Heartaches and marriage break-ups
May 21, 2014 at 8:46 PM
One Proven Way to Make Your Business More Profitable
Business Benchmarks for profitability are a key indicator of how well a business is performing financially regarding its level of profitability. Usually benchmarks are derived from the 10 top performing companies within an industry. What are the benchmarks in your particular industry?
At DaltonPlan® I have worked with a number of business owners across a wide range of industries. During this time I observed a pattern emerging with their financials and worked out a calculation that enabled me to compare the financial performance of businesses operating within the same industry.
By stripping out certain variables I am now able to compare financial performance from business to business. In this way a pattern has emerged over the past 20 years revealing certain benchmarks that have been achieved by industry top performers, one being Gross Profit as a percentage of Sales.
My aim this year
For example, in certain cities in New Zealand the building industry is booming. This attracts all trades including plumbers, electricians, plasterer, painters, roofers, builders etc. My aim this year is to make all business owners across these trades aware of the DaltonPlan® business benchmarks for their industry.
The advantage of an entire industry adhering to proven business benchmarks for profitability is that the business owners learn to compete on points of difference, rather than on price alone.
They don't survive
From my time in the market place, I have observed some business owners quoting jobs, I can only assume in ignorance, at unsustainable levels of profit just to "buy the job". They don't survive.
The problem is that it is cyclical. Look at how many bankruptcies there are each year and then look at the number of new businesses starting up ready to head down the same path. As my accountant once said to me, after we discussed my benchmarks, "Deano, you can't defy gravity".
By using the DaltonPlan® business benchmarks, business owners promote customer benefits over price, such as, using high quality sustainable materials, high quality workmanship, years of experience in the industry or being able to provide a fresh new look, high degrees of problem solving, completing the job on time and on budget, friendly fully qualified staff on site, operating an OSH "Safe Site" to eliminate downtime caused by accidents etc… There is a long list of benefits that businesses can compete on rather than destroying the industry by price slashing.
Reach the point
It has been my experience that a business owner who employs an unsustainable, price-cutting strategy as a point of difference to competitors doesn't last long in business. The length of time that they survive in business is directly proportional to the amount of equity he/she has in their home to draw on to pay tax and suppliers before the equity runs out or they reach the point where they can no longer service the loan and they go bankrupt. Too often I've seen the heartaches and marriage break-ups that follow.
So, my message to business owners is to find out what benchmarks you should be aiming for. Go to our website, before it's possibly too late, and download the benchmarks for your industry for a small amount of $100 + GST and live a happier life, secure in the knowledge that you are performing up there with the best.
Click on http://daltonplan.com/collections/all-benchmarks. It could change your life and if you have any questions after reading the information, call me or go to Contact Us page on our website http://www.daltonplan.co.nz and type in your request.
by Dean Dalton DBA
Director, DaltonPlan® Business Action Planning Limited
BUSINESS PROFILE – Here's the Proof
By Annette Eggers
Director Feijoa Films Limited
09 889 7900
021 153 8206
I created my film making business in 2007 with a lot of passion but no experience for how to run a business and in 2009 I decided to have a business plan done and I was guided to the DaltonPlan business plan. I needed general guidance and I was looking more specifically for financial expertise, sales strategies and proven methods and simple business modelling. Structuring quotes was also one of the essential aspects of the work that needed to be established.
Prices or an idea
It's a very competitive industry where so many people apply for the same job and getting it is either down to the prices or an idea that the client really likes. In that respect, accurate quoting is a must and Dean gave me a method that I'm still using today. After 4 years of practice I can say I'm spot on every time! After the recession hit, it became even more competitive and using the DaltonPlan benchmarks helped me to adjust my pricing constantly and precisely.
In this business, we have to manage profitability over the whole year. When jobs line up, then profitability is good but we need to keep in mind that there are some quieter times even though I have regular clients that keep coming back. As customer demand is quite cyclical I'm carefully budgeting for the whole year.
We have worked on flow charts and I can use them in two different ways; the ones that stay the same whatever the job and these have been pinned on the wall for a few years and the ones that change for each job.
Whatever their use, they guarantee a smooth and structured running of operations. I know what has to be done and in which order. I can have up to 13 people working on a project so I need to be have clear and established organization.
We have worked on flow charts and I can use them in two different ways; the ones that stay the same whatever the job and these have been pinned on the wall for a few years and the ones that
change for each job. Whatever their use, they guarantee a smooth and structured running of operations. I know what has to be done and in which order. I can have up to 13 people working on a project so I need to have clear and established organization.
After the plan, I quickly implemented budget management methods and a business model that suits me and it all worked well from the start. Few and slight adjustments have been worked on after that.
All this work has allowed me to be selective with the jobs I'm taking. When your business is successful it's great to be able to choose the jobs you want rather than the jobs you need. I have a strong interest in environmental questions and I want to commit to and support projects that align with this.
It's all going well and I can set the goals that really motivate me. This business planning experience was amazing. It gave me motivation and direction. Dean and I keep in touch once in a while but I'm confident that I've got control over my business and I progress ahead positively and with confidence.