Financial Benchmarks

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Financial Benchmarks

  1. 1. Financial Benchmark Ratios Sabatier Consulting LLC
  2. 2. Finance <ul><li>Please note that the benchmarks provided in the following slides are based on a normal economy…not a recession. </li></ul><ul><li>If, your publication is non-profit and your financial goal is break-even each year, then you are working toward a P/L of -0- vs. a positive. </li></ul>
  3. 3. Finance <ul><li>Sample Consumer Publication </li></ul><ul><li>Operating Ratios (dept expenses as % of total revenue) </li></ul><ul><ul><li>Editorial & Design 8.0% </li></ul></ul><ul><ul><li>Gen & Admin 8.0% </li></ul></ul><ul><ul><li>Advertising 18.0% </li></ul></ul><ul><ul><li>Circulation 14.0% </li></ul></ul><ul><ul><li>Manufacturing 30.0% </li></ul></ul><ul><ul><li>Ex.'s % of Rev. 78.0% </li></ul></ul><ul><ul><li>Net profit 22.0% </li></ul></ul>
  4. 4. Finance <ul><li>Sample B2B (trade) Publication </li></ul><ul><li>Operating Ratios (dept expenses as % of total revenue) </li></ul><ul><ul><li>Editorial & Design 17.6% </li></ul></ul><ul><ul><li>Gen & Admin 8.6% </li></ul></ul><ul><ul><li>Advertising 25.7% </li></ul></ul><ul><ul><li>Circulation 10.2% </li></ul></ul><ul><ul><li>Manufacturing 22.0% </li></ul></ul><ul><ul><li>Ex.'s % of Rev. 84.1% </li></ul></ul><ul><ul><li>Net profit 15.9% </li></ul></ul>
  5. 5. Finance <ul><li>Sample Association [member] Publication Operating Ratios (dept expenses as % of total revenue) </li></ul><ul><ul><li>Editorial & Design 18.0% </li></ul></ul><ul><ul><li>Advertising 13.0% </li></ul></ul><ul><ul><li>Circulation 2.0% </li></ul></ul><ul><ul><li>Manufacturing 45.0% </li></ul></ul><ul><ul><li>Ex.'s % of Rev. 78.0% </li></ul></ul><ul><ul><li>Net profit 22.0% </li></ul></ul>
  6. 6. Creative Budgeting <ul><li>Too often efficient management is identified with cost control. It is easy to forget that the primary objective is not to save money, but to make money. </li></ul><ul><li>This is particularly important when magazines are under pressure, as they are in today’s economy. </li></ul>
  7. 7. Creative Budgeting <ul><li>There’s a major difference in attitude between the publisher who sees his job as reducing spending by 10% and the publisher who sees his job as increasing earnings by 10%. </li></ul>
  8. 8. Creative Budgeting <ul><li>Budgets are frequently the principal instrument for introducing control from above. They are meant to be planning tools relating vision to verity. </li></ul>
  9. 9. Creative Budgeting <ul><li>An effective budget should: </li></ul><ul><ul><li>Incorporate the budgeter’s goals and aspirations </li></ul></ul><ul><ul><li>Reveal the budgeter’s perception of the realities – money, people & circumstances </li></ul></ul><ul><ul><li>Propose a plan for using those realities to reach the objectives. Numbers are meaningless unless related to objectives and circumstances. </li></ul></ul>
  10. 10. Summary Report <ul><li>Prepare a final evaluation report that includes: </li></ul><ul><ul><li>Objective of Evaluation </li></ul></ul><ul><ul><li>Each Department-interviews, information request, findings, analysis, and recommendations </li></ul></ul>
  11. 11. Characteristics of profitable publications <ul><li>Fill an information need/how to </li></ul><ul><li>Strong readership base </li></ul><ul><li>Endemic & healthy advertising base </li></ul><ul><li>Frequency of 6x year or higher </li></ul><ul><li>Diversified revenue sources [more than 1] </li></ul>
  12. 12. Characteristics of Profitable Publications <ul><li>Maintain tight ad/ed ratio </li></ul><ul><li>Positive growth trends </li></ul><ul><li>Continue to invest/improve the publication </li></ul>
  13. 13. Characteristics of profitable publications <ul><li>Good management team in place </li></ul><ul><li>Effective sales force </li></ul><ul><li>Staff support and resources </li></ul>
  14. 14. Contact… <ul><li>Sabatier Consulting [email_address] </li></ul><ul><li>703.536.2635/212.213.1550 </li></ul><ul><li>www.sabatierconsulting.com </li></ul><ul><li>This presentation is copyrighted by Sabatier Consulting. </li></ul>

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