Date post: | 01-Jul-2015 |
Category: |
Business |
Upload: | bobgortonhh |
View: | 197 times |
Download: | 7 times |
© HARD HAT Business Advice 2009 The reproduction or transmission of all or part of this document, whether by photocopying or storing in any medium by electronic means or otherwise, without the written permission of the owner, is prohibited. The commission of any unauthorised act in relation to this document may result in civil or criminal actions.
HARD HAT Business Advice
Boosting Sales and Profits
HARD HAT Business AdvicePage 2Boost Sales & Profits/Robert Harden/2009/v1.00
Purpose of today
Start of a journey … •setting out the steps you need to follow on that journey, and•sharing with you some HARD HAT expertise•giving you the edge you need to succeed in business
We are going to workshop together to build a personal Business Action Plan – giving you the edge you need for profitable growth!
This plan will be the template for your future success ...
HARD HAT Business AdvicePage 3Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
1. Overhead
2. Break-even point
3. Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 4Boost Sales & Profits/Robert Harden/2009/v1.00
Your objectives for today?
Why am I here?!
HARD HAT Business AdvicePage 5Boost Sales & Profits/Robert Harden/2009/v1.00
They will transform your business!
Improve sales and profitability with…
… the concepts of Critical Resource Limitation, True Overhead and Value Added which are changing thinking about Pricing and Business Models in every business where they are applied.
What’s In It For You?
HARD HAT Business AdvicePage 6Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 7Boost Sales & Profits/Robert Harden/2009/v1.00
Some big questions for today…
• What do you want from your business?
• Where are you now?
• Where do you want to be in 3 years time?
• How are you going to get there?
• What does your business do for its customers?
• What are your 5 priorities for the next 90 days?
HARD HAT Business AdvicePage 8Boost Sales & Profits/Robert Harden/2009/v1.00
Business Aims & Aspirations
Let’s get SMART-er!
What are you in business to achieve?
• A job?• Own boss?• Show ‘them’ you can do it?• Get rich?• A pension?
HARD HAT Business AdvicePage 9Boost Sales & Profits/Robert Harden/2009/v1.00
Business Aims & Aspirations
SMART goals are:
• Specific• Measurable• Agreed Upon• Realistic• Time Based
HARD HAT Business AdvicePage 10Boost Sales & Profits/Robert Harden/2009/v1.00
1. To increase my turnover from £50,000 to £200,000 within 3 years time2. To make a profit of at least 10% of my sales on an ongoing basis within the next year3. To take £40,000 a year in personal drawings within 3 years4. To position my company so that I can sell it for at least £500,000 within 5 years5. To build up a company that I can hand over to my family and retire at 556. To be able to work only 3 days a week within 2 years
Write your Aims and Aspirations in Part 1 of yourBusiness Action Plan!
Some ideas for SMART Business Aims and Aspirations
Business Aims & Aspirations
HARD HAT Business AdvicePage 11Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 12Boost Sales & Profits/Robert Harden/2009/v1.00
Imagine that, by chance, you’ve stepped into a lift with a potential customer …
… you’ve got just 16 seconds to describe your business…
… and to show you can do something of value for them.
Business Description: The Elevator Pitch
It comes in three parts…
HARD HAT Business AdvicePage 13Boost Sales & Profits/Robert Harden/2009/v1.00
1. The Introduction:
This is about me…
2. The Deliverables:
This is about what we do…
3. The “so what” line :
And this is what’s in it for you…
Business Description: The Elevator Pitch
HARD HAT Business AdvicePage 14Boost Sales & Profits/Robert Harden/2009/v1.00
Business Description: The Elevator Pitch
TWO things to think about….
• Your “Value Proposition” (or USP)
• Features vs Benefits
HARD HAT Business AdvicePage 15Boost Sales & Profits/Robert Harden/2009/v1.00
Business Description: Features versus benefits
• People buy benefits not features
• “People don’t buy drills, they buy holes” [Theodore Levitt, Marketing Professor, Harvard Business School]
• Ask the question “which means that..” until you get to the true BENEFIT.
HARD HAT Business AdvicePage 16Boost Sales & Profits/Robert Harden/2009/v1.00
Business Description: The Elevator Pitch - Workshop
Discuss your business and share your ideas about your Value Proposition.
Write it down…
Craft this into an elevator pitch with:• An introduction• The deliverable• The ‘so what?’ line
HARD HAT Business AdvicePage 17Boost Sales & Profits/Robert Harden/2009/v1.00
Business Description: The Elevator Pitch - Workshop
YOUR CHANCE TO PITCH…!!
LIFT
GROUND FLOOR
FIRST FLOOR
HARD HAT Business AdvicePage 18Boost Sales & Profits/Robert Harden/2009/v1.00
Business Description: Business Action Plan Part 2
In heading: write your name, company and other items as requested
In Part 2 - Business Description summarise:
• Your business heritageExample: “A market gardening firm set up in 1953 by my father & now run by my family”
• Your business deliverables – from your elevator pitch and ….
• The ‘so what?’ line
HARD HAT Business AdvicePage 19Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 20Boost Sales & Profits/Robert Harden/2009/v1.00
Financial Performance
It’s OK to be ‘uneasy’ with finance, but…
… “Finance without strategy is just numbers, and strategy without numbers is just dreaming” [E Faber, CFO, Danone]
So, you need to do some SIMPLE numbers to take stock of where your business is, and outline where you want to take it.
Don’t Panic!!!!
HARD HAT Business AdvicePage 21Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
These 3 numbers link Accounts, Sales and Operations to make ‘Profit Builder’
HARD HAT Business AdvicePage 22Boost Sales & Profits/Robert Harden/2009/v1.00
Profit Builder: Works For Every Kind of Business
• £27m Audio & Video Co. lost £3m – now making £500k on £18m
• £10m Building Services firm losing £120k/month for 15 months – turned in 120 DAYS, made £800K the next year, and STILL making profits
• Training firm operating at break-even – now heading for £340k @ 50% margin
And for businesses like yours it’s even more effective...
How will this impact on your overall strategy?
HARD HAT Business AdvicePage 23Boost Sales & Profits/Robert Harden/2009/v1.00
A ‘different’ way of looking at some of your numbers.
The trick is in the way that these three concepts are linked together:
Profit Builder – What Is It ?!
• Critical Resource Limitation (CRL)
• True Overhead (TOh)
• Value Added (per CRL)
HARD HAT Business AdvicePage 24Boost Sales & Profits/Robert Harden/2009/v1.00
Profit Builder: What is Critical Resource Limitation?
Let’s look at some examples:
• The Critical Resource Limitation is the brake on your profitable growth.
• It’s that one thing that, if everything else is working, you find hardest to get more of.
HARD HAT Business AdvicePage 25Boost Sales & Profits/Robert Harden/2009/v1.00
Profit Builder: What is the Critical Resource Limitation for…?
HARD HAT Business AdvicePage 26Boost Sales & Profits/Robert Harden/2009/v1.00
Come on The Hammers!!
Profit Builder: What is the Critical Resource Limitation for…?
HARD HAT Business AdvicePage 27Boost Sales & Profits/Robert Harden/2009/v1.00
Is it the same for a fine dining restaurant?
A fast food outlet?
Profit Builder: What is the Critical Resource Limitation for…?
HARD HAT Business AdvicePage 28Boost Sales & Profits/Robert Harden/2009/v1.00
A Hair Dresser?
Profit Builder: What is the Critical Resource Limitation for…?
HARD HAT Business AdvicePage 29Boost Sales & Profits/Robert Harden/2009/v1.00
Machine shop?
Supermarkets? (in/out of town?)
Antique clocks business?
Professional services?
Profit Builder: What is the Critical Resource Limitation for…?
HARD HAT Business AdvicePage 30Boost Sales & Profits/Robert Harden/2009/v1.00
What would put the brakes on your business?
Discuss...
Profit Builder: What is the Critical Resource Limitation for…?
HARD HAT Business AdvicePage 31Boost Sales & Profits/Robert Harden/2009/v1.00
To use our new insight into the Critical Resource Limitation we need to establish the True Overhead of operating the business…
…NOT those used in a traditional profit and loss account.
Profit Builder: What is the True Overhead?
HARD HAT Business AdvicePage 32Boost Sales & Profits/Robert Harden/2009/v1.00
BUILDING COMPANY Traditional P&L
Sales £300,000
Materials £180,000
Labour £45,000
Gross Profit £75,000 25%
Overheads:
Staff Wages £25,000
Other Costs £50,000
Total overheads £75,000
Profit £0
Profit Builder: Example – True Overhead
£45,000
£50,000
£120,000
£0
Labour
“TRUE OVERHEAD”
Operating P&L
£300,000
£180,000
£120,000 40%
£25,000
HARD HAT Business AdvicePage 33Boost Sales & Profits/Robert Harden/2009/v1.00
If Break-Even turnover is >90% of actual = then very high probability of failure
If Break-Even turnover is between 80 – 90% of actual then probable survival – but difficult to grow
If Break-Even turnover is <80% of actual then survival is likely and self-funded growth is possible
Profit Builder: Added Value - Some Vital Statistics…
Source = Warnes B. “Genghis Khan Guide to Business”
HARD HAT Business AdvicePage 34Boost Sales & Profits/Robert Harden/2009/v1.00
30% of businesses fail within 3 years – scary but true!
Profit Builder: Added Value - Some Scary Statistics…
Source = Small Business Service Analytical unit (2006), Survival rates of VAT registered businesses, 1994-2003 key results www.sbs.gov.uk/survival (Feb)
Only 92% of all new businesses that register for VAT survive their first year!
HARD HAT and Business Link are on a mission…
HARD HAT Business AdvicePage 35Boost Sales & Profits/Robert Harden/2009/v1.00
How much is needed to pay for your true overheads (including what you need to pay yourself!) so you don’t lose money?
(This is the Break-Even Value Added)
Profit Builder: Break-Even and Target Value Added
How much money should you be making?
How much is reasonable for you to want to make?
(This is the Target Value Added)
HARD HAT Business AdvicePage 36Boost Sales & Profits/Robert Harden/2009/v1.00
Break Even Value Addedper Hour:
True Overhead of £120,000 divided by 3,000 hours
= £40/Hr
£45,000 of labour represents 3,000 Hrs of saleable work
Target Value Addedper Hour:
True Overhead of £120,000 divided by 3,000 hours = £40/Hr x 1.25
(So that break-even turnover = 80% of actual turnover)
= £50/Hr
In this example from a building company:
This adds £30,000 to the bottom line!
Profit Builder: Break-Even and Target Value Added
HARD HAT Business AdvicePage 37Boost Sales & Profits/Robert Harden/2009/v1.00
Job A Job B
Sales £1,000 Sales £1,000
Materials £600 Materials £800
Gross Profit £400 40% Gross Profit £200 20%
Profit Builder: Identifying Maximal Value Adding Products & Customers
Good Job or Bad Job?
Labour required is 20Hrs
So Value Added/Hr = £20!
(3,000 x £20 = £60k )
Labour required is only 4Hrs
So Value Added/Hr = £50
(3,000 x £50 = £150k )
HARD HAT Business AdvicePage 38Boost Sales & Profits/Robert Harden/2009/v1.00
The key to increasing profitability is:NOT Gross Margin %
But
Maximising the Value Added for the Critical Resource Limitation!
Profit Builder – The Key Point…
If You Only Take AwayOne Thing From Today:
HARD HAT Business AdvicePage 39Boost Sales & Profits/Robert Harden/2009/v1.00
Identify those products and customers that produce most Value Added and focus on them
To understand and use Dynamic Pricing tactics...
Profit Builder: Dynamic Pricing
HARD HAT Business AdvicePage 40Boost Sales & Profits/Robert Harden/2009/v1.00
£50.00
£60.00
£40.00
Is Pricing Fixed?
£70.00It’s all about designing a mix of prices!
The Keys to Profit Builder: Dynamic Pricing
HARD HAT Business AdvicePage 41Boost Sales & Profits/Robert Harden/2009/v1.00
Profit Builder: Dynamic Pricing Plan
Trade Value Resources Used Av.VA/HR
Gross Profit
Platinum 10% 300 >£60 £21,000
Gold 20% 600 £60 £36,000
Silver 40% 1,200 £50 £60,000
Bronze 20% 600 £40 £24,000
Lead 10% 300 <£40 £9,000
Total £150,000
HARD HAT Business AdvicePage 42Boost Sales & Profits/Robert Harden/2009/v1.00
Old St. Andrews Whisky...
Added Value c £1.00 per Litre
TOTAL: £60,000
Added Value c £15.00 per Litre
TOTAL £900,000Where would YOU
focus….?!
Profit Builder: What is the Critical Resource Limitation for…?
CRITICAL RESOURCELIMITATION
60,000 litres of whisky
HARD HAT Business AdvicePage 43Boost Sales & Profits/Robert Harden/2009/v1.00
Profit Builder: The Outcome for Old St Andrews…
The actual results after 6 months customer interaction:
31-Dec-08 31-Dec-07Sales 501,045£ 350,192£
Cost of Sales 289,518£ 258,147£ Gross Profit 211,527£ 42.2% 92,045£ 26.3%
Overheads 161,259£ 189,178£ Operating Profit 50,268£ 10.0% 97,133-£ -27.7%
Average VA/L 3.53£ 1.53£
Break-Even Point 381,975£ 719,742£ Break-Even VA/L 2.69£ 3.15£
BEP as % of Sales 76.2% 205.5%
HARD HAT Business AdvicePage 44Boost Sales & Profits/Robert Harden/2009/v1.00
1. Establish the TRUE overhead
2. Determine break-even
3. Identify the Critical Resource Limitation (CRL)
4. Target value added/CRL
5. Identify maximal value adding products & customers
6. Optimise customer/product combinations using dynamic pricing tactics
Profit Builder Prescription:
HARD HAT Business AdvicePage 45Boost Sales & Profits/Robert Harden/2009/v1.00
All of which creates an instinctive feel to runningthe business, and…
And the Point is…?
Understanding both your Critical Resource Limitation and Value Added means you can…
• Design the business to operate within its capacity (the Critical Resource Limitation)
• Simplify price setting and tracking by removing labour from the pricing calculation (put it in overheads)
• Maximise profitability with appropriate responses to market conditions
HARD HAT Business AdvicePage 46Boost Sales & Profits/Robert Harden/2009/v1.00
...it makes you more money!!
So what have you got to do to get at it?
You guessed!
Sell More…
And the Point is…?
HARD HAT Business AdvicePage 47Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 48Boost Sales & Profits/Robert Harden/2009/v1.00
Sales Builder: Existing Customers
The first key to selling more is to exploit your existing customer base as much as you can (because it is easiest) …
1. Identify the most profitable customers you have using the value added model• Can you sell them a meal deal (complimentary product)?• Try and super-size them (more of the same)?• Add a different product sale (Apple pie!)• Get them to buy again sooner?
2. Think about lifetime customer value:• Find out why customers leave• What can you fix?• Can you create exit barriers?
HARD HAT Business AdvicePage 49Boost Sales & Profits/Robert Harden/2009/v1.00
Sales Builder: Finding New Customers
The second (and more important!) key to selling more is finding new customers is by exploiting as many routes to market as you can…
Most only use one or two
You need at least 6
Preferably 8 or more
HARD HAT Business AdvicePage 50Boost Sales & Profits/Robert Harden/2009/v1.00
Sales Builder: Routes To Market
Consider these routes to market for your business…
YOU CAN INCREASE THE EFFECTIVENESS OF EACH OF THESE BY FOLLOWING UP WITH ONE OF THE OTHERS
• Networking• Web site• Emails• Telesales• Referrals• Co-op marketing• Postal campaigns
• Advertisements (direct response)
• Trade fairs• PR (free)• Public speaking• Joint ventures• Affiliates
HARD HAT Business AdvicePage 51Boost Sales & Profits/Robert Harden/2009/v1.00
Sales Builder: Test and Measure all your marketing!
Check out Boosting Sales!
HARD HAT Business AdvicePage 52Boost Sales & Profits/Robert Harden/2009/v1.00
Sales Builder: The Sales Funnel
Clouds of opportunity
Fog of suspects
Rain of unqualified prospects
Qualified prospects
Quoted prospects
Customers
HARD HAT Business AdvicePage 53Boost Sales & Profits/Robert Harden/2009/v1.00
Sales Builder: Example Sales Funnel
Opportunity Pipeline
18/06/2009
25 Identified Opportunities
12 First meetings booked
10 Needs Assessment
5 Quoted Proposals
8 Signed Contracts
HARD HAT Business AdvicePage 54Boost Sales & Profits/Robert Harden/2009/v1.00
Bringing it all together – the Business Chassis
Prospects x
Conversion Rate =
Customers x
Freq of Purchase x
Av Sales Value =
Turnover x
Margin =
Gross Profit -
Overheads =
Profit
2,000
50%
1,000
8
£12.00
£96,000
30%
£28,800
£18,000
£10,800
2,200
55%
1,210
9
£13.20
£143,748
33%
£47,437
£16,200
£31,237
Developed by Hard Hat Business Advice from “The Business Chassis” by Bradley J Sugars
HARD HAT Business AdvicePage 55Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 56Boost Sales & Profits/Robert Harden/2009/v1.00
Recap – what we have covered so far…
So we have talked about…
• Aims, aspirations & financial goals• What your business does• Improving profitability• Increasing sales to existing customers• Adding new customers
What does this mean for achieving youraims and aspirations for your business?
HARD HAT Business AdvicePage 57Boost Sales & Profits/Robert Harden/2009/v1.00
Key Issues & Opportunities
What is your Overall Strategy?
Then look at it from four key
perspectives:
a. Customers & Markets
b. Operations and Productivity
c. People & Skills
d. Finance & Systems
HARD HAT Business AdvicePage 58Boost Sales & Profits/Robert Harden/2009/v1.00
Go back to your aims and aspirations.
Create a forecast in Part 3
How you will go about achieving those aims and aspirations?
For example:
Key Issues & Opportunities: Strategy & Planning
• Sell more to selected existing customers
• Attract new more profitable customers
• Will lead to improved profitability and less reliance on existing large customers -> we can achieve our goals within our existing capacity
HARD HAT Business AdvicePage 59Boost Sales & Profits/Robert Harden/2009/v1.00
Key Issues & Opportunities: Customers & Markets
MARKET
MEDIA MESSAGE
• Leverage existing customers?
• Segment your market? (size, industry, location?)
• Which markets/products are most attractive?
• What are your competitors doing?
• Which routes will you be using?
• How will you to test and measure?
• How much prospecting do you need to do? (remember the sales funnel)
• How will you track prospects through your sales process?
• What is your USP/”unique perceived benefit”?
• How will you highlight benefits?
• How will you get testimonials?
• How will you ensure your message is clear and consistent with your brand?
HARD HAT Business AdvicePage 60Boost Sales & Profits/Robert Harden/2009/v1.00
Key Issues & Opportunities: Operations & Productivity
Operations andProductivity
EfficiencyCritical ResourceLimitation
Outsourcing
• What is your CRL?
• How does it impact operations?
• How can you release CLR?
• Getting more out of each unit?
• Additional income streams?
• Possible tasks to outsource? (identify non critical tasks)
• Cost versus benefit?
• Risks? (financial, operational, reputational)
• How will interfaces work (internal, customer)?
• Documented procedures?
• Systemise processes?
• Workflow and layout?
• Templates/pro-formas?
• Disaster recovery?
HARD HAT Business AdvicePage 61Boost Sales & Profits/Robert Harden/2009/v1.00
Key Issues & Opportunities: People & Skills
People andSkills
ManagingRecruiting
Developing
• Impact of strategy – need more people?
• Get the right ATTITUDE. Teach skills.
• Proper role profile and person spec.
• Can you afford mistakes?
• Do you have to get anyoneoff the bus?
• Is your appraisal/review process fit for purpose?
• What commitment do you give to training your people? (training budget?)
• Do you properly assess training needs?
• How do you enrich people’s jobs?
• Do you invest in your people? IiP?
• How do you set the right example?
• Do your people know what you expect? (job descs?)
• Do you communicate targets, values?
• Do you celebrate success?
• Is your reward system ok?
HARD HAT Business AdvicePage 62Boost Sales & Profits/Robert Harden/2009/v1.00
Key Issues & Opportunities: Finance & Systems
Finance
• Impact of your strategy on cash flow?
• Are you making best use of internal and external financing? (“Cash Builder”)
• What operational numbers do you need to see?– Break even and target VA/CLR
– Critical resource loading (capacity)
– Dynamic pricing model & tracking
• What reports do you need? (new KPIs, dashboard/non-financial, timing…)
• What reports do your people need to hit their numbers?
Systems
• Impact of strategy on IT/systems?
• Are your financial systems adequate?
• Do you need to invest in new reporting capability?
• Do your systems adequately support your marketing efforts (eg CRM?)
• Do your systems hinder your communication? (email? telecoms?)
• Does your website need beefing up? (transaction capability? Link to CRM? Order processing?)
HARD HAT Business AdvicePage 63Boost Sales & Profits/Robert Harden/2009/v1.00
Content for today: Your Business Action Plan
1. Business Aims and Aspirations
2. Business Description
3. Your Numbers
a) Overhead
b) Break-even point
c) Value added
4. Selling for Profit
5. Strategy and Planning
6. 90 Day Action Plan
HARD HAT Business AdvicePage 64Boost Sales & Profits/Robert Harden/2009/v1.00
Actions to be Taken in next 90 days
Commit to 5 Goals in 90 days
• What are the five things you can tackle now that in 90 days will affect:– Cash
– Profit – increase profit by…
– Sales – increase sales turnover by…
– Team effectiveness
– Your time effectiveness
• Make them SMART:– Specific
– Measurable
– Agreed Upon
– Realistic
– Time Based
HARD HAT Business AdvicePage 65Boost Sales & Profits/Robert Harden/2009/v1.00
Have we covered the things you wanted to get out of this workshop today?
Any questions?
Your Objectives Revisited…….
HARD HAT Business AdvicePage 66Boost Sales & Profits/Robert Harden/2009/v1.00
Wrap Up
• Complete your business action plan
• Fill out evaluation sheet
• Complete a referral card
• Collect your copy of “Boosting Sales”
© HARD HAT Business Advice 2009 The reproduction or transmission of all or part of this document, whether by photocopying or storing in any medium by electronic means or otherwise, without the written permission of the owner, is prohibited. The commission of any unauthorised act in relation to this document may result in civil or criminal actions.
HARD HAT Business Advice
HARD HAT Business Advice: 0870 066 2940
Email: [email protected]
Web: www.hardhatbusiness.com
Thank you and good luck!!