Shanli Liu, CPA, CTP explains why most business changes cause an immediate 20% performance drop. Only pursue a change if you're confident it'll deliver at least 20% improvement to break even. Service businesses face bigger risks since changes depend on human execution.
In any given function, let's say that this is your baseline of performance. Now, whenever you change anything, in my experience, you get about a 20% decrease in performance immediately. So if you change a sales script, you get a decrease in performance. You change your, your ad copy, oftentimes you get a decrease or decrement in performance. And so if I know that I'm guaranteed to have this 20% decrease, then it means that I need to make changes that I have a very strong idea that they're going to have at least a 20% increase effect. If you're building a physical product, if you're building software, that's different. In a service business, if you're changing process that people have to execute, very tough. Make sure that it's worth it.
