Hi, Did you know what are the 4 Areas
Where Your Business is Losing Money
In my 18 years of consulting I have heard it all. Everything
from competition to managed care as reasons why it’s hard to create the
business of your dreams. New customers are needed to keep any
business going but it is how you and your staff manage
these customers that determines your success in business.
In every business that I have gone into over the years, what amazes
me most is the amount of lost income from poor handling of the
major income generating areas of any business. I will cover four
of them.
The actual amount of lost income can be calculated. I will
describe where you are very likely losing large amounts of money and
why. These areas if handled will help you lose
less money in your business or in other
words, make more money.
Where am I losing money in my business?
Business owners are always looking for ways to increase revenue but we
seldom address the areas where buckets of money may be slipping
from your fingers. It is common to look at the cost of
handling a situation in your office, but little
attention is paid to the fact that not handling a weak area
of your business is costing you way more than what it may
cost to solve the problem.
You need to be able to measure the top basic areas and the way to
do it is with statistics. How can you evaluate how close
you are getting toward handling any weak area of your business or
enhance an area already doing well if you are not using statistics?
Operate off of statistics.
Most business owners commonly fail to look at what they are currently losing
from weak business management and poor training of staff. Here are four of the
key areas of lost income within the organization.
1.
You can lose money with poor reception control.
Ideally, with proper reception control at the front desk, on the
phone and certain procedural actions in place you can achieve a higher
percentage of closed customers. To the degree that the control at the front
desk is missing or the customers are dictating when they will come in
or not, you will be losing money. A good receptionist is key to
directing the incoming traffic, whether via phone or in person to the
proper staff member quickly and with good control. This is quite
honestly an easy fix and can improve your bottom line quite
markedly.
2. You can lose money from having a poor
collections ratio.
Depending on your business, once you make the
adjustment in your production for other plans such as managed
care, etc. you should be collecting 95% of the remainder. Ideally, when
calculating your true collection ratio you would use the last six
weeks of collections divided by the previous six weeks of production. There are
actually eight areas, if fully handled, that will
put your collections ratio in a whole new range.
3.
You can lose money from having an untrained or poorly trained staff.
Take your average weekly collections divided by the number of Full
Time Equivalents (FTE). Don’t forget to include the owner’s hours
and if he or she works 60 hours that is a 1.5 FTE. Every staff member
has value to the organization, but some are clearly more valuable than others.
When you have a staff member that knows what to do, is very
efficient in his or her ability to get the job done and somehow motivates
others, you know they are worth their weight in gold. What is
sometimes difficult to understand is that getting employees to actually do
their job with a high degree of productivity IS attainable. Every
time you hire someone within your organization you should have a
certainty as to how much income per week they should bring to the table
through their efforts. The average should be somewhere around $3,500 a week for
each FTE.
4.
You can lose money from lack of effective marketing.
Effective marketing is a big area where businesses fail. They usually plan
their promotion like they plan their meals – one at a time. It pays to
have a marketing plan and be able to correctly determine the ROI (Return
On Investment) from marketing actions. Most businesses send out one
promotion piece and then tally the responses, not the amount
of money produced from those responses. This gives a false picture.
Then business owners think that their marketing “isn’t
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