Sometimes the best way a small business can improve their bottom-line is by merely scraping their under-performing products or services.
Refusing to let go of stagnant products will put your business at risk of not only earning lower profit levels but becoming irrelevant within your target market – remember, there is a reason the product has lost its’ popularity.
Here are a few essential tips to help you decide which products need to be cut from your business.
Are you emotionally attached?
There will always be those few products that have emotional significance. It might be the first product you ever sold that is now making you virtually zero money. However, for the sake of profitability; businesses should emotionally detach themselves from their products and services.
Consider the 80/20 rule
An often used marketing and business rule states that businesses should focus their attention on the 20 per cent of products that generate 80 per cent of revenue. Using this principle, companies should compile a shortlist of the products and services that bring in the most profit and scrutinise the products that fall short of this mark.
Test it out
If it is still too difficult to make the right cut, businesses should consider a trial run first. Going a week or month no longer promoting and marketing the least profitable products will help businesses imagine a life without them. At the end of the chosen time, analyse the results.