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Business Metrics: Key to Survival and Success

Learn essential business metrics for survival and success, including current ratio, gross profit, net profit, and more. Understand the key components in sales, administration, operations, and finance. Discover how to set goals, track performance, and forecast effectively to thrive in the competitive business world.

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Business Metrics: Key to Survival and Success

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  1. WELCOME Key Business Metrics for Survival and Ongoing Success JIM HEILBORN JIM HEILBORN ASSOCIATES

  2. Key Business Metrics for Survival and Ongoing Success Standard measurements Current Ratio – Current assets/current liabilities=current ratio Quick Ratio – (Current assets-inventory)/current liabilities=quick ratio Gross Profit – Revenues – cost of goods= gross profit Gross Margin – Net sales – cost of goods sold=gross margin percentage Net Operating Expense – Gross margin – SG&A = net operating profit Net Profit – (Net operating profit+ income) – (other expenses + taxes) =net profit Gross profit ratio, Pretax profit ratio, Sales-to assets ratio, etc. etc. All important…but............

  3. Key Business Metrics for Survival and Ongoing Success THE KEY COMPONENTS SALES ADMINISTRATION OPERATIONS FINANCE

  4. Key Business Metrics for Survival and Ongoing Success KNOW YOUR NUMBER 1 KEY INDICATOR • THE RESTAURANT

  5. Key Business Metrics for Survival and Ongoing Success LEADING INDICATORS VS. TRAILING INDICATORS

  6. Key Business Metrics for Survival and Ongoing Success KEY COMPONENT SALES

  7. Key Business Metrics for Survival and Ongoing Success • Value - What customers and investors are willing to pay for, that employees are willing and able to provide. In a public, for-profit enterprise, sustainable value requires all three groups. Value must be worthy to those paying and those providing or it will not endure. Mickey Connolly and Richard Rianoshek, Ph.D. The Communications Catalyst

  8. Key Business Metrics for Survival and Ongoing Success • Every product or service you can provide is one less reason for your customers to talk to your competitors. • Every product or service you provide is one more reason for your competitor’s customers to talk to you.

  9. Key Business Metrics for Survival and Ongoing Success 1= Low 5 = High

  10. Key Business Metrics for Survival and Ongoing Success • KEY INDICATORS SALES • SALES ACTIVITY – SEE CHART • BID LISTS • NUMBER OF BIDS PLACED • PERCENTAGE OF SUCCESS ON BIDS • DOLLAR VOLUME OF QUOTES • NUMBER OF ACTIVE CUSTOMERS • NUMBER OF NEW ACCOUNTS • NUMBER OF NEW ORDERS • AVERAGE GROSS MARGIN/PROFIT • GROSS PROFIT PER DAY • DOLLARS PER REP • BACKLOG • SALES TO PLAN

  11. Key Business Metrics for Survival and Ongoing Success GOAL TASK/OBJECTIVE TIME FRAME Average monthly gross Average daily sales = $ Within next ___months sales = $ Average monthly GP $___________ Within next ___months dollars = $ Number of calls needed per day - Number of appointments needed per day = Number of orders needed per day to equal daily average of $________=

  12. Key Business Metrics for Survival and Ongoing Success GOAL TASK/OBJECTIVE TIME FRAME Number of orders needed per day to equal daily average of $__ GP dollars = $ Ratio of appointments to orders = ____ appointments to ____orders Average dollars per sale = $ Average GP dollars per sale = $ Average Number of calls to make per week =

  13. Key Business Metrics for Survival and Ongoing Success GOAL TASK/OBJECTIVE TIME FRAME Average Number of calls to make in next 30 days = 30 DAYS Average Number of calls to make in next 60 days = 60 DAYS Average Number of calls to make in next 90 days = 90 DAYS Number of new accounts to open in next 30 days = 30 DAYS Number of new accounts to open in next 60 days = 60 DAYS

  14. Key Business Metrics for Survival and Ongoing Success GOAL TASK/OBJECTIVE TIME FRAME Number of new accounts to open in next 90 days = 90 DAYS Sales Mix Number of orders/dollars generated from new Accounts per month = / Number of orders/dollars generated from established ongoing accounts = / Review of Top Ten & rolling forecast to identify and focus on opportunities and activity On a weekly and monthly basis

  15. Key Business Metrics for Survival and Ongoing Success GOAL TASK/OBJECTIVE TIME FRAME Product Mix Casegoods dollars $ Seating dollars $ Systems dollars $ Other products dollars $ Number of orders/dollars generated with primary vendors per month = /$

  16. Key Business Metrics for Survival and Ongoing Success FORECASTING - A CRITICAL METRIC

  17. Key Business Metrics for Survival and Ongoing Success TARGETING PLAN Name Date Top Ten Hot List/Close/DollarsTop Ten Target List 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. Lead Sources Prospecting Plan 30 Day Booking Forecast - 30 Day Billing Forecast -

  18. Key Business Metrics for Survival and Ongoing Success * Represents booking from previous forecast .

  19. Key Business Metrics for Survival and Ongoing Success

  20. Key Business Metrics for Survival and Ongoing Success STRATEGIC PARTNER OR ABUSIVE MATE? SELECTING YOUR PRIMARY VENDORS

  21. Key Business Metrics for Survival and Ongoing Success PRIMARYSECONDARY TERTIARY

  22. Key Business Metrics for Survival and Ongoing Success

  23. Key Business Metrics for Survival and Ongoing Success

  24. Key Business Metrics for Survival and Ongoing Success

  25. Key Business Metrics for Survival and Ongoing Success

  26. Key Business Metrics for Survival and Ongoing Success KEY COMPONENT ADMINISTRATION

  27. Key Business Metrics for Survival and Ongoing Success • KEY INDICATORSORDER PROCESSING • TIMELINESS • ACCURACY • INTERNAL PROCESSING COSTS • ERROR RATE • COMMUNICATION INTERNAL EXTERNAL

  28. Key Business Metrics for Survival and Ongoing Success • KEY INDICATORSHUMAN RESOURCES • Productivity • Contribution • Participation • Dependability

  29. Key Business Metrics for Survival and Ongoing Success KEY COMPONENT OPERATIONS

  30. Key Business Metrics for Survival and Ongoing Success KEY INDICATORS OPERATIONS • SELLING SERVICE AS A PERCENTAGE OF YOUR BUSINESS • PROFITABILITY OF SERVICE OFFERINGS • DELIVERY TIME AND COMPLETION • INSTALLATION COMPLETION • PUNCHLIST • SERVICE CALLS – COMPLETING ON THE FIRST CALL • FINAL SIGN OFF

  31. Key Business Metrics for Survival and Ongoing Success Meeting the test • Determine the need for the product or service Is it a long-term sustainable need? • The cost of providing the product or service • Level of service you and your company can provide • “Implementability” • Impact on your current business • R.O.I – Return on Investment • Measuring for results

  32. Key Business Metrics for Survival and Ongoing Success The Cost of Service Labor - Wages, Taxes, Benefits Space – Taxes, Utilities, Rent/Mortgage, Insurance, Office Equipment & Supplies, Maintenance Equipment – Tools, Machines, Maintenance, Supplies, Vehicles, Insurance, Phones

  33. Key Business Metrics for Survival and Ongoing Success KEY COMPONENT FINANCE

  34. Key Business Metrics for Survival and Ongoing Success KEY INDICATORS FINANCE/ACCOUNTING • ACCOUNTS RECEIVABLE • 75/10/10/5 RULE • DSO • ACCOUNTS PAYABLE • DISCOUNTS TAKEN/OFFERED • LINES OF CREDIT AND LINE DRAWN • VENDOR RELATIONSHIP • CASH FLOW • WORKING CAPITAL - DOLLARS AND RATIOS • BANKING RELATIONSHIPS • BOOKED TO BILL RATIO

  35. Key Business Metrics for Survival and Ongoing Success • BENCHMARKING • OFDA • BIFMA • MANUFACTURERS • INDUSTRY ORGANIZATIONS

  36. Thank you Jim Heilborn Jim Heilborn Associates www.jheilbornassociates.com jim@jheilbornassociates.com 916.434.8711

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