January
Theme: The 5 Priorities of Business:
Principles
- Prepare/Plan - Product - People - Profit.
Profit Now and Smile
Later
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As a kid, I can remember on vacations
riding in the car behind my Dad and actually saying "Are we there yet, Dad?"
His answer was to teach me to read maps and estimate miles-to-destination
using my thumb as a measuring tool comparing its length to the legend. I knew
how many "thumbs" it was to Lansing, Michigan and about how long it
took to go a "thumb".
In business, it is helpful to
know when we are "there".
If we are "here"
now and what to be "there",
in my book, the strongest
benchmark is profit. And without profit, a business will not
survive! Pricing right is one of the keys to creating profit.
When selling a product, it is
critical to know the cost of goods sold and the overhead. Overhead is all the
costs to keep the business in operation even when when there are no sales (horrors)
and in a service business this will be all costs. After you have all these
estimates, you can now project profit.
Don't make the mistake of
thinking if we want 20% profit on a job or item, you multiply the total cost
by 20% and add that to your price. This will give you a 17% profit not 20%.
Sound strange? Well, it is just a little algebra.
Here are the common multipliers
to get your price with the proper profit percentage and use as a "rule of thumb"
for profit. Yes, the decimals do make a difference.
Multiplier for 10% profit is
1.11. Costs time l.ll = Price with 10% Profit!
Multiplier for 15% profit is
1.18.
Multiplier for 20% profit is
1.25.
Multiplier for 25% profit is
1.33.
Multiplier for 30% profit is
1.43.
So, how many thumbs do you need
to go to get "there"?
Linda Lucas Fayerweather
www.ChangingLanes.biz 419-897-0528 linda@changinglanes.biz
Consider working with a coach
or a MasterMind Team to make 2012 the year of your dreams!
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Share the Profit
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You have carefully hand-picked
your staff, taken care to groom and train them and your rapport with them
couldn't be better. So, with the knowledge that more and more companies
are hiring, the question on your mind may be whether or not your precious staff
will stick around or bolt to what they feel may be bigger opportunities.
If you want to reward your
staff, while at the same time retain them for years to come, you may want to
consider employee retention bonuses combined with profit sharing.
Design a profit sharing
contract. If your company hits all of the targets you have set for the year,
give your staff their bonus, half in cash, half in a retention account. Each
year your company hits the target you again, pay out half, put the other half
in their account. After five years your staff member can earn the first years
bonus along with any bonus earned for the present year.
If your staff member chooses to
walk away after a few years, wish them luck and send them on their way. Pay
out only the required years they have earned. Your contract can stipulate how
much that employee walks away with. Here is an example of a staff member
making $35000 annually showing raises.
This is just one of the many
options that give you and your staff member a sense of security in an
ever-changing market. Need help to figure out what kind of bonus works best?
Contact your favorite Business Coaches at Changing Lanes!
Tiffiny Fayerweather
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Making
Profit on the Internet
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This week, to wrap up the
series on the 5 Priorities of business, I will be talking about making
profits on the Internet. A key component to making money on the
Internet is making it easy and secure for people to give you money.
It is often one of the most over looked steps.
First let's talk about security.
The Internet has made it easy for fraud. Fraud can happen to anyone and any
site. About once a month I read about some company having a breach of
security. Some times worse than others but overall in most cases credit card
data is stolen. For big companies it is really damaging. For smaller
companies, it can be downright disastrous. Like out of business disastrous.
Because of this, small companies need to be extra careful when it comes to
security.
I'm not going to go in to too
much detail but here are some good rules to go by.
If you want to read up about
further security practices check out OWASP and do searches for "Best Online
Security Practices". Security is very important
and should be taken very seriously. So please take some time to learn about
it and do everything you can to ensure security for your customers.
Now that we have talked about
security, let's talk about making it easy for users to give you money. By
this I mean your checkout process. If you make it difficult for a user to
checkout by creating road blocks, they are less likely to buy products from
you or return to buy products. Here are some examples of road blocks.
The checkout process should be
four steps or less from the time you click checkout.
The payment process should be
easy, too. There are many payment gateways out there. All have their advantages
and disadvantages. So take some time to choose the right one that will work
for your business.
Personally I like the idea of Stripe.com. It's great for any small to mid size company
that wants to make the checkout process easy, give the illusion that they
have a merchant account but don't want to deal with the security that comes
with processing credit cards.
If you want
to offer even more options, even if you use stripe.com or have a merchant
account you could add the option for a user to checkout via PayPal or Google
Checkout.
The whole point is to make the
checkout process
easy, friendly, and secure for a user. The easier it is for a
customer to give you money the more likely they will.
In these modern times if you
don't accept credit cards and your sales demographic dictates that you
should, then you are more than likely missing out on a lot of profits. But be
smart about it, find a service that provides credit card processing that will
fit your business both in cost and image. Then find a professional web
designer to add credit card processing to your site (it's much cheaper to pay
for a professional than it is to get sued over fraud due to lack of
security).
Remember with any sales and
checkout process there is always room for improvement. If something isn't
working, change it. It is a lot cheaper to rewrite the checkout process than
to lose sales. If you can't afford to go with a full on merchant
account, start with PayPal or Google Checkout. No matter what, make it easy
and secure for the user!
--
Jeff Mendelsohn
Liquid Mechanix Studio, LLC
419.297.3364
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