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| Business Development |
 Divide to Multiply - Your Path to SuperPROFITS
- Part 3By Mara Osis - Action International In Part I, we started your journey to SUPERProfits by showing how the two distinct activities of lead generation and conversion multiply customers coming into your business. In Part 2, we discovered the impact of getting customers to return again and again, and spend more every time! But even with effective lead generation and conversion, and sharper focus on repeat business and higher average sales, you can still fall short of success, unless you focus on the fifth element: margins. It’s What You Keep That Counts! - Unless your business operates with healthy margins, you can’t survive, never mind grow. Don’t confuse margins with markups. Markup is your selling price minus direct product cost; margins are what’s left after you pay all the bills. That means keeping a laser-sharp focus on all direct costs and overheads. Employing some simple, yet profound basics will protect your margins. Never compete on price unless you also lead in volume. Review your value proposition, articulate it clearly, then focus on serving value driven buyers. Know what it costs to open your doors every day and hour. Know your breakeven point, and what each sale contributes to paying your expenses. Set monthly budgets and constantly challenge yourself to trim costs. Brush up your negotiation skills, be ruthless about eliminating duplication, and avoid customer complaints and rework by doing things right the first time, every time. Cull poor performers, invest in technology to increase productivity, use early payment discounts, and keep inventories lean. Look for less expensive ways to sell and distribute your goods or deliver your services. This is not exactly fun! - Cost cutting is hard work and may produce less spectacular results than working to increase your revenue side. But the impact of cost control is key as your business grows. Refer back to Part 2 for ideas on increasing average dollar sales, including price increases, handling higher margin items, and selling to people who value exclusivity, quality, or performance. If you have a sales team, reward them for maintaining high margins - discounting requires little skill! Leverage yourself and grow exponentially through strategic alliances, multiple outlets, independent agents or the Internet. HOMEWORK: See below what increasing your margins by only 10% - from 20% to 22% - will do. On your own, or with your bookkeeper or accountant, determine what today’s margin is and begin by implementing, one at a time, some of the ideas listed above. The Circle is Complete! - Combining 10% increases in lead generation and conversion rates, nets us a 20% increase in customers. Adding on 10% each to number of transactions and average dollar sales brings us a 45% jump in revenue. Finally, increasing margins by 10% gives us a SUPERProfit increase of 60%! The key is implementing small changes in many areas - dividing to multiply! The more areas you work on, the more the magic multiplier effect works for you!
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