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Achieving 50% Operating Margin: Strategies for Financial Growth and Sustainability

Explore effective actions to enhance your operating margin and secure your organization's financial health. In this guide, Greg Marsello discusses the importance of increasing your operating margin to 50%, highlighting the necessity for surplus, reserves, investments, and staff growth. Discover strategies such as targeted promotions, production cost reduction, focusing on profitable offerings, leveraging technology, and smart pricing. Learn about diversification in delivery methods and the significance of strategic planning for long-term success. Elevate your financial performance with actionable insights.

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Achieving 50% Operating Margin: Strategies for Financial Growth and Sustainability

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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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