Topics Covered In This Episode
- Introduction to Managing for Profit: The podcast begins with Mercer and Jeff discussing the concept of profitability and the critical role of the team in ensuring a profitable business. They emphasize the importance of generating a profit surplus through value exchange in the marketplace.
- Setting Expectations & Expense Management: This section covers how Key Performance Indicators (KPIs) can be used to manage expectations and performance. Jeff and Mercer introduce the 'five-for-one' marketing approach for a 20% profit margin on every $5 in revenue. They also explore ways to reduce expenses, such as eliminating unnecessary recurring subscriptions, to manage for profit rather than just covering costs.
- Reviewing Tools & Profit Margin Goals: Mercer and Jeff emphasize the need to assess operational tools and discontinue those that are redundant. They also underline the importance of setting profit margin goals, suggesting that an ideal profit margin for an agency should be around 15% net profit.
- Planning for Profitability amid Reinvestment: Mercer and Jeff discuss the challenges of sustaining profitability during substantial reinvestment phases in business. They stress the importance of time-bound forecasting and proactive planning to mitigate sunk costs.
- Managing Business Risks & Failures: This section explores the implications of a business bet not panning out. They emphasize the need for an exit plan in the face of negative market response to new offers. They also differentiate between experiencing failure and being a failure, underscoring that failure is part of the learning process. They wrap up the episode by encouraging listeners to stay forward-focused and heed the signs that guide the next steps.
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