Business is becoming increasingly more competitive, and most business owners are facing pricing pressures. One strategy to face this challenge effectively is to find your profit centres (i.e. Cash Cow).
This is not easy. You can do this by first holding a strategic workshop with all the key leaders in your company and undertake a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of your company and your competitors. Next, talk to other people friends in the industry, suppliers, competitors, trade journals and get their opinions on the industry. In short, by knowing your company, your industry and your market, you will be able to discover a great new source of profits.
The best way to find your profit centres is through customer feedback. A good tactic in getting the right kind of feedback is to go to the top twenty per cent of your customer base and ask them some of these questions:
- Why do you do business with our company?
- How did you first come into contact with our company?
- Why did you first decide to do business with us?
- Why do you continue to do business with us?
- What do we do better than anyone else? What do we do well? What do we do poorly?
- What other products, services, or solutions would you like to see us add to our offerings?
The answers to these questions will point you toward the real profit centres of your business. Yet another source for new profit centres is new markets. To discover these new markets, think laterally to expand your customer base. First, look at your customer base and the problems that you have solved for them. Then, have your team consider what other kinds of businesses have similar problems, and then try to solve those problems for these new customers.
Maintaining Your Profit Centers
Also remember that you should keep your focus on main profit centres, and ensure that they remain consistently profitable. This is equivalent to “knowing what you do well, and sticking to it.” Stay close to your core areas of business and maintain a consistent focus. Maximize the profitability of existing products and services through repackaging or redistribution. Then you can invest in new products and services that complement your core offerings. This is also key to creating new profit centres. For example, training, customization and consulting services may be made available for software developers along with the software products.
Finding New Profit Centers Across The Globe
The task of finding new profit centres for a company depends on the nature of the company and its products and services. And many companies will find that their main profit centres are geographical in nature. Focusing on geography to identify and create new profit centres entails establishing your company as a global player (you can use the Internet to do this).
New profit sources result from the ability to enter and open new geographical markets. Find new regions by first identifying a good partner to test the market for you. Then, when the market proves itself, you can either acquire the partner or set up your own operation.
The most important success factors for establishing profit source and becoming a truly global company are:
- Appearing local to each country or region by speaking their language, dealing in their currency, following their business norms and customs, and providing them support locally;
- Offering a global product or service that will be in demand regardless of the country or region;
- Leveraging resources from across the globe in a seamless manner to help solve local problems;
- Creating a realization among customers and prospects that they are not alone in using the product or services of the company;
Many customers throughout the world are using the same. Strength and comfort lie in diversity and numbers.