How to find and keep hidden money in your App Business
It’s interesting, in that every business has many many different ‘points’ that could either be expanded upon or optimized.
My goal here today is to shift your thinking to really start to realize that there are so many ways that your business could be improved without going out there and drumming up more sales.
And when I say improved, I mean finding money inside your own business that you didn’t even know was there.
What really jazzes me up about this is that there are so many businesses out there with money sitting right underneath their noses.
Money that with a few simple moves could be brought into their business.
Ed: That’s silly, aren’t the business owners already experts of their business? They’ve worked in their businesses for so long. How could they miss such simple things?
Ed summed it up in his question, when he said they’ve worked ‘in’ their businesses for so long.
The crazy thing is I’ve been guilty of this myself in the past :).
I was so focused on the technical side, thinking ‘make it beautiful, big and packed with features’ – and then you will have something successful.
It doesn’t work :).
Imagine two pizza store owners.
Twenty years after they both started out, one is still running his pizza business and the other is pulling in over 1.5 billion dollars of revenue each year.
And I’m telling you that the 1.5 billion dollar pizza shop does not have the best pizza.
So how did Dominos do it?
They constantly worked on their business, looking at ways to make every piece of the puzzle more efficient, faster, better.
Being that I traditionally speak with business owners in the technology world – let me give another example.
Imagine a lady named Janet starts up a Software Development Company that creates and licenses fleet tracking and monitoring software for fleets of fishing ships.
After a few years, she’s not doing too badly, and she even has some good sized clients that are providing her with $2 million dollars of annual revenue.
Unfortunately with a business of this size, Janet is starting to face some challenges that are affecting the continued growth of the business – one of which is a lack of time, and thus she has become very reactive to the needs of the business.
There is a lot I could speak about in terms of how these challenges could be overcome but today I’m focusing on finding hidden money :).
So let’s jump in a bit deeper.
Janet has a small team of 5 people – 4 developers and a gentleman who handles the finances.
Janet’s workload involved building relationships with her existing clients, resolving issues her clients were having, working on potential new clients and helping her team develop updates and customizations to the software for her clients.
Now it’s time to play the hidden money game 🙂
For this game, we are going to work on Janet’s business with the goal being to expand your vision and understand all the possibilities available for any business.
Heh, I have a challenge in that this could easily turn into a book so I’m just going to focus on a few things :).
One potential optimization point for Janet is developing customizations of the software to suit the needs of each of her clients.
Customizations are your add-on sales
- Offer free customizations if the life-time value of the client justifies the investment.
- Leverage her staff to clients, by offering them a ‘dedicated’ resource that just works with them and their customized version of the software. Naturally she can do this at a profit, or just charge the minimum amount to cover the salary of her staff member.
- Sell customizations of her software at a profit by using a combination of cost justification and education.
- Offer clients different customizations as an upsell.
- Find, educate and offer the client customizations that help their business be more successful. Cost justification is easy here, which allows her to charge a premium for the customization.
- Package customizations and sell the pack for a saving on each individual customization in the pack.
- Put metrics in place to measure the effectiveness on different offers and tweak them.
- Have a six month marketing campaign focused on educating her clients about optimizations to their business processes they could introduce into their own businesses via a customization.
- Going in at cost price to offer customizations to client but building the customization in a way that’s modular so she can resell it at profit to future clients.
Another potential options which isn’t strictly a customization is finding complementary products in the market from other businesses and forming a partnership.
What business is Janet really in?
If we take a step back and look at Janet’s business, we can see that she isn’t in the ‘tracking and monitoring fleets of fishing vessels software’ business.
Cliff: That was a mouthful =S…
No. She’s in the ‘Tracking & Optimizing fleets’ business, which means she could expand into offering a version of her software to fleets of other vessels and even vehicles.
She could even expand further into offering her product to conservationists tracking herds of animals, farmers monitoring their livestock and so forth.
Fun & Growth = Better, Stronger and more profitable Business
It might not seem like it but staff are one of Janet’s biggest optimization points.
An investment of time and money into training her staff and improving the culture will mean better, faster, more efficient and happier staff!
The awesome thing about business is that this can all be measured!
Metrics are your friend, they show you how your business is going on a daily basis, they let you anticipate areas of concern and adjust course and they allow you to test different initiatives to grow your business and tweak the ones that work best.
Just imagine receiving a daily report with numbers across your business on how all the impact areas of the business are faring J.
Don’t have sales staff? Think again…
One overlooked facet is that her development staff are actually also her sales and customer support staff.
They are a point of contact in her business, and a way to improve (or decrease!) client relations.
Just imagine if Janet spent the time to put together workshops with her staff to come up with a framework for how clients are greeted, supported and even perhaps train staff to offer upsells whenever a client expresses a frustration with a component of the system.
Every conversation between her clients and her staff is an opportunity to improve client relations and increase the likelihood of additional add-on sales in future.
The million dollar piece of the puzzle.
Now. All this stuff is ‘nice’ and all, but it doesn’t mean squat without a concept known as systemization where these strategies are implemented and then executed on a continual basis until they become part of the standard operating procedures for the business.
This means that going in, implementing something and then moving on to something else the next day won’t work.
It needs to be put into place, measured, tested, tweaked, updated, documented and then finalized.
This then becomes a ‘framework’ that can be re-used over and over again. And if Janet is savvy, she’ll continue to look at ways to continually improve the framework.
Take a plant, it grows or it withers and dies.
Life, and business is exactly the same.
Either choose to continually grow… or choose to wither away.
One final piece to leave you with is that I’m guessing you have some sort of exit strategy for your business.
One day you are going to want to sell your business.
The neat thing about squeezing all the juice out of everything you do is that this means more money coming in the door, it means better systems, and it means a bigger multiple for the sale price of your business.
Leverage your staff
I’ve seen employers out there treat their staff like second-class citizens.
We’re all human beings and I’m sure it’ll come as no surprise to you that employers who follow these practices have extremely high staff turnovers.
An employer needs to utilize their staff, and use them to leverage their time so that they can focus on working on their business with their key executives.
Leverage even goes further.
Have a problem in your business that you can’t solve?
Setup a workshop, put the problem on the whiteboard and give your staff time to come up with some possible solutions.
Workshops are amazing. If done right!
Seriously, they are the secret to making your business run without you and giving you the free time to truly enjoy life.
Which is the reason most of us started a business in the first place :).