Many small businesses find it hard to develop. Often one person or a small team have to do everything from HR to Credit Control, and this often leads small businesses to over extend themselves service wise.
We’ve been guilt of this ourselves by offering lots and lots of different services we think will make us money. However, doing a cost analysis, you may find that actually you need to be quite ruthless in cutting products from your portfolio.
For example a small business can offer over 10 different services that will lead to all kinds of support issues. Often the small business becomes a middleman and this in itself makes it very complex to support. Many businesses join MLM or Affiliate businesses, which distract you from what you’re actually good at.
We ourselves found that we was like any small business, we grew rapidly offering a multitude of services. One service at the time seemed to be making money but when reviewing our business plan it became apparent that it wasn’t making the profit we had expected. If anything this service was actually holding back growth of the business.
We looked at the whole client base and their averaged spend. We then looked at the time supporting this particular service. It turned out that on every account we were making a loss on this particular service. This particular service was key to online activity however were we really the best company to offer this service? In short, no!
The figures were coming out that if we cut the service from our offering then we would gain at least 5 hours a week. That means a whole 5 extra hours a week into services we excelled in, better skilled to do and ultimately meant maximising profit.
Doing this analysis and making this change initially looked a very dangerous process as we could of lost the whole client base. However by being up front with our clients, we advised why we’re going to stop the service and also gave our client base enough warning as to the plans and time schedules of the change.
Within 1 week of stopping the service we found that we were not only able to concentrate on and develop our core products but we saw dramatic improvements in our bottom-line.
We have found that if you stick to what you’re good and concentrate on how to improve those you will find your business will grow. Without taking this ‘step change’ in our business we wouldn’t be able to have employed new staff and also increased our turnover accordingly. Often businesses remain within the business rather than managing the business.
Feel free to leave your comments below we’re interested in your thoughts and welcome a discussion on this subject.