AskBiz Blog

Analytics

25 AskBiz guides on analytics, covering Inventory, Profitability, Marketing and related operating decisions for SME founders.

25

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ABC Analysis: 20% of SKUs (Category A) Generate 80% of Revenue (Focus Here)

Store 1000 SKUs. By revenue: Top 200 SKUs (Category A, 20%) = SGD 800K revenue (80% of total). Next 300 SKUs (Category B, 30%) = SGD 150K (15%). Last 500 SKUs (Category C, 50%) = SGD 50K (5%). Focus: stock Category A aggressively (never stock-out), monitor Category B weekly, stock Category C conservatively (order-to-demand). Inventory investment: 50% in Category A (high sales), 30% in Category B, 20% in Category C. Rebalance quarterly as sales mix shifts.

Break-Even Point: 1000 Units/Month at SGD 50 Price (Below This = Loss)

Restaurant: fixed costs SGD 30K/month (rent, utilities, staff). Variable cost per meal SGD 8 (COGS). Menu price SGD 20/meal. Contribution margin: SGD 20 - SGD 8 = SGD 12/unit. Break-even: SGD 30K ÷ SGD 12 = 2500 meals/month. Below 2500 = loss. Above 2500 = profit. Daily BEP: 2500 ÷ 30 days = ~85 meals/day. If you sell 100 meals/day, profit = (100 - 85) × SGD 12 = SGD 180/day = SGD 5.4K/month profit.

CAC Payback: SGD 500 to Acquire, SGD 50/Month Revenue, 10-Month Payback = Long

E-commerce: monthly marketing spend SGD 10K, customers acquired 20. CAC = SGD 500/customer. Monthly profit per customer SGD 50 (gross profit after COGS/support). Payback: SGD 500 ÷ SGD 50 = 10 months. If customer LTV = 12 months of profit = SGD 600, payback 10 months is acceptable (ROI 20% = SGD 100 profit above CAC). But if LTV = 8 months (churn early) = SGD 400 profit, then payback is unprofitable (lose SGD 100 per customer).

Cash Conversion Cycle: 60 Days (Receive Payment After 30 Days, Pay Supplier in 7) = Burn

Restaurant: holds inventory 5 days (perishable goods), collects payment 30 days average (B2B catering), pays suppliers 7 days. CCC = 5 + 30 - 7 = 28 days. Working capital needed: 28 days × average daily COGS SGD 1K = SGD 28K. Optimization: reduce inventory to 3 days (just-in-time), collect in 15 days (earlier invoicing), extend supplier payment to 14 days. New CCC = 3 + 15 - 14 = 4 days. Working capital needed: SGD 4K (freed SGD 24K). Opportunity: invest SGD 24K in growth (marketing, expansion).

Churn Prediction: 3 Months Without Purchase = 85% Won't Return (Reactivate Now)

Retail: customer last purchase Jan, now April (3 months). Historical data: 85% of customers inactive 3 months never return (churn). Send reactivation email April (before 3-month mark): 25% open rate, 5-10% click through, 2-3% purchase rate. Reactivation value: SGD 100 order × 2-3% = SGD 2-3 revenue per reactivation attempt. Cost: email SGD 0.01. ROI: 200-300x. Send 1000 at-risk emails = SGD 2-3K recovered revenue.

Cohort Analysis: June Customers Are 30% More Loyal Than March (Why?)

Retail store: cohort analysis shows June customers 40% repeat rate (6 months later = 40% repurchased), March customers only 10% repeat. 30% gap suggests seasonal difference. Root cause: June inventory premium brands (higher margin items), March economy brands (lower loyalty). Recommendation: stock premium brands year-round, improve March acquisition messaging (clarify brand positioning). Potential: raise March cohort repeat to 25% = +50% revenue from March customers alone = SGD 50K additional annual revenue.

Concentration Risk: 3 Customers = 40% of Revenue (Fragile Business)

B2B manufacturer SGD 10M annual revenue: top 3 customers = SGD 4M (40%). Lose 1 customer = SGD 3.33M revenue, -10% impact. Business at risk if customer consolidates (merger, relocation) or disputes. Concentration risk: unacceptable. Target: top 3 customers <30% of revenue (each <10%). Action: identify 10 similar-size new customers over 2 years, grow revenue from SGD 10M to SGD 15M such that top 3 = 30% of new base. Reduce risk, smoother growth.

Customer LTV: Premium Segment (SGD 5K/Customer) vs Budget Segment (SGD 500/Customer)

Retail: premium customers (bought furniture, avg SGD 2K/order, 5 orders lifetime) = SGD 10K revenue, minus 35% COGS = SGD 6.5K gross profit. Minus 15% operating cost = SGD 5.5K LTV. Budget customers (bought basics, avg SGD 100/order, 3 orders lifetime) = SGD 300 revenue, 65% COGS = SGD 105K gross, minus operating cost = SGD 52.5K LTV. Marketing spend justified: SGD 500 to acquire premium (9% of LTV), SGD 50 to acquire budget (9% of LTV). But: premium acquisition cost higher, breakeven slower.

Customer Profitability: B2B Segment 30% Margin, Retail 20%, Wholesale 5% (Defund Wholesale)

Manufacturer: B2B (direct to companies) SGD 5M revenue, 30% margin = SGD 1.5M profit. Retail (e-commerce/stores) SGD 3M revenue, 20% margin = SGD 600K profit. Wholesale (distributors) SGD 2M revenue, 5% margin = SGD 100K profit. Blended: SGD 10M revenue, 22% margin = SGD 2.2M profit. If you shift 10% from wholesale (SGD 200K) to B2B (SGD 200K): new profit = -SGD 10K from wholesale, +SGD 60K from B2B = +SGD 50K profit (2.3% improvement). Recommendation: phase out wholesale, focus B2B and retail.

Daily Gross Profit Tracking: Know Your Margin Every Morning, Not Every Month-End

Retailer: monthly gross margin 38%. COGS jumps week 2 (new supplier invoice at 5% higher price). Without daily tracking: discover week 5 (month-end P&L) = 4 weeks at wrong margin = SGD 4K extra cost absorbed. With daily tracking: day 8 alert "COGS up SGD 200 vs forecast" = investigate = discover new supplier rate = negotiate or switch in week 2 = save SGD 3K of the SGD 4K. Daily tracking = 30-day faster reaction time.

Geographic Profitability: NYC Store 40% Higher Margin Than Phoenix (Why Open There?)

Retail chain: NYC store SGD 200K revenue, 25% margin = SGD 50K profit. Phoenix store SGD 200K revenue, 17.5% margin = SGD 35K profit (same revenue, different margin). Root cause: NYC rent higher (SGD 40K/month) but higher prices accepted (40% premium), Phoenix rent lower (SGD 20K/month) but lower prices (price competition). Expansion decision: NYC profitable but capital-intensive (high rent), Phoenix lower-touch but lower-margin. Diversify: both models. Next city: target high-density markets like NYC (margin-focused) or emerging markets with low rent + growth potential.

Gross Margin: Category A 50% (healthy), Category B 15% (dying slowly)

Retail store: electronics category SGD 1M revenue, 15% margin = SGD 150K gross. Apparel SGD 800K revenue, 50% margin = SGD 400K gross. Home goods SGD 500K revenue, 30% margin = SGD 150K gross. Blended: SGD 2.3M revenue, 31% gross margin = SGD 700K gross profit. Shift: reduce electronics 10% (low-margin, 15%), add apparel 10% (high-margin, 50%). New mix: electronics 35%, apparel 55%, home goods 10%. New gross profit: SGD 750K (+7%). ROI: reshift inventory costs SGD 2K, gained SGD 50K annual profit.

Inventory Carrying Cost: Holding SGD 500K Stock Costs SGD 100K/Year Without Selling a Unit

Retailer: SGD 500K inventory on hand. Carrying cost: capital cost 4.5% (overdraft rate on SGD 500K) = SGD 22.5K/year. Warehouse rent SGD 5K/month = SGD 60K/year. Insurance 0.5% = SGD 2.5K/year. Shrinkage 1% = SGD 5K/year. Obsolescence risk 3% = SGD 15K/year. Total: SGD 105K/year = 21% of inventory value. Slow-moving SKUs (bottom 20% by turnover) = SGD 100K of inventory = costing SGD 21K/year to hold. Sell or liquidate = save SGD 21K.

Inventory Turnover: Category A Turns 12x/Year, Category B Turns 2x = Different Stocking

Retail store 1000 SKUs. Category A (popular items): turnover 12x/year, hold 1 month stock = SGD 50K. Category B (slow movers): turnover 2x/year, hold 6 months stock = SGD 100K. Working capital tied up: SGD 150K. If you reduce Category B to 3-month stock (turnover 4x/year instead of 2x), free SGD 50K. Opportunity: invest SGD 50K in Category A (higher velocity) = higher total profit.

Lapsed Customer Winback: 30% Reactivation Rate = Free Revenue From Customers You Already Paid For

Retailer: 2K active customers, 800 lapsed (no purchase in 90 days). Winback campaign: email + SGD 10 voucher. Cost: SGD 0.50 email + SGD 10 voucher = SGD 10.50 per contact. Reactivation rate: 28% = 224 customers reactivated. Revenue: 224 × SGD 65 avg order = SGD 14.6K. Campaign cost: 800 × SGD 10.50 = SGD 8.4K. Net: SGD 6.2K profit. Compare: acquiring 224 new customers at SGD 45 CAC = SGD 10.1K spend. Winback is 40% cheaper per converted customer.

Marketing ROI: Google Ads 300% ROI vs Facebook Ads 50% = Defund Facebook

Monthly ad spend: Google SGD 10K → SGD 30K revenue (SGD 20K profit at 40% margin) = 200% ROI. Facebook SGD 10K → SGD 5K revenue (SGD 2K profit) = -80% loss. TikTok SGD 5K → SGD 12K revenue (SGD 4.8K profit) = 96% ROI. Blended: SGD 25K spend → SGD 47K revenue → SGD 26.8K profit = 107% ROI. Optimization: cut Facebook (negative), increase Google and TikTok (positive). New allocation: Google SGD 12K, TikTok SGD 8K, Facebook SGD 0 = projected +SGD 8K monthly profit.

Net Revenue Retention: If Your NRR Is Below 100%, Your Business Is Shrinking Without Knowing

Subscription/recurring-revenue business: January cohort SGD 50K MRR. By July (6 months): churned SGD 8K (16%), downgraded SGD 4K (8%), upsold/expanded SGD 6K (12%). Net: SGD 44K remaining = NRR 88%. Every month you must acquire SGD 6K new MRR just to stand still. Fix churn (to 10%) + expand (to 15%): NRR 105% = business grows from existing customers alone.

OpEx Ratio: 35% of Revenue Spent on Overhead (Should Be 25%) = Losing Profit

Retail chain SGD 10M revenue: operating costs SGD 3.5M (35% ratio = too high). Breakdown: rent SGD 1.5M (15%), labor SGD 1.5M (15%), utilities+supplies SGD 300K (3%), admin SGD 200K (2%). Target OpEx 25% = SGD 2.5M allowed. Excess: SGD 1M/year opportunity. Action: (1) renegotiate rent (SGD 1.5M → SGD 1.2M = -SGD 300K), (2) improve labor efficiency (same output, 10% fewer staff = -SGD 150K), (3) reduce waste (SGD 300K → SGD 250K = -SGD 50K). Total savings: SGD 500K/year (5% of revenue recovered as profit).

Price Sensitivity: 10% Price Increase = 20% Volume Drop (Elastic Demand)

Product A: base price SGD 50, volume 100 units. Raise to SGD 55 (10% increase): volume drops to 80 units (20% drop). Elasticity = 2.0 (elastic = price sensitive). Revenue impact: old SGD 5K, new SGD 4.4K = -12% revenue. Bad move. Product B: base SGD 50, raise to SGD 55: volume drops to 95 units (5% drop). Elasticity = 0.5 (inelastic = price insensitive). Revenue impact: old SGD 5K, new SGD 5.225K = +4.5% revenue. Good move. Which to raise? Product B (inelastic).

Revenue Breakdown: 40% Online, 35% Retail, 25% B2B = Wildly Different Margins

Company total revenue SGD 250K. Breakdown: Online SGD 100K (40% of revenue, 40% margin = SGD 40K profit). Retail SGD 87.5K (35% revenue, 20% margin = SGD 17.5K profit). B2B SGD 62.5K (25% revenue, 5% margin = SGD 3.1K profit). Blended margin: (SGD 40K + SGD 17.5K + SGD 3.1K) / SGD 250K = 24% blended. But if you shift 10% revenue from B2B to Online: new blended margin 25.5% = +SGD 3.75K annual profit. Waterfall shows hidden channel economics.

Revenue Per Employee: SGD 200K Is Good, SGD 80K Is a Warning — Where Do You Stand?

Retail chain: SGD 2.4M revenue, 18 employees = SGD 133K revenue per employee. Industry benchmark: SGD 180K. Gap: SGD 47K × 18 employees = SGD 846K revenue gap OR you have 4-5 excess employees (4 × SGD 133K = SGD 532K → reduce headcount to 14 and hit benchmark). Restaurant: SGD 1.2M, 15 employees = SGD 80K/employee = at lower end. Peak performers (Michelin-starred or high-volume fast casual): SGD 150K+. Gap to close: SGD 70K/employee × 15 = SGD 1.05M revenue to find without adding staff.

Sales Pipeline: 50 Qualified Leads × 20% Close Rate = SGD 500K Forecast

B2B sales: 100 prospects (5% close rate) = 5 deals. 50 qualified leads (20% close rate) = 10 deals. 20 proposals out (40% close rate) = 8 deals. 5 in negotiation (80% close rate) = 4 deals. Total expected closes: 5 + 10 + 8 + 4 = 27 deals/month = SGD 2.7M revenue (at SGD 100K/deal). Forecast by stage visibility = know revenue before customers decide.

Seasonal Demand Forecast: Summer 40% Higher Than Winter (Prep Inventory Now)

Retail apparel: winter avg 100 units/month, summer avg 140 units/month (40% spike). Current inventory March: 100 units (1-month stock). By May (summer start): if you don't adjust, will stock-out mid-June. Correct: from April, order 140 units/month (increase 40%), have 3-month buffer by June (420 units on hand). Cost: additional working capital SGD 40K (40% increase × SGD 1K per unit). Benefit: zero stock-outs during peak season = avoid SGD 100K lost revenue (100 units × SGD 1K profit per unit).

Supplier Concentration Risk: Top 1 Supplier = 60% of Purchases = Business Stops If They Stop

Manufacturer: total purchases SGD 800K/year. Supplier A: SGD 480K (60%). Supplier B: SGD 160K (20%). Supplier C: SGD 160K (20%). Supplier A raises prices 10% (SGD 48K increase) — you have no leverage to negotiate (too dependent). Supplier A has quality issue Q3: production delays 3 weeks = SGD 150K missed orders. Diversify: reduce Supplier A to 40% (SGD 320K), add Supplier D SGD 160K. New leverage: can credibly threaten to shift 20% more = Supplier A offers 5% discount = SGD 24K saving.

Transaction Unit Economics: 30% of Sales Lose Money (Identify & Eliminate)

Online retailer order: SGD 50 price, SGD 30 COGS (GROSS SGD 20). Minus shipping SGD 5, payment fee SGD 1, customer support contact SGD 2, return (10% rate, 50% cost) = 5% × SGD 15 = SGD 0.75. Net profit: SGD 20 - SGD 5 - SGD 1 - SGD 2 - SGD 0.75 = SGD 11.25 (22.5% margin). Looks good. But outlier: low-volume SKU (A/B testing), 20% return rate (quality issue), higher support cost (assembly question). Actual net: SGD 50 - SGD 30 - SGD 5 - SGD 1 - SGD 4 (support) - SGD 5 (returns) = SGD 5 (10% margin). Or: negative margin if customer demands refund (50% chance for low-quality item).