Written by Hamish Knox
Last year I stopped offering my most profitable service. As William Faulkner would have said, I killed one of my “darlings.”
In working with businesses of all sizes a common challenge for leaders is failing to holistically analyze their product/service offerings to determine if one or more are impeding the growth of their organization.
At the beginning of this year, several clients invited me to work with them on their strategic plans. The following four questions were the core of our conversation on growing their businesses.
- What are all of the services/products you sold last year?
- Which do you love delivering/producing the most and least? Why?
- What percentage of revenue and profit did each bring in last year?
- How much time does each take to deliver/produce?
With one of my clients we discovered that a service that brought in over 65% of their net profit was their biggest time suck and also their least favorite to deliver. After some discussion we created a plan to effectively outsource delivery so they could have more time to prospect for their other current services and enter a new vertical market.
Because we are human we get emotionally attached to the products and services we offer to our clients. Just like the restaurateur who believes they “have to” keep a chicken Caesar salad on their menu, we can believe that we “have to” keep offering a product or service because we don’t make time to look at the macro view of our business. Our brain is wired to be risk averse so to override our natural risk aversion we must get our analysis out of our heads and onto a piece of paper, whiteboard or spreadsheet to allow our rational brain to take over.
Yes, it might not be possible to completely kill one of your darlings. In that case, consider the systems or processes you could create to reduce the time investment you or your team has in delivering or producing.
You analysis may bear out the other way in that through answering those four questions you may discover that a service you don’t like actually provides the greatest profit both in money and time. In that instance best to examine what’s causing you to be less than enthusiastic about that product. You may believe its tired while your team and your customers believe its remarkable.
Make time to break apart your business a few times each year. You’ll reach your current mountaintops faster and discover new ones to conquer.
Until next time… go lead.