Don’t Ask These Questions In Business
Summary
- There are two types of questions you should avoid asking: those that can be solved with a spreadsheet and those that can be solved with testing.
- About 30% of the questions I receive are like, "Should I sell this product or that one?" These can typically be answered with numbers and formulas.
- To decide between two products, compare their lifetime value (LTV) and customer acquisition cost (CAC). If one has a much higher LTV to CAC ratio, it's wise to allocate more resources there.
- For questions where the solution involves numbers, rely on math and data instead of seeking external advice.
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How To Take Action
I would suggest implementing a strategy where you rely heavily on numbers and testing to make business decisions. When you're unsure about which product to sell, start by comparing each product's Lifetime Value (LTV) and Customer Acquisition Cost (CAC). Use a simple spreadsheet to list these numbers and calculate the LTV to CAC ratio. Focus your efforts on the product with the higher ratio, as it offers better returns.
A good way of addressing questions that can be solved with numbers is to create a process where you first attempt to solve them using math. This approach can help you avoid unnecessary external advice and save both time and money. For small business owners and entrepreneurs, understanding basic spreadsheets and simple formulas can be invaluable. Take an hour to learn or brush up on these skills if needed, and make it a routine to track key metrics for your business decisions.
For personal growth, apply the same principle. When facing lifestyle or career questions, ask yourself if the answer could be derived from testing different approaches in your life. For example, try different routines or habits for a few weeks and track your energy levels, productivity, or happiness. This way, you have personal data to guide your decisions instead of relying solely on others' opinions.
Keeping data-driven guidelines will help you make smarter, faster decisions without overthinking or seeking too much external input.
