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Chapter 5

Watch the recorded training session from 13 Jan 2024 HERE

Watch: The Gift of Time (below)

Discuss: Why is “time” one of God’s greatest gifts?

Discuss: LAST WEEK’S COMMITMENTS:

  1.  Participate in the Make-A-Sale Challenge and report on my experience. Did you try to make a sale? What did you learn from trying?

BUILDING CUSTOMER LOYALTY 

Read: At this point, you should have at least one customer. If you don’t, focus on getting a customer as soon as possible. Once you have customers, you need to work hard to keep them loyal to your business. You can build loyalty by engaging your customers, listening to them, and creating positive experiences for them. Finding new customers can cost your business far more than what it costs to keep current ones.  

Always be looking for ways to engage your customers. To engage with your customers means to interact with them and build a connection with them. This can involve listening to their needs, answering their questions, and addressing any concerns they may have. engaging with customers can help build their loyalty and trust in the business. As a business owner, be sure to engage your customers. For example, communicating through email can be an effective tool. Your customers’ good experience should be your top priority. 

Discuss: Think of a business that engages you as a customer. How does this affect your relationship with the business? 

Read the chart below. Discuss as a group which ideas you like best?

Read: Before you can set your product’s price, it is important to know how much it costs you to make 1 unit of your product or service after ALL costs are included. This is called your Unit Cost.

The formula for calculating the Unit Cost of a product is: (Cost per unit = (total fixed costs + total variable costs) / total units produced). Unit cost is also known as the cost of goods sold, average product cost, or cost per unit. Businesses use unit costs to measure which product is the most profitable and to help them set prices.

In the video you will watch below, a company called ABC Manufacturing makes a product called a “widget.” The video explains how to figure out the cost to make 1 unit of your product. This is called your Unit Cost per Product.

ABC Manufacturing pays the following monthly expenses to make widgets:

  • $50,000 to pay worker salaries (labor wages)
  • $25,000 ingredients to make the product (raw materials)
  • $30,000 rent each month
  • $4,000 insurance each month
  • In 1 month, the company makes 100,000 products. 

Question: What is the cost to make 1 product?

Answer: The per unit cost is calculated below.

  • $50,000 for salaries divided by 100,000 units =  $0.50
  • $25,000 for ingredients divided by 100,000  =    $0.25
  • $30,000 for monthly rent divided by 100,000 =   $0.30
  • $4,000 for insurance divided by 100,000 units = $0.04
  • Total per unit cost =                                          $1.09

The company must sell their product for more than $1.09 to avoid losing money on every sale. 

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Assignment:

How much does it cost you to provide 1 unit of each of the products you wrote down above? Calculate the per unit cost. If you buy ingredients in bulk, divide the total cost by the number of products that can be made in order to get the cost to make one item. For example, if it costs you $100 for cloth to make 10 bags, the cost for cloth is $10 per bag (100 divided by 10).

Your Name

Questions from the Entrapov loan application:

List each of the main products or services you sell, but this time give the cost to you for creating each product or service. For example, if you sell bread, add up all the costs to make 1 loaf of bread. This is different (and should be less) than the amount you charge a customer to buy the loaf. We are wanting YOUR costs in this exercise.

Questions from the Entrapov loan application:

Your Name
Supervisor Name