The 5 Things I Look For Before Starting Any Business | Ep 967

Alex Hormozi· Host0:00

If I wanted to start the perfect business, these are the things that I would focus on. So think of these like the five advantages that make any business easier to grow and way more profitable. And this is what's helped me build a portfolio of companies that generated over two hundred and fifty million dollars in revenue last year alone. And so for each one, I'll describe what it is, I'll give examples, and I'll show you industries that excel in them and industries that suck. There are very few businesses that have all five, and even having one of these makes the business that you have better than others. And so just think of this video as like an S-tier ranking for opportunity vehicles. So if you've ever heard or thought, "Man, like, I feel like I've got a, you know, level ten skill set and a level two opportunity," then this video is for you. So let's get started with number one: sticky. It's the most important thing. If you do not have what's called revenue retention, you have nothing. Revenue retention just means how much revenue from last year you retain to the next year. That's all it is. If you don't have that, you will always be in the sales business. So John Paul DeJoria, who started, uh, Paul Mitchell, he started Patrón, he says this quote that I always remember. He says, "You want to be in the resale business, not in the sales business." And so there's two types of retention that people discuss. One is logo retention, which is if you had a hundred customers in January, how many do you have now? And then the second is the revenue retention piece, which is if you made a hundred dollars from those customers in aggregate in January, how much do you make from that same cohort or group of customers today? And so logo retention, just to be clear, you almost never have a hundred percent logo retention. Like, you can't get more than a hundred percent. You only have a certain amount of customers, and it only decays over time. And so some reasons for that is that there's something called structural churn. So someone moves away, they die, their, you know, their business dies, there's a f... you know, they fire the employee, if you do a payroll thing, who use