3. Organic Growth: More of the same
Geographic Expansion: New areas
Market Niches/Segments: Specialization
Innovation: New products & services
Merger & Acquisition: Buy your way in
Business Re-
conceptualization:
Do the same thing in a different
way
Conceptual Age
Strategies:
Arbitrage processes
4.
5.
6. 2012$’s - 2010$’s
2010$’s
X 100
Monthly Revenue:
April 2013 back to May 2012
Rolling 12 months April 2013 - Rolling 12 months April 2012
Rolling 12 months April 2012
X 100
7. 12/12 – 3/12 – 1/12 ANALYSIS
-200.0%
-150.0%
-100.0%
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
Change
Current Client JAN 05 thru CURRENT
Series3 Series2
Series1
10. N FEBMARAPRMAYJUNJULAUGSEPTOCTNOVDECJANFEBMARAPRMAYJUNJULAUGSEPTOCTNOVDECJAN FEBMARAPRMAYJUNJULAUGSEPTOCTNOVDEC JAN FEBMARAPRMAYJUNJULAUGSEPTOCTNOVDEC JAN
A B B D C B B B C B C C C C B B B D C D D D D D D A A A A A A A D B B B D A A A A A A A D B B B
A A A B B C C D D D B A B B A A D A C C B B B C C C B D C D D D A A A A B
B C C C D D D D D D D D D D A A A A A A A A A B C C C C C C C C C C B B B B B C C C B B B B B
A A B B B B B B C B B B C B B B C B B B B B C C C C C C B C C C C C B B B B B B B B B B C C C C
C C C C D D D D D D D D A A A A A A A A A B B B B C C C C C C C C B C C C B B B B B B B B C C C
C C C C C D D D D D D A A A A A A A B B B B B C C C C C D A D B A A B B B B B B B B B C C C C C
C C C C C C C C C C C B B B B B B B B B B B B B B B C C C C B B B B B B B B B B B B B B C B B
C C C C C C C C B B B C C C
B B B B D C B B B C B B B B C C C C C C C B C C C C C D D A B B B B B B B B
Counter- Intuitive
20122009 2010 2011
11. Plant Seeds The Good Life
Money Grows on TreesWeather the Storm
INVESTMENTPRIORITIES
FUNDING AVAILABILITY
Long Term
Short Term
AbundantLimited
12. Weather the Storm
Danger
Money Grows on Trees
Caution
Best
The Good Life
Advancing
Plant Seeds
FUNDING AVAILABILITY
INVESTMENTPRIORITIES
Long Term
Short Term
AbundantLimited
13. THE GOOD LIFE STRATEGY
The Good Life
Best
Pay down debt and build cash reserves
Implement business re-conceptualization strategies
Introduce new products/services; enter new markets
Implement exit strategy and sell now to capture high
valuation
Fund ownership buyout
Implement a self-insurance program
Accelerate training in new strategic or market areas
Build inventory and secure additional outside vendors
Consider outside manufacturing
Spin off undesirable operations
Implement Corporate Social Responsibility Plan and give back
14.
15. BALANCE
SHEET RATIOS
INCOME
STATEMENT
RATIOS
INVESTMENT RATIOS ASSET MANAGEMENT
RATIOS
Stability Profitability Overall Efficiency Working Capital
staying power earning power roi power cashflow power
Current Ratio Gross Margin Sales-to-Assets Ratio Inventory Turnover Ratio
Quick Ratio Net Margin Return on Assets Ratio Inventory Turn-Days Ratio
Debt:Equity Return on Equity Ratio AR Turnover Ratio
AR Turn-Days Ratio
AP Turnover Ratio
AP Turn-Days Ratio
16. Sales/Revenue Operating Costs Profit
Inbound Calls Net Cash Flow Gross Margins Proposed
Website Visits Cash Burn Rate Per Day Labor Efficiency
Proposals Submitted Percent Indirect Labor Billable Hours
Conversion Rates Number of Complaints Aged Receivables
Order Backlog Re-work Hours Write Downs
Work in Progress Contribution Costs Largest Expense to Sales
Machine Up Time # Overhead Employees Items Shipped
Gross Profit per Day Purchase Orders Issued Labor Fee Multiplier
New Accounts Opened Number Sick Days Invoices Mailed
Repeat Orders Number Working Days Machinery Down Time
Revenue/Employee
17. Gross Domestic Produce US Leading Indicator
M2 Money Supply Housing Starts
After Tax Disposable Income Retail Sales
Durable Consumer Goods Aerospace Manufacturing
Price of Oil Interest Rates
Unemployment Non-Durable Consumer Goods
18. Society Technology Economy Energy Politics Environment
Population Automation Inflation Oil Majority
Party
Regulations
Education Bio-Tech GNP Coal War Clean Water
Work Force Electronics Interest
Rates
Solar Terrorism Clean Air
Boomers
Retiring
Wireless Dollar Value Nuclear IRS Endangered
Species
Abundance
Mentality
Hybrid Cars Bank
Funds
Fusion Social
Security
Global
Warming
Global
Talent
Aerospace Private
Funds
Wind Regulations
Stock
Market
Bio Health Care
19.
20.
21. WEATHER THE
STORM STRATEGY
Eliminate all unnecessary expenses
Reduce training
Renegotiate vendor contracts
Ensure competitive banking rates
Re-finance long-term debt
Develop energy savings programs
Move to a paperless environment
Hire a savings consultant to review costs
Use personal mileage plans for business travel
Video conference instead of travel
Implement employee layoff plan
Reduce employee benefits
Outsource and out-task
Weather the Storm
Danger
22. PLANTING SEEDS STRATEGY
Acquire a troubled company
Upgrade key players
Hire sales person
Boost your marketing and advertising
Raise prices
Extend credit to loyal customers
Purchase a facility or implement improvements
Upgrade or replace equipment
Expand internationally
Implement training program in core competencies
Re-conceptualize your business
23. Caution
MONEY GROWS ON
TREES STRATEGY
Giving exuberant bonuses
Excessive stock options
Purchasing luxury automobiles, boats, and airplanes
Providing unnecessary employee perks, i.e. memberships
Taking executive vacations/retreats
Draining cash reserves
Funding ideas and research without sound strategy
Season tickets to sporting events
Fishing or spa trips
Political contributions
Money Grows
on Trees
24. Sales/Revenue February 2010 to January 2011 e.g. $1.1M
Sales/Revenue February 2009 to January 2010 e.g. $0.9M
= 1.22
Sales/Revenue February 2009 to January 2010 e.g. $0.9M
Sales/Revenue February 2008 to January 2009 e.g. $1.1M
= 0.82
ROLLING 12- MONTH ANALYSIS
Editor's Notes
Every one I talk to tells they are busy and that the are looking for more work. We all want to grow our businesses. We recognize the there is another level of performance that is greater than our current benchmark. Let’s explore some tools and perspectives that will help us move beyond our current benchmark to the next level of performance.
We always plan to grow. Doesn’t always happen that way. How to strategically and proactively manage growth and not have to react – too late – when things go as unplanned.
First let’s set some common understanding and clarify what we mean by growth. Then we can talk about managing it.
Growth typically refers to the top line, however, it is the bottom line growth that really matters. As growth occurs costs of goods sold and operating expenses often grow too. Management is about measuring, monitoring, and controlling the growth of all line items on the income statement, balance sheet, and most importantly the cash flow report. After all, it is the bottom line we are really trying to grow.
PSBJ: To make the list, companies must have recorded revenue of at least $500,000 in 2009 and demonstrated revenue growth through 2011. The 100th Fastest-Growing Private Company this year posted a revenue growth rate between 2008 and 2011 of slightly more than 65 percent. Doubling every three years is rapid growth.Here is how we do the caluculations.Here is how to do the calculation. Explain
Why you should track on rolling 12 months basis – flattens out the peaks and valleys and is the best indicator of growth
If we are going to manage growth, then we should have a plan. Business owners typical make a plan, and says we will grow. As we know it doesn’t always turn out that way. The recession taught us about negative growth, and after that we flat was described as the new up. Business owners I work with and talk to all express the desire to grow their business. We need some management tools to keep us on track.
Here is what happens. Lets start with caution, some are actually back in caution. Caution – danger – advancing – best. The cycle that we are in, as defined by the ROC, is always one cycle ahead of what we feel we are in. Example. Probably most people think we are in advancing, when we are actually in best, or even back into caution. Because economic cycles lead the way, are reactionary management is always trailing. Everyone knows to buy when it is up. The trick is to buy when low and sell when up. Because it is counter intuitive, we need tools and management strategies for different economic conditions.
Here are some examples of the ROC for various companies I have been working with. You can see the economic cycles from 2009 to 2013. Most companies declined during the recession, some more than others. Some have counter cyclic cycles and grew during the recession. Most have recovered, reached the previous “old” benchmark and want to continue growing to a new level. Few are actually doing it. The most important thing to learn here is that the economic cycles defined by the ROC are counter intuitive. That would suggest we are managing less effective viewpoint.
There are four basic scenarios that can be used to describe the situation or conditions your business is operating in. The conditions can be described based on the availability of funding (limited or abundant) and investment priorities (short term and long term). Here’s a brief description of each of the quadrants.
The economic cycles correspond with each of the four scenarios. It is important to recognize that we typically float around the center and rarely hang out in the far corner extremes.
Possibly use this slide as example of scenario planning
Predicting the economic cycle your business, and recognizing some businesses are counter cyclical provide great insights. The rolling 12 month analyses allows owners to see their growth rate clearer. Let’s spend some time looking at some financial health ratios and key performance indicators.
There are four elements of financial health: stability, profitability, overall efficiency, and working capital. These ratios are the indicators of the your power to stay in business, earn money, effectively manage assets and liabilities, and have cash. Many of you may see these ratios from your banker in the covenants on your loans. I have a general guide line sheet I can share should some one want it.
Financials reports and ratios provide valuable business information; however, they are always reporting on the history of where the business has been. When managing growth we are interested in where the business is headed. Key performance indicators, especially leading (as opposed to trailing) indicators, gives us insight as to what is going to happen in a business. Here are a few examples.
There is also macro economic indicators tells what is going on the national and regional economy as well as our specific industry. Does any one track macro economic indicators?
There are six areas of geopolitical, economical, and societal influences affecting businesses. Understanding the driving influence on the industry that you operate your business in are important to your growth strategy and financial success. Here are few significant trends.
Final Slide: summarize the presentation
Every one I talk to tells they are busy and that the are looking for more work. We all want to grow our businesses. We recognize the there is another level of performance that is greater than our current benchmark. Let’s explore some tools and perspectives that will help us move beyond our current benchmark to the next level of performance.
Not using this slide
Possible use of this slide as an example of scenario management decisions
