How A Business Consultant
Can Dramatically Grow Your Business

If there is one thing I have found that business owners don’t understand, it is how incremental increases in business dynamics can lead to HUGE increases in revenues and profits.

Let’s play a game with profit margins. To do that, we will make some simple assumptions to start.

Here is what we’ll play with, to make it easy.

We will explore the following areas:

• Leads
• Conversion Ratio
• # Customers
• Annual Transactions
• Transaction Value
• Total Revenue
• Profit Margin
• Profit

Let’s say that the following numbers fill in the blanks.

• Your advertising campaign has brought in 1,000 leads, your conversion ratio is 20% resulting in 200 customers.

• You know from your current customer data base that your average customer makes 4 transactions per year averaging $100 per transaction, resulting in $80,000 in gross revenue at a profit margin of 50% giving you a gross profit of $40,000.

Got all that?

Let’s lay it out here.

• Leads: 1,000
• Conversion Ratio: 20%
• # Customers: 200
• Annual Transactions: 4
• Transaction Value: $100
• TotalRevenue: $80,000 (4 X $100 X 200)
• ProfitMargin: 50%
• GrossProfit: $40,000

Now look what happens with just a 10% increase across the board.

• Leads: 1,100
• Conversion Ratio: 22%
• # Customers: 220
• Annual Transactions: 4.4
• Transaction Value: $110
• Total Revenue: $106,480 (4.4 X $110 X 220)
• Profit Margin: 55%
• Gross Profit: $58,564

This illustrates how incrementally small changes can have an incredibly huge impact on your bottom line.

Let’s take a look.

By merely increasing these key factors by 10% you have increased your gross profits by a WHOPPING 46%.

Let’s look at how YOU might do this for your business.

1. You make your marketing and advertising more effective by using laser targeted methods that are trackable and quantifiable thereby increasing the number of leads.
2. You fine tune your conversion techniques and by just raising it from 20% to 22% your customers grow to 220.
3. You utilize a direct response marketing system that automatically stays in touch with your customers raising the annual number of times your customers buy from you to 4.4 times per year.

Through incremental price increases, you have raised your gross revenues to over $106,000.

And finally, with that incremental increase in profit margin, you make almost $19,000 more dollars from the same amount of work increasing your gross profit by that HUGE 46% number.

The moral of this story?

Do not underestimate the value of incremental increases in your business model and the bonanza that can be awaiting you at the gross profit line in your profit and loss statement.

And finally, these results are not difficult to achieve. I have found that most business people simply are not aware of the power of incremental differences in achieving results and what these can mean to the bottom line. This is why you need a business consultant – they can become the most highly valued asset you will ever have in your company.

A Business Consultant’s understanding of these numbers, but even more importantly, their ideas to implement these changes, more than pay for your cost of making them a working partner for the life of your business.

To Your Success!

MichaelB

Related Post: Business Consulting | Why You Need A Business Consultant

In this rapidly changing world, can you as a business person keep up with the shifts occurring in the marketing and advertising world?

Is your business operating at peak efficiency?

Let me ask you some simple questions. Let’s see how well you know your business.

• Do you know the ROI of your advertising dollars? In other words, is your advertising trackable and quantifiable? Do you know how much money any advertising you do specifically brings into your business? If not, I can virtually guarantee you are probably losing money on your marketing and advertising. If you can’t track what works – then it’s probably not working.

• How many times a year does your average customer purchase from you? What is the average transaction value? How much is that average customer worth to you over their lifetime? This is an incredibly important number to any businessman, because this number determines how much money you should or could spend to acquire new customers. Your customer acquisition costs are a primary ratio in determining the value of any marketing or advertising outlay you make.

Are you beginning to see the value of in having your own trusted business advisor/business consultant? Let’s try some more.

• Do you utilize direct response permission based marketing? If not, you are leaving thousands and thousands of dollars on the table.

• Do you keep a database of customers and contact them regularly, as in once a week at the very minimum? Sound like a lot of work? It doesn’t have to be, by using automation this part of your business can run on autopilot, increase your sales to your existing customer base, thereby increasing your profits and bottom line without you lifting an additional finger.

• Do you really understand the key ratio in your business, the almighty Profit Margin? Do you fully understand what tiny incremental increases in Profit Margin can mean to your business? And once you grasp the importance of this, do you understand how to make it happen?

• Do you know the only three ways to grow your business? As simple as that sounds, yes, there are only three ways your business can grow. Let me give them to you. Your business can grow by acquiring more customers; it can grow by selling your existing customers more of your products or services; or it can grow by some combination of either increasing prices or cutting costs. That’s it – those are the only three things you need to be concerned with, because those are the only three things that cause change.

• In this recession, what are you doing with your marketing and advertising budget? This is typically the biggest mistake businessman make. In slow times, the first thing they cut is their marketing and advertising expenses. Why is this a mistake? There are actually two main reasons.

1. First, all your competition is doing the same thing! This is the natural reaction by your typical business person – advertising and marketing is the easiest cost for them to control so it’s the first thing cut.  HUGE MISTAKE – this is the time to be aggressive in your marketing and advertising – it’s the time to step it up. Out of recession or slow times lies tremendous opportunity to literally steal customers directly from competitors by outmarketing them during bad times. With creative and intelligent marketing, this is the time you can assume the leadership role within your business’ category or niche. By carefully examining, re-aligning and shifting your marketing and advertising costs, many times it’s possible to still slash your costs dramatically, gain more advertising for the dollars spent, outmarket your competition leaving them in the dust and dramatically grow your business even in difficult times.
2. The second reason this is a huge mistake is because marketing and advertising are the ONLY expenses that  bring MONEY in the door. I see businesses make this mistake and never recover. They cut marketing dollars dramatically,  see revenues fall dramatically and blame it on the economy. NO – blame it on a bad decision.  Let me say it again – your marketing and advertising is the only expense you have that brings customers in the door – learn that and learn it well.

• Do your salary expenses bring customers in the door?
• Does your lease/rent expense bring customers in the door?
• Does your auto lease expense bring customers in the door?
• Do your water/power/utilities expenses bring customers in the door?
• Do your legal expenses bring customers in the door?
• Do your accounting expenses bring customers in the door?

Starting to get the picture? Starting to see why a business consultant can be absolutely invaluable to you? He can be the golden asset standing in your corner to dramatically grow your business even as recession swallows up your competition.

Until Next Time,

MichaelB

Related Post: Business Consulting | Dramatic Consumer Demographic Shift Occurring At Breakneck Speed

Will Your Business Survive?

Entire villages of traditional media outlets are being ransacked, raped and pillaged at alarming speed as the rapid move towards internet local search leaves them bewildered and broke.

Since December, at least 5 major newspapers have filed for bankruptcy.

1. The giant Tribune, which owns the LA Times, Chicago Tribune, Baltimore Sun, The South Florida Sun Sentinel and many others.
2. The Star Tribune of Minneapolis.
3. The Journal Register which owns dailies in over a dozen large US Cities.
4. Philadelphia Newspapers which owns both the Philadelphia Enquirer and Philadelphia Daily News.
5. The Sun Times Media Group which owns the Chicago Sun Times as well as many more newspapers throughout Illinois.
6. The San Francisco Chronical is floundering and here in Washington…the Seattle P-I, after 146 years, printed it’s last newspaper on March 17, leaving the major metropolitan area of Seattle with just one newspaper.

In fact, 33 newspapers have filed for bankruptcy just since the beginning of this year, and many more are laying off anywhere from 10-25% of staff.

But that’s not all…

The Yellow Pages are dead! Nobody’s fingers do the walking any longer and our landfills are filling up with dead phone books people don’t even take into the house any longer, just a straight one way stop to the garbage can.

And Television – when was the last time you watched a commercial? People just pick up the remote and move on and away to another channel. How about costs? Can you say expensive?

So what’s with this dramatic shift? Are these recession caused events, or do they signal something more dramatic occurring?

If you think these were caused by recession think again. There is a dramatic shift occurring and if your business does not shift into this new wave, you stand the chance of going broke.

Let me ask you a question.

Where are most of your advertising dollars targeted on a local basis?

Are you still using these dying or dead media outlets for the majority of your marketing?

If so, your business is in jeopardy and you could find it on the same trash heap as the media outlets you are using for marketing.

Why? Simply put, everyone is moving online.

The latest statistics show that fully 80% of all consumers seeking local businesses and services are searching for them online – and primarily at Google.

Those not using Google are using Social Media sites like Twitter, Facebook, MySpace, and hundreds more – while video marketing is now the big winner.

Fully 55% of all online visitors watched online videos last year at sharing sites like YouTube, Viddler, DailyMotion and over 900 others, while video composed 60% of all new online content, yet only 5% of businesses are using video in their current marketing mix.

Where is your business today in the scheme of things?

Are you still throwing your advertising dollars at tradional media while 80% of your audience has moved elsewhere? Is it time to reconsider your marketing strategy before your competitor establishes a stronghold you can’t overcome?

Are you ready to be a leader with your business, and quit advertising in traditional media just because your competitor is? Let them throw their money away while you swiftly move to a leadership position by following your audience – online with the internet.

Move now and move quickly or be left behind.

In this sea of digital change, there is good news for local busineses.

Consider a study of U.S. online consumers done by the Online Publishers Association.

Their study showed that 50% of online searchers are spending money when they find the service or business that serves their needs.

That is an incredible conversion rate – something entirely unheard of in the offline tradidional media world.

The businesses receiving the most local searches?

• Restaurants and Bars
• Banks and Financial Services
• Physicians and Health Facilities (Doctors and Dentists of every type and persuasion)
• Consumer electronics stores
• Auto dealers and auto service
• Real Estate and associated searches (Realtors, Homes for sale, builders, contractors, electricians, etc.)
• Furniture and Appliance stores
• Legal Services
• Travel Services
• Pet Services

And other categories fall closely behind.

The bottom line is your potential customer is looking for you online.

Can you be found? Have you put yourself in front of the internet savvy consumer, or are you still using dead media for your marketing.

As a business consultant, the one dramatic shift I would advise you to make is to expand your online presence and online marketing to place your business in front of your potential audience. Miss this boat, and your ship may well sink!

To Your Success!

MichaelB

Related Post: What Is This Thing Called Internet Marketing Consulting?