80/20 Analysis For More Profit

Good morning. Are you making decisions based on data? Or are you simply guessing what will work in your business? The average business owner still doesn’t know their numbers and financials. Time to change that today. 💹 

Follow The Profit

It’s important to learn and test new methods of growing your business. However, most business owners would benefit from simply following the profit. You know, if you begin to follow the money, you might make more of it. 🤯 

Sarcasm aside, you need to take 30-60 minutes each week to analyze which of your traffic sources is actually creating cash. Not only that, you need to cut what is not bringing you cash. It will help you dial in your focus and put the blinders on what actually matters. This is difficult to do — many founders are in denial that something isn’t working. Especially if they put a lot of energy into it.

80/20 Analysis

I first read the book 80/20 Principle last year. As simple as the concept is, it blew my mind. I discovered that about 20 percent of my clients were bringing me 83 percent of my entire revenue. I then did the analysis for an e-commerce company and found 2 of their products were pulling in about 60 percent of their revenue. Crazy, right?

After discovering this, I spent all my time working on those 2 products. For my own business, I put most of my attention to the clients who kept the lights on. 80/20 is the first step you must go through before you make decisions based on data. 📈 

What To Measure And How

In a simple, lean business, all you really need to measure is cash flow. You want to see which traffic sources, products, offers, customers, and clients are bringing you the most profit. Not revenue, but actual profit. Start here. Don’t get bogged down in worrying too much about organic reach, ad clicks, and other metrics that barely move the needle.

You want to know how much cash each customer has brought you in total (AKA your Lifetime Value), your AOV (average order value), and the PPC (average profit per customer). These metrics are needle-moving. Doing this alone will put you far ahead of most business owners.

Eventually, you can use generative AI to help you analyze this data. You can ask ChatGPT which questions are useful for creating more profit. Then, get some feedback from the AI to scan these numbers and help direct your attention to what matters: profit.

If You Need Help With 80/20 👇️ 

Part of a growth consultant’s job is to help you identify your most profitable sector. It’s time to find what works best and scale it up efficiently. If you want to use data correctly and make better decisions in your business, book a session with me here for some help.

Thanks for reading,

Austin Weatherhead | Founder @ Zunesty