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<\/a> <\/p>\nAnd if it makes you feel any better, Alex Hormozi<\/a>, CEO and Founder of Acquisiton.com<\/a>, isn\u2019t afraid to admit that he\u2019s done this plenty of times in his entrepreneurship, investment, and philanthropy journeys. If anything, he\u2019s more than happy to dish out all the details, including his strategies for how he bounced back.<\/p>\n In this article, I\u2019ll share scriptures from Alex\u2019s bible for recovering from business failure, how he\u2019s turned his missteps into major wins, and his recommendations for refining a business model<\/a> that\u2019s on its last leg.<\/p>\n Table of Contents:<\/strong><\/p>\n <\/a> <\/p>\n When Alex Hormozi made his first major business oopsie, he shared that his mistakes were attributed to two things: Being a bit too trusting (when you\u2019re a first-time boss, it happens, you learn from it) and having a faulty business model.<\/p>\n When he first began experimenting with entrepreneurship, Hormozi was flipping gyms the best way he knew how. He\u2019d fly out to various locations, sell memberships on behalf of the gym, and keep upfront cash from acquired customers<\/a>; the gym itself would keep the actual members\/revenue made from memberships.<\/p>\n And although this was working well for a long time, after a while, it just wasn\u2019t. \u201cThe more I sold, the more refund risk I exposed myself to,\u201d Alex told My First Million<\/a> hosts Sam Parr<\/a> and Shaan Pari<\/a>.<\/p>\n Now that Alex has made it out of the initial turbulence that is the trial phase of starting a business venture from scratch<\/a>, he\u2019s now able to take a step back and offer insights that can help others avoid similar pitfalls.<\/p>\n In the next section, check out his takes on how to salvage your business from a rough patch.<\/p>\n <\/a> <\/p>\n Here\u2019s Hormozi\u2019s advice on how to turn around a sinking business:<\/p>\n \u201cI had a hole in my model \u2026 I was selling, and other people were delivering,\u201d Alex confessed.<\/p>\n \u201cThen, those people would tell customers to refund their money and sign up with them directly for half the price of what I was asking. After a while, I realized that I should just cut the middle man out and start selling straight to customers.\u201d<\/p>\n Sometimes, the \u201chole\u201d in your business model may have not been there to begin with. And sometimes it appears over time; then, you only notice that it\u2019s there because something stops working the way it should.<\/p>\n The point is, if you identify that something within your business isn\u2019t working or providing the results you want to see, don\u2019t be afraid to pivot. If you don\u2019t, your business will be the first thing that suffers.<\/p>\n When it came down to reinventing the wheel of his business model, Alex said, \u201cI think we were just doing it wrong. I think we need to show them how we fill gyms rather than flying out and filling it for them.\u201d<\/p>\n He followed, \u201cWe did that, then I called the 30+ gyms that we turned around and said, \u2018Hey. Remember that thing I did? Want me to show you how I did it?\u2019 Almost all of them said yes and I made about 240,000 in profit.\u201d<\/p>\n As a business owner, when you take a step back and think about what you\u2019re actually offering to clients and consumers, you have to consider what would happen if you were to monetize access to your expertise, not just your ability to get things done.<\/p>\n <\/a> <\/p>\n When it comes to Acquisiton.com<\/a>, one of Alex\u2019s leading business ventures, he admits that he\u2019s \u201cbetter at building than buying.\u201d However, when he says \u201cbuild,\u201d he doesn\u2019t mean he\u2019s taking apart the business from scratch. In actuality, he means getting in there and working with what he\u2019s already got on his hands.<\/p>\n \u201cThe nature of having inbound deal flows is \u2026 we get weird deals. They\u2019re very interesting,\u201d Alex admitted.<\/p>\n When it comes to cash flow deals, things look different based on every company that Alex and his team work with. \u201cSometimes, I\u2019ve gotta buy out a partner, and it\u2019s very weird and terrible \u2026 and some people don\u2019t want to get into that. But we\u2019re operators, so we\u2019re happy to get into it, and we get really good evaluations out of it,\u201d he said.<\/p>\n Often, what\u2019s needed from the Acquisition.com end changes based on the company they work with. In one particular case, while working with a B2C publishing business, Hormozi was able to convince founders at the company to shift its perspective on a potential upselling method<\/a>.<\/p>\n \u201cI was like \u2026 this has nothing to do with what we do \u2026 It was a deal breaker for me,\u201d he continued. \u201cThen I suggested that we survey the audience. I told them, \u2018Put your offer next to my offer. Just see what they want.\u2019 85% of people wanted my offer. It was a great moment.\u201d<\/p>\n <\/a> <\/p>\n Hormozi is clearly committed to results, especially when it comes to devising plans for businesses (even if that means going back to the drawing board a few times). Personally, I think he\u2019s so great at what he does because he\u2019s able to think strategically through the part that people often rush through (but matters most): Cultivating an offer that is truly effective for his target market.<\/p>\n Check out his playbook for how he\u2019s done this for his own business (and others) below:<\/p>\n \u201cYou have to understand how to create value so you can charge as much as possible and convert as many people as possible,\u201d Hormozi explains.<\/p>\n When it comes to creating an offer that meets the needs of your audience, Alex urges folks to master the \u201cvalue equation.\u201d The value equation, in essence, is simple, only consists of a few variables, and each of those variables represents elements of the buyer journey and consideration process. It looks something like this:<\/p>\n Although the value equation may seem like it\u2019s got a lot going on, Hormozi\u2019s understanding of it makes it easy and digestible for folks. Check out his breakdown of the value equation below:<\/p>\n Once you\u2019ve got a grasp on the ins and outs of the value equation, you\u2019re bound to know the ins and outs of your customers.<\/p>\n Alex added, \u201cYou have to look at the post-purchase steps, deconstruct them, and then include those things within the offer, so the customer feels like those little things they\u2019d have to spend extra money on or time on are already available to them.\u201d<\/p>\n When it comes to securing the bag (and a loyal customer base), Alex strongly advocates for going all the way. And by \u201cgoing all the way,\u201d he means getting almost scarily specific about what\u2019s going on in your customer\u2019s mind.<\/p>\n \u201cItemizing all the issues a customer would have to do as a result of a purchase \u2013 things that increase risk, make results take longer, things that make them start doing things they hate \u2013 then creating solutions for those issues \u2026 that\u2019s what creates a valuable offer.\u201d<\/p>\n As a business owner, you\u2019ve got to aim to not only acknowledge all the touchpoints of a customer\u2019s buyer but to solve for them, too. Oftentimes, the only difference between your product or service and a competitor\u2019s is what\u2019s being given to them.<\/p>\n As Alex mentioned above, you\u2019ve got to think big when it comes to developing an offer that\u2019s actionable for your customer base. Plus, this ideation process goes hand-in-hand with how you\u2019ll customize the value equation to your own venture and, furthermore, identify ways to make your offer impactful.<\/p>\n \u201cThe higher the conversion for the offer, the more validation there is for upping the price,\u201d Alex said.<\/p>\n And, when you really break it down, this ratio makes sense. Simply put, folks are willing to invest in what works, so if there\u2019s guarantee that your service or product will 100% fulfill their needs and wants, they\u2019ll be more than willing to become loyal clientele.<\/p>\n <\/a> <\/p>\n According to Hormozi, his procurement of Skool<\/a> was one of his best deals yet.<\/p>\n Recently, Alex invested in Skool, a SaaS company turned community platform focused on offering courses and events \u2013 all related to personal development and learning \u2013 to its growing user base. However, as someone who had already invested in multiple companies, Alex wanted to ensure that his decision to partner with Skool was well-informed.<\/p>\n \u201cA huge percent of my audience are people who want to start a business. So, there\u2019s this entire part of my audience that wants to start a business, and I wanted to have something for them \u2026 without cannibalizing Acquisition.com,\u201d he articulated. Alex then further clarified, \u201cIt had to be something that was demand-constrained, that would help people start a business. [Ultimately], it had to be a scalable thing.\u201d<\/p>\n Plus, his biggest takeaway from this investment? Getting it at the right time. For Alex, getting Skool at where it was in its lifecycle was critical for how he envisioned its future, especially with his game plan for expansion involved. If he\u2019d gotten Skool any later than when he did, he figured that he\u2019d have less leverage and less value to add.<\/p>\n All-in-all, if I were a business owner like you, here\u2019s what I\u2019d extract from Alex\u2019s Skool acquisition: Making a strategic investment \u2013 of any talent, company, or resource \u2013 will swing in favor of your entrepreneurial growth and, eventually, success.<\/p>\n Plus, what makes the investment \u201cstrategic\u201d is not the investment itself. It\u2019s how you see it creating synergy with the audiences and endeavors that you already have.<\/p>\n\n
Why do businesses fail?<\/h2>\n
How to Recover from Business Failure<\/h2>\n
1. Find the hole in your business model, then patch it quickly.<\/h3>\n
2. Show them how.<\/h3>\n
The Business Behind Acquisition<\/h2>\n
Hormozi\u2019s Multimillion Playbook: Key Tips and Takeaways for Entrepreneurs<\/h2>\n
1. Master the value equation.<\/h3>\n
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2. Get granular about the steps it\u2019ll take to get results.<\/h3>\n
3. Conversion rate and increase in product\/service price are one in the same.<\/h3>\n
Investments and Plays That Hormozi\u2019s Watching<\/h2>\n
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