These slides show the 4 common methods most CEOs use to transform their Net Profit but to no avail. There are only 2 most effective strategies to transform your Net Profit as shown in these slides. These 2 strategies have been used by our clients from different industries with great success. If you apply as mentioned in these slides, your Net Profit will be transformed as well. I can be reached at www.victor@crossbowconsultinggroup.com to answer any questions that you may have. Thanks for watching this slide show. Victor Ang CEO www.crossbowconsultinggroup.com victor@crossbowconsultinggroup.com

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What Is Net Profit?
Revenue – Costs = Net Profit

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Declining Net Profit?
2006 2007 2008
Sales Revenue $100,000 $150,000 $200,000
Variable Costs $40,000 $82,500 $130,000
Fixed Costs $30,000 $40,000 $50,000
Net Profit $30,000 $27,500 $20,000

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Increase Sales Volume
Sales
Volume
Increase
Look At What A Sales Volume Increase Does
Current Gross Profit Margin (Providing Fixed Costs Remain The Same)
5% 10% 15% 20% 25% 30% 35% 40%
1% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40%
5% 0.25% 0.50% 0.75% 1% 1.25% 1.50% 1.75% 2%
10% 0.50% 1% 1.50% 2% 2.50% 3% 3.50% 4%
15% 0.75% 1.50% 2.25% 3% 3.75% 4.50% 5.25% 6%
20% 1% 2% 3% 4% 5% 6% 7% 8%
Contribution To Gross Profit Margin By Sales Volume Increase

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Increase Customer Base
24%
76%
Customer Profitability
Profitable Unprofitable

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Discounting
Price Cut
Look Before You Cut Prices
Gross Profit Margin To Be Generated
5% 10% 15% 20% 25% 30% 35% 40% 50% 60%
1% 25% 11.10% 7.10% 5.30% 4.20% 3.40% 2.90% 2.60% 2.04% 1.70%
5% - 100% 50% 33.30% 25% 20% 16.70% 14.30% 11.10% 9.10%
10% - - 200% 100% 66.70% 50% 40% 33.30% 25% 20%
15% - - - 300% 150% 100% 75% 60% 42.80% 33.30%
20% - - - - 400% 200% 133% 100% 66.70% 50%
Sales Percent Increase Required To Maintain Same Gross Profit

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Cost Cutting
Reductions
Percent Margin Gained When Total Costs Are Reduced
Total Costs Percentage (Variable and Fixed Costs Combined)
60% 65% 70% 75% 80% 85% 90% 95%
1% 0.60% 0.65% 0.70% 0.75% 0.80% 0.85% 0.90% 0.95%
2% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90%
3% 1.80% 1.95% 2.10% 2.25% 2.40% 2.55% 2.70% 2.85%
4% 2.40% 2.60% 2.80% 3% 3.20% 3.40% 3.60% 3.80%
5% 3% 3.25% 3.50% 3.75% 4% 4.25% 4.50% 4.75%
10% 6% 6.50% 7% 7.50% 8% 8.50% 9% 9.50%
15% 9% 9.75% 10.50% 11.25% 12% 12.75% 13.50% 14.25%
20% 12% 13% 14% 15% 16% 17% 18% 19%
Gross Profit Margin Regained When Total Costs Are Reduced

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Why These Strategies Don’t Work
They Cost You More Money than
They Make You

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2 Strategies That Really Work
Strategy No: 1
Process Improvement
Strategy No: 2
Price Improvement

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Why Focus on Process?
• Everything Is Process-Driven
• There Is a Cost In Every Process
• Value-Added Vs Non Value-Added
• Lasting Results

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7 Cost Reduction Opportunities
• Transportation
• Inventory
• Motion/Movement
• Waiting Time
• Over-Processing
• Over-Production
• Defects

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Increase Price
Gross Profit Margin
Price Increase
5% 10% 15% 20% 25% 30% 35%
20% 25% 50% 75% 100% 125% 150% 175%
25% 20% 40% 60% 80% 100% 120% 140%
30% 17% 33% 50% 67% 83% 100% 117%
35% 14% 29% 43% 57% 71% 86% 100%
40% 13% 25% 38% 50% 63% 75% 88%
45% 11% 22% 33% 44% 56% 67% 78%
50% 10% 20% 30% 40% 50% 60% 70%
55% 9% 18% 27% 36% 45% 55% 64%
60% 8% 17% 25% 33% 42% 50% 58%
Gross Profit Margin Increase from Price Increase

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Sales Drop Due to Price Increase
Price
Increase
Look At What A Price Increase Does
Gross Profits To Be Generated (Providing Costs Remaining The Same)
5% 10% 15% 20% 25% 30% 35% 40% 50% 60%
1% 16.70% 9.10% 6.20% 4.80% 3.90% 3.20% 2.80% 2.40% 2% 1.60%
5% 50% 33.30% 25% 20% 16.70% 14.30% 12.50% 11.10% 9.10% 7.70%
10% 66.70% 50% 40% 33.30% 28.60% 25% 22.20% 20% 16.70% 14.30%
15% 75% 60% 50% 42.90% 37.50% 33.30% 30% 27.30% 23.10% 20%
20% 80% 66.70% 57.10% 50% 44.40% 40% 36.40% 33.30% 28.60% 25%
Sales Percent Reduction That Will Still Maintain Same Gross Profit

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Conclusion-To Transform Net Profit
• Process Improvement
• Price Improvement
• Cost Cutting
• Discounting
• Customer Base Increase
• Sales Volume Increase

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For More Information
Victor Ang
CEO
Crossbow Consulting Group
www.crossbowconsultinggroup.com
victor@crossbowconsultinggroup.com