Module 2

Diagnose before you fix

7 lessons, 29 stepsOne instruction at a time, each with the result to expect. Tick steps as you go; Helix remembers.

Outcome: you can name the one thing holding your profit back and pick the right kind of fix.

Related SOPs: 03 Constraint diagnosis

In plain words

Stage: Grow (keep more of every sale, then scale). Every lesson below is tagged with its stage; see Attract, Convert, Grow.

What it is: Before you change anything, find the one thing holding profit back.

Why it matters: Fixing the wrong thing wastes weeks. Usually only one problem is the real blocker at a time.

Do this:

  1. Look at your numbers: visits, conversion rate, order value and ad costs.
  2. Find the weakest one compared with a healthy range.
  3. Fix only that one this week, then check again.

Words to know:

  • Conversion rate: Out of every 100 visits, how many end in an order. 2% means 2 orders per 100 visits.
  • AOV: Average order value: total sales divided by number of orders.
  • CPA: Cost per acquisition: how much ad money it took to get one sale.

All words are explained in the glossary.

Lesson 2.1: Three kinds of constraintGrow

Why this matters

A constraint is the one thing limiting your profit right now. Fixing anything else first wastes time and money. Most stores are short of sales even when the owner thinks they have an "ads problem".

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Step 1 of 3

Open the Dashboard on Month and write down orders, net sales, MER and contribution margin (contribution profit divided by net sales).

Expected result

You have four numbers to diagnose from.

Open your growth dashboard

Good to know

Kind What it looks like What fixes it
Throughput (not enough sales) Your cost ratios are healthy, but you get too few orders. More visitors, better ads, a better-converting site, new channels.
Efficiency (costs too high) One or more cost ratios are too high. Better prices, cheaper product cost, cheaper shipping, bigger orders, better ads.
Capacity (cannot keep up) Products sell out, cash runs short, orders ship slowly. Stock planning, a cash forecast, better supplier terms, faster fulfilment.

Lesson 2.2: The five situationsGrow

Why this matters

The same tactic can help one store and hurt another. Your scorecard puts you in one of five situations, and each has a different next move. Picking the right one stops you scaling a leaky store or cutting a healthy one.

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Step 1 of 3

Check your net profit % for the last 30 days on the Dashboard. If it is 10% or more, your situation is healthy profit: grow and win every customer you can serve at a profit.

Expected result

You know whether you are in the healthy group.

Open your growth dashboard

Lesson 2.3: Fixing variable costsGrow

Why this matters

Variable costs come with every order, so a small fix pays back on every sale for good. Most stores can take several points off without customers noticing. Work down the list and stop when VCR is back under about 45%.

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Step 1 of 6

Email your top supplier asking for the price at the next order quantity up, and a quote for simpler packaging spec.

Expected result

You have a written quote you can compare against the cash a bigger order (MOQ, minimum order quantity) would tie up.

Lesson 2.4: Fixing fixed costsGrow

Why this matters

Fixed costs stay the same however many orders you get. Cutting waste helps, but the bigger fix is often growing sales so fixed costs become a smaller share. Do both deliberately.

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Step 1 of 4

Export your bank and card statements for the last 3 months and list every subscription with its monthly cost.

Expected result

You have one list of every recurring charge.

Lesson 2.5: Fixing marketing costs (high MER)Grow

Why this matters

High MER means ads eat too much of your sales. Changing the ads is often the wrong fix, because the problem can be the site, the offer or a short-term shock. Follow these steps in order before you touch a campaign.

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Step 1 of 6

Check for a short-term shock in the last 7 days: best seller out of stock, the slow week after a sale, a competitor's sale, the season, tracking that stopped counting sales, or site downtime.

Expected result

You have either found a shock (fix it or wait it out) or ruled one out.

Lesson 2.6: When several KPIs are high at onceGrow

Why this matters

A KPI (key performance indicator) is one of the key numbers you track. When several are bad at once, trying to fix them all spreads you too thin. Fix the one worth the most dollars first.

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Step 1 of 2

For each bad number, estimate how many dollars of profit a month it would add if it went back to its healthy range (for example: MER from 38% to 30% on $40,000 sales = $3,200).

Expected result

You have a dollar figure next to each bad number.

Lesson 2.7: The scale testGrow

Why this matters

Scaling means spending more on ads to get more sales. Done as a planned test with a worst case decided up front, it is safe. Done as a leap, it is how stores burn cash.

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Step 1 of 5

Write down your spend steps, for example $300 a day, then $600, then $900.

Expected result

You have three planned spend levels.

Example

A store makes $50,000 a month. MER is 20%, VCR 40%, FCR 30%, and profit 10%.

  1. The store doubles sales to $100,000. Fixed costs stay the same in dollars, so FCR drops to 15%.
  2. While growing, MER rises to 30%. That is normal.
  3. New profit = 100 - 30 (MER) - 40 (VCR) - 15 (FCR) = 15%.

What it shows: the store's problem was heavy fixed costs. Growth was the fix, even though ads got less efficient.

Self-check

  1. Which kind of constraint is most common?
  2. Name three fixes for high shipping cost.
  3. RPV is $3.20 and MER is high. Is it the site or the ads?
  4. Outbound CTR is 0.4%. What do you change?
  5. What is the most you can lose in a scale test?
Answers
  1. Not enough sales (throughput).
  2. Ask for better carrier rates, use boxes that fit, raise the free shipping amount. Also: charge for express, or use a warehouse closer to your customers.
  3. The ads. An RPV of $3.20 is healthy.
  4. The ad itself: the picture or video, the message, or the offer.
  5. The extra ad spend.

Words to know in this module

Profit
What is left from sales after product cost, shipping, payment fees, discounts, refunds and ads. This is the number Helix cares about most.
Conversion rate
Out of every 100 visits, how many end in an order. 2% means 2 orders per 100 visits.
AOV
Average order value: total sales divided by number of orders.
CPA
Cost per acquisition: how much ad money it took to get one sale.
MER
All ad spend divided by all sales, as a percentage. MER 25% means $25 of ads for every $100 of sales.
Margin
The share of each sale you keep after product cost. A $100 sale with $40 product cost is a 60% margin.
Product cost
What one item costs you to make or buy, including freight to your warehouse.
Cash forecast
A week-by-week list of money coming in and going out, so you can see tight weeks early.
Fixed costs
Bills that stay the same each month, like rent, software, staff and your own wage.
Variable costs
Costs that grow with every order: product cost, shipping and payment fees.
Free shipping threshold
The order amount where shipping becomes free, like 'Free shipping over $100'.
Bundle
Two or more products sold together, often with a small saving.
Campaign
The top level in an ad account. It holds the goal, like getting sales.
CTR
Click-through rate: out of every 100 people who saw your ad, how many clicked.
All words to know