It’s September 22, 2010. I’m sitting across from my business advisor at my bank, Autoworkers Community Credit Union. We’re having a very emotional discussion about the future of my business. The business my wife and myself started from scratch with no money, living in a shitty, drafty apartment with a newborn. As we review my year end and my Profit & Loss statements, she takes in a deep breath and leans back in her chair. I know exactly what she is going to say. I can feel the blood rushing to my cheeks and ears making my face all hot and flushed.
“Chris, I’m going to be honest with you, I’d declare bankruptcy and move on.”
I sat there in silent shock. I had an emotional breakdown. I was pissed off (at myself).
Here I was, ten years into a business that, up until the big recession, was very successful and very profitable. How could I allow all the hard work and struggle over the last decade slip through my fingers?
After an awkward silence and accepting her offer of some kleenex, I leaned forward in my chair and looked her straight in the eyes.
“Bankruptcy simply isn’t an option! I can turn this all around. I promise you. I’m going to fix everything that went wrong and re-build Citrus from the ground up!”
She did her job. She advised me. But now that I had made my intentions perfectly clear, her job was now to help me and I had to make some pretty uncomfortable life-changing decisions.
The following are my hindsight observations. As always, they apply to my situation and my business strategy… but you may find some ideas helpful in your business situation.
1. Find balance between emotional decisions and analytical decisions
In my experience, I find most business owners to be very passionate about what they do. When passionate people make decisions, sometimes the reasoning can be obscured by emotion. So my first suggestion to help you make more profit would be to lean on any and all analytics you can and make decisions 80% based on hard data and 20% passion, emotion and intuition.
By analyzing and applying insightful critical thinking to REAL data about your business (profit, expenses, customer demographic and psychographics, website traffic, advertising effectiveness etc…) you make better decisions. Better decisions will almost always net you better results. One way better results manifest is in increased profit.
2. ROI or say goodbye!
I have fallen victim to this trap many times and on occasion, continue to feel its rib-crushing grip to this day although I am much more disciplined about it now.
Many times I have taken myself in a direction that has nothing to do with making money in the name of “wouldn’t it be cool if?”. It’s taken many forms from purchasing completely unnecessary equipment (LightForm!) to building a stage in my studio to livestream. Now I’m not suggesting that 100% of your business activities should be about making money… but 99% of them should be! Measuring the expected Return On Investment for whatever business project you take on is critical. So go ahead and create the Podcast, build the livestream stage or purchase the fancy camera, just make sure you have a plan to convert those expensive endeavours into a return for your business.
3. Spend less! Spend Smart! Stop expense “creep”
I know. Duh! But people continue trying to make more and more money without working towards reducing expenses. Optimizing your income AND expenses will make a significant impact on your profit. I literally just had this conversation with some friends, discussing “expense creep” over coffee. Humans tend to want to minimize the impact small recurring expenses have on their bottom lines. For example, our discussion was about streaming video services and how adding $3.99/month for MGM + $10/month for Netflix + $7.99/month for Amazon Prime +++ adds up quickly! These small incremental additions equate to creep and they chip away at your potential profit.
If you find you are one of these people who succumb to various forms of expense creep, implement a quarterly “de-creeping” of your various services.
4. Hire smart!
Instead of letting staffing go (as mentioned in point #6), hiring more and better staff can really help shift your business from 1st gear to 2nd gear. In addition, up-training existing staff to perform some of the more repetitive tasks within your business can free the decision makers up, allowing you to surge forward because you can now focus on business development instead of preparing photos for your social media posts!
Sometimes I’m asked by business owners why you would want to re-brand your company. There are many reasons, but one is, by re-branding your business or a sub-brand or a product/service within your business as premium, you can better justify an increase in that business/sub-brand/product. You of course could simply raise your prices without re-branding. I’ve seen that work many times. Business owners sometimes think that by raising their prices they’ll lose customers, but in most cases, that doesn’t happen. However, by performing a re-brand (or re-positioning your brand as premium) you may be able to justify an even greater price increase resulting in a higher profit margin.
6. Systems and efficiencies
During Citrus’ infancy we had no systems or processes for doing… well, anything. Simple tasks like accurately tracking our billable time or complex tasks like how to manage the content smoothly for a website project, we had no significant internal processes.
By building systems that make your operation much more efficient you can save a LOT of time, lost money due to errors and even reduce staffing requirements. A well-run, efficient and lean company is a profitable company. My experience has taught me that this tends to happen organically as entrepreneurs find their way within their business. But… when you’ve been in business for a long time, sometimes you need a boot in the arse to help you see where parts of your business may have “loosened up”. Stay open minded. Listen to people (customers). Analyze your data and don’t be so entrenched in the way you do things, because you’ve always done them that way, that you miss new and exciting opportunities.
7. Don’t be scared to change your mind
Running a business is all about daily decisions. Some are good and some are not as good. Your business evolves. As much as some one like me constantly reinforces the need to try to be consistent you also need to recognize when something isn’t working or if a better idea presents itself and be prepared to pivot a little. I know personally, sometimes I can almost feel guilty altering my direction… especially after I have been broadcasting a specific way of doing things, but the fact of the matter is, your ideas will give rise to new and better ideas and you need to take advantage of those. In many cases, those new and better ideas will give rise to an efficiency or a cool new product or service which could give rise to increased revenue or reduced expenses. Go for it.
Remember, at its core, business is quite simple. (A) Capture peoples attention. (B) Convert that attention into revenue/profit. (C) Deliver on your promise. If you filter everything you do through that lens, it might be enough on its own to keep you on the right track!
It’s the very beginning of 2020 and a great time to do some critical review of your operation, products and services and tighten those bolts down nicely to set yourself up for maximum money-making potential for the year ahead!
Would you like my help starting your business or taking your current business to the next level? Email me directly, text me at 905.442.3323 or call me at the same number. It's always free to chat!