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Member You - The Mathematical Formula For Making Money
Running a home based cleaning business with your spouse can be a good way to combine business and family activities under one roof. But are you and your spouse the right match to work together as well as live together? Before you invest time and money into starting up a cleaning business with your spouse there are several key questions you should ask.1. Will your financial situation allow both of you to quit your present jobs and go into business together? It may be necessary for one person to continue working on either a part-time or full-time basis until the business is profitable enough to provide the income you need.2. What is your mission statement? Before taking out any loans or buying supplies and equipment, decide on a mission statement and write a business plan. This will help you get the "big picture". While writing your business plan, remember to address how the bu
Next, let's demonstrate the impact of improving all five variables by progressively larger amounts:
Case #1: Improve all 5 levers by 10% each.
Net profit = $32,210
Profit to Effort ratio = 1.22:1
N.B. Here's how to work out the Profit to Effort ratio. First of all work out the % increase in profit. This is derived by taking the original profit of $20,000 away from the new Net Profit and dividing the result by $20,000. In this instance our $12,210 increase in profit represents a 61% growth. Next, determine the relative effort by simply adding the % increases in each lever. In this example our relative effort is 50% (i.e. 5 x 10%). Finally, divide the % increase in profit by the % relative effort and you'll have the Profit to Effort ratio.
Case #2: Improve all 5 levers by 25% each.
Net profit = $61,035
Profit to Effort ratio = 1.64:1
Case #3: Improve all five levers by 50% each.
Net profit = $151,875
There are various factors to consider when buying a product, but the two main
areas must surely be price and quality.Price is easy - the only three options you have are up, down or same. That's
it. Quality is much more involved. Firstly we cannot judge or even quantify the
quality of a product if we don't have a yardstick. There are two ways to do this
and both have their place. Firstly, find an equivalent product sold by a rival
company and compare its attributes with your own product. Better still, obtain all
competing products and produce a checklist of each product's attributes,
comparing each with the other. Now add your own product to the mix and see where
it lands in the quality hierarchy.A second way of measuring quality is to produce a product specification (the
above comparison exercise could feed in to this). Most specifications
allow tolerances for cert
Embrace this truth and profits will flood your business.
Disregard this truth and financial-cancer will eat you.
What is this truth?
Quite simply, the size and speed of your entrepreneurial success is directly proportional to your understanding of The Mathematical Formula For Making Money.
Despite serving as the corner stone of every single commercial success since the dawn of commerce most businesses neglect its power. Being so familiar with the diluted version of the formula these businesses overlook the enormous profit-potential held within.
The Formula
Mindful of this blind-spot, let's now take a close look at the Mathematical Formula For Making Money:
Leads x Conversion Rate = Customers
Customers x Average Dollar Sale x Sales Per Customer = Gross Profits
Gross Profits x Profit Margin = Net Profits
Please pay close attention to what I am about to tell you: your number of customers; your gross profits; and your net profits are the least important figures in this formula.
Why?
Because they merely represent outcomes. They tell you how good or bad you're doing without telling you why. And without knowing why you're doing so well (or so bad) you are in no position to fix the cause with speed and accuracy. All you can do is guess and implement random strategies in the hope that one day your results will improve.
The real power of this formula is stored within the five highlighted variables (a.k.a. levers).
A Demonstration Of Power
Quite literally, when you apply these levers to your business your profits will increase exponentially.
Allow me to demonstrate.
Assume for the moment that your business currently operates under these circumstances:
Leads Per Annum = 10,000
Conversion Rate = 0.1 (10%)
Av. Dollar Sale = $50
Sales / Customer = 2 per annum
Profit Margin = 0.2 (20%)
Plugging these into the formula gives you a net profit of $20,000 per annum.
Let's now demonstrate the impact of improving progressively more levers without increasing your overall effort:
Case #1: Improve leads by 100%
Net profit = $40,000
Profit to Effort ratio = 1:1
I.e. for every % increase in effort you get the same % increase in profit.
Case #2: Improve leads and conversion rate by 50% each.
Net profit = $45,000
Profit to Effort ratio = 1.25:1
I.e. for every % increase in effort you get a 1.25% increase in profit.
Case #3: Improve your leads, conversion rate and average dollar sale by 33% each.
Net profit = $47,052
Profit to Effort ratio = 1.35:1
I.e. for every % increase in effort you get a 1.35% increase in profit.
Case#4: Improve all levers except profit margin by 25% each.
Net profit = $48,828
Profit to Effort ratio = 1.44:1
I.e. for every % increase in effort you a 1.44% increase in profit.
Case #5: Improve all five levers by 20% each.
Net profit = $49,766
Profit to Effort ratio = 1.49:1
I.e. for every % increase in effort you get a 1.49% increase in profit.
Observation: By simply increasing the number of levers you improve you magnify your leverage. In other words, for the same amount of effort, the more levers you improve the more your profits improve.
In this example we see that by spreading your effort over all five levers you increased your net profits by $29,766. Compared to the $20,000 increase gained from improving only one variable we see that your profit growth is almost 50% greater for doing nothing more than spreading your resources over all five levers. Imagine all the extra money you could be generating right now without any extra effort. All it takes is a simple change in focus.
Conclusion: To leverage your efforts for maximum returns you must focus on improving all five levers in your business.
An Even More Powerful Demonstration
Next, let's demonstrate the impact of improving all five variables by progressively larger amounts:
Case #1: Improve all 5 levers by 10% each.
Net profit = $32,210
Profit to Effort ratio = 1.22:1
N.B. Here's how to work out the Profit to Effort ratio. First of all work out the % increase in profit. This is derived by taking the original profit of $20,000 away from the new Net Profit and dividing the result by $20,000. In this instance our $12,210 increase in profit represents a 61% growth. Next, determine the relative effort by simply adding the % increases in each lever. In this example our relative effort is 50% (i.e. 5 x 10%). Finally, divide the % increase in profit by the % relative effort and you'll have the Profit to Effort ratio.
Case #2: Improve all 5 levers by 25% each.
Net profit = $61,035
Profit to Effort ratio = 1.64:1
Case #3: Improve all five levers by 50% each.
Net profit = $151,875
With the upcoming new year comes new technology. Even though there have been very few major innovations in the exhibit industry since the advent of the portable pop-up display, we at OneSource Exhibits are the first to test new technologies and determine their worthiness. The fabric mural pop-up is one of those advances we have been very impressed with. The fabric pop-up has been around for a few years, but the quality of the graphics has never, until now, rivaled the quality of ink jet or Lambda graphics. With major technological advances in fabric materials and dye-sublimation printing, resolution has taken a dramatic leap while costs have steadily dropped.The fabric mural pop-up display has the look and feel of a traditional photo mural panel pop-up, with less than half the weight, a faster set-up time, and more cost savings. Any graphic image can be printed on a fa
Why?
Because they merely represent outcomes. They tell you how good or bad you're doing without telling you why. And without knowing why you're doing so well (or so bad) you are in no position to fix the cause with speed and accuracy. All you can do is guess and implement random strategies in the hope that one day your results will improve.
The real power of this formula is stored within the five highlighted variables (a.k.a. levers).
A Demonstration Of Power
Quite literally, when you apply these levers to your business your profits will increase exponentially.
Allow me to demonstrate.
Assume for the moment that your business currently operates under these circumstances:
Leads Per Annum = 10,000
Conversion Rate = 0.1 (10%)
Av. Dollar Sale = $50
Sales / Customer = 2 per annum
Profit Margin = 0.2 (20%)
Plugging these into the formula gives you a net profit of $20,000 per annum.
Let's now demonstrate the impact of improving progressively more levers without increasing your overall effort:
Case #1: Improve leads by 100%
Net profit = $40,000
Profit to Effort ratio = 1:1
I.e. for every % increase in effort you get the same % increase in profit.
Case #2: Improve leads and conversion rate by 50% each.
Net profit = $45,000
Profit to Effort ratio = 1.25:1
I.e. for every % increase in effort you get a 1.25% increase in profit.
Case #3: Improve your leads, conversion rate and average dollar sale by 33% each.
Net profit = $47,052
Profit to Effort ratio = 1.35:1
I.e. for every % increase in effort you get a 1.35% increase in profit.
Case#4: Improve all levers except profit margin by 25% each.
Net profit = $48,828
Profit to Effort ratio = 1.44:1
I.e. for every % increase in effort you a 1.44% increase in profit.
Case #5: Improve all five levers by 20% each.
Net profit = $49,766
Profit to Effort ratio = 1.49:1
I.e. for every % increase in effort you get a 1.49% increase in profit.
Observation: By simply increasing the number of levers you improve you magnify your leverage. In other words, for the same amount of effort, the more levers you improve the more your profits improve.
In this example we see that by spreading your effort over all five levers you increased your net profits by $29,766. Compared to the $20,000 increase gained from improving only one variable we see that your profit growth is almost 50% greater for doing nothing more than spreading your resources over all five levers. Imagine all the extra money you could be generating right now without any extra effort. All it takes is a simple change in focus.
Conclusion: To leverage your efforts for maximum returns you must focus on improving all five levers in your business.
An Even More Powerful Demonstration
Next, let's demonstrate the impact of improving all five variables by progressively larger amounts:
Case #1: Improve all 5 levers by 10% each.
Net profit = $32,210
Profit to Effort ratio = 1.22:1
N.B. Here's how to work out the Profit to Effort ratio. First of all work out the % increase in profit. This is derived by taking the original profit of $20,000 away from the new Net Profit and dividing the result by $20,000. In this instance our $12,210 increase in profit represents a 61% growth. Next, determine the relative effort by simply adding the % increases in each lever. In this example our relative effort is 50% (i.e. 5 x 10%). Finally, divide the % increase in profit by the % relative effort and you'll have the Profit to Effort ratio.
Case #2: Improve all 5 levers by 25% each.
Net profit = $61,035
Profit to Effort ratio = 1.64:1
Case #3: Improve all five levers by 50% each.
Net profit = $151,875
Have you decided to venture into the Shaklee Business Opportunity?Great! You’ve made a excellent decision because you are on your way to partnering with an established and impressive company. The opportunities can be immeasurable, but you can’t get very far on just opportunities, you have to take the initiative to achieve financial freedom by outlining a plan for yourself.Now you may ask, how am I going to find customers without being that pesky door-to-door salesman? How am I supposed to generate leads for my very own Shaklee business opportunity? How do I train my distributors so that I can achieve that six-figure income?Questions like these are going to help you get started off on the right foot. Here are some tips to help you out:Your First Step to Success: Find a team that fits you and has been previously established.The first key to success in any businessmula gives you a net profit of $20,000 per annum.
Let's now demonstrate the impact of improving progressively more levers without increasing your overall effort:
Case #1: Improve leads by 100%
Net profit = $40,000
Profit to Effort ratio = 1:1
I.e. for every % increase in effort you get the same % increase in profit.
Case #2: Improve leads and conversion rate by 50% each.
Net profit = $45,000
Profit to Effort ratio = 1.25:1
I.e. for every % increase in effort you get a 1.25% increase in profit.
Case #3: Improve your leads, conversion rate and average dollar sale by 33% each.
Net profit = $47,052
Profit to Effort ratio = 1.35:1
I.e. for every % increase in effort you get a 1.35% increase in profit.
Case#4: Improve all levers except profit margin by 25% each.
Net profit = $48,828
Profit to Effort ratio = 1.44:1
I.e. for every % increase in effort you a 1.44% increase in profit.
Case #5: Improve all five levers by 20% each.
Net profit = $49,766
Profit to Effort ratio = 1.49:1
I.e. for every % increase in effort you get a 1.49% increase in profit.
Observation: By simply increasing the number of levers you improve you magnify your leverage. In other words, for the same amount of effort, the more levers you improve the more your profits improve.
In this example we see that by spreading your effort over all five levers you increased your net profits by $29,766. Compared to the $20,000 increase gained from improving only one variable we see that your profit growth is almost 50% greater for doing nothing more than spreading your resources over all five levers. Imagine all the extra money you could be generating right now without any extra effort. All it takes is a simple change in focus.
Conclusion: To leverage your efforts for maximum returns you must focus on improving all five levers in your business.
An Even More Powerful Demonstration
Next, let's demonstrate the impact of improving all five variables by progressively larger amounts:
Case #1: Improve all 5 levers by 10% each.
Net profit = $32,210
Profit to Effort ratio = 1.22:1
N.B. Here's how to work out the Profit to Effort ratio. First of all work out the % increase in profit. This is derived by taking the original profit of $20,000 away from the new Net Profit and dividing the result by $20,000. In this instance our $12,210 increase in profit represents a 61% growth. Next, determine the relative effort by simply adding the % increases in each lever. In this example our relative effort is 50% (i.e. 5 x 10%). Finally, divide the % increase in profit by the % relative effort and you'll have the Profit to Effort ratio.
Case #2: Improve all 5 levers by 25% each.
Net profit = $61,035
Profit to Effort ratio = 1.64:1
Case #3: Improve all five levers by 50% each.
Net profit = $151,875
If you have a small business blog, or are thinking of starting one, you should be aware of the ways you can use your blog to drive traffic to your Website. It's simpler than you think.The first thing to understand about your blog is that each entry is counted as one Web page. Even if you have your blog set to display 10 blog posts on the same page, each of them is counted as a separate Web page by the search engines. That's why it is important to treat each blog entry as an SEO tool. The following tips should be kept in mind for each blog entry in order to optimize them for the search engines and drive more traffic to your Website from your blog:
1. Optimize each blog post around a single keyword
2. Make sure your keyword is in your blog post title, preferably at the beginning
3. Use subheads with or tags that also use your keyword
4. fort you a 1.44% increase in profit.
Case #5: Improve all five levers by 20% each.
Net profit = $49,766
Profit to Effort ratio = 1.49:1
I.e. for every % increase in effort you get a 1.49% increase in profit.
Observation: By simply increasing the number of levers you improve you magnify your leverage. In other words, for the same amount of effort, the more levers you improve the more your profits improve.
In this example we see that by spreading your effort over all five levers you increased your net profits by $29,766. Compared to the $20,000 increase gained from improving only one variable we see that your profit growth is almost 50% greater for doing nothing more than spreading your resources over all five levers. Imagine all the extra money you could be generating right now without any extra effort. All it takes is a simple change in focus.
Conclusion: To leverage your efforts for maximum returns you must focus on improving all five levers in your business.
An Even More Powerful Demonstration
Next, let's demonstrate the impact of improving all five variables by progressively larger amounts:
Case #1: Improve all 5 levers by 10% each.
Net profit = $32,210
Profit to Effort ratio = 1.22:1
N.B. Here's how to work out the Profit to Effort ratio. First of all work out the % increase in profit. This is derived by taking the original profit of $20,000 away from the new Net Profit and dividing the result by $20,000. In this instance our $12,210 increase in profit represents a 61% growth. Next, determine the relative effort by simply adding the % increases in each lever. In this example our relative effort is 50% (i.e. 5 x 10%). Finally, divide the % increase in profit by the % relative effort and you'll have the Profit to Effort ratio.
Case #2: Improve all 5 levers by 25% each.
Net profit = $61,035
Profit to Effort ratio = 1.64:1
Case #3: Improve all five levers by 50% each.
Net profit = $151,875
Once you have your company’s web site up and running, it is vital that you do everything possible to keep it that way. Nothing sets off alarms in a customer’s head faster than a non accessible web site or one that has features which do not work. A web site is literally your company’s window to the world and every aspect of the site; including the design, content, accessibility, ease of navigation, and uptime, says a lot about your company.A fully functioning, attractively designed, feature-loaded web site spells professionalism and expertise, while a poorly designed and inaccessible site reflects very poorly on your business. Still, the best designed site on the web; one loaded with impressive features and clever design tricks means absolutely nothing if your customers can’t get to it because it is down. Unfortunately, if your site is hosted by some other company and resides on their sful Demonstration
Next, let's demonstrate the impact of improving all five variables by progressively larger amounts:
Case #1: Improve all 5 levers by 10% each.
Net profit = $32,210
Profit to Effort ratio = 1.22:1
N.B. Here's how to work out the Profit to Effort ratio. First of all work out the % increase in profit. This is derived by taking the original profit of $20,000 away from the new Net Profit and dividing the result by $20,000. In this instance our $12,210 increase in profit represents a 61% growth. Next, determine the relative effort by simply adding the % increases in each lever. In this example our relative effort is 50% (i.e. 5 x 10%). Finally, divide the % increase in profit by the % relative effort and you'll have the Profit to Effort ratio.
Case #2: Improve all 5 levers by 25% each.
Net profit = $61,035
Profit to Effort ratio = 1.64:1
Case #3: Improve all five levers by 50% each.
Net profit = $151,875
Profit to Effort ratio = 2.64:1
Case #4: Improve all 5 levers by 100% each.
Net profit = $640,000
Profit to Effort ratio = 6.20:1
Observation: As you continue to improve all five levers the magnification factor on your net profit increases at an exponential rate.
In this example we see that when we doubled our effort from case #2 to case #3 our leverage increased by 61% (i.e. ((2.64 - 1.64) ? 1.64) x 100). But when we doubled our efforts once more from Case #3 to case #4 our leverage increased by 135%
This has to be one of the most magnificent realisations you could ever make in business.
Conclusion: Never stop improving all five levers of your business.
A Tragic Habit - And How To Fix It
Clearly these two examples demonstrate the power of leveraging all five variables in your business.
Tragically, most businesses seem to care about only one of these levers - the number of leads. To make matters worse, of all the levers this one will cost you the most to improve!
So if you're stuck in the 'drive-more-traffic-to-my-business' trap - STOP! Instead, harness the multiplying power of all five levers and you'll find that your profit to effort ratio will skyrocket.
Or to put it another way, by applying all five levers to your business (instead of only one) you will make more money with less effort.
Right about now you may be thinking to yourself, "That's all well and good in theory but how could I possibly increase all five levers by such large amounts?"
Although there are over 200 ways to amplify these levers space restrictions preclude me from discussing the how-to's here. What's important for now is that you understand the magnifying potential stored within this formula. With this understanding achieving a 100%, a 200% or even a 1000% increase in profit is well within your grasp.
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