Gaining competitive advantage – look at your gross profit

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So you thought Gross Profit was merely a line on your annual Income Statement.  You may be surprised to know that it is so much more.

There is no other line on your Income Statement that has so many business processes feeding into it.  Gross Profit is a financial barometer for your business.  Understanding Gross Profit could gain competitive advantage and more money for your business.

So what is Gross Profit and how do you calculate it?

In simple terms, it is Sales minus Cost of Sales.

Now let’s break these two concepts down:

Sales = Selling price per unit x Total number of units sold

Cost of Sales = Materials costs + Labour costs + Manufacturing costs + Distribution & selling costs

Therefore, gross profit is the amount of money left over after paying all costs directly associated with getting your product to market.

It could be argued that every single cost you incur is related to bringing your product to market.  Whilst this is true, it is desirable to split up your costs into two (2) categories:

  • Costs that can be directly attributed to the products and services that you sell
  • Overhead costs that not directly attributable to any particular product or service but are more related to being in business, regardless of whether you make a sale or not. (e.g. office rent, administration costs)

Why is it desirable?  This seemingly arbitrary splitting of costs becomes important when you have more than one product and / or service.  For example, attributing costs to product A and product B enables you to work out which product is more profitable.

Another way of looking at gross profit is – the amount of money left over from the sale of products and services to pay your overheads.  In the case of more than one product, it is essential to know which one makes the greater contribution to paying your overhead costs.

So when a financially skilled business coach performs a diagnostic review of your business, he or she is going to look at all the inputs and processes that go into developing the Gross Profit line.  Broadly, they are:

  • Price – your pricing strategy
  • Sales volume – your customer base
  • Materials costs – your buying, storage & inventory strategies
  • Labour costs – your human resource strategy
  • Manufacturing cost – your creation, assembly & technical strategy
  • Distribution & selling costs – your marketing strategy

Gross Profit reflects everything that goes into assessing demand, finding customers, communicating with them, creating your product or service, distributing and selling to your customers, and providing warranties and after sales service.

It also reflects everything to do with acquiring materials, recruiting and training people, safe processes, productivity, technical expertise and machinery to make the products and services sold.

So the next time you look at your Gross Profit line, remember that a good hard look behind the scenes will reveal a gold mine of information and gain competitive advantage.

If you are starting up your own business or want to boost your existing business read my latest book Recession Riches and Wealth at:

http://www.garyweigh.com/recession-riches-and-wealth

Until next time!

Gary

Business strategy implementation – workplace disharmony

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You have completed your business plan and you have moved to business strategy implementation.  Something is not right.  Your workplace is not the harmonious pit of productivity you expected.

Part of the answer lies in the different goals and motivations of business owner and employee.

Owners are primarily investors and risk takers who seek career independence.  Employees are the opposite.  They tend to be risk-averse income seekers who value security and predictability.

The more ambitious ‘2-3 year stay’ employee will appear to be taking a risk by job-hop for promotion but there is little real risk provided he or she is reasonably competent.

Because owners and employees view the business world from opposite perspectives, their motivation and decision making are always going to be diametrically opposed.

Business owners want a return on investment therefore they want profit results.  The only results that really interest most employees are their continuing job prospects, a good income and security for their family.

Most employees are happy to exchange a good day’s work for their wages.  However, they are not focused on profit results anywhere near as much as the owner is.

Although employees are often judged and rewarded on performance, their performance targets are more likely to be related to sales, gross profit or key performance indicators.  It is only the owner who is really focused on the bottom line.

That makes for a natural divergence of goals between employer and employee.  Owners’ goals are generally tied to their business while an employee’s goals can relate to anything but the business.

Money can encourage goal confluence in the short term. In other words, people are happy to be compliant for money until it suits them to do otherwise.  However, in the longer term, people tend to follow their own path.

I have just released a new guide for any entrepreneur who is starting up a business or even thinking about it.  It’s an investment and a time saver because it is brimming with business ideas and you don’t have to make the mistakes that others do.

Visit http://www.garyweigh.com/

Until next time!

Gary

Starting up your own business – Entrepreneurial ego

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Science World, Vancouver B.C.

It takes a lot of self-belief and courage to blaze your own business trail.  It takes considerable self confidence to start up your own business in spite of skepticism; and to convince partners, financiers and other stakeholders that you are pursuing a valuable opportunity and that you have the know how and resources to make it happen.

To then market your own products and services and to constantly talk about yourself and your business usually requires more front than a bus.

These characteristics define many startup entrepreneurs.  They also define the attributes of a healthy ego if arrogance and an exaggerated sense of superiority are not present.

The shy retiring types generally don’t do as well in the start up stage unless they have a strategy to circumvent their shyness.  They just don’t have the pushing power required.  However, they often make good implementers, managers and technicians once the business is up and running.

One trait that defines a healthy entrepreneurial ego is attracting people smarter than themselves and people who have expertise that they don’t.   The unhealthy ego either tries to go it alone or hire substandard talent who pose no threat.  The problem is that substandard talent is still a significant expense but doesn’t contribute much to the bottom line.

Similarly the smart entrepreneurs know how to get the best out of other people by not feeling the need to micro-manage everything, but by making others accountable and by leveraging income and profit off their skill and hard work.

It still takes great confidence and self belief to start up your own business, take the ownership reins firmly and manage it.  Managing by being the boss is always preferable to managing by consensus or by being popular.   In my experience, employees still respect a clear job description, clear rules and a strong, fair, decisive leader.

Being a firm and fair leader doesn’t require arrogance or an overwhelming need to be right all the time.  It means ensuring that people work to the plan and to the systems in place.  Being decisive means making timely decisions; not ignoring good advice.

Starting a business and making a profit requires a healthy positive ego, not an unhealthy negative ego.  After all, the successful entrepreneur must make him or herself attractive to many stakeholders before they can even get out of the blocks.

Until next time!

Gary

For more reading about an Aiki way of life visit my Aikido Secrets blog at

http://www.aikido-secrets-to-calm-success.com

I have just released a new guide for any entrepreneur who is starting up a business or even thinking about it.  It’s an investment and a time saver because it is brimming with business ideas and you don’t have to make the mistakes that others do.

Visit http://www.garyweigh.com/recession-riches-and-wealth

Starting up your own business – the good and bad of ego

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Ego can be harmful to your business.   While healthy ego can drive self belief, set standards of quality and customer service, unhealthy ego can cause a business operator to become too self absorbed, with insufficient focus on the needs of customers.

Business should not be about you.  If it’s about you, then it isn’t about the customer, and all businesses must stay customer focused to thrive.  You are not in business to create a self legacy.  That might be an outcome but not your initial intention.

It is customer demand and their favourable buying decisions that form the foundations of our income and wealth.  Satisfying customer demand builds repeat business.  You reap the rewards when your business exists for the problem solving and betterment of others.

One of the symptoms of an unhealthy ego is the need to be right all the time.  Professional advice providers like doctors, accountants, lawyers and financial planners can be prone to this condition.  It is because they are in a position of being experts in a narrow field of knowledge and eventually start to believe that they are experts on everything.  Untreated, this condition may cause the business owner to become obstinate, opinionated, and close minded.  This combination is very unattractive to customers.

Another detrimental symptom arises out of the need to talk about ourselves incessantly during the never-ending process of marketing our business.  This can breed an over-inflated attitude of superiority and self importance.  It can also result in becoming attached to the outcomes of what we do.   If possible, let others do the speaking for you in the form of advocacy and testimonials.

Appropriate behaviour in business is paramount.  All behaviour is preceded by thought, so the way in which a business owner’s ego perceives him or her self in relation to the wider customer population is critical to business success.   This also applies to interaction with staff.

An attitude of arrogance with customers will result in a decline in sales, particularly repeat sales.  Also, there comes a time when being the boss and having your staff follow like drones will stifle future growth.

It is much more enlightened and profitable to delegate responsibility, accountability and decision making, and allow others to shine.  This will get you the human leverage you are already paying salaries for.

Customers like to do business with people who they find attractive.  In general, that means being attracted to someone who is friendly, knowledgeable, attentive and helpful.   In other words, treat customers as you would like to be treated.

A good start to attractiveness is to develop a healthy ego.  Being attentive and making customers feel valued means developing good listening skills.  Knowledge is always an advantage in business but more important is the ability to maintain an open-mind and an attitude of endless learning.

To represent quality and still be able to be humble enough to acknowledge your own frailties and imperfections means combining smart business with humanity.  Customers never tire of dealing with real people, flaws and all.   It makes all of us realize that we are human, and no better and no worse than anyone else.

Until next time!

Gary

If you enjoyed this article and would like to read more, visit my other blogsite at:

http://www.aikido-secrets-to-calm-success.com

Nine (9) ways to avoid financial stress

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Financial stress is a common experience for many.  The continuing effects of the global financial crisis, combined with rising interest rates and rising prices puts many families under stress.  Here are nine (9) tips to help you get back on the path to stress-free living.

1. Work on improving your income

You must have a regular source of income and preferably more than one.   Your income is the foundation of a stress-free financial life.   Income can flow from a variety of sources, but most importantly, it creates the opportunity to repay debt, build wealth and maintain your desired lifestyle.

2. Avoid credit cards

Don’t spend money you don’t have and don’t let your credit spending get out of control.   It is much smarter and safer to use a debit card to access money you have already saved.   Even better, you won’t have the monthly stress of receiving a growing credit card bill.

3. Go ‘pre-paid’ on your mobile phone

A mobile phone is just another way to spend money you don’t have.   To add to your stress, many telephone companies are quick to ruin your credit rating if you don’t pay on time.    The most economical way to have a mobile is to use pre-paid phone cards.   This way you pay with money you know you have.

4. Go back to paying cash

Pretend you are back in the days when credit cards didn’t exist and you paid cash for your purchases.   You will once again appreciate the true value of money as you stop and think before every purchase.

5. Pay off personal debt quickly

Owing money can be a particularly stressful experience.  It’s always best to spend less than you earn but it is not difficult for debt can get way out of control, particularly when things go wrong in life.  It is a common mistake to use expensive debt to finance periods of illness and recovery.  This is the job of savings and insurance.

There are no tax breaks for personal debt, so get rid of it as fast as you can.   Personal debt includes home loans, personal loans, car loans, hire purchase and all forms of credit.   There is a variety of ways to manage debt and reduce your stress levels quickly.

6. Consolidate your Debts

If you have equity in your home or an investment asset, you may be able to consolidate all your debts into one at the home loan rate of interest.   As part of a home loan refinance, your personal debts can be rolled into your mortgage loan, which means one loan repayment per month at a lower interest rate instead of many.

7. Create a cash buffer for the Unexpected

Life is full of little emergencies and unexpected events.   A stress-beating nest egg tucked away in an easily accessible cash account won’t alter the emergency, but it will certainly help relieve the financial worry of affording a new fridge or car repair.

8. Build a Nest Egg for the Future

Investment means creation of wealth by building your personal portfolio of growth assets.   Generally speaking, the more income producing quality assets you have behind you, the lower will be your stress levels.  You will need professional assistance to guide you to investments that are appropriate for you.

9. Protect Yourself against the unexpected

Plenty of things can go wrong during your life.   Disaster can strike your health, your home, your family, your income, your business and your personal wealth.     Smart people are those who not only invest wisely, but sleep easy by insuring themselves and their property against the unexpected.

If you are thinking about a new business or a new income stream, you will get a lot out of my new book ‘Recession Riches and Wealth’.  Click on the Recession Riches and Wealth page of this blog:

http://garyweigh.com/recession-riches-and-wealth

Until next time!

Gary

Emotional business management – Aiki principles

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Photo courtesy of Spiral Photography

Besides being a business coach and educator, I am an enthusiastic Aikido practitioner.  Over time, I have seen Aiki principles working in practice enough to know that it has application across the full range of human emotion and interaction.

I firmly believe that the principles of Aiki have a valid place in the highly competitive and egotistical world of business, which of course is where I make my living.

Business is merely a subset of life, except for the addition of two powerful factors – money and power!  These two ingredients have enormous potential to alter human behaviour.  They are catalysts for greed and competition and can bring out the very worst in people.

Aikido is known world wide as the art of peace.  It is a defensive, non-confrontational, non-competitive Japanese martial art driven by calm and relaxation, with care for the wellbeing of the opponent inherent in the art.

The introduction of Aiki principles is about applying concepts of peace to business interactions, but at the same time having effective defensive skills to deal with any difficult situation.

Aiki is a powerful addition to the personal strategic business arsenal.  In essence, it is maintaining a peaceful mind when competing and fighting are the easier options.  It is extending and injecting the power of calm and relaxation into all things.

You may have to do some Aikido training to appreciate it but you will realise what an overwhelming advantage the power of Aiki really is.

Aiki emotional management has immediate and obvious benefits for business.  It lowers deadly personal stress levels and plays a direct and positive role in business productivity and performance.

There are three (3) basic main Aiki principles of peace to observe when interacting with others on a business basis.  They are:

  • Respect (for self and others)
  • Self control (rather than control over others)
  • Being centered (a state of balanced, calm alertness)

There are many more Aiki principles that are applicable but they all flow from these basic three.  These principles are a must for powerful business interactions and positive results.  I will discuss each Aiki principle of peace in more detail in future posts.

For more reading about Aikido and its many life secrets, visit my other blog at:

http://www.aikido-secrets-to-calm-success.com

If you are starting your own business or even considering it, you should read my book “Recession Riches and wealth” at:

http://garyweigh.com/recession-riches-and-wealth

Many thanks to Dean Miscamble of Spiral Photography specialist in martial arts action photography.  Visit

http://www.spiralphotography.com.au

Until next time

Gary

Emotional business management – the Aiki way

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Photo courtesy of Spiral Photography

In a recent blog article, It’s ok to be emotional,  I talked about the issue of bringing emotions to work and how it is generally frowned upon in traditional work places.

In a series of follow up articles, I would like to explore this issue a little deeper.

The fact is that business owners, managers and employees all bring their emotions to work.  Like it or not, human emotions are here to stay as long as business is based on human interaction.

What is not widely appreciated is that the human emotions many bosses want banished from the work place can actually be the foundation of good business interaction.  The secret lies in understanding it and self managing it.

As I pointed out in my previous article, Emotional Intelligence (EI) Researchers have found a direct correlation between high EI and effective leadership, team success and employee performance.

Emotional Intelligence is an awareness of one’s own and others’ emotions and the ability to control those emotions and influence the emotions of others.  Those who have high levels of emotional intelligence are generally happier with them selves and suffer less stress.

I would like to introduce a new concept to the discussion of emotional business interactions.  It is called Aiki-emotional management and its principles are derived from the art of Aikido.

Aikido is a Japanese martial art whose origins can be traced back to the feudal era of the Samurai.  It is a purely defensive martial art that has an inbuilt care for the wellbeing of the attacker.  Although it can be dangerous and even lethal, it is not a fighting art.  It is known throughout the world as the art of peace.

Aikido, in its simplest translation, means ‘the way of joining energy’ – ‘Ai’ (join), ‘ki’ (energy) and ‘do’ (the way).

Care must always be taken with the absolute meanings of words which have been derived from symbols, in this case Chinese and Japanese kanji, because they represent ideas rather than literal translations of the components.

Nevertheless, the principle of ‘Aiki’ describes an idea of oneness and harmony in the midst of conflict.  In aikido, it describes the notion of blending rather than clashing.

One of the secrets of Aikido is that it requires a completely calm mind and relaxed body to execute it.  Size, strength and speed of an opponent don’t matter in the slightest because force is never met with force.

The idea of oneness also includes oneness of the self.  The coordination of mind and body and making positive human connections through the extension of ‘Ki’ energy are central to the art.

Aikido is all about balance, timing, movement and self control.  The energy of another is welcomed, co-joined and redirected, usually to the ground or to immobilization.  To deliberately injure another person in anything other than the most dire and extreme circumstances, is considered a failure.

There are no competitions in Aikido, only regular practice.  It is often referred to as an internal art because it is considered to be a personal journey of learning whose principles have wide application in everyday life.

In the next article, I will continue this blog journey of applying the hidden principles of Aikido to the emotional human being at work.

For more reading about Aikido and its many secrets, visit my other blog at http://www.aikido-secrets-to-calm-success.com

If you are starting your own business or even considering it, you should read my book “Recession Riches and wealth” Go to the recession riches and wealth page on this blog.

Until next time

Gary

Starting up your own business – identifying opportunity

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Looking for business opportunities is fun.  It is an exciting and empowering process.  Opportunities, when converted, ultimately lead to business growth by adding new clients, new products and additional sales from existing clients.  There is nothing quite so self satisfying!

Don’t wait for opportunities to come to you – make them happen.  Opportunism is a business practice that doesn’t receive enough emphasis in business training.  It is the creation of everything.

So where is opportunity found?  The broad answer is ‘outside your business!’   There are far more revenue opportunities outside you business than inside it.  Opportunities inside your business are usually related to technology, cost reduction and productivity.

Opportunity seeking is a mindset, not a specific location.  Actively seeking opportunities for unfulfilled demand is central to the entrepreneurial spirit, but only a positive and optimistic mind will find them.

The opportunistic mindset is one of abundance, not of lack and scarcity.  If you think there is opportunity awaiting you, there is.  Alternatively, if you think there is no opportunity, there isn’t.

Your opportunity could be local, industry wide or global.  It all depends what you are looking for and how expansively you choose to think.  History is often a good teacher, so look to the past to find clues to future opportunity.  In looking for trends, consider the following questions in relation to the past 3-5 years.

  • Who has disappeared from your industry and why?
  • How has the internet changed your industry?
  • What new technology has been developed in your industry?
  • Do you see any product or service parallels between you industry and another industry?
  • Are your clients and their demands the same today as they were then?
  • Has government legislation banned, allowed or changed anything?

Expand your thinking outside of what you are currently doing.  Don’t allow your future to be determined only by your existing clients.  There is nothing more exciting than creating your own future by proactively identifying opportunities.  The future does not belong to procrastinators, but to brave business explorers.

When you find opportunity, don’t sit on it.  Most opportunities have a use-by date.  In other words, if you don’t act, someone else will sooner or later find it and act on it.  And where does that leave you? ….. Usually out in the cold thinking “Oh what could have been!”

If you are starting up your own business or want to boost your existing business read my latest book Recession Riches and Wealth at:

http://www.garyweigh.com/recession-riches-and-wealth

Until next time!

Gary

Starting up your own business – make money while you sleep

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‘Making money while you sleep’ means earning income without your direct time input.  Most people stay poor because they merely sell their time and do nothing more to supplement their income.

Time-based income will always be limited because you only have 24 hours in a day, 7 days in a week and 52 weeks in a year to sell; and you have to sleep sometime, right?

To remove the limits on your income potential, you must disconnect your income from the amount of hours in a day or the time you have for sale.  The key to earning income while you sleep is leveraging.  This means having a quality product or service that is in demand, and then leveraging off other people’s time, other people’s money, other people’s products and resources.

There are many ways to make money while you sleep.  It is all about setting up a number of income-generating systems and then allowing each to do its work.  Recurring income streams can be generated online and offline.

The goal is to diversify!  So you should set up many different recurring income streams so that if a problem occurs with one, the others will still be working for you.  That removes a great deal of the risk of interruption from your overall future income earning ability.

Online income streams usually take some time and effort to set up but they are a lot easier to automate, thereby requiring minimal input from you.  Offline income streams generally require a higher level of ongoing input and maintenance because the offline world has fewer tools to automate the process.

In my latest e-book, Recession Riches and Wealth, I show you 10 ways to make money while you sleep.  I explain the many options that exist for removing the limits from your potential income capacity.

In the book I also explain over 100 easy and practical business ideas that have the potential to make money for you, particularly in times of recession.

In addition, I explain the 15 Golden Rules of Business that I have formulated.  These are the building blocks of a sound business, whether it is online or offline.  To ensure that you have everything you need, I give you plenty of useful business tips that lead to business successes, together with the many common traps and mistakes to avoid.

I am an Australian business trainer and financial planner with decades of experience and success to back it up.  I will tell you the secrets to income generation, business profitability and wealth building.

The irony is that the secrets aren’t really all that secret.  It’s just that few people are trained in these areas; they ignore the basics and fail to do the simple things well.  Instead, they turn to the promise of fast money online solutions.

So choose a different path!  If you are starting up your own business or want to boost your existing business read Recession Riches and Wealth at http://www.garyweigh.com/blog/recession-riches-and-wealth

Until next time!

Gary

Top small business ideas – outsource to build your business

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Whilst you continue to be a one person business, you are self employed, selling your own time.  If you are looking for a top small business idea, start outsourcing to other people and start leveraging and building a business.

Outsourcing is the key!  Online you can find anybody to do anything at a highly competitive price.  I have outsourced most functions of my business to other people.  Good people around the world will be ecstatic to work for you for between USD $2 – $10 per hour but as usual you get what you pay for.

When you find the right person (which is not hard), you will find that they are well qualified, very efficient and meet deadlines, most of the time with a 24-hour turnaround.  They also follow up and do it all with friendly cooperation.

Offline recruitment agencies may still be necessary for high end recruitment where the position is senior or supervisory, hands on and face to face, but for lower level work, technical work, specialist skills, online work where working remotely is fine, recruitment agencies will become obsolete unless they move their businesses online and become outsourcing hubs.

One of the advantages of growing your business online is that everything you need night and day is available from outsourced talent.  Just some of these functions are:

  • Virtual Secretary / assistant
  • Administration
  • Content / article writing
  • Sales page / landing page writing
  • Website updating
  • Keyword research
  • Blogging
  • Image management
  • Link building
  • Affiliate marketing
  • Social network marketing
  • Forum marketing

Work goes on for you while you sleep and you will slash your overheads.

If you would like to know more about how to build your online business contact me at gary@garyweigh.com and visit http://www.garyweigh.com/blog/business-startup

If you would like to read some ground breaking articles on Aiki-management visit my Aikido Secrets site at http://www.aikido-secrets-to-calm-success.com

Until next time!

Gary

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