You may have heard the famous pareto rule which states, 20% of the causes produces 80% of the efforts. Wouldn’t be great, if we know what 20% of causes and just do that and get 80% of the results. For eg. Let say you spend on marketing 10K every year. In that 2K amount spent on certain activities is going to get 80% of the returns. If you can know what those critical activities are, you can save the rest of the 8000 and spend on other important needs.
Simlarly 80% of your profits may be coming from just 20% of your customers or products/service. In otherwords 20% of your efforts produce 80% of your profits or 80% of your efforts doesn’t add much value. Just by understanding where your efforts are more valuable, you may able to do business with very less time and resources and get most benefits.
80 / 20 Rule for your profits
At myBooks team, we wanted to address this problem to help business owners identify where their most valuable business is happening. We know we have the data to get this insights. So we developed analytical functions and reports to get this important insight. As a result of it, we are able to create profitability of customers and products/services. Using these profitability reports business owner identify who are the most profitable and least profitable customer or products/services are. With this insight, they can give more attention to their top customer and product/services. May be also make decision on discontinuing their least profitable customer or products/services.
This key insights on Top 5 customer or products/services is available right in the dashboard of myBooks. You can get this insight for any time selection like current quarter, previous quarter etc. By this you can see if there is any drop in top 5 and track, monitor and make necessary changes in case any action is required.
We have even created a profit & loss report which you can run by customer selection. You can run a profit & loss report for multiple customers and compare how the income and expense trending against each one of them. This can be done for your products or services to. If you have product or service line, which is not making much profits and taking lot of effort, it may be a good idea to evaluate the continuation of such product or service line items.
We hope this feature will be very valuable for myBooks user community, If you have any comments or feedback, Please feel free to share with us. We would love to hear from you drop in a comment below.