by VentureStreet  Join Our Network
Is One of Your Goals to “Lose” Some Excess Weight? Why Not Have the Same Goal for Your Business?
By Sieg Weber



Is One of Your Goals to “Lose” Some Excess Weight?
Why Not Have the Same Goal for Your Business?

When you hear people talking about sales goals, they’re almost always referring to gross sales. “I want to do $500,000 in revenues. I want my company to grow to $1 million, $10 million, etc.”

But which is more important… sales, or profits? Shouldn’t the goal be to increase profits? …the money you keep after paying your expenses? Doubling your revenues doesn’t equate to doubling your profits, does it? In many cases quite the opposite happens. Sales may increase, but the profits lag far behind.

Perhaps a better idea is to “trim” your business…stop calling on the unprofitable and time consuming accounts…so you can reduce your costs and dramatically increase your profit margins.

This in mind, let’s look at company XYZ, Inc.

XYZ Inc. is a Mfg Rep Company. It does nearly $6 million in total sales. The manufacturers pay commissions of 30 percent, so the company earns $1.8 million. The company pays out $1.5 million to its 30 employees and other expenses, leaving a $300,000 net profit. XYZ Inc. has nearly 600 accounts, but the bottom two hundred accounts don’t do much business with them. They do however; take up a lot of the sales and service time, effort, and attention.

Doing an analysis, XYZ Inc. discovered their 200 smallest accounts spend only $500,000 annually…but take up over one-third of the sales staff’s available time. Considering the implications they came to these conclusions:

• If they stopped calling on these small (the bottom third) accounts, sales would drop to $5.5 million
• Commission income would drop to $1.65 million from $1.8.
• However, they could reduce their employee count and related expenses by 1/3, or $1 million (a $500,000 savings).
• The result would be a $350,000 increase in profit to $650,000.

“Trimming” the business was step one.

Step two was to have the entire company focus their efforts toward improving the quality of service to their best, or their “A” Class customers. This meant the team could easily keep their best customers very happy…turning them into raving fans who referred additional business to the company. The bonus was that the prospective customers referred by the “A” Class customers were just like them …also “A” Class. They were also able to find additional products and services they could sell to those “A” Class customers.

The sales team identified their “Ideal Customers”, their qualities, size, values, culture, etc …customers they wanted to do business with, and then went after them. The attitudes and morale of the organization changed. The sales people were making more money, and everybody was having more fun because they were spending their time, energy, and effort serving their “A” Class customers. And, with their new-found, free time, they are able to look for new opportunities and clients with the same profile as their “Ideal Customers”.

XYZ Inc. can now set it’s sights on growing the company to $8 million, and then $10 million in sales, by doing business with only the “best” customers... with much higher profit margins.

So, how can you reduce some excess weight in your Business this year?

Here are the three things we just went over:

• Trim your customer base. Stop calling on those who take up lots of your time, are hard to deal with, price shop, etc …and don’t do much business with you anyway.
• Create a profile of your “Ideal Customer”, and then find more clients who fit that profile.
• Give your best customers a consistently incredible, “WOW” level of attention and service.
“Under Commit and Over Deliver”.

…on your side.
Sieg



Need a management consultant? Get matched to a local professional near you.
Find Management Consultants
Other articles you may like:
3 Big Reasons Why Online Businesses Fail And Ultimately Disappear
Know these 3 biggest mistakes committed in sales and marketing and you will never commit...

7 Steps to Growing a Business More Rapidly
Your business maybe running you instead of you growing it. If that's the case, you...

Are Seven Percenters Killing Your Business?
How much time are you and your top team spending on strategic initiatives? You'd be very...

“…That's Not What They Pay Me For”
If the first impression you make “stresses” me (the customer), any opportunity you had...

“One Thing” Every Entrepreneur Absolutely Must Do
In the movie City Slickers the trail boss “Curly”, played by Jack Palance, was a...

Be the first to find this article helpful.
Need a management consultant? Get matched to a local professional near you.
About the Author

Sieg Weber, SRW Business Consulting
PO Box 7333
Redlands, CA 92375
909-800-2367

If you would like to re-print this article, please contact the author.
Other articles you may like:
Leadership…An Informed Perspective
I have published articles, written books, taken courses, done extensive research, and...

Should business owners be concerned about lawsuit risk?
One aggressive lawsuit can destroy and business owner's financial security.

Poka Yoke
Mistake proofing is a technique for eliminating errors. It is based upon the premise...

What is the Significance of a Business Logo?
When it comes to branding, there is perhaps no more important factor than your business...

Size Really Does Matter…or Does it? (Part 1 of 2)
In the world of business, size really does matter, especially when it comes to how...

Editorial Disclaimer: The views expressed in articles published on this website are those of the authors alone. They do not represent the views or opinions of this website or its staff. The articles on this site do not constitute a recommendation or endorsement with respect to any views, company, or product. Authors affirm that article submissions are their original content or that they have permission to reproduce.

Home   |   Articles & Videos   |   Affiliates   |   Networking Groups   |   Search by Category   |   Professionals

Terms of Use   |   Privacy   |   About Us   |   Contact Us   |   Member Login

© 2003-2014 - VentureStreet, LLC

Join Our Business Network