What Drives Your Economic Engine?
What Key ratios do you use to measure your economic success?
Think about it in terms of the following question:
If you could pick one, and only one ratio - be it profit per "x"; cash flow per "x" -to systematically increase over time, what "x" would have the greatest and most sustainable impact on your economic engine?
Let's assume that you conduct your business from one location, and that you measure your success by the amount of profit you make. The next question is, profit per what ("x")? Is it profit per customer, per product or service, per employee? Which "x", by focusing on it and improving the ratio over time, would provide the highest and most sustainable economic growth?
Let's illustrate with a few examples:
1. Profit per customer
In this instance, you're looking to increase the number of transactions by each customer. How can you get your customers to come back repeatedly and buy high-margin products? What main products can you sell that support highly profitable consumable accessories?
An example is Gillette. They moved from disposable razor blades to high-tech razor blades with disposable click-in razor blades. A subtle shift - but with higher technology products, their repeat transactions became far more profitable than the old disposables. How can you apply this concept to your business?
2. Profit per product/service
Now, let's look at increasing profit margins in two additional areas:
a) Reducing the cost of providing our products/services.
- Negotiating better deals with suppliers.
- Reducing your production costs. How can you employ technology to reduce the cost of producing goods or services? If you're outsourcing the technical part of the job - is the organization you're using employing the most sophisticated and efficient methods available at a more effective price? Would you be better off doing it in-house?
b) Increasing the efficiency of delivery and distribution of your products/services. Look at:
-Creating a more disciplined, self-motivated and productive team who will simply do the job.
-Improving your business systems to eliminate unintentional slack.
3. Profit per employee
Here we're talking about profit per staff person. How can you run the most cost-effective team - not just in the sales department, but overall? You need to hire the right people, for the right positions, with the right level of self-motivation to drive the business. Take your time filling the higher skill positions with the right people, and then establish great systems to support them. Your high-caliber team will then take care of the rest of the business.
So, there you have three examples of key ratios that you can use to drive your economic engine. And there's more. How about "profit per customer visit"? What if you have a multi-location business and you're looking to expand? Do you measure "profit per outlet" or "profit per region"? How will that simple choice of the "x" factor drive your business decisions?
So, go ahead and pick one - just one! Then measure it and focus on ways you can increase its ratio over the next six months.
Let us know your results - we'd love to hear. And if you're not sure which measure to choose, or what its effect might be, call us today at 416-483-9251 or 905-943-4265.
Profit Building Workshop
'5 Ways to Super Profits'
Don't Waste another Cent on Strategies that Don't Dramatically Improve Your Profits!
Learn '5 Ways' that DO work and how you can implement them in your business!
“What do you want from your business?”
Want a significant improvement in your sales? Want to increase your after-tax profits? Want to boost your personal income? Just want to reduce your stress levels … and your business’s reliance on you? Then the “5 Ways to Super Profits” Workshop is just for you.
Have you ever suffered from employees appearing not to care, while you seem to be doing all the work? And they go home early while you work well into the evening…just to maintain, much less grow your business? If so, then this hands-on workshop can provide dramatic benefits for you. You’ll get to start working on your business during the session and learn ways to move your business forward on many fronts. And, you’ll get to take the business improvement tools with you to start improving your business the very next day.
'5 Ways to Super Profits'
Action International Office
7030 Woodbine Avenue, Suite 500,Markham
(north Steeles & Highway 404)
Wed. February 17 6:45 pm - 9:00 pm
$39.95 per person ($29.95 for 2nd person from same company)
To Book YOUR Tickets for the next Workshop
CALL Joanne NOW @ (905) 943 4257
or email seminars@actionbusinessdevelopment.com
To find out more about this exciting opportunity to grow your profits click here .
Complementary Business Consultation
Find out how to MAKE MORE MONEY with LESS EFFORT
We've identified 5 key ways to increase business profits. Find out how well your business embodies these 5 ways and how your business practices could be tuned for greater impact!
We will ask you a few brief questions on the phone and then arrange a time for your complementary consultation.
We can meet in your office, our office, or over the phone -- whatever makes the most sense in your situation. When we meet we'll ask you about your business, your goals and your challenges. We'll give you feedback on your current situation and come up with at least a couple of ideas that you can implement in your business right away! Then you can decide what the right next step is for you.
Don't you really owe it to yourself and to those who depend on your business to find out if there is a better way?
We have time for a limited number of consultations in January. So don't delay.
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