Boost Your Business: Achieve 20% Revenue Growth and Cost Reduction with CMTC's 2020 Strategy (Full Transcript)

Speaker 1: Number one, we're talking about 2020 today, and the idea is there are things you can do in your business to boost your revenues, boost the top line. There are also things you can do to carve 20% out of your cost side of your business. And we're going to show you not just what CMTC does to do that for you if you were to hire us, we're going to show you how we do it, and you're perfectly welcome to take what we give you today and go out and put it into operation in your own business. In fact, we would hope you'd do that, okay? And also, starting now, it's important that you do it now. We've got a little section of this presentation where we show you how important it is to do it, do it now. With that, we're going to talk about 2020. 2020 is an idea that comes to us through our oversight from the Department of Commerce. 2020 is about how to carve 20% out of your cost, boost your sales by 20%, and I'm not just going to tell you a little bit about what it is or what service is, I'm going to tell you exactly how to do it so that you can go home, go back to your office, and do it yourselves. First of all, you can't do everything, right? It's kind of like you walk into your office on Monday morning, 200 things hit you in the face that you need to do. And so, even if you have the inkling at some point in the day, I'm going to improve my business, you'll say, to make this improvement, it's going to cost this much, and this, let me get this kind of, but if I do this other thing, it'll cost this much, and it's going to give me a little bit better return. So, you go into paralysis by analysis. The important thing is that you need to have some strategy for deciding what to do, what not to do, a process to eliminate cost, to eliminate waste in your processes, a way to sustain, implement and sustain that change, and then on the sales side, there's only three ways we can improve your sales, right? One is to come up with completely new products. Another is to diversify your product and or resources into other market channels that lead to new customers, okay? And then finally, just plain old heavy lifting, how do you sell better, how do you market better? Okay? Now, we're not going to go into as much detail on these, because what they really all depend on is a process of innovation. We're going to talk about that process of innovation and how you build it into your company. What about why it's important to do 2020? What does it mean to you? What's the value for your business? Well, number one, let's just take a hypothetical company. It's a 40 million a year manufacturing company, all right? Now, across this grand land, the average return on sales is about 5%, like it or not, okay? You may do better, you may do a little worse. You're pretty much limited by what's out there. So, you know, the profit contribution for this average company is 5%. The expense contribution, 95%. So 95% of everything you take in gets eaten up in labor costs and parts and raw materials. So that leaves us with a profit of about 2 million. That's very simple, straightforward. Now, let's take a look at a future state where we've come up with maybe a new product or some new sales channels, whatever, and we're able to increase that 40 million a year revenue stream to 48 million. Now, I'm going to oversimplify here. Certainly we all know that when you look at the cost curve in a factory from zero load to 100% load, your cost curve looks something like this, right? But I'm going to simplify this and say, on average, if you're a manufacturing company, you're still going to make 5%, okay? So we're going to keep this cost contribution at 5%. So profit on a 48 million dollar cash stream is 2.4. Profit of $400,000, which is better than a poke in the eye, but it's no great shakes, right? Especially if you have to jump through a lot of hoops or spend a lot of money to get that additional revenue stream. Let's take the next step and let's take a look at cost cutting. Now we've got our 1.2 improved revenue stream, or 20% improved revenue stream. Now we're going to cut 20% out of our cost. So what we end up with is kind of a new distribution between expense and profit of 76% expenses, 24% profit, multiply that out. Now you have an 11.5 million dollar profit. Now you can work back through the numbers, but you don't get the full 11.5 unless you do both things, all right? But you have to admit that increasing your profitability by 475% is much better than a poke in the eye. Now I want to just kind of open it up to everybody. You can tell me what you think. Should you even attempt to do something like this? Is it worthwhile? What do you think? Not everybody at once. So you're comfortable in that you have techniques to carve costs out and the control to carve costs out, not so comfortable that you could innovate new products or figure out new ways to drive that much, and that's a reasonable thing. We address that in the second half of the presentation on the 20% improvement, okay? Now, you know, I can't tell you whether it's worthwhile for you, whether it's something you want to do, but I can tell you this, that if you do the same thing you've been doing, your company today is engineered very nicely to produce the results you're getting. You will not see a change unless you do something different. So the time is now to commit to 20% improvement in revenues, 20% improvement in cost structure, and get it on the road.