My Busines Blog

Month: October 2019

A Not For Profit Is Not A Business

For the past range of years there was an ever increasing chorus of self anointed professionals affirming that a no longer for income enterprise is actually simply any other business and as such must be run like one. All too frequently, these pronouncements are made via individuals who have little expertise of not for earnings and their purpose, consequently, it’s quite smooth for them to make this assumption; in any case, from the outdoor looking in, many now not for income do resemble organizations nowadays, so this sort of mischaracterization is comprehensible. And this false impression is in addition bolstered through the increasing professionalization of no longer for profits through the years; revenue and advantage programs, in lots of now not for income today, are pretty similar to those in enterprise, so it is now not unreasonable that these assertions keep. However, just like the antique axiom, “you can’t decide a book by means of its cowl,” so is it a mistake to finish that a now not for profit is certainly a business absolutely because it could seem like one.

While there are sincerely a number of obvious similarities between a commercial enterprise and a no longer for profit employer, there also are some of dissimilarities that are not so apparent. More frequently than no longer it is the alternatively obvious similarities that are seized upon to presume that those two organizations are genuinely one within the equal. Yet, it is the no longer so visible dissimilarities that really separates a now not for benefit from a business and distinguishes it as being one-of-a-kind. Differences that visit the very coronary heart of a not for profit and speaks to its purpose, its characteristic and function in society.

According to most these days, “The Business of Business is Business,” that is Milton Friedman’s description of enterprise. All corporations are earnings pushed and their sole motive is to make a profit for his or her owner or investors and whilst this is not possible these agencies must both expand a new profitable product or service or shut down. It’s that easy. Either generate a earnings or exit of business. Businesses have no different duty, whether they’re large or small, creating a earnings is their singular and best reason.

Not for earnings on the other hand are different. First, these groups are absent any earnings reason while embracing a twin cause in preference to the singular objective of a enterprise. Not for earnings are generally the introduction of nearby citizens who come together voluntarily for the only purpose of imparting facts, a offerings or every so often a product, intended to serve the apparent wishes of an undeserved section of the general population. In this recognize no longer for income goal handiest a selected side of the population. These organizations are price pushed believing in the idea of imparting a needed network services via the involvement and participation of neighborhood residents. All not for income started this manner with nearby citizens – volunteers doing the whole lot earlier than gradually giving way to expert personnel who anticipate duty for facilitating that procedure. Most no longer for income nowadays, depending upon their length and adulthood, are a blend of volunteers and experts rationale upon providing wished services. Thus not for earnings have each a volunteer and workforce structure that requires continual interest. And it’s this duality of motive, structure and characteristic that truly differentiates a now not for profit from a commercial enterprise and makes them particular.

Now for the ones diehards who still need to insist that a not for income is honestly a commercial enterprise and consequently must be run like one; if this perception is predicated upon the notion that a now not for income need to have a detailed marketing strategy in place, that it ought to have well defined and measurable dreams, that it need to have certainly delineated working technique, that it ought to be financially accountable and utilize its constrained resources in the most expeditious manner viable. Then I might truely consider this interpretation. For that is absolutely the way in which all not for earnings must perform. However, those tenets in no manner communicate to the purpose and role of a not for earnings and its meant likeness to a commercial enterprise, as a substitute these concepts are simply requirements with the aid of which they need to conduct their enterprise and in no w

Theory into Action – Calculating Damages Payments and Accounts of Profits in Patent Cases

It is all well and right to be advocated to use and obtain for patent safety. The fundamental treatments for patent infringement are a slim injunction to prevent future instances of the infringement, and both damages or an account of income. In this text, we have a look at the degree of financial repayment that can be presented by these damages and accounts of earnings and the elements taken into consideration of their calculation.

Claimants who have effectively proved legal responsibility in an motion for patent infringement, either actual or expected, are entitled to opt for their remedy. Successful litigants will find out that the degree of the award for repayment might also vary widely relying upon their election among damages and an account of income.

Comparison of the Remedies

The variance among an account of profits and damages exists due to the fact the point of interest is on the affairs of different events: in one example that of the claimant and the alternative at the defendant.


An award of damages specializes in the losses sustained by the claimant. There is no higher restriction on the degree of damages that may be provided. Relief for patent infringement may additionally overlap with other regions of intellectual belongings; as an example the copyright of the claimant can also have additionally been infringed (an example being software). In calculating the sum to be paid in damages, a courtroom will disregard whether or not the defendant should have averted infringement by way of using substitute system and accordingly prevented a rate of infringement altogether. It is irrelevant. Losses now not caused by the infringement are not recoverable.

An Account of Profits

On the other hand an account of income focuses on the earnings made by means of the defendant, without connection with the damage suffered by the claimant on the palms of the defendant. The motive of the account is to prevent the unjust enrichment of the defendant with the aid of the use of the claimant’s invention. The claimant is dealt with as though they had been accomplishing the business of the defendant, and made the profits of the defendant. As such, the higher most restrict of an award is the sum of income made through the defendant due to the infringement. In maximum cases, an award of damages will identical or exceed the maximum award in an account of earnings; but an account of earnings may additionally greatly outstrip an award of damages inside the proper case. When assessing an award, to mention that a defendant ought to have generated higher income is immaterial: the claimant ought to take the defendant as he discover them.

The income must have been earned from the usage of the claimant’s invention, and if the infringed invention shaped only part of the general product or procedure, then handiest that part of the earnings resulting from the patented invention is recoverable. This is in which maximum trouble is experienced in assessing the income earned by means of the defendant and some of methods may be taken at some stage in the assessment. Courts take the view that this would be unfair upon the defendant for the claim to be awarded all of the earnings wherein attribution of profits is possible. Manufacturing tactics that use the patent in question as a small step in the production technique provide a normal instance, in that it honestly can’t be stated that the entire earnings of the utility of the system is due to the infringement. Where it’s far suitable to apportion losses, the reference for the assessment will contain splitting the profits among infringing and non-infringing parts of the technique.

On the other hand, there are instances wherein it is appropriate for the claimant to recover all of the earnings of an invention, however whether this is so turns on the data of the case.

Making the Calculations


It is trite to say that the claimant is entitled to be located within the role they would have been had the infringement now not taken location in the context of damages. The test for the measure of damages in patent instances is seen within the utility of the ‘however for’ check, and the harm ought to be the herbal and direct result of the defendant’s acts. Although the claimant have to prove their loss, they’re assessed liberally. Courts comprehend that monopoly rights result in better prices or licence prices, so that is the peg to which damages are assessed.

A court docket is commonly organized to imply that inference with the claimant’s monopoly will reason harm in the ordinary route of events, and the absence of a particular manner to calculate damages will no longer always bring about an award of nominal damages, however a honest sum of what an affordable man or woman may count on to have misplaced, as regards to the general trade that has been interfered with via the defendant.

There are two approaches to calculate the damages suffered via a defendant, and the approach turns on whether the claimant manufactures the patented invention or whether or not manufacturing of the invention is licensed to others.

The Reasonable Royalty

Where the patent owner licenses the manufacturing or use of the invention to others, the degree of damages is the misplaced royalty profits.

A court is normally willing to award an inexpensive royalty to the claimant, notionally asking: if the claimant did supply a licence to use the patent, what might they reasonably be expected to reap inside the market?

The damages are restrained to the lost licence prices that might had been payable through the defendant. Where previous licensing costs were agreed, the determination of the rate because it has been determined within the unfastened market can be persuasive evidence of the proper sum payable, as this is the sum that the infringer can be presumed to be asked to pay. The sum can be expanded wherein general licence fees impose regulations upon the licensee which aren’t just like the behavior of the defendant when committing the infringing acts. Thus when a product is commonly made available on a utilization most effective basis, and the infringer has synthetic and bought the product with purported licences to in addition increase the discovery to its licensees, an uplift inside the award payable is possibly.

Where there may be no precedent of licensing by means of the claimant, calculation of a reasonable royalty can also recall:

the patent owners’ previous conduct in pricing and terms
Percentages general within the exchange
value of designing around the patent monopoly rights
The right sum for the notional licence price is the sum that a capacity licensee might be willing to pay to go into the market.

Where there is no licensing hobby, the courtroom may also use this notional licence fee to calculate damages. Evidence of the quantum to be presented may be a quoted licence charge by way of the claimant. Where there’s no quote for a reference factor, the measure may be the fee that a licensee who isn’t inside the marketplace would pay, no matter whether they could were able to make non-infringing equivalents.

Manufacturers of Patented Inventions

When the patent proprietor manufactures the product, the patentee is entitled to lost manufacturing earnings.

When the patent owner is a manufacturer in preference to a licensor, it has frequently been said that the perfect discern can’t be arrived at with mathematical precision. It is the income that the claimant should have made that units the baseline for the award. Some allowance may be made for the exertions made through the defendant, as it’s miles presumed that not all income made by means of the defendant would have been made by the claimant had there been no infringement.

Heads of Damages

Depending on the type of case, the subsequent heads of harm have been set up through preceding case law:

Loss of earnings
within the shape of sales diverted away from the claimant by cause of the infringement;
misplaced margins on income no longer made because of the pressing need to reduce fees due to rate depression as a result of the infringer.
Loss of goodwill and popularity to the claimant, which arguably has several dimensions;

Sums representing the benefit of the usage of the discovery with the aid of defendant in the market, that is qualified by taking the marketplace price of the use. It is damages for the unauthorised use, which resonates as a licence rate for the use and restitutionary damages (occasionally referred to as ‘advantage primarily based damages’), an area of damages law rarely pressed.

Lost income on income misplaced on items that are generally offered with the discovery

Springboard Damages: damages which might be suffered after the infringement via establishing a marketplace presence thru infringement and early access into the market.

Diminution of fee in subsidiary organizations owned via the patent owner because of the lack of sales through them where the earnings flow through to the maintaining corporation.

Depending on the character of the patent, there may be losses sustained through loss of sales on merchandise generally bought with the patented products, furnished it’s far foreseeable and as a result of the infringement.

As a fashionable rule a claimant become entitled to get better for losses and prices reasonably incurred in mitigation.
Where the patent proprietor has decreased expenses in a aggressive market, a court may also have regard for the argument that the patent proprietor couldn’t have maintained their sales at modern-day expenses in that surroundings. This is a matter that is going to causation of damage – the claimant is not entitled to get better losses except the defendant prompted them.

In the case of infringement of a product, a great start line for assessing damages is to reap proof of the wide variety of infringing merchandise made and within the alternatives bought, the sums received and the approximate fees incurred. This creates a reference point for the calculation.

The factor wishes to be made that the damages recovered in any specific case relies upon at the information of the case. The trendy precept of awarding tortuous damages applies – that any losses because of the infringement are recoverable, whether or not or now not the precise heads seem within the list above. A defendant is said to take the claimant as they locate them, and therefore damages outside those heads of damages which are bizarre to the claimant will be recoverable in the best case.

Making an Accounts of Profits

Defendants are not obliged handy over the gross income acquired by reason of the infringement. In retaining with the method that the claimant is said to face inside the footwear of the defendant, a court docket will make allowances to the defendant for components of the gross profit that are due to right fees associated with making income, inclusive of advertising and advertising and marketing; increases in value of products or services once offered or supplied and additional functions of the product or service that are outside the infringing invention (such as fee brought offerings).

In the event an infringer makes a loss in a production method, the sum with the aid of which the infringing technique reduces the ones losses are recoverable on an account.

Where it’s far difficult to separate out the distinct components of a procedure so as attribute a percentage of the earnings, courts may also determine to assign a percent of the profits on the equal percentage that the prices and prices are attributed to them by using adopting an accounting method. A judge will make an affordable approximation. Account may additionally then be taken of the relative significance of the relative points of interest of various parts of an infringing product. In this way the courts reserve a discretion to provide a larger slice of the income in which the infringement can pretty be said to play an crucial position in the earnings acquired by using the defendant. This approach takes a ‘base allotted profit’ percent and then that percent is weighted for the importance to the income received.

There are instances where the patented invention has conveniently discernable impact on income, either positively or negatively. For example, the patented invention may additionally lessen the costs associated with the producing system, making the method extra efficient. In that case a larger proportion of the earnings might be payable to the claimant on an empirical basis. It includes a contrast between the profitability achieved while the patented invention is used and on the other hand when it isn’t used. This brings attention of efficiencies delivered by means of the discovery into consideration for the calculation of the slice of the profits to be offered

The Origin Of Profits: How to Unlock Your Business Earning Potentials

After all is said and achieved, income is essential to a business’ survival as air is important to lifestyles. But how does one make income? Or positioned another way, where the heck does profit come from?

Proffering an answer to those questions is the essence of this unusual article. This article has been past due, I’m happy I in the end wrote it. I know quite a few you have got been thinking why I frequently emphasize that earnings isn’t always the primary thing to focus on in business, nicely the truth can be unveiled in this newsletter once and for all why this has been so.

Question: What Is The Origin Of Profits?

I have continually believed that there is extra to profits than just chasing cash. Dr. Stephen R. Covey helped make clear my thoughts when he came up with a great analogy in his traditional e-book, ‘The 7 Habits of exceedingly effective human beings’. He mentioned the manufacturing and production capacity [P/PC] stability the usage of the analogy of a goose and the golden eggs. I am constructing up on his analogy by referring to the underlying precept to commercial enterprise.

Imagine you are a rooster farmer and also you wanted to sell more eggs. What would you cognizance on? Selling greater eggs [output] or feeding the fowl that lay the eggs? [input]

Imagine you are a fisherman and also you wanted to sell extra fish. What could you cognizance on; promoting more fish [output] or catching extra fish? [input]

Imagine you’re a dairy farmer and also you desired to sell extra milk. What could you awareness on? Selling more milk [output] or feeding the cows? [input]

I ought to cross on and on, however by way of now I am sure you flawlessly recognize the factor I am looking to make. However, I will like to add a ultimate one; I use this frequently after I communicate in seminars because it’s funny and flawlessly drives home the factor.

If you have been married and also you desired to have toddlers as a couple, what could you cognizance on? Having infants [output] or making love? [process]

The point is very simple but very unusual in exercise. As with maximum simple things, they’re seldom practiced. I think its fundamental human nature to always attention on the output as opposed to at the enter or system. We shy away from the paintings and recognition at the end result. As lots as I would love to see effects, I even have always recommended myself with the above analogies.

For every expectation [output] there is a instruction [input] and execution [process]. The outputs we frequently attention more on in enterprise is income and they’re no longer automated, they’re depending on some matters [input and processes] earlier than they may be performed.

Answer: VALUE

Relating this analogy to business is what solutions the query; what is the foundation of income? While it’s so a good deal easier to head beforehand chasing profits, it is a whole lot wiser to invite your self where income comes from or how earnings is made. I even have heard it again and again once more from numerous marketers this word;

“I’m searching out a business that may make me some suitable money.”

I want they existed.

The reality is that there is no enterprise that doesn’t have the potential to make you some proper money. It’s all a depend of what you awareness on as an entrepreneur. Going back to the analogies above, there’s no hen that isn’t probably able to laying eggs; there is no cow that isn’t potentially able to generating milk, there is no fisherman that isn’t always probably capable of catching fishes and also there’s no guy and girl that is not doubtlessly able to making babies. The key phrase in these kinds of analogies is potential. This is what Dr. Stephen R. Covey referred to as the manufacturing potential. Without making sure that there’s an good enough stability among what you want [production] and your ability or potential to get it [production capacity], you may by no means get that which you are seeking.

If as a hen farmer, your awareness is greater on selling eggs than feeding the hens that lay the egg, then you definitely are killing the hens’ potentials of laying eggs. Sooner or later, instead of promoting eggs, you will begin making chicken barbeques as a result of numerous useless hens. Why? The moment you shift cognizance to promoting eggs as opposed to feeding the hens with the intention to subsequently lay the eggs; you’ve got given up the opportunity to sell more eggs. Hens do not lay eggs due to the fact you’re ambitious approximately selling eggs, they lay eggs due to the fact they were created to put eggs if they are properly fed. So your duty as a fowl farmer who wants to sell eggs is to properly feed the hens. Fulfilling your very own responsibilities of feeding them empowers the hens to lay more eggs that you can finally sell.

Business is not any unique.

Value is the bait your enterprise has to create on the way to attract the type of clients to be able to give up their money in trade for the bait [value] which in flip will make you earnings. Until a bait is created, do not assume earnings. The extra bait [value] your commercial enterprise can create, the extra cash clients are prepared to pay, the extra earnings you stand to make. Wanting profit with out growing value is the definition of stealing.

Customers don’t pay for nothing, they pay for something. That some thing is what is called VALUE.

So here’s the big query;

“Is your enterprise creating two times as a great deal fee because the earnings it is expecting?”

The problem with maximum entrepreneurs is they continually need to make income with out first sitting down to reflect onconsideration on the values they have to create and alternate with the clients in return for his or her cash which then will become their profits.

As an entrepreneur, your commercial enterprise is simplest as profitable as a great deal as the best and quantity of value you are capable of create through it. Therefore, your venture is to assume now not about profits, but extra approximately price. The maximum profitable corporations in the global are the most price including companies inside the world. Your profitability is tied on your capability to consistently define, create, talk and supply price. Until you’ve got efficiently established a commercial enterprise that could do all these, you are a long way from being profitable. It’s not rocket technology, its simply commonplace feel!

Oh I forgot, common feel is unusual!

I ask again:

“Is your commercial enterprise creating twice as plenty price because the income it is looking forward to?”

This is the query every extreme wondering entrepreneur have to focus on answering through anything enterprise they pick to build. Meaning, you are not in enterprise to make income, you’re in business to create and add price. Business in different words, isn’t a cash making mission, however a value developing project. The money (earnings) most marketers spend a bulk of their time having a pipe dream approximately doesn’t come mechanically; it comes as a result of growing and adding fee.

I individually assume most agencies fail due to the fact they do now not live with the aid of this principle; to GET, you have to first GIVE. Your getting is depending on your giving. This is a natural regulation of the universe you cannot find the money for to disobey or manage. Reaping will always come after Sowing. Harvest season will by no means precede the planting season. This is an irrefutable regulation of nature; you both obey or chance the results.

Don’t allow your self to be deceived, constantly remember the fact that making profit is depending on four key things; defining, growing, communicating and turning in fee. You need to keep in mind that fee is the origin of earnings. It is my aim through this uncommon article that will help you understand and higher positioned to use this commonplace principle of existence.

Value is your enterprise’ potential for profitability

Making cash in business is a question of ability. The perfect question rather than asking what commercial enterprise could make you a few correct cash is this;

“How can I create a enterprise that has the potentials to make me some true cash?”

The second you update the word “looking” with the phrase “create”, the picture approximately the beginning of income will become a lot clearer.

Businesses that make suitable money aren’t FOUND, they are CREATED!

It is your duty as an entrepreneur to create a commercial enterprise that could make you a few good money by way of coming up with something ability to provide. Without that input of potential [production capacity] to your enterprise, there may be no way you’re ever going to make a dime.

The potentials of your commercial enterprise to make a few exact cash rely upon how a lot price you provide to the public. Value is what makes your enterprise doubtlessly capable of making income. In essence, fee is the foundation of profits. Until you could create something of cost, your choice to make earnings from commercial enterprise isn’t always handiest impossible, it’s miles universally unlawful.

Here’s why.

When you are trying to make cash from a commercial enterprise that is not supplying and handing over cost, what you’re doing is known as ripping people off and that my friend, is a crook offence.

If as an entrepreneur, your consciousness is extra approximately making earnings than developing cost, you then are proscribing your enterprise’ capacity of being worthwhile.

What then is Value?

Value is definitely whatever that has the ability of creating a effective impact on any other human being.

I actually have determined to use this definition to clear the cluster and help you recognition on what definitely subjects. All the definitions of cost are summarized in that sentence. The whole essence of value is to make a difference in the lifestyles of the recipient period. This is where the popular advertising and marketing phrase of “promote blessings and not features” originated from.

People pay for solutions to their issues and till your business is probably capable of proffering answers to humans’s problems due to the fee on your products/services, neglect about making earnings. In fact, you aren’t certified to make income just as it isn’t feasible to get without giving. Focusing on making profits with out growing value is the definition of stealing.

How to be profitable without stealing

1. Definition of VALUE: The high-quality control philosopher, Peter Drucker was out of the ordinary in his statement of what the most crucial question in enterprise is; “what’s our business?” Trying to define the type of price your commercial enterprise will create and provide up on the market, is the answer to the query, “what’s our business?”

The first step to creating earnings without stealing is to sit down down and define what you need to name price in your business. Every enterprise cannot provide the identical type of cost, so it is highly vital you define your own form of fee because that is what separates your enterprise from all others who are in similar industries or presenting comparable services or products. So what type of cost do you need your commercial enterprise to offer? In other words, what kind of trouble do you need your commercial enterprise to be fixing for her goal customers? Your first project as an entrepreneur is to pick out and outline the price your business is imparting or bringing to the world.

To answer these questions would require you to invite and solution the primary question; “what’s our enterprise?”

In Peter Drucker’s personal words, right here’s the way to solution the question;

“The purchaser defines the business. A business isn’t always described through the organisation’s name, statutes or articles of incorporation. It is defined by using the want the purchaser satisfies while she or he buys a services or products. To fulfill the purchaser is the project and purpose of every business. The query of what’s our business can simplest be spoke back through searching on the business from the outside, from the point of view of the client and market. All the client is interested by are his or her own values, wants and truth. For this cause on my own, any severe try to nation “what our commercial enterprise is” need to begin with the client’s realities, his situation, his behavior, his expectancies and his values.”

2. Creation of VALUE: the second step in making earnings without stealing after figuring out the form of price your enterprise desires to provide the sector is to invite your self; how will we create this cost? A business should have a specific aspect that it need to provide to the market with a purpose to appeal to the eye of the client. This unique thing is what we name product or service. The advent of this product/provider is where a business starts offevolved. Without this product/carrier there may be no business. Why? Because human beings do not purchase whatever, they purchase some thing. And that something have to meet a need or clear up a problem for them. The ability of a product/service to fulfill the wishes and solve the troubles of human beings is what is known as value.

Value is what human beings pay for and why merchandise/offerings promote. Without the cost in them, they are as exact as vain. In different phrases, you are in business when you have created something of price and you stay in business by way of consistently growing fee. Your capability to create price is the most important characteristic of a commercial enterprise and the determinant of success in commercial enterprise. Your ability to make income is hinged on your ability to create fee.

Definition of fee is understanding what to recognition on as a enterprise, advent of price is the real services or products you want to offer in your target market. That you have got recognized your agency’s definition of value does not mean your organisation currently possesses or affords that fee. After all, you can’t in all likelihood supply what you do not have. So the second one step is growing your very own version of fee which you want to provide the arena in change for cash.

Three. Communication of VALUE: nobody will ever realize that your business has diagnosed and created some thing of price to the sector if it in no way comes out to proclaim any such factor exists. There are 1,000,000 and one people within the world who are in need of the type of price your commercial enterprise has recognized and created, it’s far the obligation of your enterprise to make the existence of such cost acknowledged to the world. This is the place of communique. Value communication is the essence of marketing. Perhaps the most important key function in business is advertising. This is in which you get the customers interest via spreading the existence of your product/provider. This is the way you get those who may be interested in the value you’ve got created to understand approximately its lifestyles. You ought to announce the existence of your enterprise’s particular type of cost in order that the ones in want of it could come for it at the same time as providing you with cash in change for the benefits your business product/carrier offers.

At the coronary heart of cost communique is promoting. Marketing is set growing awareness and getting the buyers’ interest. Selling is about converting that interest right into a enterprise transaction. Meaning, promoting is set making the purchaser a client – someone who has given up his or her cash in trade for product/service you created.

Marketing and selling, make up the two key functions of the Value Communication section of a business. This is where the commercial enterprise comes in touch with the ability purchaser and what takes place at some point of this phase is what will decide whether or not the commercial enterprise could be a success or no longer.

4. Delivery of VALUE: the final step in making income without stealing is the real delivery of the cost you’ve got recognized, created and communicated to the sector that your business offers. In turning in the price you want to be sure that it’s far precisely as you have got communicated. You clearly do not want to over promise and underneath-supply. So ensure you deliver on the identical best and quantity of cost you have previously communicated. Doing this makes your commercial enterprise crucial within the eyes of these you serve.

So over to you my dear reader, how has your business been able to outline, create, communicate and deliver value to the

Profit Maps Model – How to Generate Profits Using the Profit and Loss Statement

(An Effective, Simple and Easy to Implement Tool for Profit Improvement and Cost Reduction Using the Profit and Loss Statement)


Improving profits is one of the predominant targets of any business, but maximum managers do not clearly recognize a way to circulate beyond the basics of value-reduction and income improvement.

Typically the agency’s reaction to the want to reduce cost is to lessen the personnel. In maximum situations this is a mistake or simply a quick-term solution. The excellent approach is to give employees a chance to take part in developing price discount techniques in order that income improvement is perpetual.

I never located a idea that in particular informed me a way to take a business, corporation, branch or group thru an smooth to use process to achieve value-discount or income improvement using the road items in the profit and loss announcement. The Profit Maps demonstrates how huge corporations, a small commercial enterprise or a single branch can enhance its earnings and decrease costs using the verified technique that is based totally on team innovation and control.

The Profit Improvement Paradox

In maximum business conversations most effective moments skip earlier than some reference is made to improving profits. This is predictable because the principle cognizance of enterprise is to make profits. What is not so predictable is maximum managers’ restricted capability to formulate powerful plans for profit development. This is what I name as the profit development paradox.

The Reasons for the Profit Improvement Paradox to Exist

o Management Distraction in different components of business and not specializing in profitability and cost-discount
o Lack of Management Training to come to be extra privy to profit development situations.
O Management Turnover
o Lack of a Constant Process for Profit Improvement as many groups truly do no longer have a constant, systematic manner for reducing expenses and enhancing income on a non-stop foundation.

Many books which have been written about cost management focus on interest based totally practices. Most widely known is hobby based totally costing, hobby based totally budgeting and hobby primarily based control. These tremendous principles and frameworks provide a notable deal of statistics approximately fee dimension. Once you have got examine them however you could find yourself through asking however how do we reduce fee after having measured them cautiously? And where can I find a list of cost discount ideas organized by way of line items? The solutions to those questions are the premise of the Profit Maps Model. Without it continuous development in profitability are unlikely.

The Profit Maps Model

The Profit Maps Model acts as an engine for continuous improvement, produces on the spot effects, and will become a center competency for the enterprise.

The Profit Maps Model consists of the following 5 steps
1. Picking your crew
2. Preparing your crew and your business
three. Brainstorming all of the questions
four. Taking action and documenting the consequences
5. Reviewing and following up

Each step in the process performs a vital function. Systematically implemented, they generate a synergistic approach the grants consistent, continuous focus and improvement.

Step 1 – Choosing and Managing the Profit Impact Team

The use of teams in particular to improve earnings and loss is unusual, no matter control’s big acquaintance with groups and what they can accomplish. The Profit Maps approach shows managers how to pick out the right crew members, arrange conferences and set concrete desires for optimum effects in earnings and loss control. When applied in proper sequence with the alternative steps within the Profit Maps Model, the Profit Impact Team turns into the engine that drives earnings constructing forward and perpetuates it.

The Profit Impact Team has the following characteristics,

o No Fewer Than Five, No More Than Eight-More than eight slows down the procedure even as much less than five takes a narrow view and no longer all departments can be represented.
O ‘Out of the Box’ Thinkers
o Cross-Discipline, Complementary, Cross-Sectional Skills – Since cost-discount requires more than one abilities and experiences and purposeful experts have the depth of know-how needed to dig under the surface and ferret out opportunities for price reduction.
O Commitment to Reducing Cost -We know that nothing builds commitment extra correctly than the humans accountable for implementing the process being those who created it. Stress this point by creating incentive programs for the Profit Impact Team.
O Performance Goals-What makes the Profit Impact Team so powerful is that the manner of placing overall performance dreams is inherent in the idea. Because the aim of the team is to lessen fees from each line of the income and loss announcement, fulfillment can effortlessly be measured via examining the next income and loss assertion.
O Profit Impact Team Members Hold Themselves Accountable The Profit Impact Team holds a monthly evaluation which ought to be timed to comply with the distribution of the profit and loss statement.
During this manner, individuals chargeable for the particular line objects report at the action steps, the consequences, and any want for corrective action steps or new strategies. Each crew member have to report on his or consequences. Then all crew members are recommended to explicit their views and offer recommendations. After each presentation, have all crew contributors supply feedback to the presenter in terms of how swiftly or slowly outcomes are being acquired.

Step 2 – Preparing your Team and Your Business

In step 2 of the Profit Maps Model each group member ought to be ‘prepared’ to apprehend the strategies of innovation management. Here the fundamental steps are to prepare the crew members to recognize the enablers of improvements in addition to how to cope with the setbacks that occur as the innovation method unfolds.

A education application need to be used to assist put together the team for those enablers of innovation.

During the education, the crew will learn to recognize and degree the business’s capacity to alternate, to lay the basis for destiny innovations, to measure the ideas fulfillment, and to make wanted adjustments. This system additionally teaches the crew how to show to the workforce for answers to tough questions- and faucet into enter that may make the difference between fulfillment and failure.

Step three – How to Use the ‘Questions Brainstorming’ Method in Your Organization

Organizations and management strategies regularly shrink back from asking questions because they’re perceived as antagonistic, confrontational demanding situations to authority. However, questions may be an crucial part of locating innovative answers and need to be recommended always and inside all stages of an agency.
‘Questions Brainstorming’ is a brand new technique that stimulates creativity and fuels persistent improvement. The conventional exercise of brainstorming for solutions generates fewer thoughts and therefore, fewer answers. Brainstorming questions, alternatively, lets in teams to be extra creative whilst exploring a topic.
How It Works-The Group maintains asking questions till they have exhausted the topic. Only whilst all of the questions have been requested is it time to start looking for answers. The questions are prioritized and every is assigned to an individual to are looking for solutions. The technique of thinking about questions presents the framework for the solutions, and those in turn assist assemble the movement items.”

Step four – Taking Action and Documenting Results

Taking action and documenting the effects is the step of the Profit Maps Model that movements you ahead toward successful implementation of your ideas.

Asking questions generates an countless listing of ideas for similarly exploration. Our next step, taking action and documenting, suggests a way to use the ones thoughts as a framework for building concrete programs for price-discount and earnings improvement. Taking motion and documenting is the performance development planning hobby and administrative step of the Profit Maps Model. This step is essential as it enables us build and whole motion steps, tune consequences, and flow in the direction of performance, even as at the equal time serving as treasured software documentation.

Taking action and documenting can be damaged down into the following additives

o Ranking the Profit Maps Model questions
o Formulating the movement steps
o Assigning obligation
o Setting a goal date
o Measuring development
o Developing a contingency plan
o Initiating review and observe-up
o Choosing the following Profit Maps Model query

It is essential to use all of the components. Because each element builds on the previous one, skipping a step might weaken the complete shape.

The standards normally used while ranking questions are those best probably impacts at the income and loss announcement, the maximum enthusiasm from the team, the lowest capital funding, handiest a minor trade to a process or technique, and new schooling software as the best requirement.

Once ranked, the top questions need to be transferred to a overall performance development plan where action steps, dimension of outcomes and contingency making plans can take location. Taking the time to report these sports makes improvement planning run greater easily, maintains the group on route and holds people chargeable for the achievement of the overall performance development plan.

Step five – Reviewing Progress and Following Up

Profit Maps Model is a dynamic continuous process. Its concepts whilst systematically applied result in continuity of earnings development and value-discount. Reviewing and following up is the crucial ultimate step that continues the process going. Its vital position is to create a perpetual development technique at the same time as retaining improvements cutting-edge with modern-day enterprise needs and making sure durability.

Reviewing and following up includes, a complete evaluate of each action step to decide whether or not the price financial savings concept or answer has merit and may be followed by way of the agency, a timely follow-as much as ensure that the person accountable is in reality taking the important steps to complete the assignments generated through the overall performance development plan and a spark of ignition forcing the group to invite the perpetual question, ‘what’s the following earnings development query?’

Conclusion – How and Where to Get Started

The Profit Maps is the vital piece that has been missing from organizational design- a non-stop process for income improvement and fee discount that have to be a part of each business.

Getting the method commenced may be an smooth promote. The most tough component could be overcoming the corporation’s resistance to this new method.

Set up a meeting along with your boss and tell her or him which you would love to put together a Profit Impact Team made of 5 to 8 employees from diverse departments inside the organization. Mention that the goal of this crew is to apply the Profit Maps Model to generate a list of creative thoughts that when applied will start to generate value-discount and earnings development.

Once you have got the attention and support of your boss you’re geared up to start.

Use the complete and free

How to Double Your Profits Without Increasing Your Sales

The five% answer.

Recent research reading the tax returns of over 1 million groups have shown that most of the people of agencies in this u . S . A . Make a pretax earnings, as a percent of sales, of five% or less. I am now not simply regarding small agencies.

If your enterprise made a pretax earnings ultimate year of 5% or less, you could at least double, and most likely a whole lot extra than double, your pretax profits genuinely by means of decreasing fees 5% while merely protecting income degree.

If you currently experience a profit ratio, as a percent of sales, that exceeds five%, congratulations! You are in the minority. You are exceeding the average and excelling where others aren’t. But you can do higher. Much higher. In reality, unless your profit ratio is extraordinarily high, the standards I will display you here have to show to be nearly as effective on your agency as they may be for the ones businesses creating a profit ratio of five% or less.

The way to double your profits is to reduce your fees by an quantity identical on your pretax income as a % of sales at the same time as doing nothing greater than conserving income degree!

If your income ratio, as a percent of income, is less than five%, you may use it to replace the 5% example I am the usage of along with your % and examine as although I am speaking to you without delay. Of route, this will additionally work with 1%, 2%, 3%, or four%.

So, at the same time as I have called this the 5% answer it is able to simply as effortlessly have been known as the 1% answer or the four% answer or anything percent this is equal to your pretax income as a percentage of income from your last fiscal year. The concept is the same. Take your pretax profit ratio and reduce costs by this percentage, even as protecting income level and you’ll come very close to doubling your earnings.

Let me show this the usage of a bigger corporation for example. If you have got $one hundred,000,000 in income and a 5% pretax profit your costs are $ninety five,000,000. This way 95% of the earnings out of your income is going to cover your prices. Your pretax earnings is $5,000,000. If you may decrease your costs via best five% you may boom your profit to $nine,750,000.

Your original $ninety five,000,000 of expenses instances.05 (a 5% discount) = $4,750,000. This is how plenty you’ll have added for your backside line.Your profits have risen ninety five% from $five,000,000 to $9,750,000 with out a unmarried greenback increase in income!

You have almost doubled your profits. Let me placed those numbers in angle for you;with a mean of 249 business days a 12 months except for vacations, this organisation simply delivered $19,076 in keeping with day to the bottom line. This become finished definitely by using reducing costs through five%! How plenty consistent with day might you upload on your bottom line by using doubling your profits?

To realise the same growth in profits at the present ninety five% cost ratio, this employer could must boom sales to nearly $2 hundred,000,000. Which might you believe you studied will be the first-rate manner to go? Could they even growth sales from $a hundred,000,000 to $200,000,000? If so, how? At what cost?

Remember, we are speaking about nearly doubling your sales to gain the identical backside line end result that can be carried out by means of merely holding sales stage and lowering charges by way of 5%. Doubling this organization’s income would be an nearly impossible challenge to accomplish in any affordable period of time. However, cutting their fees by means of an amount on the way to permit them to double, or maybe triple, their pretax earnings can be finished in a completely quick time and pretty effortlessly.

The idea is the identical irrespective of what your sales are. For instance, if your income are $five,000,000 and you’ve the identical five% pretax earnings ratio your pretax income are $250,000, leaving your fees at $four,750,000. If you can lower your prices by 5% they may drop via $237,500. This turned into arrived at by means of taking 5% or.05 of your charges which were $4,750,000. Your new pretax earnings level is $487,500. You have nearly doubled your income with out growing your income a penny.

To recognize this identical income growth by using growing income, you’ll have had to growth sales through $four,750,000 or, in other phrases, you’ll have nearly needed to double sales. The way to decide how much of a sales increase you will need to match the added earnings found out by way of cutting your prices is to simply take the added earnings realized by way of your cost reducing efforts and divide it with the aid of your pretax earnings ratio.

There you have got it. You could need to almost double your income from $5,000,000 to $nine,750,000 to recognize the equal profit increase that you can reap by using simply slicing your expenses by using 5%. Imagine that. You can nearly double your profits with the aid of clearly reducing expenses an amount same to your pretax earnings ratio. Compare the attempt required to reduce fees by means of a trifling five% to the cost and attempt required to double your sales;one can be achieved very effortlessly and the other cannot. It is simply that simple!

It would not depend if your income are $a hundred,000 or $a hundred,000,000,000, it really works the identical way.

Double your income or lessen fees by using 5%? Think of the effort and cost that might be required to try and double your income. Think of the risk. Think of the personnel charges. Think of the marketing charges. Think of the ability and operational adjustments that would be wanted.

Even if you may double your sales, what number of years wouldn’t it take? Just consider our instance of the $five million dollar employer. Think approximately this. Which do you think is more without difficulty accomplished, turning this organisation right into a $10 million dollar employer or reducing charges by using 5%?

Reducing your costs by means of 5% isn’t always very difficult, may be carried out in a completely brief time, entails no boom, and improves your coins drift. In fact, you should be effortlessly capable of lower fees by way of a whole lot extra than this. Trying to growth sales by a hundred% will take a chunk extra doing.The preference would look like a totally simple one.

Of route, you can save five% and a incredible deal more. There are hundreds of approaches, big and small, wherein you can keep 5% and much extra.Yes, I recognize that during some instances you may be not able to lessen a cost by way of five% and, in reality, you will do well simply by using being capable of manipulate them.

But there are many places in which you may without problems reduce real greenback fees via 10%, 20%, even 50% or greater.Think normal and no longer simply character prices. Think of the regions wherein you can reduce charges via 1% or 2%, think of the regions in which you can easily lessen expenses with the aid of 25%, 50% or more.

Think approximately what I have shown you. Plug your pretax income probabilities into those formulation and spot the impact fee manipulate and expense discount will have on your employer.

This edition of The Welch Report has been provided by way of Derrick Welch the writer of ‘In Pursuit of Profits: How to at Least Double your Profits Without Increasing Your Sales’. Including 1,000 Cost Control, Expense Reduction, and Income Producing Strategies You Can Start Using Today To Dramatically Increase Your Bottom Line.

And ‘Defy Mediocrity. Choose to be Uncommon. Think of the Alternative’.