Earlier this week, I was at my Mastermind group and there was a really interesting illustration of how important it is to focus on the things that actually matter most.
I will simplify the numbers, but one of the businesses we were discussing has two separate income streams.
One makes up 60% of turnover. The other makes up 40%.
So, in a £1 million business, that means £600,000 comes from income stream 1 and £400,000 comes from income stream 2.
Their goal is to double the business over the next two years.
But what became very clear is that income stream 2 is not really scalable. It is capacity-constrained. They need to keep it ticking over, and it should not be ignored, but it isn’t going to grow much beyond that £400,000, apart from perhaps a little bit of inflation.
That means income stream 1 has to do the heavy lifting.
If the business is going to get to £2 million, income stream 1 needs to grow from £600,000 to £1.6 million.
So the conversation was really simple.
The focus has to be on income stream 1.
Income stream 2 still matters. It needs to keep going. But when time, money and energy are limited, the real focus has to be on the scalable parts for the business to hit its goals.
It reminded me of a client who came to me a couple of years ago and said they wanted to sell their business in three years.
Again, there was finite time each week, but also a finite period before sale. They wanted to maximise profits in that time to increase the value of the business.
So that is exactly what we focused on.
We looked at the different products they offered and worked out which were the most profitable. Then we made sure their time, effort and attention went into those areas.
Because there was a clock ticking.
They didn’t have time to increase every sale across every product line. The key was to improve profits as quickly as possible in order to improve the eventual sale value.
And I think that is a really important lesson in every business.
Not every part of your business is equal.
In an ideal world, with unlimited time, you could try to grow every single bit of it.
But none of us have unlimited time.
So we have to choose.
We have to work out which products, which services, which customers or which income streams are the ones that really move the needle.
So my question for you this week is this: Do you know which of your products, services or income streams is the most profitable?
And is that where you’re spending your time and energy every week?
Because knowing where the real profit sits can make a huge difference to how you plan your next few months.
Many thanks
Jon
PS If you would like some help picking the right strategies to grow the right parts of your business, join us on next week’s live web event on Your Growth Engine. We will help you pick the two growth engines to focus on over the next few months. It’s the same principle… and it works.