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The Game w/ Alex Hormozi
7 Business Concepts You've Never Heard of (But Will Make You LOTS of Money) | Ep 675
Feb 21, 2024
27:28
Snipd AI
Exploring seven essential investing concepts for business growth and financial success, including Lifetime Gross Profit, Customer Acquisition Cost, and Return on Invested Capital. Simplifying complex financial metrics with real-life examples. Gain insights on measuring and interpreting these indicators for informed investment decisions and business scaling. Discussing strategies for optimizing cash flow, reducing payback periods, and assessing business risks and growth potential.
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Quick takeaways
- Understanding the Lifetime Gross Profit (LGP) to Customer Acquisition Cost (CAC) ratio is crucial for assessing business profitability and scalability.
- Analyzing Return on Invested Capital (ROIC) and Payback Period helps businesses evaluate expansion costs and time to recoup investments.
Deep dives
Understanding Lifetime Gross Profit and Cost to Acquire a Customer
One of the main ideas discussed in this podcast is the importance of understanding the concept of lifetime gross profit (LGP) and cost to acquire a customer (CAC). LGP measures the total profit a business makes from each customer over their entire lifetime with the business. It takes into account factors like how often a customer buys and how long they stay with the business. On the other hand, CAC refers to how much it costs a business to acquire a new customer, including expenses like advertising and labor costs. By knowing the LGP-to-CAC ratio, businesses can determine their profitability and scalability. A higher ratio indicates a more attractive and scalable business model.
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