Yesterday evening, 25 November, in cooperation with ActionCOACH, we organised a webinar on ‘the only 5 ways to increase your profit (even during the coronavirus period)’. During the evening, Janine Lie-A-Kwie, owner and Business Coach, took us through her 25 years of experience as a strategy consultant, innovation adviser, researcher and lecturer in Entrepreneurship & Small Business Management for SMEs. She gave the participants important insights.
By achieving 10% growth in five areas of your marketing and sales, you can increase your profit by 61%. We try to explain this using the explanation and worked example below.
Every business has a basic structure consisting of 5 components. These form the structure of every business, namely generating leads, conversion rate, number of transactions, average sale value and profit margins. Because many entrepreneurs have no insight into these, they miss out on considerable potential for growth.
Every business consists of these 5 components, from the supermarket around the corner to large companies such as Shell, KLM, etc. You can regard these 5 components as a mathematical formula that can lead to business growth, success or bankruptcy.
The first step of this formula works as follows: Number of leads generated x Conversion rate = number of new customers.
With this formula you can do 2 things. You can increase the number of new leads, or increase your effectiveness in converting those leads into customers. This can be achieved by adding various strategies.
The next step of the formula is: Number of customers x Number of transactions (how often they buy from you) x Average sale (average spend) = Total turnover.
Once you know how many customers you have, you can multiply this by their average purchase frequency to calculate the total number of transactions. You then multiply that number by the average sale value, which gives you the total turnover generated in that period.
The last step of this formula is: Turnover x Profit margin = Profit
If you want to increase the profitability of your business, you need to find ways to improve your profit margins, as soon as you can make an extra margin on every transaction.
Magic This is where the magic happens. Because this is a mathematical formula: Number of leads generated x Conversion rate x Number of transactions x Average sale x Profit margins = PROFIT, if each individual component is increased, the multiplier effect does its work. Even a small change in each component can result in exponential growth.
For example, a 10% increase in each of the 5 components of the Business Chassis will result in a 61% increase in bottom-line profit! Small improvements aimed at each of these five areas will bring about exponential growth in your business.
This is a powerful concept that most entrepreneurs overlook. Simply understanding how the mathematical formula works changes the game. When you take the time to develop the specific strategies you can use to make the improvements in the Business Structure, this can change the future of your business.
ActionCOACH is happy to think along with you about ways to increase certain components. They offer a free strategy plan worth €395. You can find more information via the following link.
On Wednesday evening 2 December we are organising a webinar on closing the 2020 tax year and preparing for the 2021 tax year. Click the link for more information.
For more information, you can visit the ActionCOACH website. If you have a personal question for Janine Lie-A-Kwie, you can email her at: janinelieakwie@actioncoach.com
If you would like to watch the webinar again, send an email to info@hogiaf.nl
For more information about the partnership between HOGIAF and ActionCOACH and the benefits for HOGIAF members, you can follow the following link.
About us
The largest cross-cultural and multisectoral business association in the Netherlands.
