When Sales Can Wreck Your Business (and how to see it coming) Presented by Frank Coker, CEO of Corelytics and Finance Professor at the University of Washington iSchool

1. Presented by:
Frank Coker, CMC, MBA
CEO
CoreConnex, Inc.
Producer of the
CorelyticsTM Financial Dashboard
When New Sales Can
Wreck Your Business
And how to see it coming

2. What can you see?

3. Agenda
• The Myth
• Gross Margin and Profit
• LOB Performance
• Business Models
• Benchmarks
• Key Trends
• Look Ahead
• Monthly Process
• Q&A

4. The Myth
More sales are always good for business, right?
Why not?
– Sales with a negative margin destroy companies
– Increasing sales in an LOB with declining margins
may increase losses at faster rate
– Sales volume is often not as important as margin
– There will always be a leader and a laggard LOB

5. Gross Margin
Gross Margin = Revenue - COGS
COGS (Cost of Goods Sold a.k.a, direct costs)
• Cost of Sales • Direct labor
• Materials – Billable Staff
(product costs) – Contractors

6. Profit
Profit = Gross Margin - SG&A
SG&A
(Sales, General and Administrative expenses, a.k.a., “overheads”)
• Admin payroll • Legal
• Marketing • Training
• Rent • Taxes
• etc.

7. Signs of Disaster
• Rising revenues
• Falling margins

8. Manage by Line of Business
(LOB)
Standard LOBs:
– Monthly Service Agreements
– Time & Materials
– Project
– Product
– Other

9. What Can You See?
Combined Service LOB
T&M LOB Product LOB

10. Your Business Model
• Your Predominant Business Model ®
(PBM®)
– Monthly Service/Maintenance Agreements
– Reselling Product
– Project Work
S-L Index™ benchmarks and the
Predominant Business Model© (PBM©) are
proprietary to Service Leadership, Inc.

11. Benchmark Performance
• Leading indicators & evolving trends
PBM
Benchmarks
(S-L IndexTM)
LOBs
Goals

12. Know Your Trends
Gross Margin for each LOB
PBM
Benchmarks
(S-L IndexTM)
LOBs
Goals

13. Know Your Forecast
Gross Margin by LOB
PBM
Benchmarks
(S-L IndexTM)
LOBs
Goals
Scenarios

14. Monthly Process
• 30 Minute Monthly Action Plan

15. Learn More
https://dashboard.corelytics.com