Are you looking for a way to make simple, small changes in your business that will have a big impact?
If you could apply a small 1% change to your business on a consistent basis, it could make a huge impact and movement in your business. Making these small changes in your business makes it digestible for you and empowers your mindset to continue.
Join me today as I go over how you can apply a 1% change to 7 drivers in your business.
Connect with Danielle:
Website | https://www.kickstartaccountinginc.net/
Instagram | https://www.instagram.com/kickstartaccounting
Twitter | https://twitter.com/KickstartAcct
Things Mentioned in Today’s Episode:
Worksheet | https://kickstartaccountinginc.com/powerofone
Profit Planner: Text Profit Planner to 844-499-6969
Book your FREE strategy call https://www.kickstartaccountinginc.com/get-started
What is your financial health? Take the FREE Quiz Here – https://quiz.tryinteract.com/#/6192948f1ab9670018ebce02
Full Episode Transcript:
Welcome back to another episode of entrepreneur money stories. Have you ever thought about what a 1% change could do for your business? I know it sounds so small. However, if we can use the right drivers and apply 1% to each driver, we have watched our clients create huge movements and impacts in their business. So today, we're going to be talking about the power of 1%. And how you can apply the 1% change to each of the seven drivers to create momentum, profits and cash in your business. Alright, here we go. What are the seven drivers of business, the number one driver is price, our price directly correlates to the revenue in our business. Now, I hear from our clients and business owners all the time, I can't raise my prices, either the market or the economy or inflation. My mindset, I struggle with all that so I can't raise my prices, immediately just start thinking, if we can start applying 1% on a regular basis, making these small changes makes it digestible to both you and then empowers your mindset to continue and makes the changes small and digestible for your clients. So imagine applying the 1% rule to each one of your customers. What would be the impact on your business today? Now let's apply that to every future customer that comes in our door. It's a small price increase, but it's digestible. And with the other drivers, it's going to create huge momentum, profits and cash in your business. The second driver is volume, sell more. Now I hear you especially for a service based business, sometimes there's only so much that we can do. We only have so many hours in the day. And so adding 25-50% revenue or clients to your roster sounds so daunting, it can really hold you back as a business owner for going for your goals, because these are big changes in your business. But what if we made small changes in our business? And next month, we sold 1% more, so we've increased our prices. And now we've increased our volume, small amounts. So this is digestible, and can help change our mindset, increase profits, and increase cash flow, you get where I'm going here.
Alright, the third driver is the cost of goods sold or direct labor costs. So this is for anybody who has a team working directly with your clients. So your direct labor to provide the service to your clients or customers, or the cost of goods sold, that needs to be purchased the inventory that needs to be purchased. In order for you to deliver your product, if you can reduce the price you pay for your direct labor. By 1%. We are putting direct dollars in our business. So this is creating efficiencies within our team and making small changes so that we can impact and have a cost savings of 1%. Now, we've had a total increase of 3% in both directions. Alright, let's go to operating expenses, operating expenses, the fourth driver. Now I hear it from business owners all the time. I operate so lean. I'm an online business owner. I don't know that I can cut any more expenses. I hear you and I understand. We do have an expense grading worksheet, that I'll put the link in at the bottom in the show notes. So if you need assistance and walk through each operating expense, that sheet will aid you in thinking through each of your expenses. However, if we can make a change by 1% one small savings to reduce your expenses. Next let's think about accounts receivable. So that's a big accounting word I know, this is the money that is owed to you, as a business owner. So you have invoiced your, your client or your customer, and they owe you money. So think about all the ways that you can collect faster, or bill earlier. I see business owners bill only at the 15th of every month or only at the end of each month when they've collected their hours with our staff. What if we can shorten the billing cycles so that we're billing more often and collect faster, so offering do upon receipt, discounts, or shortening your payment terms so that you can get cash in the door faster. Again, these do not have to be major changes, but they can be small changes to increase your cash flow. So a few other ways to increase our accounts receivable by 1% is to shorten your cycle times. Give value to your customers who pay you fast, get out invoices on time, send out reminders early and often. For recurring invoices, get credit card authorization forms, so you can bill your customers automatically and eliminate billing mistakes. These are all different strategies that you can use to implement your 1% to accounts receivable. Next up is inventory or employee utilization hours. So how can you reduce the amount of stock you have on hand if you hold inventory, or the number of employee utilization hours. So this is the number of employees that you have with open availability? When is the last time you had a discussion with your team to discuss how many hours a week they wanted to be working. And if they had additional time that you can utilize. So rather than finding your next employee or contractor, you can utilize your current staff members' time. So increasing our employee utilization hours. Again, not big changes. I'm asking you to do it by 1%. All right. Lastly, on our seventh driver is accounts payable. Again, I know another big accounting term that is the money that you owe to other people, how can you slow down the payments to your creditors? I see this happen all the time. As business owners, we are really quick to hand out our credit card and allow our vendors to charge our card at the time of service or purchase. How can you leverage your vendors who are willing to offer you terms and then possibly put it on a credit card where you have an additional 30 days to pay. So think about how you can slow down the payments to your creditors to your vendors by 1% reaching out to one vendor this month. So this is the power of one. If you can increase or decrease each lever by one day or 1% What would be the impact on your cash flow or net income? We've attached a worksheet for you go to kickstart accounting inc.com/power of one and we want to hear from you what is the impact that's making in your business the power of one and this worksheet can help you create the KPIs for you to manage on a monthly basis for you to be able to compare the actual results each month. We want to make this as easy as possible because for your job as the business owner is to clearly evaluate what's working and what's not. Choose one cash improvement strategy every 90 days and see the power of one work for you. Imagine having extra cash. Maybe you'll pay down your debt. Take an owner's draw or distribution. Invest in a new project, sit and wait for the perfect next opportunity or keep it as insurance. There are so many opportunities once we are able to start to tap into our profits and our cash as a business owner. So let's tap in to the power of one. Don't forget to tag us on Instagram at kick started counting like or share this episode. And don't forget to hit subscribe on your favorite podcast platform so that you are alerted each week. For every new episode that's released. We have some amazing guests upcoming. We want you to learn from their money mindset, learn from their journey, learn from their mistakes. And so we're here to be a resource and service to you
Transcribed by https://otter.ai