The effect on Profitability when a branch understands their numbers and the effect of small incremental changes have on your bottom line.
The stakes Are high and up until now, you haven’t had anyone teach you the language of profitability at the branch level.
Let me first start out with a brief explanation of what I call CPI. These letters stand for Critical Profit Indicator. This is just simple math, the top BBP minus the bottom BBP = CPI. Let me explain.
As we teach in our Profitability Academy the top number is all the revenue and we put that into basis points. The total revenue divided by the closed volume for the month gives us that number, the top business blood pressure.
The bottom business blood pressure is comprised of all the branch's expenses except for LO Comp. That means rent, utilities, phone, processors salaries, everything except for LO comp. We then take that total number of expenses and divide it by the volume closed for that month. So Top BBP minus Bottom BBP = CPI.
Now let's take a look at the Chart. You can see here that down the left side is volume. I’ve made it easy for you. If you're used to thinking monthly volume, find your monthly volume down the left, next to it we convert to annual volume. If you think in annual volume just start there.
Across the top is the what-if scenario. What if you could increase your CPI in 5 basis points increments starting at 10 basis points. The next column is 15 and the next 20 etc.
In this first example I want to take a very small branch, one doing 2 million a month, and let’s just say that we can only improve your CPI by 10 basis points, when you line up the columns and row, you get $24,000. That means that what’s at stake is $24,000 in profit each and every year. Now that’s a pretty conservative number from what we’ve seen in the past. Does it make sense to invest in our program knowing that your going to add that much money to your bottom line, most will say yes, that’s a great rate of return. Now let's outline a couple of more what if you did 4 million a month and thru our teaching, you improved your CPI by 15 BP that’s $72,000…just as a side note our program costs are the same no matter how much money we add to your bottom line. Let’s try one last example what if your branch did 90 million a year and you really dialed into our teachings and added 20 basis points to your CPI….That would add $180,000 in profit to your bottom line. As I said before the stakes are high and all you need to do is apply yourself, dig in and learn from our over 30 years of experience, and reap the benefits for you and your family. If you’d like more information on our program go to www.branchprofitability.com. Thanks for watching.
