Read all the way down to get the TIP OF THE WEEK!
Friday, 20th of March - 2015
This week and for the next 33 weeks, we will take apart your business and work on each part in 3 week blocks. In each 3 week block we will IDENTIFY, ANALYZE and then IMPLEMENT changes to make in each part of your business that WILL yield results GUARANTEED!!
If you participate and follow along each week, applying small changes and tweaks to your business model/operations, you will see BIG results in increased profits for your business. Even if you can - or only choose to try one or two of the 3 weeks blocks, you WILL see positive results!
THIS WEEK: we are working on IMPLEMENTING systems, changes, strategies to the COST OF GOODS SOLD you have IDENTIFIED and ANALYZED the last 2 weeks. You will need to spend 3- 4 HOURS DECIDING what changes you will be making and then additional time following up on the implementation of the changes made to the TOP 20% of your list!
TODAY! We will work on DECIDING what changes to IMPLEMENT based on the the Cost of Goods Sold items you IDENTIFIED and ANALYZED last 2 weeks.
Each week, we will be offering a general TIP for Making More Money IMMEDIATELY along with the informational blog that can be applied to ANY business.
I will be available to you throughout the rest of the week for any specific questions you have regarding YOUR business and identifying, analyzing or implementing any changes, methods or systems for your business!
This week's topic COST OF GOODS SOLD involves the DIRECT costs associated with the delivery, production or manufacturing of the products or services you deliver to your customers. We will also talk about making CHANGES that will IMPROVE your Gross Profit (which is what you have after you take your product or service SALE and take away the Cost of Goods Sold). We will be focusing on the TOP 20% of the list you itemized and rated last week.
Our goal this week, after ANALYZING the Cost of Goods Sold that you identified last week, is to take the information you gathered and the details you noted, after making your LIST and to implement changes needed to MAXIMIZE your GROSS profit!
IN THE NEXT WEEK: Spend one hour the first time you sit down, and start making a new LIST of changes you want to make or implement in the BOTTOM 80% of your rated list. (see more explanation below). The next time you sit down - either the SAME day or the NEXT day, spend 2-3 hours deciding what to change/implement for the TOP 20% of your list. These are the MOST important changes so pick 1-3 things to change/implement and FOLLOW THROUGH making those things happen THAT DAY or within the WEEK.
POSSIBLE CHANGES: possible changes include ELIMINATING products or services that you have a very low GROSS profit margin, PHASING OUT products you sell or produce (if they have a low GROSS profit margin), ADDING NEW products or services because the analyzation has given you new ideas that when researched resulted in a GOOD Gross Profit Margin, re-negotiating sales contracts with clients to include bigger orders if it saves your business shipping costs etc.. and MAKING CHANGES to existing Gross Profit Margin's by re-negotiating costs of labor, materials or products or changing pricing slightly in order to achieve the target Gross Profit Margin..
START AT THE TOP: Start at the top of your list and work your way down. For each item, look at the RATING you gave it last week and compare it with the other items. The items with the LOWEST ratings may need to be eliminated. You may realize that these lowest rated items are COSTING you company resources and not making you very much money, OR they may be COSTING you money. Do some thinking on HOW you can sell MORE of those products / services, Items at the bottom of the list may need major tweaking or they may need to be eliminated altogether. Take some time to really figure out HOW MUCH TIME and HOW MUCH MONEY the changes will cost, analyze your risk and make a decision!
Items in the middle of the rating system may need just small changes or tweaks to move them up on your rating list. They may be able to make you more money just by changing a few small things or by putting a few dollars into target marketing.
YOUR 20% HITLIST: After deciding action items based on the BOTTOM 80% of your rated list, spend 2-3 hours (bring your team in on this!) making some decisions on how to MAXIMIZE the items on the TOP 20%! After spending this 2-3 hours, take a look at your list and decide if follow up time is needed OR if more time is needed by your or another member of your team for implementation on any of your items to MAXIMIZE the Gross Profit Margin on that item.
Your top 20% may only include 1, 2 or even 3 products or services. Invest some time and money making changes that will MAXIMIZE the gross profit for these items. For instance, here are 2 examples (one product based business and one service only business).
#1 - PRODUCT based business - Lets use a business that sells windows and doors primarily and primarily to residential homeowners. Let's say the top 2 rated products sold (out of 15 total) were French Doors and Bay Windows with Window Seats. (The reason these 2 were the top rated is because they are popular and at the same time have the highest GROSS profit margin) There are several ways I would suggest MAXIMIZING the COGS on these 2 products:
After doing your research on which age/types of homes and which neighborhoods are purchasing these types of products, spend a few dollars on some TARGET advertising on these 2 items. Commit to a specific time period, maybe a 6 week "sale" for example, on these items and notify your supplier that you are doing so and ask for a temporary discount on your cost of the product, and an even bigger discount if you meet a certain number of sales within the time period. Many suppliers are more than willing to do this, if and when you are spending money on marketing and featuring these products.
#2 SERVICE based business - Let's use a Janitorial business that does primarily commercial work. Let's say that when looking at the Cost of Good Sold for this business - the TOP rated Gross Profit Margin is the FLOOR cleaning/waxing service but that this service is only being used regularly by a small percentage of the client list.
Approaching your entire client list and offering them a small discount on your first service so that you have a chance to impress them with your services and can then ask for a commitment on a quarterly basis for the floor cleaning service. Adding even a small percentage of your client list to that service on a regular basis will, in fact increase your overall Gross and Net profit. The second part of this, which will only increase your GROSS profit is that once you are buying MORE wax and other related products to provide this service, you can then ask your supplier for a little better price break.
NEXT week we will be IDENTIFYING and listing all of your leads sources and sales programs or methods for your business. Don't worry! In 3 weeks, we will be back to REVIEW and make any ADJUSTMENTS necessary to the work you are doing this week and its associated follow up/results.
TIP OF THE WEEK!
The Tip of the Week this week is - "FOCUS ON YOUR TOP 20!" As you sit down and look the work you did the last few weeks, SCHEDULE SOME TIME to come up with strategies regarding the top 20% of your list and FOLLOW THROUGH with these changes.. it may seem insignificant to take the time to do this but it is NOT! The first one or two of your products/services on your list that you have the BEST gross profit on is where you need to focus. Decide how you could MAXIMIZE these items, how can you sell or provide MORE of these in the next 30 days and DO IT!
I have seen through my clients trial and errors, and even seen in my own businesses, very small changes, small tweaks in how you do things make a HUGE difference.
If you would like to speak to one of our consultants to brainstorm possible changes for your business, based upon the work you have done in the last 2 weeks- visit our website and fill out a contact form we would be glad to help! TheMaxProfit.com
Looking forward to next week and the 35 weeks to follow and getting to know some of you while helping your solve some of your biggest questions/puzzles.
Check out our website at: TheMaxProfit.com and if you need help with your business, fill out a contact form and one of our consultants will contact you. You can also give me a call (or text) directly at 360-490-7045.
Renee Johnston
CEO
The Max Profit
Business Services Group
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