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16. What if we don't have a really good handle on profit? Is there a minimum threshold for getting started? For most companies revenue has been a proxy for profit. That's why we recommend our profit matrix analysis to get to the best numbers possible as a place to start. Customers with the highest revenue aren't necessarily the most profitable. It is amazing how few customers make up the majority of the profit. We know because we separate the highly profitable franchise customers from other profitable customers. There are usually only a small percentage of them. Once you know the true cost layers, it is easy to see where to focus for improvement. Frankly, just this exercise brings huge benefits—in terms of profit and team alignment. Then again, sometimes it just doesn't matter. You know where you
want to focus and we just start with what you have. Where we'd start
then is with our strategy decision model, which can predict whether
you will make money with a strategy or not. |
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