Does your biz time = $?
We had a YTD (year to date) meeting a few weeks ago among the Pure Adapt brain trust. The middle of May is no special time, but it just felt like a great time to step back and take a look at how our first year as a corporation is going. George ran us a monster report, and the numbers were quite surprising. Revenue across the board was higher than expected, and we're much more profitable at this point in time than I thought...which is great.
I went back yesterday and looked at the report again and something disturbing stood out to me: about 75% of our revenue is coming from about 30% of our work (the good 'ole Pareto Principle). Which got me to thinking - wtf are we doing with the other 70% of our time?
I decided to go through and re-evaluate all four of our jobs (including my own) and realized that for every project (not just the company as a whole) we do a lot of crap that doesn't drive revenue in any way shape or form. Now, we've got projects like the SL price guide that we're invested in long term and no one expects to be pulling in what Detailed Image does, but it still didn't all add up to me.
So today I met with my partners and pitched them a plan to cut everything out of our business that isn't generating revenue. The things we think *could* bring revenue in the future will be limited to 1-2 hours/day so that everyone is spending the vast majority of their time on the things we KNOW are bringing revenue already (DI, some client work, and SL).
We all love being entrepreneurs, but sometimes we forget that the point of running a business is to turn a profit (I'm not downplaying the importance of doing it the right way and treating people with respect, but if that's all you're doing than you should be a non-profit). Particularly when you're a company like us that owns a handful of sites and also does work for clients, it's hard to figure out what the right balance both short term and long term is. We've done a pretty good job of identifying those things the past few months, and once I saw that report it was crystal clear that our resources could be distributed differently.
My partners all agreed and we're on a better path today than we were yesterday. I wonder how many other businesses suffer from the same problem? I'd venture a guess that it's most of them...I know at least most of the companies I've worked with have been that way.
The company I was an engineer with (large consumer goods company) generated almost all revenue and profit from two "classic" product lines, but spent most of their time and money in fruitless R&D. Yea some of that's important, but not to the extent where you're eating your profit. They would be a FAR better company if they cut 90% of marketing and new product development and focused on their core line...and then spent the remaining 10% of R&D that's left on future products. Instead they ignore their cash cow and keep throwing the kitchen sink at failing new products (I'm sure they'd disagree if they read this...but I know I'm not the only one who worked there that thinks this).
Common problem. Simple solution. So why don't more companies notice it?
I went back yesterday and looked at the report again and something disturbing stood out to me: about 75% of our revenue is coming from about 30% of our work (the good 'ole Pareto Principle). Which got me to thinking - wtf are we doing with the other 70% of our time?
I decided to go through and re-evaluate all four of our jobs (including my own) and realized that for every project (not just the company as a whole) we do a lot of crap that doesn't drive revenue in any way shape or form. Now, we've got projects like the SL price guide that we're invested in long term and no one expects to be pulling in what Detailed Image does, but it still didn't all add up to me.
So today I met with my partners and pitched them a plan to cut everything out of our business that isn't generating revenue. The things we think *could* bring revenue in the future will be limited to 1-2 hours/day so that everyone is spending the vast majority of their time on the things we KNOW are bringing revenue already (DI, some client work, and SL).
We all love being entrepreneurs, but sometimes we forget that the point of running a business is to turn a profit (I'm not downplaying the importance of doing it the right way and treating people with respect, but if that's all you're doing than you should be a non-profit). Particularly when you're a company like us that owns a handful of sites and also does work for clients, it's hard to figure out what the right balance both short term and long term is. We've done a pretty good job of identifying those things the past few months, and once I saw that report it was crystal clear that our resources could be distributed differently.
My partners all agreed and we're on a better path today than we were yesterday. I wonder how many other businesses suffer from the same problem? I'd venture a guess that it's most of them...I know at least most of the companies I've worked with have been that way.
The company I was an engineer with (large consumer goods company) generated almost all revenue and profit from two "classic" product lines, but spent most of their time and money in fruitless R&D. Yea some of that's important, but not to the extent where you're eating your profit. They would be a FAR better company if they cut 90% of marketing and new product development and focused on their core line...and then spent the remaining 10% of R&D that's left on future products. Instead they ignore their cash cow and keep throwing the kitchen sink at failing new products (I'm sure they'd disagree if they read this...but I know I'm not the only one who worked there that thinks this).
Common problem. Simple solution. So why don't more companies notice it?
posted by Adam McFarland at
6/11/2007 06:25:00 PM
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