Here’s the part 4 of the FREE audio copy of The Business Essential Series: Back to the Basics.
Back to Business Basics
In the Back to Basics, 6-Part Podcast Episodes, we introduce a number of fundamental ideas and theories that you will use through the entire Business Essentials Series workshops. You will learn how a business is supposed to work and most importantly it provides you with a series of practical tips, suggestions, ideas and tools that you can apply to your business immediately as you begin your journey of making More Profit in Less Time.
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TRANSCRIPT: Bonus Episode 17
Title: Back to Basics (Part 4 of 6)
Date Published: March 12, 2016
Running Time: 10:22 minutes
And have you done it? Other than budgeting, have you actually generated series, significant and meaningful reporting within your business? Now that means creating reports for both sites, to creating something like KPI’s , Key Performance Indicators within your business, that can be clear, consistent and work through every single time, to see how your actually tracking. Last thing you want to do is get to the end of financial year and say “Hey we got great turnover, but wasted more money.” Why I haven’t actually made any money? Why do I seem owe more money invested in GST than what I started the year with? This is ridiculous, it’s because you haven’t kept control with your own business. Take personal responsibilities. Use the tools around you. Do you understand when you break-even? So, break-even by product? Break-even by category? Break-even by service? At what day of the month do you actually break-even inside your business? If at all? If you don’t know those things then how do you know again on how to plan a way to move forward and implement the strategies than you need to do to bring that one day further back through at the moment? What do you do? Let’s see you reach that break-even, it’s costing you money for being in business. I don’t know about you, but I find it ludicrous idea. So it’s that looking for way more break-even, is how I can actually go by achieving that, so that I can enjoy the profits they’re after. At what time of the day do you break-even? This sounds needy greedy stuff but if you do it, you’ll actually understand much better behind it than most businesses this are really important, than things that you need to know but you don’t usually find out.
The other part of it is what’s the maximum utilization within my business? So how much more work at what day you cannot take on to make sure that I get a good return in investment inside my business. So how much more could you do? Have you reached you maximum utilization? Do you need to look at putting all that team members? Plant an equipment? Expanding the technology to be able to expand your own capacities, go some research and development. Further training and development? Have you reach your own maximum potential or maximum utilization. Very important, if you don’t know what it is.
Now most of us have actually used a variety of different bookkeeping packages, and accounting packages within our business. But did you know they actually produce these things for reports? And do you actually look at them? And do you understand how they actually work? Now we cover that during Business Essential Series and you’ll be able to take it back to your accountant, bookkeeper, and get a further clarification on how they actually apply inside your business. But unless you understand what a profit and loss sheet are actually use, what is your PNL? What is your balance sheet? How does it actually apply to my business? If you don’t understand those simple basics, then how can you make and tell a decision? Very very simple.
So are you delivering your services consistently? Consistency is the foundation of a healthy growth; you don’t wanna be known as a guru one day and a dumb the next. So it’s all about making sure that you’ve got those things happening regularly inside your business. It’s not the big things that make the big differences. It’s a small things done consistently that may have the biggest outcome in positive way inside your business. Have you actually created your niche within your business? Now in other words where do you fit within the market place? You copy all things to all people because if you trying to you’ll end up being nothing to nobody. So the reality is, have you created your niche?
Do you understand what’s your Unique Selling Proposition or Unique Selling Position is within the market? And have you guarantee that it was something meaningful? Let me give an example, I’m working at the moment with a client which is an electrician. Some of the biggest problem that people have with tradespeople is that – and I’m sure you’d never have this for yourself – is that they don’t turn up with the right turn off on time. When they do, to make sure that they work as a sufficient quality and that when they leave they haven’t left behind the huge mess. So what my client does is he actually is that he has a Unique Selling Proposition that says “We guarantee that we will turn up on time. If we are not able to turn up on time and haven’t let you know with a sufficient notice in advance then there’s a financial penalty in regards to the electrician that will be supplied to you”. You also guarantee that is not in that they will turn up on time but they guarantee that their services if you’re not 100% with their services, they’ll redo it. If you’re still not happy with their services, they will pay a competitive account back and redo their services. When they leave, they guarantee that they will leave the job site far cleaner than they actually found it. Now, does that overcome those issues that common within that area? Absolutely. Does that guarantee that we are overcoming those things? And do we have to put in place the systems, the processes, the checklist, and making sure that our team is trying to understand the importance of doing those things consistently? Absolutely. Have they created a unique selling point within their market place? Had they identify their niche? Have they guaranteed it properly? Yes! What have they also done, they’ve now taking the focus away on price to quality. So they’re no longer competing in price, your now looking at the best person into the best job and unless, they vastly outside the scope of being, uh, within market levels. The reality is, you’ll going to use them. If they much of much around of the same sort of price you even they’re little bit of more, if they’ve tick of those boxes most people will use them, what are you doing in your business to make sure that you’ve got a unique selling point and guarantee that it’s meaningful. Important question are actually put in there.
So one of the things I’d like you to do is take the challenge to actually pause the DVD now and sit down and write down 3 things, 3 things that you can use that you’ve learned so far inside your business. Just quick notes and jot it down and then actually go forward, so you can actually use this information later. So remember, what have I learned today, that I can apply to my business right now.
Okay, so the key to growing, a business with More Profit Less Time, I’m sure that’s what you’ve been waiting for instead of some of the other areas. But let me explain, most business owners vaguely know how many customers they have. They may or may have not a list of those customers, and they may or may not have contact with those customers, they’ve got a vague idea. Then a roughly what they revenue is, and know no roughly how much profit they do or do not make. When you know those numbers for sure, things get really exciting. So I want you to actually grab your pen and paper, and sit down and write down these things and put down your numbers in. Because it’s when you put your numbers in, you focus on your specific areas within your business, this is when it gets truly exciting; this is where if you follow these areas. If you just simply increase each of these categories by at least 10% over the next 12 months, your profits will grow by more than 60%. It’s just a mathematics simplicity, so I’m not talking about massive business revolution here. I’m talking about business evolution and looking at various sectors in your business. And growing it by just 10%. So let’s look at what those numbers are. Are you ready? Okay, so the first thing you need to do is actually be able to have a very careful record of where your leads are generated and how many are generated. If you don’t know where your leads generated from and how they generated then how do you know what your marketing advertising is doing? How do you know exactly what you’re actually got coming in. Once you know the exact numbers of leads, then you need to actually look at your conversion rate. Cause that conversion rate will then determine how many new customers that you actually get. So number of leads, multiple add value conversion rates will actually give you a customers. We can’t affect your customers without affecting those preceding two numbers, so get those numbers and have a look at what they are, and what we can work on strategies. If you’re receiving a thousand inquiries a year, we’re talking about increasing your inquiries, from a thousand to eleven hundred if your conversion rate is 25%, we’re not talking about increasing it 35%, we’re talking about increasing it from 25% to 27.5%. So 27.5% is much easier to get after having 25%. You gotta have those baseline numbers in all of these areas. So how many existing active customers are you dealing with on a regular basis? And don’t kid yourself.