love + constant care + proper irrigation + fertilisation + pruning to ensure the olive tree survives hundreds if not thousands of years
Who said your business is different from our precious Olive Tree?
If you take care of Profits, People & Palestine your “olive tree” will survive.
Pricing to boost your profits
What is within your control
Cash Flow management
What’s in a mark-up?
Leverage + Value to grow your business
the honest truth: why business fails & how you can succeed
81% of variables are within your control
Let’s leave the economy, staffing and unions aside!
Increase chance of success You can’t be good in everything – Know thyself: Technical/professionals not necessarily business people. To succeed, you need to ensure either you/your team have:
Need to do a Skills Audit
we need to eat!
My Dad – Victor Dedicated husband Loving father Entrepreneur – gets seizures Great salesman – always looking for needs to fill Loves his business & his friends Understands people needs But a lousy financial manager!
My mum - Souad Super mum – 5 kids (3 girls & 2 boys) in 6 years Diplomat Relationship builder Wise financial manager Business in her blood
Everything happened to my family in 1975! Eli Mahlab – General manager of Engel bakery Jerusalem. Eli saved my family
You need a financial manager
You need to keep your records
Know your margin
The purpose of a business is: to make money It does this when it simultaneously increases:
Return on Investment
Distinguish between business and service for the greater good.
Net Profit Is . . .
What remains after you deduct all expenses from the revenue your business generates.
It’s important to understand that profit and cash flow are two different things.
Cash Flow Is . . The cash that flows into your business from all sources after deducting the cash that flows out of the business. A business can never grow faster than its cash flow allows. If you try to grow a business faster than this, it will fail.
The Cash Flow Cycle Goods are purchased from a supplier who gives credit. Cash out to pay creditors. The goods go into inventory for resale. The goods are sold to customers, some of whom pay at the time of sale and the others receive credit. Cash in from cash sales & accounts receivables The amounts owed by credit customers are recorded as accounts receivable, which will be paid in due course. Cash out to pay other expenses.
Your Cash Flow Projection You must prepare a Cash Flow Projection for 12 months in advance. Then you must monitor it monthly and roll it over each quarter. Your cash flow projection is your main financial management tool.
How to Project & Monitor Your Business
Look at your cost structure.
Determine what profit you require.
Calculate the sales you need to achieve this.
Test the validity of this sales volume.
Determine what resources are required to support sales.
Prepare a Cash Flow Projection to ensure finance is OK.
Establish KPIs to monitor your progress.
4 Ways to Grow 1 Increase the number of customers (of the type you want). Increase the transaction frequency 2 Increase the transaction value of each sale 3 4 Increase the effectiveness of each sale
To Increase Profit You must increase revenue or You must reduce expenses or A combination of the two
Work on the price You can increase revenue by increasing price. Provided that any decline in volume does not offset the price increase. Or you can increase revenue by decreasing price. Provided that the increase in volume is sufficient to offset the reduction in margin.
You can increase profit by increasing volume. Provided that price remains constant so that the increase in volume translates in higher gross profit. Or you can increase profit by decreasing volume. Provided that the saving in costs outweighs the reduction in gross profit. Work on Volume
Work on Fixed Expenses You can increase profit by reducing fixed expenses. Provided that sales revenue does not decline or if it does, the reduction in revenue is less than the saving in fixed expenses. Or you can increase profit by increasing fixed expenses. Provided that there is a resulting increase in gross profit from greater market share or higher gross margin.
The Components of Revenue The number of customers you start with Less Those that you lose each year Plus Those you pick up Equals Your total number of customers Multiplied by The number of times they deal with you each year Equals The number of transactions Multiplied by The average value of each sale equals Your Total Revenue
To Increase Your Total Revenue You Must Get more customers to Stay with you and come back more often and Spend more with you each time and / or Recommend you to their friends and associates
Cost Behavior & Activity-Based Costing There are 3 types of costs Fixed Costs Variable Costs Activity-Based Costs
These are costs independent of the dollar value of sales and the level of activity. They are usually associated with the physical capacity of the business to provide its service to customers. Fixed Costs
These costs vary directly with sales revenue. In other words, when sales rise or fall, they rise and fall in exactly the same proportion. Variable Costs
Work on Variable Expenses You can increase profit by decreasing variable or activity related expenses. Provided that there is no change in product or service quality that could have a consequential effect on sales volume. Or you can increase profit by increasing variable or activity related expenses. Provided that the improvement in product or service quality allows you to win greater market share or premium price.
These costs are driven by activities undertaken in the business. On the surface, they usually appear to be fixed costs, but in fact they are activity-related. Activity Costs
If you want to manage a business, you must manage the activities that make up the business. To manage these activities, you must first be able to measure them because—what gets measured gets managed.
The difference between big & small business: 1.Leverage - to create new customers and make sure they keep coming back 2. Value – what you can provide that solves a real need and cannot be duplicated
Leverage Get CLEAR on your business model: Partners Distributors Franchise Licence e-commerce/internet Employees vs. contractors
Creating Value Creating value builds loyalty; Loyalty builds growth, profit and even more value; Profit is indispensable but it is a consequence of value-creation
Customers buy differences they perceive
Fundamental truths 1. Why is your service/product different? Why is it better? It's always thelittle things that make a huge difference 2. It's all about SYSTEMS - you systematise the 90% so that you can humanise the 10% 3. Ways to dazzle the customer. Provide something different from other businesses
The aim now must NOT be to satisfy the client. The aim must be to DAZZLE them - to be MEMORABLE