Why Most Businesses Stall After $3M | Ep 860
episodePreviously titled “Why Most Businesses Stall After $3M | Ep 890” — renamed by the publisher on Aug 2, 2026
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What are the biggest lessons learned after crossing $250M in revenue?
i wanted to make a video about five business lessons that i just learned crossing 250 million in 2024 and i wanted to make this because like i think at all levels you're always growing like when i was at one million dollars a year you know i uh i had a certain amount of lessons that i had to learn i think it's a 10 million there's certain lessons i'd learned 100 million there's certain lessons i'd learned this last year there's five lessons that are i would say new but would have applied kind of retroactively to all stages of business growth for me. So the first one was the cost of change. And so it's like, what does that really mean? So 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 us 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 right which is pretty significant 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 like this big list of stuff where i'm like man we should need to improve this we need to improve this we need to prove this and i have all these ideas of things that i think that'll improve it but
But when I actually am honest with myself and I think, huh, how much is number one going to 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. And so what's ended up happening is that there's all these little 5% 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. Some of these things I just choose to never do. And I'll try not to stay explicit here, but this is what reminds me of this concept, which is that some shit stays fucked.
How does constant change affect business performance?
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. Now, let's say you do something that is good. 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. 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 and 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 about 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 in relation to education, which in the US it certainly isn't.
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Chapters
8 chapters
1
What are the biggest lessons learned after crossing $250M in revenue?
0:16–1:01
2
What is the cost of change in business?
1:01–2:42
3
How does constant change affect business performance?
2:42–9:40
4
Why is virality often overrated in business?
9:40–15:32
5
What metrics should be used to measure revenue retention?
15:32–17:39
6
How can businesses determine their LTV to CAC ratio?
17:39–22:09
7
What strategies help to scale a business effectively?
22:09–23:51
8
What is the importance of customer retention in business growth?
23:51–33:18
Speakers
1 identifiedMore from The Game with Alex Hormozi
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