If there was a way of increasing your sales by only 10% yet receiving an increase in profits of 61% would you be interested in finding out how you could do this in your business?
Business owners almost always want to increase profits, why wouldn't they? Many successful business owners I speak to work really hard to drive profits up but are missing a trick.... a really simple trick! One I am going to share with you now,
Once you understand the "ActionCOACH 5 Ways" the principle you can explore exactly how you can achieve massive increase in profits with some simple tactics.
The Standard Profit Model:
Normally we look at profit development from the standpoint of three variables, namely sales, expenses and profits defined by the formula: Sales - Expenses = Profits.
In this approach, each variable depends on the other, so normally businesses look at either increasing sales or decreasing expenses in order to improve profitability.
The ActionCOACH 5 Ways Profit Model:
The ActionCOACH "5 Ways" Model moves away from this narrow view and breaks the sales variable into five separate components. These variables can be worked on individually to leverage profits on the bottom line using the "Divide To Multiply" principle.
According to the "Five Ways" Model all business is driven by five key profit generating areas:
1. Lead Generation,
2. Conversion Rate,
3. Average Sale,
4. Average Number of Transactions and
5. Profit Margins.
These 5 areas make up the profit generating equations. Increasing any of these variables can increase your sales and profits, while keeping expenses constant.
Increasing Your Profits:
In today's highly competitive business world, it is not possible for business owners to sit back and see the profits roll in. We want more Customers, more Revenues, and more Profits. However, these are outputs of the "5 Ways". Understanding these 5 key areas, and knowing how to test and measure everything, is critical in driving your profits effectively.
1. Lead Generation:
This is defined as the total number of potential buyers, or 'prospects', that a business contacted or that contacted the business over a year. Leads are generated by effective marketing. The challenge is knowing which marketing strategies are working - this is where "Testing and Measuring" is critical.
2. Conversion Rate:
Most people confuse responses, or the number of potential buyers, with results. The sound of ringing phones does not mean that the cash registers are ringing.
Conversion rate is the percentage of people that did buy versus those who could have bought. For example if 10 people walk into a store and 3 buy something then the conversion rate is 3 out of 10, or 30%.
3. Number of Transactions:
Average number of transactions is the number of purchases the average customer will make over a year. Developing repeat customers is a great way to cost effectively increase your profits. Many business owners make the mistake of subscribing to the myth of once a customer, always a customer - not true. Successful businesses have effective ways to ensure they keep coming back.
4. Average Sale:
Average sale is the average amount spent by the average customer with each purchase. Up-selling and Cross-selling products that are of value to the customer at the point of sale will really help to increase your revenues.
Think of how many times you have been asked "Would you like to go large?", and how many times have you spent slightly more than you initially intended? Having consistent up-selling or cross-selling tactics in place will make a huge difference in profits.
5. Profit Margins:
The margin is the profit percentage of each and every sale. Simply put, if a business sells something for £100, and £25 was profit, the profit margin is 25%. Profit margins are vital to know for each product or service you sell; that way you can ensure you are maximising sales of your most profitable lines and not spending time and resources selling low profit margin lines.
Utilising the 5 Ways to Maximise Your Profits:
This innovative idea of focusing on the 5 Ways has helped many businesses dramatically increase their profits. Even businesses with a long-term buying cycle or a limited number of transactions can leverage the concept by working with the other variables to improve bottom-line profit.
By stepping outside the conventional accounting perspective of profit, and recognising that a number of additional variables drive the bottom-line you can have a massive impact on your business.
The questions to consider for your business are:
1. Where are you going to start focusing to increase your profits?
2. How are you going to improve each area?
3. How are you going to test and measure the impact of each strategy?
Want to Explore the 5 Ways in Your Business?
If you would like to explore how the 5 Ways Chassis can be used to maximise profits in your business, why not book onto my Free 5 Ways seminar at The Somerset Business Show.
Seminar: "5 Ways to Maximise Your Profits"
This seminar will cover the five main areas that drive your business and deliver massive increases in your profits.
1. The '5 Ways to Maximise Profits'
2. How to grow profits by 61%
3. Profit building strategies
You'll also receive Complimentary Business Building Gifts:
1. 1:1 Profit building session
2. Sales and profit building book
3. 66% discount on 90 Day Business Planning event
To book your ticket:
If you are interested in sponsorship please contact us.
Register your attendance to be in with a chance to win the show prize
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