What Did the Most Good for Your Profitability?

What Did the Most Good for Your Profitability?

Here’s a question for you:

If you had to pick one move that you’ve made in your business (past or present business) that had the biggest impact on profitability, what would it be?

Just as for other articles here in the Small Business Success Center, I once again polled several entrepreneurs. This is how they answered the question:

success“Turning a service into a product,” says John Jantsch, DuctTapeMarketing

I guess I would have to say it was committing to the concept of turning what has always been considered a custom service into an innovative product and brand. That decision, in hindsight of course, set in motion so many of the positive things that have occurred since in terms of profitability. Marketing for the small business, and for the small business marketing consultant who provides it, was commonly viewed as a highly creative and personalized endeavor. By turning marketing into a system

and packaging it with set of deliverables and a set price, we were able to replicate results much more easily, create a differentiating element in the marketplace, and impact profitability tremendously. Determining to call all of this Duct Tape Marketing turned out to be a pretty good decision as well.

success“Partnering with others,” says Scott Belsky, Behance

The most important “move” we made related to profitability was the realization that “we can’t do it alone.”

Businesses are often obsessed with protecting margins and trying to cut out middle-men — and for good reason. However, small businesses gain credibility when they have deal flow – regardless of whether or not some of the deal is being shared with a source. Whether it is selling subscriptions, filling ad inventory, or distributing products, it often pays to involve (and incentivize) others to help you generate revenues and, more importantly, examples. The most valuable testimonial in an early stage business is a happy customer and a recognizable customer — or better yet, both!

We decided early on that we would give up some margin on our products and services in order to involve other partners. As a result, we have a number of thought partners that are committed to growing our business. Nothing beats the value of committed partners that are generating early revenues and opportunities for your business.

success “Recognizing what we were worth,” says Andru Edwards of GearLive:

I have to say that, if I could just pick one, then the one thing I did in business that had the biggest impact on profitability was recognizing what we were worth.  In the beginning of our ad-supported online business, I was just happy with anything that any advertiser was willing to give us, and happily gave them ad real estate for bargain prices. It took me a little bit, but there was a day where the lightbulb went off, and everything clicked. I was way underselling our ad inventory, and pretty much, we were being taken advantage of.

I immediately started asking advertisers for what I thought we were worth, rather than being happy with what they were willing to pay. Once I did that, the number of advertisers we had diminished — but the goal wasn’t to have a bunch of advertisers. We wanted a few good advertisers that paid well. The good thing is that these advertisers still felt we were worth it to their advertising budgets, and they didn’t even question our rates. We moved our rates to be in line with other top Internet sites, because we felt that our content could match up. Luckily, advertisers agreed.

This is actually a good overall business tip – know what you are worth. Don’t undervalue yourself — and, please, don’t overvalue yourself either. Have a realistic mindset of where your business stands in your industry, and then make sure you are getting what you are worth.

success“Registering my name as my domain,” says Ed Bott, Ed Bott’s Windows Expertise

Without question, the best move I made was back in the dark ages of the Internet (1995 or so), when I registered my own domain name. Through the years, I’ve had it drummed into my head by marketing experts that building a memorable brand is one of the most important things you can do for a business. Well, they were right. Much of my consulting and writing business is based on my personal brand, so being able to refer potential clients to my website at edbott.com means they’re more likely to remember how to come back. It also means I can control my incoming and outgoing e-mail addresses to make my business look as professional as possible. It helps make certain that people are able to find me easily using search engines as well.

Whenever I see a business that uses an AOL or Yahoo or Google e-mail address or a canned website hosted at someone else’s domain, I’m immediately suspicious. Do they have a long-term commitment to their business? Are their other business processes equally unsophisticated?

success“Deciding when to be a tightwad, and when to spend,” says Harry McCracken, Technologizer

My site, Technologizer, is just a few weeks old — so rather than aiming for instant riches, I’m working hard to get into habits that will help profitability come sooner rather than later. And I’m finding that it’s essential to know when to be a tightwad, and know when to spend.

When I began planning Technologizer, I told folks that I intended to rent office space early on. Bad idea — I’m perfectly happy working out of my home when I’m there, and roaming from improvised workspace to improvised workspace when I’m out and about. (I spent a remarkable amount of time in the lobby of one conveniently-located hotel that has a comfy sofa, and I’m writing these words from a Starbucks that I consider my branch office near San Francisco’s Moscone Center.) End result: I’m saving the thousands of dollars that even the most basic real office would cost.

But there are times when it doesn’t pay to be a cheapskate. My biggest expense so far: Hiring a lawyer who helped with contracts and incorporating my company. I also bought a new laptop with a larger screen that lets me work faster. And after years of futzing with Wi-Fi hotspots, I finally broke down and signed up for a wireless data plan, assuring that I have Internet connectivity wherever my work takes me. I think all these moves improve my odds of success — and are therefore investments rather than expenses.

success“Hiring my first employee,” says Jeremy Gutsche, TrendHunter.com

Hiring talented people provides enormous leverage. Accordingly, the best move would have to be hiring my first employee, Trend Hunter’s editor, Bianca. In my case, the example is even more pronounced because I hired Bianca 8 months before I quit my full time job. Given that I only had 40 hours of evenings and weekends, her full time dedication enabled my work to be focused and strategic. For aspiring entrepreneurs caught in the corporate ladder, the move to hire a first employee can help get your start-up running.

success“Hiring someone to help with email,” says Dane Carlson, Business Opportunities Blog

I’ve hired an assistant to help me sort and process email.

Like almost everyone who’s ever ventured online, I receive an enormous amount of email. Spam, mailing lists, and automated reminders I can filter and deal with. It’s the email from real people who want to do business that I have trouble with.

My entire business is online, so it’s no surprise that the vast majority of all of my business communication is over email. Recently, though, I realized that I was missing out on revenue because I was having a difficult time figuring out which emails were most profitable to respond to first. Some valuable messages were from people who wanted to give me money directly for a service while others were from people that wanted to give me free content that I could monetize later. My email assistant now helps me to sort through the chaff and find the wheat.

And now for my own answer to what made the biggest positive impact on MY business’s profitability:

success“Spending on talented service providers,” says Anita Campbell, Small Business Trends:

It sounds crazy, but spending money to hire service providers made my business more profitable. This is how it works: you hire contractors to round out your virtual company, and you get more done. When you have the capacity to get more done, you can go after bigger opportunities. Bigger revenue opportunities brings more money in on the top line. More money coming in on the top line (sales), allows more money to drop to the bottom line (profit).

Of course, your hiring has to be aligned with sales increases, and you can’t let hiring get too far ahead of your sales.  And you must have a solid business model and pricing model to begin with.  But spending on the right things works!

So, now you’ve heard from several seasoned entrepreneurs.  What say you?  What made your business more profitable?  Leave a comment and share your wisdom.

Image: Depositphotos.com


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

19 Reactions
  1. Oh my goodness, there’s so much good stuff there (I just printed it out to read a few more times post coffee) that I’m almost afraid to muddy it up with my two cents.

    So here’s just a penny’s worth:

    I’ve automated as much as I possibly can, and for a one-man show, that’s been unbelievably helpful.

    Automator, Photoshop actions, e-commerce, a txt file full of standard responses (this is not one of them) to cut and paste… And I’m always looking for more.

    When my tech falls down it’s a hassle, but for the other 95% of the time, it’s a godsend.

  2. These are terrific, and I agree with them all, and I’m going to link to them on my blog.

    What did the most good for my profitability was the decision to accept all payments via credit card. Early on in my small business, I dealt with late or no payments, since small businesses are often the last ones to get paid.

    I decided to change my payment policy. As a P.R. provider, it was unusual to say that I needed all payments by credit card, but since I work exclusively with small businesses, many of them were glad to get frequent flyer miles on their credit cards (especially Amex).

    I keep the information on file and process the payments according to the agreement I have with the client. The fact that I already had credit card processing in place helped me move quickly into creating DIY PR products, which also helped my business grow dramatically, and John Jantsch described above.

  3. The one thing that has repeatedly been a major influence in my business’s success is trusting my instincts. I saw a need for my services (POD publishing) and Anita, you were one of my first clients. As we moved forward, (we being my partner, Tom, and I) we saw a benefit in building blogs for our authors. That led to building blogs for local small businesses. Each time, it was a gut instinct that said there was a need, and I could fill it.

    Everything else flows from my keen instinct on choosing what works, most of the time. Of course, I’m not perfect. At least twice, AGAINST my gut feeling about the project or the person, I took on clients that…were not a good fit.

    Today, my gut instinct is my Inner Samurai, as my author Susan Reid likes to call it. It works. People say women have more of it than men, but I’m not so sure. The men I know have very strong instincts – but, men and women often dismiss that gut feeling and move in a wrong direction.

    Accept your Inner Samurai’s guidance. It works.

  4. Another great topic on BusinessTrends.com, with tons of really good tips. I hope you turn this into another one of your Special Reports, Anita!

    In the beginning, leading a network was a huge boost to my profitability, but it was of course a gradual process.

    Keeping work email in one email box, and channelling all the rest to different ‘secondary’ email addresses really helps me stay organized. Any time I sign up for a new membership, or for another e-newsletter, that files under Yahoo Account.

    Finally, Scott and Anita, you both make excellent points about team building and outsourcing. I’ve been doing more of that recently, and I really see the difference in the numbers as a result. When I take a month and opt to do it all myself, I just don’t pull in as much as I can be making.

    Thanks for this post – it’s worth hearing about the experiences others have had.

  5. This comment was submitted through Twitter, from Laura Allen, CEO of 15SecondPitch.com:

    la15SecondPitch @smallbiztrends Great question! Outsourcing the ‘small stuff’ to a virtual assistant that I found at: http://www.longerdays.com 🙂

  6. Delegating “less important, but still important” work to others so I could focus on the really important work that only I can do.

  7. For me, buying in bulk from wholesalers. I had to first get over the anxiety of spending larger amounts on supplies than I wanted to. Once I accepted that and got on an ordering routine, it saved me money in the long run to buy in larger quantities and I traveled to pick it up and saved shipping fees also.

  8. Oops, I need to correct a silly error: I meant to say “SmallBizTrends.com.” This is what I get for multi-tasking during e-conversations.

  9. Kenneth Darryl Brown

    Utilizing technology to be more profitable! I use my computer and other technology tools to improve my productivity, effectiveness, efficiency and profitability! For example, I conduct my first call meetings and most of my client appointments ONLINE! My profit margin is over 80%!

    Second, I hold online networking meetings! On these sessions, we share information, knowledge and support each other! Last year, we connected 500 people. So far this year, we have matched over 480 entrepreneurs!

    Third, I am active with social media tools like podcasts, blogs, social online networks (Twitter, Linkedin, Facebook Squidoo & My Business Community) and wikiis. This reduces my transit time for networking. I can stay connected with talented experts and professionals without getting in my car and burning gasoline! This also reduces the the wear and tear of my car! By connecting with interesting people, reading and researching online, I continue to expand my knowledge and awareness! That is a good thing!

    Last, I could not survive if I did not have a methodical formula for sales and profitability success! We created a business profitability calculator that keeps us and our clients on the right track!

    I could not be successful without utilizing technology in my business! Without my technical expertise, I would be one of the 80 percent of all entrepreneurs that fail within the first five years!

    By using technology, I have a better quality of life! I maintain a daily exercise routine. Most times, I managed to get my afternoon nap! (Smile) Now, I have more time for my clients, my family, friends and me! I am happier. I have less stress in my life. I am more relaxed than ever before! Life is good!

  10. This comment was submitted through Twitter, by Lauri Burkons, technical writer:

    burkonsconsult @smallbiztrends Hooking up with a consulting firm – they find the clients/projects; I do the work.

  11. My two cents of general advice:

    – Analyze your costs by the using the Pareto principle (“80/20 rule”). I learned this lesson from work as a cost analyst at a company belonging to the ITW (Illinois Tool Works, Inc.) group.

    – Go through the whole supply chain in order to find bottlenecks in the process and create long-term relationships with your suppliers and customers. From my work as a purchaser of raw materials for the production of welding electrodes and participation in the Swedish National Association of Purchasing and Logistic.

    – I will come back with a tip from my own small business when we have become profitable!

  12. Seeking out and working with “ideal” customers. These are clients and customers who require slightly less than my system can deliver. By profiling clients who value and need the unique benefits that I provide, I find that there is very little wasted energy and time and my clients are all very happy.

  13. There are a number of things I could point to but I think the most rewarding – both from on a financial and on an emotional level – are the business alliances I have made over the years.

    Sometimes working in a consulting or business advisory role is solitary work. But I have the good fortune to have developed a network of exceptional professionals to work with on specific projects and assignments.

    Working in a successful partnership or alliance with people I’ve developed a business relationship with is very satisfying; and it usually means the business assignment completes on-time and on-budget!

  14. For me the key to driving profitability along with growth was the decision to focus on “scalability.” With every activity in the business, I factor in its scalability. This includes everything from creating an exclusively online business, to receiving upfront payments, to forging synergistic partnerships, to leveraging automation technologies, to “product-izing” the services, to “product-izing” knowledge into books, etc.

  15. “But spending on the right things works!”

    The ideas are really good and your last line Anita-is really good and TRUE.

    We can’t just receive, receive and receive and we will become more profitable. We must spend which is somehow can be equated to risks. At the end, it’s a matter of spending on the right things and not how much you’ve spent or not.

  16. Understanding the difference between a system and a product.

    If it’s an ongoing activity or something that is done more than once you should develop a systematized way of doing inside your business.

    If it’s temporary, goal directed, unique, and has a beginning and an end, it should be managed as a project.

  17. Several years ago, I read a book called “Attracting Perfect Customers”. It opened my eyes to the disproportionate amount of angst and resources that went to troublesome clients. I decided to tighten my qualifications for the kind of clientele I was willing to work with and soon found that I was only working with people who were aligned with my core values. This shift led to better relationships, low stress, and high satisfaction for both myself and the client.

  18. Usually 80% of your profit comes from 20% of your clients. Find more clients similar to that 20% and phase out the less profitable 80%. Repeat this process over time.

  19. Lesenswerter Post, danke.