What if your success is being limited by what you don’t know? This is something that plagues large and small businesses alike. Successful businesses! I would wager that one of the many things that separates successful businesses from wildly successful businesses is how well they fill in their knowledge gaps.
The goal here is to know your business well enough to be intentional and strategic in the actions you take. Let’s look at Costco as an example, the classic American small business (tongue in cheek here, but follow me on this one). They sell a full rotisserie chicken for $4.99. Years of high inflation? No problem. Still $4.99.
What about the pinnacle of fine dining that my parents used to use as date night cuisine: the Costco $1.50 hot dog and a soda. Guess how much it is now. That’s right, $1.50 (last I checked).
You can look up the case studies, but this is an interesting situation. They are likely losing money on each chicken and hotdog sold. If that is the case, why would they do this?
Because they know. They know and they’re doing it for a reason. They have a membership you have to buy to get in. They have a bunch of other products with higher profit margins than their chicken. You like the chicken, but you came to shop.
Now imagine you’re a small business owner and you actually don’t know. You’re looking at your micro-sized version of Costco, whatever that might be, and you’re thinking “Wow people are LOVING that rotisserie chicken we’re selling!”
You’re looking at your bank account each month and the number’s getting bigger. You think “We should lean into this chicken craze.” You pull other products and you devote more of your limited shelf space to chicken. You set up new partnerships with chicken farms. You run ads for the chicken in all your marketing channels and chicken sales go through the roof! You’re the chicken queen or king!
The next time your royal highness checks the bank account you see the number is actually going down. Not only is it going down but it’s like someone took all your income away and replaced it with costs. How could that be? You’re moving chickens like you’re a crossing guard! (get it? Because people are always asking why the chicken crossed the road? Never mind, let’s keep going).
You took an action that makes total sense. But what you didn’t know was that you were losing money on the chicken, and you were making most of your money from the items you pulled off the shelves.
It’s not the fall that’ll kill you. It’s hitting the ground. It’s not the chicken that’s the problem, it’s not knowing. Imagine instead what you could have done if you were better informed.