Back in January I wrote about the Profit Window and the process of profit optimization.

I used that writing as a prompt to look at our business again and identify areas where we weren’t as efficient as we could be in generating profit.

Based on that thinking, we implemented a handful of changes.  It took about a week’s worth of work to execute.

Now, in June, we’re on track to capture $75 – $80,000 in additional revenue with margins of over 50%.  

To provide a concrete example of how boosting efficiency works, I’ll explain my thinking and how this came about in this short case study.

Where Were We At?

I started with the Profit Window by listing the value produced for us:

  • Cash
  • Time/Options
  • Security/Stability
  • Marketing/Sales Assets: trust, data, testimonials.

And then I considered anti-value, what was actively bad for us:

  • Waste in unused service subscriptions.
  • Excessive PM time on projects.
  • Constant vigilance required for one of our services.

Then, I did this same process for our customers.

After this, I went through and asked a series of questions:

  1. What is the governor for the value being produced for each form of value?  What’s the limiting or restraining factor?
  2. What is producing anti-value?
  3. What contributing resources or systems aren’t at better than 80% optimization?

I came to lots of answers: 4 pages of lists on value and how we create it.

I realized in this process that we had let ourselves be eroded by entropy.  

We had failed to maintain tactics that we had already proven were value creators.  Additionally, we hadn’t maximized several resources.

I came up with 9 different tasks we could do to improve our efficiency in producing profit.  Then I ranked them in an impact/ease matrix.

What We Optimized

What I ended up with was:

  1. Having a VA audit our payments to make sure our reporting was fully accurate (low impact/low effort).
  2. Implementing a strategic client communication process (high impact/low effort.)
  3. Implementing a more rigorous lead qualification criteria (high impact/low effort.)
  4. Auditing our SaaS subscriptions and hosting accounts and weeding out low value services (low impact/low effort.)
  5. Updating our directory listings and making sure that we were in multiple directories (medium impact/low effort.)
  6. Requesting testimonials for a new service from previous customers (medium impact/low effort.)

Almost immediately, our VA recovered $5,000 when we found that one of our clients on our support service had been using a bad credit card.  We found another one and were able to get them to pay as well- an additional $4,500.

I spent a few minutes gathering past testimonials from customers and making sure that they were integrated into our marketing.

I also had our VA maximize our directory listing strategy. This mostly didn’t work, but did contribute a few additional leads and one customer on our support service – $3,600/annually. (And the jury is still out, time will tell.)

I audited our SaaS payments and had our team consolidate hosting.  This will save us around $1,200  by year end.

I created an account management process that reached out to our highest value clients each quarter and implemented it.  We immediately went into project conversations with each of them.  I thought one or two projects might go forward, but we ended up with three projects at $60,000 – $63,000 and a few possible follow-on projects coming up.

Today, we’re currently in a second round of optimization around our support service- automating onboarding, reporting, and decentralizing follow up for new customers.  Each of these measures is designed to produce more value for us and for our customers.

Discipline to Think

You could have made an argument back in January that I should have set profit aside and stayed focused on our current initiatives.  You could also make an argument that I shouldn’t be writing about running a business, I should be spending that time actually running it.

In the moment, both when I wrote about profit and when I applied my insights, I had both of these thoughts.

But I’ve learned through experience that my most powerful gains in effectiveness are often a result of refining my thinking through writing and speaking.   

In this case, a few days worth of thinking resulted in enough revenue to pay for a full time employee for the year.

Entrepreneurs operate under continual pressure.  We naturally have a bias for action because we face seemingly existential threats on a regular basis.

But resisting that impulse to hustle and dedicating energy to generate insight for your business is the most powerful way to spend your time. 

See also: Thinking is the 80/20 of Doing

Featured Image is from the second optimization of our support process.