You airline ticket sales agency $ 5 million. Your sales team's hard work, and has landed a new business account. Will lead to your account in $ 400,000 for new businesses. These share trading, customer has told you that are willing to pay you only 7% sales fee. I will be able to make a profit in this new business will incur significant losses or you?
Return on revenue (ROR) for your agency is only 12.2 per cent. How can accept only 7 per cent in fees? If you say "no" to potential customers and will go elsewhere. The account could really can?
In my opinion, is an "additional work analysis" when taking a new account. You can then analyse whether you can afford to deal with new businesses. Your break-even point is the point where "total expenditures variant intersects with line revenue. Where is your variable costs only 15% of your gross income, you can theoretically could charge 8.5 per cent and still break even. This means you should do your best to negotiate 8.5 per cent in fees or new business shutdown if the client is only going to pay 7% as in my example open.
Air sales $ 5,000,000
Total service charges 527390
Total fixed expenses 381700
Total expenditures variant 81,500
Total expenses 463270
Net income before taxes 64120
Dividend income of 12.2 per cent
Home agent productivity
In many companies the cost of labour in changing costs. However, I maintain that is fixed in the travel agency, labour costs. You need to labor agents and phone computer phone is ringing off the hook. Of course, if you take in $ 2 million in additional work, you'll need to bring in additional staff, thus increasing your fixed costs. The so-called influence of step. You will have an increase in the fixed cost line. But for my purposes, for example, suppose that after taking into account the $ 400,000, you do not need to add any fixed expenses, i.e., no need to recruit new, you won't need to buy additional computers, you will need to increase your space and etc.
However, it's good to know how much you have room to manoeuvre. You can see if you have additional business analysis you can select several things:
• Number of tickets that need to be sold in black.
• New business profitability.
• Your hard by variable costs and impact reduction.
• Impact revenue raised your fees through the bypass.
• Point in that you have to increase the fixed costs to fit new business.
I have seen many make the mistake of reducing income taxes without receiving any intelligent interest in return. If you review this information carefully, you'll have the tools to make sound decisions. It allows you to measure the profitability of additional business.
There is one feature that can be drawn from the breakeven analysis. Once you are beyond breakeven point, you can offer special incentives for your sales staff to landing new accounts, i.e. the value of the following business can pay 3 per cent, compared with 1% or 1.5% of the fee income. Will be amazed how quickly increase your sales! The Agency's work is no different from any other work. Make sure you know the fixed and variable costs and profits are sufficient to maintain yourself in business!
Tharwat abouria CT
President
Travel CPR for business-a strategy for life!
http://www.travelbusinesscpr.com/
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