Page 78 - Paulisms: Gold Nuggets for Small Business
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month
Increase in net profit per 70%; (Q-H)/H month
Increase in net profit for year $84,000 (Rx12)
Increase from $120,000 to $204,000 net profit per annum or 70%.
The above example shows the power of the funnel and incremental margin. OK, some may say it seems too simple and good in theory. Well, nothing is easy in life. Here’s a real-life example:
A few years ago, we had to go from 500 jobs on our books nationwide to 3,700 within seven weeks with our main client. We had to scale up. There was no way we could increase capacity by employing more staff. We had been using the licensee contractor model of no installation employees for 20+ years. But all these extra jobs required installation and we had to meet our client’s timeframes.
It was hard finding the extra installer capacity, but we went out and found them, and sometimes it meant paying more. We also had to fly in product at an extra cost. Our selling price was the same, but our costs were higher. But this didn’t worry me. Our overheads were covered.
If I recall, we just took on some temporary administration staff. We knew all our costs, although some were higher than in the past. Now do the maths in your head:
