The Easy as Pie Method for a More Profitable Business

A tale of two of my favorite things: a woman-owned, profitable business and delicious pies, with a storyline that could help you make your business more profitable too. 

This is the tale of two of my all-time favorite things: a woman-owned, profitable business and delicious pies that are handmade right here in Brooklyn, NY.

Honestly, is there anything better?

Pssst...the answer is NO.

I’ll let you in on a little secret though... While the pies at Four & Twenty Blackbirds have always been incredible, their business hasn’t always been as profitable as it is now. 

From the beginning, all of the ingredients were there for sisters Emily and Melissa Elsen, the owners of Four & Twenty Blackbirds. They had an unbelievably good product, a strong work ethic, a clear vision for their business, and the desire to serve their community.

What was holding back profits before CFO on Speed Dial came onto the scene?

Truthfully, the business was doing a lot of things right when we began looking at their company’s numbers, but as with almost anything in life, there was room for improvement. 

In this case, there was room to make Four & Twenty a more profitable business. And for them, that meant shedding and changing a couple of the parts of their business that were not working as they had hoped and were not cost-effective. 

How did we know which ones needed attention? We looked closely at the revenue and costs associated with each business line to find out exactly how profitable each one was. Then we took an even closer look at the least profitable business lines to find out if it was possible to bring them up and make them more profitable and if not, come up with a plan to stop the profit bleed by closing these business lines.

Yup. I know it’s hard to cut an entire revenue stream, but sometimes that is exactly what’s needed.

A business line that doesn’t create enough profit is not economically sustainable.

Specifically, we found that Four & Twenty had two parts of their business that they really liked offering and that were amazing ideas in theory, but that in the end, didn’t add profit to the business.

Checking out of the library

The first of these was their location in the Brooklyn Public Library. 

If you’ve ever seen this library you’d understand why they’d want to set up shop there. It’s a gorgeous, historic building that serves a huge portion of the community they are passionately involved with.

However, the patrons of the library generally aren’t interested in or able to buy a $5 slice of pie as they browse for books or use the public computers. If anything, they are looking for something along the lines of a bottle of water and a bagel with cream cheese. This meant that to serve the customers at the library, the Four & Twenty team had to add new products at lower price points to their menu.  It also meant they weren’t very successful at serving their iconic core offering - tasty pies whole or by the slice. 

So while the dream of having a location in the library was a wonderful one, the reality simply did not add up to enough profit to justify keeping it going.

It took several months for the company to make the decision, and then actually move out. But the library brought in another Brooklyn-based company to serve patrons and Four & Twenty still serves the neighborhood from one of their nearby retail locations; so this was a win-win for all involved.

Founder Melissa Elsen has this to say about the decision

As a small business owner, it’s tempting to look away from the harder to answer questions — but CFO on Speed Dial kept us focused so we could make a clear-eyed, data-based decision about whether to keep our Brooklyn Library location open; and then provided the accountability we needed to actually follow-through on the decision to close it. Looking back, the move has definitely helped boost our overall profitability.

Reconsidering wholesale

Another portion of the business that Emily and Melissa were passionate about pursuing was selling their pies wholesale. And they were able to achieve this when they began stocking individual slices of pie on the shelves of places like Whole Foods, Fresh Direct, and other specialty foods stores around town. 

Again, a fantastic idea in theory, but the reality of slicing pies and individually packaging each slice meant there was a lot of time and wasted portions of pies cutting into their profits. Instead of offering pre-packaged slices to wholesale customers, Four & Twenty now offers a smaller size pie; which a few retailers love.

While they did lose some wholesale customers and overall wholesale revenues are lower now; there is a comfortable profit margin on each pie which makes it possible for Four & Twenty to keep their wholesale clients happy, with profit.

Tips for making your business more profitable

Just like Four & Twenty, there are likely parts of your business that could use some trimming and reshaping to increase the profits you are seeing. To find them, take a detailed look at the revenue and costs for each product or service separately; or even each customer. Then rank the list by the gross margin (percentage of profit) each activity provides to the business.

There may also be clients or programs in your business that are draining your other resources like your energy and your enthusiasm for the work you’re doing.

That’s why we recommend that you look at how much difficulty that particular business line (or client) causes you alongside the specific costs of serving them. After you’ve ranked each activity by the gross margin, rank it on a scale of 1 to 5 with number 1 being your top, smoothest, most enjoyable business line. The business lines or customers with the highest gross margin and #1 status for ease and enjoyment is where you should focus services and growth; while keeping a keen eye on the others.

If you’d like more resources and support in your profitable business journey, then subscribe to Speed Notes. Twice each month, you’ll receive a newsletter with solid tips and tools for growth-oriented business owners who use numbers and values to drive decisions. 

Or, join us at CFO Advisor, a 6-month program that provides CFO support through a mix of 1:1 and group sessions plus online skills building. Learn how to manage your finances, boost profits, and upgrade your financial decisions based on meaningful information.

What are you waiting for?  

Check out CFO Advisor here