A brief guide to increasing profitability

1. Increasing profitability Alan Fishman, Private CFO Consultant alanefishman@gmail.com 513-503-4015

2. Where to begin? First task: What should my company be making? Obtain data that represents what other similar companies gross and net Try to benchmark revenue and profit per employee Get data on private and public companies in your industry from investment bankers Set targets for operating profit/ EBITDA

3. How to cut costs? Look at top five categories of expenses that you can cut Write the details of what you plan to do to measure results Focus on activities that drive costs Learn about lean management that teaches employees to control activities and costs Have outsiders review your business to identify cost saving areas Remember that activities/systems drive costs not people Review cheat sheets on cost cutting on the Internet

4. Focus on revenue Need to make sure that revenue is stable or rising Increased gross margin can magnify results of cost control Loss of customers and revenue will compound your cash flow issues Try to maintain an increasing sales trajectory as your business is in a much more favorable light

5. Once you have a plan… Document your plan in text Prepare monthly financial forecast Develop a weekly cash flow model Make sure that you are on track Meet to review actual vs. plan on a monthly basis

6. Cash flow model Develop at least 13 week cash flow model Try to tie to financial forecast Be realistic and overly optimistic cash flow models don’t help Compare plan to actual weekly results

7. Financial forecast Need a monthly income statement and balance sheet forecast Compare actual vs. plan to readjust Get your team involved to make sure it happens Your forecast for revenue and expenses must be realistic

8. Monthly activities Compare plan to actual How are you doing with lean activities and learning? Measuring liquidity (ability to borrow less actual borrowings) is the best measure of cash flow

9. Contact me I will provide details to fill in the blanks if I understand your situation All situations are different and require thought and consideration Example documents and files are on the internet for you to use but require customization This is a starting point so let me know if you need help