Fat Margins was founded in 1996 by Charles Moyer to help business owners build profitable, sustainable businesses they could sell for top dollar at the time of their choice.

Companies whose owners learn and apply the systems and procedures taught by Fat Margins typically experience profit margin increases of 5% – 50% and net income growth of 20% -200%, or more.

Additionally, an owner who works with Fat Margins to properly structure and groom his or her business for sale will typically get paid market value, (as opposed to liquidation value) for the company’s assets, along with a goodwill premium of three to four times annual net income, when sold. For every $1 of increased net income, the market value of most businesses increases $3 – $4. That means that for every $50,000 of increased profit, a company’s market value increases $150,000 – $200,000.

Fat Margins is unique and different in two significant ways.

They focus on increasing profit margins, not on cutting costs.

A substantial difference between Fat Margins and other profitability advisors is their strong emphasis on helping clients improve their profit margins and increase the profitability of their sales.

Spending time trying to cut costs and chasing marginal sales yields little reward.

When working to increase profit, most owners spend their time trying to trim their company’s operating costs and/or increase sales.

Working to cut costs generally yields a low rate of return for the time expended. This is because so much effort has been expended over the years trying to cut them, there are few savings left to be found.

When a company chases after added sales, it almost always ends-up bringing in unprofitable, lower margin business. Additionally, most efforts to increase sales include running promotional programs, hiring additional sales staff, or cutting prices, all of which cost money and eat away margins. Combining discounted profit margins with increased selling costs is a surefire way to end up in bankruptcy.

Savvy business owners know:

That some customers are more valuable than others.

That some sales are more profitable than others.

They enjoy extraordinarily high profits because they spend their time
acquiring profitable customers and high-margin sales.

Focusing on improving the profitability of a company’s customer base by increasing profit margins is something few business owners work on, yet this is where the most dramatic increases in profit are to be found. Because so little effort has been spent here, there’s a lot of low-hanging fruit available for the taking.

Fat Margins emphasizes the long-term.

The second difference is their emphasis on teaching business owners how to maximize the market value and salability of their businesses. Implementing Fat Margin’s programs will certainly result in almost immediate profit and cash flow increases. However, the biggest payoff from applying them comes sometime later when the business is sold and the owner receives payment for the goodwill value that has been built-up over the life of the business.

Goodwill often more than doubles the selling price for a business that demonstrates profitability and has been properly groomed for sale.

For a business to sell for maximum market value

it must offer a prospective buyer two things:

• Consistently increasing profit and cash flow.

An unprofitable business is worth little more than the liquidation value of its assets minus its debts, with the exception, it seems; of a few internet-based companies. A marginally profitable business is obviously worth more than an unprofitable one and will command a higher selling price. Unfortunately, goodwill, which contributes a major portion of the price in a sale, will not be received unless a company is able to demonstrate its ability to consistently increase profit over time.

• The ability to operate independently, without the day-to-day involvement of its owner.

Prospective buyers who are willing to pay full value for a company are looking for an investment, not a job. They may, or may not, want to work day-to-day in a business they buy. Nevertheless, they absolutely expect that the company will have a management team in place to operate it. Without such a team, no buyer is going to pay for goodwill.

When your business is consistently profitable and able to operate without your day-to-day involvement, you’ll be paid far more for it than you will if your company cannot fulfill these two requirements.

To get an idea of your company’s current market value and how much it will appreciate if profit rises, enter your company’s financial information into the Business Valuation Template and see for yourself.

Entering your information into the template is absolutely confidential. There is no way for Fat Margin’s personnel or others to access your company’s financial information.

Mission Foundation

Fat Margin’s systems are based on research findings drawn from studies completed by over two hundred top-notch sources, include prestigious universities such as Harvard, MIT, and Yale, consulting firms such as Bain & Co., McKinsey, and Simon-Kutcher Partners, and subject matter experts including Dan Ariely, Dan Kahneman, Amos Tversky, William Poundstone, and Chris Anderson.

The research findings, when taken as a whole, clearly show that most businesses benefit most by concentrating their profit improvement efforts in three areas:

1. Better targeting of prospects and retention of those that become profitable customers.
2. Elimination or restructuring of relationships with unprofitable customers.
3. Improving pricing skills.

Key findings that support Fat Margin’s concentration in these three key areas follow.

Facts that prove the need for better prospect targeting and customer retention:

• 80% of a company’s sales and 80% of its profit come from about 20% of its customers. What shocks most business owners is that the 20% that provides the sales is NOT the same 20% that provides the profit. There’s some correlation, but it’s almost certain that some of the highest volume customers provide little or no profit, while some lower volume customers are highly profitable.
• A 5% reduction in customer turnover will usually increase a company’s net income by 25% or more.
• Most customers will pay a 10% – 15% price premium for good service.
• A referred prospect is 50 times (not 50%) more likely to buy than a prospect found any other way and sales cycle time is cut in half.

Facts that prove the need to eliminate unprofitable customer relationships:

• Most companies subsidize 15% – 40% of their customers. They actually pay more out-of-pocket to sell to them than they take in. Identifying and eliminating relationships with customers that cost more than they’re worth will increase a company’s net income by a minimum of 25%, and almost always much more.
• To see how important the elimination of unprofitable customer relationships is to the profitability of a typical business, take a look at the Coast Distributing Company case study.

Facts that prove the need to improve pricing skills:

• Price is the key determinate of business profitability. A 1% increase in price will nearly always increase bottom-line, net income by at least 11%.

To see what effect price and cost changes have on your company’s profitability, take a look at the Effect Of Price/Cost Change Worksheet. Step one is to enter the current data from your company’s financial statements into the worksheet. Once the data has been entered, you can then make changes to it, such as raising and lowering prices, gross profit percent, fixed costs, etc., and see exactly what effect the changes would have on your company’s profitability, if implemented.

Entering your information into the template is absolutely confidential. There is no way for Fat Margin’s personnel or others to access your company’s financial information.

• 96% of businesses mis-price their products and services. 92% undercharge and 4% overcharge. Most businesses let large amounts of cash slip through their fingers because they charge too little for their products and services.
• 80% of companies use price discounting as their primary marketing tool. Nearly every one of them is going broke. Matching their prices will put your company out of business too. The key to long-term success is to learn to compete using tactics other than price cutting.
• 90% of sales people offer discounts without being asked, needlessly giving away profit.
• Less than 25% of a company’s customers buy primarily on price.
• 96% of price complaints aren’t about price. They’re an easy, face-saving way for a prospect to say no without having to disclose their real reason(s) for not buying.

To find out how well your company is currently pricing its products and services, take the Fat Margins Pricing Proficiency Assessment and see whether or not you and your people have room for improvement. Again note, a 1% increase in prices will increase net income by a minimum of 11%.

Only about 6 out of 100 businesses ever become truly profitable.

According to the U. S. Small Business Administration, about 65% of new businesses fail within their first five years and no more than 12% survive ten. What’s worse is that about 75% of those that survive lead marginal existences, barely hanging-on and never becoming truly profitable. Only about 6 out of 100 businesses that are started ever thrive and become valuable assets.

The overriding objective of Fat Margins is to reduce the number of failed and marginally existing businesses while increasing the number that are truly profitable and are in the top 6%.