From the course: Small Business Secrets

Finding your most valuable service or product

From the course: Small Business Secrets

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Finding your most valuable service or product

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As a small business owner, it can sometimes be really easy to just caught up in selling everything and anything that you've got. And while you do want to make money, sometimes selling lots of things, can be more stress, and actually, can be less profitable for your business. But how do we know which of all the things that you sell. Is the most valuable line of products or services? I call that the MVL. Now, if you've only got one thing that you're selling, that's easy. It's that one thing. But if you're selling lots of them, it's going to take a little bit more analysis on your part. I've given you a worksheet that can help you walk through that process. Keep in mind, this is not exact science. This is what I call entrepreneur math, which means it's just subjective. We're trying to get a general idea, and get you more clear about what you should be focusing on. So, let's look at that first column. In that column, simply list all of the different lines of products or services, that you sell. If you need to pause the video, I'll be here when you get back. In the next column, let's list the sales that you received for each of those products or services. In the last month, or, in an average month, how much, overall do you sell, of each of those products and services? List that, in this column. And the next column, list the expenses. How much does it cost us, to sell, each of those products or services? The expenses actually can vary, from item to item. So, let's figure out how much it costs us, overall to deliver, that kind of product or service. By the way, one question people have is. How do we factor in expenses that don't tie directly to one product or service? In that case, just divide that among all of the expenses, and just add it in to the total expense. And now, we can calculate the total profit, for each of these products and services. It's very simple. It's sales, minus expenses. Go ahead and put your answer, in that column, for each product and service. Now, total profit is important, but we also want to consider the profit per unit. So, first we need to figure out how many of each thing are we selling. Go back through your records over the last month, and determine how many of each unit you sold in the month. And write that number down in this column. And now we can get to the most important number, the profit per unit. Divide the total profit, by the number of units sold. And this number, this profit per unit tells, us how much value we're receiving to the bottom line of the business, for selling, each product or service. Now, that's important, but, money alone is not the only consideration. As a business owner, your business should give you more life, more enjoyment. So there are two more things that we want to consider outside of the dollars and cents. The first one is values. These are the things that you and your business believe in, the principles that you try to follow in your life. Does selling that product or service, help you with living those values? Does it support those values? This seems like a strange question, perhaps, but it's not. It's very common, for business owners to drift a little bit into selling a product or service, that doesn't really support what they value, simply because they were chasing money in the moment. Go ahead and write your answer, as to whether or not selling each of those items, supports your values. And then last, how much do you enjoy delivering that product or service? On a scale of zero to ten, zero being it's absolutely miserable, and ten being it's the most enjoyable thing you can possibly think of, Where do each of these things fit, on that scale? Go ahead and give them a subjective number between zero and ten. Now that we've completed all that, it's time for us to rank, the products or services. Look at the profit per unit, how well they support the values, and, how much you enjoy, selling those things. And figure out what's the number one thing. What's the best thing, for you to be selling in your business? It's up to you, but you can consider all of those things together. And then go ahead and, list out all of the others. That number one thing, is, your most valuable line. And the idea is to focus all of your effort, all of your sales, all of your marketing. Into selling that one thing, because not only will that bring the most profit to your business, but that will bring you the most enjoyment, as a business owner.

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