Edition 163 – Tweaking
I’ve worked with a large number of family businesses, in a wide range of industries, over a long period of time. What never ceases to amaze me is when family business owners are looking to grow, they usually focus on the big, shiny stuff. A new product or service. Partnering with another business on a concept. Buying out a competitor. All exciting.
Except, sometimes, the most effective ways to build profit, revenue and innovation inside your business is through “tweaking”.
Here’s some recent examples of some minor tweaking I’ve seen in family businesses that can generate massive results.
- A professional services firm that increased it’s fee for a core service by $1k.
- They figured out they were at or below market in terms of pricing.
- Most of their clients were happy – and a large number were delighted.
- The work they do changes people’s lives – yet they typically receive a fee 1/3 of other professionals they work alongside in this core service.
- They handle around 5 of these matters per week.
- Increasing by $1000 per engagement was not going to adversely impact the financial position of their clients.
- A tweak of $1000 added not just $250K to the top line – it went straight to the bottom line as pure profit.
2. A cafe increasing the price of a cup of coffee from $3.60 to $4.00
- A kg of beans generates around 120 cups of coffee.
- This cafe purchases 30 bags of beans each week.
- That means they’re making 3600 cups of coffee each week.
- A 40 cent uplift in the price generates an additional $1440 per week.
- That’s just under $75K in additional revenue to the business – which again, heads straight to the bottom line as pure profit.
- The funny thing about this example of tweaking – their former price was the cheapest in the local area, so the business owner had room to move without upsetting his clients.
In my experience, incremental change can generate significant returns. Except, most family business owners focus on the “next big thing” or “the big win” rather than tweaking what they do now.
This Week’s Tip
Take a look at the staple product or service offer in your business. Where do you sit in the market? How much room is there to move on pricing? If there is room to move, what are you waiting for?