Main Subject - Business

Have you ever noticed how easy it can be to see what someone else is doing wrong? But then when we hold up the mirror to ourselves, seeing our own issues clearly is like looking into a thick fog. Small business owners in general tend to face this challenge regularly – they know that they're not making as much money as they want to, but they don't k

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

now why. This month, we'll look at ways that you can “clear the fog” and get more clarity about challenges in your own business and what to do about them.

I was recently working with a client, Barbara, who complained that each month she was losing money in her business. She knew this because while she had the same minimal amount in her bank accoun

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

t, her credit card balance kept getting higher each month. Now you might be saying “That's just like me,” or you may be thinking “I keep way better track of things than that…” In either case, there is usually room for improvement. Consider the following (I'll use the term “program” to include drop-ins, class-cards, unlimiteds, workshops, etc. – basically

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

any “yoga service” you get paid for). Here are some key questions to ask yourself:

“Which program, product or service do I earn the most money on each month?”
“Which program, product or servicedo I make the least money on each month?”
“Which is second most profitable? Third?”

If you can quickly answer these

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

questions, great – you're ready to move to the next step. If not, these are critical questions to answer. If you're thinking that you don't like working with numbers and this just doesn't sound like it matters, consider this.

Imagine your car is making a funny noise and you bring it in to your mechanic. He stands 10 feet away (with the hood cl

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

sed) and listens to your car rattle and chug, then proclaims “It sure sounds like it has a problem, but for the life of me, I can't tell what to do about it.” Sounds ridiculous, right? You expect the mechanic to open the hood, maybe hook up some diagnostic equipment and poke around until he can figure out what's wrong. The same is true in business. Just a

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

s your mechanic can't fix the problem without first looking to see what's broken, you can't get a business (studio or other) to make more money until you know which areas are working (making money) and which are not.

So how do you actually do this? Here's how. First, get together whatever records you have of who bought what during the past three m

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

onths (not who took what class, but who paid money for a program or service). Next, you're going to create a table that shows where you made money and where you didn't. Look at the sample table below to see where each number came from as you follow the steps – just do it with one row first (the idea is the same for all the rows). Then, do it for your own

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

studio. Here's how it works:

March Program or service # Sold (# of Students, clients, etc. during month) Price Amount paid back to teachers Gross Profit per item Monthly Gross profit for program

Drop-ins 96 $17 $7 $10 $960

10-class card 22 $150 $70 $80 $1,760

20-class card 18 $290 $140 $150 $2,700

1-mo unlimited

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

29 $160 $56 $104 $3,016

Partner Yoga workshop 8 $70 $35 $35 $280

Intro to Yoga workshop 15 $50 $25 $25 $375

Yoga privates 14 $80 $25 $55 $770

Gross Total/mo. $9,861

NOTE: If this table didn’t get formatted right or looks confusing, please see: www.centeredbusiness.com/newsletter5-07.htm

1. Write down the na

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

e of each program or service. (e.g. “Drop-ins”, “10-class card”, etc.)

2. Looking at just the records from last month, next to each one, write down how many people paid for that program or service. I'll use the “Drop-ins” row as an example. There were 96 people who paid as drop-ins during this month (March in the example).

3. For eac

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

h product or service, write down the price of that item. In the example, the drop-in price is $17.

4. If you pay teachers per head, write down how much of the price you end up paying back to the teachers (use an average based on 2-3 classes per week for unlimited programs). In the example, teachers are paid $7 per head.

5. Subtract w

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

hat you pay teachers from the total price for each item. This is called “Gross Profit” per item. In the example, this is $17 minus $7 which equals $10 as “Gross profit.”

6. Multiply the number sold by the price, and write this in the next column. This is your monthly gross profit for that item. In the example, this is 96 drop-ins times $10 gros

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

s profit for each one resulting $960 of gross profit for drop-ins during March.

7. Add up all the numbers in the “Monthly Gross Profit” column and you have your total gross profit for the whole month. This is the amount you have available to pay your expenses (rent, utilities, staff, etc), as well as yourself. In the example, this studio had $9

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

,861 to pay their other expenses during March.

8. Do this same process to create a similar table for the remaining two months.

Now that you've done all this, who cares? Let's look and see. Now we can answer questions like “Which program was most profitable for this studio during this month?” The answer is clearly their 1-month unl

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

mited (not a surprise – this is true for most studios that do 1-month unlimiteds with auto-renew). Now here's a surprise. This studio owner intuitively felt she made a lot of money on drop-ins because there were so many of them each month. In reality, it just takes lots of time processing drop-ins, but it's really her lowest profit program.

Now that y

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ou know, how can you do it better? This is the key. Using the example, there are two key changes to make. This studio owner needs to shift people away from drop-ins and direct them toward the 1-month unlimited. She'll do this by: a) Raising the drop-in rate to $20 and b) offering a “special” for first-time unlimited program subscribers to get 50% off

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

their first month of unlimited (remember, it automatically renews each month).

So how did it work? The result was that profit for 1-month unlimiteds jumped to over $4,500 per month (while profit from drop-ins dropped by just $400 per month).

It was a total win-win situation. Students who were afraid to commit to a regular yoga practice bec

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ame more committed by buying 1-month unlimited programs (and are now enjoying more benefits from yoga in their life).

This studio is now making an extra $1000 a month in profit. The key was simply to sit down for an hour with a pencil, paper and calculator. This is the power of financial evaluation. So, when are you going to do this for your own s

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

tudio? I know you're busy, but how many other things that you “need” to do can have this kind of impact on your business? My challenge to you is for you to make a commitment to do this sometime within the next 24 hours. Set the time aside and just do it (Don't worry, it doesn't need to be perfect). Just do it!

I look forward to your new success.

Namast?

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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The real story of Lynne and Dave – different investment advisors and newsletter strategies. Different results. By Glenn Harrington of the Harrington Newsletter Co.

The most important reasons people exhibit at a trade show? To see what's new and to gather leads - information for future business. So, how do you that besides standing in the booth and walking the aisles? The key is understanding the nuances of networking.

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