👏 What I learned at Acquisition.com Scaling Workshop in Las Vegas?

Last week, I spent two days with Leila and Alex Hormozi and the Acquisition.com Team in Las Vegas at their Scaling Workshop. In this article, you will learn how to grow your business by overcoming growth constraints and making it more attractive to investors by increasing value and lowering risk.

📈 Identify your business constraints

🏢 Understand basic company valuation

🚀 VAM strategies ↑ Value vs. ↓ Risk

🔗 ACQ - Scaling Workshop in Las Vegas

If you have a business with less than $5M in revenue, this event is for you. Especially if you have hit a growth plateau, this event can help you unlock the constraints that are holding you and your company back from growing. Regardless of whether you want a business for life or to sell it, creating a business that is sellable is always a long-term win.

If your business is under $1M, it's good for you to know these strategies, but at the stage you are at, you need to simply focus on growing your business without taking on too much risk... and that's okay. I mention this because another fallacy from these types of events is to actually try to scale your company too quickly.

Until you have some sort of product-market fit and revenues between $3M to $5M, you should focus on growing your business. And if you have been listening to Alex Hormozi, then you would know there are only two ways to do this: get more customers or make them worth more. So, focus on this first!

Ben Rodman, the Managing Director at Acquisition.com, gave the example of scaling your business is like selling a house. To make it more sellable, you need to make it more livable. In the process, sometimes you realize you don't want to sell the house and keep it after all. Either way, if you worry about making the house sellable before building it, you are not focused on building your business.

Once the business is out of its infancy stage, then you can focus on the strategies and actions to begin thinking like a great CEO. Great CEOs think like investors by allocating resources (money and actions) to the opportunity that will provide the most value to the company. This is why CEOs who are owners are more committed to the journey.

Another reason not to focus on selling a company before $5M in revenue is that most companies under this revenue line are not attractive enough for institutional investors. However, once you reach this level of yearly top-line revenue, you unlock a new way to generate value by selling the company itself. In this case, you can shift your strategy to increase value and decrease risks.

For the first time in my life, I was shown during the workshop how to do a proper company valuation. This made the entire experience worthwhile. As Warren Buffet said: "Value is what you get. Price is what you pay."

Here are some of the basic concepts when looking at business valuation. A bad business costs a lot of money to get started, runs at capacity, and makes little profit. A good business, on the other hand, grows by itself, without capital, and makes tons of profit.

Alex Hormozi's rubric on this is that the best products are unique, expensive, sticky, and sell with owner/founders that are hardworking, intelligent, and honest. Simply put, from the $100M Offer Book, you need to be faster, easier, and more certain. You need to give them what they want, then do more and do it better.

As Alex explained during the Q&A, "companies are all the same at a higher level." For him, high enough it's all the same company and the same problems, which is a mix of increasing value or lowering risk.

↑ Increase Value

- Revenue per Year (Top Line)

- Revenue Growth per Year

- EBITDA (Bottom Line)

- EBITDA Margin (Net Margin)

- Revenue Retention

- LTV to CAC Ratio

↓ Decrease Risk

- Key Man Risk

- Unicorn Employee

- Key Customer Risk

- Single Channel Risk

- Market Risk

- Data Risk

Company Valuation Formula

EBITDA × EBITDA Multiple = Company Valuation

At the end of the day, a business is acquired when both the business owner and the investor are happy with the price. Since business investments are compared to any other investment, investors will worry about "preservation of capital and growth."

Investors can invest in the S&P 500 or residential real estate for low risk and low effort with a 10% return. Or in your company for high risk and high effort. Therefore, that Risk-to-Return Ratio needs to be higher to make it worthwhile for the investor to invest in the first place. This is why 80% of businesses can't sell.

Most EBITDA Margins range from 2 to 3.5 with an average multiple of 2.46. Therefore, based on your EBITDA, your company might not be worth investing in. It's not that it's worthless, it's just not sellable. And you can't fabricate enterprise value out of thin air; this often requires major company-wide efforts to increase the EBITDA Multiple to be worth an investor's interest.

This is why Leila and Alex Hormozi created the Value Acceleration Method (VAM). It's their true and tested process to increase value and lower risk, which they used to sell their 3 companies and many more in the Acquisition.com portfolio. But you need to attend the workshop to find out how VAM works and how it can make your company more sellable.

What I can tell you is that a key concept is for you to identify the biggest constraint in your business. Companies grow to their constraints. Therefore, through a data-driven process, you need to identify and confirm the constraint, then find a solution. Then execute and implement the strategy and tactics to solve the constraint and grow the business.

How do we find the right problem?

Problem/Solution Matrix

- Wrong Problem → Wrong Solution

- Wrong Problem → Right Solution

- Right Problem → Wrong Solution

- Right Problem → Right Solution

Scaling Action Plan

- Confirm Constraint

- Identify Solution

- Breakdown Step-by-Step

- Fix it. Do it again...

How to solve problems? Framework (What → How → Who)

- What? More Customers. Increase LTV. Remove Risks.

- How? More. Better. New.

- Who? Hire.

At the end of the day, the workshop and the teachings of Leila and Alex Hormozi are that if you don't apply and implement it, then you don't learn. Learning is having the same condition but exerting new behavior. That's the speed of learning. Because it does not matter if you don't apply. This is why I plan to write 3 more articles on the 3 main things I plan to implement from the Scaling Workshop with Leila and Alex Hormozi in Las Vegas. Stay tuned!

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