The 10 Most Important Numbersto Watch in Your IT BusinessBy Larry SchulzeThe Taylor Business Group
The Taylor Business GroupVAR/MSP Centric Professional ServicesConsulting Firm• Direct Consulting• Accounting/Finance Manag...
The 10 Most Important Numbers toWatch in Your IT Business“We are all self-made, but only thesuccessful will admit it!”-Ear...
The 10 Most Important Numbers toWatch in Your IT BusinessGrowth Style BusinessversusLife Style BusinessWhat road are you t...
Key Factors of a Growth Style Business• There is a Vision• Entrepreneurial - Willing toTake (Calculated) Risks• Believes i...
10 Most Important Numbers#10 – Product Margin• Must be at least 18% overall• Product must be a part of asolution• Clients ...
10 Most Important Numbers#9 – Hourly Service Rates• 4.5 times the hourly burdenedsalary rate• Requires a service organizat...
10 Most Important Numbers#8 – Sales Compensation• 1/3 of every gross profit dollar goes to thesales person; 2/3 to company...
10 Most Important Numbers#7 – Sales Expense• Not to exceed 10% of total revenues• Includes:– Sales salaries– Sales commiss...
10 Most Important Numbers#6 – Administrative Expense• Not to exceed 20% of total revenues• Includes:– Office and building ...
10 Most Important Numbers#5 – Service UtilizationDefinition:Utilization – Percentage of Service Inventorytime that is bill...
10 Most Important Numbers#5 – Service Utilization• 75% Billable Utilization– 6 Hours per DayAverage– 2 Hours per Day not B...
10 Most Important Numbers#4 – Managed Service AgreementProfitability• Minimum of 65% gross profit margin• Remaining 35% of...
10 Most Important Numbers#3 – Service Salaries• Not to exceed 33% of servicerevenues• Includes all service relatedemployee...
10 Most Important Numbers#2 – Service Department Profitability• Minimum of 55% Gross ProfitMargin• You must price right an...
10 Most Important Numbers#1 – Net Operating Income• Minimum of 10% Net Operating Income• Must achieve all of the abovebenc...
10 Most Important Numbers• How do your numbers compare?• Do you really know yournumbers?• Are your financials/Chart ofAcco...
10 Most Important NumbersDo you measure up?Q&A
Kaseya Connect 2013: The 10 Most Important Numbers to Watch in Your IT Business
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Kaseya Connect 2013: The 10 Most Important Numbers to Watch in Your IT Business

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You don’t know what you don’t know. Many of us believe we are a growth style business but in reality we are a life style business. A growth style business is managed by the numbers. Unfortunately, many IT Solution Providers do not know their numbers or what they should be. This presentation focuses you on the 10 most important numbers for your business to be successful, profitable and growing.

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Kaseya Connect 2013: The 10 Most Important Numbers to Watch in Your IT Business

  1. 1. The 10 Most Important Numbersto Watch in Your IT BusinessBy Larry SchulzeThe Taylor Business Group
  2. 2. The Taylor Business GroupVAR/MSP Centric Professional ServicesConsulting Firm• Direct Consulting• Accounting/Finance Management Services• Workshops• Business Improvement Groups• Roadmap to Profitability Financial Dashboard
  3. 3. The 10 Most Important Numbers toWatch in Your IT Business“We are all self-made, but only thesuccessful will admit it!”-Earl Nightingale
  4. 4. The 10 Most Important Numbers toWatch in Your IT BusinessGrowth Style BusinessversusLife Style BusinessWhat road are you taking?
  5. 5. Key Factors of a Growth Style Business• There is a Vision• Entrepreneurial - Willing toTake (Calculated) Risks• Believes in Plans not Hope• Creation of a Sales Engine• Invests in their Company andtheir People• Manages through People not toPeople• Manages by the Numbers
  6. 6. 10 Most Important Numbers#10 – Product Margin• Must be at least 18% overall• Product must be a part of asolution• Clients versus customers• HaaS/TaaS increases productmargin• If you don’t ask, you will not get!• Manages by the Numbers
  7. 7. 10 Most Important Numbers#9 – Hourly Service Rates• 4.5 times the hourly burdenedsalary rate• Requires a service organizationalstructure• Rates prior to volume or longer termdiscounts
  8. 8. 10 Most Important Numbers#8 – Sales Compensation• 1/3 of every gross profit dollar goes to thesales person; 2/3 to company• Compensation plans mustdrive objectives• Compensation plans include:– Salary– Commissions– Bonuses
  9. 9. 10 Most Important Numbers#7 – Sales Expense• Not to exceed 10% of total revenues• Includes:– Sales salaries– Sales commissions and bonuses– Marketing/Advertising– Sales training– All other sales related expenses
  10. 10. 10 Most Important Numbers#6 – Administrative Expense• Not to exceed 20% of total revenues• Includes:– Office and building expenses– Benefits– Payroll taxes– Internal IT expenses– Administrative salaries
  11. 11. 10 Most Important Numbers#5 – Service UtilizationDefinition:Utilization – Percentage of Service Inventorytime that is billable per technician.Utilization % = (Number of billable hours)divided by(Number of week days inthe month X 8 hours)
  12. 12. 10 Most Important Numbers#5 – Service Utilization• 75% Billable Utilization– 6 Hours per DayAverage– 2 Hours per Day not Billable– 1 Week per Month not Billable– 3 Months per Year not Billable• 25% of Time Accounts for hours paid butnot worked– Vacation Time– Sick Leave– Personal Leave– Bench/Administrative Time– Training
  13. 13. 10 Most Important Numbers#4 – Managed Service AgreementProfitability• Minimum of 65% gross profit margin• Remaining 35% of revenue allocated to:– Unburdened labor – 25%– Tool expense – 10%• Reasons for less than 65% GP– Low pricing– Inefficient processes and procedures– Incapable service team
  14. 14. 10 Most Important Numbers#3 – Service Salaries• Not to exceed 33% of servicerevenues• Includes all service relatedemployees:– Service manager– Engineers and Technicians– Help Desk– NOC engineers/technicians– Service Coordinator
  15. 15. 10 Most Important Numbers#2 – Service Department Profitability• Minimum of 55% Gross ProfitMargin• You must price right and keep yourexpenses in line:– 33% Salary expense– 5% Annuity Revenue COGs– 3% Mileage expense– 1.5% Parts expense– 1% Training Expense– 1% Meetings, travel and lodging expense– .5% Miscellaneous expenses
  16. 16. 10 Most Important Numbers#1 – Net Operating Income• Minimum of 10% Net Operating Income• Must achieve all of the abovebenchmarks• Service must be at least 60%of total revenues• MRR must be at least 50% oftotal service revenue
  17. 17. 10 Most Important Numbers• How do your numbers compare?• Do you really know yournumbers?• Are your financials/Chart ofAccounts detailed so you cancompare your numbers?• Will you implement the bestpractices to increase yourprofitability?
  18. 18. 10 Most Important NumbersDo you measure up?Q&A

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