So, you want to double your turnover, eh? Here is a way to do just that by focusing on just two key levers of your business. Let me refresh your understanding of the five key levers you can manipulate to grow your business.
- Number of Leads – Get more customers coming through the doors
- Conversion Rate – Convert more enquiries into sales
- Number of Transactions – Increase the frequency a customer purchases
- Your Profit Margin – Increase the profit margin per sale
- Average Dollars per Sale – Increase the average sales amount per customer
By pursuing a regular marketing campaign based on networking, referral gathering, direct contact, writing, public speaking, advertising and promotion you can explode the number of leads pouring into your sales funnel. You can also push your conversion of leads into customers up by 5-10%. This takes a little bit of work but is well worth it.
You can put up your prices – this is a fast way to increase profits. Make sure price increases are made to products or services that have high volume or are moving at an acceptable rate. Throw in higher conversion rates from leads to customer and this will put a smile on your face!
All the above strategies work to improve your profits, yet to obtain the best bang for your buck you cannot beat the following one two punch:
Increase the number of transactions
If your customers usually make 4 purchases per year, then stretching this to 5 per year will have a profound effect on your bottom line. This is a strategy to use on your existing customers. How do you get them to come back more often and buy? Here are just some of the tactics you can use:
- Customer Loyalty programs
- Invitations to special promotions
- Email marketing or newsletter ( keep in touch or else they will drift to your competition)
- Customer appreciation nights and notifications of exclusive offerings
Increase the average dollar amount of each transaction
If you are not already actively encouraging your customers to spend more via the following tactics you should be, for example:
- Up-selling – Guide them to the $400 suit rather than the $200 one
- Cross Selling – Would they like a shirt or tie with that suit? (Buy the $400 suit and we will throw in the shirt and tie for a bundled price)
- Down Selling – Ok so you don’t want the more expensive suit how about the cheaper one?
To appreciate the impact that adjusting these two levers makes to the net profit of this example businessss let’s look at the following lists. The amount of transactions is increased from 4 to 5 and the average dollars per sale rises from $100 to $125. Everything else remains the same.
- Customers
- Transactions Per Year Per Customer
- Units Purchased Per Transaction
- Average Sale Price
- Gross Revenues
- Return %
- Bad Debt %
- Net Revenues
- Gross Profit Margin
- Gross Profit
- Fixed Costs
- Pre-Tax Profits
- Pre-Tax Margin
Figures Before
450, 4, 1, $100, $180,000, 2.00%, 3.50% ,$170,100, 50%, $85,050, $50,000, $35,050, 21%
Figures After
450, 5, 1, $125, $281,250, 2.00%, 3.50%, $265,781, 50%, $132,891, $50,000, $82,891, 31%
The bolded figures in the after list are what you should be interested in. The net profit has more than doubled.
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By twelch in
Strategic Planning
Jun
7
Business consultants have the power to strategize. Every business needs a strategy and contacting a business consulting firm to find out the best areas for this can be very beneficial. Having a strategy in place is one thing, but being able to carry it out is another.
A business consultant can come up with a strategy for cutting costs. Companies need to be able to keep their profits up and losses to a minimum. There are ways to cut back and save thousands, the key is knowing where to look. A consultant can look at every area imaginable and see which areas the company would benefit from is cost with reduced.
Having a sales strategy is also critical. A company has to know what to sell, who to sell to and how much to sell a product for. A consultant can look at how much it costs to provide a product and make sure that it is priced appropriately so that the company makes a profit. Sales are crucial to the growth of a business.
There are many things to keep in mind when expanding . Expansion is a huge decision and a company needs to make sure that they can benefit. A business consultant can do research and see if the location the company will be located in is profitable. If the expansion is taking place within the company, with no relocation, the consultant will make sure that they business can stay afloat.
Business consultants can also come in and figure out funding strategies. If a company needs to borrow money for a project, the consultant can make sure all of the essential paperwork is done. Every lender will require something different or their rules may be different. This can be a lot to keep up with. A consultant can treat every aspect of that.
When it comes to strategizing, business consultants are the best. They will look at the situation, find the pros and cons, and then put their strategy into motion. This can be a huge stress reliever and can save the company valuable time.
Click here for more on strategic planning.
By twelch in
Strategic Planning
Mar
31
Summary:
The higher up a person’s position is in an organization, the harder it is for them to get honest feedback from subordinates. Most people refrain from offering honest, negative feedback because they don’t want to upset or anger their boss. However, choosing the right strategy to offer negative feedback may improve their insights as well as your working relationship.
The first thing to remember is that your feedback should be honest and data-driven because people respond much better to specifics than to generalities. Yet, even the most thought-out and organized feedback can insult your boss and create a defensive response. Before you offer advice, make sure your boss is open to feedback. If you haven’t been invited to offer feedback, then consider asking for it.
Remember, if what you say isn’t critical to the company or your department, and may only serve to jeopardize your working relationship, then you might want to keep quiet. Offering negative feedback is not worth risking your job or your relationship with your boss.
Article Quote:
“Giving your boss feedback, commonly called upward feedback, can be a tricky process to master. However, if offered correctly and thoughtfully, your insight can not only help your boss, but also improve your working relationship.”
Link: http://blogs.hbr.org/hmu/2010/03/how-to-give-your-boss-feedback.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+harvardbusiness/hmu+(Management+Essentials+on+HBR.org)
The ability to make strategic decisions regarding your position within an organization should be approached with both data and a forward looking approach to the success of the company. It is also important to remember that your point of reference is not complete when it comes to the realities and pressures placed on your boss. Therefore, phrase your feedback in a manner that reflects your perspective and doesn’t come across as “I know how to do your job better than you do.”
Finding the right tone and time to offer feedback is critical if you truly want to make positive changes. Before speaking up, take an honest look at your true motivations. If your true intent is to somehow get back at your boss out of spite, realizing that intent before your speak up could save you embarrassment and possibly your job.
For more on making strategic decisions, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Mar
1
Summary:
Starting off the new year with a strategic plan and high hopes to achieve success won’t get you far if your plan is flawed, as most are. The following steps outline the basics when developing a strategic plan.
1. Know the difference between a strategy and a tactic. Strategy is the plan that defines where you’re going. Tactics are the things you do and use to get to the destination.
2. Be specific. A few words can make all the difference in the direction you take your firm, and the tactics you use to implement a strategy.
3. Engage the aging process. Like great wine, the making of a strategic plan takes time. A strategic plan is NOT built during a weekend retreat! It evolves out of thoughts, research, information, and experiences.
4. Keep it simple. Use the A-B-C approach:
A. Establish what you want to achieve: STRATEGY.
B. List available, realistic ways to make it happen: TACTICS
C. Select options that give the highest rewards for the lowest output: IMPLEMENTATION.
5. Follow the plan. Most plans are developed, and then put on a shelf.
6. Be flexible. If, during the course of the year, you find that the plan needs some tweaking, you can certainly modify it. Be careful not to switch directions too often, as this will discredit you and your plan in the eyes of its followers.
Article Quote:
“Every year, we meet thousand of decision makers around the country in our consulting and speaking work. Like you, they’re smart, ambitious, and they’re doing a decent job. But, they’re also often frustrated that they aren’t doing better. When we break down the element for them, we find that few if any of them have a good strategic plan they can work from. In fact, most of them don’t even know how to create one.”
Link: http://lazerpromotions.com/blog/general/6-ways-to-build-a-stronger-strategic-plan
All the steps listed above are important to follow when building and implementing your strategic plan. Another useful tool is performance technology that not only keeps the plan visible to all users, but allows management an instant view of progress and accountability. ManagePro software is one such application that allows users to execute and monitor their strategic plans.
For more on strategic planning, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Feb
16
Summary:
Strategy planning is important but needs to be met with action in the real world if the strategy is to move from fantasy to reality. Dealing with reality requires the ability to cope with the facts instead of ignoring them from a twenty-thousand foot point of view. An example of this is what happened inside the Toyota company. Toyota executives had knowledge of fatal crashes involving their automobiles back in 2007, yet customers had to wait until February 2010 for Toyota to finally announced a full recall of over 8.5 million vehicles.
The problems of fatal crashes in other countries were not immediately important to the executives of Toyota. The planning process involved consensus in Japan rather than consensus worldwide. They were busy too looking at the big picture at a distance to see the detail that mattered.
Article Quote:
“Strategy isn’t always wrong. It can be extremely valuable. Planning doesn’t always fail. And it is certainly necessary. Yet overconfidence in the power of strategic planning has led to financial crisis, to botched and illegal wars, to missed opportunities in business, politics, sports, and life.”
Link: http://www.management-issues.com/2010/2/15/opinion/strategy-is-fantasy–action-is-real.asp
Strategic planning can be considered a fantasy because it looks to an unknown future and makes predictions about how it will unfold. Keeping the focus of the strategic plan on the core business values; in Toyota’s case that would be to design and manufacture dependable cars, will keep your company from trying to be everything to everyone.
Toyota became the largest car manufacturer in the world in 2009, in part because they wanted to make cars and trucks for each class of consumer. By changing the focus from dependability to ‘be everything to everyone’, Toyota’s quality controls were compromised.
Faulty parts were installed in their vehicles and when the fatal crashes were brought to Toyota’s attention, nothing was done to correct the problem. Nothing, until a widely publicized crash in California brought the problem right to Toyota’s front steps.
For more on strategic planning, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Dec
21
Summary:
The real problem with strategic planning is not planning at all, it is executing the actions to secure the pre-determined results, as this author writes. Execution still remains as one of the top challenges for entrepreneurs to small business owners to C-Level Executives. This article highlights a five point model developed by Jay Galbraith, designed to help determine why the strategy is not being effectively executed.
The model includes Strategy, Structure, Processes/Systems, Rewards, and People as areas to focus on that may be causing the strategic plan to fail. This model is useful because it can serve as a quick assessment to determine why the strategy is not being effectively executed.
Article Quote:
“Within the center of the star are the desired results. All points are interconnected and encompass the center. When there is a lack of alignment between the points, then performance gaps are created. These gaps not only strain the limited resources of time, energy, money and emotions, but also contribute to the inability to secure the desired results.”
Link: http://www.post-trib.com/news/hoagland-smith/190464is 9,hoagland-smith-1130.article
This time of year, several companies are working on their strategic plans and looking to improve results in the coming year and beyond. Developing the strategic plan is only half the battle, putting the plan into action is the other. Performance technology that assists in tracking results and keeping everyone in the organization both informed and actively participating will save time, emotional stress, and keep the plan at the forefront of everyone’s activities.
For more on strategic planning, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Dec
21
Summary:
In the fore-front of every health care company’s strategic radar screen is health care reform. However, this author highlights many other important trends to watch, such as medical home, cloud computing platforms, socialnomics, accountable care organizations, comparative effectiveness indicators, and customer transparency.
Offered is advice on surviving the healthcare reform by monitoring mega-trends such as, watching the consumer trends, who Wall Street is watching, and how innovators are positioning themselves.Amidst this looming change, strategists must be prepared to identify and capture opportunity, have the capacity to absorb change, and manage through obstacles to build on their company’s advantages.
Article Quote:
“Strategic planning calls for analytical thinking and objective decision-making that continuously works to improve corporate vision and strengthen brand. Management needs answers to tough, introspective questions.”
Link:http://www.lindsayresnick.com/healthcare_strategy/2009/12/what-to-watch-in-2010-reform-medicare-strategy.html
The sweeping healthcare reform set to change this nation is a major concern not only for the healthcare industry, but also for everyone who uses it. How the healthcare industry faces these challenges and how it will affect every American remains to be seen. The challenge is finding the opportunities and adapting quickly to change. Monitoring, analyzing , and interpreting trends and incorporating scenarios into the planning process enables leadership to make intelligent and informed decisions. Performance technology is a great tool to use when developing and implementing a strategic plan.
For more on strategic planning, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Dec
17
Summary:
Tactical planning takes strategy and puts it into action. Three key components of a basic tactical plan include action plans, measurements and an education and training plan for department employees, according to Steve Van Remortel, a consultant, speaker, certified behavioral analyst and president of SM Advisors Inc., a strategic planning and talent management consulting firm.
Reasons given for the importance of tactical plans include: a result in company-wide involvement, buy-in and accountability. When these factors increase, so too will active participation in putting the strategic plan into action.
Article Quote:
“Each action plan is developed to achieve an organizational goal, and must have an owner and a prioritized completion date. Because accountability is so important, all action plans should be reviewed at least monthly.”
Link: http://www.greenbaypressgazette.com/article/20091206/GPG03/912060606/1247/Tactical-planning-makes-a-difference
Successful Implementation of tactical plans requires a lot of work and involvement. Some individuals may be resistant to change while others embrace it. Striking the right balance sometimes requires coaching to get a strategic plan into action. As each department completes its action plans working “on” the business, instead of “in” the business, the success of the organization will likely accelerate.
Accountability is by far one of the biggest components in successful strategy implementation. A good strategy software lets everyone see who’s responsible for what, when it’s to be completed, and at what stage of completion the task is.
For more on implementing tactical plans, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Dec
17
Summary:
This article offers definitions on widely used business terms. Miscommunication on key terminology creates havoc when it comes to implementing a strategic plan. Furthermore, this author explores the question of who should own the definition of terms like objectives, goals, strategies and tactics. Should it belong to the executive in charge or an outside agency?
Objectives, or high level achievements, should sit at the top of the strategic plan. Organizations should have no more than a handful -any more is an overload and may cloud what is really important to business success.
Article Quote:
“Most people use some form of objectives, goals, strategies and tactics for their plans, but get a group of 10 people into a room and you might have 10 different definitions of what those terms mean? That’s why agreeing on their meaning is vital to your plan. Term agreement is a lubricant to productivity.”
Link: http://sclohonet.blogspot.com/2009/12/planning-for-2010.html
Effective communication must start with a clear understanding of what terms mean. Who owns the term is not what is important. What’s important is that everyone understands what’s being said.
Once you’ve moved beyond term definition, and created your strategic plan, it’s time to put it into action. This is another area where clarity in communication helps avoid slip ups. Individual accountablity and follow-up improves with strategic planning technology. Management can have instant access to track projects and people.
For more on strategic planning, see http://www.performancesolutionstech.com/category/strategicplanning/
By twelch in
Strategic Planning
Dec
17
Summary:
The importance of understanding competitors and how this understanding may facilitate successful planning of marketing activities is what this article is about. The purpose is to give the researcher wide knowledge over strategic marketing planning and apply this knowledge in assessing the strategic marketing planning of McDonald’s Corporation in particular context with its competitors. An in-depth analysis of fast food industry is required as to facilitate the researcher in its aims for the paper.
Article Quote:
“Strategy is very important for any organization as it offers the direction the organization would like to pursue to attain its objectives. In the recent years, the integration of strategic planning and functional marketing has been perhaps the most relevant development in the field of marketing management as marketing managers have all the more realized that tactical marketing decisions must be made within a wider strategic framework.”
Link: http://ivythesis.typepad.com/term_paper_topics/2009/12/strategic-marketing-planning.html
Strategic planning is important for all businesses. At the core of the strategic plan should be the mission and vision of the company. Scenario planning and SWOT analysis enhance the plan, while providing the benefits of a clearer understanding of the business environment. McDonalds has been successful in their strategic planning, but equally important is implementing the plan and following up on objectives. A strategic management system that provides all of these features will save time and increase productivity.
For more information on strategic planning, seehttp://www.performancesolutionstech.com/category/strategicplanning/