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How to squeeze your business model

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Getting Maximum Profit from your Business Model. What it really means to work ON your business vs IN your business.

Talk given Oct 12, 2011 at Uconn NU Supplier Diversity Pilot

Published in: Business, Economy & Finance
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How to squeeze your business model

  1. 1. How to Squeeze Your Business Model for Fun and Profit<br />NU Supplier Diversity Program Pilot Oct 12, 2011 John Seiffer <br />
  2. 2.
  3. 3. Business Model (simplified)(LTV – CA) *N = $$<br />
  4. 4. WHY?<br />
  5. 5. Money<br />Value<br />
  6. 6. Value has 2 parts<br />
  7. 7. Value has 2 parts<br />Why they spend money at all<br />
  8. 8. Value has 2 parts<br />Why they spend it with you<br />
  9. 9. Value has 2 parts<br />Why they spend money at all<br />Why they spend it with you<br />
  10. 10. Take Away #1<br />Learn the words the customer uses for each of the 2 parts of value<br />
  11. 11. (LTV – CA) *N = $$<br />
  12. 12. (LTV – CA) *N = $$<br />LTV = Life Time Value<br />
  13. 13. What a customer pays <br />(minus) <br />What it costs to provide the value they pay for<br />(times) <br />How often /long they do that<br />Life Time Value<br />
  14. 14. (LTV – CA) *N = $$<br />CA = Cost of Acquisition<br />
  15. 15. Cost of Acquisition<br />
  16. 16. Cost of Acquisition<br />What it costs to convert a lead to a prospect and turn that prospect into a customer.<br />
  17. 17. (LTV – CA) *N = $$<br />N = Number of Customers<br />
  18. 18. 3 Reasons to Spend<br />LTV = Providing Value for Customers<br />CA = Acquiring Customers<br />N = Growth (adding capacity to do either of the above)<br />
  19. 19. Take Away #2<br />Know WHY you spend $$<br />Not WHAT you spend it on<br />
  20. 20. (LTV – CA) *N = $$<br />
  21. 21.
  22. 22. work <br />ON<br />not <br />IN<br />your company<br />
  23. 23. (LTV – CA) *N = $$<br />
  24. 24. Take Away #3<br />Work ON your Business to Optimize Capacity<br />
  25. 25.
  26. 26. (LTV – CA) *N = $$<br />
  27. 27. Banks<br />Investors<br />Royalty<br />Credit Cards<br />Customers<br />Vendors<br />CA$H but not Money<br />
  28. 28. [(LTV – CA) *N] – PB = $$<br />
  29. 29.
  30. 30. Take Away #4<br />Outside funds are NOT free<br />Learn to be profitable before you grow.<br />
  31. 31. Summary<br />Learn the words your customers use for 2 kinds of value.<br />Know why you spend every dollar<br /> (LTV – CA) *N = $$<br />Optimize Capacity<br />Use Outside Funds at the right time<br /> [(LTV – CA) *N] - PB = $$<br />
  32. 32. Squeeze Your Business Model<br />John Seiffer john@BetterCEO.com<br />203-775-6676 www.Blog.BetterCEO.com <br />

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