📈 How can we measure the value of two companies' growth?

Alex Hormozi explains two companies. One is new and changes a lot. The other is older and grows slowly. The older one is worth more because it is more reliable and likely to make money in the future.

-- 📉 Stability breeds confidence in future profits.

⏳ Longevity enhances value over volatility.
- 🔍 Mitigate risks to sustain business growth.

contrasting Business Stability vs. Volatility

In the video "The Tale of 2 Companies" from Alex Hormozi, let me show you two examples of two companies. One company is super volatile; it has big years and low years, and profit swings a lot. It's only been around for 2 years. On the other hand, you've got a company that's been around for 10 years and has grown at 10% a year. They are both, in this year, the exact same size. Which company is more valuable? This one, the second one, and the reason is that you have a high degree of confidence that it will continue to generate profits into the future and ideally grow in those profits. We think about all the different ways that a business can go to zero and consider how we can prevent all of those from happening.

Volatility can kill a business fast. Stability builds value over time. Trust in consistent growth, and you find the real strength in investment and future returns.

In a comparative analysis of two businesses, Hormozi highlights that consistent, steady growth often signifies greater value compared to erratic, risky profit fluctuations. The ability to predict future performance and minimize volatility is key. Hormozi stresses the importance of understanding underlying risks that could jeopardize a company's survival, such as market changes or operational inefficiencies. By applying these insights, one can better assess the long-term potential of companies, focusing on risk management and growth sustainability as pivotal factors in determining overall value.

Reflect on your insights in a brief response of 25 to 100 words in the comments below. Also, engage with your classmates by replying to two comments and liking three others that enrich the discussion!

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