Stop Doing Things That No Longer Make a Profit

Posted by: Today's Tip Contributor on February 11, 2011

As the old saying goes, insanity is doing the same thing over and over and expecting to get different results. It does not matter how long you’ve done something, if it no longer offers both profits and growth, stop doing it!

Most businesses are a mix of break-even activities, loss centers, and one or more sources of profit. For example, a gas station owner may have three properties, one of which is in a high-traffic area and makes a solid profit from pump sales, while another makes a profit only on its large convenience store and food court. The third used to make a profit from both gas sales and repairs, but now barely breaks even. Add it all up, and you have a low-profit business that takes a lot of management effort. Sell the property that barely breaks even, concentrate on the two that have profit centers, and you are heading toward a stronger bottom line with the ability to focus more management attention on building those profits.

It is hard to sell off or close parts of your business that do not make money, especially for small businesses, because all its parts tend to be interlinked. However, by taking this hard step early in the year, it becomes much easier to move ahead with growth-oriented innovations before another year gets away from you.

Alexander Hiam
Founder
Amherst Fine Art
Amherst, Mass.

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