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Focus On What Is Profitable In Your Business


There is a big difference between corporations that sell tens of millions of dollars per year and the entrepreneurial, family run businesses that may do only a few to several million dollars per year. Although you can’t compare the two businesses there are lessons to be learned from the major corporations.

For instance, Cisco bought Flip Video only to announce later they would no longer produce the Flip. When the Flip came on the retail scene it was a big hit. Easy to use, easy to upload and produce videos. Business people loved it for its portability and cost. The marketing and packaging was clever. Very hip, at the time.

Consumer fans of the Flip were in shock when Cisco announced its demise. They didn’t understand how such a consumer friendly product could be discontinued. But Cisco was looking down the road. What Cisco saw was that IPhones and other smartphones were more convenient and producing just as good a quality of video with ease of uploading as the Flip. Plus Kodak was also offering a popular video cam for those seeking a device like Flip.

Cisco realized that the Flip, though an industry innovator, was quickly being replaced. Cisco saw the wave of the future and decided to get out before starting to lose money. Cisco decided to put energy into more profitable products.

Last week Hewlett-Packard, the world’s biggest manufacturer of personal computers, announced intentions of getting out of the personal computer business. H-P, like Cisco, is looking down the road. What they see down the road is a changing consumer, a changing economy, lots of new competitive product offerings and technologies. The role of PCs in people’s lives is changing. The PC is evolving. Profit margins are relatively low. So H-P has decided to take the company down a different path. (Note as of 06/04/12: Since this post was written, H-P has reversed its decision and will, for now, remain in the market)

Of course there will still be personal computers. Businesses will continue to use computers. Actually, businesses, overall, have not transitioned to investing in IPad-like and smartphone-like devices as much as consumers have. With such a narrow profit margin on personal computers (4-6%), H-P is getting out while they still have something to sell and turning the focus elsewhere.

The end of an era. Though this came as a surprise in the business world years from now this could look like a very smart business move with great vision.

How does this relate to you and your business?

Ask yourself:

– Are you focusing on the right segments of your business?

– Do you need to change your marketing direction to work on more profitable projects or sell more profitable goods and services?

– Or are you going to stay with what you are doing that may not bring you the success you are looking for?

In this economy, it’s time to rethink your business. Just like Cisco and H-P have done. It’s time to look down the road at where you want your business to be in one year, five years, even further into the future. We are witnessing a vastly changing business landscape.

Now is the time to determine and eliminate the non-profitable portions of your business. This is the time develop a business plan and a marketing plan to focus on the profitable segments of your business.

Remember, you are in business to make a profit.

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