Aaron Rodriguez discusses the strategic importance of a balance point for a business

The determination of the Balance Point (BP) is one of the central elements in any type of business as it allows us to determine the level of sales necessary to cover total costs or, in other words, the level of income that covers fixed and variable costs. This balance point (or zero leverage) is a key strategic tool in determining the solvency of a business and its level of profitability. Aaron Rodriguez, an expert in the implementation of business optimization plans, explains the true importance of having a balance point for an adequate business. To begin with, some basic aspects must be defined.

Fixed Cost (FC) makes reference to all those costs that are independent of the operation or running of the business. “Those costs that must be incurred regardless of whether the business is operating, e.g., rents, fixed costs for water, energy, and telephony, secretary, salesmen, etc. Whether or not there are sales, there is always an associated cost,” Rodriguez explains.

Variable Costs (VC) refers to everything involved in the live operation of the business, for example, merchandise or raw materials. Unlike fixed costs, variable costs change in direct proportion to production and sales volumes. For the business to make sense, the selling price must be higher than the purchase price. This difference is what is known as the contribution margin.

Based on several examples, fixed costs have a constant amount over time, since the factors involved are fixed by contract: leases, salaries, depreciation, amortization, etc. The variable cost, on the other hand, increases according to the activity of the business. The sum of both costs corresponds to the Total Costs.

Rodriguez indicates, “It is interesting to make this distinction because once the business starts operating, the race to cover the fixed costs begins first (rents, salaries) and then the variable costs (merchandise, raw materials).” When revenues reach the point where all costs (fixed and variable) are covered, it is said to be at the balance point. This point is also known as the balance point since when we cross it, we leave the deficit area and move to the profit area. To obtain this, some formulas could be used.

In the first hypothetical case, the balance point can be obtained in Value, while in the second, it can be obtained in Sales Volume. It should be clear that this second equation presents in the denominator the Contribution Margin (the difference between the Sales Price and the Cost of the product). This second equation can offer a simple way to know the balance point for any company or business that applies a standardized contribution margin.

Here the formula reduces to BP=FC/CM, where CM is the contribution margin. If the contribution margin of the product is 30% of its value (purchased at $70 and sold at $100), and the fixed costs are $5,000, the balance point is obtained in this simple way: BP=5,000/0.3: that is when the sale of $16,667 (or 167 units) is reached, the balance point has been reached.

According to this example, and to how we consider the information, we can calculate the balance point in sales volume, or the balance point in terms of value, or the balance point for long-term projects. However, beyond these considerations, there is one aspect that, as in any economic activity, is particularly relevant: the time factor. If we consider the Time factor, we can see that the reality of a business is very different depending on when it reaches the balance point. In this case, the point is reached when 167 units are sold.

“Determining the balance point allows us to check the viability of the business. If there is consistency in the rate of revenue, there will also be consistency in the range or timing at which the balance point will be reached,” says Rodriguez. If economic activity destabilizes and becomes more volatile, the balance point will also be volatile, moving out of the usual range and causing liquidity problems that will force postponement or refinancing of credit or raw material payments.

To conclude, the balance point allows you to know the level of profit. In the case of the example, once the balance point is reached, not everything sold is net profit. From each new unit sold (from unit number 168 onwards, continuing with the example), the net profit is only the contribution margin, the 30% that is already determined. This contribution margin is so-called because it contributes to the financing of fixed costs. Once the fixed costs are covered, this contribution margin becomes net profit. In other words, if an additional 100 units are sold per month, the net profit is $3,000.

Aaron Rodriguez highlights some of the trends to be seen in process management this year

2020 was a turbulent year, and now everyone is facing 2021 with a lot of optimism. As a result, some trends will take hold throughout this year. The current context has had a clear and resounding influence on the type of trends that are making headway in this area. Teleworking, social distance and the fact that offices have become empty have allowed technologies that were not yet incorporated into the day-to-day work of companies to become essential. Because of this, Aaron Rodriguez, a business management expert who has advised numerous companies across Central America, points out which are the most important trends in people management for this year.

To begin with, working in cloud environments has been one of the biggest enablers when it comes to team mobility and allows access to files or tools regardless of location. “To put it simply, the cloud is a set of remote servers where the information and data we find on the Internet is hosted,” Rodriguez explains. With this technology, all the functionalities in charge of human resources can be accessed digitally. This technology, which is already being implemented in most of the companies in the sector, makes it possible to leave behind the concept of presence.

Returning to the concept of face-to-face, distance leadership will also be imposed on face-to-face leadership. This type of leadership will have to adapt to the new normality and enact different characteristics. High knowledge in virtual tools, trust in the team, total transparency, agility in responses, clear expectations, and orders are some of the main characteristics that a remote leader must promote to achieve the involvement of his team and collaborators.

Consolidation of employee branding is a trend that has started to take place. A happy and motivated worker is a productive worker, involved and aware of the company. Employee branding is a good resource for companies to communicate their culture and values through the employees themselves, who become brand ambassadors in a natural and voluntary way, facilitating the attraction of the talent that best fits each organization. The fact that they are the ones who share the company’s messages and campaigns, and above all that, they speak positively about their work environment, is a plus of credibility and trust towards the user.

On the other hand, the welcome processes are very important moments for employees. A correct adaptation process, so that the employee does not feel disoriented and knows the processes and obligations of his position can be the difference between success or failure. With the current scenario, these processes have migrated to the digital environment, leaving aside the face-to-face processes that were carried out until now. Rodriguez states, “Techniques such as gamification with specialized tools and apps, checklists, availability of documents and necessary material online are some of the measures to achieve successful digital onboarding. The key is to create a rewarding and enriching experience for the worker and make them feel comfortable and confident.”

There is no doubt that Big Data is here to stay. The management and analysis of large amounts of data allow companies to know their environment better, but also to know themselves better. In this way, Big Data allows us to improve the management of people by knowing better the state of the team, optimize the selection of talent or evaluate the performance and productivity of workers. Big Data is still a developing technology and promises to offer a wide range of solutions and information in the very near future.

Lastly, collaborative networks are an extremely important trend today. This refers to environments formed by people sharing space on the network where they collaborate towards a common goal. It is carried out by exchanging ideas and information. Compulsory distancing has led to an increase in this type of synergy. “Collaborative work stimulates aspects such as creativity, transparency in work and honesty. A way of replacing face-to-face group work adapted to the new times,” Rodriguez explains. It is very likely that these ways of working will continue to expand and evolve to offer more and more features and options to optimize collaborative social networks, which are still in their infancy.

Aaron Rodriguez discusses what is needed to achieve strategic objectives in SMEs

The principles of project management have changed relatively little in recent years and, despite this, there is still the inconsistent application of the necessary practices. The key aspect in this process is consistency; achieving a goal (whether business or personal) is a commitment that must be taken seriously; otherwise, there is no point in setting them in the first place. Aaron Rodriguez, a business plan implementation expert with extensive experience in resource optimization, provides detailed information on what is required to achieve SMEs’ strategic objectives.

Strategic objectives should be an intermediate step between the organization’s vision and mission. They should be defined in a clear, precise, and understandable way, and should express the ultimate and most important goals that will enable the organization to move towards its corporate mission and vision. Rodriguez points out, “Offering a service or selling a product requires different processes that ensure consistency at all levels; however, it is recommended that they be flexible for better performance. Many companies fail to improve their processes, as they are seen as a recipe to be followed to the letter and not as key points to ensure quality and efficiency.”

A process is a succession of tasks and decisions that are linked together to transform an investment (of time or resources) into a service or product. Processes are made up of different aspects that are of great relevance when it comes to understanding them. First of all, they must be definable. This means that they must be documented, with established measurements. A Project Manager can help you in the clear definition of the tasks.

Processes must be strictly repeatable. A process is a sequence of activities; when planning those activities, they must be communicated, understood, and executed consistently by the work teams. They also need to be predictable. They need to develop stability to ensure that the planned activities are executed consistently to achieve the expected results. And finally, it is of great importance that the processes are measurable. Measurements ensure the quality of all activities to be performed, as well as their results.

The presence of people with good skills is paramount to the fulfillment of a company’s strategic objectives. Rodriguez adds, “Every organization is made of people; robots are not that smart yet. People create for other people. If you don’t accept that what sustains any business system are humans, it will hardly affect a positive change in your industry and for your customers.”

Strategic planning is the starting point for creating a plan to follow. For people to do this, they must have a common point to follow, which is based on mission and vision. The mission relates to the focus on what your company does and what makes it different from your competitors. While the vision indicates how you see your company today and what is the ideal scenario in which your company develops and creates a benefit for your customers.

In order for the above elements to work correctly, it is necessary to carry out several analyses of the environment, the competitor, the scenario, and the forecast of results. These analyses are part of all strategic planning and, once covered, they lead to the correct setting of strategic objectives for a company, regardless of its line of business.

Planning times vary according to the proposed strategy, but it is worth noting that they are usually divided into short (one year), medium (up to three years), and long (more than three years) terms. The three main tools needed to perform these analyses and set objectives at different timeframes are key pieces to complete the puzzle.

To begin with, there are the manuals. These documents enable coordination and communication and allow the organization’s information to be recorded and documented in an orderly fashion. There are several types of manuals, including operations manuals, departmental manuals, quality manuals, and organizational manuals.

Benchmarking is a crucial tool, as well. It is used to find the best characteristics and processes of a product or service and use these values as a parameter to improve your company’s products, processes, and services. Normally, the company is compared against the industry leader to give value to the comparison.

And finally, a SWOT analysis is never too much. It is the name given to an analysis of the strengths, weaknesses, opportunities and threats that can influence the achievement of your objectives. It is a tool that allows you to make a diagnosis of the current situation of the object of study that allows you to make decisions in accordance with policies and objectives.

Aaron Rodriguez provides tips for creating a successful multifunctional work team

Some people believe that multifunctional teams can be very productive because they have clear governance, accountability, specific goals, appropriate project management tools, as well as the organization to invest in and prioritize their success. Multifunctional teams are generally created to drive innovation, break down bureaucratic boundaries and reduce production cycle times by providing a more collaborative environment. Aaron Rodriguez, an expert in management and optimization of resources, provides some of the best suggestions for businesses to have fairly stable multifunctional teamwork.

A multifunctional team is a team in which members have different skill sets, but all work toward a common goal. It often includes people from different departments and from all levels of the organization, although it may also include participants from outside the organization. These teams are generally self-directed. They are assigned tasks, which are then approached in unique ways due to the varied experience of the team members. Each participant can offer his or her own perspective, leading to a more “out-of-the-box” solution. This creative approach can lead to innovation, which can be a substantial market advantage over the competition.

“Multifunctional teams often exist in small or startup environments. Because startups generally have a small number of employees, team members may have to perform a variety of tasks in different departments, thus collaborating with those departments as well. This certainly creates a cross-functional team environment, even if the organization has not yet recognized it,” Rodriguez explains.

Multifunctional agile teams are common. If a multifunctional team mixes specialists from different fields, agile teams take this a step further. They have them combine and require each team member to expand beyond their area of expertise. In addition, Agile requires self-organizing teams, which fits very well with the way a cross-functional team works. Team collaboration can help the organization work productively and efficiently at all times. Cross-functional collaboration is a great team-building proposition and can create a more productive environment.

According to Rodriguez, assembling the right team is one of the best strategies to implement from the start. “There is a skill set that is required to have an effective multifunctional team. The project will dictate some of these. The work will require a variety of expertise from the team, and therefore that team should have people who have the various skills needed,” Rodriguez adds.

Having a leader is also more than suggested. While it is not a prerequisite to have one person in charge of a multifunctional team, the benefits outweigh the risks. First, everyone on the team must take responsibility. Find a leader who can give the team accountability and develop self-leaders from each team member. A team leader needs to educate, delegate and give autonomy while tracking progress. Collaborate with the team, too, by inviting them into the planning process. If you can, get mentors to help guide the team and instruct them as needed.

Rodriguez has made it abundantly clear that objectives have to be always defined. Just like any other team, if a multifunctional team does not have clear objectives, they may find themselves going in directions that lead to a dead end. Therefore, it is crucial to have objectives defined and established even before assembling the team.

Some of the ways to define those objectives are the same as any other project. For example, you want to have the charter to define project priorities. An approved budget gives everyone a financial roadmap. It’s important to always keep in mind what outcomes you want and in what time frame you have scheduled to complete them.

Rodriguez explains, “The earlier you determine these markers, the easier time you will have. Team members will be able to go off on their own, with greater autonomy, knowing what is expected of them, when it is expected, and what resources they need to achieve those expectations.”

Aaron Rodriguez explains how eCommerce platforms can improve customer retention practices

Increasing retention of existing customers is always more profitable than acquiring new ones, so it is imperative to focus on strategies to increase retention rather than just focusing on various marketing strategies to attract customers. This is true no matter what type of business you have or why your customers are leaving you. All businesses should focus on attracting new customers to help increase revenue, but they should also pay close attention to retaining existing customers, including newly acquired customers. Aaron Rodriguez, an eCommerce expert for process optimization, relates eCommerce platforms to customer retention, and how much can be improved through them.

Having a solid understanding of the different customer sections that compose the customer database is very important, as well. You may want to separate them into segments such as loyal or loyal customers, underperforming customers, and non-active customers, among others. Once you have your customers segmented into different groups, you can drill down even further to understand their needs by industry or business type. This will allow you to tailor offers so that they find them irresistible.

Providing customers with an outstanding experience promotes customer loyalty. “By offering personalized experiences that exceed customers’ expectations throughout the entire buying process directly, you will influence recurring sales and loyalty. The content of e-mail marketing campaigns should also be personalized – automatically – making the customer feel unique,” Rodriguez indicates.

The intangible results of the work on the brand image can be transferred to a fully measurable level. Analyzing, measuring, and correcting the attitude towards your brand are very important actions in brand reputation management. You need to position your brand in the consumer’s mind to position yourself as the first choice over the competition. Rodriguez adds, “If you work on the trust of your eCommerce customers and react to the warning signs in time, then recurring sales will be assured.”

The loyalty program is also an effective channel for recurring sales for a public that may seem loyal to your proposals if there is no advertising overload. It is necessary to reward their loyalty by offering offers, promotions and, in short, better purchasing conditions, to make them feel special and encourage sales of your business.

Training customer service personnel is always a prudent thing to do. Agents who have been trained in capturing customer feedback can spot customers who are dissatisfied or are considering buying from competitors and can pass that information on to the company. They should also be trained to pass on competitive information so that your marketing department can take appropriate action.

Offering training to all employees in basic customer retention techniques will inarguably give them the tools they need to help the business retain customers. This is achieved by properly addressing complaints, converting dissatisfied customers into satisfied and loyal ones, and educating customers about the value of your products and services.

And last but not least, always follow up with new customers. This is a golden strategy that all businesses should strive to achieve, but it is especially important for an e-commerce company. Following up with new customers provides a human touch to an impersonal transaction, thus creating the foundation for a loyal relationship. It is not always possible to track every new customer, but you can set a dollar value or any currency and track all new customers who spend more than that amount. This is very easy to implement online.

Keeping existing customers is always more profitable than acquiring new ones. To put it another way, acquiring a new customer costs up to seven times more than keeping an existing one. But in addition, keeping repeat customers helps to predict workflow and potential revenue while making it easier to serve them due to the increased knowledge we acquire over time.

Aaron Rodriguez offers insight into how COVID-19 changed eCommerce in Mexico

The growth of eCommerce in Mexico has been developing continuously in recent years. For example, as a result of the coronavirus pandemic, two out of ten eCommerce companies had an expansion of more than 300% last year, marking an extraordinary difference with respect to 2019, as indicated by the study COVID-19 Impact on Online Sales Mexico, on the growth of eCommerce in Mexico in 2020. Aaron Rodriguez, an expert in optimizing eCommerce operations, explains in more depth what impact COVID-19 has had on eCommerce throughout Mexico.

For this year, it has been projected that, for 19% of companies in Mexico, online sales will represent more than 30% of their total sales. In this context, knowing the evolution of eCommerce in the country is of utmost importance for Mexican companies, so they can take the necessary steps to implement the digital transformation as soon as possible, adopt the online commerce model, improve eLogistics processes, and reach a larger mass of consumers.

Although the growth of eCommerce in Mexico during 2020 and 2021 has been accelerating, it is important to clarify that this is a general trend and cannot be reduced only to the Latin American country. In fact, the volume of money moved through online sales has been increasing year after year in all regions of the planet. For example, a study conducted last year estimated that at least 10.8 million consumers will have made their first online purchase by 2020. However, the fact that e-commerce in Mexico is growing, despite the global boom in this type of transaction, is particularly striking considering the country’s economic growth.

Rodriguez explains, “During these times of pandemic, in which the State has had to implement measures of national confinement and social distancing, which, despite being necessary for public health, have had serious consequences for the national economy, but which conversely have had a positive impact on online sales.”

As an example of this, it is worth noting that eCommerce in Mexico facilitates social distancing. According to the study of eCommerce related to online sales in Mexico, 62% of people buy online because they receive the products at home. This is a reason that has always favored the eCommerce boom. However, beyond simple convenience, home deliveries have become a fundamental practice to respect containment and distancing measures during the COVID-19 pandemic. In this way, secure deliveries have allowed people to continue to make all their purchases from home and without the need to go in person to commercial establishments.

It is clear that COVID-19 has had a global impact, and therefore, the eCommerce trend has had a worldwide presence. This has meant that, regardless of the economic situation of each country, companies are being able to venture into eCommerce to sell products to consumers anywhere in the world, without the need to experience the relocation of the company. The same happens the other way around, as consumers in Mexico are able to buy from online businesses in other countries with great agility, which facilitates globalization in Mexico. All this is possible because transportation providers are usually the ones in charge of international logistics.

Rodriguez has also made it clear that eCommerce in Mexico is cheaper for businesses. “The fact that selling online is cheaper than selling physically cannot be overlooked,” he explains. “It is true that, in principle, shipping costs and the logistics service associated with shipping can make the purchase more expensive. However, eCommerce in Mexico is freeing many companies from the cost of maintaining physical stores, many of them in central urban centers where rents are high.”

As a result, retailers themselves are the first to focus on online sales, which further boosts the eCommerce boom and helps explain the growth of eCommerce in Mexico.

Aaron Rodriguez offers strategies for using social media to improve marketing activity

If a person has a business, he or she cannot rely only on traditional advertising to achieve the necessary momentum to develop in the market. More opportunities are needed to get the right positioning for their business, and these opportunities can be found in social networks. Virtual platforms are a fast, simple, and cheap way to bring more people closer to a business. Aaron Rodriguez, a marketing and business process improvement expert, provides different strategies on how to use social networks properly to obtain wonderful results in the marketing activity.

If it was already known that social networks are a fundamental tool for boosting a business, what it is needed to know is how to use them profitably. The closest thing to social networks that people used to know in the past was to establish relationships with customers through the classic email, which could take up to days to get a response. Today, however, with the use of social media profiles, you can contact customers directly, learn a little more about their information, find out who their contacts are and other relevant information to establish connections with them.

“Currently, we have an endless number of social networks on the Internet; however, to promote our business, we must know how to choose which ones to use for best results,” says Rodriguez.

As part of the most important social networks in the market today, you can find Twitter. Twitter is the fastest way to communicate with your customers. Here you will find followers, and it is to them that you should direct your publications. Posts are relatively short, so always try to attract attention quickly and appropriately. Remember that Twitter allows you to manage your brand, and you can use it as a test platform to start your business.

Facebook has been relevant for quite a few years now, and this social network is the one that your business must have. Facebook offers the owners to create a page for their business. This fan page will allow them to get closer to their customers and interact with them shortening the barriers of time and distance. Your fans will be able to contact you through this page and will be aware of your updates. You can also promote these pages to reach a much larger audience.

Through Instagram, you can generate a concept of your brand to your followers. Remember to share images that portray a unique moment, for example, a celebration for the anniversary of your business, the opening of a new store, and you can even organize contests for your followers to share the best photos with the experience in your business.

“Constantly interact with your audience through all the social networks you have available. This is a good way to show interest in opinions, suggestions, or even complaints about your business. If your audience does not receive a response to their actions, you will end up driving them away from your social media pages,” explains Rodriguez.

One of the ways to attract the attention of your customers is to offer them exclusive benefits for followers, friends, or fans on social networks.
Take advantage of offers or discounts through these platforms, organize contests so that they replicate your content and, therefore, your brand. On the other hand, it is important not to limit yourself to talk only about your business on social networks. You can also alternate posting content of general interest, such as current events, news, events that have to do with the line of your business. This way you can capture the attention of other users, and bring them closer to your brand.

Once you understand all these strategies, you will know the perfect way to set your business on the path to success. Boost your business through social media and put together the right strategies according to your needs and expectations.

Aaron Rodriguez offers insight optimizing resources to make a business achieve success

A company’s resources are the very essence of it. Regardless of sector, size, or business model, companies are made up of common resources that define them. A project manager must identify which are the basic resources of his company, thus prioritizing those that are key to the organization. It is not easy, because there are many types of resources according to different factors, as long as they pursue the main strategic objective of the company. Therefore, it is advisable to prioritize those resources that are necessary for the development of a company. Aaron Rodriguez, an eCommerce and market analysis expert, gives insight into the different keys that help optimize a company’s resources for its respective development.

One of the most important responsibilities of any project manager is to optimize a company’s resources. There is indeed a different set of rules and regulations for each project manager. However, several keys promote a balanced, controlled, and optimized consumption of a company’s resources. It should be noted that among the many types of resources in a company, four of them are very relevant when it comes to a work plan, including material, financial, human and intangibles.

Material resources are any tangible and exhaustible physical element. They are necessary for the production of goods or services offered by the company. States Rodriguez, “Financial resources are those assets that can provide certain liquidity to the company. They can be cash flow, obtained from the production of the company’s main activity, loans from investors, government subsidies, or bank financing, etc.”

Human resources are related to the effort, dedication, and time of the people who are part of the company. This refers to talent, so difficult to materialize and, at the same time, so valuable for the performance and final result of the product or service.

Intangible resources is a space that includes the administrative resources of a company. The category covers the attitudes, and behavior of the people in the team, the relationship with external collaborators, performance, the result of the use of tools that promote labor productivity, the quality of the results, the company’s image, brand value, among others.

Project planning is a constant activity for many project managers. This means that they must always be modifying aspects of the schedule, depending on setbacks or optimization improvements. Hence, the importance of using a project manager that allows flexible scheduling. Not only that, but one that is capable of detecting resource consumption while planning or re-planning activities.

Rodriguez explains, “When working with this type of graphs, it is also possible to detect the consumption of global resources. For example, if we manage different work teams that share activities of different projects, we can see the total planned consumption of that person’s work to control a possible overload or an allocation of available work. In this way, we plan much more realistically and effectively for a more realistic optimization of resources.”

Another case of project management is the uncertainty of possible setbacks. By not being sure what will happen with a supplier, delivery, or the total duration of an activity, we can check how different scenarios will affect the overall project schedule. As a testing laboratory, the project manager thus identifies critical paths, potential bottlenecks, or tricky situations that could jeopardize the success of the project.

It’s important to work with project managers who can also plan based on different scenarios. Test, change, and test everything the professional needs to know in advance the impact of each change, without the whole team seeing the tests. This way, it’s possible to know if there are possibilities to improve the performance of a company’s resources.

“Optimizing resources is a tedious task in project management. It is not always achieved as one wishes, and sometimes it is important to use the right project management tool so that the results of our work are what we expect, with the least possible investment,” Rodriguez asserts.