Today, I want to share with you the concept of the power of one.
How can you use this powerful concept within your business?
This concept can transform your business significantly if you use it correctly.
What do I mean by the power of one?
It simply means making a small change or just one change that you can implement in your business.
- Can you increase your prices by 1%?
- Can you negotiate with your suppliers to reduce the cost of the products they supply to you by 1%?
- Can you simplify the time that it takes you to produce a product and reduce that by one day?
- Or can you eliminate one item that you are using within your business that is no longer relevant or might be unnecessary?
There are a number of things that you can do by just applying this concept, the power of one. Let me run through in some more detail how this concept may work.
The Power of 1%
Let’s look at a price increase of 1%.
So, you’re currently selling a product. You might be selling your product for $95, as an example. You go in and apply the 1% rule on that. That takes that up to $96. That extra 1%, $1 is added to your bottom line.
Now, couple that up with a 1% increase in volume.
How can you sell just 1% more?
If you’re selling 100 items, how can you sell 101 items?
If you’ve got a 1% profit that you’re making now with the extra 1% that you’ve added (you’re now selling your product for $96 instead of $95), and instead of selling 100 products, you’re now selling 101 products, there is a compounding effect taking place.
1% increase on the price that you charge, then 1% increase on the volume that you sell, and then, you’re buying it for 1% cheaper as well. Before you know it, that 1% is compounding and your bottom line is benefiting from the changes.
The Power of One and Time
Another thing to consider is how you can reduce your production time or the time that it takes you to deliver a product by just one day or one hour, depending on the product or service that you offer. It’s simple and easy to calculate. One day’s reduction in production eliminates and reduces one day’s worth of production costs.
What is that equal to in your business?
Then, you get that product earlier to the customer.
Let’s say you have a 14-day production run and the delivery of your product takes 14 days, but now, you’re producing it in 13 days. You’re able to get that product to the customer one day earlier. It’s costing you less, so one day less of production costs, and now it’s out to the customer sooner. That’s a more satisfied customer.
That customer pays you earlier, so now your accounts receivable reduces as well. And, we haven’t even taken into account reduction in accounts receivable strategies of engaging with customers and ensuring that you can reduce the amounts that you’re owed.
Impacts of the Power of One
Applied correctly, the power of one can lead to the:
- increase in your selling price
- decrease in your cost price
- increase in your volume
- decrease in your production days
- reduction in accounts receivable days
It just starts blowing up. And, we are just talking about 1% or one day in doing these things.
The Power of One and Systems
What systems are you using in your business that you don’t need? I’m sure there’s one system that you could certainly eliminate.
Let’s say you’re using Google Drive to store documents and you’re also using Dropbox to store documents. Get rid of one of them. They both do the same thing. You don’t need both of them, so get rid of one of them. It eliminates the unnecessary hassle, confusion and need to recall:
“Did I store it on the Google Drive or did I store it in Dropbox?”
“Where are these files all kept and stored?”
Implementing the Power of One in Your Business
The power of one is significant when you start to implement it in your business. Every day, make one change, just one change in your business. Focus on that and try and implement that for 30 days. If you get through the 30 days, try and implement that one change for 90 days. If you succeed in 90 days, then make that 12 months. And then after 12 months, can you carry that forward?
Similarly, can you eliminate one unnecessary thing? What can you do without just one thing?
This is the power of one. It has a compounding effect, and also, it has such a huge effect on unnecessary wastage. So, think about what you can do within your business. You can quickly and easily increase your pricing by 1%. You can definitely ask your suppliers to reduce costs by 1% and you can increase your volume by 1% as well. These are three quick wins, but your bottom line will show a different result at the end of the day.