What’s Your Best Leverage Point for Growth?

Brian ran a successful manufacturing business selling consumer products in a specific sporting niche. They had reached sales of just over $15 million per year and wanted to increase sales and profitability.

So where should they look for business growth? Focus on new markets? Improve their production efficiencies? Here is a simple tool that they used to find the right place – the Sweet Spot – to get the most growth of sales and profitability. (Note: Brian is a business coaching client of my company.)

You are faced with this same challenge. You have limited time, attention, staff hours, and money, so where is the best place to invest these raw ingredients to scale your company?

Consider, every business has a “Limiting Factor” (capital L; capital F). Your company’s Limiting Factor is the single biggest constraint currently limiting your growth. It’s the one ingredient that, if only you had more of, would allow your business to grow instantly.

The first step in finding your Sweet Spot is to identify, as clearly and concretely as you can, your company’s Limiting Factor. In Brian’s case they determined their Limiting Factor was the length of their “design cycle” (the time it took them to go from new product idea to actual have product to ship to their distributors and wholesale customers.)

What about you? What is your company’s Limiting Factor, the one ingredient that if you had more of it would do the most to help you immediately grow?

The more precisely you can identify your Limiting Factor, the easier it is to effectively push it back.

For example, if you say your Limiting Factor is “lack of sales,” you might come up with a dozen ideas to increase sales. But dig deeper and see if you can pin your Limiting Factor down more precisely. Is it the need for more leads on the front end? Perhaps your business has enough leads but instead lacks the sales capacity to effectively follow up on all the leads you are already generating? Or is it that you have plenty of sales staff, but lack a proven sales process so your sales team’s conversion is too low? As you can imagine, depending on your answer here, you’ll need to take an entirely different approach to solve that Limiting Factor. That’s why it is so critical that you narrow down your Limiting Factor to the most accurate kernel you can.

Your Sweet Spot is your best ideas on pushing back your Limiting Factor. Every time you push back your Limiting Factor so it is no longer your biggest constraint, you expose a new Limiting Factor to work on. Good! This is how you find business growth in a leveraged way—by focusing each quarter on pushing back your current Limiting Factor.

Now that you’ve pinpointed your company’s current Limiting Factor, step two is for you to brainstorm a list of all the potential ideas you have to push back your Limiting Factor.

Don’t settle for five or six ideas, push yourself to come up with at least ten, ideally fifteen to twenty ideas.

For example, if your Limiting Factor is a lack of sales capacity to follow up effectively on the leads you currently generate, your list of ideas could include: a better lead qualification system to prioritize your sales efforts, hiring more salespeople, or creating a sales video to do some of the selling for you. The key is to push yourself to come up with as many ideas as you can that could potentially help you push back your Limiting Factor. The best way to come up with a few great ideas is to first come up with a potential list of a lot of ideas.

Next, run your brainstormed list of potential tactics through two filters: the “Low-Hanging Fruit” filter and the “Home Run” filter.

1. The “Low Hanging Fruit” Filter:
A Low-Hanging Fruit is an easy, straightforward idea that you’re almost certain will work. While it may or may not have a big impact, it is simple to implement and you have a very high level of confidence that it will work.

2. The “Home Run” Filter:
A Home Run, on the other hand, is an opportunity that if you hit it well and all goes just right, has a huge payoff for your business.

Go through each brainstormed idea on the list and ask, “Is this tactic a Low-Hanging Fruit?” If it is, check the box next to it with “LH” for Low-Hanging Fruit.

Then in a second, separate pass, go through your list of brainstormed ideas and ask of each item in turn, “Is this tactic a Home Run?” If it is, mark it with “HR” for Home Run.

What you’re looking for are those tactics that are both Low-Hanging Fruit and Home Runs; these are your Sweet Spot ideas, the highest leverage choices to push back your Limiting Factor. By definition your Sweet Spot ideas are Low Hanging Fruit (i.e. easy to implement with high odds of success) and Home Runs (i.e. will have a big impact.) These Sweet Spots are the best tactics to focus your company’s resources on first.

The final step is to turn your Sweet Spot ideas into a mini-action plan of who does what by when. See how easy it is to find your Sweet Spot.

How did all of this work out for Brian’s company? Over the past five years of our work together, they have shorted their design cycle from 36 months down to 18 months. Plus they have gone from 1.5 products in the design cycle at any one time to now doing 4-6 at a time. This has helped them grow sales by $2.5 million and triple their operating profit margin.

Now it’s your turn. Get to work finding your Sweet Spot.

If you enjoyed the ideas I shared, then I encourage you to download a free copy of my newest book, Build a Business, Not a Job. Click here for full details and to get your complimentary copy.

David Finkel, CEO of Maui Mastermind and WSJ Best Selling Author
Business David is a Wall Street Journal and Business Week bestselling author of 11 business and financial books. A syndicated columnist for Inc.com and HuffingtonPost.com, David’s articles have appeared in over 6,500 publications. As the founder and CEO of Maui Mastermind®, David has worked with 100,000+ business coaching clients and community members to buy, build, and sell over $5 billion of businesses.