Tapping Your Unseen Business Potential Fall 2009 Meeting October 1, 2009.
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Transcript of Tapping Your Unseen Business Potential Fall 2009 Meeting October 1, 2009.
![Page 1: Tapping Your Unseen Business Potential Fall 2009 Meeting October 1, 2009.](https://reader030.fdocuments.net/reader030/viewer/2022032612/56649ef55503460f94c0923c/html5/thumbnails/1.jpg)
Tapping Your Unseen Business Potential
Fall 2009 MeetingOctober 1, 2009
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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.
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Presentation Topics
1. Where Business Potential Hides
2. Quantifying Your Potential
3. “Tapping” That Potential
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Employee retention rates are a good indicator of corporate
health
Where is Your Potential Hiding?
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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?
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High turnover in operations indicates a too diverse
product and service offering portfolio
Where is Your Potential Hiding?
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Low Turnover in Finance and Administration Indicates A
Bloated Infrastructure
Where is Your Potential Hiding?
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Most contracting firms are only achieving 6% of their revenue potential
Startling “Facts”
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20% of your customers are responsible for 80% of your
revenues
Startling “Facts”
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Your offerings portfolio ensures that at least 30% of possible
customer revenues are left for your competitor
Startling “Facts”
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Very few contractors are achieving the optimal chargeability rate of 80%
Other Places to Investigate
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Shared compensation programs may be paying some employees too
much.
Other Places to Investigate
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Most contracting firms are only achieving 6% of their revenue
potential
The 6% Performance Barrier
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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
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Compare the actual revenue realized by the potential revenue amount –
this represents your upside revenue gap
The 6% Barrier
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It is possible to double the size of your business in 12-24 months
without adding one new customer!
The 6% Barrier
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The Revenue Per Customer Metric allows for you to “measure”
effective customers – helping you break the 80/20 Rule
Customer DNA
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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
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Extract the common characteristics of your “best”
customers
Customer DNA
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Compare this “DNA” Overlay with all active customers
Customer DNA
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What customers are under-utilized and should aggressively be
“marketed”?
Customer DNA
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The value of the calculation is in the trending of the information
– not the snapshot
Trends
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Revenue per Customer
Penetration in Optimal Revenue Potential
Scenario #1
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Resolution is to increase the number and diversity
of offerings available (horizontal acquisition)
Scenario #1
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If you are in a niche market – this might be impossible to
overcome
Scenario #1
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Revenue per Customer
Penetration in Optimal Revenue Potential
Scenario #2
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This is the “death spiral” scenario – created, in part, by the recession
Scenario #2
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Only innovation – looking at a new way of doing business will
lift you out of this scenario
Scenario #2
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Revenue per Customer
Penetration in Optimal Revenue Potential
Scenario #3
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Resolution is to “fire all the salespeople”
Scenario #3
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Conduct an offerings audit to determine relevancy
Scenario #3
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Penetration in Optimal Revenue Potential
Revenue per Customer
Scenario #4
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This is the best scenario because it fully leverages
both customers and offerings – the two
“hidden” components of every business
Scenario #4
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Offerings are sold based on a “reaction” to a customer’s
request
Portfolio Destinations
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The goal is to create an offerings portfolio that focuses on a
customer destination
Portfolio Destinations
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AIM is the foundation for creating a comprehensive
offerings portfolio
Portfolio Destinations
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Assessments are quantitative studies that “show” the monetary value of
a current or improved condition (e.g., water conservation audits)
Portfolio Destinations
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Implementation offerings are your core services and should represent 60% - 70% of total revenue
Portfolio Destinations
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Maintenance offerings allow you to interact with the customer
throughout the entire business cycle
Portfolio Destinations
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Many contracting firms do not calculate
chargeability correctly – leading to high levels of
“opportunity”
Quick Hits - Chargeability
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Excluding the non-chargeable personnel from the calculation
can drag down the overall score
Quick Hits - Chargeability
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Not charging the time of the owner is the same as giving
away your most valuable asset
Quick Hits - Chargeability
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Shared compensation programs are great for rewarding deserving employees
Quick Hits – Shared Compensation
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For sales people – reward on the deal’s profitability – not, as many owners do, the gross revenue of the deal
Quick Hits – Shared Compensation
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For operational staff reward chargeable hours and
beating fixed price estimates but deduct hours
needed for re-work
Quick Hits – Shared Compensation
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Administrative personnel can take an active role in reducing your G&A expenses – a basis for their shared compensation
Quick Hits – Shared Compensation
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RewardReinvest
Review
The Business Cycle Release
Research
Portfolio Destinations
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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