A very large and well-known soda manufacturer once decided that their name means beverages. So they bought a winery, which tanked- and not in a good way. After this, they decided that their name probably means soft drinks and refocused on their core business.
What about your business? What is your focus? Are you making, doing, or selling anything that distracts from that focus? Remember that marketing encompasses all contact between your company and the outside world. Its as if your business is projecting a message. Products and services that deviate from your focus blur the signal. Instead of seeing a crisp clear message, potential customers see a fuzzy picture that makes it harder for them to figure out what youre all about. That lack of clarity makes it harder for them to decide to spend their money at your business. Who loses? You.
For example, one of my clients was seeking ways to boost her profits. We separated her services into logical divisions and looked at the profits by division. We soon discovered one set of services whose profits were far lower than the others and that required far more resources than the other divisions. She shed the losing services and referred those customers to other companies who specialize in those specific services. Result? She got more time to provide the services that generate the most profit and netted some fusion marketing partners to boot.
Take a good hard look at your business. How can you organize your products and services into divisions? Having accomplished that, calculate each divisions costs, revenue, and profits. If you find any that are performing far below average, consider dropping them and referring those customers to other businesses who specialize in what youre letting go of. See if these other companies will refer business to the parts of your business that you excel at.
How powerful can this be? Say Division A earns $10,000 in profit on $100,000 in earnings. Division B profits $5,000 on $75,000, and Division C profits $15,000 on $125,000. With this example, your business is profiting $30,000 on total revenue of $300,000- a 10% profit margin. Division B is clearly the losing horse in this race. Dropping Division B and doing nothing else would have your business profiting $25,000 on $225,000 in revenue- a profit margin of 11.1%. Just like that, youve increased your profit margin by 10%. Not too bad for simply letting go.
Freeing yourself from the constraints of losing product and service divisions lets you devote more time and energy into growing the most profitable parts of your business, which can only increase your profits even more. In the above example, were I the business owner, Id expand Division C to fill the vacuum left by dropping Division B. Doing this would give me more profit and a higher profit margin than I started with. It would also help reduce competition and increase goodwill by referring customers to other businesses.
Money aside, casting off anything that is slowing you down will give you far more time and energy to use any way you wish- possibly even in parts of your life that have nothing to do with your business. How many of us could use more personal time? I sure could.
Find and maintain a laser-like focus on the products and services that produce the most profit with the least cost and you will enjoy higher profits, more time and energy, fewer hassles, and a lot less stress.