Paul Thornhill

Budget for Success Welcome back to the Steps to follow when budgeting. Step 3 was about identifying and totaling the businesses variable costs or COGS.... Now we want to determine what is it going to take to cover all the costs associated with whatever it is we do. Step 4: Determine your Break Even You want to know how much revenue is needed and how many, be it in units, boxes, sessions or hours that need to be sold in order to break even. This will give you a better idea of the work involved before you turn a profit. My assumption, as you noodled around the idea of what it is you plan to sell, be it product and/or service, is that you had a price point in mind. The difference between the sell price and the variable costs is your Gross Profit. For example, if you thought you would have sales of $100,000 and your variable costs were $42,800, the Gross Profit would be $51,200. This GP would be used to cover the fixed costs and contribute to profit. Also for this example, I will assume our fixed costs total $2,850 per month or $34,200 annually. To find out your break even you need to do a little math. The first step is to total your Fixed Costs and the second is to calculate the Gross Profit Margin (GPM). GPM is simply the GP divided by the sales multiplied by 100. In our example that is 51.2%. That means 51.2 cents from every dollar sold is available to pay your overhead costs and contribute to profit. To determine Break Even now divide your Fixed Costs by the GPM. With these numbers annual break even is $66,796.85 or $66,800. That was how much, but what about how many? Let's assume what you sell is $100 each - could be $100 and hour, a session, a visit, a unit etc. So now divide the B/E Revenue by the individual sales price. In this case $66,800 divided by $100, which is 668 - for the year or on average 56 "somethings" per month. Next up - Sales Budget using Profit Need help coming up with your budget or would like to talk about how I work with owners? Click on this link: http://paulthornhill.ca/free-training/

Welcome back to the Steps to follow when budgeting. Step 2 was about identifying and totaling the businesses fixed costs. The next "set of costs" are called variable costs. Also known as COGS (Cost of Goods Sold), these expenses typically vary with sales.... Step 3: Determine your variable costs Here are some examples of variable costs: * Raw materials * Shipping costs * Transportation * Labor COGS expenses vary (no pun intended) with the type of business. In a manufacturing business there will typically be more expenses associated with producing the final product ready for sale than say a business providing a service that is knowledge based - like a single lawyer law firm or a contracted Registered Massage Therapist. Either way it's important to know all the costs associated with delivering your product or service. As with Step 2 and Fixed Costs, we will be using the businesses variable costs in our calculation of Break Even, albeit in a round about way. That's for next time. Need help coming up with your budget or would like to talk about how I work with owners? Click on this link: http://paulthornhill.ca/free-training/

Budgeting - Part 2 of 5 Welcome back to the Steps to follow when budgeting. Step 1 was about using a tool to assist and having the big picture Sales or Revenue number in mind.... On to the next step and I recommend you start with expenses, because they’re much easier to predict. Step 2 of 5: Determine your fixed costs Also known as overhead costs, these expenses remain the same each month. The list could be long but here are several: Rent Payroll Business insurance Website hosting Internet and phone services Professional services Bank fees These costs are yours as the owner. You are accountable for these "bills" at the start of each month. Often times fixed costs are a big motivator for a new entrepreneur. Shortly we will be looking to determine when the business reaches BREAK EVEN (B/E). To calculate B/E, it is imperative you know your monthly or annual Overhead Expenses. Need help creating your budget or would like to talk about how I work with owners? Click on this link: http://paulthornhill.ca/free-training/

Budgeting - Part 1 of 5 The COVID world has certainly had a significant impact on society. and perhaps none more so than the business community. To that end, it has brought out the entrepreneurial spirit in many. I have had a significant increase in the number of people, male and female, inquiring as to the Steps they should follow to start their business.... One of the first things I ask is, Do you have a budget? I don’t necessarily mean you have to forecast every cost or sales dollar down to the penny, but have you looked at the key areas, within your expected or planned Income Statement. History tells us that every dollar plays an essential role in a startup budget. In fact, if you’re anything like the majority of small business owners, you’re setting up shop with less than $50,000 in the bank. One survey reported that 61% of new startups DID NOT have a budget. A startup budget is a just a breakdown of how you plan to use your capital and cover expected business costs, and it is indispensable. Here is the 1st of 5 Steps I recommend you follow: Step 1: Use a Tool of some sort and Set a Sales Target Part A There are many tools to choose from to help you track the budget. You could use accounting software, like Quickbooks, if you have it or you can get a Template in either Excel or Google Sheets. Part B As you have thought about your new business, have a sales $ amount in mind. More on that later. Need help creating your budget or would like to talk about how I work with owners? Click on this link: http://paulthornhill.ca/free-training/ See more

Turn Prospects Into Customers ... Overnite! Get a customer - Keep a customer! There are a few key ways to draw your prospects in and seal the deal. You need to be:... * Inviting * Informative * Fun Maybe the biggest fear of most new customers is the dreaded buyer’s remorse. You want to avoid this at all costs and that means delivering on the marketing claims you’ve made. That said, we all know "ya can't please everyone!" If that should happen in your business there are two ways to deal with it: 1. Offer to refund money-no questions asked 2. Offer a bonus they can keep even if they return the product or cancel the service. These actions will soften your buyer’s remorse and they will not only trust you more, but will speak positively about your business. There are number of other ways to turn a prospect into a customer: Try these: * Offer a special price as an opportunity for you to test the market. * Offer a referral incentive. * Offer a smaller, more inexpensive product first to build trust. * Offer package deals. * Offer payment options, if applicable. * Offer a bonus if they pay in full. The options really are as limitless as you make it. You can use these or other ideas to find what works the best for your business, products/service and target market. Remember this quote By making it inviting, easy, informative, non-threatening, educational, inspiring and fun to do business with you, you’ll loft your company above the competition. Jay Abraham Need help with your marketing or would like to talk about how I work with owners? Click on this link: http://paulthornhill.ca/free-training/ #plumbers #plumbingandheating #electricians #skilledtrades