In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley explores the “hidden cost of growth” in e-commerce. Drawing from his own journey scaling to eight figures, Josh explains how business expansion often leads to overwhelming complexity, not more freedom. He introduces the “momentum matrix,” a framework based on the 80/20 rule, to help entrepreneurs focus on the most impactful products and sales channels. Josh shares actionable strategies for prioritizing efforts, reducing operational overload, and maintaining lifestyle goals while scaling, emphasizing that true freedom comes from systems and focus—not just hitting revenue milestones.

Welcome to the Ecomm Breakthrough Podcast! 🚀 In this episode, Josh Hadley shares his journey in scaling a business from zero to eight figures, focusing on practical strategies for founders. We discuss the importance of simplicity in business, utilizing “The Momentum Matrix” to identify growth drivers and profit engines while avoiding “The Complexity Trap.” Learn how the 80 20 principle animated helps identify the most impactful SKUs and sales channels for optimal time management and accelerated growth. Tune in to level up your business!

Tools and Frameworks
“Momentum Matrix for Products”: “00:06:58”

Concepts and Principles
“Pareto Principle (80/20 Rule)”: “00:05:40”
“Pareto Principle (80/20 Rule)”: “00:21:12”
“Strategic Neglect”: “00:25:32”

Websites and Platforms / Sales Channels
“Amazon“: “00:17:59”
“Shopify“: “00:17:59”
“TikTok Shop“: “00:17:59”
“Etsy“: “00:17:59”
“Walmart“: “00:20:12”
“Discord and WhatsApp”: “00:22:33”

Action Items
“Identifying Top SKUs”: “00:26:45”

Chapters:
00:00:00 Introduction & The Freedom Myth
Josh introduces the podcast, his background, and the misconception that revenue milestones guarantee freedom.
00:02:03 The Hidden Cost of Growth
Explains how scaling increases complexity faster than revenue, leading to operational burdens and diluted focus.
00:04:23 Applying the Pareto Principle
Discusses the 80/20 rule and how 20% of products or tasks drive 80% of results in e-commerce.
00:06:58 The Momentum Matrix for Products
Introduces a framework to categorize products into four buckets based on their impact and alignment with the brand.
00:08:01 Bucket 1: Core Growth Drivers
Details the characteristics and strategies for top-performing, brand-aligned products.
00:11:29 Bucket 2: Profit Engines
Describes products that generate strong profit but are less central to the brand’s direction.
00:12:34 Bucket 3: Maintenance & Harvesting
Covers products with limited market potential, requiring minimal attention and resources.
00:15:45 Bucket 4: Sunset/Kill Products
Focuses on products with zero or negative profit, recommending liquidation and exit strategies.
00:16:55 Momentum Matrix for Sales Channels
Applies the same bucket framework to sales channels, prioritizing those with the highest impact.
00:17:59 Sales Channel Buckets Overview
Explains strategic growth engines, cash engines, opportunistic channels, and distractions, with examples for each.
00:21:29 Momentum Matrix for Affiliates
Describes how affiliates are bucketed by impact, with most resources devoted to top performers.
00:24:26 Strategic Neglect & Focus
Emphasizes the importance of ignoring low-impact tasks and products to protect focus and scale effectively.
00:26:45 Action Steps & Conclusion
Encourages listeners to identify their top 20% drivers, implement bucketing, and focus on what truly moves the needle.

Transcript:
Josh Hadley 00:00:00  Welcome to the E-com Breakthrough Podcast. I’m Josh Hadley. I’ve scaled my own ecommerce brand from 0 to 8 figures, and I’m actively building towards nine figures in sales. This podcast is where I document that journey and share the systems, the strategies, and the lessons learned in real time so that you can learn what actually matters and scale your own business. Have you ever told yourself that, hey, when I have that $1 million business, or that $5 million business, or even that $10 million business, all my cares in the world will be gone. I will have the freedom and the lifestyle that I want to live. And then guess what? You hit those thresholds and those milestones, and then you’re like, what happened to my freedom? What happened to the lifestyle that I set out to achieve? Today we’re going to be diving into the hidden cost of growth. And this is I am preaching to the choir because that was me I remember my first business ever was, hey, wouldn’t life be amazing when I hit $1 million in revenue.

Josh Hadley 00:01:00  I can’t even fathom what that looks like. And then I achieve that and I say, oh, I’m nowhere near the kind of the freedom aspect or the lifestyle that I was on set out to achieve. We’re going to be diving into how to prevent those issues from creeping up inside your business. That as it scales, how do you still continue to maintain that freedom of time and lifestyle that you set out to achieve? I’m going to be sharing three actionable things that we have implemented in our own brand to ensure that it’s not only me who’s getting constrained, but it’s also the team members that also feel like they’re getting more free time back onto their calendars in order to help grow the business in the correct way. So who am I? Number one, my name is Josh Hadley. I am first and foremost a man of faith. I’m a father of four and also a husband to a beautiful wife. I’ve been in the e-commerce space for over ten years now and primarily driving revenue on some big sales channels Amazon, TikTok, Shop and Shopify.

Josh Hadley 00:02:03  And last but not least, I am the host of the Ecomm Breakthrough Podcast and is one of the number one e-commerce podcasts for business strategy. All right, so today we are diving into what is the hidden cost of growth, why scaling actually makes you feel busier instead of free. And guess what? All of us get stuck in this trap at one point or another. When I explain this inverted pyramid of value in my last episode, I talked about how most founders get stuck doing the admin, the busywork, even the operational optimizations where they just feel like they’re putting in 40 60 hours a week, which is good. However, they’re not focused on the growth levers in the business. And so what happens, though, when you do focus on the growth levers of the business? Your business will actually scale. It will begin to grow. But therein with that scale will come the additional cost. And we’re going to be diving into what is that hidden cost. If you’re doing the right things and you are working on the growth levers of the business, what are the costs that you are going to incur and how do you prevent having to pay some of the expensive costs associated with the growth of that business? All right.

Josh Hadley 00:03:17  So let’s talk about what is the hidden cost of growth. All right. Basically complexity grows sometimes faster than even your revenue or especially your profitability. So why does that happen? Well, let’s say you did work on focusing on those growth levers. That means you either introduced more SKUs to your business or you introduced additional sales channels. All right. Now those things are good. It did create some more revenue for you. But by incorporating those new, new things into the business, the number of tasks has increased. Therefore, the amount of execution has gone to a slower pace. And so this is where this complexity trap begins to. Again, it’s another pivot point with most entrepreneurs where again, if you can get yourself out of the admin and out of the busy work and all the operational stuff in your business, that’s great. And you’ve began focusing on the sales aspect, that’s even better. However, now your biggest constraint in the trap you want to avoid is now letting this cost of growth dilute your time.

Josh Hadley 00:04:23  And so here’s what happens. Revenue increases, but it creates an exponential operational burden. More SKUs create more demand attention. More sales channels have unique needs. More tasks fragment your focus and your team’s focus. And more decisions that you have to make is going to slow down your execution. And again, remember busy does not equal scalable. All right. So how do we prevent this. And I want to share three practical ways that I have implemented kind of a a better operating system into my business to minimize the cost of growth and scale in your business. But first, this all stems from the 80 over 20 principle that the Pareto principle, if you will, where it’s 80% of the outcomes, are tied to 20% of the inputs, which if we just boil this down out of your 20% profit drivers for your business, you’re there are 20% of your products that make up 80% of your revenue. And guess what? There are 20% of your products that equal 80% of your profits, because revenue and profits don’t always equal the same thing.

Josh Hadley 00:05:40  There may be SKUs. There may be sales channels that might actually help you generate a lot of revenue, but maybe not a lot of profit. And so that’s why it’s important to really bucket these carefully between revenue and profitability. And then ultimately, out of all the tasks that you do in a given week or day, or even throughout your entire team. Only 20% of them will actually drive an 80% of impact, whether it be to revenue or to sales or to profitability in the business. And guess what? Outside of those things, those growth levers, you want everything to move over into maintenance mode. And so here’s the important framework that I’ve had to adjust in my business as we’ve grown. So over the past year, our business literally doubled okay. As an eight figure business doubling. That’s significant when you’re a seven figure business and you’re doubling, you know, those are good things, but it doesn’t create the operational complexity that an eight figure business that doubles entails. And so here are the frameworks that I had to share with my team because we started to get eaten alive by all the additional tasks, all the same things that we were once upon a time doing.

Josh Hadley 00:06:58  Maybe even when we were a high seven figure brand, we needed to dial things back and get focused on the true value levers within every single task that we do in the business. So here are the three actionable like frameworks that I have shared with my entire team that you can kind of rinse and repeat for yourself. So this is the momentum matrix for products that I have shared with my team. So let’s dive into what these are. And you’re going to see bucket number one is if we’re using the Pareto principle or that 8020 principle. Bucket number one is my 20% of products that are driving 80% of the returns from a revenue standpoint, as well as a profitability standpoint from the business. But here’s the overall framework that my team is using outside of. Just like the data revenue and sales numbers, here’s what they need to be focused on as the framework as well to classify something in bucket number one. A core growth driver for the business. Okay. Number one, it’s clear it has a clear brand aligned skew.

Josh Hadley 00:08:01  Okay. Which means we have the vision. We have a mission for our brand. This product specifically targets and coincides with the overall vision and mission that we have for the brand. This wasn’t just a product that we threw out just because we knew we could make money. It actually serves the ultimate lifetime value of a customer. And as you can see here, that’s another point. This actually drives lifetime value of a customer because either it is a purchase. It is a purchase that people will come back and rebuy, or it is something that they will upsell themselves into. So if they buy one of my other products, it is a great complimentary or maybe the next enhanced version of that product, or it’s the kind of the next level or version 2.0 of that product. Okay. It. It is designed to become a category leader. It has a high potential to scale, which also means it has a large Tam and total addressable market. Okay, so if our products are producing an outsized return in terms of profit and revenue, and they meet these other frameworks that I just shared with you, these are our core growth drivers where I want my team to be spending their time.

Josh Hadley 00:09:14  So what does that look like? What is my team actually doing with these products. So number one they’re doing aggressive marketing okay. There’s continuous optimization from conversion rate optimization to main image testing for click through rate optimization. We are going all in on this limited set of SKUs that are like the top 20% of SKUs that drive 80% of our revenue and profitability. Okay, we ensure that inventory never goes out of stock for these products, and we are always relaunching these products either with new versions of them, a 2.0 version, or there’s a new variation. We always want to be launching those products because we know this is a core growth lever for the business. All right. So what are the rest of these buckets of products. Because and I’ll share with you guys where this pain point really came from in our business is we have over 1600 different SKUs. And so with having 1600 different SKUs, there is no way that even me or my entire team, we could spend enough time on every single one of our SKUs.

Josh Hadley 00:10:22  And so it’s become super imperative for us to apply this framework to our business so that my team and myself knows, hey, there are a lot of products, there are a lot of things that we could be working on. However, these are the products that actually provide the best ROI. The other ones, while they still produce a profit. That’s great. We’re not going to just like, kill them tomorrow. But what I am telling you to do is stop spending so much time trying to perfect some of our mediocre performing SKUs or some of our, you know, lower performing SKUs that we want to be better. Instead of doing that, the overall message that I’ve been sharing with my team is ride the winners, take where the momentum is already driving, and continue to double down on where we already have existing momentum. All right. And that’s why these buckets help kind of align our team to know and to help them understand. This is when I should spend my time on this type of product versus these are the this is the amount of time I should spend on another type of product.

Josh Hadley 00:11:29  All right. So let’s talk about a couple other buckets here. So bucket number two these are our profit engines for the business. They do generate strong profit okay. they have predictable seasonality. Possibly they are proven winners. However, maybe they don’t define like the direction of the brand, right? And maybe we found this opportunity. It was a great product at one point in time we liked it. however, it really like if we were to lose that product, customers probably wouldn’t know this, right? It’s not in line with the overall vision. However, I’m definitely not giving up on it because it’s a significant driver of profit for the business. So what are we doing for those types of products? We have moderate marketing. Okay. So it’s like the team is still optimizing PPC campaigns and stuff for it, but not to the same scale that they’re really optimizing my PPC campaigns for my CRO, for my core growth drivers in the business. Okay. We have occasional optimizations for the conversion rate for click through rate.

Josh Hadley 00:12:34  we still focus on inventory, but I’m okay if inventory goes out of out of stock for a short period of time with these SKUs because they’re not. They’re not the end all be all for the business. Okay. We will occasionally relaunch these products. and have a 2.0 version or a variation. It is a good brand defense strategy. but we we have little to no experimentation. Right. We stick with our proven playbooks for these products. We’re just trying to harvest as much profit as we can. All right. Let’s dive into bucket number three. Bucket number three is all about maintenance and harvesting. Okay. Which is hey, these products look, they make money for us, but they have limited Tam, which is total addressable market, right? So really, like, even if we become the number one best seller in this category. Like, how impactful is that? Are we talking thousands of units a month or are we talking at best maybe selling 500 units a month? Right. And as you can see, like I want the opportunity that can sell thousands or even tens of thousands of units a month.

Josh Hadley 00:13:41  And that’s what I want to push things towards, right? these don’t support our overall brand direction. Again, maybe they’re products that we found like a good opportunity on, but like, they’re not key to the overall vision and mission of the business. And again, these are the type of products where they don’t require a whole lot of time and attention. Maybe it’s kind of a sleeper category that you found on Amazon or on TikTok where it’s like, okay, we’ve got a really good niche into the market. However, my team knows that because of this, we’re only going to spend a very limited amount of time supporting these types of products. So that’s this is what it looks like for my team and how they support them. There’s just very light marketing that goes into it, very light PPC optimization campaigns. We’re not optimizing our conversion rate or the click through rate for these products. Inventory can go out of stock for, you know, longer periods of time. And I’m okay with that. because I don’t want my default rule in my business to be, hey, we never go out of stock.

Josh Hadley 00:14:43  I know that’s a rule that a lot of like, again, if you’ve been in the Amazon seller community for a while, the number one rule is never go out of stock. Well, guess what happens if you scale your business portfolio? Like I have to over 1600 SKUs and you use that same rule, hey, never go out of stock. Guess what happens? Okay, across 1600 SKUs, somebody is inevitably going to make a mistake. And what will happen is like a once, once upon a time strong performing skew that is in bucket number three is just going to lose market share, and it might lose 50% of market share over the course of a year. And if you have purchased your inventory to ensure you never go out of stock, guess what happens? You now have 2 or 3 years worth of inventory. Do that across 1600 SKUs. That’s how you go bankrupt. That’s how all of your inventory. That’s how all of your cash sits on your balance sheet, tied up as inventory.

Josh Hadley 00:15:45  Okay. again, you’re probably going to be doing very minimal product relaunches for these products. And we’re just using automated rules from PPC to our optimizations. Literally this is set on autopilot. And then our last but not least bucket number for this is where we have like our products where we just want to sunset them or we want to kill them. that’s because they have either zero or actually negative profit. So if you’re not looking into the profitability skew by skew, it’s an important one to focus on. It’s going to create an operational headache for you. These are brand misaligned. Maybe again, it was a once upon a time. It looked good like a great opportunity. But it has absolutely nothing to do with your brand vision. and there could be just like, immense seasonality complexity that’s required with this type of product. Okay. So with these products, we’re just trying to exit them. We’re trying to liquidate our inventory. We just want to get this mental load off of us. Right. And we just want to be able to move forward thinking through, hey, put all of your time and attention into bucket number one, the core growth drivers of your business.

Josh Hadley 00:16:55  So that’s the momentum matrix for products. So if you’re just listening to this make sure you come check this out on YouTube so that you can actually see the breakdown of this matrix. Take a screenshot and even share it with your team because you cannot treat all of your products equally. And that’s the key aspect. That’s the key takeaway. I want you to know, the hidden cost in scaling and in growth comes from thinking that you need to treat everything equally in the business. Okay. Well, as another example, what’s another framework that we’ve applied for our own business? This is applied directly to our sales channels. All right. So instead of going down these one by one. I’m going to talk at a very high surface level. And again, if you want to actually see this. Make sure you come back and watch the YouTube video there on our YouTube channel Ecomm Breakthrough. All right. So bucket number one for sales channels we have strategic growth engines. So again this is where probably 80% of my revenue is coming from in the business.

Josh Hadley 00:17:59  Right. But 20% right of of our sales channels are actually going to produce 80% of the revenue. And what does that in general look like. I’ll paint some broad strokes here. So these strategic growth engines okay. They have large Tam large total addressable market right. Amazon’s a perfect example of this like I think what what are the statistics. 50% of American households have a prime membership. Something like that. that’s a massive total addressable market. Compare that to Etsy. How many buyers are actively shopping on Etsy. The total addressable market on Etsy is a fraction of what it is on Amazon. All right. So again these strategic growth engines they’re scalable without linear headcount. They have high LTV lifetime value potential. They’re brand compounding. They have data leverage which means you can take the data, harvest it and double down in the areas where you’re winning okay. And they have repeatable playbooks. So what are some of those sales channels that are strategic growth engines Amazon, Shopify TikTok shop and arguably big box retail. Okay.

Josh Hadley 00:19:12  Bucket number two. These are cash engines okay. And again as we go back I want everybody to understand bucket number one is where my team and my time I am adamantly focused on this. Okay. This is where I have aggressive team investment. The actions that we’re taking to support these channels. We have senior talent that we’re hiring for these channels. We have systems that we’re building out for these channels. There’s weekly CEO oversight for these sales channels, and there’s continuous optimization. But if you compare that with bucket number two, which is like a cash engine, an example of this would be maybe like boutique wholesale or just, you know, wholesale in general, Walmart as a sales channel, it just has limited upside. It can be a good sales channel, but it’s much more limited to the other ones that we talked about here. You do want to protect your profit, but you want to cap your team’s expansion here. You want to have minimal experimentation. You want to limit your, complexity creep and, you know, CEO insight or oversight.

Josh Hadley 00:20:19  Here is maybe the CEOs diving in to take a look and view the reports once a month. Compare that to bucket number three. That’s opportunistic. This has small total addressable market. it’s hard to scale. A lot of manual efforts required low repeatability, non compounding, limited brand leverage. So my examples for this would be. Cian. Teemu. Etsy. International expansion. Okay. Maybe it has you know what I’m requiring here. If we’re going to do these things I’m saying hey it has to be a low operational load, no custom infrastructure, limited headcount and the CEO is not involved, no oversight. And every year we’re going to come check this out and see if it’s even worth anybody’s time. Okay. And last but not least, we have bucket number four which is I call these the sales channel distractions. These are they they require heavy customization. They add operational complexity. They don’t really material materially move the needle as it relates to revenue. And they require you personally. Some of these things are like trade shows showing up at a farmers market or even like boutique retail.

Josh Hadley 00:21:29  Okay, those are not super scalable. And so for those, you know, anytime my team comes across those, we want to kill them. We want to sunset them. We’re not debating about those sales channels. All right. Now last but not least, we have the momentum matrix for our affiliates. And basically like I’m just trying to share with you that no matter what task or what opportunity it is in your business, the 80 over 20 principle, the Pareto principle is alive and well. So as a good example, we’ve done that even with our affiliates. Okay. Our all affiliates created equal. We have over 5000 affiliates that have talked about our products on TikTok shop and other channels. Okay, great. Do we treat all 5000 equally? No we don’t. We have bucket number one. We have our brand evangelist. These are the 20% that are driving 80% of the returns, actually driving meaningful GMV or revenue or sales for the business, which means they’re posting probably five plus videos per month.

Josh Hadley 00:22:33  they’re opening up our email newsletters. They’re engaging in our discord or WhatsApp, and they love our brand. So what are we doing with these types of creators? Well, we have one on one support calls. We’re giving them unlimited product samples. they get retainer opportunities. They get a help source, new product ideas. We’re going to run bonus competitions with them to give them more bonus opportunities. We’re going to surprise and delight them with gifts. These are people that are. This is the 20% of creators that are providing 80% of the return for us. So that’s where all of our time and energy goes into. Whereas the other buckets that we have, bucket number two, we have creators that have potential. They’ve posted at least one video. They have joined our email newsletter. They have joined our discord. They’ve shared their contact info with us. So we’re going to add them to group coaching calls. We’re going to try to gamify the posting to get them to try to engage more with the brand.

Josh Hadley 00:23:31  We want to share lots of creative brief. We want to share lots of success stories with them. We just want to continue to remind them that we exist. Okay, bucket number three. These are creators that are onboarding. They’ve successfully requested a sample. They’ve posted one video, but they’ve not really joined our email newsletter or our discord. Okay. What we want to do is we want to find their contact details outside of Amazon. We’re going to continue to message them and try to engage them. And then last we have like bucket number four. These are our dormant creators right there. They haven’t posted for us in the last 90 days. They’re not replying to any of our messages. They’re not engaged in discord or WhatsApp. So we just have a bot that reaches out to them every quarter trying to re-engage them. So as you can see here, as we go down these buckets, my team is involved less and less and less, whereas most of their time and energy sits in bucket number one.

Josh Hadley 00:24:26  That’s the same principle that applies to sales channels, to our products, or even to our creators, and to there can be a countless number of things that we could dive into in a business that needs to scale out that way. Okay, so if we go into, as we wrap things up here, we went from finding fixing the weaknesses of the business to just amplifying the strengths instead of saying, hey, we need to change all of the main images for all 1600 SKUs. We said, hey, no, actually, there’s only ten SKUs that we actually want to focus on changing and improving the main image for, because it’s these ten SKUs that are driving 80% of our profits and potential. How much more simple is our business? When I can say, hey, it’s actually not 1600 SKUs, it’s only ten. All right. So how does that apply to your business? Here’s one of the most valuable things. And again, as an entrepreneur, You you you want to win, but you need to incorporate what I call strategic neglect into your business.

Josh Hadley 00:25:32  You need to get comfortable ignoring things, which here’s some examples it might feel irresponsible to ignore skews sales channels or affiliates that exist, but it might be necessary to focus on the ones actually driving meaningful revenue or profit. It might feel sloppy not to optimize everything. It might feel uncomfortable to tell your team, hey, remember when I told you we wanted A-plus content on every single one of our products? Yeah. No. actually, I only want it on ten. Right? Scale requires strategic neglect. If it doesn’t move the needle meaningfully, it doesn’t get attention. Remember, business strategy is nothing more than unlimited opportunities with limited time, with limited resources. Okay, so this is your goal as the owner, as the business owner, the CEO. The entrepreneur. Your real job is to protect your focus and your team’s focus at all costs. That means you’re not solving every problem. Solve some problems. Don’t need to be solved. I don’t care that my main image looks like crap for a product that I’m retiring, and I just want it to go out of stock, right? I’m not redoing every task.

Josh Hadley 00:26:45  I’m not fixing every underperforming asset in the business. I accept strategic losses. Your job is your job is to guard your attention and your team’s attention and reset your priorities consistently. Remember systems and focus scale. Distraction is what kills okay. So focus and systems start here. So here’s my action item for you after watching this okay. Find your top 20% of SKUs that drive 80% of your profit. Or find your sales channels that are driving 80% of your profit. Find the creators that are driving 80% of your profit, whatever it is. Find the 20% and tell your team to focus on that 20% and let everything else drift. Create and bucket each of those different segments of whatever task, whether it be products, sales channels, or even affiliates, so that your team can operate from a clear framework so that they don’t see and say, hey, I have 100 SKUs I need to manage, where should I spend my time? No, make it simple for them. Tell them the five SKUs to focus on.

Josh Hadley 00:27:54  And guess what? You’re going to see your business grow ten times faster. You’ll have less stress, and you won’t have to eat the hidden cost of growth as you do that. If you like this episode, make sure you leave a review on your favorite podcast platform of choice and do yourself a favor. Do somebody else a favor and share this episode with another operator who needs to hear it. Remember systems and focus scale. Distraction kills. We’ll see you on the next episode.