Have you ever thought about what’s the biggest cost in your business…and can you turn that into a profit?
It’s not a question you hear everyday, but one that can make a real difference. I’ll give you an example. Recently we were working with this services business, amazing entrepreneurs. They are doing really, really well from a traffic point of view, really really well from a lead generation point of view but when we were speaking about how to scale the business, it was really important that we spoke about how do we maintain profit as you add additional resources, e.g. staffing.
So what we did together was look at, ok what are the biggest cost in the business? In this case it was architects, so we were paying for architects to draw up the plans that went hand in hand with the development applications this business was putting together for clients.
Then we looked at, ok, can we do the Cost-Centred to Profit-Centred Strategy?
So instead of taking the costs of architects as a cost in the business, what about we run up a second business, an Architecture Firm. We know that there is already the demand, so there is no risk there plus we have the capacity to take on additional work which essentially became another income stream.
- We reduced the cost in the original business
- We spun up another business, with another income stream and profit
- We went from a lower profit business to now having two higher profit businesses.
Give it some thought, with your business is there anything you could do to turn from Cost-Centred to Profit-Centred. It’s a great strategy.