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Increasing Your Operating Margin

Increasing Your Operating Margin. Lifelong Learning 2007 Greg Marsello. Operating Margin. Operating Margin. Operating Margin. Ideal LERN Financial Format with Percentages. $____ 100% $____ 10-15% $____ 45-50% $____ 60% $____ 40% $____ 35% $____ 5%. Why Increase Operating Margin to 50%?.

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Increasing Your Operating Margin

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  1. Increasing Your Operating Margin Lifelong Learning 2007 Greg Marsello

  2. Operating Margin. Operating Margin. Operating Margin.

  3. Ideal LERN Financial Format with Percentages $____ 100%$____ 10-15%$____ 45-50%$____ 60%$____ 40%$____ 35%$____ 5%

  4. Why Increase Operating Margin to 50%? • Surplus must grow • Reserves must grow • Investments must grow • Staff intellectual capital must grow • Security/independence must grow

  5. 50% Operating Margin LERN Financial Format $____ 100%$____ 10-20%$____ 30-40%$____ 50%$____ 50%$____ 30-40%$____ 10-20%

  6. No More Than 30%!

  7. Actions to Take • Increase promotion costs. Be more targeted. • Decrease production costs. Better negotiating. Increase prices. • Focus resources on winners. Cut the dogs. • Require accountability. Staff training plans. Look at the numbers.

  8. Actions to Take • Let moneymakers make money. Telecommuting more important. • Software must do more of the work. Web-based is best. • Reduce meetings to 5% of time or less. Use virtual office. • Dean/Director buffers staff from Central Administration. Focus on the job. • Think in terms of business units. Centralize operations.

  9. Actions to Take • Diversify delivery method mix. F2F courses, online, conferences, seminars, contract training, consulting. • Dean/Director must be out of day-to-day and generating opportunities. 50%. • Do not copy the competition. Beat the competition. • Plan. Everything needs to know what they are doing.

  10. Pricing Is Critical • Know your production costs • Know your production percentage • For open enrollment, know your average participants • Do market pricing

  11. Pricing Example Step 1. Production Costs = $400 Step 2. Production Percentage = 40% Step 3. Required Income = $1,000 ($400/40%) • NOTE: Contract sales skip next two steps. Step 4. Average Participants = 10 Step 5. Formula Price = $100 Step 6. Do Market Pricing/Finalize Price • Options: Reduce Costs. Offer As Is. Don’t Offer.

  12. Moving Forward • Major shift takes 3-5 years. Be realistic. • Focus attention on pricing. Someone should be approving. • Think diversification. Think investments. • Use One-Year Market Plan. Also have a Three-Year Strategic/Vision Plan. • Make 50% Operating Margin a Priority.

  13. Thank You!marsello@lern.org

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