5 DEADLY mistakes business owners make that put them OUT OF BUSINESS…

Summary

• When making changes in your business, rely on statistics, survey data, and financials rather than emotions, intuition, or opinions. For example, when we reduced our prices based on gut feelings, we lost around five or six million in top-line revenue which taught me the importance of data-backed decisions.
• Focus is crucial for business teams; split attention leads to decreased performance. When we tried to allocate team members to work simultaneously on different projects like Gym Launch and Prestige Labs, it didn't work well. Ensure adequate resources and infrastructure before expanding product lines or services.
• Pay close attention to customer feedback instead of assuming what they want. We invested a million dollars in a retention-based CRM for gyms while our clients primarily wanted more leads. This mistake highlighted the importance of understanding customer needs directly and acting on that information.
• Maintain clean data and accurate financials in your business, which is fundamental for making informed decisions. Previously, incorrect churn data nearly led us to unnecessary business changes, demonstrating the impact of reliable data on business health.
• Be cautious when delegating hiring responsibilities, especially to inexperienced leaders. Unqualified or overhired teams can cause inefficiency and damage to the company as seen with our marketing department fiasco in 2018, which resulted in significant restructuring.

As an actionable strategy, consider asking "how would I break my business?" and then do the opposite to identify clear steps for growth and improvement. This approach helps simplify complex decisions and avoid common pitfalls in business management.

Video

How To Take Action

To make smart changes, I would first look at the numbers, like stats and financials, before just going with what I feel. If I think prices need to change, I'd check surveys and data to make sure it's the right move.

When adding new stuff to the business, I would make sure my team isn't spread too thin. More projects mean we need more hands on deck, so things don't slip through the cracks.

Listening to customers is super important. I would ask them what they need most before I start working on a solution. Instead of guessing, getting direct feedback means I won’t waste time and money on the wrong thing.

Keeping track of money and data helps me make good choices. If my numbers are messed up, I might do something silly for my business. So, I'd have someone I trust keep those details clean and organized.

When hiring people, being careful is key. I wouldn't let just anyone hire for me, especially if they're new to it. It's better to have a few good workers than a bunch who aren’t the best fit.

Last thing, asking "how could I mess up my business?" might seem weird, but doing the opposite of that gives me clear steps to make things better. When I see someone else do something that doesn't work, I'd just avoid doing the same in my business.

By following these steps, I can avoid common traps and grow my business in a solid and smart way.

Quotes by Leila Hormozi

"Making changes in your business based off of emotion, intuition, opinions rather than stats, data etc."

– Leila Hormozi

"Focus is more important than time."

– Leila Hormozi

"Ignore my customers' feedback."

– Leila Hormozi

"Neglect systems for clean data and clean financials."

– Leila Hormozi

"Allow inexperienced people to hire always."

– Leila Hormozi

Full Transcript

what is up in this video today what i want to share with you are five ways to break your business this actually came about because alex and i were at dinner the other night with somebody and they were asking us they're like how do you grow your business and this is obviously a question too that like you know when we're stopped by people and they're asking us things they're like can you help me grow my business i just have questions about growing my business and alex and i like to actually frame this a different way and we actually do this with each other a lot which is okay well if i wanted to break my business what would i do and then let's look at what the opposite of that looks like and so i wanted to break down with you uh five things that i have done that have broken my business and what i've learned from them to then actually grow it from understanding those lessons and failures okay so the first one is making changes in your business based off of emotion intuition opinions rather than stats data etc like survey data statistics your financials all that jazz and this is something that actually happened in i want to say late 2018 which was we're at one of our quarterly meetups and we were talking about our pricing and um our team came to us and kind of sidelined uh the two of us and said you know we really think we need to reduce our prices we just think that we're too high for the marketplace right now etc etc and it was for one of our top level programs one of our companies and we had no stats we had no numbers we had no surveys done we hadn't asked our clients i mean like who wouldn't want the product to be cheaper like that's ridiculous so even if you ask it's like the people want it cheaper faster better cheaper always but instead we just kind of listen to the opinions of others based on their gut intuitions and a lot of them their feelings like they just didn't know how to solve a problem so they felt stressed about it and they wanted to solve it and so we actually did reduce our prices and instead of having happy customers reducing churn um increasing our profit margins everything actually did the opposite which is we lost you know i want to say i don't know i think maybe five or six million in uh top line that year because we cut our prices did it reduce churn no did it increase customer satisfaction no and if i look back now and i look at the lenses i know and having done like pricing workshops and reading books and such it wasn't enough of a price increase to make a difference it was just based on everyone's cut they're like maybe we cut it by you know 15 people are really gonna you know stick longer and they're gonna be happier and all that nobody gave a and so that was the first thing that i learned is if i ever see or especially when we're advising an entrepreneur or ceo and they're making a decision i'm like where's the data to back this up okay you want to hire this new position okay you want to do this new customer flow okay you want to start this new product line where did you acquire that information or is it just a emotional urge that you have or it's a gut feeling that people on your team have like we cannot make decisions based on that now when we make decisions and even when we start our software company we priced that we did pricing surveys we learned from uh patrick campbell who has a great um little mini booklet on basically how to do this and we rolled that out and because of that the business was very successful just based on the fact that we used a framework to figure out how to price our product that is the first thing i would say is if you want to break your business just go with your gut on what to charge uh what to make decisions based off of don't use data don't use statistics the second thing that you would do to break your business is i would open up more product lines i would open up new levels of customer service and i would add more complexity without paying any mind to my infrastructure here's what i mean by this is that when we started gym launch we had a team and there was a core team there right and then we decided that we're going to start prestige labs prestige labs was um fueled by gem launch essentially because it was they are products that you the gym sell through their facilities for the most part when we're looking at that you know we're new and we don't understand all this and we're like well couldn't we just like split the teams like they can do like half gym launch and half prestige labs and we didn't do that to the full six cent but we did do it with about 50 of the teams we said okay you've got bandwidth because they did a lot of them had bandwidth take that other 50 of your bandwidth and work on this company and what i learned through that process is that focus is more important than time so um when it comes to teams when it comes to employees this is one of my biggest lessons of all time is that they may have the time but they don't have the focus or the bandwidth mentally to focus on two things now if we start a new product line if we add a new level of customer service we have to look at what resources we have to acquire you know are we going to go hire people how are we going to build this team and how is it not going to take away from any of the existing resources we have in the company and what you see a lot of the times with newer companies and where people break is that they just stretch the current that they have and they're like well you have an extra 15 hours a week 10 hours a week why would you not be able to focus on this i'm able to focus on all this it's like well clearly you're not well enough because you're breaking your business right and that's just the truth most people can't focus on multiple things and especially if you are a newer business there is a very small likelihood that you have the systems to even make it easy for someone to do multiple things at once and so that is the second way to break your business is that you open up and you expand without adding the infrastructure needed right and so you split everyone's focus even if they have the time and you just can't do it the third is that i would ignore my customers feedback okay and so when i say ignore my customers feedback i'll tell you a story about this which is in 2018 we decided that we were going to invest in technology for gemalge and that technology was going to be a crm for gyms that helped retain customers and it was proactive and it had some smart technology and all that jazz um and it was also going to upsell customers it was going to sell them products it was going to help with a lot of things and during the i want to say the eight month development process while we were amid doing this um a lot of our customers kept saying they're like uh you know we just really want more leads we just really want uh more customers and at this point the cost of facebook ads were rising and so for them to acquire customers it was getting harder and harder but we were working on this project which was retention based and so we get really far down this path and i remember uh there was one customer particularly he was making like an uproar the community and so i actually ended up meeting with him and i said like what is going on he's like do you guys not get it he's like we don't care about retention he's like we just want more leads the way he said it was obviously like he was being actually kind of a dick um and the whole conversation was kind of stupid but what i took from it was that there is truth to that and so we went we talked to other customers we talked to other people and we realized that we were focused on what we thought the customer wanted rather than just going and asking the customer is this what you want and a lot of the times it's also not just asking the customer the customers that are necessarily your best top customers but asking all levels of customers that you have because if your top customers are only you know four percent of your business then asking them is not going to be useful because the rest of the people just want more leads and that was actually the case for us is that you know our very top customers which very small percentage of the business wanted the retention system wanted the upsell system etc but most of our customers just wanted more leads and so we would have saved a million dollars we had just asked our customers what do you want rather than thinking we knew what they wanted for them and so that was the lesson learned there if you want to break your business ignore your customers if you would like to lose a million dollars like we did ignore your customers don't get feedback before you start something the fourth piece is that i would if i wanted to break my business i would neglect systems for clean data and clean financials and this is something i think in the beginning of business i don't even think you understand what that looks like and that's okay but you have to bring in someone at some point who does and i'll explain why that's very important is that we had i had known that we had issues in our you know our finance department for uh you know since the business had been conceived and kind of you know was like well we're getting by and it's just finance and how important could it be and and then it came to a season where i remember our finance team uh i got the reporting one week and it was like all of a sudden churn had gone up to like it was like 27 and i was like what the hell i was like oh my gosh should we call like an emergency meeting we took an entire week trying to figure out what was going on at the end of that week what we found out was that someone had just entered the wrong reporting numbers and that our turnout actually been staying the same and it was crazy because we were going to make some huge changes as a business we're like this is insane if it's happening like this and for the next three months as i then i started to realize that that department needed more infrastructure but through that time they were still feeding us all this false data and so it felt like you know alex and i knew that we needed to make database decisions and that the company needed to make decisions based off of surveys and metrics and numbers and this the department just couldn't keep up it couldn't provide it to us we were just kind of shooting blind and we made some decisions that i think you know were not helpful to the business at all because we didn't have any data and it's funny because then we brought in financial leaders we turned around the finance department and now it's like every decision is made off of data every single leader uses the data we all use the reporting that we have we all use the dashboards that we have we make decisions based off that and that is how i can monitor the health of the business and i look back now and understand how blind i was without that information looking at the decisions i made i'm like well of course you made those decisions you didn't have any data or the data you had was wrong and so if you want to break your business don't pay attention to the data don't make sure it's correct and just again kind of like number one use your gut to make decisions really good idea and then lastly number five is if i wanted to break my business i would allow unexperienced people to hire always and this is something that as uh our first company gemmon was growing really quickly i literally didn't have the time in my calendar unless i you know sacrificed everything else in life which i was already working 18 hours a day at that point so it didn't really i don't know what else you would sacrifice besides sleep which you know i was like not not gonna happen i was like i have to teach other people to hire and i did that but i did it too much to an extent i almost placed too much faith in them and it wasn't because i think that here's the thing is that it's good to trust people and hand that off to a competent leader manager but the key piece was that i handed off to inexperienced leaders and managers and so i had inexperienced leaders and managers hiring and what happened with that is that they overhired and they hired the wrong kinds of people for the business the worst one was our marketing team in 2018 you know i let go of the director who had been in there um who was just too inexperienced to run the team and we were essentially running it you know behind him playing like puppeteer when i really got to dive into the team i was like holy crap i think that we had 17 people in that department i ended up cutting it down to five and it was because it was so inefficient there was so much um excess and the team and the people that were hired were not the kind of people that we're going to do well in our company and so it's really funny because i through the process i felt terrible because you know anytime you go and you flip around department you let people go just you feel like um but i remember we had hired two graphic designers and it was like a month later and i'm looking in our canva account and these graphic designers have been making like all our social media posts and all that stuff i'm in our company canva and all of a sudden i see all these like purchases for all these posting things and i look and the damned graphic designer had literally been going to canva and then purchasing their work in canva with our company credit card and then presenting it like they've done it crazy that is what i learned from that and that like completely screwed up our marketing department for like a year um and it was really obnoxious to bounce back from um and we did and obviously you know the department's great now but it was just a complete freaking mess and it's only because i did everything right except for remembering that these people were also inexperienced and so that they could not uh they didn't have you know conditioned lenses to see uh hiring through and so that is how you can break your business it's just let people who've never hired people hire everybody for your business it just sucks if i were you and i was watching this video um at least what i hope you get from this video is that you can take this and apply this to any tactical or strategic decision you're making right now which is one if you're trying to ask how do i do this instead say how do i do the opposite of this um if you're like how do i lose weight instead of asking that question you would be like how do i gain weight right and then oftentimes you can then just look at what the opposite of that would be and that will help you become more clear about how to grow your business because i think a lot of people think it's this elusive thing and you have to be really smart and all the stuff but in actuality just think how would i break my business and then do the opposite of that right look at somebody who's a terrible business and do the opposite of it and a lot of the times that helps me is if i think of a friend i have whom maybe i consider them to be the same level business acumen as me and i think if i were them how would i absolutely destroy my business and i think about that and then i'm like okay and then how would they absolutely dominate this business and that helps me think a lot more clearly when i'm trying to make decisions around how to grow business um and how to make tactical and strategic decisions along the way so i hope that video is useful use it do the opposite of everything i just said there and i will see you on the next one