5 Things I Just Learned After 14 Years of Business | Ep 846
episodePreviously titled “5 Things I Just Learned After 14 Years of Business | Ep 873” — renamed by the publisher on Aug 2, 2026
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What are the five business lessons learned?
Five business lessons that I just learned, crossing 250 million in 2024. So the first one was the cost of change. It was the first time that I've actually quantified how much does changing something in the business actually cost? So if you would imagine a straight line, right? It's saying, okay, this is normal business activity, right? Straight line is going across.
What is the cost of change in business?
Now, let's imagine we want to change something, right? So that's like our normal revenue, but then we decide, you know what? I'm going to change something in the business. So what ends up happening is this little line kind of dips down. And I've estimated just for my kind of like this, again, there's no science behind this, just my estimate. that I get about a 20% decrease in effectiveness across any function that I'm going to change, especially if it's manual. Now, if you split test a headline, that's different, but if you're like, hey, we're changing our onboarding process, or we're changing our sales process, or we're changing our outbound process, or we're changing our something that people are involved with, we tend to get a decrease immediately of 20% in a performance, which is pretty significant.
And so as soon as I realized that we had almost this guaranteed cost of change, which is about 20%, I was able to quantify what things were worth doing. Because if you're anything like me, I have this big list of stuff where I'm like, man, we need to improve this, we need to improve this, we need to improve this, and I have all these ideas of things that I think that'll improve it. But when I actually am honest with myself and I think, huh, how much is number one gonna actually improve the business? If I say, well, I think I'd maybe get us a 5% improvement, Well, if I have a guaranteed 20% decrease or decrement in performance, and I have a 5% incremental increase in performance, do I want to take a 20% guaranteed loss to have a potential for a 5% gain? Probably not.
Why is perfection detrimental to business performance?
And so what's ended up happening is that there's all these little 5%, 5% little improvements that I think could happen, but there's only like one or two, 20, 30, 50% plus improvements I think we can do in the business. And so what happens is some of these things I just choose to never do. And I'll try not to stay explicit here, but some stays... You just have to accept that the business will not be perfect, but your chase of perfection will actually make your current business worse because you're constantly changing things. But let me spell this out one more level. So let's say you have your 20% loss, right? Now, let's say you do something that is good, right? You start going up, right? 20% loss, it starts going back up.
But what happens if you at the same time say, oh, well, now I'm going to start changing something else, right? And so basically you incur this permanent 20% decrease because you're always changing something. So you're always 20% below where you should be in the business. 20% is a lot. Oftentimes in the business, my business has done exceptionally well when I just let them breathe. Because here's the other part that no one tells you. If you change nothing, you get about a 5% guaranteed improvement. Think how crazy that is. If you change nothing, you just 5%, you can book it. Think about GDP. Partially, some people are like, oh, that must be, you know, that could be in relation to education, which in the U.S. it certainly isn't.
It could be in relation to technology in terms of GDP improvement, or it could be an increase because of population, which in the U.S. there's no population increase, or not really. For me, I just kind of see that across all businesses that if you just let people do stuff, they just get better at it, right? People get more efficient at it. I'll leave you one tactical framework that you can kind of use to think through this, which is, this is actually from the investing world that I've borrowed as an entrepreneur, which is called ICE, all right? And so it's an acronym, I stands for impact, which is like how big, that's that 20%, that's that 50%. How big of an impact do I think this is gonna make on the business, right?
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Chapters
8 chapters
1
What are the five business lessons learned?
0:00–0:20
2
What is the cost of change in business?
0:20–1:40
3
Why is perfection detrimental to business performance?
1:40–5:41
4
How to evaluate the impact of business changes?
5:41–14:04
5
What defines revenue retention versus virality?
14:04–14:51
6
How to measure customer retention effectively?
14:51–18:53
7
What is the ideal LTV to CAC ratio for businesses?
18:53–27:23
8
How to scale a manual service-based business?
27:23–34:15
Speakers
1 identifiedMore from The Game with Alex Hormozi
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