Have you ever been to an awards ceremony for a company? Ceremonies where they share the results of different sales team members and hand out glass and plastic trophies for sales achievement? These ceremonies are generally thought of as morale boosters. They reward people for the hard work over the last quarter or year. After all it’s nice to be appreciated and receive public recognition. Even if it’s just a certificate in a frame, it feels good, right?
It’s nice when the president of your company recognizes your achievements. Sometimes you might have wondered if they even knew you existed! As you walk off the stage, what are you thinking? Are you really satisfied with that plastic trophy? Does it help you pay your bills?
Not that there is anything wrong with trophies, but they won’t help you go on vacation. That trophy won’t put your kids through college. Most of those trophies and awards are based off of GROSS income. How much of that income did you take home? What was your NET income?
While most companies focus on gross income, it’s your NET income that dictates your lifestyle. It’s your net income that will allow you to achieve your true goals. Instead of setting your goals at the gross income level, consider a focus on your net income.
Consider a strategy that forces you to focus on net income. To increase the money that ends in your checking account, consider the following two rules to live by:
7% Rule – The 7% rule is your marketing budget. This should be the cost of acquiring a single customer (not lead). Take your average sale and multiply it by 7% and you will have what you can invest in getting new customers. That means if on average a sale is worth $1,000 to you, you can invest $70 to get that customer. Don’t buy into the hype of “just 1 customer and you break even) as that will leave you broke.
Weekly Accounting – Regardless of your sales cycle make yourself do accounting weekly. This means that each week you need to pay all of your bills. If your sales cycle for your product or service normally takes 30 days, then you better amp up your sales to ensure you have something closing weekly. Increasing your net income means getting money coming into your small business weekly.
When your small business strategy has a focus on net income you will be able to get out of survival mode. Put the 7% rule and weekly accounting into action to start taking home more money today.
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Todd Bates is a national Marketing and Business coach. Through his programs, such as Todd Bates Systems, he shares innovative systems to help businesses owners and sales professionals dramatically grow their sales.