Highly regarded business coach teaches the SUPER MOVES for financial management. Learn from this elite business coach the proper way to handle finances in your organization so your business can thrive.
You must know your break-even point.
I realize that every business is slightly different and the profit margins from item to item or service to service can vary dramatically. However, you must know approximately how many customers you need to have on a weekly basis to cover your total weekly expenses and break even. YOU MUST KNOW THIS. If you don’t know this, it becomes very hard to make staffing, financial, and leadership decisions. Most owners I’ve spoken to are like swimmers swimming in a dense fog only 50 feet from the shore. They have no idea where they are in relation to the shore and if the fog doesn’t clear or if someone doesn’t show them the way soon, they are either going to drown from exhaustion or they are going to drown because they just gave up, thinking that continuing to struggle is just an exercise in futility.
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Business Coach Ample Example:
Years ago I was hired as a business coach to help a dermatologist grow her business. She knew exactly how many customers and up-sells she needed per location, per week, to break even. As far as I could tell, every aspect of her business was clearly focused on achieving this goal, which is why she hired me for the specific task of teaching the dermatologists how to systematically up-sell 20% of the time. She said, “We begin to make a really good profit when my team starts up-selling to our patients consistently 20% of the time. Our original location up-sells at a 25% to 30% average, but I need some help creating a system to do this that isn’t reliant upon me constantly coming to close the deal.”
You must know your one-time profit per product or service.
It’s very important that you know how much profit you actually make per product or service so that you can properly manage your business. When I owned www.DJConnection.com I knew that my team needed to provide entertainment service for eight weddings or events per week just to break even and that after that, I made a profit of approximately $167 per wedding. This knowledge allowed me to approximately determine how many shows we needed to do per week, per month, and per year to achieve my financial freedom and time freedom goals.
You must know much money it costs you to acquire a new customer.
In a perfect world, you wouldn’t have to spend money on marketing to new customers and word of mouth would organically make your business grow exponentially forever. The reality, however, is that whether you are Nike, McDonald’s, Southwest Airlines, or Disney World, you are going to have to invest in consistent advertising to stay in the minds of your ideal and likely buyers. The big question is this. How much money does it cost your company to attract one customer?
Business Coach Ample Example:
I once worked with this dude who made incredible food so he decided to become a caterer. He did such a good job catering that he decided to start a company to keep up with his word of mouth business. Because he did not know what his break-even point was, how much profit he made per catering gig, and how much money it cost him to acquire a new customer, he was going out of business for the third time when he called me. I wanted to help the man, but I could tell that he was a lost cause when he started saying, “Things were going good and then the economy tanked and some political changes started happening up at the aquarium where I had that big house account. Next thing you know, the business is falling apart. Every time, I just get bitten by the economy or something I can’t control.”
I asked the guy, “So why did you call me if you truly believe that your businesses just fail and there is nothing you can do about it?” He said, “Well I wanted to see if I could partner with you because it seems as though you are really good at picking the right industries to work in. You’ve focused on entertainment, photography, public relations, web development, fitness, medical, and other industries that are more stable.” I’m sure that this guy doesn’t hate himself and doesn’t want to struggle financially his whole life, but he is going to if he does not take the time to know the numbers, like you are learning to do right now.
You must collect the money you are owed and stop acting like a casual bank.
When you go through all of the effort to deliver your products and services in a consistent and quality-controlled way, you simply cannot allow yourself to feel bad about collecting the money you are owed. Your customers would not go to the local grocery store and fill up their carts without expecting to pay for those groceries and they shouldn’t expect to be able to buy things from you without paying for them, either.
Business Coach Fact:
According to the U.S. Census Bureau’s annual Families and Living Arrangements table package released January 28, 2015, one of five children receives food stamps. The number of children receiving food stamps remains higher than it was before the start of the Great Recession in 2007.
I have noticed a disturbing pattern. For some reason, business owners seem to struggle with the concept of making their customers pay them. It seems as though many business owners are scared to ask their customers to pay them so they just sit back passively waiting to get paid. They just wait passively for their payments to come in without ever directly asking the customers to pay them on time. I’ve also noticed an even weaker move wherein business owners delegate the collection of their hard-earned money to a passive bookkeeper they have hired. This cannot happen.