When you go about your business day-after-day, seemingly without end or without getting anywhere, do you say to yourself "There's gotta be a way out of here!"  "There's gotta be a way of getting 20 more free days a year, and still making more profits!"

Do you feel shackled to your business?  Shackled and behind bars?  That your business is not giving you the freedom and the lifestyle you so desperately want?  If only you could find the right key, the key to unlock the shackles and open the cell door, the key to control of your business, to freedom and the lifestyle you went into business for.

Harry Houdini made escaping the shackles look easy.  He knew the way out.  He would free himself from handcuffs, chains, ropes and straitjackets, doing so while hanging from a rope or suspended in water, sometimes in plain sight of the audience.  But he knew the tricks and had the keys, concealed keys.  And he made a lot of money making it look easy. 

 

Increase Margins

> Lift prices

 

Improve Margins

> Review less profitable lines
> Reduce the cost of making the sale.
> Better purchasing

 

Improve Productivity

> Improve your personal productivity as owner/manager
> Improve systems and processes.
> Improve the productivity of staff.
> Identify sources of error & rework - reduce waste.
> Benchmark productivity targets

 
 
 
 
 
 
SALES  

-          Line A

$0,000

-          Line C

$00,000

-          Line C

$0,000

 

$000,000

Less  
COST OF SALES  
Purchases

$00,000

Freights

$0,000

Sub-contractors

$00,000

Wages (Direct)

$00,000

Total costs of sales

$000,000

GROSS PROFIT

$000,000

EXPENSES  
Accounting

$0,000

Advertising

$00,000

Bank Charges

$000

Cleaning

$0,000

Computer Support

$0,000

Depreciation

$00,000

Electricity $0,000
Insurance $00,000
Office Supplies $0,000
Printing and Stationary $0,000
Publications $000
Rent $00,000
Repairs and Maintenance $0.000
Subscriptions $000
Travel & Accommodation $0,000
Telephone, Fax & Internet $0,000
Superannuation $00,000
Wages and Salaries $000,000
Total Expenses $000,000
NETT PROFIT $00,000
 

 

 

 
 
 

Increase Sales

> Users - more customers
> Usage - more often
> Uses - different customers
> Generate more leads
> Lift conversion rates
> Improve customer retention - customer service focus

 

Lower the cost of operation

> Review all overheads.
> Benchmark all costs.
> Improve procurement - e.g. always get multiple quotes
> Calculate your 'cost-per-day' of opening
> What is your breakeven?

 

Outcomes:

 

> Improved effectiveness - doing the right thing.
> Improve efficiency - doing it the right way.
> Increased profits and better cash flow.
> Improved  lifestyle for you - the Owner. Regain control of the business and your life.



 

Which key fits which lock?  Mandela knew the keys which would give himself, and his people, freedom weren't the ones dangling from the warden's belt.  They were different keys and came from outside intervention.

No doubt your accountant reckons he knows the right key, and mutters something about increasing sales, increasing prices and cutting costs at least once a year.  But he is rarely specific about where, and how to use his keys to unshackle your business.

There is a key; in fact there are five keys.  You probably don't need all of them, but you may need one or two.  And your accountant is partly right.  But you have to be more precise than that.  What you have to do is find the right keys that will unlock your shackles, and the cell door - to freedom and lifestyle.

Increase Sales

Most Small and Medium Enterprises (SMEs) are built on the personal expertise of the owner.  Marketing is a bit of a mystery - how does it work, what will be most effective, where do we start?

Have you thought about: 

  • identifying the right target market for your business;
  • developing and documenting a marketing plan;
  • researching customer's perceptions of your business's performance;
  • reviewing the effectiveness of your promotions;
  • training staff for "plus five %" sales techniques;

Is your business strategy to maximise profits by maximising sales, or by maximising margins?

But maybe the problem is not in your marketing?

The Art of Conversion

Maybe you are in the right market place, with the right product or service, and still not getting the sales.  Many people have forgotten, or indeed never known, the art of converting a prospect into a sale!

  1. Could it be your sales technique?
  2. Have you asked the right questions?
  3. Have you established where the "pain" is, what problem is the prospect seeks to solve?
  4. Do you understand 'specifically' what the buyer is seeking?
  5. Have you countered the obvious objection to the sale?
  6. Can you illustrate practical examples where your product or service removed the "pain"?
  7. Have you removed the risk to the buyer? 

The Unseen Shadow Lurking: How often are you facing a prospect who is either new in the market place or has a new requirement?  In other words, its open slather, and may the best man win!

Let's face it, most of the time you identify a prospect they already have a preferred supplier, and unless they are pretty upset with them, you have to overcome the relationship they, the Lurker, has established with the prospect.

And you know that most people detest sales people who slag the competition.  It gets them offside right away, and goodbye to the sale!

But you can depose the competition without rubbishing them.  Author Randy Schwantz calls it "asking the Perfect Picture question".

Why not have a chat to us about increasing your conversion rate - same effort, bigger result!

Increase Margins

Many SMEs are reluctant to raise prices, fearing loss of sales.  But there is always competition.  It is sometime said a business can raise prices by up to 4% without having any impact on sales.  That 4% will go straight through to the bottom line.

But there is more to increasing prices than that.  You need to consider the mix of your product lines, and how well each is doing, the markets you are in, the marketing strategy for each market and the pricing policy that implies - to name just a few of the considerations.

You need to evaluate the issues to make the right decisions.

Improve margins

Higher prices are not the only way to improve your gross profit margin!  Margins are not just the result of prices alone.  You also have to look at how well do your buying, write-offs and write downs, discounting, goods receiving processes and any other element of your variable costs.

You have to understand the role of all variable costs in your 'real' Cost of Sales.  Do you include direct labour, freight and consumables.  Reducing the real cost of sales will improve margins.

Some lines may have better Gross Margins (when properly calculated) than others.   Should you review your product mix?  Removing less profitable lines will improve your overall margin!

Some customers or customer groups are less profitable than others?

Remember, it is the overall Gross Profit you make that pays the overheads and provides your profit!

Catalyst can help in improving your Profit Margins!

Lower the cost of operation

A lot of your costs will be Fixed Costs i.e. they are unlikely to vary much with the volume of sales.  Do you know how much it costs you to stay open each day?

Lowering the Fixed Costs will lower the amount you have to sell (at a given Gross Margin) to break even.  Everything after that is profit!

Many overheads must be maintained at reasonable levels - cutting them out entirely may be disadvantageous to the business. 

So:

  • review your overheads;
  • benchmark each overhead cost against similar or related businesses (how do you know what the right level should be for your business?);
  • improve your procurement to reduce costs;
  • calculate your breakeven level.

Improve Productivity

Cash

Stock

Debtors

Cash


Improving productivity really means "Can we get more profit from our assets and from our people?"  Consider the "Working Capital Cycle"

What are the implications of:

  • Improving stockturn?
  • Reducing average Debtor days?
  • Increasing average Creditor Days?

Employees are the largest single cost factor for many businesses, but the answer to improving profits is not always cutting staff. 

Challenged by available management time!  But what if it took a lot less time to do jobs, particularly routine jobs.  What if there weren't so many mistakes and errors to fix?  Do you realise that up to 30% of your management time can be taken up in fixing your, or other peoples mistakes.  Reduce waste!

You need to:

  • Reviewing 'value added per employee' and benchmarking the results;
  • Reviewing staff "Utilisation rates".

Opportunities for improvement in productivity may lie in reducing errors and waste (have you measured these?) and improving systems and processes.

And the Final Result

If you can do the right thing - concentrate on those things which will make a real difference to the business (i.e. increase your effectiveness) and get a better return on your efforts (i.e. increase your efficiency) you will increase your cash flow and profitability.

Spend less time worrying about cash flow and profitability and you can spend less time worrying and more time on your lifestyle.  You will be back in control!

 

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