Tag: sales

The Exact Steps To Building Sales and Gross Margin

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The Exact Steps To Building Sales and Gross Margin

You must first know the customers and products that account for 80% of your sales and profit. Please note that this required in-depth analysis of product sales and gross margin by customer. For some companies they may have a select number of customers that account for a large percentage of the revenue but do not account for the same percentage of profits.

Once you have this data then it is a matter of implementing programs to increase sales (see bonus below). Do not ignore gross margin. You cost of delivering a product or service to a customer could possibly be reduced with a resultant increase in profits, pricing may need to be adjusted or both.

Bonus Note: There are only three ways to increase sales:

1) sell more to existing customers
2) increase the transaction size of sales to existing customers and,
3) acquire new customers.

Also please note that increasing sales does not mean that profits will increase at the same rate or at all. For example, it can cost you more in the first year to acquire a new customer than that customer brings in first year profits. If that is the case you might be asking why would you do that. You might do that if the lifetime value of the customer exceeded the cost of acquiring that customer by enough of a margin to make it worth you time, money and energy.

Recently I completed this exercise with a client and directed the sales manager to schedule a meeting with the largest customer. The purpose of the meeting was to negotiate higher prices. The meeting was successful and the client realized an immediate benefit to profits as a result of this work. The effort was then extended to remaining customers and this client went from a break even profit model to earning 7-9% net income before tax on sales volume of approximately $12 million. Does the process work? It works every time.

Steve’s Law of Growing Market Share Part 1:

If You Use Half The Tools Available For Growing Sales and Gross Margin You Will Be In The Top 20% of Companies In Your Industry As Measured by Annual Sales Growth. 

Steve’s Law of Growing Market Share Part 2:

If you use 90% of the tools available to you for growing market share and profits, you will achieve elite status. If you consistently use those tools each day, week and month, you will maintain elite status and be healthier and happier along the way.

May You Achieve Success Beyond Your Most Amazing Dreams

Steve Pohlit,
Business Development and Real Estate Investment Coach
Managing Partner,
Steve Pohlit International LLC
www.stevepohlit.com

 

The 5 Finger Plan For Outrageous Business Profits

The 5 Pillars of A Successful Business

What happens when you apply the 80:20 rule to the activities required for any business to operate?

Extraordinary Profits

A Positive, Low Stress Working Environment

Continual Increases In Revenue and Profits At A Rate That Far Outpaces Your Competition

How do you achieve these goals? Well just take a look at how most companies are run and don’t do what they do. People in most companies spend the majority of their time on activities that have little or no impact on building revenue and profits. Let’s review the components of how to solve this.

First there are only five (5) areas of business that need your attention. Hold out your hand and look at your fingers and thumb – 5. Now follow with me on this because I am not in a room with you to reinforce the point. Hold out your hand and assign each of the (5) pillars as follows:

1.Sales – thumb
2.Gross Margin – index finger
3.Expenses – your “flip em” finger
4.Working Capital – next finger
5.Employees – pinky

80% of your time as an owner or CEO should be spent on these 5 pillars and 80% of the 80% should be spent on Sales and Gross Margin – the first two. When you spend the majority of your time on marketing the right balance of products and services that bring you optimum sales volume and gross margin, you can expect:

  • Recruiting and retaining the best people is easy,
  • Liquidity is abundant, and
  • If any area of expense begins to be out of balance, it doesn’t hurt much while you are bringing it back in line.

Recently I met with a friend who has a professional service that has a healthy price point. Consider the economy is reported to be as week as it has been in 10 years, I asked him if he was feeling any impact. He told his next opening was two months out. Then he hired my company to bring him more targeted prospects. He has alway had a marketing focus the entire 15 years I have known him and he business does well every year. Repeat he has a continual focus on the marketing funnel and is working it all the time.

Spend 80% of your time on Sales and Gross Margin. An alternative is to have a credible firm drive targeted prospects to your business.

Sharing with all my readers the energy of peace, happiness and abundance

Steve Pohlit
The Profit Expert

Email Steve to schedule A No Obligation Consultation On Building Your Business Profits.  Let’s discuss how to use cutting edge Social Media Marketing, Internet Marketing and Direct Response Marketing in the revenue building cycle of your business to drive your profits sky high.

FREE Report:

How To Increase Business Profits by 30% or More in 90 Days or Less