CEO Tools Blog
Re-Mix Your Business for Profit
Fora 'tweener to our 12-Seasons, how about we start to look at the hugely powerful tool of re-mixing your business to improve profit? One example is my business: basically I'm involved in a mix of three different products or market segments, namely consulting with CEOs/Senior-Managers plus speaking to small CEO groups, and also speaking to large (100s-to-thousands) of managers. As a recession approaches, I move my mix of business from consulting towards speaking, mainly to the smaller groups (8-20 CEOs or Managers in a group, where I literally do over 100 groups each year). The reason: recessions trigger a typical CEO knee-jerk reaction to cut advertising and consultants (obviously the wrong thing unless ads and consults aren't working, in which case they shouldn't have had them in the first place)!
So, how can you change your mix of business? Try looking at the product, market, customer, service, and other segments in which you now participate or could participate. Figure out "What Causes Sales" (WCS) in each, then figure out how to predict how each will behave in the future (see our June 12-Seasons piece on "Looking into the Future"). Next, activate your WCS to emphasize the area you want to pursue in different time periods.
Another way we changed mix was at the printing company: we emphasized sheetfed printing early to dramatically improve profit (it is substantially more profitable) and then followed by building our other segment, web-printing, to "fill up" our plant 7-24-365. the higher margins in sheetfed bought us time to do the latter. Both examples are clearly strategic.
So, what is your MIX STRATEGY? We'll offer more on this in coming weeks and months at www.ceotools.com/blog -- check it out regarding mix change in a number of different categories, such as product/service mix, customer mix, geographic mix, market mix, channel mix, specialty mix, services mix, and others. We'll also address the three components of gross margin and how to change your mix there between price/volume, and their interplay with mix.
We're just hoping that these ideas help you in your business!
With best regards, Kraig