You Should Build Your Business Like Harvard

Summary

• Education businesses often struggle because they lack high standards. Like Harvard, to build a notable brand, you must be selective about who you accept and avoid making guarantees about future outcomes.

• Education businesses need continuity. Harvard’s model involves renewing the educational journey, which others can emulate by creating lasting value beyond initial training or courses.

• For a business to be sellable, it needs reliability in future cash flow. Building a strong brand is crucial, as is understanding and creating a demand for ongoing services or content that people continue to find valuable.

• Differentiate between one-time value and ongoing consumables. For example, if you teach someone to sell, they've gained a skill for life, but if you provide a monthly service that continually updates or provides new resources, that can drive recurring revenue.

• Price the onetime education component high, as it provides life-changing value, and keep consumable pricing reasonable. This ensures ongoing engagement without overcharging for continuous access, which could deter customers.

• Avoid confusing education businesses with software services. Starting a software company from an education base without full focus on software is unlikely to succeed.

• Education business can thrive by including community aspects or ongoing deliverables that members regularly use, ensuring they see consistent value and remain engaged over the long term.

• If considering transitioning an education business into a tech business, it often requires full commitment. Examples like Sam Ovens and Alex Becker highlight the success of going all-in on the new venture.

• Understand that high churn can be an inherent feature of a customer base, especially with very small businesses or entrepreneurs who fluctuate in their engagement levels.

• Permanent customer acquisition is crucial. Focus efforts on identifying and nurturing long-term customers by consistently solving their problems and maintaining engagement.

• Financially, it's key to know how much it costs you to acquire a permanent customer and what that customer's lifetime value is. Use this to refine acquisition strategies.

• Before expanding offerings with additional products or services, ensure they solve a need consistently recurring in your business.

• Ultimately, it's okay if your business generates more cash flow and isn't immediately sellable. The focus should be on aligning with your long-term goals and how you want to generate income.

Video

How To Take Action

I suggest starting by establishing high standards for your business. Be selective about who you accept, like Harvard. Don't just take anyone with a credit card. It's important to maintain your brand's value. Next, add continuity to your education business. Create an ongoing learning path, like courses or updates repeatedly offered.

Look at what parts of your service are used just once and what parts are consumables—things customers need regularly. Charge high for the one-time education that gives lifelong value. Price your ongoing services lower so people are happy to pay repeatedly.

Include community aspects for engagement. Networks are valuable because people don’t want to leave a group or community. Secure ongoing value by providing regular updates or new content that keeps customers returning.

Be careful about mixing education and software. Moving from education to tech requires full focus and commitment to succeed.

Find ways to solve permanent customer churn by calculating how much it costs to get a lasting customer and what their lifetime value is. Use this to decide on acquisition strategies.

Lastly, focus on what aligns with your goals. Whether your business is immediately sellable or just high cash-flow, it’s fine if it aligns with your long-term goals and how you want to make money. If considering transitioning to tech, ensure full commitment is there to succeed. It’s about balancing immediate benefits with future prospects, creating a strong foundation, and understanding your customers.

Quotes

"If you want to create a brand around education, you can't let everybody in"

– Alex Hormozi

"A business that has enterprise value has reliability of future cash flow"

– Alex Hormozi

"People in the education space mistake a payment plan for continuity"

– Alex Hormozi

"I prefer to make bets that where if I wait I win"

– Alex Hormozi

"Life's only going in one direction. It's getting shorter"

– Alex Hormozi