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Two Principles Behind Elements: Three Handles of Income and 80:20

(About a 1 Minute Read)

Deming - SVGThe legendary W. Edwards Deming,the man many in Japan credit for most of the Japanese post-war economic miracle of 1950 to 1960 taking Japan from the ruin of WWII to becoming the second-largest economy in the world due to his ideas and guidance.

Deming said "You can't manage what you don't measureā€. will show you that you have not been measuring sales performance effectively EVER!

The Income Formula

The Income formula is:

Income / Revenue = Active Clients * Average Sales Value * Average # of Transactions

This equation reconciles to the company's financial reporting under Income (or Sales or Turnover or whatever term the company wishes to use).

As an example limiting ourselves to one day: $1 Revenue RGB146-32-145

But the business owner knows that if: $8 Revenue corrected

Thus we can use specific tactics to improve any of the three components of income.

However, up to now, business has not had the ability to measure these components and if one does not measure, one cannot improve.

Cloud technology enables us to see the history of the business owners' decisions.

David Seamans

Co-Founder at Elements, Retired CPA and Company Coach with 35 years of experience building better businesses.

Posted 13 Jan, 2021