💸 What hidden costs are affecting your profit margins?

Alex Hormozi explains a big mistake for business owners. They think spending $50 to make $100 is good. But they only make $10 profit. This is not a smart plan for their business.

-- ⚠️ Understand true cost versus revenue.

💰 Focus on profit margins, not sales.
- 📊 Analyze spending to ensure profitability.

Understanding True Profitability Mistakes

In the video "Don't make this mistake..." from Alex Hormozi, this is probably one of the biggest mistakes that business owners make. Let's say I sell these for $10, but it costs me $9, and the average person buys 10 pieces, so it's $100 in revenue. However, it costs me $90 to sell the 100. If my team comes to me and says, "Dude, we're killing it! We're spending $50 to get a $100 sale; we should do this all day," but what's really happening is I'm actually spending $50 to make $10 in gross profit. Not a good equation.

Many business owners fail to grasp the true cost of their sales. They see revenue but overlook expenses, which eat into profit. Focus on net profit to build a sustainable business.

In his discussion, Alex Hormozi emphasizes the invisible costs that can erode profit margins, particularly through a real-world example of misleading revenue generation. He illustrates how superficial metrics can obscure the larger picture, urging owners to delve deeply into expenses associated with sales processes. By dissecting costs beyond mere advertising expenses, his insights guide business leaders to identify where inefficiencies lie—enabling them to adjust strategies for improved profitability. Reflect on your own business operations and share your insights into unnoticed costs in the comments below, discussing how they have affected your bottom line. Engage further by responding to two of your peers and liking three comments that enhance this valuable dialogue.

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