Hi, everyone. James here from Impact Business Solutions and the creator of the Scale Your Business, Scale Your Life program. Welcome to video number four. I’m very excited. If I could show a way to increase your profits by 30% over the next 12 months, is that something you’d like to know about? If it is, stick around. I’m going to show you how you can do it in just a few seconds.
Hi, everybody. Welcome back. So, as I said in the intro, in this video we’re going to be looking at how you can drive insane profits in your business. And, when I say insane, I’m talking profit growth of 30% or more over 12 months. It probably sounds like it’s a little impossible, but I can tell you that it’s absolutely doable. It’s something we do time and time again with our clients because what I’m going to talk to you about is the first exercise we actually work on with every single client that we engage with. So, it’s important for you to understand that profitability primarily can be driven by focusing on just five key areas of your business, and I’m going to take you through one at a time what these areas are. We’ve actually developed a little worksheet that you can download and you can fill in your own numbers. I’d like to see where you are right now and, then, to see to see where you possibly can be by making incremental improvements in each of these five areas. So, let’s get into the five key areas first and foremost.
The first key area we want to focus on is going to be your leads, and we’re focused on how many leads you’re actually generating over a period of time, whether it’s in a week, whether it’s a month, 90 days, or a year. I can tell you that most businesses don’t track their leads. Not only do they not track how many come in, but actually tracking where they come from. But, right now, our interest is how many are physically coming in. So, that’s the first key.
The second thing we’re going to look at is your conversion rate. How many of these leads are you physically converting into a paying client or customer? So, again, typically business owners don’t track that. They don’t track what that conversion rate looks like. But, it’s going to be really important for us, as we start to look at improvement, to look and say, “Where are we right now?” so we can gauge where we can go and what that effect is going to be.
The third thing we want to look at is the number of transactions in your company. Now, depending on the type of business you are, i.e., if you’re in the retail space, you’re going to have many hundreds of transactions. If you are in the construction or remodeling business, probably not so much, right? Probably going to have a number of paid transactions each week that are probably less than 50. If you’re in the consulting business, the number of transactions is probably even lower; although, you’ll have probably a lower amount of clients, but having multiple transactions over a year. So, in our business for instance, we have clients that may be on for 18 months, two years, and it’s a monthly retainer. Right? So, we can look at that as a transaction.
4. Ave. Sale
The fourth thing you want to look at is your average dollar sale. So, if I were to ask you to divide your total revenue by the number of clients you have, we’re going to get an average of what each client is actually worth to the business. So, it’s going to be key for us to understand that.
And, then, fifth is your margin. Do you know what your margin is in your business? What are you currently working on right now? Is it 10%, 15%, or 20% margin?
So, these five key areas all play a role in how profitable your business is at a kind of micro level if you will. So, we want to look at and see how can we affect each of these five categories? How do we go from generating 500 leads a year to 550? How do we take your conversion from 15% to 20% to 25%? How can we increase the number of transactions you can make with your customers? Maybe right now you have one transaction a year with a client or a customer. How can we get that to two or maybe even three? And, then, how do we work on your average dollar sale? How do we take your average sale from say $100 to maybe $115 or $120? Alright? And then your margin, which is really how do we reduce your expense, so actually increase the margin on your product or your services?
So, those are the five areas that we would focus on in any business. It’s the first thing we do. I can tell you, since 2009, the minimum we have been able to increase profit, 32%. I tell you this because I want you to understand that it’s absolutely doable, but it requires your focus. It requires you to look at each of these categories and figuring out how you can affect each of them, not by 50%, but by 5% or 10%. That’s where the increase is going to come from. So, you focus on these things, your profitability is going to go up. Guaranteed.
So, I hope that’s been useful. Again, my name is James Lawson. from Impact Business Solutions.
Right now we’re getting ready to shoot video number five, which is going to focus on systems and processes. Right? What is that about? That’s about you working less and generating more in terms of revenue and income, something I think you might want to look and check in on. It’s going to be a lot of fun. I hope you found this useful, guys. Check us on Facebook. Drop us an email. It’d be great to hear from you. I look forward to seeing you soon. Thanks very much and have a great and very profitable day.