Posted on 16/12/2016, 16:58
Can you remember the summer of 2012, the London Olympic Games and in particular the success of the British Track Cycling Team? They were a team, led by Sir Dave Brailsford who went from no success in 2002 to the best in the world in 2012.
Brailsford was interviewed by the French press after the success of Sir Bradley Wiggins and the Olympic Team. They asked him what had made the difference and in his own inimitable style he replied, “We have rounder wheels”.
That wasn’t entirely untrue. Brailsford is a great believer in continuous improvement through the aggregation of marginal gains. Forget trying to be perfect – focus on progression and compounding the improvements. The team focused on every part of the project and tried to improve each part by 1% or more and the results speak for themselves.
So how does that relate to your business?
At Pro-actions we ask our clients to focus on improving 5 key areas:
These are figures you should have to hand and an improvement in any or all of them will lead to an uplift in the Gross Profit of your business. To see how effective this can be let’s take a look at a worked example:
Roundwheels Ltd. sells bicycle wheels at an average price of £1000 per pair. They identify 1000 leads per annum and sell a set of wheels to 300 of these. 1% of customers buy a second set of wheels from them and the gross profit margin for the business is 30%.
The Turnover for Roundwheels is £303,000 pa giving a Gross Profit figure of £90,900 pa.
The directors of Roundwheels read about Sir Dave’s success and think they can replicate this by striving for marginal gains in the 5 areas their Pro-actions coach has discussed with them. They believe a 5% uplift is feasible which leads to:
Identifying 50 more leads which in turn generate 17 more sales per annum. They strive to get an extra 4 customers to buy a second set of wheels and they increase the price of a set of wheels to £1050.
The Turnover for Roundwheels improves to £397,000 pa and the Gross Profit of the business improves to £125,200. An improvement in Gross Margin of 37%.
Clearly, this is a contrived example with a fantasy organisation. You may not be able to increase these 5 areas by the same amounts. However, you can Download our FREE Profitability Calculator to help you work out how marginal gains can improve the performance of your business.
We always get our clients to start with the end in mind. If you know where you want to go you can build a plan of how to get there. You will need to work out the activities you need to put into place in order to hit your new targets and if you would like to discuss these with one of our Business Coaches please call one of our team on 03333 440517 or email us: firstname.lastname@example.org
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