You Will Stay Poor If You Don't Understand These Equations | Ep 527

The Game with Alex Hormozi

Alex Hormozi

Entrepreneurship, Education, Business, How To

4.9 • 4.4K Ratings

🗓️ 20 April 2023

⏱️ 13 minutes

🔗️ Recording | iTunes | RSS

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Summary

(This episode is a re-run. Original airdate was November 16, 2021)

It’s all about understanding the formulas. Today, Alex (@AlexHormozi) talks about the importance of understanding the two fundamental equations of business to make informed decisions. He also emphasizes the need to know the number of new sales per month and lifetime gross profit per customer.

Welcome to The Game Podcast where we talk about how to get more customers, make more profit per customer, and keep them longer, and the many failures and lessons we have learned along the way to $100M in sales. We've got roll-up-your-sleeves kind of hustle with a little bit of cleverness and a lot of heart.

Timestamps:

(1:22) - Fundamental equation: number of new sales or sales velocity

(2:55) - How to calculate lifetime gross profit per customer

(7:30) - Equilibrium point is where we level out

(9:25) - Cost to acquire a customer

(10:27) - 3:1 LTV to cap ratio or greater is necessary for growth

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Transcript

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0:00.0	Hey guys, real quick. So Layland, I are definitely working on our social media presence.
0:03.1	If you guys haven't noticed, and we're just breaking now into LinkedIn.
0:06.4	All right. It's not as bad as I thought.
0:08.4	It's actually been pretty awesome so far.
0:09.5	And you guys have been really cool in there and people are sharing our stuff a lot.
0:12.2	So if we aren't connected on LinkedIn,
0:14.0	that go ahead and let's connect and let's rock and roll.
0:17.0	And if you don't have high quality data,
0:18.5	then you will have poor decisions and you will not like the life that you end up leading.
0:22.6	Welcome to the game where we talk about how to get more customers,
0:25.0	how to make more per customer and how to keep them longer in the many failures
0:27.8	and lessons we have learned along the way.
0:29.4	Hope you enjoy and subscribe.
0:35.2	If you're an entrepreneur, then you need to be able to make decisions in order to make good decisions.
0:39.9	You need to have high quality data.
0:41.5	And if you don't have high quality data, then you will have poor decisions
0:44.1	and you will not like the life that you end up leading.
0:46.4	And so one of the important skills or attributes that I believe success
0:50.0	entrepreneurs have is in understanding the basic equations of business.
0:53.2	And so what I want to share with you today are probably two of the most
0:56.8	use equations that I use when talking to the portfolio companies that we have
0:59.8	when analyzing decisions about what we need to do with the business,
	...

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