Brad Sugar Show me the money.. The formula for building a business.

Brad Sugar Show me

the money.

The formula for building a business


The five ways to build your business

1. LEADS


LEADSThe number of enquiries.

How many people came into your shop last year, week, and month?

How many people did you call?

How many people telephoned you last year?

1. LEADS

2. CONVERSION RATE


CONVERSION RATEHow many of those leads did you turn into business? What percentage?

We are going to multiply the number of leads by your conversion rate.

This will give you your number of customers.

TEST AND MEASURE.

1. LEADS

2. CONVERSION RATE

3. NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2)


NO. OF CUSTOMERS

1. LEADS

2. CONVERSION RATE %


4. NO. OF TRANSACTIONS


HOW MANY TIMES DOES A CUSTOMER BUY FROM YOU?

NUMBER OF CUSTOMERS X NUMBER OF TRANSACTIONS

NO. OF TRANSACTIONS

1. LEADS

2. CONVERSION RATE



5. AVERAGE VALUE SALE


ACQUISITION COST

IF YOU SPEND $1000 ON AN ADVERTISEMENT AND IT GENERATES 10 CUSTOMERS.YOUR ACQUISITION COST = $100 PER CUSTOMER

AVERAGE DOLLAR SALE

1. LEADS

2. CONVERSION RATE




6. TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5)


CUSTOMERS X NO OF TRANSACTIONS X AVERAGE SALE

= TOTAL REVENUE OR TOTAL TURNOVER

TURNOVER / REVENUE

1. LEADS

2. CONVERSION RATE





7. MARGINS


MARGINS = THE % MARK-UP YOU CHARGE

1. LEADS

2. CONVERSION RATE





7. MARGINS

8. PROFIT (TURNOVER X MARGIN) (6 X 7)


TURNOVER X MARGINS = PROFIT

LEADS

X CONVERSION RATE

= NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2)

NO. OF TRANSACTIONS

X AVERAGE VALUE SALE

= TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5)

X MARGINS

= PROFIT (TURNOVER X MARGIN) (6 X 7)


LEADS

X CONVERSION RATE

= NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2)

NO. OF TRANSACTIONS

X AVERAGE VALUE SALE

= TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5)

X MARGINS

= PROFIT (TURNOVER X MARGIN) (6 X 7)


CHANGING THE OTHER 5 WILL: BRING IN BETTER RESULTS IN THE 3

LEADS 4000 X CONVERSION RATE 25% = NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2)

1000 NO. OF TRANSACTIONS 2X AVERAGE VALUE SALE $100 = TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X

AVERAGE SALE) (3 X 4 X 5) $200000 X MARGINS 25% = PROFIT (TURNOVER X MARGIN) (6 X 7)

$50,000


1. LEADS2. CONVERSION RATE3. NUMBER OF TRANSACTIONS4. AVERAGE SALE5. MARGINS

The five ways to build your business

CALCULATIONS WHEN WE HAVE AN INCREASE OF 10% ON ALL 5 AREAS

$80525.50(TURNOVER X MARGIN) (6 X 7)= PROFIT

27.5%X MARGINS

$292820 (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5)

= TURNOVER

$110 X AVERAGE VALUE SALE

2.2NO. OF TRANSACTIONS

1210 (LEADS X CONVERSION RATE) (1 X 2)= NO. OF CUSTOMERS

27.5%X CONVERSION RATE

4400LEADS

INCREASE OF 10% NEW FIGURES

61% INCREASE IN PROFITS.

CALCULATIONS WHEN WE HAVE AN INCREASE OF 100% ON ALL 5 AREAS

1.6MILLION (TURNOVER X MARGIN) (6 X 7)= PROFIT

50% X MARGINS

3,200,000 (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5)

= TURNOVER

$200 X AVERAGE VALUE SALE

4 NO. OF TRANSACTIONS

4000 (LEADS X CONVERSION RATE) (1 X 2)= NO. OF CUSTOMERS

50% X CONVERSION RATE

8000LEADS

INCREASE OF 100% NEW FIGURES

IS IT POSSIBLE?YES!

IS IT POSSIBLE?YES!

When we we filling in the charts, did you know the figures?

You cannot manage what you cannot measure.

LACK OF CASH?

LACK OF CASH?

You focus more on gettingyour product ready for salethan getting customers in toBUY.

LACK OF CASH?

You focus more on gettingyour product ready for salethan getting customers in toBUY.

You are not collecting thecash fast enough.

Brad Sugar Show me the money.. The formula for building a business.

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