Forget doubling your business. What if you just made it 1% better?
One of my favourite business strategies is the Power of One. The idea is simple: small improvements across a handful of financial levers can create a surprisingly big result.
There are seven places to look:
Price. Volume. Cost of Sales. Overheads. Debtor Days. Creditor Days. WIP or Stock Days.
Take a business turning over $1 million.
Increase prices by just 1%, without losing customers, and that’s potentially another $10,000 in revenue.
With little additional cost, much of it can drop straight to profit.
Reduce your cost of sales by 1%. Negotiate harder, reduce waste, improve purchasing or tighten job management.
Cut overheads by 1%. Find the subscriptions, inefficiencies and expenses that have quietly crept in.
Then there’s volume. Sell 1% more.
But be careful here. More sales only help if your margins are right. Selling more of something that barely makes money simply creates more work. And selling more at a loss? Congratulations, you’ve just found a faster way to go broke.
The final three are cashflow gold.
Reduce debtor days by 1 day. Get customers paying faster.
Increase creditor days by 1 day, where appropriate. Keep your cash longer without damaging supplier relationships.
Reduce WIP or stock days by 1 day. Turn work and inventory into invoices and cash sooner.
None of these changes sounds revolutionary. That’s precisely the point.
Your challenge: Take these seven areas and calculate what a 1% or 1 day improvement in each could mean for your business.
Then pick one. Improve it. Measure it. Then move to the next.
Hint: Start with price. It’s usually the easiest and most powerful profit lever. If that’s not right for you, tackle cost of sales next.
Financially unshakeable businesses aren’t necessarily built through massive breakthroughs.
Sometimes, they’re built 1% at a time. Don’t underestimate the power of this strategy.