Regression Analysis? Any need?

A business exists to maximize profits. Thus, every tool that provides valuable insights about costs or revenue should be valued. As the facilitator commenced the class, we looked at correlation. Some variables could be positively or negatively correlated, and the correlation could be strong or weak. As we discussed the value of correlation, we saw that it is not crucial as a standalone but forms the basis for another analysis – Regression. We concluded that correlation does not mean causation.

While operating our business, our climbing our career ladder, or even in our personal daily lives, different variables will come into play. Our ability to effectively work within those variables will determine our success. Excel is a powerful tool and is the weapon thru which we would cut through various challenges.

First, the business person, running a business is challenging. If you operate in Nigeria, various variables arise, ranging from the cost of operation, for example, petrol, transport, and utilities to political factors. We can control some of these factors. If we can build a correct model with Excel comprising these various elements, we can make some accurate forecasts which would support our business. Take a look at the marketing side, we invest a lot of resources into branding and advertisement campaigns, how can we tell the amount of revenue expected with each additional unit of investment? The regression analysis can help us do that. With this, it is helpful for us as business persons to keep accurate records as these records would form the basis of all analyses.

Second, as a career person, we face slightly different challenges from the business person. As we progress in careers, we know there are limiting factors such as the cost of transport to work, time of commute to work (based on Lagos traffic), personal development materials, and our general corporate outfit. If we can accurately store data for a healthy period, we can make healthy forecasts in our careers. For example, based on our data, it is known that there will be heavy traffic by 5 pm, so we can stay back in the office to commit more time to work. With this, we have saved wasted time on the road and positioned ourselves for higher positions in the office.

Finally, in our personal lives, we should use regression analysis to evaluate our cost of living amidst other variables such as time of the year or against ourselves. For example, we can consider the cost of petrol during the various times of the year as well as the cost of petrol to that of transport or cost of goods in the market. With this, we are better positioned to maximize our salaries relative to our savings.

Seeing that this analysis is crucial to everyone in all spheres of life, we should invest in building a robust data bank that reflects our position in life. With this data, make various analyses to gain insight into what is going on and use those insights to take decisions. With these data-driven decisions, we will live healthier and more fulfilled life.

Life, Love, and Life

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