The term 'growth' is all-encompassing, which isn't altogether bad, but it lacks specificity.
With almost every business owner I speak with recently, their priority right now is profit. This may seem obvious, but as I start to unpack why, it will highlight the real importance of maximising profit and give you some foundational steps you can put in place to help get the result you're after.
But first, let me identify the outcome to avoid.
I'm sure you've seen a business that has 'scaled' and was getting triple-digit revenue growth year on year. But, then, within months of facing an unexpected downturn in sales, or even a plateau of growth, their high cost base has made it hard to weather the storm, and they are forced to wind back the things that have helped them grow, and maybe even let good staff go.
Focussing on sales is important as you begin to ascend revenue bands because it opens up cashflow opportunities across asset acquisition and new business generation.
However, when this drive for more revenue isn't from a solid foundation, it doesn't take much to go wrong, and you can find yourself putting out fires on multiple fronts at once as issues compound on one another. This can be emotionally draining as you are trying to build systems and processes around already existing activities while dealing with cash flow pressures. Not impossible, but ideally avoidable.
Prevention is better than cure, so let's explore the sorts of disciplines and foundations that can help you maximise profit at all stages of growth.
Note: If you want to dive deeper into this topic, I'm co-hosting an event called the Profit Maximisation Plan. We're running live on Zoom. If you'd like to join us, register here.
Maximise Profit Fundamental #1 - Aim For Boring
The best businesses are boring… Let me explain.
When you start a business, you have a vision, a capacity to solve a genuine issue in the market that would use your unique capability to do things better than what the industry had resolved to accept.
It is simple in definition, but somewhere along the line, complexity tends to set in. It's common for your 'what', 'how' and 'who' to evolve as you follow opportunities to generate sales. These added layers create an overreliance on you to keep all the balls in the air.
Ultimately, the success of a business lies in its capacity to generate ongoing profits without the owner needing to be operationally involved. This type of business is driven by systems, processes, and a predictable pipeline of work that sits firmly inside the company's core competencies.
That's what I mean by boring.
You're adopting a less is more approach, and it's practically powerful because it gives you the ability to focus. Achieving high-performance requires mastery, which is why doing less is not only appealing; it's tremendously practical if you cut back in the right areas.
This attributed quote has no doubt evolved, but it perfectly illustrates my point. When Michelangelo was asked about the complexity of sculpting his statue of David, he said: It was easy; I just chiselled away everything that wasn't David.
Your business already has the slab of marble; you have staff, IT equipment and the expertise to deliver great products and services. So, let's cut away everything that doesn't deliver your value proposition and leverage your genius.
Maximise Profit Fundamental #2 - Leverage Your Genius
When we want the best outcome in life, we turn to experts.
When a loved one has a heart attack, you want the country’s leading cardiologist assigned to them. Sure, you like and respect your GP, but she's not who you turn to in these circumstances, much like after the birth of a child, you hang off every word of a paediatrician. Each profession occupies a particular space in our mind.
The generalist dabbles in a bit of everything - like a home handyperson who can paint a wall, install some shelves and fix a leaky tap. They're often very skilled people, but they're seen as a commodity in their current service delivery model. So they get asked to quote for small jobs, they get haggled on price and compete in a crowded market.
Instead of being categorised as a home handyperson, you would much prefer to be seen as a skilled craftsperson, like a stonemason.
Expert stonemasons get flown in from all over the country and even overseas to build feature walls and fences for high-net-worth clients. As a result, they're booked out well in advance and demand much higher prices for their expert services.
They get referred by their clients because of the prestige associated with having a wall built by them. In turn, they develop a profile and identity within the community of their ideal clients and occupy a space in a market with fewer direct competitors.
Being a specialist means you turn away work outside your zone of genius. This is the sticking point for businesses early in their journey. Let me put it this way...
When you try and appeal to everyone, all you do is appeal to no one.
You're much better served by holding the position of expert. Experts don’t negotiate on price, largely because customers rarely ask them to. Instead, they protect their profit because they charge expert-level prices and don't amass tools that they don't need.
As consumers, why don’t we ask medical experts for a discount? Maybe it’s because you know it has taken them a long time to build up their expertise. Or because you hold them in higher regard, or because you trust them more. In part, it's because it's socially awkward, and you're not sure whether you are allowed to.
There is a lot to be said for modelling your service delivery on that of a doctor.
Maximise Profit Fundamental #3 - Live Your Value Proposition
Leveraging your genius is ultimately about identifying your core competencies and building a winning value proposition around them.
Your core competencies are the mechanism for determining your services; because your services may change to meet market demands, changes to technology and other external factors. Your core competencies, however, lies in how you solve problems.
A superhero can shoot lasers from her eyes; this means she can save people trapped in a burning car by cutting open the door using lasers. AND she can also disintegrate a villain's oncoming missile with lasers - she can help people in many different ways.
Your core competence will presumably come from your founder's passion and mission, and vision for the business. But it will extend beyond just their skills.
Then, with a solid core competence identified, we use it to develop a winning value proposition.
Your value proposition is your promise to your buyer personas about the value you provide to them. It encompasses the full range of benefits and solutions used to differentiate your service offering from that of your competitors.
I go into more detail on the broader focus of defining and living a value proposition here.
The headline is that a value proposition is more than a sentence of text; it's an attitude shift.
It's about demonstrating that you hold a distinct and superior place in the market for your area of expertise. It explicitly illustrates that you know their problems and goals and have a system, products, and services to get them where they want to go.
Your Profit Maximisation Action Plan
When you "aim for boring", keep things simple and stay firmly in your zone of genius, you can much more easily develop tactics that maximise profit.
You avoid unnecessary expenses and hold a premium price point in the marketplace, which creates a positive feedback loop. Now, you audition clients to work with you instead of doing cold outreach.
This doesn't happen by chance; it is part of a systematic process of building what I call a Marketing Compass. It is your unwavering confidence in a plan that gives your predictable and scalable growth.
If you want some help identifying where you sit on the Marketing Compass, take a look at our Marketing Game Plan process.
Otherwise, if you want to go deeper into The Profit Maximising Plan, join us for our online workshop at the link below.
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