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Business Intelligence for Custom Integrators

Tuesday Morning Coffee

Tuesday Morning Coffee

VITAL Question # 58

Posted on March 30, 2015 at 8:20 PM

What Does It Cost To Do The Same Thing?

 

 

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” –Albert Einstein

 

Compounding Performance

 

 

Compounding (definition) refers to generating earnings from previous earnings.

 

 

Recently a discussion with a friend over a sarsaparilla turned to what is the cost of the status quo in business? Meaning, what if we just keep doing what we’re doing.

 

So we went down a different path. What if, we could grow 15% each year for three years? And, what if, we could improve profit 3% then 2% more and then 2% more in those years?

 

Napkin time for sure.

 

We started with a $3.5M dollar business making 8% net. The numbers work relatively regardless of the start. The volume growth brought us a $3.477M accumulative sales increase (almost equal to our current run rate). The profit improvement because it is first dollar based, got to an amazing $823K in the 3 years.

 

So instead of being a $5.3M enterprise making 15% net, we would remain a $3.5M business making 8% assuming the wheels didn’t come off in the meanwhile.

 

In this example, it would cost us $270K a year equivalent by just doing what we are doing.

 

Our free in depth business analysis can show you where your hidden costs are. And if you agree we can coach you to better profits and better results. It’s VITAL to your business.

 

Use the Power of Compounded Performance to your advantage.

Categories: VITAL QUESTIONS

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