If I was a betting man I would bet you want more profit.
We all want more profit… well, most of us anyway.
Today I’m going to begin to write a small series of simple ways to grow your profit.
This first one is on your “average dollar yield”.
Average dollar yield is the value of each transaction in your business on average.
Example: If today’s trading revenue was $2,000, and this was spread over 10 sales throughout the day, then your average dollar yield is $2,000/10 = $200.
If your revenue was $2,000, and this was spread over 200 sales, then your average dollar yield is $2,000/200 = $10.
Every business has a different average dollar yield. The amount is not important.
A simple way to increase your profit is to increase your average dollar yield from each customer.
This increases your revenue and more profit drops out the bottom for you to spend on yourself or business investments.
Using the two examples above:
Let’s say your average dollar yield is increased by 3%, so instead of being $200, it is now $206. Because you had the same 10 transactions, then your revenue today would be $2,060.
That is an extra $60 revenue for no extra work.
And for the 200 sales example… $10 becomes $10.30, giving $10.30 x 200 transactions = $2,060.
Again an extra $60 revenue or the equivalent of another six customers for the day comparing to the old figure.
Divide your revenue by transactions and find out your average dollar yield
Do you track it daily? Or weekly, or monthly, depending on what is the most relevant and useful timeframe for your business.
Now let’s look at ways to increase it for you.
How about sharing other products you sell with every order?
Buying paint… how about a brush?
Buying a coffee… how about a muffin?
Buying a burger… how about fries? (we have all heard this one).
Now let’s look at leverage.
$60 x (let’s say) 360 days trading a year equals an extra $21,600 in revenue!!
Wow… totally worth it.
But what if you had 70 franchisees, and they did the same?
70 x $21,600 = $1,512,000 total group revenue increase.
And imagine if your franchise royalties were 9%.
That equates to an extra $136,080 income for you… for no extra work.
What possibilities open up now for you?
An extra piece of equipment?
An additional team member to give you some days with family?
This is great it you own a single location business, and even a better win - win - win if you own a franchise group.
Win #1 - the customer
Win #2 - the franchisee
Win #3 - you.
This is why I love the power of leverage.
Find out what your daily average dollar yield is and make a plan to increase it at least 3%.