tapping your unseen business potential fall 2009 meeting october 1, 2009
TRANSCRIPT
Tapping Your Unseen Business Potential
Fall 2009 MeetingOctober 1, 2009
Copyright MaterialsThis presentation is protected by US and
International Copyright laws. Reproduction, distribution, display and use of the
presentation without written permission of the speaker is prohibited.
Presentation Topics
1. Where Business Potential Hides
2. Quantifying Your Potential
3. “Tapping” That Potential
Employee retention rates are a good indicator of corporate
health
Where is Your Potential Hiding?
High turnover in sales and marketing indicates a heavy reliance on new customer acquisition or
a reactive sales environment
High turnover in sales and marketing may mean a heavy reliance on new customer acquisition or a reactive
sales environment
Where is Your Potential Hiding?
High turnover in operations indicates a too diverse
product and service offering portfolio
Where is Your Potential Hiding?
Low Turnover in Finance and Administration Indicates A
Bloated Infrastructure
Where is Your Potential Hiding?
Most contracting firms are only achieving 6% of their revenue potential
Startling “Facts”
20% of your customers are responsible for 80% of your
revenues
Startling “Facts”
Your offerings portfolio ensures that at least 30% of possible
customer revenues are left for your competitor
Startling “Facts”
Very few contractors are achieving the optimal chargeability rate of 80%
Other Places to Investigate
Shared compensation programs may be paying some employees too
much.
Other Places to Investigate
Most contracting firms are only achieving 6% of their revenue
potential
The 6% Performance Barrier
Take the largest 2-3 customers and multiply their average revenue by the total number of active customers to
calculate Optimal Revenue Potential
The 6% Barrier
Compare the actual revenue realized by the potential revenue amount –
this represents your upside revenue gap
The 6% Barrier
It is possible to double the size of your business in 12-24 months
without adding one new customer!
The 6% Barrier
The Revenue Per Customer Metric allows for you to “measure”
effective customers – helping you break the 80/20 Rule
Customer DNA
Take the total revenue for a stated period of time and divide it by
the total number of active customers to calculate your revenue per customer metric
Customer DNA
Extract the common characteristics of your “best”
customers
Customer DNA
Compare this “DNA” Overlay with all active customers
Customer DNA
What customers are under-utilized and should aggressively be
“marketed”?
Customer DNA
The value of the calculation is in the trending of the information
– not the snapshot
Trends
Revenue per Customer
Penetration in Optimal Revenue Potential
Scenario #1
Resolution is to increase the number and diversity
of offerings available (horizontal acquisition)
Scenario #1
If you are in a niche market – this might be impossible to
overcome
Scenario #1
Revenue per Customer
Penetration in Optimal Revenue Potential
Scenario #2
This is the “death spiral” scenario – created, in part, by the recession
Scenario #2
Only innovation – looking at a new way of doing business will
lift you out of this scenario
Scenario #2
Revenue per Customer
Penetration in Optimal Revenue Potential
Scenario #3
Resolution is to “fire all the salespeople”
Scenario #3
Conduct an offerings audit to determine relevancy
Scenario #3
Penetration in Optimal Revenue Potential
Revenue per Customer
Scenario #4
This is the best scenario because it fully leverages
both customers and offerings – the two
“hidden” components of every business
Scenario #4
Offerings are sold based on a “reaction” to a customer’s
request
Portfolio Destinations
The goal is to create an offerings portfolio that focuses on a
customer destination
Portfolio Destinations
AIM is the foundation for creating a comprehensive
offerings portfolio
Portfolio Destinations
Assessments are quantitative studies that “show” the monetary value of
a current or improved condition (e.g., water conservation audits)
Portfolio Destinations
Implementation offerings are your core services and should represent 60% - 70% of total revenue
Portfolio Destinations
Maintenance offerings allow you to interact with the customer
throughout the entire business cycle
Portfolio Destinations
Many contracting firms do not calculate
chargeability correctly – leading to high levels of
“opportunity”
Quick Hits - Chargeability
Excluding the non-chargeable personnel from the calculation
can drag down the overall score
Quick Hits - Chargeability
Not charging the time of the owner is the same as giving
away your most valuable asset
Quick Hits - Chargeability
Shared compensation programs are great for rewarding deserving employees
Quick Hits – Shared Compensation
For sales people – reward on the deal’s profitability – not, as many owners do, the gross revenue of the deal
Quick Hits – Shared Compensation
For operational staff reward chargeable hours and
beating fixed price estimates but deduct hours
needed for re-work
Quick Hits – Shared Compensation
Administrative personnel can take an active role in reducing your G&A expenses – a basis for their shared compensation
Quick Hits – Shared Compensation
RewardReinvest
Review
The Business Cycle Release
Research
Portfolio Destinations
Most contracting firms have inherent value that is never realized – much of it being found in customer rosters and offerings portfolios.
It is possible to double the size of your firm without adding one new customer – while, at the same time, significantly reducing your cost of sales.
The recession has created a “chaotic environment” that is ideal for implementing sweeping business changes.
Are you ready to “tap” your unseen business potential?
Final Points
