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Wednesday, April 24, 2024
Financial Intelligence

Why it’s a good idea to “silo” your profits


Howdy there, business owner! Do you want to make more money? We thought you’d say yes. Do you like gardening? Wow! Two yeses in a row? Today is our lucky day at Zoomination.co.za.

Let’s take this thought further… If the profits in your business took on the appearance of a garden, how would it look?

Most businesses have a balance sheet that looks like this.

We’re not kidding! In asking our “partners in accounting” how the normal businesses run their balance sheets – all their income and expenditures get dumped together – and one number is spat out. Month-on-month, year-on-year. You get to see that your business is in the clear (profitable), but it doesn’t exactly give you a clear area why your business is doing okay.

  • All your services/products are marketed the same
  • Your marketing budget is spread over a wide range
  • There isn’t an actionable plan you can form from this, because you don’t know what’s the more profitable action to take!

You see, at Zoomination, we try to teach businesses to “silo” their income. What specific services/products are your customers asking for (with their purchase decisions?) Let’s call the specific ones “profit-centers.” Is it a better plan to drill down on one specific “profit-center”, so that your various incomes can look like the following:

Neater, huh?

Each “profit-center” gets:

  • A different target audience,
  • A different marketing,
  • An advertising strategy,
  • An outcome tailored to this profit center.

Once we can drill down on what’s really working and bringing in a profit for our business – we can learn what actions to take next.