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