Marilyn Landis of Basic Business Concepts Inc. speaks about Sales vs. Finance

1. Sales vs
Finance….
Really??
DISCLAIMER
This presentation comes with
sales tools….
A CFO talking sales? Scary

2. Sales vs Finance….
Really??
Why do they tend to be in separate corners? …Using
Finance to improve sales? Is that possible?

4. You hire talented, dedicated sales staff
– what do they need to be successful?

5. Direct
Expense
Reduces
Profit Running a Sales Initiative
x x Lower prices
x
More benefits to
customer at same price
x
"Freebies" loss leaders to
entice
x
Sales tools – for lead
generation
x
Sales Tools -
Memberships to network
x
Sales tools - Give a
ways/leave behinds
x
Salaries/Commissions for
staff
Total $'s Total $'s
What your sales
team asks for
….what they promise
will generate sales
But are you getting a return on
the investment you make in the
people and the tools you
provide them?

6. We are entrepreneurs -
“We will survive…in tough times
some companies prove more
resilient than others. Can that
trait be learned?”
CFO Magazine, S. Leibs 2012

8. Your Professionals – you know
how to sell the circus peanut to
the buyer who wanted a banana
and an orange

9. Why do businesses fail?
“The number one reason on the list of
course is, ‘Ran out of cash.’” Here are
more: ….Lack of financial & operational
controls….Finally, I like this one the
best, ‘We were naïve idiots.’ “
Coleman Morning Brief, 7/6/15 , data from autopsy.io

10. TRUEISM
Cash follows profit…..
eventually ……
the inverse is also true
Let that sink in for a moment

11. Do you know which account is
your most profitable?
 Is your largest account your most profitable?
 When is an account too small?
 Are you high volume low margin?
 Are you high margin low volume?
 Do you follow the 80/20 rule? 80% of cost to
support 20% of customers or 80% of profit
from 20% of account – it makes a big
difference in profitability

12. Do you think Nintendo survived
128 years without bringing sales
and finance together?

13. Why Finance is not the enemy of
Sales…..
 Finance gives you the ROI on your sales
team
 Finance gives you the ROI on the tools you
give your sales team
 Finance tells you whether or not an account is
profitable
 Finance tells you what you need to generate
sustainable cash from new sales

14. Before we go any further – let’s
pause to define a couple of
financing terms

15. The red line moves with revenue
– until December….
$-
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
Avg.
Month
YTD 2012
Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
S
a
l…

16. Keep in mind:
Your COS will have a floor….
Call centers were
rooms full of
agents in cubicles
with phones have
a minimum
staffing level even
when call volume
is low

17. Today ….
 Call centers are
virtual….agents work
from their
homes…anywhere…
.electronic
messaging….
texting…computer
generated
interface…

18. If all variable expenses are in
COS ….
Call Center, LLC
Sales $ 956,100
COS 305,952
Gross Profit 650,148
Expenses 602,343
Net Profit $ 47,805
Gross Profit is what
you have to cover
overhead and profit

19. Matching costs to the revenue
they create…..
 Payroll – if you pay on Friday October 1st for the
prior two weeks….14 days of payroll go into
October …. But only one day generated revenue
for October.
 28-Day Billing Cycle ….You bill on October 25th for
28 days …. You have expenses for 31 days ….
Two days from prior billing not included …. 6 more
days of expense for next billing.

20. ….your positioning yourself for failure
if your gross profit consistently fails to
cover fixed expense

21. Costs….Fixed….Variable…
Equipment…Working Capital
 What if fixed expenses increase….profit shrink?
 What is the impact of well paid family or long time
employees on overhead?
 Is your business big enough to handle these
costs?
 What if variable costs grow faster than revenue?
 What impact will investing in a new soft switch
have on account profits?

22. PROFIT
Are you a low margin
high volume
business
…..or
Are you a high
margin low volume
business
DON’T GET THEM
CONFUSED!
“One of the mistakes a
lot of CEO;s make, is
assuming they they’re
going to have success
on their revenue…..a
strategic CEO needs to
know how spending
should be adjusted if
projected revenue isn’t
met”
Brad Feld, 8/3/15, “What a Smart CEO
Understands” and two comment letters

23. Remember….if you’re losing a
penny on every call you won’t
make it up in volume!

25. Assume capacity to increase sales
without increase in fixed expenses
Call Center, LLC
Sales $ 956,100 100%
COS 305,952 32%
Gross Profit 650,148 68%
Expenses 602,343 63%
Net Profit $ 47,805 5%
Investment in
sales Tools $ 5,000
Gross Margin 68%
Need new sales $ 7,353

26. ROI – 0.5% real vs “Wishing &
Hoping”
With New Sales963,453
Gross Profit 655,148
Expenses 602,343
New Net Profit 52,805 5.5%
 If 1% increase in sales
with the $5,000
investment in sales
tools
 0.5% increase in net
profit margin
 However, if fixed costs
increased more then
0.5% no gain

32. So – how does this help sales?

34. Your prospective
customers have the same
dynamic…..
They have to spread their
operating costs across the
sale of products or services
they deliver
- And
You want to be one of their
operating costs…

35. Do they have the profit margin to add you as an
expense?

36. If there margins are too small to add you
– your sales pitch should be “we can do
it cheaper” and “we can help you
increase sales”…remember they want to
know their ROI on investing in your
service – help them calculate it!

37. If their margins are
large enough to add
you – your sales pitch
should be quality &
benefit of service and
maybe your less
costly than their
current investment in
call staff…remember
they want to know
their ROI on investing
in your service

38. “I have not failed 700 times. I have not failed
once. I have succeeded in proving that those
700 ways will not work. When I have
eliminated the ways that will not work, I will find
the way that works.” Thomas Edison, 1847-1932, entrepreneur

39. 621330 - Offices of Mental Health Practitioners (except Physicians)
0-1MM 1-3MM 3-5MM
5-
10MM
10-
25MM
25MM
and
Over All
Net Sales 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Gross Profit 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Operating
Expenses 77.6 86.8 84.7 95.7 97.9 95.0 89.7
Operating Profit 22.4 13.2 15.3 4.3 2.1 5.0 10.3
All Other
Expenses (net) 4.1 .6 2.1 .5 .2 .3 1.1
Profit Before
Taxes 18.3 12.6 13.2 3.8 1.9 4.7 9.2

40. Note that margins decline as
sales increase….
541611 - Administrative Management and General Management
Consulting Services
0-1MM 1-3MM 3-5MM
5-
10MM
10-
25MM
25MM
and
Over All
Net Sales 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Gross Profit 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Operating
Expenses 80.0 84.9 86.5 90.0 92.7 91.0 88.5
Operating Profit 20.0 15.1 13.5 10.0 7.3 9.0 11.5
All Other
Expenses 5.5 1.2 .1 1.0 .8 1.5 1.6
Profit Before
Taxes 14.5 13.8 13.4 9.0 6.5 7.5 10.0

41. Why are we here?

42. Notice the profit margin and the fact
there aren’t many >$1M in sales
541921 - Photography Studios, Portrait
0-1MM 1-3MM 3-5MM
5-
10MM
10-
25MM
25MM
and
Over All
Net Sales 100.0
Gross Profit 100.0
Operating
Expenses 95.7
Operating Profit 4.3
All Other
Expenses (net) 4.2
Profit Before
Taxes .2

43. 541110 - Offices of Lawyers
0-1MM 1-3MM 3-5MM
5-
10MM
10-
25MM
25MM
and
Over All
Net Sales 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Gross Profit 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Operating
Expenses 75.8 81.5 82.4 81.0 81.0 74.0 78.9
Operating Profit 24.2 18.5 17.6 19.0 19.0 26.0 21.1
All Other
Expenses (net) 4.3 .7 .5 .4 1.0 1.6 1.5
Profit Before
Taxes 19.8 17.8 17.1 18.6 17.9 24.4 19.6

44. Bring finance and sales together….
The pessimist sees a
barren desert……
The optimist sees a
really…really…really
low tide

45. Once you’ve made your nut….
The “Incremental
Growth Strategy of
Pricing”…..once you’re
past breakeven you
can charge less
because the other
accounts are paying
for overhead expense

46. Incremental Growth………
This works as long as there
are accounts paying the
overhead….if they
leave… and you only
have incrementally
priced accounts….cash
to pay for overhead is
…. DELETE

47. “We will either find a
way or make one.”
Hannibal 247-183 B.C.

48. Marilyn D. Landis
412-537-3476 Cell
800-373-6916 Office
www.basicbusiness.biz