Finance Growth Stages Operations Strategy

Stage 1- Non-negotiable rule: Focus on your money makers

One of the biggest challenges of a Stage 1 company (1-10 employees) is getting focused. Not only on what crisis to take on for the day or week, but what product or services they should offer. Getting focused on product offerings requires a business owner to rewire their thinking on how they set up their Profit and Loss statement.

If you can’t tell which products or services are making you money — and most P & Ls don’t — you need to get your financial system set up to track each product or service by revenue group. Make sure you are capturing ‘cost of sales’ for each revenue group so you have a clear idea what it takes to offer that product or service. One of the five non-negotiable rules for a stage 1 company is to focus 80% of resources on selling the two or three offerings with the best profit margins.

Here are three tips on how to focus your resources on the top money makers:

1. Identify your top 2 – 3 product offerings. Be tough. Don’t just select offerings you like or are good at. Make sure there’s a solid market out there for what you are delivering. Most startup companies are built on the CEOs strengths – that’s why they started their company. In this stage of growth, the CEO’s time often is spent in the specialist or technician mode. A CEO can’t start early enough moving themselves out of the specialist mode and into a management mode.

2. Create a Financial Statement that tracks revenue and cost of sales for each of those offerings. Hire a part time accountant and tell them what type of financial profile to set up for you. It’s easy in a service company to assume you can’t track people’s time in order to track what projects they spend the most time on. You’ll get push back from every employee who truly believes ‘there’s no way I can keep track of how I spend my time each day.’ Well, there is and you should. If you are a service company and your product is your ‘people’, where they spend their time has to be part of your cost of goods on those products or services. If employees’ time simply gets put into ‘salaries’ under expenses, you’ll never be able to make hiring decisions based on where you are making money. This is a profit drainer for service-based companies.

3. Begin to focus your energy, resources and sales on the products and services that are making you the most money! This could mean that you – or your sales team – must shift time away from certain customers and spend more time with other customers. It also could mean realigning a marketing campaign, or hiring people with different skill sets.


This article, derived from content created by FlashPoint!, is based on the 7 Stages of Growth concepts developed by the Origin Institute and James Fischer. It was contributed by Jacqueline Sousa, a certified Growth Curve Specialist and regional director of the Florida SBDC at FIU.

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