Consider Downsizing Business Activities
One of dozens of strategies listed and linked to here:
How to Make More Money
from Your Business
By Steve Gillman
Why would you consider downsizing business activities as a
way to increase the profits you make? There are a couple reasons.
To start with, even a company which is profitable may not be
making a profit in all areas. It is not that uncommon for a profitable
enterprise to be losing money in one or more divisions. This
is true even with small businesses. A lawn care business might
be making money but still have a few customers that generate
little income and are far from the base of operations, and so
are serviced at a loss.
In a case like that there is an obvious solution: drop those
customers. Better yet, find another business which can profitably
service these customers, and arrange for that. Just be sure to
let them know that you expect reciprocal referrals.
On a larger scale, closing down money-losing parts of a business
is just sometimes necessary, and the sooner the better. If you
own a chain of five restaurants and two of them consistently
lose money despite all your best efforts, close them. Your company
profits go up immediately when you cut out those losses.
Of course, it is even better if a sale of those assets is
possible. This is more likely with parts of your business that
are actually making money, which brings us to the second reason
to consider downsizing business activities: to redeploy assets
for future growth.
For example, every single one of our forty websites makes
some profit, but some make only a little, and they all take some
time to manage. If I can sell a few of them (and I may), I can
use the money to better market the sites that have more potential.
I will have also freed up some time that can be spent in better
ways. Even if revenue drops temporarily because of the sale of
those sites, it will probably grow once I invest the proceeds
and time freed up into out other sites.
Let's look at another example. I know from experience that
a carpet cleaner (I used to be one) can make twice as much money
per hour on commercial accounts versus small houses. There are
big empty spaces and fewer items to move. Now, in theory the
business would make the most money by doing any and all jobs
that yielded some profit. But how many different directions can
the owner go with his time and mental effort? If a he dropped
the residential clients (perhaps referring them to a competitor
for a fee), he might focus all the time freed up on getting new
commercial accounts, and a year later he could, be working less
but making more money.
So you can increase profits by downsizing business when the
parts you eliminate are losing money, and you can increase profits
by downsizing as a way to redeploy and eventually "upsize."
Look at all the parts of your business to see if either of these
is a possibility.
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