WHERE TO START - BUSINESS TRANSFORMATION

The Lesson - You need the data to monitor the progress. Without Monitoring you become a sailboat with no sail.

Remember in order to change we first need to take the temperature of the water. The doctors take X-Rays and blood work to get a picture.  I am keeping this simple for a kickoff we can get into much better metrics once you have the basics.  How do we do this?

WE need to compute your sales per FTE ( full time employee) and profit per FTE. 

Take your Gross Sales last year and divide by the number of full time employees you have. If you have part timers figure them in at what percentage of a work week they contribute to 20 hours would be .5

So if your annual Sales were 1,000,000 and you have 5 full time and one .5 then you have 5.5  so our sales per FTE are $181,818

Now take your profit and do the same computation so if you made 100,000 the it would be 100,000 divided by 5.5 or 18,181

We could drill this same thought down into expense line items but this is premature.

Your goal now is to increase sales and profits per employee.

So when i hit 2 million in sales i want way more than 200,000 in profits without cutting corners.

Keep your eye on your totals and if you need to keep adding people as sales increase then you need to rethink-

 how can i double my size and not my employee base

 I took one company from 18 employees and 4 million in sales to 25 million with 2 FTE and 2 Part Time employees. We created technology way outside the box which removed much of the human element. As people left for other opportunities they were not replaced. Initially the 18 people were shifted from daily back office grunt work to helping with marketing and taking new potential customer calls. We used those resources to grow the company 6 fold. Then it was sit back and enjoy the profits as he had 6x the revenue and 1/6 the employee cost.

 The goal here though is to outgrow the need to add employees at the same pace.  So if you double your sales then you can multiply profits by 3-4-5x. Since all the salaries and benefits are only added for 1 additional employee not 5.5 more.

So in my example first year
5.5 FTE   1,000,000 in Sales    100,000 in Profit

Year 2 - i use new marketing and technology spend
6.5 FTE  2,000,000 in Sales    350,000 in Profit.

There are hundreds of ways to move your company along like streamlining the process, new technology, partnerships and more which i will cover in later blogs. . You can measure this monthly and set goals for the next month and quarter.

Listen to some of my audio for other useful ideas.
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