All the institutions in this article refer to non-disciplinary institutions, and unless you want to transition to non-disciplines, please don't bother me.
In the previous article, I proposed a proportion of the profitability of education and training institutions, such as fixed cost investment such as rent, equipment depreciation, decoration depreciation, if it cannot be controlled within 25% of the revenue used, you will easily lose. If the labor expenditure cannot be controlled below 35%, it will also be easy to lose.
Many people have written to me privately that it is simply impossible for an organization at this rate to control gross profit at 40%. On the one hand, the doubt is that it is impossible to control the labor cost below 33%, and on the other hand, it is impossible to achieve a gross profit of 40%, so I decided to do the math through this article. Moreover, I can say very responsibly that if your organization's gross profit is less than 40%, then I sincerely suggest that you might as well find a class.
Is 40% gross profit really hard to do?
40% gross profit means that if the annual revenue is 500,000, you can earn 200,000, and the net profit can be about 15-20. If the annual revenue is 1 million, you can earn 400,000, and the net profit can be about 25-30. If the annual revenue is 2 million, you can earn 800,000, and the net profit can be about 650,000-700,000. If you can achieve a revenue of 3 million, it is not a dream to make one million this year, isn't it very happy?
But the reality is cruel, many people can't actually earn this money, if the customer unit price is 3,000 yuan,
An institution with a revenue of 500,000 yuan a year needs to complete the payment and elimination of 166 people per year, and this kind of institution is likely to be the boss with an employee to work, the venue cost must be at least 15%, the employee must take at least 10%, so there is still 37.5 left. So find no, if you are an individual form of the institution, the gross profit margin will be particularly high, but unfortunately, now all self-employed are illegal existence, and the self-employed will also be eliminated by the market.
Institutions with a revenue of 1 million yuan a year need to complete at least 333 annual payment and consumption of courses. At this time, one or two people may not be enough, at least 3-4 employees are needed to participate in the daily work. Venue costs and personnel costs are increasing, and we conservatively calculate 15% and 35% respectively, so there is 500,000 left. The average monthly income of employees is around 8,000, so it seems reasonable.
Institutions with a revenue of 2 million a year need to complete at least 666 annual payment and consumption, at this time, you need more employees, and even the problem of increasing subjects, and the site area also puts forward higher requirements. After adjustment, the number of employees is 10 and the cost of the venue is 250,000. In this way, if the labor expenditure is still calculated according to the proportion of 35%, it means that the average monthly income of employees is about 6,000, and for the boss personally, the gross income has exceeded one million, and it is obvious that at this time you will be scolded by employees as capitalists or weekly pickpockets.
So why is it said that 40% of gross profit is the passing line of institutional operations, in the second case, we control 40% gross profit, whether it is fixed costs or employee income, it will be in a reasonable range. For the third case, because the absolute value becomes higher, it means that 35% becomes a baseline, and in the remaining 50% of the space, there will be more room for maneuver.
On the other hand, it should be clear that I did not calculate the fixed cost as the upper limit of 25%, and the site cost of many education and training institutions is about 15%, which means that there is still about 10% of the operating space. And if your venue cost is already close to 25%, it means that your revenue target is set too low, which will leave you with no more room to adjust your staff's income. The reason why many institutions account for a high proportion of labor costs and why they can't make money is because the ceiling of revenue is too low, the performance cannot be done, and they are accustomed to eating the old capital, in an old saying: "The first emperor has not yet started a business, and spent the budget."
40% gross profit is only a passing line, and cost reduction and efficiency increase are long-term tasks
For education and training institutions, there is no room for business model entrepreneurship, but more of a process of reducing costs and increasing efficiency. We must be clear that cost reduction and efficiency increase are not a causal relationship, but a parallel relationship, not by reducing costs to improve profit margins, but cost reduction and efficiency increase are two parallel things. Most of the time, if a single cost reduction wants to bring about an increase in benefits, there must be several assumptions, otherwise it will definitely bring operational risks.
For example, we have to assume that the reduction of costs will not affect the quality of finished products and services, nor will it affect the delivery capacity of products and services, or that the profit loss caused by my reduction in quality and delivery capacity can be covered by the improvement of profit margins.
For example, if a teaching and training institution lays off high-income teaching staff or market developers, can it ensure that this part of the reduced cost can offset the profit of the loss of students caused by the loss of employees, as well as the impact on the brand and reputation?
For example, we can also assume that reducing costs and increasing working hours will not cause an emotional backlash among employees, which in turn will affect the stability of the organization. One of the reasons why more and more young people want to work as freelancers is that they are endlessly sacrificing the physical and mental health of their employees while not creating a more attractive work environment. It seems to reduce direct employment costs, but in fact it increases recruitment and management costs.
The purpose of reducing costs and increasing efficiency is to improve operational efficiency, more effective management behavior is inseparable from two actions, one is the planning of tasks and the rationality of the process, this part I have shared a lot in my various articles and videos, this point is really too important, how can your work efficiency be guaranteed? How to normalize your business behavior is, in the final analysis, to have a reasonable process. In fact, education and training institutions do not need too complex processes, simple and crude can be extracted with clear goals, on the other hand, combined with reality to achieve twice the result with half the effort.
Taking the teaching and training institution as an example, the process is unclear and unreasonable, the most specific manifestation is that you don't know how much performance can be completed this month, and you don't know how the teacher is doing this month's class, everything is based on a momentary interest to mess around, and in the end it must be a hurry, and the efficiency is impossible to get anywhere.
The second task is the rationality of the way of working and staffing. How many employees do organizations with 300 people need to be allocated, and how many employees do organizations with 500 people need to be allocated, is it a turnip and a pit or a person with multiple posts or a specialty, and the spread of labor costs is still more capable and much more.
Revenue-oriented focus is on whether there is continuous optimization of work styles and personnel skills in front-end market development or back-end delivery. Standing on the street, every institution looks similar, why some people do well, some people do poorly, the difference is that the working style is different staffing, and the results are naturally different.
In fact, when a business operator begins to think about how to "reduce costs and increase efficiency" or how to control costs, it is likely to be because the business performance level has encountered problems, that is, this change is passive, since it is passive, the room for you to adjust must be limited. Of course, many people simply feel that they don't earn enough, but they don't seriously think about what the problem is, and this possibility doesn't even touch the threshold of institutional operation. This does not mean that there is no problem, whether it is more than 40% or below 40%, it is no longer important to him at all, because there is only one way out for this type of institution, and sooner or later he has to find a place to go to work.
The third task to be done is to think about the future development direction of the education and training industry. If you pay a little attention, even if the policy is tightening and the new population is declining, the industries that have been eliminated the most in the market are really not education and training institutions, but those traditional industries. Because people's needs are still there, the market is still there, and this market is still in the process of continuous development. Of course, for what kind of subjects will be the richest in the future, you can refer to https://m.toutiao.com/is/UFg9oCQ/ - the five most "rich" subjects in the non-subject teaching and training industry in the next five to ten years - today's headlines
The fourth task is to know how the market is changing and what the needs of customers are. Many educators have a habit that research peers far exceed research customers, and the homogenization of all walks of life also has such reasons, I will do what others do, and I will do what others do. You put yourself into a customer's perspective to see your industry, don't you feel hopeless? In the service sector, do consumers really have no money to spend or are they really unwilling to spend? Because everyone looks like they are worse than rotten, as long as I am not the worst, this is a reality, in fact, it is an opportunity.
Is it really difficult for education and training institutions to achieve sustainable profitability and predictable growth? At least in my past many years of agency operation coaching, at least this is not a particularly complicated matter. "Teaching and Training Institutions (Non-discipline) Refinement Operation Manual" and New Teacher Tao Intensive Research Association are continuously registered, detailed private message: "Operation Manual". Paid items, do not disturb if you are not sincere.
The author, Mr. Wang Wenjie, intermediate economist, human resource manager, founder of New Teacher Road Study Club, small and medium-sized enterprises refined operation counseling consultant, engaged in enterprise operation counseling for more than ten years, providing operation counseling for hundreds of hundreds of small and medium-sized enterprises, especially good at systematic combing, rapid discovery, and effectively promoting small and medium-sized enterprises to improve operational efficiency in a point-by-point and tailor-made way, effectively promoting sustainable profits and predictable growth.