 10.

• 14:27Alex Hormozi?

  And you're doing like two-ish with 500,000 in profit, right?

• 14:30Speaker 02

  Yes, 600. I mean.

• 14:34Alex Hormozi?

  Hey, every dollar counts. I'm with you. Okay?

• 14:35Speaker 02

  Yes. And in a session that I had this morning, or this afternoon, in asking questions about how to scale, Ed told me, I should not scale, I should sell. So.

• 14:47Alex Hormozi?

  Isn't it because you don't like it?

• 14:48Speaker 02

  Yeah, that's what he said.

• 14:53Alex Hormozi?

  I'm just reading here.

• 14:54Speaker 02

  Yeah.

• 14:55Alex Hormozi?

  Clear, boy. Okay.

• 14:56Speaker 02

  He said, "Do you love boats?" And I said, "No."

• 14:59Alex Hormozi?

  Well, before we break your life, just a couple of frames, because I didn't say this earlier, but I'll say this now. I'm really not talking to anyone per se. I'm talking through them to everybody else, because, believe it or not, the problems that you have is the same problem that like five other people here have, or 10 other people here have. So just wanted to set that up front. I'll just share something that might be just maybe a different frame on this, which, like, have you heard the story of the three stone cutters? So a guy walks up, sees a stone cutter, and he says, "Hey, how's your day going?" And the guy's like, "It's terrible. It's brack breaking work. It sucks." And he's like, "Okay, wow, I got it." And he goes to the second stone cutter, and the guy says, "Well, you know, pays the bills, you know, keeps the family fed, you know, that's fine." And then he goes to the third stone cutter, and he says, you know, "How's your day going?" He says, "Oh, it's amazing. I'm building a cathedral that, you know, is going to last for generations for my kids," right?

• 15:43Alex Hormozi?

  And so the same work, just different perspectives on the work itself. And so the perspective that I'll share is just that, having now owned a lot of different businesses, almost all businesses are the same as if you chunk up high enough. Because if you get two or three levels up, you're going to have a director of sales, director of marketing, you're going to have director of IT, you're going to have personnel issues, you're going to have HR, you're going to have legal, and it's going to suck every other day. You know what I mean? And so it's kind of like, you know, I've had 10 executive assistants and I currently have none. And the common thread between all of me and them is them, obviously. And so I say this because like, if we're, if we're trying to hope for the, for the business to be the thing that brings you joy, I would just really strongly push against that.

• 16:25Alex Hormozi?

  And I'd rather you just see the business through a different perspective, which is like, this is an opportunity to get to learn some skills. Like a good friend of mine, he was in the fitness industry and then started a cookie company, which makes it seems completely antithetical, right? He's like, I'm creating demand and supply. But what was interesting about it is that I asked him, I was like, are you passionate about cookies? And he was like, no, not at all. And I was like, why are you doing this? And he was like, well, I think there's a good gap in the market. This is before crumble. So he had the right idea, like he thought that gourmet cookies were going to be a thing. He ended up having a bad partnership, whatever. But the point is, is that he was right about his idea. He did a hundred different recipes to figure out the one chocolate chip cookie that was amazing. And he did, and he did really well. But the thing is, is that he wasn't, he wasn't in love with cookies. He was in love with being excellent. And I think that that's, that's at least how I try to see businesses. Like, how can I let this business be an expression of the values that I have? Rather than this business has to fill a hole in my heart.

• 17:10Alex Hormozi?

  So, back to you. Okay. So do we exit this thing? Do we get another location? Cause I'll bet if you just didn't hate the people you work with, you'd probably be okay with it.

• 17:18Speaker 02

  With getting another location?

• 17:20Alex Hormozi?

  Oh, no, just in general, like, I mean, cause right now you have this, this desire, cause you have what? Two million in debt, right?

• 17:26Speaker 02

  Yes.

• 17:27Alex Hormozi?

  Yeah. So you have two million bucks in debt. You're doing 600, not 500,000 dollars in profit, noted. And so basically after taxes, it's going to take you like six years, seven years to pay the whole thing off. Assuming you don't spend any money, which would suck, right? That would blow. Okay. So I can feel that that is crushing weight. So either you want to scale past it. So these debt payments aren't killing you, because it's eating probably the majority of your cash flow. Or selling and kind of either starting over or, you know, doing something else, et cetera, right?

• 17:54Speaker 02

  That's right.

• 17:55Alex Hormozi?

  Okay. Do you have an offer on the business?

• 17:57Speaker 02

  No, I wasn't even looking to sell until an hour ago.

• 18:00Alex Hormozi?

  It was like, sell.

• 18:03Alex Hormozi?

  So you have 25% margins, so it's not bad. Or no, less than that because you're a little higher than 2 million in revenue, right? 2.7 is that what it is?

• 18:09Speaker 02

  2 million.

• 18:09Alex Hormozi?

  It is 2 million. Okay, so it's 2 million top line, 600, excuse me, 600,000 bottom line. So I mean, you're running 30% margins. The only issue is you made a bad decision like four years ago, or however many years ago you took the debt out.

• 18:18Speaker 02

  Yes, because it's pretty capital intensive to have 50 boats.

• 18:22Alex Hormozi?

  Yeah. So how's cash flow for the business?

• 18:25Speaker 02

  Good. I mean, COVID was great. We sold like crazy and unfortunately put a lot away. So I don't have a cash constraint.

• 18:33Alex Hormozi?

  That's great. So, okay, outside of like, let's sell this thing, you still want to grow it, right?

• 18:38Speaker 02

  I want to grow business. This just happens to be the vehicle.

• 18:41Alex Hormozi?

  I don't think this is a bad business. I mean, a boat membership, fundamentally, you have very high margins on each incremental membership, correct?

• 18:47Speaker 02

  Yes.

• 18:47Alex Hormozi?

  So you're kind of at this point where like, you've covered all your costs and so each additional membership makes you a lot more money, right? Disproportionately drops the bottom line is my point.

• 18:57Speaker 02

  Yes.

• 18:58Alex Hormozi?

  Okay. So what stops you from selling 10 times the memberships?

• 19:02Speaker 02

  That was the question that I tried to answer, coming here and going through the framework. And when we were going through the circles yesterday, I came down to, I think it's my offer.

• 19:12Alex Hormozi?

  Okay. And is this, is this a franchise or is this yours that you just started on your own?

• 19:16Speaker 02

  That's the other part of the equation is that it's a licensing model. And I think the conversation in the room today was, is it really mine if I'm under a licensing structure?

• 19:26Alex Hormozi?

  Yeah, I mean, you can sell the business. You have an existing agreement, but what do you give away top line?

• 19:30Speaker 02

  Nothing.

• 19:31Alex Hormozi?

  Oh, okay. What do you license?

• 19:33Speaker 02

  Marks in the system. It's a reservation software system. So technically my members do because we're licensed and not a franchise, I can't pay directly, so the members do.

• 19:43Alex Hormozi?

  Okay, what percent do they give away?

• 19:45Speaker 02

  It's a $500 a month membership, 30 bucks a month goes to corporate.

• 19:49Alex Hormozi?

  Okay, so whatever that is, 6%. Okay, I mean, that's fine. Okay, so I mean, I wouldn't say it's strangling you. Okay, so it's 20% of your margin functionally. So do you currently do ads? Do you do outbound? Do you organic? You doing affiliates? What are you doing in growth?

• 20:03Speaker 02

  We spend about 6,000 a month in paid ads. We do a lot organic.

• 20:08Alex Hormozi?

  What's raw as on this? Good, bad?

• 20:11Speaker 02

  Well, according to the marketing agency that I use, they're very, very great.

• 20:16Alex Hormozi?

  According to them, they're like, it's exceptional. You just spend all your money here.

• 20:19Speaker 02

  I only spend $11 per lead and that's a fabulous number in the industry evidently.

• 20:24Alex Hormozi?

  Well, what percentage are you closing of leads?

• 20:27Speaker 02

  Uh, the industry standard is 6%. When I was doing it myself, it was 10.

• 20:30Alex Hormozi?

  I'm gonna pause here, just for everybody. Zero fucks about industry standard.

• 20:33Speaker 02

  Okay.

• 20:34Alex Hormozi?

  And I'll tell you why. Average American, overweight, in debt, divorced seven times over. Why would I care what the average industry person? They all suck, they don't make money, fuck them. So anyway, sorry, go back to you.

• 20:43Speaker 02

  We're at 4% lead to close.

• 20:45Alex Hormozi?

  Okay, 4% lead. So cost, so 25 times lead cost. So at 2, whatever, 266 is cost of acquisition right now, not including sales commissions. Membership is 500 a month?

• 20:54Speaker 02

  It's a $5,000 initiation fee and then $500 a month. We sell five-year contracts.

• 20:59Alex Hormozi?

  I love this. Why are we getting out of this business? Call it $300, $400 with commissions, whatever, to get the sale, to get a $5,000 upfront and then, and then $500 a month or? Yeah, that sounds chill.

• 21:12Speaker 02

  So that's why I was thinking I'd do more of it.

• 21:14Alex Hormozi?

  Yeah, do more sounds great. I love this for us. I love this for us.

• 21:20Speaker 02

  I love this.

• 21:21Alex Hormozi?

  Yeah, okay. So why don't we spend more on ads?

• 21:25Speaker 02

  Sounds like I should.

• 21:26Alex Hormozi?

  I feel like that's not a terrible idea. The thing is, is you have a business where, this happens a ton, by the way. Like you get, and this, this is actually really interesting because that's, in my opinion, is purely psychology. But you have a certain amount of cost that you have that's fixed cost in the business. And then you spend enough marketing to get above the fixed cost and then make some profit. And then you like exhale, you're like, oh, thank God I'm not losing money. But it's like, you're willing to work so hard to make everyone else money. Your landlord, the licenser, the, your, the employees, like you're paying all their mortgages. But then like, you're just forgetting to like pay you. And so it's like, let's go ham on that side. Like when it gets easy is when you go hard. So I'm, so you do this, what else do you do? You said you're good at organic stuff?

• 22:05Speaker 02

  Yeah, we are. And a third of our new members come from our existing referrals or existing members.

• 22:12Alex Hormozi?

  Okay, cool. Do you have a really structured referral system or just people talk to people?

• 22:16Speaker 02

  Yes, and yes.

• 22:17Alex Hormozi?

  Okay.

• 22:18Speaker 02

  Yes, we have a.

• 22:18Alex Hormozi?

  Cause we have a whole bunch of badass stuff for referral stuff. But that's one thing that can probably get juiced beyond the scope of right now. But that's a big one. And then ad stuff, honestly, if we could just take a look at it, it's like we could probably figure this out in five seconds of what needs to. The thing is, is what's your close rate on people who come in?

• 22:33Speaker 02

  So 4% lead to close. And then we, 33%.

• 22:37Alex Hormozi?

  Okay, you're fine. Yeah, like your stuff's not fucked up. We just need to get the referral system in place. We need to spend more on ads. We can make sure attribution is right. If we needed to tweak, like if you were like, I'm closing 10%, then it's either a sales motion issue or it's an offer issue. Now, if the lead costs are too high, but you said they weren't, if the lead costs were too high, I would look at offer as well, but that might not be the issue right now. And so I think probably more and better creative that we do on the outside, and I'm sure, are you doing Google AdWords? Is that your primary? Yeah. More and better creative, probably better targeting in terms of what keywords we're looking bidding on. And there's probably a handful of like really easy CRO stuff. So conversion optimization that we can do on the actual funnel itself. Like, we just don't know a lot. Like, there's so many little things there that you can just like immediately increase how much the business is making from each lead.

• 23:21Alex Hormozi?

  And that'll probably just give you a little bit more exhale, like in order to spend more, because I think that's what we have to do.

• 23:27Speaker 03

  Thank you.

• 23:33Alex Hormozi?

  Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Leila 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 30-ish 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.

• 24:19Alex Hormozi?

  And so if that's at all interesting, you can go to acquisition.com/roadmap, R-O-A-D map, roadmap.

• 24:28Speaker 03

  Hi, Alex. First Google saved you.

• 24:30Alex Hormozi?

  You bet.

• 24:30Speaker 03

  I've only found you three months ago and life changing.

• 24:33Alex Hormozi?

  Oh, thanks.

• 24:34Speaker 03

  No, thank you. Really.

• 24:35Alex Hormozi?

  All you.

• 24:36Speaker 03

  And when you said one time. It's like entertainment if it's just, oh, that was cool or like it changes behavior is change behavior.

• 24:43Alex Hormozi?

  Oh, cool.

• 24:43Speaker 03

  So thank you for that.

• 24:44Alex Hormozi?

  I appreciate that.

• 24:45Speaker 03

  And and it's only two people in my life that have done that for me. So thank you for that. So my name is Angela.

• 24:50Alex Hormozi?

  Buy a book at the next launch.

• 24:51Speaker 03

  Ah, no, no, no, thank you. No, I I really mean it. I really do. You are Michael Singer.

• 24:56Alex Hormozi?

  Oh.

• 24:56Speaker 03

  So um, my name is Angela. I own a cybersecurity consulting. We focus in cybersecurity compliance.

• 25:03Alex Hormozi?

  Mm hmm.

• 25:04Speaker 03

  Uh, for middle market and enterprise customers. I've been in this industry for a long time.

• 25:09Alex Hormozi?

  Don't you want a boat membership business?

• 25:12Speaker 03

  I love what I.

• 25:13Alex Hormozi?

  No, I'm I'm.

• 25:14Speaker 03

  Love. I love our industry because it's always like changing.

• 25:17Alex Hormozi?

  I love it. I love it. Okay. So I T compliance, mid-market.

• 25:21Speaker 03

  Cybersecurity, mid-market and and and and climbing to enterprise, more and more enterprise customers. I did revenue of five mil- almost five million in twenty twenty-three, brute force, and then it's dropped. So I'm like at three point six right now. My my net margin was thirty-five percent. Now I'm at like eighteen percent. So it's shrinking. And what I've accumulated over these years was, you know, obviously ignorance and a lot of things that I wasn't even thinking, but people debt. So now all that that margin is going to the people's side, right? But also my sales, right, have dropped in my leads because I've been focusing now on the things I never did because I was just, you know, hunter. And now I'm focusing on learning how to become a real C E O and learning how to do people things well and all of that.

• 26:06Alex Hormozi?

  Okay.

• 26:06Speaker 03

  So I'm solving right now for some things. I didn't realize my concern was even recruiting. I found a recruiter by the grace of God that's amazing. And he's helping me solve these problems. And then the next thing I was solving for right now is the practice leader, which is like a technical person too that's good with clients. And watches all the people that we work with and works with them, grows.

• 26:26Alex Hormozi?

  What's holding you back?

• 26:27Speaker 03

  So that I'm working on.

• 26:28Alex Hormozi?

  Okay.

• 26:28Speaker 03

  I think I'm cracking the note with that.

• 26:30Alex Hormozi?

  Okay.

• 26:30Speaker 03

  Um, I think I may have found somebody, but we'll find out in a week or so. So but in the meantime, sales has been my thing. And then I would say my industry has evolved and COVID definitely was a game changer. Where cost per um, events have increased tremendously. Your conference stuff, you gotta play to pay, uh, play to speak right now, which wasn't the case before. And, you know, I had family changes and.

• 26:53Alex Hormozi?

  Yeah. Do you go to conferences to get customers?

• 26:55Speaker 03

  I used to.

• 26:56Alex Hormozi?

  Okay.

• 26:56Speaker 03

  And I'm not doing that anymore, very little because of the cost and, you know, the the time.

• 27:02Alex Hormozi?

  Are you coming back with us?

• 27:04Speaker 03

  Um, I don't know.

• 27:05Alex Hormozi?

  Okay, no worries. We have a whole conference playbook that just murders. So for if you're selling at conferences.

• 27:09Speaker 03

  I need that. I need a lot. I need all the help I can get.

• 27:11Alex Hormozi?

  No worries. No, it's fine. I just figured I'd ask so we could.

• 27:13Speaker 03

  But I'm learning tremendously from you. So thank you so much. I'm listening very intently to everything you say. So, you know, LinkedIn is obviously my, my, my market.

• 27:22Alex Hormozi?

  I want to pause. So can you handle more customers? Yes or no?

• 27:25Speaker 03

  Yes.

• 27:25Alex Hormozi?

  You can handle more customers. So your demand constraint?

• 27:28Speaker 03

  Yes.

• 27:28Alex Hormozi?

  Right now?

• 27:29Speaker 03

  Yes, right now. And it's, it's like change over time.

• 27:32Alex Hormozi?

  Okay, great. So right now you can handle more customers. You've got this other person that work out they don't, whatever. Okay. So demand constraint is where we're at right now.

• 27:39Speaker 03

  Yes.

• 27:39Alex Hormozi?

  So you used to do conferences. They got too expensive, which means the sales motion didn't work as well as it used to.

• 27:43Speaker 03

  I used to do little, not a lot.

• 27:44Alex Hormozi?

  Okay, maybe we should do more.

• 27:45Speaker 03

  It was organic friends, networking, call, everything.

• 27:49Alex Hormozi?

  Basically, you just did all outbound as your primary way. That's what you did. Okay, got it. So, and no one else did the outbound? Just you?

• 27:56Speaker 03

  Just me.

• 27:56Alex Hormozi?

  Okay, so.

• 27:58Speaker 03

  Now I have a marketing person that's like, keep the lights on, marketing person, I would say. Nice guy, but anyways.

• 28:04Alex Hormozi?

  He's not that good.

• 28:05Speaker 03

  And we're doing some content and we're, you know, like that.

• 28:09Alex Hormozi?

  Well, it's like, keep the lights on marketing. It's like, either you're getting us business or you're not.

• 28:12Speaker 03

  I've used agencies before. It was awful too.

• 28:15Alex Hormozi?

  If you don't know how to market, you're not good no matter what you spent money on, right?

• 28:19Speaker 03

  I know. But no, I, listen, the, the thing I'm thinking here is.

• 28:22Alex Hormozi?

  Do you want my advice?

• 28:23Speaker 03

  Yes, I want your advice, of course. Yes, you figured it out. Thank you, Alex. Thank you.

• 28:28Alex Hormozi?

  So outbound is what you're good at. You can either go one-on-one the way you were, or you can go hunt when there's fish in a barrel. What's the average customer worth to you?

• 28:37Speaker 03

  Seventy-five, eighty thousand.

• 28:38Alex Hormozi?

  Yeah, I think like.

• 28:39Speaker 03

  No, for per, per percent.

• 28:41Alex Hormozi?

  Yeah, heard. You were the, the prototypical conference playbook. Go to conferences, run the sales motion through the conference, collect as many leads as humanly possible, and then basically have an offer that's structured there so that you have urgency for people to sign up. Like, that is the way to do it.

• 28:55Speaker 03

  And LinkedIn?

• 28:56Alex Hormozi?

  Hmm?

• 28:57Speaker 03

  LinkedIn?

• 28:57Alex Hormozi?

  I, I would say LinkedIn is kind of what I would say is my like. For you, because, because of how your type of business works in terms of the sales motion overall, you, what'll happen is it'll look like this. So you all, so it's like you'll fish with a net. This is me fishing with a net.

• 29:13Alex Hormozi?

  On a boat membership, right? Okay. So we're fishing here and this is events, right? And then what will happen is kind of like a telephone poll. You'll start, you know, you'll close, close, close, and then you'll have fewer, fewer leads. And what you'll do is in the meantime, you're outbound to go up during that time period until you lean into the event. And then you'll have the next event. And so it's kind of this crisscross motion while it's just you. Once you get enough cash flow, which you're probably close to at now, I would then have somebody who's doing basically the SDR work for you. So sales development representative, somebody who's doing the outbound, who can just basically set and qualify. Yeah, exactly. Because for you, I'm sure you can close on a couple of calls anyways. And so

• 29:51Speaker 03

  Some take longer because they're a big company.

• 29:53Alex Hormozi?

  Sure, no, you're good. But getting the SDR is probably the largest time constraint for you right now and also not that expensive. And so I would, step one, run conferences for sure, so I could fill up the pipeline. Cause that's like, that can happen fast and you have the cash flow to do it. And then second, in that same time, because you could do these concurrently, I would just, I would put the ads out for SDRs so that I could bring somebody in to start feeding you.

• 30:14Speaker 03

  I have somebody that could fill that role right now. He's my

• 30:17Alex Hormozi?

  What is he not, why is he not doing that? Is it the marketing guy?

• 30:20Speaker 03

  No, he's not the marketing guy.

• 30:22Alex Hormozi?

  Maybe we should let the marketing guy go.

• 30:23Speaker 03

  But you know, I guess he's a recruiter guy.

• 30:25Alex Hormozi?

  He's a good dude. He's a good dude.

• 30:26Speaker 03

  He's my recruiter that's like a salesperson recruiter.

• 30:30Alex Hormozi?

  Okay.

• 30:30Speaker 03

  And he, he's working with us because he wants not to be a recruiter anymore. He wants to be in sales in a technical field so he can learn something technical.

• 30:38Alex Hormozi?

  I mean, if you

• 30:39Speaker 03

  And he's putting all the time and effort to really learn our industry.

• 30:41Alex Hormozi?

  If you did recruiting and you did outbound for recruiting, which is what most recruiters do, doing SDR work is like the closest comparable role anyways.

• 30:49Speaker 03

  Yeah.

• 30:49Alex Hormozi?

  So I'm fine with that.

• 30:50Speaker 03

  So conferences, LinkedIn, then thought leadership, LinkedIn, just to like, so they

• 30:54Alex Hormozi?

  Thought leadership, you mean just like post good shit?

• 30:56Speaker 03

  Posting shit.

• 30:57Alex Hormozi?

  Okay.

• 30:57Speaker 03

  No, but no, like I'm thinking about this, like trying to solve a client's problem, like, listen, you have this issue. Here's how it works.

• 31:03Alex Hormozi?

  Mm hmm. Well, all you do is to be a thought leader, you just take the stuff you're doing privately and then just talk about it publicly.

• 31:10Speaker 03

  Yeah, exactly.

• 31:11Alex Hormozi?

  So yeah, just talk about your client work.

• 31:12Speaker 03

  And now webinars?

• 31:14Alex Hormozi?

  Hold on.

• 31:15Speaker 03

  No, okay. Just, no, I agree.

• 31:17Alex Hormozi?

  Go to conferences. Hire somebody to do more. Oh, no. Making a shitload of money. We need to work.

• 31:22Speaker 03

  Oh, I love money.

• 31:23Alex Hormozi?

  Right. So like, do the conferences, fish with the net, fill up your pipeline, get the SDR so that you get the stability that'll happen. So this is our events that'll, event leads, this is our SDR leads. Until eventually, the SDR leads will stay here. And then this will just continue to stack over time. Makes sense?

• 31:41Speaker 03

  How many conferences per year?

• 31:43Alex Hormozi?

  How many a week can you do?

• 31:44Speaker 03

  Oh, God. No, I mean, I couldn't. I have family, kids.

• 31:50Alex Hormozi?

  How many a month?

• 31:51Speaker 03

  Maybe two a month.

• 31:52Alex Hormozi?

  Cool. That's fine with me. Let's start there.

• 31:55Speaker 03

  Thank you, Alex.

• 31:56Alex Hormozi?

  Thank you.

• 31:56Speaker 03

  Thank you.

• 32:01Speaker 04

  Hey, Alex.

• 32:02Alex Hormozi?

  Yes, ma'am.

• 32:02Speaker 04

  Catherine.

• 32:03Alex Hormozi?

  Hi, Catherine.

• 32:04Speaker 04

  I have a dance school, two locations.

• 32:06Alex Hormozi?

  Wonderful.

• 32:06Speaker 04

  We do 2.7 mil.

• 32:08Alex Hormozi?

  Congrats.

• 32:09Speaker 04

  Thank you. Been in five years in business, so aiming for three mil this year and at least 10 plus in the future. Constraint will be space, capacity, facility, space.

• 32:20Alex Hormozi?

  Heard.

• 32:20Speaker 04

  So, yeah.

• 32:21Alex Hormozi?

  Okay.

• 32:22Speaker 04

  What would you like to know?

• 32:24Alex Hormozi?

  Well, is that, is that just what's stopping you? Is just getting another location?

• 32:27Speaker 04

  I could do, if I can get to three million this year, I'll be at probably 80% capacity, running my core programs.

• 32:34Alex Hormozi?

  Okay.

• 32:35Speaker 04

  Right? Which is the key. I could add daytime. There's things I could do on the side.

• 32:39Alex Hormozi?

  I don't think you'd complicate the model.

• 32:41Speaker 04

  Right. So, next step in scaling at that point is, is it additional locations or acquiring new studios?

• 32:49Alex Hormozi?

  Yeah.

• 32:50Speaker 04

  I don't want to franchise. I think it's either acquiring studios that are already, that people want to retire from and buy them out and run their, their businesses and then sell the whole thing eventually. Or ground up, organic, built from location, location.

• 33:04Alex Hormozi?

  So, do you want what you want to hear or the truth?

• 33:09Speaker 04

  Both. No, I want the truth.

• 33:11Alex Hormozi?

  Do you want to exit?

• 33:12Speaker 04

  Yes.

• 33:12Alex Hormozi?

  Yeah. So, and when you say, okay, what size exit?

• 33:16Speaker 04

  At least 20 mil.

• 33:17Alex Hormozi?

  Yeah. So the fun fact for everyone here, the hardest amount of money to sell for is between 10 and 30 million. Because it's just not big enough for people who have real money and it's too big for people who don't have real money. And so, uh, like it's easier to get like a hundred million dollar deal done than it is to get a 25 million dollar deal. 25 million dollar deal is like the, the, one of the hardest deals to get done because it's somebody who usually has a way bigger checkbook and it's just like really scraping down the bottom and doesn't really care because it barely moves the needle for them. Just for context. Now, that being said, if you want to sell for more, the difficulty of selling your particular business is that it's so people driven. It's so talent driven and there haven't really been, to my standard, any super successful, high service based gym businesses.

• 34:00Alex Hormozi?

  The closest one for a period was Orange Theory and then they went to shit during COVID and never recovered. But like, they were the closest ones and it's just because it's the talent. It's just, it's such a service heavy business and it's so reliant on the quality of the trainers, coaches, instructors, whatever you use, the word you use, right? So selling it will be difficult. You would be able to sell it to somebody who doesn't know what they're doing for sure, but you're not going to get a huge amount of money for it. So some doctor who has no idea about business but think he does because he has money would buy it. But you're probably like, you might get, you know, it would be 10 with a bunch of hair on it and earn, you know, clauses and a bunch of crap. So if you wanted to just do this forever, then I'd say like, just keep growing. That's amazing. That's fine.

• 34:40Alex Hormozi?

  But most people make this work in a franchise model typically, I think, I mean, you can get gyms for free, studios for free, like that, like that's, that's not, it won't be hard for you to find, you know, ballet, dance, et cetera, um, locations, because so many people are in pain and don't want to run them. Like you could get them for free. I mean, that's how I expand, like I got them for free. So the good news is the business is good. It's just what is your expansion path? So either M and A, de novo, meaning organic growth, you open it yourself, or you go from like a franchise path. The franchise and or licensing is for sure more sellable than those ones. And I don't normally give this advice. The issue is just that. I know I understand the nature of the business, obviously, pretty well. They're very hard to sell for a lot of money.

• 35:23Alex Hormozi?

  You can offload them really easily because somebody else has a dream and thinks that they're going to make it work. It's like restaurants, like you can sell them for nothing because somebody else has is a cook and people tell them their cooking is good. And they're like, you should open a restaurant like you love fitness. You should start it like that. It's very easy to get people to say yes, not for a lot of money, though. So my, my honest truth is, I think if you look at your current business model and say, how could I cut down the complexity by 80%? And then franchise it. So I'll give you, I'll tell you a story. So the most successful fitness franchise right now is Alloy. They do semi-private training. Rick Mayo is a really good friend of mine. He had a $4 million a year, single facility. And they had smoothie bar, merch, PT semi-private, large group. They had the whole, they had everything, right?

• 36:06Alex Hormozi?

  And when he went to franchise, he looked at revenue per square foot across all the business units and saw that semi-private was by far the highest revenue per square foot. So he had his 6,000 whatever square foot facility. He fired all of his clients, except for his semi-private. It was still profitable with a 6,000, you know, square foot lease. Opened up a pilot location with only the most profitable service that had three employees. One manager that does mornings and evenings and does sales. And then an assistant that does morning and assistant does, does evenings and works backup. And so with a three person model, does 500 or 600,000 dollars a year, 50% margins. And you can just cookie cutter that thing. And so I think your instinct on the front end was of like, I could add all these things. I think is 100% right not to do that.

• 36:50Alex Hormozi?

  And then look at your most profitable times, like your most profitable pricing and packages. And then I would look at stripping this down to like, how could I get this to the fewest possible people? Who could run this so that I could open up, basically somebody else could do this. And that's probably the like, that is the most likely path to the goal that you have. I'm not saying it's easy, but it's the most likely path to where you want to go.

• 37:09Speaker 04

  Yeah. And what about the licensing?

• 37:11Alex Hormozi?

  Same, same, just different, different legal structure.

• 37:13Speaker 04

  Okay. Hmm.

• 37:15Alex Hormozi?

  Yeah.

• 37:15Speaker 04

  Alright.

• 37:16Alex Hormozi?

  Just being real. Like, I mean, you could obviously open more locations. Seems like you're competent. I say this as a compliment, but if you want the, if you want the exit that you're looking for, like, I can't, I mean, I know a lot of people in the fitness world who have five locations, 10 locations. So if you, like, almost every one of them did, never sold the whole thing. I don't know one who sold the whole thing. Every one of them piecemealed it, one to a trainer, one to a customer, one to a competitor, what, like, they had to break the whole thing up when they got tired.

• 37:42Speaker 04

  Really?

• 37:42Alex Hormozi?

  Yeah.

• 37:43Speaker 04

  Okay. Interesting. Thanks so much.

• 37:45Alex Hormozi?

  Cool. Yeah. Thank you.

• 37:50Speaker 05

  Hi, my name is Michelle. This is actually my second time coming to the workshop.

• 37:54Alex Hormozi?

  You grew from like 400 to 1.2, right?

• 37:56Speaker 05

  I'm hoping to break a million this year. Last year I did 356.

• 38:00Alex Hormozi?

  It's a good return.

• 38:01Speaker 05

  Yeah, yeah. My main takeaway from last year was I just needed to do more to even have more in the system to figure out. I know, crazy. So I have spent the last, this, I'm going on my third year of my business. I'm trying to replicate gym launch in the pet care industry. Um, I am named Dogco Launch. It's not that innovative, but, uh, so it is-

• 38:24Alex Hormozi?

  I think it's a wonderful name.

• 38:25Speaker 05

  I mean, I like it.

• 38:27Alex Hormozi?

  Okay.

• 38:27Speaker 05

  Um, so I do coaching and consulting. I modeled off of, I've really tried to study very deeply how you approached gym launch, from what I can tell, um-

• 38:36Alex Hormozi?

  Happy to answer any questions.

• 38:37Speaker 05

  Huh? Yeah. Well, I even read Gym Secrets. It was great. So we did 356 last year. I'd like to break 3 million this upcoming year. Um-

• 38:46Alex Hormozi?

  You mean 26?

• 38:48Speaker 05

  26 million?

• 38:49Alex Hormozi?

  No, no. Yeah.

• 38:51Speaker 05

  What? Yes, sorry. This upcoming year in 2026. Yes.

• 38:53Alex Hormozi?

  But this year you want to do one, two, you're pacing one, two, and then next year you'd like to do three. Okay, got it. So what's stopping you? I'm guessing you're not supply constrained?

• 39:03Speaker 05

  Well, I-

• 39:04Alex Hormozi?

  Can you take more customers?

• 39:05Speaker 05

  No.

• 39:06Alex Hormozi?

  Huh. Word. Okay. So how are you getting customers now?

• 39:09Speaker 05

  Organic.

• 39:10Alex Hormozi?

  Okay, that's why. All right. So just you making content on Instagram, on YouTube?

• 39:15Speaker 05

  Predomin- most of my market's on Facebook. So I have an interest group for companies that want to grow in the pet care space. And I also do a speaking circuit on the four conferences that are in our industry.

• 39:27Alex Hormozi?

  Mm hmm. Great.

• 39:28Speaker 05

  Throwing my own conference this year because I figured I'd.

• 39:31Alex Hormozi?

  So you're saying conferences generate leads? Crazy. Keep going. Yeah. And thought leadership. Yeah.

• 39:37Speaker 05

  Yeah, yeah. So yeah, organic content has been predominantly how I'm getting people.

• 39:42Alex Hormozi?

  Okay, so you want to sell more stuff, but you can't sell more stuff because you can't deliver on more stuff. So who's stopping you from delivering more stuff?

• 39:51Speaker 05

  So I really found about the Money Miles book because I did. That was my original structure. It got me off the ground very quickly. I did the scarcity based core model. It's like, high 25 companies in a great window, spicy year. And it's been a difficult model to continue growing. I'm also the only coach in the business, so it, I'm doing everything.

• 40:14Alex Hormozi?

  The model might be fine. You're just the only person doing delivery.

• 40:17Speaker 05

  Yeah, yeah.

• 40:19Alex Hormozi?

  So we need to find another person to do delivery, or you need to change how you do delivery?

• 40:24Speaker 05

  So I'd like to change how I do delivery initially.

• 40:27Alex Hormozi?

  Okay.

• 40:27Speaker 05

  I'd like to go to more of an evergreen model where people can join at any point in time. I don't know if evergreen is the right word for it.

• 40:34Alex Hormozi?

  I mean, I know what you're saying. Sell every day.

• 40:36Speaker 05

  Yeah. That's what I have been considering.

• 40:40Alex Hormozi?

  I don't actually think that's the approach that I would take, though.

• 40:43Speaker 05

  Okay.

• 40:43Alex Hormozi?

  I wouldn't change your selling model because you're supply constrained, not demand constrained. So why would we change anything on the demand side? So it's the delivery that's the part that's holding it back. So what is the delivery right now? One on one, one to, one a small group? Like, what's the?

• 40:56Speaker 05

  Yeah, so I do a weekly coaching session with each cohort.

• 41:00Alex Hormozi?

  Okay, of how many?

• 41:01Speaker 05

  I have six active cohorts.

• 41:03Alex Hormozi?

  Okay. And so you do weekly and it's what, an hour?

• 41:06Speaker 05

  Uh, 90 minutes.

• 41:07Alex Hormozi?

  Jeez. Okay, got it. So you do one 90 hour day and then the other six days of the week you chill?

• 41:12Speaker 05

  No, I'm doing Zoom calls like 45 hours a week. I do a daily office hour.

• 41:17Alex Hormozi?

  Okay, so then what is the other deliverable besides the 190 minute thing?

• 41:21Speaker 05

  So it's just very high touch right now. Like I

• 41:25Alex Hormozi?

  Are you over promising? Or are you just, and I say this not as a slight insecure about worrying that they're not going to get value? And then you just like keep hopping on calls?

• 41:35Speaker 05

  That is part of it. I'm in part because it's been so new and I really want to establish like goodwill in the industry. I've been throwing everything into it, but I've kind of created this monster where it's hard to start to work myself out. Cause the expectations on me are very, very high.

• 41:52Alex Hormozi?

  Who do you think sets the expectations?

• 41:54Speaker 05

  Me.

• 41:55Alex Hormozi?

  Yeah. So I think we just need to change the expectations of delivery, which either is just stick with what you promise. Cause you might not promise nearly what you're delivering. So if they said yes to it, just meet expectations. Like, and that might just mean that you just need to learn a script of how do I deal with people who ask for my time? Which is like you route them to a resource or you route them to the calendar when the next time is available.

• 42:21Alex Hormozi?

  Cause the thing is, is you reward people for reaching out to you quickly by responding quickly and answering their question. And so then they do more of it. Cause you've trained your audience to do that. So you just need to train them to do something else. What are you afraid of?

• 42:35Speaker 05

  Oh, so many things.

• 42:38Speaker 05

  But we don't need to go down that list. Um, I feel that one of my differentiators has been accessibility and

• 42:47Alex Hormozi?

  Oh, it's totally differentiator.

• 42:48Speaker 05

  Yeah.

• 42:49Alex Hormozi?

  In the beginning, when you're an underdog, you do that because you say, hey, you know, you could go to these guys, but you're just a number with me. You get my cell phone, right? But at some point you get big enough that you're like, I can't give you my cell phone because I'm good enough and I've proven that. And so you have these cohorts. Basically this is the equivalent of like, you can't like, there's price raises you can do. You can also do delivery decreases. Like you're going to keep paying the same amount and you're just going to get less. But the way you're going to pitch it is that you're going to get even more, but rather different. And so whenever I've done a delivery change, I don't position it as, hey, I'm going to do less of what you liked. I'm going to say, hey, I've listened to all your feedback and I'm actually going to change this in a way that benefits all of you guys in these 17 reasons. And it's, and what you have to do is you have to Position this as a moral high ground.

• 43:33Alex Hormozi?

  Right. And so it's a, hey, I made a promise to you. And I've realized recently that I'm actually breaking this promise. And so I no longer can stay out of integrity to what I promised you guys. And so in an effort to stick with my integrity, I have to change it to this. And so that way, if anyone tells you that you can't do it, or you're saying, are you telling me to question my integrity? And then they're like, oh, that's right. And they're fucked. And so that's the, that's actually how you have to roll something like that out.

• 43:56Speaker 05

  Mm hmm. Okay. Most of my clients know each other. Are there any concerns about?

• 44:01Alex Hormozi?

  Well, you do it to everybody.

• 44:02Speaker 05

  Okay, okay. So this would be just broadly, okay.

• 44:04Alex Hormozi?

  Yeah.

• 44:05Speaker 05

  Okay.

• 44:06Alex Hormozi?

  Like, this is how things were. This new thing has come to my attention as a result of this new thing. New information, new decisions, new actions. This is what's happening. Here's why it's great for you. Seventeen more reasons that you didn't expect. And this way I can reinvest in these things that you really care about that I haven't been able to do, which is a promise I made to you that I have been falling short of.

• 44:24Speaker 05

  Okay. What if they don't feel like I have been under delivering?

• 44:27Alex Hormozi?

  It's not up to them.

• 44:29Speaker 05

  But like the kind of talking, the positioning of I'm doing this so that I can fulfill with integrity. I don't know that they'd resonate with that. And I'm sorry if I'm splitting hairs.

• 44:40Alex Hormozi?

  I mean, you gotta sell you right now.

• 44:42Speaker 05

  How do you mean?

• 44:43Alex Hormozi?

  You're trying to sell me on the way that you don't want to do.

• 44:50Alex Hormozi?

  You're like, I hate this life, but I damn it, I'm going to defend it. So like, you just have to, you have to flip that. Fundamentally, like you're going to burn out because you don't, and like you can't do what you're doing. You would like to help, you want to help more dog owners, right? Or dog co-owners, right? Yes, you cannot do that with your current model. So if you said that you have a mission of helping this many people, you currently are out of integrity with that mission. So either you change your mission and say, I'm actually going to play really small and I'm not going to help that many people. And that's fine. Or I'm going to provide something different that I think is going to be even just as valuable or even more valuable to you guys in this way. And you will lose some people and that's okay. Because you will make room for better people who pay more and didn't come in with the old expectations.

• 45:33Speaker 05

  Yeah. Okay. Okay. Thank you.

• 45:41Speaker 06

  First of all, thank you for all the value you share.

• 45:43Alex Hormozi?

  You bet.

• 45:44Speaker 06

  There's like a few number of people that I respect and you're one of them, so.

• 45:48Alex Hormozi?

  Well, that makes one of us.

• 45:49Speaker 06

  Yes.

• 45:52Speaker 06

  So my name is Lucas, right? I run a DTC skincare brand in commerce.

• 45:58Alex Hormozi?

  Oh, yeah, you do like 12 million top line and you have like a bunch of different brands that you have. But they're all white labeled, right?

• 46:03Speaker 06

  Yeah, so we do actually 10 million.

• 46:06Alex Hormozi?

  Yeah, and you want to get to 100, right?

• 46:08Speaker 06

  We want to get to 100.

• 46:09Alex Hormozi?

  Yeah.

• 46:10Speaker 06

  The key constraint right now is margins, right? So 15% margins.

• 46:14Alex Hormozi?

  Yeah. Do you know why your margins are low?

• 46:17Speaker 06

  I think we.

• 46:18Alex Hormozi?

  Want me to tell you why your margins are low?

• 46:21Speaker 06

  Yes.

• 46:21Alex Hormozi?

  You don't have a brand.

• 46:22Speaker 06

  So we, we, just to give you some numbers, like 100 and. We might have scaled too fast or like scaled too much to, uh, because here's the thing, the more we scale, the higher the CPA, right?

• 46:36Alex Hormozi?

  You're a performance marketer, right?

• 46:38Speaker 06

  Yes.

• 46:38Alex Hormozi?

  You have to learn brand.

• 46:40Speaker 06

  Yes.

• 46:41Alex Hormozi?

  You're not going to arbitrage your way out of it. You're falling into the trap that I did and I was stuck there for three and a half years. All right, so you can stay for three and a half years or you can take three and a half minutes. All right. So what happens is you're going to keep scaling spend, right? And revenue is going to keep going up, but your margin is going to compress, which you're already seeing, right? And that makes sense because you go to less profitable audiences, you continue to scale, right? And so I think, like my visual for this is like in each rung, we have like the same number of sales that are going to happen, but I only have to buy this much traffic to get the same number of sales versus this much versus this much versus this much. And so for you to scale long term, you need to get to the point where 70% of your advertising

• 47:26Alex Hormozi?

  is brand driven, not direct to buy, but it's building founder story, it's building narrative, unique differentiation, things like that, that are top of funnel awareness, like associations with things that your ideal avatar would find interesting, so that you cannot just be a media arbitrage white label thing, because you're just always going to be beholden to like the newest hack, the newest bidding strategy, the platform. Form sure you can get the cheapest clicks and you'll never build something that's actually like sellable in the long haul. I'm assuming that's what you want to do.

• 47:55Speaker 06

  Yeah, so we want to build for an exit.

• 47:57Alex Hormozi?

  Right, you have to build a brand. No one wants to buy these arbitrage businesses.

• 48:01Speaker 06

  A few investments that we made right now is first of all rebranding, like with a branding agency. Second is.

• 48:08Alex Hormozi?

  You need to master it. Like as a physical product, e-commerce owner, like your core most important skill is the brand. Like you can't outsource that. It's the most important thing.

• 48:19Speaker 06

  Got it.

• 48:20Alex Hormozi?

  Like, so you need to learn the skill of branding.

• 48:22Speaker 06

  Branding.

• 48:22Alex Hormozi?

  Which is fundamentally making associations with things that people in your audience find positive.

• 48:28Speaker 06

  Got it. Do you think we have a model problem as well? Because for example.

• 48:34Alex Hormozi?

  You mean you run ads, you sell stuff, you ship it, right?

• 48:36Speaker 06

  Yeah.

• 48:36Alex Hormozi?

  No, I don't think.

• 48:37Speaker 06

  Because I I was thinking about changing to a subscription model because we're not doing that yet.

• 48:42Alex Hormozi?

  You can have a percentage. What is the, what's for all of them or for, are they consumables?

• 48:47Speaker 06

  Uh, so we sell gadgets, like skincare gadgets, and then we also sell consumables. Uh, we usually do bundles.

• 48:54Alex Hormozi?

  Well, the gadgets are going to be really tough for for subscription.

• 48:56Speaker 06

  Yeah, yeah, of course. We want to, like, we just manufacturing a new serum in the US and the idea would be.

• 49:03Alex Hormozi?

  Like hair or like supplement?

• 49:05Speaker 06

  Uh, skincare, like topical, topical, uh, yeah.

• 49:08Alex Hormozi?

  Yeah, motions and potions. Yep.

• 49:10Speaker 06

  Yes.

• 49:12Speaker 06

  And the idea would be to slowly be shifting towards subscription because.

• 49:17Alex Hormozi?

  That that's fine. To me, that's again, that's you still thinking with your performance marketer hat. You're just trying to like, how do I increase cart value? How to increase LTV? Like, yeah, and that's fine. There's nothing wrong with that. So think about conversion optimization overall as steroids, which is like you can use them once and then that's it. You get a one-time pop and then that's your new baseline. And so like whatever you're doing, you can get a double, sometimes a triple from CRO improvements. But after that. You still need to solve the big gaping hole in the front end, which is like, how do I get more traffic? How do I get more repeat buyers? How do I command a premium? Because the only way that you can outspend competition in the long haul, who are just as good as you are at performance marketing. Because again, it's not even you versus them. It's your employees versus their employees. And if you have access to the same talent

• 50:02Alex Hormozi?

  and you have the same undifferentiated products, you're running on the same margins. So you're just going to be a completely commoditized business functionally in terms of how much you make versus how much you spend. And so the only way to de-commoditize this is that you have to build the associations that allow you to command a premium price that get people to be more loyal to you. So you can attract better talent as well, because they actually believe in what you're about. Right? Like, you have for sure spreadsheeted your life in terms of how you thought about your business?

• 50:27Speaker 06

  Yes.

• 50:27Alex Hormozi?

  Yeah, for sure. I get it.

• 50:29Speaker 06

  Yeah.

• 50:29Alex Hormozi?

  But like, you actually have to put a different hat on if you want to get to the next level.

• 50:33Speaker 06

  Got it.

• 50:33Alex Hormozi?

  So you actually have to stop thinking as quant and start thinking in terms of psychology of customers. And not like, oh, this specific type of ad. It's not like that. You have to expand out your window in terms of attribution of how long it takes to make a sale. You should start looking at how many people actually follow the account. There's a great article, I think it was the CMO of Chubbies wrote this. I want to say it was Chubbies. But he talked about the ROAS doom loop or the direct response doom loop. And you're in that now. Which is that you just keep spending more to make less. And then you're like, oh, I'll just spend more. And then you make less. And it just gets until eventually you're like, I'm just putting money in and getting it back out. And I'm just like, I have a number, but I don't make anything. Right? So it's a very vicious loop and cash flow sucks for the business.

• 51:11Speaker 06

  Yeah.

• 51:11Alex Hormozi?

  Yeah, I get it. And so the only way out of that is you have to rethink. It's a strategic change to rethink how you're advertising.

• 51:19Speaker 06

  Got it. And in terms of branding, what do you mean by branding? Because sometimes for me, branding looks like woo woo, you know?

• 51:26Alex Hormozi?

  Totally. I thought the same thing. And then I built like multiple billion dollar companies off of it. So like, like, I get it.

• 51:32Speaker 06

  But like, if you can put it in a framework, what would be like the key levers of branding for you?

• 51:39Alex Hormozi?

  You can charge more money. People buy more times. Don't need to go more, that's good enough. You get higher CTRs, higher conversion rates, all of that.

• 51:48Speaker 06

  Yeah, but I mean, in terms of like building a brand?

• 51:51Alex Hormozi?

  You post your stuff next to shit that people like.

• 51:56Alex Hormozi?

  So they think it's cool.

• 51:58Speaker 06

  Okay.

• 51:58Alex Hormozi?

  And then eventually you take the cool thing away and then your thing's still cool. And so then they pay a cool premium to buy your thing versus the other guy's thing that's not cool. And they keep buying your thing because they feel cool when they buy it.

• 52:11Speaker 06

  Got it.

• 52:13Alex Hormozi?

  So do you know Jim Shark?

• 52:14Speaker 06

  Yes.

• 52:15Alex Hormozi?

  Why would they pay Sam Sulek to become an ambassador? Why would they pay him money when he can't directly drive ROAS? Branding is higher return on spend than direct response does over a longer time horizon. The thing is, is your problem is you have a 30 day window for everything you're looking at, maybe 60. If you look at brand, you have to extend to six to 12 months. But when you do that, you actually start getting insane returns on capital. But you have to start thinking like a capital allocator rather than just a direct response performance marketer. I could talk to you more about it, but like, I want to go too deep in it. But that's, that's fundamentally, that's the frame shift you need. And you having many businesses, I don't think helps you. There's probably one of them that's your flagship one, that's probably the best one that has the most potential.

• 52:55Speaker 06

  No, I just have one business.

• 52:57Alex Hormozi?

  I thought you had multiple brands under there.

• 52:58Speaker 06

  No, no, no, no, no. I mean, it's, we just have one skincare brand.

• 53:00Alex Hormozi?

  You said you had gadgets and widgets and then you have.

• 53:02Speaker 06

  No, no, no. Gadget is like skincare gadgets.

• 53:05Alex Hormozi?

  Okay.

• 53:05Speaker 06

  Like rollers. Yeah, exactly. And then.

• 53:08Alex Hormozi?

  But it's one, one.

• 53:09Speaker 06

  Just one brand.

• 53:10Alex Hormozi?

  Okay.

• 53:10Speaker 06

  Nothing else.

• 53:11Alex Hormozi?

  I feel a little better.

• 53:12Speaker 06

  Okay.

• 53:14Alex Hormozi?

  But I stick by what I said. You have to have a frame shift. Otherwise you're not going to get past where you're at.

• 53:17Speaker 06

  Okay. Thank you.

• 53:19Alex Hormozi?

  Yes, sir.