If You Don't Understand Margin, You Don't Understand Business

Alex Hormozi
Alex Hormozi
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2021-02-18に共有
Want to SCALE your business? Go here: acquisition.com/
Want to START a business? Go here: skool.com/games

If you’re new to my channel, my name is Alex Hormozi. I’m the founder and managing partner of Acquisition.com. It’s a family office, which is just a formal way of saying we invest our own money into companies. Our 10 portfolio companies bring in over $200,000,000+ per year. Our ownership stake varies between 20% and 100% of them. Given this is a YT channel, and anyone can claim anything, I’ll give you some stuff you can google to verify below.

How I got here…

21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: "Gym Launch" does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
31 yrs old: Started our family office Acquisition.com. We invest and scale companies using the $42M in distributions we had taken + the cash from the $46.2M exit.
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.
34 yrs old: I became co-owner of Skool.com/ to help the many people who want to start a business online do so.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money - not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,

Alex

FULL DISCLOSURE
I make content to make money - just - on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.
コメント (21)
  • @grantstewart4513
    Accountant here, this info is absolutely golden! Entrepreneurs need to put this to heart.
  • @mattpiccirillo5697
    Takes a simple concept like margins, simplifies it for any non-finance majors, but also presents it in a tangible way that can make a significant difference for people…bravo
  • @DonCarlosHormozi
    Another gem from Alex Hormozi!!!! Every time I see him, he looks like he's put another inch on his arms!!!!
  • @epic-controller93
    In the last example he gives, there are 2 ways of increasing Gross Margin Ratio from 75% to 80% 1- Increase the COGS-Cost of Goods Sold- Monthly cost of the program from $400 to $500. Wich is a 25% increase in price to the customer. or 2- Decrease the salary of the coaches from $4,000/mo to $3,200/mo. Of these 2 options, decreasing the salary of the existing coaches or hire new coaches at a lower salary might compromise the quality of the product, on the other hand, increasing the perceived value of the product and therefore justifying the 25% increase in price might be easier. Great stuff! I was thinking about pursuing an MBA but the experience of running a business in addition to studying these videos and implementing the knowledge will help me advance a lot more.
  • @gorkagarcia8715
    This is clearly focused towards service-based businesses (Really helpful though), would like to see another version where you focus on product-based businesses instead
  • @marwanelhadi9030
    Yeah but lets keep in mind that also increasing the margin wether by increasing profit or decreasing the cost comes with ether losing clients or employees so it’s not always that easy
  • @chriswood5940
    Thanks Alex!! I’ve been in business for 10yrs and this is enormously helpful!!
  • @a7xfanben
    One of your best videos I've seen so far. Will watch again, thank you!
  • @LukaBendzo
    Thanks man! I think this is also important for people when trying to negotiate their salary. It's always important how much someone will make off of you so you can get compensated properly... I'm running my own business and your content is super helpful! I've read your $100M offers book, loved it! Looking forward for more content!
  • @soul598
    this is really great , it is good to see it implemented in your type of business , i use the same formula in a different way because i have a different business . i sell goods , so my cost is fixed monthly rents salarys ِetc... no matter how much sales i make , and with the harsh competition i just target more sales and that’s will automatically lower my cost and for my clints i keep the price or lower the price to keep up with the competition . my average margin is 26% to 27% , and my cost is 5% and i try to keep it like this so at the end of the year my net margin is close to 22% and with more sales the cost can be low as 3% .
  • @jamie_gelaskins
    Alex, it's a 33% increase. Teacher is testing to see if we're paying attention ;) My products have great margin and I've never considered the true take home value that a slight increase in this way (likely for all the same reasons your clients give you). Thanks for the enlightenment, amigo! 💚
  • @bozjohnson4915
    Super appreciate your videos. 😀Thank you for your consistent, solid information. You are one of the few business people I listen to. Thanks!
  • @TheNathanielWoods
    Alex,We want you to deep dive more on this topic, more examples of models for people starting to grow a team, along with suggestions of how your would build for hiring first 1-3 coaches in a organization
  • @matei.chelbegean
    It’s so great that both your heart is gold and your material is gold. kudos to you for helping us all out man. Super helpful and inspiring material. I started with your new stuff and am working my way backwards. Your production has improved in the newer stuff, but your energy and value brought seems to have always been there! Thank you.
  • @toughlovetom6887
    15% increase to 20% Net Margin is a 33.3% increase. 20% down to 15% would be a 25% decrease. 12:00
  • @ericwest1152
    Alex took business 22 years ago thanks for your videos. you will be continually successful bc you help people
  • @dannywarnock8822
    So good! It's kinda hard to believe it until you see it for yourself. Even at 50% Gross margin our business was under water for years.
  • @lizziesophiaTV
    Love these old videos where you dove into the nitty gritty details Alex! So appreciate you breaking down the concepts and making them accessible for all entrepreneurs. Any chance Caleb might work some of these “boring work” videos into the YouTube strategy going forward? I know they’re not popular topics that are going to get the same sort of views and reach as the newer stuff, but they are so so valuable.