What is your financial capacity?

How much money are you leaving on the table?

There are 6 Essential Elements Every Small Business Owner Needs to Know and the very First One is Your 100% Financial Capacity. Even if you’re a well run business you’re likely leaving 10’s of thousands of dollars on the table as additional profit that’s available to invest in growth every week or month.

And remember this old adage you can’t improve what you’re not measuring.

Let me run through 2 simple examples that are from local businesses right here in the Fox Valley.

One is a restaurant, one was my car dealership.

So here’s an example of a local restaurant that we did their 100% financial capacity for them. I rounded off the numbers a little bit to make it a little easier.

They had 30 tables, they were open 6 days a week, 10 hours a day their average table turn was 1 hour. Their average ticket per table was $50. So for this restaurant let’s look at their 100% financial capacity:

30 tables x 10 hours a day x $50 a table, $15000 a day is their capacity, $15000 x 6 days $90,000 a week is their 100% financial capacity.

Here’s where they actually were. They were doing $23,000 of revenue a week that was 25% of their capacity.

Now what did this do for this restaurant owner?

Well prior to this he was running a little bit in fear that maybe he was at capacity. Because again one of the things all business owners have in common is that lack of time.One of the reasons you have a lack of time is you don’t have the proper processes and strategies in place.

When we were able to show him this he was able to remove that fear and realize he really had tremendous potential for growth. Now going through some of our principles, we’re going to be able to show this restaurant how to get closer to that 100% capacity.

When we first introduced this 100% financial capacity into our own car dealership a number of years ago it was an great eye opener for our management team back in our fixed operations.

Let me just show you what happened there. At the time we had 20 technicians, at 40 hours a week, our average labor rate was $70/hour, our average parts rate was $21/hour for $91/hour. We had 20 technicians x $91/hour x 40 hours.

Our 100% capacity should have been $72800 a week.

We then also looked at it, just to break it down what was 100% efficiency of every technician and that should have been $3640. At the time we were actually just around 60% or around $45000 as you can see we were leaving almost $30000 of revenue on the table every single week.

I can’t tell you how much of an eye opener this was for our management team.

Because at the time, just like every other business owner, everybody thought we were at capacity. We had no time left to do anything more.

We did just a few things:

  • We were able to increase our staff we kind of implemented the 80/20 rule.

  • We made sure we had the right staff the right technicians, that were getting at least 100% efficiency.

  • We had a number of them getting 120%.

  • We were able to add hours by increasing shifts and there were numerous other things over the course of a few years to the point where we got back to this number and actually beyond this number because of implement principles, strategies, marketing ideas like knowing what was unique about us and placing that in all our ads.

So now that you know the first of the 6 elements that you have to that every business owner should know.

There are only 3 ways to increase your profits

  • You can create new customers

  • You can win back old customers

  • You can grow your referrals

You can increase your dollar per sale and you can increase the frequency, the number of times your customers buy from you.

A lot of businesses will focus on constantly creating new customers and while that is certainly a good marketing and business strategy.

The lowest hanging fruit or the simplest way is right here.

Win back old customers–get referrals–retain the customers you’ve got and by doing that you’re going to start seeing an increase in the dollar per sale and you’re going to see an increase in the frequency of the number of times that your customers or clients buy from you.

I hope this somewhat valuable to you I’m going to ask you to please like our page and watch www.finepointmarketing.com for more valuable videos and if you want some help on dominating your market within your industry give us a call or email us.

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