Monday, December 20, 2010

Bottoms Up! – Use a ‘reverse’ income statement to achieve your business goals

"Begin with the end in mind". You may know this as the second habit in Steven Covey's book, "The 7 Habits of Highly Effective People". Did you know it's also the power behind the 'reverse' income statement?
When crafting your business' 2011 goals, don't start with a sales target. Instead, establish your profit target first. Then use the 'reverse' income statement to figure out what business activities are required to meet the target.
You may hate reading accounting reports, but the 'reverse' income statement ("RIS") is one tool you'll love using. It's not a traditional profit and loss statement like the one your accountant prepares.
Instead, you construct a RIS using only the 7 levers that drive the bottom line of every business. These 7 levers are only things you'll need to ensure that you'll meet your profit target:
  1. # of new business leads
  2. % of leads that result in a new customer
  3. % of prior customers who purchase from you this year (customer retention)
  4. Average sale amount
  5. Number of transactions/year per customer
  6. Gross margin %
  7. Fixed cost amount
Here's how one company put these RIS levers to work to create its 2011 plan (the name has been disguised).
In 2010, Turicum Dental Associates turned a profit of $47,885 after all fixed and variable expenses, including the dentist's/owner's salary. Turicumt wanted to develop a plan to grow its 2011 profit to $85,000. Enter the RIS.

Friday, December 10, 2010

Articulate Your Business Goals Now

The legendary chemist and microbiologist Louis Pasteur once said, "Chance favors the prepared mind." When I think about my career over the past 20-plus years, I recognize many times when indeed luck or chance seemed to come my way. Interestingly enough, opportunities seemed to appear when I was most prepared to accept these challenges.

How does being prepared for opportunities truly help a business owner succeed? 
The Product Development & Management Assn. conducted a study to evaluate the relationship between clarity of ideas and success and found that low clarity resulted in 23% of businesses achieving success while a whopping 85% of businesses achieved success when they were very clear and articulate about their goals and ideas. When you give words to your ideas and vision, they have a significantly higher chance of becoming reality.

Articulating your goals is clearly a method of preparing your mind and your company for opportunity. Therefore, today’s tip is simple: Write down your top three business goals for the next six months. Do it right now—before you have the chance to get involved with some part of your business that is calling you. Once you have these goals written down, post them in your office or a place where you will see them every day to remind yourself why you’re getting up each morning and going to work (even if that’s just down the hall in your bunny slippers).

Beth Goldstein, President, Marketing Edge Consulting Group, Boston MA

Thursday, December 9, 2010

What Can A Business Coach Do For Me?

Have you ever considered getting a business coach?  

Do you know what a business coach is or does?  There are coaches for athletes, singers, actors, musicians, golfers and more.  So, why would a Business Coach be considered so different?  For most entrepreneurs, they have no less a commitment than the actor, or athlete; yet the notion of a business coach remains foreign or considered only when the business is in trouble.

On the other hand, great business leaders as notable as Apple’s Steve Jobs and Google’s Eric Schmidt share one thing in common: They both rely on a mentor and business coach.

Here’s advice from a real business owner.  

Tuesday, December 7, 2010

Hear "Not Yet" Instead of "No": Increase Your New Client Count by 25%

How would you like a 25% increase in new clients? "How?" I'm sure you are asking. Well, you start by answering this all important question.

What do you usually do when you hear NO from a prospective client?

Think carefully because how you answer this question will tell you a lot. This question can reveal whether you are maximizing your marketing efforts or squandering them.

You see, it's not unusual to hear NO when you're in business. Chances are you hear it on a daily basis. The problem is not with the NO. The problem is what happens next.