Click here to post your answer to this month’s question. The best entry receives a $50 gift certificate at a local restaurant!
Donny and Marie, now “world class dancers,” decide they want to open a new business in Guerneville, in which they provide the benefits of hypnosis to couples with marriage problems. They always work together, just like “dancing with the stars,” as co-therapists in the same session with the couple at the same time. They charge $60.00 an hour and the standard visit is one hour.
To satisfy their hypnosis license requirements, they must write down the results of their sessions after each visit. These notes take about 15 minutes to write down and should be done immediately after each session. They also believe the best notes are in crayon.
Although they only need about 700 square feet for their business, they’ve already signed a lease for a 1,000-square-foot facility, which will cost about $2,500 per month. Additional overhead will cost $500 monthly.
To maximize income for the business, they plan on using the extra 300 square feet as a karate studio to help clients/patients work off a little frustration before each session. The karate instructor, known as the “sergeant,” will be great for creating some discipline in the client couples’ relationships.
Business development principles: Frequency and efficiency
“Frequency” is the occurrence of an event in a specified amount of time. How frequently do you need a sale or transaction to occur? Knowing your client’s lifetime value is one of the keys to the frequency of continued sales. Frequency of a sales transaction can occur in four ways: How many sales you perform in a day (week, month, year); how many transactions you obtain from one customer in each occurrence; how many transactions you achieve from each customer in a lifetime; and how many additional sales are leveraged through client referrals.
It’s critical for the successful business owner to understand exactly how many events, whether sales transactions or production items, are necessary for the sales forecasting needed to reach the business goals. If the owner or manager understands and applies the proper use of frequency within a business, the odds of success are much higher.
“Efficiency” is often expressed as a percentage of each day you create income. So, in a service sector business, if you’re working an eight-hour day and can invoice for five of those hours, you’d have a 62.5 percent efficiency rate for that day. In a product-based business, efficiency would be expressed as how many products sold in that same eight-hour day.
As is often the case, we, as business owners, tend to think we’re a lot more efficient than we actually are. It’s important for the successful business owner to track what they do every 15 minutes of each day they’re in the office.
Time to dig deeper
Donny and Marie, longing to renew their singing and dancing careers, have decided that hypnosis couples therapy is not as enjoyable or as profitable as they’d hoped. They know the lease will continue for another five years, and that any sublease of the entire premises is unlikely. Also, since they’re in Sonoma County and know Sonoma State University graduates multiple psychology students, and since Donny knows how to use hypnosis while at a lunch, they’re thinking about bringing in some new psychology students to do the work. They figure if they can hypnotize both the students and the couples, they can simply spend 10 minutes with each couple and have the students finish the hour session. This way, they figure they can work with a lot more couples per day and generate more money.
You’ve been asked to help Donny and Marie because you like them—yes, look into my eyes, you really, really like them and want to help them. How would you help Donny & Marie make more money in their new business?
The mission of the California Business Development Center is to improve the ROI of your business. Here’s how we do it. The CBDC, (R) recreates business systems & strategies to (O) organize your talents and teams to (I) inspire you and your company to higher levels of business success.
Do You Have the Answers?
1. How many sessions do they need each day to net $5,000 per month?
a. About three
b. A little over six
c. A little over four
b. A little over six
c. A little over four
2. What’s the difference if they hire a full-time secretary at $20 per hour?
a. They’d get to work less sessions per day.
b. They’d have to work more than eight sessions per day.
c. They could work the same, since their efficiency would increase.
b. They’d have to work more than eight sessions per day.
c. They could work the same, since their efficiency would increase.
3. What is one of the best ways to improve gross revenues for their business?
a. Sublease the remaining, unused space in the office.
b. Hire another secretary to take calls and schedule the existing appointments.
c. Stop doing therapy as co-therapists.
Answers: 1. (b), 2. (b), 3. (a) or (c)
how business smart are you?
What would you suggest to Donny and Marie so they can earn the same and work less?
Click here to post your answer to this month’s question. The best entry receives a $50 gift certificate at a local restaurant!
