Back to articles page

How Do I Make A Meaningful Difference To My Bottom Line?
By Bob Lyon - #66

“How do I make a meaningful difference to my bottom line?” ... is a question most small business owners ask themselves when selling their business. If you put any of the principles I'm about to teach you into practice, it'll create such an impact on your business, and I guarantee it will leave you begging for more.

Your existing customers are the HOTTEST market you've got, and yes, you do have to have a good product and customer service. What links the two together is MARKETING, and the facts are that out of 100 products, 90 will never get past the initial development and testing stages. And of the 10 that do, 7 will fail in the market within 3 years.

To add insult to injury, 80% of new businesses are gone within 3-5 years. Why? Because in the vast majority of cases, people have no idea how to sell, promote or market their products.

Most business people I meet have brilliant skills in their field of expertise or have a great product, but they can't market their way out of a wet paper bag.

In any business marketing is everything. Your marketing and sales skills are the bridge between your products and your customers. And it's here where we find the biggest mistakes most people are probably making right now.

The mark of a true champion, whether in business or sport, is the ability to succeed when the chips are down, and to do it consistently whenever it's needed.

That's why sports people practice thousands of catches - so they won't drop the crucial one. They do hundreds of repetitions, over and over again, so that when the pressure is on, they get it right.

So, are you ready to be a champion - a consistent champion? Good! 
Look at it this way ... whether you're getting great results or just getting by in your business, you're still going to spend time playing the game of business. So why not be the best?

And to be the best, you must master the basics first. Because when it comes to selling your business or simply making money, marketing and sales is where it's at. Get the basics right and the results will take care of themselves.

However, before we can get started on marketing and sales, we need to look at how much it costs to run our business.

The first stage of growing any business is to make sure the business is profitable.

How many sales, customers or dollars do you need each week to break even? Unless we concentrate on breaking even, we won't be able to spend our time money or talents growing our business.

So, how can we tell quickly, whether we're breaking even without having to wait for our accountant to tell us each month?

It's a good question and one that's easy to answer.

First we need to establish what our fixed costs are ... that's rent electricity, water, wages and the costs of your basic materials (i.e. 
the products you've used). Don't forget to include your marketing, advertising and any other costs.

Then work out how many products or services you need to sell to cover those fixed costs.

Let's say your fixed costs were $4000 each week - and your average sale is $100 then you'd need 40 sales to break even.

That's 40 sales multiplied by $100
equals $4000 ... Can you follow that?

It's really quite simple once you get the hang of it. And once you understand the underlying principle, and begin to apply some good sales and marketing strategies ... your business will begin to fly.

OK, let's find out what your actual break-even is...

The costs of running my
business each week is:      $_____________

My average sale is:            $_____________

Therefore, the number
of sales I need to make
each week is:                     _____________

Most businesses never really set profit goals

Being successful in business has very little to do with the size of your business or what your turnover is. It's all about how much profit you make. For a business to stay in business, keep employing people and keep doing good work there has to be a profit.

Most businesses unfortunately never really set profit goals - they've never budgeted for it and even worse, they've never developed a plan to achieve it.

That's usually because most people don't know how to make their goals real, especially in business. So they find it easier NOT to set goals.

What we need to do now is put in place some measures to increase the profits you make. We need to be doing things that will earn you more money.

Now contrary to popular belief, profit is the one thing we can't get more of. But what we can influence is the variables that contribute towards the profitability of the business.

We should be looking at the business in five separate and distinct areas ... What we call the Power - 5 Principle. When you truly understand how a business works, you'll realise that profit is a factor that is the result of other variables and can't be altered in isolation. The same rule applies for customers and revenues.

So, what exactly is the Power - 5 Principle?

Well think of it as a formula ...

Number of leads x Conversion
Rate = Number of Customers x Number of Transactions
x Average Dollar Sale = Turnover  x Profit margin = Profits

You can't get more customers. But you can increase the number of leads you get, and you can increase your conversion rate, and when combined will result in more customers. Similarly, you can't get higher revenues without improving the number of transactions each customer makes or the average amount of dollars they spend.

Profit has to do with the last part of the Power - 5 Principle … The margins.

Activities designed to improve margins have a direct effect on profit. They involve things like pricing policy, discounting, up- selling and controlling expenditure. There are other less obvious activities that are just as important. Things like stock control, and accounts management, controlling time and even your ability to know your numbers.

For information about how your business can benefit from the “Power - 5 Principle” and a FREE report entitled “How To Sell Your Business At Your Price … And Cause A Stampede Of  Prospective Buyers Literally Begging For Your Time” go to www.betterbusinessreport.com/ab4s1.htm or call Bob Lyon direct on 043 883 0937.

Back to articles page