How you can radically improve the lack of profits in your business

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Are you stuck in your business and not making as profit as you would like to? This presentation will take you through step by step and show you how to correct that

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How you can radically improve the lack of profits in your business

  1. 1. How you can radically improve the lack of profits in your business © Copyright One Sherpa Pty Ltd 2010
  2. 2. Have you started your business then found you’ve got stuck and can’t go forward? © Copyright One Sherpa Pty Ltd 2010
  3. 3. When you start a business there seems to be so much to do and so little time to do it so…. © Copyright One Sherpa Pty Ltd 2010
  4. 4. Are you feeling like you’re drowning in too much work? © Copyright One Sherpa Pty Ltd 2010
  5. 5. Are you wondering how to move forward? © Copyright One Sherpa Pty Ltd 2010
  6. 6. Are you wondering what your priorities should be? © Copyright One Sherpa Pty Ltd 2010
  7. 7. Are you frustrated at the lack of progress? © Copyright One Sherpa Pty Ltd 2010
  8. 8. Are you worried that you’re running out of money and there isn’t any momentum showing in your business yet? © Copyright One Sherpa Pty Ltd 2010
  9. 9. In the early stages of a business you must be sure that ALL your effort is in the right direction © Copyright One Sherpa Pty Ltd 2010
  10. 10. Using your resources wisely at the beginning of a business is so important because… you have no room for error while you’re not making profits © Copyright One Sherpa Pty Ltd 2010
  11. 11. It’s so easy to waste resources in areas that don’t matter and find you don’t have enough to really help with momentum © Copyright One Sherpa Pty Ltd 2010
  12. 12. Thinking like a business owner and NOT an employee will change your priorities © Copyright One Sherpa Pty Ltd 2010
  13. 13. The single biggest area where we see small business owners fail is when they get their business model wrong and… as a result push much of their effort in the wrong direction © Copyright One Sherpa Pty Ltd 2010
  14. 14. It’s hard enough to get a business going when your effort in in the right direction and… IMPOSSIBLE if you waste it on a flawed business model © Copyright One Sherpa Pty Ltd 2010
  15. 15. PROBLEM #1 Has three measures which can tell you whether you’re wasting your time with a flawed business model © Copyright One Sherpa Pty Ltd 2010
  16. 16. The first measure is called Customer Value © Copyright One Sherpa Pty Ltd 2010
  17. 17. The first measure is called Customer Value This measure makes sure you are making the right margin on your sales © Copyright One Sherpa Pty Ltd 2010
  18. 18. The second measure is called Transaction Flow © Copyright One Sherpa Pty Ltd 2010
  19. 19. The second measure is called Transaction Flow This measure makes sure you are bringing in the right volume of sales for your business © Copyright One Sherpa Pty Ltd 2010
  20. 20. The third measure is called Money Flow © Copyright One Sherpa Pty Ltd 2010
  21. 21. The third measure is called Money Flow This measure makes sure you are not leaving profits and cash locked up in your business © Copyright One Sherpa Pty Ltd 2010
  22. 22. These three simple measures will tell you whether you’re wasting your time on a flawed business model and where to focus to get things right © Copyright One Sherpa Pty Ltd 2010
  23. 23. Let me show you how to check these measures in One Minute Business Checkup © Copyright One Sherpa Pty Ltd 2010
  24. 24. PROBLEM #3 © Copyright One Sherpa Pty Ltd 2010
  25. 25. The first step in addressing the Business Model is to ensure that you have the correct margins flowing in your business. © Copyright One Sherpa Pty Ltd 2010
  26. 26. The best way to address this is to find out how much cost you can afford for the CURRENT level of sales. © Copyright One Sherpa Pty Ltd 2010
  27. 27. In the short term you have more control over your COSTS than your SALES so let’s see how to do that © Copyright One Sherpa Pty Ltd 2010
  28. 28. PROBLEM #3 $10,000 off Annual Other Costs © Copyright One Sherpa Pty Ltd 2010
  29. 29. Once you are getting the right margin on the sales that are currently in your business (i.e. Your Customer Value Measure is Correct)… © Copyright One Sherpa Pty Ltd 2010
  30. 30. The next step is to make sure you have the correct volume of sales in your business (i.e. Address your Transaction Flow Measure) © Copyright One Sherpa Pty Ltd 2010
  31. 31. To calculate the correct The reason for this is that to volume of business, take be sustainable your the Administration Costs administration costs should and divide by .12 not exceed 12 cents in each dollar of sales. i.e. $800,000 / .12 = $1,000,000 © Copyright One Sherpa Pty Ltd 2010
  32. 32. Adding $200,000 of sales will also require more interaction costs such as product costs , people costs and marketing costs… so we’ve added $160,000 to other costs in the model © Copyright One Sherpa Pty Ltd 2010
  33. 33. PROBLEM #3 $200,000 more sales $160,000 more sales © Copyright One Sherpa Pty Ltd 2010
  34. 34. If you are able to hold your working capital to the same level with the additional sales then the model looks fine © Copyright One Sherpa Pty Ltd 2010
  35. 35. However with additional sales and costs of interaction it is likely that both Accounts Receivable and Accounts Payable will increase © Copyright One Sherpa Pty Ltd 2010
  36. 36. To calculate the likely increase we ratio the increase as follows: Accounts Receivable Original Accounts Receivable DIVIDED BY Original Sales MULTIPLIED BY New Sales EQUALS New Accounts Receivable $120,000/ $800,000 * $1,000,000 = $150,000 © Copyright One Sherpa Pty Ltd 2010
  37. 37. To calculate the likely increase we ratio the increase as follows: Accounts Payable Original Accounts Payable DIVIDED BY Original Other Costs MULTIPLIED BY New Other Costs EQUALS New Accounts Payable $90,000/ $580,000 * $740,000 = $114,827 say $114,830 © Copyright One Sherpa Pty Ltd 2010
  38. 38. PROBLEM #3 $30,000 more Accounts Receivable $24,830 more Accounts Payable © Copyright One Sherpa Pty Ltd 2010
  39. 39. Checkout your own information now. © Copyright One Sherpa Pty Ltd 2010
  40. 40. Make sure you have checked the measures for your business © Copyright One Sherpa Pty Ltd 2010
  41. 41. If you don’t know where to find the numbers then at least take a guess © Copyright One Sherpa Pty Ltd 2010
  42. 42. Using the sandbox you can ‘play with the numbers’ until you get the right shape to aim for © Copyright One Sherpa Pty Ltd 2010
  43. 43. Go to www.oneminutebusinesscheckup.com and make sure you’re aiming for the right business model TODAY © Copyright One Sherpa Pty Ltd 2010

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