26 Jun What is Our Business Alchemy Process and Why You Should Care
By Jeremy Lott
The essence of the Business Alchemy Process is simple yet profound: transforming the lead in your business into gold – more profits, better cash flow, and all-around success. Picture it as a magical journey where we unravel the mysteries of your finances and pave the way for prosperity.
What’s Different About the Business Alchemy Process
In my line of work, I've come to appreciate the power of structure. While some consultants prefer a more freestyle approach, I've found that having a set process and plan can work wonders.
Picture it like this: you're embarking on a journey, and I'm your guide. Instead of simply asking, "Where do you want to go?" and leaving you to figure it out, I come armed with a roadmap – a structured process that lays out the direction we need to take.
But here's the beauty of it: while we have a clear path in mind, we're not bound by rigid rules. Along the way, we can adjust and customize our approach to suit your unique needs and the quirks of your company. It's like having a GPS that recalculates your route based on real-time conditions.
This structured yet flexible approach ensures that we stay on track while also allowing room for creativity and adaptation. So whether you're charting new territory or navigating rough terrain, rest assured that we'll find our way together, every step of the way.
Who Can Benefit from Business Alchemy?
Business Alchemy works best for companies that have the power to set their own prices and estimates. This autonomy not only grants them freedom but also opens the door for me to impart my expertise in pricing strategies and ensure that every sale translates to profit. As such, I find myself drawn to service-oriented companies, where this flexibility reigns supreme.
I do have a handful of manufacturing clients in my roster, but my expertise truly shines in sectors like construction. There's something about the construction industry that resonates with my process – perhaps it's the intricate dance of costs and estimates, or the tangible results that stem from sound financial management.
But regardless of the industry, profit happens when income exceeds expenses. As Jim Rodgers once said, "When your outgo exceeds your income, your upkeep becomes your downfall." If you have a bottom line, business alchemy can help!
Stages of Business Alchemy
The Business Alchemy Process is a comprehensive, in-depth journey toward financial empowerment. It's not just about balancing the books; it's about transforming your business from the inside out. Here are the stages of the process:
1. Demystifying Cash Flow: Saving Your Business with M&Ms
First off, we delve into the cash flow equation. But we don't just crunch numbers; we make it fun with a presentation featuring everyone's favorite treat – M&Ms. Through this interactive session, we dissect the cash flow equation, pinpointing areas for improvement and laying the groundwork for financial enlightenment.
2. Unveiling True Costs: The Key to Profitability
Next comes the cost analysis. We leave no stone unturned, uncovering the true essence of your business costs – from direct labor and materials to overhead expenses. Armed with this knowledge, we craft a modified contribution margin, revealing the delicate dance between sales and costs. This sets the stage for understanding your break-even point – the holy grail of financial stability.
3. Defining the Pricing Policy: Stop Losing Money
Right after the cost analysis comes a pivotal moment: refining your pricing and estimating practices. Now that we have visibility into the true cost of every job, we can ensure that you're bidding, estimating, and charging jobs appropriately to ensure you’re not throwing good money after bad.
When we got to this stage with one of my clients, a seasoned electrician, 17 years deep in the trade, we discovered that his business was bleeding profits on jobs under $5,000. With our strategic intervention, his bidding approach transformed. Now, he enjoys gross profits of 15% to 35% on every job, reversing two years of losses into newfound stability and success.
4. Profit First Implementation: Game-Changing Strategy
Enter Profit First implementation, inspired by Mike Michalowicz's revolutionary book. By adopting savvy cash flow strategies, we ensure you always have funds for bills and even set aside some profit upfront – no more waiting for scraps at the end of the month.
5. Strategic Bill Paying: Keeping Cash Flow Healthy
Then, we fine-tune your bill-paying strategy, creating a scientific formula to prioritize payments and maintain optimal cash flow. Intentionality in your bill pay schedule is the key to maintaining positive cash flow so that you have the resources you need to fuel future growth.
6. Budgeting for Growth: Proactive Financial Planning
Now that the groundwork is laid and your financial foundations are solid, it's time to look forward. We work together to create a proactive budgeting plan aimed at fostering growth and expansion. By allocating resources strategically and anticipating future needs, we ensure that your business is poised for success in the long term. Whether it's investing in marketing campaigns, expanding your product line, or exploring new markets, this proactive approach to financial planning empowers you to make informed decisions that drive sustainable growth.
7. Mastering Cash Flow Projections: Your Financial Crystal Ball
We project your cash flow for the next 13 weeks, helping you navigate potential peaks and valleys with ease. We establish clear policies for accounts receivable and payable, ensuring smooth financial operations. Key performance indicators and benchmarking provide valuable insights into your business's health and competitiveness.
8. Setting AR and AP Policies: Cornerstones of Stability
And as your trusted financial partner, we don't stop there. We develop a comprehensive growth strategy, advising on crucial decisions like equipment purchases and hiring. Some elements, like cost analysis and budgeting, are revisited regularly to keep you on track.
How We Measure Success
When it comes to gauging the impact of the Business Alchemy Process, we don't rely on guesswork. We have concrete metrics that tell the tale of transformation.
First up, we scrutinize cash flow projections over time. Smooth sailing in this department – with positive cash flow projections that remain stable – signals a job well done. It's like seeing the tide turn in your favor, a sign that our efforts are yielding tangible results.
Next on the checklist: profit growth. We're not just talking about a slight uptick here and there; we're aiming for substantial increases in your bottom line. When your business is thriving, it's music to our ears – a testament to the effectiveness of our strategies.
But let's not forget about you, the business owner. One of our key indicators is the amount of money you're paying yourself. It's not just about growing your business; it's about improving your quality of life. If you're taking home more than ever before, that's a surefire sign that our partnership is paying off in dividends.
The Business Alchemy Process isn't just about numbers; it's about transforming your business from lead to gold. Through structured yet flexible stages, we unravel the mysteries of your finances, paving the way for prosperity. Whether you're in construction or manufacturing, profit happens when income exceeds expenses, and that's where our process shines. From demystifying cash flow to setting AR and AP policies, each step is meticulously designed to empower your business and enhance your quality of life. As we measure success through tangible metrics like cash flow projections and profit growth, our ultimate goal remains unchanged: to turn your business dreams into reality, one calculated step at a time.
Connect with me today to see how we can transform your business together!
Author Bio
Jeremy Lott's academic journey at Brigham Young University helped him found a landscaping company in 2006. Though the venture was initially successful, the 2008 market crash ultimately led to a heartbreaking bankruptcy.
This pivotal moment spurred Jeremy to take charge of his financial future. Through rigorous self-education and academic pursuit, including an MBA at the University of Utah, he honed his accounting skills and became proficient in tools like QuickBooks.
Now armed with expertise and experience, Jeremy helps business leaders in construction and other industries navigate financial uncertainties. His approach blends bookkeeping proficiency with strategic financial guidance, offering a lifeline to those seeking to transcend financial chaos and achieve lasting prosperity.
