Build More Profit Into Your Small Business by Doing Less

Our military does an excellent job defending our country while contending with every possible terrain and climate. The reason we are so successful it that we are prepared to go anywhere any time. We know how to pack huge amounts of supplies into very small spaces. We can move thousands of people half way around the world on a moments notice. It would be great if businesses reacted in the same way. But, unfortunately, most businesses do business as usual, while waiting for things to go back to the way they were.

Imagine if our military reacted that way. “It’s just too hot in Iraq so we’ll be taking the summer off. We’ll be at the beach if you need us.” But today’s business owner would rather whine and complain about whose to blame rather than attacking the problem with strategies and objectives that will keep the business viable.

Look at our military history. Today’s fighting man or woman can accomplish much more than their counterparts in World War II or Viet Nam. They use technology to keep civilians and soldiers safer while still accomplishing their mission. Today’s small business owner can accomplish the same thing. They can actually increase profits with the same or fewer customers.

What makes you money?

To begin this process, sit down and list your five most profitable products and services. What are the things that make the most profit, not the most money — the most profit? If any of the products or services you offer are not profitable, then they need to go. I know you have loyal customers who might need them but if they are only producing goodwill with non-profitable customers then you need to make a change.

Who makes you money?

The next step is defining your most desirable customer. Who has a need for your five most profitable products or services? People don’t stop buying during tough economic times, but they are more careful in their decision making. Show them value for their dollars and they will buy.

Fewer customers can produce more profit.

Take a look at your average sale. How much higher would it need to be in order for your business to be more solvent? Five percent, ten, higher? Whatever the number there is a process to make that happen. Several years ago I worked with a company that had a very simple business model. Every Monday a salesperson would make 75 cold calls. The goal was to find 20 prospects that would allow a product in their business for a one week trial. Of the 20 prospects the average sales person would sell five of the prospects.

When you really dissect this model, it’s a recession busting technique. First, if you have not defined your ideal customer, you are wasting time and money talking to people who are not going to make you money. So, it should not take 75 cold calls (think radio, TV or newspaper ads instead of cold calls) to find your 20 prospects. It’s always cheaper to use the rifle approach to advertising than the shotgun.

If you have correctly identified your best customers, who truly need one or more of your top five, then you should also be able to sell more than five of them. Doing business as usual means you are wasting valuable selling time talking to the 15 that are probably not really valid customers. So spend your time more profitably by talking to the best customers and less time on the others. The more productive your selling time is, the better your bottom line will look.

The additional benefits of this process are that you should be able to increase your average sale because you are talking to a better class of customer. Those who have a need for one of your top five will almost surely have a need for one or more of the others either now or in the future. And, they are going to be a source of better referrals as satisfied customers.

Some Final Thoughts

When times change businesses need to change with it. Strong businesses, like a strong military, understand that the economic playing field is not always going to be level. If you want to survive, you need to take a more proactive stance in setting objectives that will keep the doors open and what strategies you will use to accomplish your goals. We all know the rule – when you run out of ammo; go to bayonets.