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

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Presentation transcript:

Brad Sugar Show me the money.

The formula for building a business

The five ways to build your business

1. LEADS The formula for building a business LEADS The 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 The formula for building a business CONVERSION RATE How 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) The formula for building a business NO. OF CUSTOMERS

1. LEADS 2. CONVERSION RATE % 3. NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2) 4. NO. OF TRANSACTIONS The formula for building a business HOW MANY TIMES DOES A CUSTOMER BUY FROM YOU? NUMBER OF CUSTOMERS X NUMBER OF TRANSACTIONS NO. OF TRANSACTIONS

1. LEADS 2. CONVERSION RATE 3. NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2) 4. NO. OF TRANSACTIONS 5. AVERAGE VALUE SALE The formula for building a business 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 3. NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2) 4. NO. OF TRANSACTIONS 5. AVERAGE VALUE SALE 6. TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5) The formula for building a business CUSTOMERS X NO OF TRANSACTIONS X AVERAGE SALE = TOTAL REVENUE OR TOTAL TURNOVER TURNOVER / REVENUE

1. LEADS 2. CONVERSION RATE 3. NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2) 4. NO. OF TRANSACTIONS 5. AVERAGE VALUE SALE 6. TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5) 7. MARGINS The formula for building a business MARGINS = THE % MARK-UP YOU CHARGE

1. LEADS 2. CONVERSION RATE 3. NO. OF CUSTOMERS (LEADS X CONVERSION RATE) (1 X 2) 4. NO. OF TRANSACTIONS 5. AVERAGE VALUE SALE 6. TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5) 7. MARGINS 8. PROFIT (TURNOVER X MARGIN) (6 X 7) The formula for building a business 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) The formula for building a business

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) The formula for building a business 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 2 X AVERAGE VALUE SALE $100 = TURNOVER (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5) $ X MARGINS 25% = PROFIT (TURNOVER X MARGIN) (6 X 7) $50,000 The formula for building a business

1. LEADS 2. CONVERSION RATE 3. NUMBER OF TRANSACTIONS 4. AVERAGE SALE 5. MARGINS The five ways to build your business

CALCULATIONS WHEN WE HAVE AN INCREASE OF 10% ON ALL 5 AREAS $ (TURNOVER X MARGIN) (6 X 7) = PROFIT 27.5% X MARGINS $ (NUMBER OF CUSTOMERS X TRANSACTIONS X AVERAGE SALE) (3 X 4 X 5) = TURNOVER $110 X AVERAGE VALUE SALE 2.2 NO. OF TRANSACTIONS 1210 (LEADS X CONVERSION RATE) (1 X 2) = NO. OF CUSTOMERS 27.5% X CONVERSION RATE 4400 LEADS INCREASE OF 10% NEW FIGURES 61% INCREASE IN PROFITS.

CALCULATIONS WHEN WE HAVE AN INCREASE OF 100% ON ALL 5 AREAS 1.6 MILLION (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 8000 LEADS 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?

You focus more on getting your product ready for sale than getting customers in to BUY.

LACK OF CASH? You focus more on getting your product ready for sale than getting customers in to BUY. You are not collecting the cash fast enough.