What can you prune to promote strategic growth in your business?

Anyone that knows me knows that I am an avid gardener. I often find life, business and gardening lessons mirror one another.  Let’s take pruning, for example. It seems counterintuitive to cut off branches, leaves, or even roots to get larger, fuller plants. And yet, it is one of the most important tasks for a thriving, healthy garden. Just like a garden, a healthy and thriving business requires an owner who can tend to the health of their business by pruning or removing things that are inhibiting growth.

If you are not sure if it makes sense to cut off what may seem like perfectly healthy areas of your business, or you are uncertain which areas to prune to promote growth, you are not alone. Instead of the three D’s of pruning (dead, diseased, damaged), let’s consider the three P’s: Products, Processes, and People. Is it time to do some healthy pruning in your business?

Products and Services
Product profitability is not the only criteria to consider when deciding to keep or eliminate a product. How the product contributes to your overall growth strategy, brand management and production efforts are also factors you should consider.  Products and business lines (even when profitable) can compete for a company’s resources and minimize full potential.

Take the time to evaluate all your products and services. Analyze which products require the most resources. Determine which product lines are unprofitable and underperforming. Reexamine your overhead and production costs as they relate to those items. Even if a product is profitable, it might prevent you from making more money by producing and selling other even more profitable items.

In some cases, decreasing production of one item, rather than eliminating it completely, might be better for your product mix. As you approach mid-year, take the time to analyze each product and service your company offers. Consider what it costs to produce, sell, market, and deliver. In every case, you need to determine the value it provides for the company overall. A strategic financial advisor can equip you with the facts to analyze this objectively.

People
You may have hired someone who aced their interview, but as they begin working for you, you notice their behavior negatively affects the rest of your team. A company, after all, is only as strong as its people. If there are employees that are underperforming or are negatively impacting the morale and culture of the company, even if they are a top performer, it may be time to prune the relationship. Workplace culture surveys and performance reviews can help ensure your team members are contributing to the health and growth of your company. You can use survey results to make improvements to the workplace or prune where necessary. Ending relationships is never easy, but if employees are preventing others from doing or succeeding at their jobs, contributing to turnover, or exhibiting damaging behavior, it is time to prune.

Do you know which customers are your most profitable? You can apply the concept of pruning when assessing whether to continue a relationship with a specific customer. Retaining loyal customers is important, but you should focus on retaining the customers that are profitable and not draining. Quite simply, unprofitable customers consume more resources than they pay for. They divert attention from a company’s profitable customers, and they can create tension within the organization between those working to increase sales and those with more focus on the bottom line. Ending relationships with customers is difficult, but by pruning customers that have a negative impact on your company, you can use the renewed time and resources to focus on those customers that are increasingly profitable and are a source of referrals. If it is time to prune a customer, the best course of action is to communicate a price increase or renegotiate the value proposition, and potentially, in a professional manner, migrate them to other providers.

Processes
Sometimes processes designed to increase efficiency or quality can introduce unwieldy red tape and produce the opposite of the intended effects. Fostering a continuous-improvement culture will help keep processes lean and efficient. Many times, companies have business process challenges that go undetected. Evidence of bottlenecks in existing processes include frequent delays, customer, staff, or vendor complaints, stakeholder confusion, and/or reduced productivity.

Companies often utilize an extensive system of checks and balances to catch errors, yet they still occur. Environments evolve and change without reviewing and update of processes. Organizations often overlook cost-benefit analysis when implementing processes. If this happens in your organization, it is time to have an expert assess your business processes and systems. From production to inventory to lead time and quality, where can you prune in the process to create leaner and more effective business processes?

Ready to Make Way for Real Growth?
What do you need to prune in your business to make way for strategic growth? If you need a sounding board and strategic financial recommendations to objectively help your company flourish, B2B CFO® is here to assist. Our Partners provide decades of business and financial acumen and can help you step back from the company and identify where pruning needs to take place for long-term, profitable growth. Learn more, visit b2bcfo.com.  Let’s talk about your businesses growth. For a complimentary discussion, email me at KimSherman@b2bcfo.com.

Sources

Matuson, Roberta. Corporate Pruning: Trimming Your Staff Without Cutting Into Morale. Forbes, 17 May 2023

How to Break Up with Bad Customers: Saying “Bye” Without Burning Bridges. Act!, 2024

10 Smart Ways to Assess an Underperforming Product or Service. Forbes Coaches Council, 4 Nov. 2020