The Profit Flywheel Part One — What You Need to Know About Asymmetry
The Profit Flywheel is a methodology that can get you closer to your life goals. But it’s not always about growing revenue. Sometimes it’s about achieving the things you went into business for.
Like most people, you probably want something else other than just doing well in business. You have specific goals that you want to accomplish.
The Profit Flywheel is our methodology for getting you closer to the things that actually matter in every step.
It’s not about speed. You can move really fast and not get closer to anything — you may even move in the wrong direction and get further away.
It’s not necessarily about growing your revenue either. You could spend a million dollars to make $100k more, but still nowhere closer to your goals.
There are several aspects of this method, including audience audits and asymmetry.
An audience audit shows you what you need to know about talking to your people to generate cash. You have to know where they are and communicate with people who already know who you are.
And if you’re doing something new, there’s always a risk.
But what you can do is to create asymmetry. You want to make sure that it’s an asymmetrical risk in your favor. If you’re taking a risk, you need to make sure that the upside is greater than the downside.
This only means that you’re more likely to win than fail.
Introducing the Barbell
Is the barbell balanced? Is it asymmetrical? And if so, in which direction?
One form of asymmetry is low risk and the other extremely high risk. And then there’s the middle of the barbell, which is where most people are.
The concept of the barbell came from Seneca, or at least it was the first time I learned about it.
It’s a bimodal strategy and for Seneca, it had to do with mitigating risk. But it wasn’t about marketing, though it’s equally applicable.
There are two sides of the barbell in marketing and sales.
There’s an upside, which is unknown and that’s why it’s unreliable. I call it the Explore.
On the other side, we have the reliable, predictable, and known. Let’s call it the Exploit. That’s the other side of the Explore-Exploit continuum.
I’ve also seen it in investing strategies. Because when we start a new thing, we often go back to revenue multiplication, get cash now, we want to do something about it.
The assumption to doing so is that its upside is financial. But it could also be relational or a legacy.
The perceived upside is that we’ll finally be able to find the things that we’re looking for. We start a new thing because of the upside it represents.
Bringing Your Business from One Side to the Other
In business, you start something and then you get a lot of rhetoric.
“You should work on your business, not in your business.”
“Your business should work for you, not the other way around.”
What all of that suggests is that we want to move it to the place where it’s an asset that works for us. It’s reliable and predictable.
One example could be real estate planning.
Do you get into real estate because of the upside? Because eventually, you want it to be reliable. It doesn’t have to be passive but reliable.
But what often happens is that people get stuck in the middle.
You lose the upside, you’re working 60 hours a week, and you don’t see the light at the end of the tunnel anymore. Moreover, it’s not reliable and not working for you.
Essentially, you’re working a job.
Other times, you’ll have partnerships and affiliates that will bring you some revenue. Those are not full partnerships but you can still see the perceived upside.
Here you have an upside, but no reliable assets.
It gets you thinking, “Should I launch a new thing now? Should I add something to my offer?”
I’d say no.
Because at this point, you’re only adding to the unfavorable asymmetry of the barbell.
What You Need to Do
Here’s what you can do to make it to the reliable side of the barbell.
- Map Your Streams of Income
Take your streams of income and map them.
Which ones have an upside? These are probably going to be partnerships and new things.
Which ones are reliable? It’s not something that you have to focus on outside of your regular day and it’s still profitable and bringing in revenue.
If you’re a marketer or if you live in the sales world, you probably have lots of things sitting right here in the middle of the barbell. If you only identify all these things, you’ll figure out which ones you can move over here to become reliable and known.
The more things that you have on that side, the more balanced the barbell will be and the more certainty you’re going to have.
2. Play Big
The more reliable the streams of income, the bigger you can play.
If you’re like me, you’ll want to play with fun things. Your reliable assets have got you covered so you can make big bets on the other side.
But don’t forget to move things to the known first, fund your priorities, and live on the reliable side.
3. Design a System That Will Get You Where You Want to Be
You may have one unintended consequence if you’re not clear on the outcomes that you want.
You don’t necessarily need to automate all the things you do but at least focus on designing your systems. Because every system needs to be in alignment with the outcomes that you want.
If you don’t map your expenses properly, there will be a lot of volatility. And that’s going to be hard to step away from even if you’ve automated your processes.
That makes it hard for a business to become reliable.
It’s not just about systems and automation. It’s also about getting to the root of what’s causing volatility in your business.
From Unknown to Reliable
As you’ve seen, there’s an ideal path for introducing new things in your business. While you’re trying to move it from the exploration end of the barbell, you’re actually looking for ways to turn it into a reliable asset.
There are several things that you can do to make it happen.
Mapping out your streams of income and expenses helps a lot. You can see what can bring you a stable income and what you can move to the reliable end of the barbell.
The more things there are on that end, the more time and resources you have for trying new things and playing big.
It’s also up to you. You’re the one who will be designing a system that leads you to where you want to be.
If you’re not sure, visit my website to get in touch and learn more about how you can make your business reliable.
