Back to the on-screen lesson ·
A focus ranks offers by contribution for each hour of the scarce resource and by fit with the position, writes down what the business will stop doing, and redirects the hours that frees to the work that earns most for them.
Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.
You will compute contribution per scarce hour for a business's offers, rank them, choose what to stop, count the hours a focus frees, and work out what those hours earn when moved to the best work.
You have a position, a tested advantage and a strategy to win on. Most small businesses also carry a tail of offers that do not fit any of them — kept because each one brings in some money. This lesson decides what to stop, using the contribution a job and the idea of a scarce resource from the money course.
| Term | What it means |
|---|---|
| Focus | The short set of offers the business concentrates on, and the list of things it stops doing. |
| Scarce resource | Whatever runs out first: cleaner hours, kiln time, the owner's Saturdays. |
| Contribution per scarce hour | An offer's contribution divided by the hours of the scarce resource it uses. |
| Not-to-do list | The written refusals that make a focus real. |
| Freed hours | The scarce hours an offer used, available once it stops. |
Every offer uses some of the resource the business is shortest of. Bright Home Cleaning's is cleaner hours. A move-out clean contributes 200 dollars in 2 hours: 100 an hour. An office contract visit contributes 180 in 3 hours: 60 an hour. A window-only job contributes 30 in 2 hours: 15 an hour. Every hour spent on windows is an hour not spent on a move-out that would have earned nearly seven times as much.
$$\text{contribution per scarce hour} = \frac{\text{contribution a job}}{\text{scarce hours a job uses}}$$
Rank the offers this way, then check each against the position: an offer can earn well per hour and still pull the business away from what it is known for. The ones that fall at the bottom on both counts are the ones to stop. Revenue is not the test — photocopying can bring in more money than wedding invitations and still earn far less for each hour of the press.
The value of stopping is what the freed hours earn once moved:
$$\text{gain} = \text{hours freed} \times (\text{best rate} - \text{dropped rate})$$
Sixteen cleaner hours moved from windows at 15 to move-outs at 100 add 16 × 85 = 1,360 dollars of contribution a month.
Another way: table
Bright Home Cleaning's offers, ranked.
| Offer | Contribution | Hours | Per hour | Fits the position |
|---|---|---|---|---|
| Move-out clean | 200 | 2 | 100 | yes |
| Office contract visit | 180 | 3 | 60 | partly |
| Window-only job | 30 | 2 | 15 | no |
Another way: steps
Name the scarce resource. It is whatever the business turns work away for, or would if it said no more often: the cleaners' schedule, the kiln, the bench, the owner's evenings. Measuring every offer against the wrong resource gives the wrong ranking, so look at what is full.
Work each offer's rate. Contribution a job — price less the costs that vary with the job — divided by the scarce hours one job uses. Hours of the scarce resource only: a job that takes three hours of van time but one of cleaner time uses one cleaner hour.
Rank and mark fit. Put the rates in order, and beside each note whether the offer belongs to the position.
Write the refusals and move the hours. The bottom offers go on the not-to-do list; their hours go to the top offer, if there is demand for more of it.
Check the gain two ways: as hours times the difference in rates, and as the month's total contribution before and after. They must agree. Then check that the top offer really can absorb the hours; if move-out inquiries are already all being accepted, freed hours earn nothing until more are won.
A focus is written down as a list of things the business will not do: no window-only jobs, no party cleans, no weddings, no e-bike batteries. Each line rules something out. 'We'll see what comes in' and 'open to all kinds of work' rule nothing out and are the opposite of a focus.
The point of stopping something is the hours it frees. Stopping an offer without redirecting its hours just shrinks the business. Tell existing customers of the stopped offer plainly and early, and point them somewhere else. Review the focus when the scarce resource changes — a new cleaner, a second kiln — because the ranking can change with it.
The ranking is where the decision starts, not where it ends. Three good reasons can keep an offer that earns little per scarce hour. It may fill hours that would otherwise be idle: window jobs booked only on the Tuesdays when no move-outs are ever requested use no hour that could earn more. It may bring customers who later buy the best offer: a first small repair that turns into a yearly service contract. Or it may protect a relationship the position depends on: the property manager who sends move-outs also asks, now and then, for a quick window job.
Each reason can be checked. Idle hours are visible in the schedule. A route to the best offer shows up in how many small-job customers came back for big ones. A protected relationship can be named. An offer kept for none of these reasons is kept out of habit.
Stopping an offer means disappointing someone, and a small business lives on goodwill, so how it is done matters. Three habits help. Give notice: write to the customers of the stopped offer a season ahead, not the week before, so that they can make other arrangements. Point them somewhere: name a business that does the work well, and, where it is honest, ask that business to look after them. Keep the door open for the offer that is kept: the customer who loses their window cleaning may still need a move-out clean next year, and a letter that ends by saying so often brings them back.
Staff need telling too, with the reason. A cleaner who liked the window rounds will accept the change more readily when shown that the hours are going to work that keeps the business, and their job, secure.
Contribution per scarce hour measures money, and money is not the only thing an offer brings. Some work teaches the team a skill the position will need next year. Some work is seasonal and fills a quiet month when the best offer has no demand at all. Some work is what the owner loves doing, and an owner who hates every hour of the business will not run it well for long.
The ranking does not pretend these do not matter. It puts a price on them. If the owner keeps commissions because they enjoy them, the ranking says what that enjoyment costs: ten kiln hours a month at 18 dollars less than café sets, 180 dollars a month, 2,160 a year. The owner may decide that is a price worth paying. What the ranking prevents is paying it without knowing.
The same goes for a quiet-season offer. Window jobs that fill November, when nobody moves house, are not competing with move-outs for any hour; their rate should be compared with the rate of an idle cleaner, which is nothing. So before a low-rate offer goes on the not-to-do list, look at when its hours fall. An offer that only ever uses hours nothing better could use is not taking anything from the focus, and dropping it would cost its whole contribution for no gain. The schedule, read month by month, shows which case each offer is in far better than any annual average, so read it before deciding.
In many small businesses the scarcest resource is the owner's time, and it is the one least often measured. Neighborhood Kitchen's evening birthday cakes earn a respectable rate per kitchen hour, but every one takes the owner's Saturday. Measured per owner hour — the hours only the owner can supply — the cakes rank last, and the Saturdays they take are the hours the owner needs for planning, for the monthly review, and for rest. A focus that frees the owner's time is often the most valuable kind, even when the arithmetic on the workshop's hours says little.
A garden designer ran a small team that did three kinds of work: full garden designs and builds, seasonal planting for regular clients, and lawn mowing, which she had started in her first year to fill the schedule. By her fifth year the team was booked solid from March to October, and she was turning away design inquiries.
She worked the rates per team hour. A design-and-build contributed about 5,600 dollars over 80 team hours: 70 an hour. Seasonal planting contributed 45 an hour. Mowing, at 35 dollars a lawn with fuel and wear taken off, contributed 18 an hour, and it took 60 team hours a month over the season.
She stopped mowing. The 60 hours a month moved to design-and-build work from the waiting list, gaining 60 × (70 − 18) = 3,120 dollars a month over an eight-month season, nearly 25,000 a year. She wrote to her forty mowing clients in January, recommended a local mowing firm that paid her a small referral fee, and kept the mowing for six elderly clients whose gardens she also planted, because they had sent her three design clients between them. The not-to-do list said 'no mowing, except for existing planting clients', and she reviewed it every winter.
Businesses that do fewer things usually do them faster and better, because the team repeats the same work, buys the same materials and learns from every job. The contribution per scarce hour in this lesson is one reason; the learning that comes from repetition, which lowers cost and raises quality over time, is another.
Every sale helps. A sale that uses scarce hours on low contribution costs the sales it displaces.
Keep the offer that brings in most revenue. Rank by contribution per scarce hour.
A focus is what we do. It is equally what we stop.
Stopping an offer is enough. The freed hours must go to the best work.
The gain is the hours times the best rate. The dropped work was earning something too; the gain is the difference.
Name the scarce resource.
$\text{kiln hours}$
The kiln is full every week.
Rank the offers per kiln hour.
$\text{café sets } 30; \ \text{gift mugs } 20; \ \text{commissions } 12$
Contribution over kiln hours.
Mark fit with the position.
$\text{commissions: outside it}$
They also break up firings.
Work the gain on 10 kiln hours moved to café sets.
$10 \times (30 - 12) = 180$
A month's gain.
Write the refusal.
$\text{no one-off commissions}$
And tell past clients which potter to try.
Work the move-out rate.
$200 \div 2 = 100$
Per cleaner hour.
Work the window-job rate.
$30 \div 2 = 15$
Per cleaner hour.
Work the party-clean rate.
$75 \div 3 = 25$
Per cleaner hour.
Count the hours both use.
$10 + 6 = 16$
Freed by stopping them.
Work the gain.
$10 \times 85 + 6 \times 75 = 1300$
Each hour at the move-out rate.
Check the demand.
$\text{move-out inquiries turned away last month: 9}$
Enough to fill the hours.
Name the scarce resource.
$\text{kitchen hours}$
The kitchen is full at lunch prep.
Read the rates.
$\text{lunches } 40; \ \text{weddings } 15$
Per kitchen hour.
Count the wedding hours a month.
$20$
Including the extra staff's prep.
Find what weddings earned.
$20 \times 15 = 300$
Lost by stopping.
Find what lunches earn in those hours.
$20 \times 40 = 800$
If offices order more.
Find the gain.
$800 - 300 = 500$
A month.
Write the refusal and tell the couples.
$\text{no weddings; two caterers recommended}$
Plainly and early.
Rank the two offers per bench hour.
$\text{commuter services } 40; \ \text{restorations } 18$
Restorations rank lower.
Work the gain on 12 bench hours moved.
$12 \times (40 - 18) = 264$
A month.
Write the refusal.
Bright Home Cleaning's cleaners' hours are its scarce resource. A move-out clean contributes $160$ dollars and takes $2$ hours; an office contract visit contributes $210$ dollars and takes $3$ hours; a window-only job contributes $30$ dollars and takes $2$ hours. Fill in each offer's contribution per cleaner hour, in dollars.
| Contribution per cleaner hour | |
|---|---|
| Move-out clean | |
| Office contract visit | |
| Window-only job |
Complete the worked solution: a move-out clean contributes $240$ dollars in 2 cleaner hours and a window-only job $40$ in 2 hours. Dropping window jobs frees $12$ cleaner hours a month, which go to move-out cleans. Work out the gain.
Divide the move-out clean's contribution by its hours.
$240 \div 2 =$ u
Contribution per cleaner hour.
Divide the window job's contribution by its hours.
$40 \div 2 =$ w
The same way.
Multiply the freed hours by the difference.
$12 \times ((\text{move-out rate}) - (\text{window rate})) =$ g
Each hour stops earning one rate and starts earning the other.
Write the refusal.
$\text{no window-only jobs}$
A focus rules something out.
Check the hours will be filled.
$\text{is there demand for more move-outs?}$
Freed hours earn nothing unless they are used.
Neighborhood Kitchen has four offers. Team lunches earn about $40$ dollars of contribution per kitchen hour and are its position; soup of the day earns $30$; evening birthday cakes earn $21$ and take the owner's Saturdays; weddings, when accepted, earn $15$ and need extra staff. Which should it stop first?
Maya's kiln time is her scarce resource. Café sets earn $90$ dollars per kiln hour, gift-shop mugs $60$, and one-off commissions $36$. Rank them, most per kiln hour first.
Number the steps in order (write the number in the box):
Northside Repairs' bench hours are scarce. Vintage restorations earn $20$ dollars per bench hour and commuter services $32$. Dev stops restorations, freeing $16$ bench hours a month, and fills them with commuter services. Fill in the month's figures, in dollars.
| Amount | |
|---|---|
| Contribution lost from restorations | |
| Contribution gained from services | |
| Gain a month | |
| Gain a year |
Bright Home Cleaning stops window-only jobs, which take $7$ cleaner hours a month and earn $18$ dollars an hour, and party cleans, which take $4$ hours and earn $8$ an hour. The freed hours go to move-out cleans at $106$ an hour. By how many dollars a month does contribution rise? Fill in each figure on the sheet.
| Amount | |
|---|---|
| Gain on the window hours, dollars | |
| Gain on the party-clean hours, dollars | |
| Total gain, dollars |
A small print shop's press time is its scarce resource. A wedding-invitation job contributes $340$ dollars and takes 4 press hours; a photocopying job contributes $50$ and takes 2 hours, though photocopying brings in more revenue in total. The owner moves $20$ press hours a month from photocopying to invitations. Fill in the figures, in dollars.
| Amount | |
|---|---|
| Invitations, per press hour | |
| Photocopying, per press hour | |
| Gain a month from the moved hours |
Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.
Bright Home Cleaning decides to stop window-only jobs, which take $6$ cleaner hours a month, and one-off party cleans, which take $9$. Complete the sentence.
The focus frees t cleaner hours a month for move-out cleans.
You can decide what a business should stop doing, and show why in dollars per scarce hour. Tell someone why the biggest revenue line can be the one to drop. Next: the substitutes customers already have.
17. Your turn: Northside Repairs, step 3
$\text{no full vintage restorations}$
The hours go to commuter services.