What We Will Cover. How MOST Businesses Do It. MOST Owners Act Like a Taker instead of a Trader. The Purpose of Your Business?

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1 Why Do I Have ALL These But NO Money What We Will Cover Business Purpose Mechanics of Money Customer Profitability Maps An Offer for You The Purpose of Your Business The Purpose of Your Business Make Money!!!!!!!!!!!! As Much As It Can Legally & Ethically At Least Enough For Dream Lifestyle Make Money!!!!!!!!!!!! Obvious MOST Owners Act Like a Taker instead of a Trader to Create Product / Service How MOST Businesses Do It DISAPPOINTMENT But Maybe Next Year Will Be Better to Get $ to Get Products / Services Into Hands of Hope, Hope, Hope LB&A,Certified Public Accountants, PLLC Page 1

2 When It s Created What s Wrong With The Taker Approach to Create Product / to Get to Get Products / Services Into Service Hands of The Way It Should Be FIGURE OUT FIGURE OUT FIGURE OUT What products/services Why in business How much money What customers What s the purpose How much time What activities What s your Dream Lifestyle For Me Timing of the process For Family Triple Overlap DISAPPOINTMENT But Maybe Next Year Will Be Better $ Hope, Hope, Hope CONFIDENCE & CLARITY I know what we need to do I know what the financial results will be I am in control CORRECT COURSE MEASURE & COMPARE Get the business structured Products/services Activities When We Know About It When We Compare it to What We Want How Does Your Business CREATE Money Combination of: How Does Your Business CREATE Money The Result of 1. Net Earnings; 2. Cash Flow; 3. Return on Investment (ROI) ; Products / Services; Does That Help You Market Better But When It Comes To The Money NO! LB&A,Certified Public Accountants, PLLC Page 2

3 A Money-Making Customer The Mechanics of Having And No Money 3 things must happen at same time Making Money!! Assume Customer S has the following data: Investment Sales 3,500 10,000 4,500 Customer ROI Customer Capital Margin Gross profit = 45% Looks good, right The Fatal Entrepreneurial Marketing Leap Let s do a big marketing push and find 20 more like Customer S. We can hire another staff member for $30,000 to help with the workload with the extra $90,000 profit and the new staff we ll still be 60 grand ahead! The Deadly Truth For Your Business The increase in customers and sales means there is also need an extra $70,000 to fund investment Increased $90,000 Less: Increased Investment ($70,000) Less: Additional Wages ($30,000) ($10,000) WORSE OFF BY $10,000 DESPITE ALL THAT EFFORT!!! The Fact of Business Physics Products/Services COMBINE TO CREATE FINANCIAL RESULTS LB&A,Certified Public Accountants, PLLC Page 3

4 Your Business Is Trying To Tell You Something (Clues About What s Happening) You Need To Listen (Clues About What s Happening) Products / Services COMBINE TO CREATE FINANCIAL RESULTS Products / Services COMBINE TO CREATE FINANCIAL RESULTS (Clues About What s Happening) (Clues About What s Happening) The Price of Not Listening Randomness in Financial Results Fear and Un-ease in Business Decisions Financial risk and disappointment Dependence on LMEC (luck, market, economy, competitors) for success So Why Doesn t Every Business Owner Measure This Recurring reasons Not aware of importance; Not knowing how to track; Not having a system to track; Not having enough time; Customer Profitability Map Some people are waiting for the economy to come back. I say the economy is not coming back. The economy has moved on. Robert Kiyosaki, Author, Rich Dad, Poor Dad LB&A,Certified Public Accountants, PLLC Page 4

5 Customer Profitability Mapping Customer Profitability Mapping Profitability Mathematical From your records Resonance Score Subjective score between 1 10 PITA factor Independent of profitability, etc Use your team Profitability (%) Resonance Score Customer Profitability Mapping Hidden Liability Hidden Liability Target More Profitability (%) John Fleming & Jim Asplund Human Sigma Avoid!! Cross-Sell NO correlation between Extreme Satisfaction and Loyalty Rationally Satisfied behave the same as Dissatisfied Resonance Score DANGER!!! Avoid Target More Who cares Take them, but be very careful about defining the relationship NEVER pay to acquire these people Jewelbox Clients These should be the ONLY type of customers who we will pay to acquire Source Analysis Usually not the obvious sources i.e. advertising; marketing; radio; etc LB&A,Certified Public Accountants, PLLC Page 5

6 Cross-Sell Using Your Customer Profitability Map Goldmine Clients Usually caused by: nibbling, or gagging Sales Pie Analysis Total Quadrant Weighting At-Risk Profit Cross-Sell Potential Profit Replacement Potential Price / Margin Analysis Total Quadrant Weighting At-Risk Profit Triage!! One on one meetings Gross assessment of risk and potential Use to set targets Communication Strategies Near-term risk assessment The cost of apathy Cross-Sell Potential Map-Stacking For Fun & Profit Usually a VERY quick source of money Communication Strategies Sales tactics Up-sells, cross-sells automate / remove discretion Cash Flow Usually the single most effective way to increase Average Transaction Return on Investment LB&A,Certified Public Accountants, PLLC Page 6

7 Map-Stacking For Fun & Profit Sales Cash Cash Flow Flow Return on Investment Money Cash Flow Return on Investment Special Offer Go to me at to take part in a test LB&A,Certified Public Accountants, PLLC Page 7