I was invited by one of my clients (NIIT Franchise) to see what is going wrong in the business as he was suffering losses from the last 6 months. I did my Right Fit (discovery meeting) with him to see what he is doing to improve his business and offered him a Financial Assessment. After a week doing my financial assessment I met him for Financial Assessment review meeting in which I asked him what will he do to improve his business. He said I’ll do more marketing. In my financial assessment I discovered that he is getting 10 leads every day i.e., there is footfall of 10 students every day but they are able to convert only 1 student out of it. With this his Income statement was like this:
Monthly Revenue – 500,000
Franchise Fee (40%) – 200,000
Salaries – 200,000
Rent – 100,000
Overheads – 50,000
Overall Loss – (50,000)
What I suggested him is, there is no problem with the marketing but the Conversion rate. His conversion rate is only 10% right now, if he can increase the rate to 20%, meaning 2 students out of 10, he can improve his business; in that way let’s see his Income Statement:
Monthly Revenue – 1,000,000
Franchise Fee (40%) – 400,000
Salaries – 200,000
Rent – 100,000
Overheads – 50,000
Overall Profit – 250,000
Which he said he can do it alone and he was in profits next month only and after that we worked on 30% and so forth and keep improving his profits and cash flows.
So you see, we need to find out the real problem before we can make any decision for the solution.
