Surprise Outcomes
By Gerry Rose, Business Consultant

This past week I met with a client.  He has been a client for more than six years.  We met to discuss his current business plan.  His goal for the meeting was to look at his profit centers so as to create meaningful dialog with potential clients.  He also wanted my ideas for how to take his primary business from an hourly rated sales system to annual rated sales packages.

His profit centers currently include hourly rates as a service provider and two products offered through vendors.  The two vendor products are also service related; therefore all three of his profit centers are services provided to his clients.

Looking at his profit and loss statement, he increased revenues from the prior year by 52 percent.  Of his 87 clients serviced in 2007, nine clients provided 71 percent of his revenue.  These nine clients alone create a six-figure income for this business owner. 

The first surprise outcome was that nine of the 87 clients make up 71 percent of his income.  If all things were equal, which we recognize that they are not, he could increase his income by getting rid of 78 clients and then substituting a similar new nine for the 78 he got rid of.  He could increase his income per hour spent by nearly double. By target marketing to a similar nine clients, he could also reduce his hours of work and commute time, while increasing his time available for family.  He is in the process of accomplishing this from systems we created.

 The second surprise outcome came from conversation around one of the vendors that offers service products.  This service product provides security to all intellectual property, all company records, and financial data for my client’s customers.  During our conversation I discovered that the vendor had not paid my client for more than six months.  The vendor has agreed to pay once per month when my clients’ commissions are in excess of $100 for that month.  The fees owed were greater than $600.  The commissions paid by the vendor are 20 percent of the monthly fees assessed by the vendor to my client’s customers.  The monthly fees assessed by the vendor start at $15 per month, or as low as $3 per month goes to my client’s bottom line.

I questioned why he had not been paid.  He told me that he did not know.  He needed to call them again.  I then asked if it were possible that this company was going out of business.  Again he did not know.  I further questioned what would happen if this vendor went out of business.  How would this affect my client’s credibility?  Would his clients ask where was their secured data?  Could he lose a large account (five-figures) for revenues of $3 per month because my client’s large company client had lost confidence in his work?

In your business have you ever been so close to an issue that you did not see it?  I am sure that if you are honest with yourself the answer is a resounding, “YES!”

The point of this true story is that sometimes we are so close to our businesses that we miss small things that we should clearly see.  Telling this story to you has me asking, “How could he have missed this?”  At the same time, I know that if it were not for my coach and advisors, there are many things that I would miss as well.

Do you have a personal or business coach working with you?   Do you work with a group of mentors or brainstorm with a group of elders who guide you in business?  How about a Master Mind group made popular by author Napoleon Hill of Think and Grow Rich fame?  All are good resources to limit the discomfort of such mistakes.  I encourage you to go out and create something like this as soon as possible.  Are you prepared to miss a six-figure opportunity for a $3 sale?

To listen to Gerry Rose interviewed about this subject, an excerpt from our ‘Champagne Sundays’ special Business Online Radio Show aired on March 2, 2008 please double click on the play button below. To hear the entire, unedited show, click here.