The Game with Alex Hormozi 7 Business Concepts You've Never Heard of (But Will Make You LOTS of Money) | Ep 675
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Feb 21, 2024 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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LTGP:CAC Ratio Defines Profitability
- Lifetime Gross Profit to Customer Acquisition Cost ratio (LTGP:CAC) is the core economic unit of any business.
- A higher ratio means scalable and attractive business growth potential.
Calculate Customer Lifespan Simply
- Calculate average customer lifespan using churn: 1 divided by churn rate fraction.
- Use this simple method to understand customer retention even without complex software.
Service Business Gross Profit Example
- In a service business, an employee making $4,000 per month handling 10 customers means $6,000 monthly gross profit.
- Multiplying by 10 months of customer retention gives $6,000 lifetime gross profit per customer.