I Blew Up a Business Through 3 Small Changes (Just Copy Me)

So this lawyer was losing $100,000 a year because his business model was broken. And so what I wanna walk through is how we fixed it and how you can apply the learnings from his business to your business. My name's Alex Hormozi. I run acquisition.com. It's a portfolio of companies, uh, that last year did over $250 million a year in aggregate. And we help businesses just like the one I'm going to walk you through today scale. So lemme give you the first rule that I have in terms of scaling a business. 1-1-1, one product, one avatar, one channel until you're at a million bucks a year. All right? So that means you sell one thing to one person in one way until you get to $1 million. The first issue was the help everyone issue. I don't think there's anything wrong with having this as a noble goal, but you're not going to help anybody if you're broke. You need resources. So the attorney launched courses and software to kind of give back. There were some financial consequences from that because the software itself alone was losing him money. And so he's spending the majority of his time on these two things. And guess where you think most of his money was coming from here? His services. Here's the reality of this. Is that every hour you were spending on the unprofitable work was an hour not spent on scaling the services, which is the main cash cow of the business. Like it kills a ton of businesses. And the thing is they feel justified in this, like they're, they're doing the Lord's work, but you're not. You're fooling yourself because you're not willing to confront the harder issue, which is that you don't know how to focus and you don't know how to say no. And it also means you don't know how to say no to customers because you cannot sell everyone. Even if you give everything away for free, you'll have people who complain. So people complaining is going to be a constant in business. You might as well have them complain and be profitable and help the people who are swimming towards you. And this is actually pretty near and dear to me because when I met Leila, my wife, she was a trainer and she actually had this bleeding heart syndrome, if you will. And she was like, I just want to build a company where people really love working and I just want to help a lot of people. And I said, do you think it's possible that you will be able to help more people if you make money? And she thought about it for a while and she was like, yeah, I think so. And so that was actually one of the first conversations we had on our first date., that led into all the things that we have today. And so this is what we did to solve problem number one. We killed the vampire, all right? Because right now they had something that was sucking up their cash flow and preventing them from scaling. Now he had this hope, maybe I'll sell the software down the line. I was like, dude, you're not gonna sell the software. It's not good enough. You don't have any money. The people that you have working for you are unfocused. It's not gonna work long-term. No one's gonna give you this multiple. Like, this is the thing. People think like, oh, I put some code together. I'm gonna have a 10x on my top line. If you think that, you're not gonna get it. People who are actually in software are going all in and it's still incredibly hard. The second thing is we took the education business and I said, okay, well what if we could use that to just drive more into the services? So we repositioned the very cheap education as free education and then that allows people to ascend themselves into the services. And so this gives you a very powerful front end that gets spread from word of mouth. You can also advertise it, but ultimately we just know that that's going to drive more people into this community where he was teaching things. And then they're like, you know what, this sounds like a lot of work. I'd love to have you do it. And the third thing we did is that, okay, if we've killed the vampire, we repositioned the education to drive the services, what can we do with the services? Well, we wanna double down. And so what does that actually mean? It means we had to reprice the services because their close rate was exceptionally high. Again, the help everyone issue. They just wanted to say yes to every single person, but they weren't able to get nearly as much profit as they probably should have. And so in his business, I saw an easy double or triple for the right avatar. And so what happens is, let's say you've got avatar A, avatar B, and avatar C. The thing is that an A client might be able to spend 10 times more than a C client. And so what most people do is they take A, B, and C, they average them and say, okay, well I'm gonna charge 2x rather than 10x. And they sacrifice their margin and ultimately how much they're able to scale. 'Cause believe it or not, there's still a ton of As. So just serve them first. The best customer you have. This is the ICP, the ideal customer profile. This is what we're doubling down on in the service. Let's find that one customer, that one avatar to sell our one product to, on one channel. So that's how we solve problem number one. Real quick, the reason for this ad is I'm throwing the entrepreneur event of the season and you're invited. This is going to be my biggest book ever. No, not like that. This is going to be my biggest book. Well, not even like that. This is going to be my biggest book ever. Actually, not even like that. This is going to be my biggest book ever, $100 Million Money Models, and I've been preparing to release this book to you for over 2 years. And at the launch event, August 16th, I'm going to be showing you how to get more customers to spend more money with you in less time over and over again. It's the most valuable skill set I have. Now on top of that, come check this out. I've got 5 mystery headliners that have all confirmed they're going to be there live and they've never before shared the same stage. And most of these people don't speak publicly. Now on top of that, I have 4 amazing bonuses that are available to anyone who wants to preorder a book. You don't have to because you can register for free for that. You can show up for free, you can enjoy all of that for nothing. But if you want to preorder a copy of the book, I got 4 bonuses for you. Now on top of that, I've got one project that I've been working on for the last 2 years that I'll be unveiling live. And I can't say what it is, but I can tell you that it's better than an NFT, it's less than a Bitcoin, and every single person who shows up live gets one. So if you want it, click register. I'll see you there live August 16th. Pre-order a book if you want. It's going to be awesome. So problem number 2 is they had broken traffic. So what does this mean? It means they had a leaky bucket, right? So when I asked him to walk me through how he was getting customers, he told me that he created content on YouTube. But when I asked him if that was where most of the leads were coming from, he said actually they go to his Instagram page from YouTube. I was like, okay, so what are your calls to action in the video? I was like, do you send them from your videos to Instagram? He said, no, they actually just randomly find me on Instagram and then they DM us on Instagram and ask us questions and that's ultimately how we get leads. I was like, okay, slow down. So you're getting all your leads from a place that you don't tell them where to go and then when they get to that, Instagram, which they find on accident, your profile doesn't even solicit them to DM you? And he was like, yes. So I was like, great, well, let's solve that now. I make this as an extreme example, but I see this as a problem that a lot of business owners make, which is that like they don't know where the leads are coming from. And so they continue to optimize for the wrong thing. They continue to stick with what's comfortable or what they know instead of adjusting based on their customers, how they behave, right? And so he was probably leaving $20,000, $30,000, $50,000 a month on the table just by not optimizing his traffic that he already was getting. So we did 5 things to solve this problem. So number 1 is we added CTAs at the 30% mark in his YouTube videos to go to Instagram and DM him. The second is that we put that CTA in more places. So we also put it in the description. We also put it in the pinned comment. We also updated his YouTube profile to also have the same CTA. So B, C, and D are all the same concept. And then finally, here's the nasty one, we started proactively DMing people who were following him because he's doing way better on YouTube than he is on Instagram. And so most of those new follows are people who are coming from his YouTube. So we just said, okay, well if someone follows you, DM them and just say, hey, you here for free stuff or do you want help with your legal stuff? They say I want help, then boom, you have a lead. If I'm a business owner, I'm thinking, okay, what can I take from this? So we took someone's existing behavior. We weren't like, oh, let's drive them through a funnel. People were already going to Instagram and DMing him and he already knew how to convert from DMs. Let's not break that. Let's lubricate it. The other piece that we did in terms of why this worked is that we were getting qualified leads up front. So we started filtering them in the DMers by saying free thing or help. And by doing that, it just got so much of the time wasted in the DMs off their plate. So the third problem that we, that we encountered was he had an hourly billing trap, right? He was billing the wrong way. They were charging $250 an hour and the average client value was $1,500. All right, so that's 6 hours on average. This, in my opinion, was leaving a lot on the table because people were actually coming to him not for hourly services, they were coming for a specific result. The issue here is that he actually was underpricing the result. And so trying to say, hey, we're $250 an hour, maybe that's a lot, maybe it's not a lot, no one has a really good idea of what an hourly rate should be unless they just look at other people's hourly rates, which makes you a commodity. Whereas if you say, hey, you want your music to be able to be sold to a record label, I'll get all of the IP protection in place in order for you to do that, well now I can position the price of my thing in relation to the dream outcome that they want, which is to become a music star and ultimately leverage that to become famous and, you know, save the world with their music. And so this underpricing trap is especially common with service providers who price based on time, based on outcome. All right, you want to be value-based, not kind of feature-based in terms of your pricing. So we ditched the hourly billing and we went with $5,800 upfront. Now that sounds— you're like, holy cow, that's way bigger. Now remember, he had plenty of sales conversations that he's able to generate, and he had a pretty good close rate. And so if you have a really good close rate or an exceptionally good close rate, then I hear that and think, oh, we're underpriced. And so on top of this $5,800, we also tagged in a little commission that he gets if they close a deal. And some of these deals are worth several hundred thousand dollars, so it actually adds up to be pretty material for him. But also, I like adding that piece in because when you talk about flat fee plus performance, guess what you think the prospect is thinking? Oh, this is probably gonna happen. So we actually, literally how we present our price will dictate the belief that a prospect is going to have based on what they will believe our incentive structure is. If he just said, hey, I'm 100% commission, then people would be like, holy cow, that's an amazing offer. And a lot of people do that because it is such an amazing offer. But how can we dial this back to find the sweet spot? 'Cause plenty of these musicians might not have been good. And some of the clients that you might work with might not actually be successful. So we have to balance our risk here. But still having an element of performance still drives that conviction. Now, what we did that I think is kind of clever, preferred way of doing things if I ever have the option is having an A/B offer. And so you can A/B anything. Hint, it's coming out of my next book, I'm talking about this. But whenever you have an offer, if you say, would you like chocolate or vanilla? Do you want to start Monday or Tuesday? Do you want to have a male or female masseuse? You can always A/B your offer, alright? And so the B offer that we made here was $25,000 with zero commission. Now what is this offer? This offer is an anchor. Because now it makes the $5,800 offer seem like a steal. So that was the main thing we did to break him out of the hourly billing. Now you might be like, well, he might not sell as many. Well, guess what we did earlier? We've got him a whole bunch more traffic and we got way more people to opt in and we already triaged to the best clients. See how this is all stacking together? So the fourth problem that came up is like, okay, he didn't have a sales process. Now he was good at selling, but he didn't have any kind of process in place to make it a sales motion that is repeatable. And so if your conversions right now are hit or miss and you're not sure what's going on, it's usually because you're missing a sales flow. And so everything was happening ad hoc. So some leads came through Instagram, others booked random calls through Calendly. And to be fair, I'm not hating on him. Like, he's doing a great job and it's small business. We're starting out. That's how it works, right? But if you're in the situation, you have a huge amount of opportunity here by just cleaning this stuff up. So the founder was actually treating every call like a legal consultation. And so he was actually charging the $250 for the call upfront because it was an hour of his time. Which for me, I'm like, oh my God, we're missing out on so many opportunities because we haven't positioned this in any kind of valuable way. It's just like, hey, pay for an hour of my time and then I'll sell you more hours of my time. Not a fan. Instead, I'd rather qualify prospects up front, have them watch a structured sales presentation, make sure that they are qualified for the product or service that we're trying to sell, then sell that thing all up front and then provide the service. And so what this does is This actually matches to what a high-intent lead, how they actually wanna buy. They wanna know that you're legit. They wanna know that you have a process. This isn't your first rodeo, and you demonstrate that even before you do your services. How someone is sold will dictate how legit they think you are. Here's what we implement inside the business to fix the sales motion. So number 1 is we put a VSL. That was 5 to 7 minutes. If you don't know what that is, it's a video sales letter. All it is is basically explaining who, what, where, when, why, this is what we do, and then frequently asked questions. You don't need to overcomplicate this. A lot of people think that there's some big black box of magic that like only these super secret ninja marketers understand. You just answer the questions in the language that they present to you on sales calls. So the normal question someone asks on calls about your products and your services, you take all those questions, you say it back to them in the video and say, a lot of people ask this question, this is how we answer it. A lot of people ask this question, this is how we answer it. That's it, that's all we're doing. Again, it doesn't need to be super long, but it will help qualify customers and you will see a dramatic lift if you only do this. The rumors are true, my next book, $100 Million Money Models, is coming out and I'm launching it at a live event. And at the event, which you can register for free. I'm going to show you how to do 4 things. 1, get more customers to spend more money in less time with you over and over again. And the craziest thing of all is that I've been planning on a secret project for multiple years, and every single person who shows up live is going to get one. And I can't tell you what it is, but I can tell you that it's less than a Bitcoin and more than an NFT. And every single person who shows up live gets one. But you got to be there live August 16th. I'll see you there. The second thing we did is we implement BANT, and I do this in basically every single business that I advise, which is Budget, Authority, Need, and Timing. So this is actually originally from IBM in like the '60s, and it has stuck. So do they have the money? Can they make the decision? Do they need this solution for them right now? And the right now is the timing piece. Are they willing to move forward today? And in terms of asking the question, we could just ask questions like, Can you afford $5,800 in order to get your business, you know, incorporated, your IP protected? Is there anyone else who's involved in this decision? That's authority. What happens if you don't solve this? Need. When would you like to get this done, or when would you like to start? You give them a dropdown like today, tomorrow, or, you know, a few weeks from now. You want to sell, by the way, to people who say today or tomorrow. See, the next thing we did, um, is that we needed to fix this from a consultation to a sales call. All right, which means that we actually have to have a script. We have to clarify whether they're labeled them with a problem over their past experiences, understand the gap between where they are, where they want to go. We aggravate the pain, make sure it's very clear what happens if they don't do it. And I'll give you the simplest structure for this, which is plus plus minus minus plus minus minus plus. All right, so what you show here is you say, hey, if you work with me, you get more good stuff, and if you work with me, you get less bad stuff. Cool. Now if you don't work with me, you're going to get more bad stuff, and if you don't work with me, You're gonna get less good stuff. And so that gives you 4 angles of persuasion that you can do in the sales consultation when you get to the S of the closer framework. So clarify, C, L, label them with a problem, O, overview the past experience, S, sell them the vacation, here we go, E, explain away their concerns. Part of that's gonna be covered in the VSL. If they come back up, you overcome them the same way. And then R, reinforce the decision, which is once they ultimately buy. The next thing we do, which I'm not always a big fan of, but because he had so many unqualified customers, is having a downsell that was basically hands-off. And just said, hey, you can buy this thing for $2,000 to $3,000, rather than saying buy it for, you know, $10 a month, right? It's a different way of monetizing the do-it-yourself path. But I also like this as a downsell because you're like, man, for only $50, you know, if I'm $3K for this and I just pay an extra $2,800 and I can have them do it and make sure it's right, I'd rather have them do it. So we actually have anchors on both sides. So the downsell's not that much less and the anchor's way higher. So it makes the best path or the best option the $5,800, which is the core offer. When we put these pieces in place for the sales process, it creates a predictable system rather than relying on ad hoc or random chance. And the prequalification process makes sure that time is spent with the viable prospects, the good people who've got the money to spend, the, the need to get solved, the authority to make the decision, they want to do it now. And the VSL sets the expectations and a structured approach in the conversation allows for continuous improvement so that you can actually look at the the sales. You can listen to the recordings, you can ask stuff, the VSL, you can ask for the script, and you keep the optimization cycle going. And this is what makes sales repeatable, measurable, and ultimately scalable to a team rather than it just being a vague, we talk to people sometimes approach, which is what a lot of business owners do because, you know, it's worked for you so far. The thing is, is sometimes what's worked for you so far is not going to get you where you want to go. Come check this out real quick. So if you're listening to this and be like, wow, these are really specific instructions, guess what? He was at stage 4, prioritize in the scaling roadmap. What was his constraint? Product. You said yes to anyone who would pay. Feedback from so many different customers creates too many different product directions. Does that sound familiar? It's because businesses behave in patterns. And the nice thing is that because they behave in patterns, they can also be solved with the same patterns. So what do you have to do? Specialize product, do a V2, price to serve that new niche down avatar. That's what we did. Marketing, you had too many unqualified leads. So what do we do? Make better free stuff, the education, and Make more creative to boost volume. Now he had enough creative, but he was leaking. Add qualification and friction so the extra volume self-selects. Doesn't this sound a lot like what we just did? Now, this isn't like a magic trick where I'm like, wait, I just reprint this for every one of these videos. No, it's like businesses behave in patterns. And so if you're stuck right now and you would like to see what we do to help get people unstuck, you can go to acquisition.com/roadmap. We actually made this for ourselves as an internal assessment tool because I wanted to have a more tech-enabled service.. But then I was like, you know what, let's just make it free. And so that's what we did. All right, now if you would like our help doing this, kind of like what we did with this particular attorney, on the next page you could book a call and our team will get to know you, get to know the business, and if it makes sense, invite you out in person to our headquarters where we can actually dig into the business and come up with the most personalized tactics that will ultimately help you scale the business the fastest. So if that sounds interesting, click the link, get the free thing, and book a call. Otherwise, enjoy the rest of the video. So the TL;DR is this: keep the main thing the main thing. And cut what's not working. Second point, traffic is useless without a clear direction. Three, price based on value, not time. If you want to see the actual conversation that I had with this attorney, you can look at it over here. Enjoy.