Hey, we all started out like that but why should people leave this forum none the wiser?
So, why not join me in sharing some sound business basics for those that are new or those who have just forgotten. Let us hear those pearls of wisdom and to start the ball.
THERE ARE JUST TWO WAYS AND ONLY TWO WAYS TO MAKE MONEY
* Increase Sales* or * decrease costs*
The amount you can decrease costs is usually limited but, the amount that can increase sales is limitless.
So how do you go about increasing your sales? there are three main ways:
*Increase the price of each transaction
*Increase the number of customers
*Increase the frequency of the sale to each customer
ideally you should try for all three at the same time.
For example, lets look at the following scenario...
* You presently have 10 customers on your list
* The average transaction value is £10 for a Ebook CD package that costs you £3 to produce
* The average frequency of purchase by a customer is 10 times a year
* Fixed overheads are £200
Sales are presently £1000 (10 x £10 x 10), cost of sales are £300 (10 x £3 x 10) and with fixed overheads of £200 this leaves a net profit of £500.
If it was now possible to increase all three sales generators by 10%, we can increase sales to £1331 (11 x £11 x 11), cost of sales become £363 (11 x £3 x 11), and with fixed overheads still at £200, the net profit now becomes £768
So profits have now risen by £268, that is a massive 53.6% increase as result of improving all 3 generators by just 10%. This shows the power of working on all 3 areas at the same time to achieve maximum results.
Sounds good in theory but how do increase your growth in all three areas?
The traditional methods are:
Lead Generation - get good quality visitors.
Converting the visitors into Sales
Re-selling to existing customers
The real secret in increasing the number of your customers is not only how many you gain but how many you don't loose and this is totally reliant on the quality of your customer service. This is particularly apparent when you try to increase sales to existing customers.
Remember this is basic theory and in real life the effect of different changes in sales
generators will vary from business to business. To maximize your own profitability you will need to also measure the effect of changing prices on the volume of your sales.
BECAUSE YOU CANNOT MANAGE WHAT YOU DO NOT MEASURE