personal, business and wealth banking | minster …...evaluating business process and systems for...
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Member FDIC
Dan Heitmeyer VP Commercial Banking
419-628-2351 [email protected]
We believe the key distinction between banks is the way they serve their customers. Through honesty, hard work and quality customer service, our knowledgeable, friendly staff is ready and willing to assist you. Whether you are banking as an individual, a family or a business, you’ll benefit from sound, strategic advice, flexibility and locally made decisions from people who truly understand your needs.
MinsterBank.com
Entrepreneur Bootcamp Series
Date Topic Detail
July 18th Sales and Marketing Strategy
Accessing contracts and targeting opportunities.
August 15th Financial Management
How to manage the business from financial reports. Determining adequate levels of capital. Understanding forms and uses of capital.
September 19th People & Partnerships
Developing and leveraging key relationships.
October 17th Systems & Processes
Evaluating business process and systems for efficiency, opportunity, and need.
November 14th Feasibility and Action Planning
Complete a feasibility plan and assess whether to drop, delay, or do the planned business startup, growth or expansion activity. Identify most impactful business tasks and make a plan to execute them.
Today’s Presenters
Donerik Black, MBA
Jasper Browne, LLC
937.397.7796
61C N. Dixie Dr.
Vandalia, Ohio 454377
www.JasperBrowne.com
RoShawn Winburn, MBA
Minority Business Assistance Center
937.333.1033
371 W. 2nd St., Suite 100
Dayton Ohio 45402
www.DaytonMBAC.org
Product/Service Purpose
Features vs. Benefits
Related Products and Services
Determining the Product or
Service Portfolio
Successful businesses share a common attribute:
They do something useful for their customers.
If you accurately understand your customers'
problems and needs, your business will have a
better chance of success.
What problem does your product/service solve?
Product/Service Purpose
Features vs. Benefits
A product portfolio is comprised of all the products
which an organization has.
1. A product portfolio may comprise of:
– different categories of products,
– different product lines, and
– the individual product itself.
2. Management is needed on all the three levels of a product portfolio. You need
managers for:
– managing individual products,
– managing product lines, and
– the top level management which manages the complete portfolio.
Related Products and Services
Essentials of Effective Pricing
• Need to cover your cost
– What are my expenses?
• Need to be competitive
– What price is right for my market?
• Needs to be in line with customer value
– Can often be a cue to quality.
Types of Business Expenses
• Cost of Goods Sold (COGS)
– The actual cost to produce the product or
service
• Fixed/Operating Expenses
– Other operating expenses not directly related
to producing products or services
– Overhead, such as utilities, rent, insurance
What Price is Right?
The real price of a product or service is
…no more than the customer is willing to pay.
Find out how much that is by using:
– Customer Surveys
– Competition Shopping
– Market Research Sales
Pricing Strategies
Pricing Strategies
When will you break-even?
The break-even analysis tells:
– How many products or service units you must sell at a given price in order to cover your business expenses
– The point at which enough sales are made to cover your business expenses, but before a profit is earned
– Your minimal sales goals
Just a Few More Terms...
• Gross Income -- Sales revenue before expenses are considered
• Gross Profit -- What remains after subtracting the COGS from the Gross Income
• Net Profit -- What remains after subtracting fixed expenses from Gross Profit
Gross Income, Gross Profit & Net Profit
Income
Sales, widgets $500
Sales, gadgets $400
Gross Income $900
COGS
Material $250
Labor $350
Total COGS $600
Gross Profit $300
Fixed Expenses
Rent $100
Utilities $ 35
Total Fixed Expenses $135
Net Profit $165
How Break-even Works
You need enough Gross Income so that after you subtract Cost of Goods Sold, there remains enough Gross Profit to pay Fixed Expenses
• Gross Income (price) - an educated guess based on what you’ve learned about the marketplace
• Cost of Goods Sold - comes from researching the cost of creating the product or delivering the service
• Fixed Expenses - comes from researching the cost of operating the business
Break-even Formula
Part one:
Gross Income minus COGS
= Gross Profit
Part two:
Fixed Expenses Divided by Gross Profit
= Break-even
Sarah Sue's Sandwich Shoppe
Fixed Expenses:
Rent $ 600
Utilities $ 150
Telephone $ 100
Business Insurance $ 25
Owner's Salary $ 2,000
Miscellaneous $ 50
Total Fixed Expenses: $ 2,925
COGS For the Swiss Gobbler
Supplier Price Sheet
and Labor Costs
Sarah estimates Ingredients per
Gobbler
COGS Swiss
Gobbler
Turkey @ $3.00/Lb 10 slices per lb. 2 slices $ .60
Bread @ $ .75/Loaf 30 slices per loaf 2 slices $ .05
Sw Chs @ $3.00/Lb 10 slices per lb. 2 slices $ .60
Mayo @ $2.00/Jar 32 ounces per jar 1 Oz. $ .06
Mustard @ $1.00/Jar 32 ounces per jar 1 Oz. $ .03
Tomatoes @ $ .50 ea 8 slice/ tomato 1 slice $ .06
Lettuce @ $ .60/Head 30 leaves/ head 2 leaves $ .04
Secret Sauce @ 3.00/Jar 32 ounces/ jar 1 Oz. $ .09
Wax Paper @ .03/Sheet precut sheets 1 Sheet $ .03
Labor @ $8.00 Hour 15 sandwiches /Hr 4 Minutes $ .53
Total COGS: $ 2.09
Monthly Break-even Point
Three things to calculate her break-even:
1. Monthly fixed expenses $2,925
2. COGS determined to be $2.09
3. Sarah sets her price at $4.95
Part One:
Gross Income - COGS = Gross Profit
$4.95 -$2.09 = $2.86
Part Two:
Fixed Expenses/Gross Profit = B/E per Mo
$2,925 / $2.86 = 1,023
Sarah Sue will have to sell 1,023 Swiss Gobblers per month to break-even.
Product Mix
When a business offers a variety of products for sale, that variety is known as a Product mix.
1. Compute a B/E analysis on each product you will sell
2. Estimate how many of each product will sell in a period
3. Multiply the gross profit for each item by the number you will
sell
4. Add all the total gross profits together
5. Does total gross profit equal fixed expenses?
Pricing for Service Providers
Step 1. Determine personal income requirements Annual Operating Expenses $10,000
Owner's Gross Wages $30,000
Total Income Requirements $40,000
Step 2. Calculate available working hrs. 52 weeks x 40 hours per week 2,080 hrs
Minus 40 vacation & 56 holiday/sick hrs - 96 hrs
Equals available hours 1,984 hrs
Pricing for Service Providers
Step 3. Estimate billable hours
1,984 hours available per year divided by 4 Qtrs. = 496 hours per Qtr.
Available Hrs. X Percent Billable = Per Qtr
Qtr 1: 496 X 20% (1 day per week) 99 Hrs.
Qtr 2: 496 X 25% (1 out of 4 days) 124 Hrs.
Qtr 3: 496 X 30% (1 out of 3 days) 149 Hrs.
Qtr 4: 496 X 40% (2 days/week) 198 Hrs.
Estimated Billable Hours: 570 Hrs.
Step 4. Calculate the Hourly Billing Rate Total income required (step 1) $40,000 per yr
Divided by number of billable hrs. per / 570 hrs per yr
Equals hourly rate = $70 per hr
Step 5. Decide If This Seems Reasonable – Is this rate reasonable? Will the market bear this rate?
– Is my salary goal too high?
– Can I reduce overhead expenses or increase billable hours?
– Can I accomplish this amount of work and manage my business while maintaining a reasonable schedule?
– Is this business venture worthwhile given my financial and lifestyle goals?
Pricing for Service Providers
LERONDA F. JACKSON
PRESIDENT & INDEPENDENT AGENT
• Started LFL Insurance in 2001 to serve individual and
business clients.
• Quotes several carriers, including Erie, Travelers, Pekin,
Safeco, Progressive, Anthem, Humana, and others.
• The only African American female to own an
independent insurance agency in Dayton.
• Member of Dayton Rotary Club, the National Council of
Negro Women, Optimist, and Kiwanis.
• Inducted into the Black Who’s Who of Cincinnati &
Dayton.
• Writes insurance articles for the Dayton Weekly News
and speaks to various groups regarding the insurance
industry, entrepreneurship, and walking with the Lord.
LFL Insurance Agency, LLC
8141 N Main St, Suite C Dayton, OH 45415
937-222-5884
Some Final Thoughts..
Don’t try to be all things to all people.
Start with the conceptual
Move to the tactical
Have a clear positioning
…and let that guide your strategy and tactics.
Please give us feedback by…
1. Completing a survey
2. Sending an email to
Registration is live for the next
bootcamp on June13th.
Reserve your spot & tell a friend!
Help Us, Help You
Click to edit Master title style Contact Us
Member FDIC
(419) 628-2351 [email protected]
MinsterBank.com
Dan Heitmeyer VP Commercial Banking