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Tools to Help You Along Your Pathway to Success

Have you ever wondered what might be holding your business back—or if your current sales approach is really working as well as it could?

In some of our past articles, like The Five Business Dangers and building a Sales Focused Organization, we touched on a few of these challenges. But what if there was a simple way to step back and look at the bigger picture? That’s where the Profit Equation comes in.

If you’re curious about how your business stacks up, you can explore these tools for free. What might you discover about your strengths—or the areas that could use a little more attention?

When you request a tool, you’ll also have the option to walk through it with us in a complimentary, no-obligation review session. Sometimes, a quick conversation can bring a whole new level of clarity.

The Profit Equation Tool

Before we introduce you to this powerful tool, below are a few things to consider:

  • Is there one silver/magic bullet or many?
  • Bottom line profits are critical if you intend to exit/sell/transition your business
  • If you don’t know your numbers (KPIs or metrics) you are at a disadvantage
  • Knowing your numbers includes financial information
  • It will be important that you understand the distinction between leading and lagging KPIs

Below are the elements of the Profit Equation:

Let’s make sense of these elements. First, a lead represents a sales opportunity. Without leads, sales don’t happen. While there are varying definitions for lead, use the definition that best suits your business. Next, conversion rate is the fraction of your leads that end up doing business with you. The conversion rate applied to your sales leads results in a new customer number. Depending on your business model, you may or may not have repeat or recurring business, so the retained customer number may be zero, or a number that represents repeat customers. For your total customers, the leading indicator is leads.

Next, we need to know the average revenue you collect from your customers. Depending on your business, this number may vary a little or a lot. Multiply the average revenue per customer by your total customers and this should represent your ‘top line’ revenue. Many businesses have direct expenses or a number that represents the cost of doing business. This cost only results from delivering your product or service to your customer. For example, if you sell an item for $100.00 and it costs you $50.00 for that item then your gross margin is 50%. Let’s say your revenues are $1 Million and your gross margin is 70%, then your gross profit is $700,000.00. From that we can deduct your indirect, fixed, or operating expenses to get to your net profit. Your fixed costs are ones that tend not to vary with the number of customers you have and include utilities, payroll, professional services, rent, etc.

Together, all of these numbers represent a formula to yield the result of net profit. Increasing net profit can result from a strategic effort to address some, if not all, of the numbers in this equation. A plan that can be put in motion will dramatically impact your net profit .

If you are looking for one magic bullet or many of them, reach out and request your Profit Equation Tool – that’s your first big step and we can help you along the way.

Is Business Coaching Right for You?

If your business has been operating for at least two years, generates solid revenue, and you are ready to grow, improve, or regain control, coaching can make a significant difference.

Sometimes the best next step is simply having the right conversation…

David Waymann and AdviCoach Business Coaching help business owners move from overwhelmed to focused, from reactive to strategic, and from working harder to building smarter.  If you’re open to the idea of having a business coach, take a chance, it doesn’t take more than a brief phone call…

David is an accomplished and experienced business professional who brings over 45 years of perspective to the table. As a business coach, he specializes in helping owners close gaps, prioritize needs, and achieve the success they want. Virtual and in-person coaching sessions are available. It all starts with a conversation – Call 734-645-9406 today to see if business coaching might be a fit for you. Or contact David. Your success is waiting!