The document discusses the realities of starting a business compared to the myth of entrepreneurship. While over 1 million businesses are started each year, over 90% fail within the first 10 years. The reason for high failure rates is that entrepreneurs often understand the technical aspects of the business but not the business aspects of running a company. It also discusses how to estimate costs, revenues, profits, and determine an appropriate business model for a sustainable business.
1. The Profitable
Provider
Brett Dillon
RESNET Conference 2011, Orlando FL
Quality Passion Knowledge
Friday, March 4, 2011
2. Profit Costs Models Planning
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3. The Myth of the Entrepreneur
• Because I’m good at
what I do, I can make
more money working
for myself!
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4. Reality Check!
• Every year Year 1: 600,000 in business
over
Year 5: 200,000 in business
1,000,000
businesses Year 10: 40,000 in business
are started
The reason for the failure rate is the assumption of the
entrepreneur that if they understand the technical work of a
business, they understand a business that does that technical
work.
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5. Do You Own a Business or a
Job?
• Works for wages • Works for profit
• Does the work • Manages work
• Plans growth
• Plans the work
The difference is your perspective!
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6. How much MONEY
do you want?
• Overhead
• Profit
• Labor Costs
• How much do you charge?
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7. How much TIME do
you spend?
• Estimate time needed
• Adjust with experience
• Use sales goal
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8. Time, Quality & Money
Time = Quality
Time = Money
Money = Quality
Knowledge = Power
Power = Work / Time
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9. Time, Quality & Money
K = W / T = > T, < K
K = W / M = > M, < K
K = W / Q = > Q, < K
P = W / T = > T, < P
P = W / M = > M, < P
P = W / Q = > Q, < P
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12. Revenue
• Sales
• Who is buying?
• What are they buying?
• Why should they buy?
• Why should they buy from me?
• How are they buying?
• When are they buying?
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13. Consultant
• 1,030 hours/yr
• (annual overhead + profit) / 1,030
= overhead charge rate
• overhead charge rate + Labor
Cost = hourly rate
• Estimated time for job x hourly rate
• Adjust with experience
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14. Cost-Based
• Costs / profit margin = sales price
• Cost Plus
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15. Performance-Based
• Maximizes shared value creation
• Creates more space between value to
client & costs to do business
• Communicate value to clients
• Be unfair
• Context
• Delivery
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