Part One - Do You Know Which Product Actually Makes You Money?
Over the next couple of weeks, I want to explore a simple question that many businesses think they know the answer to.
Where does your profit actually come from?
Not your turnover.
Not your sales volume.
Your profit.
This week, I'd like to start by looking at products.
Next week, we'll move on to customers.
Because in both cases, I've found that the biggest isn't always the best.
And the answer isn't always as obvious as we think.
One of the first numbers business owners tend to tell me is turnover.
And that's understandable.
Sales are visible. Easy to measure. Easy to celebrate.
But here's a question I think is often more important:
Do you know which product actually makes you money?
Not which one sells the most.
Not which one gets the most attention.
Not which one you're proudest of.
Which one genuinely contributes most to the profitability of the business?
They're not always the same thing.
The Turnover Trap
I've worked with businesses who could tell me exactly which product was their bestseller.
What they couldn't tell me was whether it was their most profitable.
In some cases, the highest-selling product was also the most complicated.
It required more labour.
More handling.
More administration.
More promotional support.
And when all the costs were considered, it wasn't nearly as attractive as the sales figures suggested.
Meanwhile, another product was quietly doing the heavy lifting.
Selling less.
Generating less attention.
But making a much bigger contribution to the bottom line.
The trouble is that turnover can sometimes hide what's really happening underneath.
Busy doesn't always mean profitable.
And growth doesn't always mean good business.
Looking Beyond Sales
Imagine two products.
Product A sells £100,000 a year.
Product B sells £60,000 a year.
Most people naturally focus on Product A.
But what if Product B generates more profit?
What if it requires less labour, fewer promotions and fewer headaches?
Suddenly the conversation changes.
The real question isn't:
"What sells the most?"
It's:
"What creates the most value for the business?"
That's a much more useful question.
Are You Carrying Any Passengers?
Every business has products it loves.
Products that have been around for years.
Products that helped build the company.
Products with loyal customers and a strong history.
But history can sometimes cloud commercial judgement.
That's why I occasionally ask businesses:
If you didn't already sell this product, would you launch it today?
It's an uncomfortable question.
But it's often a revealing one.
Because not every product deserves a place in the future simply because it had a place in the past.
Profitability Is About More Than Margin
When discussing profitability, most conversations quickly focus on margin.
And margin matters.
But it's not the whole story.
The most profitable products are often those that combine healthy margins with operational simplicity.
They're easier to produce.
Easier to sell.
Easier to supply.
They create less friction and more value.
Which is why the product with the highest margin isn't always the product that contributes most to the business.
A Simple Exercise
This week, look at your five biggest products.
Then ask yourself three questions:
Which generates the most sales?
Which generates the most profit?
Which would I most like to sell more of?
If the answers aren't the same product, you've probably discovered something worth investigating.
One Final Thought
Most businesses know their bestselling product.
Far fewer know their most valuable one.
And those aren't always the same thing.
Understanding that difference can change where you focus your time, investment and energy.
Because sometimes the biggest opportunity isn't selling more.
It's selling more of the right thing.
Next Week
This week's question was:
Do you know which product actually makes you money?
Next week I'll ask a similar one:
Do you know which of your customers actually makes you money?
Because just like products, not all customers contribute value in the same way.
And the answer may surprise you.
Over to You
If you could increase sales of just one product by 20% next year, would you choose your bestselling product or your most profitable product?
And are they actually the same thing?
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