The 7 Strategic Dimensions identifies important areas to maintain a balanced business, and they include: 1) How to remain innovative and plan for growth, 2) train employees and offer opportunities for professional development, 3) develop systems for smooth operations, 4) manage stakeholder relationships, 5) identify appealing products and develop effective marketing strategies, 6) choose measurable metrics, and manage costs, and 7) develop a customer-focused culture that creates loyal customers and dedicated employees. In the end; however, the results of all those activities must produce a profit on the bottom line so your business can continue to grow and remain viable.
To prove the viability of the concepts, I am issuing a challenge to invite a few businesses to participate in what I’m calling the 100% BizGrowth Challenge. The goal of this challenge is to grow participating businesses by 100% in sales or profits in 100 days. Many of the principles have been proven in the field with clients I’ve worked with over the last 20 years, but I haven’t combined all of them into a comprehensive program that specifically identifies the greatest opportunities for growth and creates a plan to achieve rapid growth.
This may sound ambitious, especially in this economic climate; however, let me demonstrate how small changes in just a few key areas could dramatically change your bottom line. If a business is operating with a 10% return on sales, you only need to improve 3% in the next 100 days in 5 key areas to double your profits.
Let me go through this step-by-step to demonstrate how this can be accomplished in the five areas. If you have: 1) 2,000 prospects who visit your business in a month (about 70/day), and 2) 50% of them become customers (1,000), 3) who make an average purchase of $100, and 4) return to your business 10 times in a period of time, your sales would be $1,000,000; 5) subtracting variable costs (VC) of 50% and $400,000 in fixed costs (FC) would produce $100,000 (I’ll leave taxes out to simplify the example).
A 3% improvement in just one area, the average purchase amount ($103), will increase your sales by 3% to $1,030,000, without doing anything else in the other areas. When you subtract your variable costs (VC) of 50% of gross sales, and $400,000 in fixed costs (FC), the result is a 15% increase in profit. The percentage will be more or less depending on your profit margin. The main point is that it doesn’t take much to increase your profits with minor improvement in just one of the three areas. How difficult is it for you to increase the average purchase amount by just 3%? You can provide better customer service, offer an extended warranty, up-sell, bundle products together, offer a deluxe alternative, or dozens of other methods.
Let’s look at what happens if you follow a plan, that you’ll follow as part of the 100% BizGrowth Challenge, to improve in all five areas by just 3%. These aren’t huge jumps in the number of new customers, their average purchase amount, or the number of times that they return. Your sales would increase by 15.8%. In addition, if you make a 3% improvement in your variable costs by examining all the waste and inefficiencies within your business, this would produce an additional $113,894 to the bottom line. The combined results in this example would more than double your profits. My goal is to help you realize at least a 3 to 6% improvement in each of the areas in the next 100 days, and much larger jumps in some of the areas by implementing a strategy and following-through on a plan that is tailored to your business.
To break this down to the ridiculous, the plan requires you to just realize a 1 to 2% improvement per month in five key areas, and I’ll show you how it can easily be achieved if you know what to work on. Again, the results you’ll realize will be different because of the differing variable but it illustrates how incremental improvements can compound over time in key areas to produce impressive results.
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