The Only Two Numbers That Decide If Your Business Survives | Ep 985

**Alex Hormozi** (0:00)
I've been in business for 14 years. I have a portfolio of companies that last year did over $215 million in aggregate revenue. And if I had to start over from scratch today, this is the most important concept to learn, right? And so I want to be clear, this is not a tactic, it's not a funnel, it's actually a ratio. And once you understand it, you'll never really see business the same way again. And the way I like to think about this is that there's a lot of people out in the marketplace who talk about different methods, but what this is, is about a better model. And the thing is, is that methods expire. Methods are like one trick ponies. You figure out a new DM hack. You figure out a new way to get your content to go viral with a new hashtag.
Whatever. Those are methods. Those are tiny tactics, but those change all the time. The things that endure are the models, the economics of the business itself.
And so that is the engine that fuels everything. And so everyone likes to talk about marketing, content, branding, et cetera, but none of it matters if you run out of money. And so let's think about the number one rule of business is don't go out of business. And so what's the thing that prevents you from going out of business? Cash flow.
And so if you can manage your cash flow, then you can basically stay in business forever. You can continue to play the game. So coming back to the number one most important business concept, this is what you need to know. Number one is what's a customer worth to you over 30 days? Now, the reason I limit it to 30 days is because that's typically as long as most small businesses can handle from a cash flow perspective, then you're willing to pay money, wait 30 days to get it back. That's also because that's the interest-free time period where people will give you money for no interest. Credit cards are interest-free for the first 30 days. And so you basically are limited by your ability to get credit if you actually had no money. But if you do have some money, then still you want to recover it back within the first 30 days. That's a rule of thumb. Now, the second thing is, okay, we know what a customer is worth to us. We know what gross profit, how much we're going to make from them after we pay the cost of delivering whatever it is that we sell. The next is, what's a customer cost me?
Now, what I'll be clear here is, I'm not talking about cost me to deliver, I'm saying what does it cost me to get them? So, what do I have to spend in marketing, in advertising, in content, in sales commissions to get a customer in the door? And you have to know these two numbers, number one and number two.
And ideally, number one is greater than number two, right? Like we want to make sure we're making more money from customers than it costs us to make it. And the thing is, if you don't understand your business math, you will continue to blame other things, right? You'll continue to blame your methods. Oh, Facebook doesn't work for me. Oh, outbound doesn't work for me. Oh, content doesn't work for me. Well, imagine you're in this scenario, right?
Is it actually an issue with Facebook ads?
Is it the ads that aren't working? Is it the method that's not working, or is it the model? You have a model issue. If you could make hypothetically a billion dollars from a customer, you could spend 12 cents to reach every single person on earth and just try to get one customer. That would be a business that could probably spend a lot of money. Real quick, I have a gift for you. This is the $100 million scaling roadmap. It's something that my team and I put 200 plus hours into building and breaking the stages of scaling into 10 steps. All right. And so what we did is we broke down everything that got us, basically got us stuck and what we did to break free at each level of the business. And if you'd like to know what product, marketing, sales, customer service, IT, recruiting human resources and finance look like it, the stage that you're currently at, this is a free gift. So all you have to do is go to aquasyn.com/roadmap. You can plug in your business information. And if you want our help, you want my help to help you break through whatever level of scaling you're at, this is not a promise. I'm just saying I'd love to help. On the thank you page, you can book a call.