But… this experience got me thinking… about why some businesses end up being really successful while others struggle to make any margins…
…and I’m glad it did… because it lead to what literally ended up being a $1 million dollar idea…
You’ll be able to relate to it, guaranteed!!
PS: Let me know by commenting below or on youtube if you’ve ever experienced anything similar… once you’re aware of it, you’ll be noticing it everywhere; it’s quite powerful.
- In this video, Silvia Myers shares her recent experience and how not getting customers what they are after can cost us 60% of our sales margins
- Silvia introduces a simple 5 step approach that could make you $1mil dollars
- There is a specific way to set up and run your business operations making sure your margins are up and costs down
- The most successful businesses in the world have been using principles of lean operations for decades and the earlier you adopt these principles the faster you’ll hit your goals
- Watch the video for the full story
See the full transcript (click here to expand)
Actually, it just happened to me recently. It was a Monday morning, and I was getting to the coffee shop ready for my morning hit of coffee. I ordered almond flat white, as I always do. I know. I’m one of those people who order those hipster-style coffees.
But anyway, after a little while of waiting, I received a full cream cappuccino. I mean, Monday morning, all I wanted to do, just get my coffee, get my hits of my caffeine for the day and just run but ugh! How annoying. I wasn’t able to do that straightaway.
My name is Silvia Myers. For the past 12 years, I’ve been helping business, small and large, dramatically improve profitability through simple actions so that they have everything they need to succeed and can make the impact that they deserve.
What happened with this cappuccino? Clearly I wasn’t going to drink that. I was never going to drink a full cream cappuccino. I had to say something. I did say, “I’m sorry but I can’t drink this. Can you please quickly make me that almond flat white?” Another few minutes of waiting, I receive a large almond latte.
Fair enough, it still wasn’t what I ordered but I was like, “You know what? I can deal with this. It’s almond milk. I can deal with this. It’s larger than I wanted. It’s latte. It’s not flat white, but I can just get that and go. It will give me the caffeine I’m after.”
But really that experience got me thinking… It got me thinking about other businesses. It got me thinking why is it that some businesses do really, really well and why is it that some businesses always struggle to make some money?
I started to put all of the numbers together. Guess what. I realized that whatever the margin was on that first coffee that I ordered, it went right down by and it shrunk by at least 60%. Yes, you heard me, 60%. How ridiculous that is.
But, you know, if you think about it, that full cream cappuccino, unless somebody else ordered that within the next 30 seconds, it was gone. It was never going to go anywhere else. It’s pure write off, pure waste. On top of that, I received a large latte, which means that that coffee used at least 20% more milk than actually I was willing to pay for as a customer or that it was necessary.
Just like that, the cost of doing business more than doubled. The sales margin went right down. The customer still didn’t receive what they ordered and still wasn’t completely happy. Guys, does any of this sound familiar?
I went further exploring whether there are other businesses too that actually double their cost, reduce their margins and still don’t make their customers happy? Wow! What a discovery all of that journey was.
Just few weeks ago I worked with a client that’s a mid-sized operation, nothing huge, a team of eight, only one shift. We started to dig into actually what is it that their customers want, what is it that they produce, what are the overall margins, what are the costs, and what is the money that they end up making at the end?
What we found was absolutely crazy. Just in five days, we found $1 million in savings. Let me repeat that, five days and $1 million. How crazy is that?
Why is all of this so important? Imagine, imagine if you could understand the secret formula that would help you deliver to your customer what the customer is after at the lowest cost possible and make the margin that’s the biggest margin possible? Wouldn’t that be ideal? Wouldn’t that help you actually make the impact you’ve always wanted to make? How much more successful that would enable you to be?
What we are really talking about here are some basics of running a lean operation. Guys, these basics and principles, it’s not something I came up with. It’s been on the market for a long, long time but yet, only very few businesses are using it effectively and to its full potential.
Let’s go through those few simple steps that you need to look at to really make sure that your costs are right down and margins are right up and that, most of all, your customers are happy because they’re getting what they paid for in the first place.
The first thing you need to understand is what is it that your customers are actually willing to pay for. What is it that they are not paying for and what is it that perhaps they would pay a little bit extra for? Make sure you always understand that.
Second, you need to understand the steps that you do in your business to give that to your customers. We refer to this as process steps. This is really what you do to deliver what customer has paid for and make sure you write down all the steps, even though they might be small, if there is handovers or waiting times, make sure you put that all in.
The next thing you need to do and here you have to be 100% honest with yourselves. What are the pain points? What is it, where is it that sometimes you get perhaps extra costs or you get frustrated or the customers get frustrated or something just goes pear shaped? What is it, in these steps, where are the pain points?
Once you have those, and this is really where the magic happens is you need to understand the root causes, the drivers of those pain points, so really dig right down and understand why, why, why is it that these pain points come up? You really need to understand the root causes.
Once you have the root causes, really from that point onwards, it’s just a piece of cake. Why is it? Because if you identify the root causes correctly, then generating those solutions or how to improve what you do, it’s just easy. You just flip that around. You come up with solutions as to how to improve what you do.
The last part, you just take action. Massive, imperfect action. All what you do is just put all of the five things into action and make sure that you start improving what you do today.
Guys, from my experience, regardless of how small or large the business is, there is at least 30% of fat that you can actually improve. Minimum 30% in every business gets just completely wasted. It completely pushes your margin down and your costs up. Is that what you want?
Today I want to ask you, how you do things in your business? Do you always deliver to your customer what the customer is willing to pay for at the lowest cost possible? Have you always made sure that your customers and your margins are looked after so that you can grow and make the impact you deserve?
Guys, I would love to hear from you. Make sure you leave me comments below. Let me know what you think. Thank you so much for watching. I’ll talk to you guys later.