In the early 1970s, an American meteorologist illustrated his discovery that small changes in the atmosphere could ultimately cause enormous climate changes, with the sentence: “A butterfly flapping its wings in Brazil can produce a tornado in Texas.”
Today, the ‘Butterfly Effect’ is how we’ve commonly come to refer to the concept that very small things can have a huge impact on other things over time.
While the idea of a butterfly causing a tornado might seem a bit far-fetched, the basic rationale is sound and can be applied to life – and particularly business – to great benefit.
If you focus on making the right small but purposeful changes to the conditions at the heart of your business, those small changes can lead to hugely impactful and positive results in the longer term – whether that’s better profits or simply a saving in time.
Look at the wider impact of every small change
For example, let’s say you’re a manufacturer of leather handbags and that your raw material costs are £10,000 per month. If you could negotiate a discount of just 5% per month on the price of your raw materials, that’s a saving of £500, which doesn’t seem very much in isolation.
But calculate the longer-term saving. Over the course of one year, it’s £6,000 and over five years, it’s £30,000. Over ten years, that’s a saving of £60,000.
With any saving you make on raw materials translating directly into profit, that’s an extra £6,000 a year in your pocket, for as long as you keep the discount.
But that’s not all…
With the average manufacturing company being sold for five times its annual profit, you would also benefit from an extra £30,000 when you sold your business.
So, you can see how a small change that might have seemed relatively insignificant at first can have a massive effect on your overall, longer-term profits.
Stay alert to the flip-side of the Butterfly Effect!
While positive changes are magnified over time, the same is true for negative ones. So it’s vitally important that you make the right choices and changes, because bad decisions – or even simply leaving poor choices in play – magnified over time, can have devastating long-term consequences for your business, from which you might not be able to recover.
This point is very well illustrated by MJ DeMarco, author and entrepreneur, in his best-selling book ‘The Millionaire Fastlane’. He says:
“Think of it like a golf club striking a golf ball. When the clubface hits the ball square, the ball goes straight and heads toward the hole. But when the clubface is rotated a fraction of one degree, the ball’s trajectory lands far off course. At impact, the divergence is minor, but as the ball travels further it widens and widens until the gap is so large that getting back on track is nearly impossible. A bad choice can set your trajectory off by only one degree today, but over years the error is magnified.”
If you only make one change today…
The Butterfly Effect has played a key part in my thinking and decision making, in both my businesses and life, for many years now and the effects have been mind-blowing. My clients often ask: “What is the single biggest change I can make now that will yield the most substantial reward in the long run?” The answer is obvious. Understand the power of the Butterfly Effect and incorporate it into your thinking around every action you take. It worked for me, so I can’t see any reason why it wouldn’t work for you.
Remember, with the Butterfly Effect you might not see the benefit of every change you make in the short to medium term, but I can virtually guarantee you will see massive results over time, especially when compounded with all the other positive changes you can implement at the same time. The compounding is where the magic really happens and the better choices you make and more positive changes you implement, the quicker you’ll begin to see results.
On ATIFJAVID.COM, you’ll find lots of advice and information about positive changes and adjustments you can make to the way you run your business now, so that, over the longer term, your course is well set to benefit from the Butterfly Effect with maximum success.