Boost Profitability Now, Multiply it Tomorrow
Volume 1, Issue 2
We speak with a lot of background screening business owners. Some are doing $10k in sales a month while others are doing $10M a month. No matter the size of company, this industry can be very profitable. The question is… Can you boost profitability now so that you can multiply it tomorrow?
We hear directly from owners time and time again that they are completely content doing 15-20% to the bottom line. But why? Why not run smarter and make more money? What happens if 2008 hits again? Do you have enough margin to stay afloat in another recession?
In truth, background screeners should easily be able to make at least 25% to the bottom line. And, if you really have your costs in line, you could realistically get to 30+% net profits.
With this in mind, how do you take advantage of both short-term gains and long-term gains at the same time? Before we get to that answer, here is an example for your review:
In the image above you can see that this business is doing $1 million in annual sales with 60% cost of goods sold and 25% expense rate. Based on these numbers, their annual profit is $150,000. On the open market, the approximate company value would be $750,000.
Now, let’s say this company really improves their COGS and ends up eliminating 33% of their COGS.
The short-term gain is the fact that this company reduced their COGS by $200,000 each year which goes right to the bottom line. Or the business could re-invest year after year after year in sales and marketing to further grow the top line.
When the day comes to sell your company, what would have been worth $750,000 is now worth $1,000,000 MORE.
Is it easy to eliminate a third of your COGS? No. Can it be done? That’s the million-dollar question, literally!
So, how do you take advantage of both short-term and long-term gains at the same time?
IMPROVE YOUR COST OF GOODS.
Wonder where you should start? …
Call Berg Consulting Group today at: (561) 712-1277 ext. 3 (Evan) or ext. 5 (Diana)
Listen HERE to see how Berg Consulting Group helped a CRA doing $10,000,000 in sales turn a profit by cutting their Cost of Goods Sold in the first year by $500,000!
To read the first issue in the Berg Consulting Group Bottom Line series, click here.