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Thrive, Survive or Dive - Kevin
 

Thrive, Survive or Dive - Kevin

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Essential tools that every business owner must know and use to forge a profitable business.

Essential tools that every business owner must know and use to forge a profitable business.

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    Thrive, Survive or Dive - Kevin Thrive, Survive or Dive - Kevin Presentation Transcript

    • Kevin Nott , M.A. Business Strategy Coach [email_address] (801) 850-1716 www.GetProfitPointed.com
    • Thrive, Survive or Dive Keys to Building a Profitable Business
    • Recommended Reading
    • What is a Business Worth?
      • Net Present Value of all projected future cash flows
        • Approximately five times your current annual net profit
      • IF
        • Your business can run in your absence
      • Otherwise
        • Your business has little value
    • Build a Business of Value
      • Profitability
        • Consistent
        • Maximized
      • Systems
        • That drive the business
        • That can be managed by others
    • Would you expect someone without the proper tools and adequate training to build a house?
    • Is it reasonable to expect someone to build and manage a successful business without the right tools and knowledge?
      • Lack of business knowledge and skills is the primary reason most businesses fail and others rarely achieve their potential
    • Key Questions to Ask
      • What is the current value of my business?
      • What would I like it to be worth?
      • How do I get from here to there?
    • Thrive, Survive or Dive?
      • Diving companies
        • Losing money
        • Sales are dropping
    • Thrive, Survive or Dive?
      • Surviving companies
        • Covering costs with revenues
        • Sales are unstable
    • Thrive, Survive or Dive?
      • Thriving companies
        • Making strong profits
        • Growing Sales
    • What Makes the Difference?
      • Thriving companies understand the concept of Profit Point
      • They manage their business around the key driving principles.
    • What is Profit Point?
      • The point where revenue is sufficient to cover all costs to that point and the company starts to make a profit
      • Gross profit equals fixed costs
      • Can be measured in sales dollars or units
      • Can be utilized to measure performance of separate business units or revenue types
    • Profit Point
    • Key Profit Point Factors
      • Revenue:
        • Amount billed to customer
      • Direct Costs:
        • Costs directly associated with a specific sale
      • Gross Profit:
        • Revenue less all Direct Costs
      • Gross Margin:
        • Gross Profit expressed as a percent of revenue
      • Fixed Costs (Overhead):
        • Costs that do not directly fluctuate with sales volume
    • Profit Point Question
      • If profit does not occur until the profit point, what does it take to reach the profit point?
    • Profit Point Revenue Formula Fixed Cost $ ---------------------- Gross Margin %
    • Profit Point Example $10,000 (Fixed Costs) ----------------------------- 50% (Gross Margin) = $20,000
    • Profit Point Unit Formula Profit Point Revenue ---------------------- Price per Unit
    • Profit Point Example $20,000 (Profit Point $) ----------------------------- $1000 (Unit Price) = 20 Units
    • Test Yourself
      • Unit Selling Price: $200
      • Unit Costs: $100
      • What is the Gross Profit per Unit?
      • What is Gross Margin Percentage?
      • Fixed Costs: $8,000
      • What is the Profit Point in Dollars?
      • What is the Profit Point in Units?
    • How Did You Do?
    • Profit Point
    • Furnaces, Inc.
      • What is the Gross Profit?
      • What is the Gross Margin?
      • Fixed Costs = $20,000
      • What is the profit point revenue in dollars?
      • How many furnaces do you need to sell to reach the profit point?
    • Profit Point Example $20,000 (Fixed Costs) ----------------------------------- 40% (Gross Margin) = $50,000 $50,000 (Sales) -------------------------- $2,500 (Unit Price) = 20 Furnaces
    • But I don't want to just break even!
      • I want to make money!!
    • Profit Dollar Revenue Target Fixed Cost $ + Profit $ --------------------------- Gross Margin %
    • Furnaces, Inc. $20,000 + $5,000 (Profit) ----------------------------------- 40% = $62,500 $62,500 -------------------------- $2,500 = 25 Furnaces
    • Profit Percent Revenue Target Fixed Cost $ ---------------------------- Gross Margin % - Profit %
    • Furnaces, Inc. $20,000 ----------------------------------- 40% - 10% (Profit) = $66,667 $66,667 -------------------------- $2,500 = 27 Furnaces
    • Managing the Profit Point
      • Increase Number of Unit Sales (Volume)
        • More sales opportunities
        • Increase the close rate on sales opportunities
      • Increase the Gross Margin Percentage
        • Increase and manage selling price
        • Reduce and manage direct costs
      • Reduce fixed costs
    • Profit Point Calculator
    • Comparing Competing Products Fixed Costs = $20,000 Desired Profit = $5,000
    • Let's Take a Closer Look
    • Items that must be considered
      • Capacity
      • Availability of leads
      • Cost per lead
      • Sales closing rate
    • It's About Profit
      • Get there quickly
      • Maximize every opportunity
      • Every sale after the goal is gravy
    • Take a Break!
    • Key Driving Principles of Profit Point
      • Know Your Numbers
      • Set Your Course
      • Create Opportunities
      • Sell for Profit
      • Manage the Work
    • Step 1: Know Your Numbers
      • What you need
      • What they are
      • Where they come from
      • How to use them
    • Numbers You Need to Know
      • Accounting
      • Marketing
      • Sales
      • Production
    • What you need to know about Accounting
      • What goes where
      • How to read financial statements
      • Basic financial analysis
    • Marketing Numbers
      • Market share
      • Advertising
        • Cost of advertising by medium
        • Response rate by medium
        • Lead conversion rate by medium
        • Cost per response by medium
        • Sales close rate by medium
        • Cost per sale by medium
      • Inbound call conversion rate
    • Sales Numbers
      • Average ticket
      • Sales Closing rate
      • Financing rate
      • Referrals
    • Production Numbers
      • On-time completions
      • Call backs
      • Labor efficiency rates
      • Material and equipment cost (usage) rates
      • Gross profit per man-day
    • Profit Point Exercise Estimating Revenue
    • Step 2: Set Your Course
      • Identify where you are now
      • Decide where you want to go
      • Establish a plan to get there
    • Strategic Planning
      • Situation analysis
        • Customers
        • Vendors
        • Competitors
        • Economy
        • Regulatory issues
        • Competitive products
        • Barriers to entry
      • Internal Analysis
        • Market share
        • Image
        • Capabilities
        • Products
        • Culture
        • Goals
    • Strategic Direction
      • Grand Focus
        • Customer
        • Product
        • Capacity
      • Basis of Competition
        • Low price
        • Quality
        • Speed
        • Service
    • Strategy Selection Matrix Price Speed Quality Service Customer / Market Product Capacity
      • Customers
        • Who is?
        • Who is not?
      • Products
        • What are?
        • What are not?
      Define the Business
    • Identify Strategy Drivers
      • Processes that are performed in the business that
      • Create distinctiveness
      • Critical to the success of the strategy
      • Must be a priority
      • Must be performed very well
    • Strategy Fit Matrix Meets Customer Wants / Needs High Low Internal Capabilities High Winner Temptation (Solution seeking a problem) Low Challenge Foolish
    • Aligning around the Strategy
      • Structure
      • Systems
      • Staffing
      • Style
      • Skills
      • Shared Values
    • Step 3: Create Opportunities
      • Increase the number of new customer opportunities
      • Increase the number of opportunities from existing customers
      • Increase perception of value
    • We Call it Marketing
      • Creating, communicating, and delivering goods and services that satisfy customer needs
      • Developing an identity with customers
        • Positive
        • Distinguishable
        • Memorable
    • What You Need to Know
      • The need you are planning to satisfy
      • Who your customer is
      • How your customer thinks
      • Your product features and benefits
      • How your product meets the needs of your customer
      • How to reach your customer
    • The Marketing Process
      • Focus on the strategy
      • Create the product
      • Create a marketing plan
      • Communicate message to customer
    • Create the Product
      • Image
      • Uniforms
      • How you answer the phones
      • Logo
      • Scripts
      • Vehicles
      • Product Lines
      • What you think of the customer
      • The work you will do
      • How you do the work
      • Literature
      • Policies and procedures
    • Marketing Plan
      • Who will we market to?
      • How do we reach our customer?
      • When?
      • How much will we spend?
      • What will the message be?
      • How frequently will market?
    • Tools for Communicating with Customers
      • Advertising
      • Public relations
      • Internet
      • Top-of-the-mind awareness
      • Referrals
      • Repeat customers
      • Cross selling
      • Educating
    • Profit Point Exercise
      • Establishing a Marketing Culture
    • Step 4: Sell for Profit
      • Increase the rate that opportunities are converted to sales (Close Rate)
      • Get more profit from every sales
      • Get more sales opportunities
    • Getting a customer to buy
      • Purchase decision is made when price is less than or equal to perceived value
      • Value is established by the customer
      • Move customer to buying decision by
        • Lowering price
        • Increasing perceived value
    • What You Need to Know
      • Why people buy
      • Your product's benefit
      • You and your company
      • How your product meets a customer's needs
      • How to logically and effectively present ideas
      • How to encourage a customer to make a decision
      • How to overcome objections
    • The Sales Process
      • Establishing selling opportunity
      • Establish explicit needs
      • Demonstrate capability to meet need
      • Offer to satisfy need
      • Gain commitment
    • Formal Sales Presentation
      • Introduction and warm up
      • Customer assessment
      • Company presentation
      • Needs resolution
      • Commitment
    • Profit Point Exercise Sales Process
    • Step 5: Manage the Work
      • Maximize amount of work performed
      • Ensure quality of work meets or exceed standards
      • Minimize costs
        • Labor
        • Materials
        • Other
    • The Key is Labor Management
      • Systems for
      • Attracting
      • Retaining
      • Motivating
      • the right people to do the right thing at the right time for the right price again and again
    • Labor Management and Profit Point
      • Labor is a primary resource in every marketable product
      • Quantity of labor time (Capacity)
      • Quality of labor time (Productivity)
      • Cost of labor
    • What You Need to Know about Labor Management
      • Motivation
      • Planning
      • Training
      • Hiring
      • Retention
      • Team building
      • Compensation
      • Employment laws and regulations
    • Employment Tools
      • Management Systems
      • Clearly understood job expectations
      • Competitive compensation
      • Safe working environment
      • Management systems
      • Time sheets
      • Employee reviews
      • Commissions and bonuses
    • Key Driving Principles of Profit Point
      • Know Your Numbers
      • Set Your Course
      • Create Opportunities
      • Sell for Profit
      • Manage the Work
    • Get to the Point!
      • Find your profit point
      • Make changes needed to get there quicker
      • Track your performance daily
      • Make daily management decisions
    • Kevin Nott , M.A. Business Strategy Coach [email_address] (801) 850-1716 www.GetProfitPointed.com