How you can quickly figure out the financial mumbo jumbo in your business

How you can quickly figure
out the financial mumbo
jumbo in your business

© Copyright One Sherpa Pty Ltd 2010

Do you find it difficult to work out what your business
numbers are saying?

Do the numbers in your business look like ants walking
up a page

Do your eyes glaze over
when a set of numbers is
given to you?


Are you
frustrated about
the fact that you
can’t get what
the numbers are
saying?


Do you wish there was an
easier way of understanding
the numbers of your business?


You may not believe this but did you know that the
numbers are one of your greatest assets in your business?

The only asset which you
can use to see what’s going
on when you’re not IN your
business are the numbers


If you can just
grasp the shape
of your numbers
then you will
gain enormous
leverage on your
Time and Money


Understanding the
numbers can help
you solve most of
the other problems
you might be
facing…

Because they can give you
an objective view that’s
impossible with just words

PROBLEM #1

Has three measures which can show you the
shape of your business and help you avoid
operating a flawed business model


The first measure is
called Customer
Value


The first measure is
called Customer
Value

This measure makes sure you are making the right
margin on your sales

The second measure
is called Transaction
Flow


The second measure
is called Transaction
Flow

This measure makes sure you are bringing in the right
volume of sales for your business

The third measure is
called Money Flow


The third measure is
called Money Flow

This measure makes sure you are not leaving profits and
cash locked up in your business

These three simple
measures will tell
you whether you’re
wasting your time on
a flawed business
model and where to
focus to get things
right

Let me show you how to check these measures in One
Minute Business Checkup


PROBLEM #3


The first step in
addressing the shape of
your business is to
ensure that you have the
correct margins flowing
in your business.

The best way to address this is to find out how much cost
you can afford for the CURRENT level of sales.


In the short term you
have more control over
your COSTS than your
SALES so let’s see how
to do that


PROBLEM #3

$10,000 off Annual Other Costs


Once you are getting the right margin on the sales
that are currently in your business
(i.e. Your Customer Value Measure is Correct)…


The next step is to make sure
you have the correct volume
of sales in your business

(i.e. Address your Transaction Flow Measure)

To calculate the correct The reason for this is that to
volume of business, take be sustainable your
the Administration Costs administration costs should
and divide by .12 not exceed 12 cents in each
dollar of sales.
i.e. $120,000 / .12 =
$1,000,000


Adding $200,000 of sales
will also require more
interaction costs such as
product costs , people costs
and marketing costs…

so we’ve added $160,000 to
other costs in the model


PROBLEM #3

$200,000 more sales

$160,000 more costs


If you are able to hold your working capital to the
same level with the additional sales then the model
looks fine


However with additional sales and costs of interaction
it is likely that both Accounts Receivable and Accounts
Payable will increase

To calculate the likely increase we ratio the increase as
follows:
Accounts Receivable

Original Accounts Receivable DIVIDED BY Original Sales MULTIPLIED BY New
Sales EQUALS New Accounts Receivable

$120,000/ $800,000 * $1,000,000 = $150,000


To calculate the likely increase we ratio the increase as
follows:
Accounts Payable

Original Accounts Payable DIVIDED BY Original Other Costs MULTIPLIED BY New Other
Costs EQUALS New Accounts Payable

$90,000/ $580,000 * $740,000 = $114,827 say $114,830


PROBLEM #3

$30,000 more Accounts Receivable

$24,830 more Accounts Payable

Checkout your own information now.


Using the sandbox
you can ‘play with
the numbers’ to
make sure you are
making sustainable
profits


Go to
www.oneminutebusinesscheckup.com
and make sure you’re achieving
sustainable results in your business


How you can quickly figure out the financial mumbo jumbo in your business

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