Profits, not sales for Keystone
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It's Not About Sales… But Profits Coach Thom Finn
Transcript of Profits, not sales for Keystone
It's Not About Sales…But Profits
Coach Thom Finn
It's Not About Sales…But Profits
Coach Thom Finn
To Make Sure You Get the Most Out of Your Learning ...
I KNOW
Tip #1: Know Your #‘s by product
• Example: Thom's Birdhouses• Know Revenues/Sales/Income• “ “ Cost of Goods Sold/Indirect Labor, • Know Gross Profit• Know Fixed Expenses• Know Net Income
Tip #1: Know Your #‘s by product
• Example: Thom's Birdhouses• Gross Margin means…• Birdhouse Gross Profit as $• Birdhouse Gross Profit as %• Margin is important, but you can't take it to
Bank
KNOW your Math….The “Math” of Discounting and of Price Increases....
40% gross margin10% price change = 25% profit changeWith a 10% Discount, what increase in customers do you need to break even?
60 60 60
4030
50
0
20
40
60
80
100
120
Base 10% Discount 10% Increase
Profit
Variable/Direct Costs
33%
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Know Your Price Increase Math…
MarginPrice
IncreaseProfit
Increase
Decrease in Customers
to Break Even
20% 10% 50% 33%
40% 10% 25% 20%
40% 20% 50% 33%
60% 10% 17% 14%
80% 10% 13% 11%
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Tip #1: Know Your #'s…by product
• Exercise on 1 of your products• What is the SALE Price?• What is cost of labor?• What is the cost of material?• Any other costs to produce?• S-COGS=GP• What is your GP$?• GP as %?
Gross Profit per Unit…
Gross Profit vs. Net Profit…
What’s the unit break-even for this company?What’s the unit break-even for this company?
Tip #2: Know Your #s…for your whole business
• TOTAL Gross Profit• FIXED Expenses are….• Gross Profit-Fixed =NET Income• What are Thom’s Fixed?• What was his GP by product?• So GP by unit x______= Total GP• So Thom’s Net Income =GP-Fixed
Tip #2: Know Your #s…for your whole business
• Exercise on typical month• Total Sales were_____• Your Gross Profit % is____• So your Gross Profit $ is____• What are you typical fixed?______• So Net Income is GP-Fixed or______
Tip #3: Break Even
• Enough Gross Profit to cover all fixed• Break Even Enough Gross to cover fixed
AND a goal of profit• Example: Thom's Birdhouses Business:
– Fixed Expenses are $1000– And GP% is______________– What is Break Even in Sales?
Marketing Campaign Break-Even AnalysisIs This Show worth it
Registration $______Labor $______Incidentals $______Total Cost $ ______divided by
Average Profit ($) per Customer $ ______equals
Number of Customers Required ______divided by
Measured Conversion Rate ______equals
Number of Leads Required ______
What is the probability that the campaign will generate the required number of Leads?
Marketing Campaign Break-Even AnalysisIs This Show worth it
Registration $ 500Labor $ 1,000Incidentals $ 300Total Cost $ 1,800divided by
Average Profit ($) per Customer $ 150Average Sale is $500 with 30% PM=$150equals
Number of Customers Required 12divided by
Measured Conversion Rate 20%equals
Number of Leads Required 60
What is the probability that the campaign will generate the required number of Leads?
Profitable Marketing ...
Profitable Marketing: WHERE to invest?
• The basis of business is investment
• If you could invest 1 hour and $10 into X or Y……
• Invest $100 Savings in Bank X or Y….
• Invest $100 into Advertising X or Y….
• Invest $1000 into Brochure X or Website Y….
Tip #3: Break Even*
• Break Even on ANYTHING• Break Even on advertising• Break Even on machinery• Break Even on Team• Break Even Analysis BEFORE, • Return on Investment After
Tip #4: Return on Investment (ROI)*
• ROI Math• ROI analysis example Thom's Birdhouses
Test AdvertisementTest Advertisement AA BB
Advertisement CostAdvertisement Cost $1,000$1,000 $1,000$1,000
No. Of LeadsNo. Of Leads 1,0001,000 100100
Conversion/SalesConversion/Sales 100100 5050
Ave $$$ SaleAve $$$ Sale $500$500 $1,000$1,000
Ave $$$ ProfitAve $$$ Profit $200$200 $200$200
Lifetime ValueLifetime Value $5,000$5,000 $10,000$10,000
ReferralsReferrals 1010 22
Dogs and Cows: Your Product Mix
• A Product Mix simple means…..• Think about your product MIX and what
you are offering learn from the big boys• All Products Great and Small….Impulse• Dogs are….• Cows are…..• The Pin Ball Machine principle: Always a
Dog, Always a Cow
Tip #4: Production Goals
• Know in advance how much you should make
• Forecasting Demand• Keep a History: What sells well, what
doesn’t sell well.• Simple Turn Tracking Sheet• What turns the fastest? Make more• What turns slowest? Make less
…thisis
Tip #4: Production Goals
• Restocking Levels• The Real Damage of Empty Shelves• Staying stocked looks better more sales• How to Stock if you are tight on Cash-
Dollar General Solution
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What to do from here…..
• Start from the top of the list.• Work this list in order,
– Know your numbers, etc.
• Questions and Discussion….• Blue Sheets for Hand Outs
It's Not About Sales…But Profits
Coach Thom Finn
Who wants more…..
Number of Leadsx
Conversion Rate=
Customersx
# of Transactionsx
Avg. $$$ Sale=
RevenueX
Margin =
$ Profit $
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With just a 10% increase...Number of Leads
XConversion Rate
=Customers
XNo of Transactions
XAvg. $$$ Sale
=Revenue
XProfit Margins
=$ Profits $
4,000 X25% =1,000 X 2 X $100 =$200,000 X 25% =$50,000
4,400 X27.5% =1,210 X 2.2 X $110 =$292,820 X 27.5% =$80,525
A 10% increase in each of the 5 areas will result in a 61% increase in Profits?
Do it 2 years in a row and your profits will increase by 159% compared to baseline?
Number of Leadsx
Conversion Rate=
Customersx
# of Transactionsx
Avg. $$$ Sale=
Revenuex
Profit Margins =
$ Profits $
Did You Know That...
