SYE focuses on the numbers that lead to a true return for investors. Many business owners get excited about revenue, but profit is a more important indicator to watch. Remember, revenue is only a metric. Profits remain after expenses reduce revenue.
SYE always examines a business’s financial records for the past three years. In a key year for the first eCommerce acquisition, revenue was $658,000 but profitability sat at a low 6.4% for the entire year in one of the historical years of financials analyzed.
A closer look at the data revealed a cycle. During the holiday months of November and December, profit hit an annual peak. In the slower months of January and February, the business always had a profit loss. This explained the low profit rates, but there was still room to increase profits, thus presenting an untapped opportunity.
Under SYE’s ownership, the eCommerce store had a profitable January and February for the first time compared to the 3 years of previous ownership due to optimization methods.
In addition to optimizing the cyclical nature of the eCommerce store, diversifying traffic and monetization methods, the customer journey was also optimized.
Understanding the customer’s journey increases profits, which starts with understanding the demographic of your company’s customers. In this case, historically most customers had been women, but an analysis of the customer journey revealed that men were also buying gifts. By giving more thought to the customer journey, the company was able to tap into new markets by expanding their customer demographics.
While there are many performance indicators that grew as a result of these optimizations, one of the largest indicators of growth in an acquisition is the variance in average order value. The average order value grew from $27.67 to $36.59, a 32.23% increase.
While there is an expanded case study of this eCommerce acquisition, here are the key metrics we’ve discussed today:
Within an 11-month period, Say Yes! Enterprises...
...Increased profits by 18.18%
...Increased revenues by 32.43%
...Increased average order value by 32.23%
...Increased company valuation by 47.78% with a successful sale.
Investors who choose and partner with SYE get the benefit of proven business acumen—predictable returns on investment in existing thriving low-risk businesses.
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