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Simplenumbers.me/slides
by
Greg Crabtree
Greg.crabtree@crbcpa.net
256-704-0620
Simple Numbers… Straight Talk… Big Profits
4 Keys to Unlock Your Business Potential
Operating expenses:
Facilities 150,000 150,000
Marketing 75,000 75,000
Salaries (management and admin) 750,000 750,000
Business chassis Payroll taxes and benefits 100,000 100,000
Other operating expenses 150,000 150,000
$400,000
$300,000
$200,000
Cash
-‐
5%
$(200,000)
$(300,000)
Getting to 15% Pre-Tax Profit
• Know your current capacity
• Being Profitable and Maintaining
Market Share can be better than
growth
• Remember, 10% is the new
breakeven
• Use the “baffle” concept to grow to
15% in profit before you add more
labor
Step #1 Step #2 Step #3 Step #4
Original 10% 15% back to 10% back to 15%
Labor Effciency:
Direct Labor (GP/DL) $3.56 $3.89 $4.22 $3.86 $4.25
Sales Labor (CM/SL) $6.57 $7.43 $8.29 $6.50 $7.38
Management Labor (CM/ML) $3.07 $3.47 $3.87 $3.38 $3.84
Career Labor Efficiency
Curve
• Make training zone as short as possible
• Create fair movement of pay relative to
value
• Eliminate crossover to replacement zone
– Manage expectations
– Transition to new roles
– Lifetime learning
LER Case Studies
1. Our own Firm – Cost of unproductive labor
2. Multi location services – fix margin and DL
3. Tech Staffing – low margin high volume
4. Marketing Firm – Owner comp fix
5. Tech Consulting – Direct Labor model
6. Construction services – Gross margin true
top line
Marketing Efficiency
4 Forces of Cash Flow
Prioritized In Order:
• Taxes set aside quarterly
• Repay line of credit debt
• Core Capital Target
– 2 months of operating expenses and
Direct Labor in cash with nothing
drawn on LOC
• Dividends (Distributions)
Weekly Accounting Rhythm
Deposits
• Take to the bank daily
• Separate duties if possible
• Use remote deposit
• Log into online account to record
ACH payments
• Daily email to management on
bank balance and who paid
Weekly Accounting Rhythm
Invoicing
• Invoice weekly if at all possible
• Have the invoicing done by those
closest to the customer
• Break monthly billing into 4 cycles
• If invoicing is in a separate system,
reconcile weekly
Weekly Accounting Rhythm
Bill Payments
• Only pay bills once a week on the
same day
• Use the “bill” process in QB to get
the right date on the expense
• 2 week Cash Flow forecast report
each week
• Turn off automatic sweep on LOC
Weekly Accounting Rhythm
Online Banking
• Check bank activity online daily
• Use a two monitor environment
• Do a “soft” reconciliation daily
• Make your accounting system be
the authoritative bank balance, not
the bank’s.
• Use online bank alerts
Weekly Accounting Rhythm
Credit Cards
• Input charge DETAIL into your
records
• Download activity if at all possible
• Update once a week on the same
day
Weekly Accounting Rhythm
Payroll
• If a QB user, we like QB Assisted Payroll the
best, all data is held within your records
• Use one of the major players (ADP, Paychex,
etc) if you want it separate. Try to automate
the entry back into your books
• Do Not do it yourself! #1 possibility of fraud
• Update LER reports after every payroll
Data to Manage
by
Profit!
Marke,ng
Efficiency
Labor
Efficiency