The “Magic Formula” For Business Success
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One of the biggest challenges facing business owners is maximizing business performance and profitability. If only there were a magic formula for business success. For companies in the Manufacturing, Trades and Technology industries this is even more challenging. With so many moving parts and complexities where do you even start the process of improving business performance?
The “magic formula” for business success can be applied to virtually any business to improve profitability and performance. The secret is to work on only one section at a time. A company can realize exceptional improvements to it’s performance by making only small incremental changes and adjustments to each part of the business process.
The following will explain the graphic and how to apply it to your business.
Marketing & Customer Service Strategies
The business process starts with attracting a potential customer (Lead) to your business. We all know there are many marketing tools available to achieve this. The key is to break down your customers into New, Existing, and Past Customers. What strategies does your company employ to increase the amount of enquiries (Leads) from each category of customer. We focus so much on attracting new customers that we often take our existing customers for granted who can eventually become past customers.
Sales Strategies
Once the potential customer has initiated a contact with your company your marketing strategy has done it’s job. The purpose of the sales process is to convert Leads into paying customers. Do you have a process for this or do you let your employees “figure it out” themselves? What can you do to improve Lead Conversions? The numbers of leads your marketing creates and your conversion rate will result in a certain number of Sales Transactions.
Your marketing and sales strategies will generate an “average sales size” ie. Total Sales/Total Transactions. What tactics can you employ to increase the average sales size? Some companies will adjust their product mix, packaging, or volume discounts. And let’s not forget the ole “would you like fries with that” strategy.
A combination of your lead generation programs, sales conversion programs, number of transactions and average sales size will make up your total revenue.
Profit Management
Managing Gross profits is crucial to driving profitability. Find ways to improve productivity and reduce labour and material costs. Improve process and negotiate with vendors to get better value. These are often your largest expense line items and can make or break your profitability.
Unchecked Operating & Overhead Costs can place a lot of financial pressure on a company and bleed profits. Constantly review the value you are receiving from Vendors and check processes to ensure your support systems are lean & mean.
Review each step of the “magic formula” in isolation and develop strategies to improve each step of the process by just 10%. The compounding effect of improving each step can increase profits by 69%.
I have a list of over 100 Strategies to improve each of the above steps and would be happy to share them with you. Just email me at tony@empoweredbusiness.ca or call me at 604.374.5934 and I will send them to you right away.
