Back in Issue #1 of Small Biz Profit Builders, I briefly mentioned that one of the most important habits that I encourage my clients to adopt is the habit of making PRE-APEX IMPROVEMENTS. The idea here is that instead of waiting until things are desperate, you must begin considering change before you reach the apex of performance. If you learn to consistently and regularly begin your change before you have completely perfected your last change you can “skip the dip” and build upon the momentum that you already have.

This is what it looks like:

In his book The Dip, Seth Godin says that part of being successful is knowing when to quit and that a phenomenon known as “the dip”, the long slog between starting and mastery, is our most important test for knowing when and what to quit. When you first start on a journey, there is a lot of reward, but after awhile the reward vs. effort is reduced. This is “the dip”. If we persevere and push through the dip we will eventually be rewarded with great success. According to this theory, getting THROUGH the dip is paramount to success.

I agree with this concept, and have ever since I read this book many years ago, but I wanted to help entrepreneurs succeed faster and minimize the effect that the dip has on their momentum, so I created my own concept (at least I THINK I created it) that I think can help small business owners avoid the devastating and soul-crushing effects of the dip. The TRICK is to purposefully and disruptively and shift momentum BEFORE you have had “complete” success. To shake up the system before it asks to be shaken up.

So, how do you apply this concept?

Let’s say you’re a Landscaper and you’ve grown your business from zero to $2MM over the last several years. You’ve done this through a combination of successful high-margin custom residential installations, contracted work with homeowners associations (HOAs), and in the winter you supplement with snow removal services that you complete using a high-priced contractor. While your HOA customers are very, very happy with your services, you’ve noticed over the years is that while the HOA jobs tend to come with hefty price tags, driving significant revenue to your top line, they don’t have the same profitability as your custom residential installations. But is that really all that bad? You’re rarely getting price pushback and you’re regularly being asked to bid more and more HOA jobs…success right?

Well, maybe.

But what’s really happening as you “grow” your business is that you’re sacrificing profit for the perception that your business is growing. If you take on more and more HOA work, you’ll be forced to hire more employees and purchase more equipment all for the promise of what? Lower overall profitability? This will eventually drive you into a dip until you have enough volume to overcome the lack of margin.

As I see it, you have a few potential “Pre-Apex Improvements” to make in this scenario:

Increase Prices – yes, I know that you’re easily getting jobs with the prices that you’re quoting, and THAT’S WHY I want you to increase your prices. Until you’re getting at least 35-40% push-back on your pricing you’re not high enough. Raising your prices is a pre-apex improvement that allows you to continue your profit growth sooner without the added expense of more employees and equipment.

Focus on the High-Margin Residential Work – While the dollar figures aren’t as high for the residential work as they are for the HOA work, the profit margins are significantly better. This pre-apex shift to focus on high-profit residential work rather than low-profit HOA work contributes more radically to your bottom line.

Hire more sub-contractors and take on more snow removal work – Because you don’t self-perform this work and don’t use your own equipment to do it, this work is highly profitable. Focusing on marketing and selling more subcontracted snow removal work is a pre-apex improvement that drives pure profit into your business.

As you consider your own business, what pre-apex improvements can you make that will significantly increase your momentum toward creating the life that you’ve always imagined? What can you do THIS WEEK to make a pre-apex improvement? Send me an email at chadjamesusa@gmail.com if you want to float some ideas around. I’m always happy to help!