Find your latent profit (in today’s newsletter)

Step 1: Find it!

In our last issue, I described an overview of my “Mine Your Own Business” System, which is designed to help you unleash the latent profit in your business, even in tough economic times.

The “Mine Your Own Business” System divides the process of unleashing latent profit into three steps as shown in this graphic:

Mine Your Own Business System
Full-size “Mine Your Own Business” graphic

Today we’re focusing on the all-important first step, Find it!, in which we identify the most lucrative sources of untapped profit potential in your business.

As I wrote in my overview of this step in the “Mine Your Own Business” introduction newsletter, if you were going to drill for oil, you wouldn’t randomly choose sites to begin drilling.  You would study and learn the lay of the land to choose, deliberately, where to invest your exploration dollars.   The same holds true as you seek to create your company’s future; if you decide to just spend on immediate projects and urgent needs, you will squander your resources, much like an oilman who only drills close to home because it’s convenient.  It’s very easy to confuse movement with progress.

Bring the future forward– 
Imagine you have found the riches

Imagine that it is three years from today, in 2012.  Imagine that you and your organization have created meaningful, breakthrough results during the three years that have just passed.  Describe the business outcomes that you have created.

For example, you may imagine that your company’s revenue from a new product, launched way back in 2009, is now tracking at $XX per year.  Or your business from international markets has tripled.  Or your repeat business rate is now at 95%.  If your organization is a non-profit, maybe you are imagining that large donations have doubled and volunteer hours are up 75%.

Think on the very optimistic side of reasonable.  Aim high.  Dream big.  Don’t hold back.  If you think it, write it.

Then, go back through your list and sort it based on the outcomes that would be most meaningful to your company’s future.  Which of these outcomes will have the most impact on making you the company you want to be?

For example, if expanding into international markets is a minor piece of your company’s future success, put it lower on the list.  If developing your business within a certain industry is a source of boundless opportunity, place it high on the list.

Extending our oil drilling metaphor, think of this as the exploration phase.  You are identifying the most lucrative places to drill, so that you will, in future steps, be able to allocate your resources wisely.

It’s possible– and worthwhile– to refine this list through deep business analysis, customer and competitive research, studying of global trends, etc. However, my experience shows that companies are able to get most of the way there in thisBring the Future Forward exercise with knowledge they already have.  The problem: Most companies have never actually taken the time and effort to describe their rosy future.

So, do the deeper analysis, eventually, but don’t wait for it. Don’t let the left-brain work be an excuse to stop your right-brain from thinking creatively about the bright future that could exist for your company.

Now think: What created this future?

Look at your list of 2012 business outcomes.  Now, imagine what occurred in the past three years, since May of 2009, to create those outcomes.

Every outcome you imagined can be traced to actions your customers took.

Mine Your Own Business System

For example, if one of the outcomes you listed in the Bring the Future Forward exercise was that your business selling to a particular industry segment would increase by 50%, consider the direct causes of that sales increase. It would be actions that customers from that industry took:  Meeting with your sales people, testing your product, considering your proposals, recommending your product to management, making initial purchases from you, making repeat purchases from you, recommending you to colleagues in the same industry.

The essence of the Find it! phase of the “Mine Your Own Business” System is that it is your customers, not you, who directly create your success.  Based on this, I use a very simple, yet clear, definition of a customer:

A customer is anyone whose actions affect your results

So, to complete the Find it! step as you “Mine Your Own Business,” connect your 2012 business outcomes to customers and to the actions those customers take.  For each business outcome, define the customers who can influence that outcome and describe, in detail, what you want them to do.  You may describe some customers in terms of categories (“Privately-held, mid-size manufacturing companies in a 100-mile radius of each of our plants”) or you may include the names of specific customers, or prospective customers, if you know who they are.

As an example, let’s say you run a coffee shop, called Java Jim’s, in a college town.  Your business is booming every evening of the week, and all weekend, but the place is practically empty during weekdays. This is significant because these slow times amount to about half the hours you are open. When you Bring the Future Forward, you imagine that, in 2012, your tables are filled all day long, Monday through Friday, and your revenue during these hours has increased five-fold, from $100 per day to $500 per day.  This translates to a revenue increase of more than $8000 per month, adding significantly to your bottom line.

Who are the customers who created this success, and what did they do to add $8000 per month to your sales figures?  Here are some possible answers:

  • Students regularly meet at Java Jim’s for study groups, ordering coffee, snacks and sandwiches while they work.This brings in $2000 per month.
  • A number of departments from the college hold their weekly staff meetings at Java Jim’s.  This brings in $1500 per month.
  • Local business people rely on Java Jim’s as a comfortable place to meet with their clients.  This brings in $2500 per month.
  • Students working on papers use your free Internet access to do research, consuming large amounts of caffeine to help them pay attention as they read boring articles.  This brings in $1500 per month.
  • Five different book clubs use the couches in front of your fireplace to hold their monthly discussions of the novels they are reading.  This brings in $500 per month.

Three things not to worry about as you do this exercise:

  1. If the numbers are right.  At this point, it just doesn’t matter. What matters is that you identify the customer actions that can most powerfully create your future success.  Right now, it’s all relative, and that’s ok.
  2. What actions you take.  That will come later, in theDesign it! and Mine it! phases of the “Mine Your Own Business” System. The purpose of your actions is to encourage customers to act, so let’s focus on customer actions first.
  3. Whether you own a coffee shop.  You can translate this example to any business.

In two weeks, on May 19, 2009, I’ll publish a newsletter that focuses on the Design it! phase of the “Mine Your Own Business” System, and then I’ll focus on the Mine it! phase in the June 2 issue.

I’m confident that if you take the advice in this newsletter, and focus first on identifying the most lucrative sources of latent profit in your business, you will soon be in a position to “Mine Your Own Business.”

You can get there even faster with peronalized help from Yastrow & Company. Call or email me today to get the conversation started about how we can “Mine Your Business.”

Steve Yastrow

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