When New Sales Can Wreck Your BusinessAnd how to see it coming

Presented by:

Frank Coker, CMC, MBACEOCoreConnex, Inc.Producer of theCorelyticsTM Financial Dashboard

What can you see?

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

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

Gross Margin

Gross Margin = Revenue - COGS

COGS (Cost of Goods Sold a.k.a, direct costs)

• Cost of Sales• Materials

(product costs)

• Direct labor– Billable Staff– Contractors

Profit

Profit = Gross Margin - SG&A

SG&A (Sales, General and Administrative expenses, a.k.a., “overheads”)

• Admin payroll• Marketing• Rent

• Legal• Training• Taxes• etc.

Signs of Disaster

• Rising revenues

• Falling margins

Manage by Line of Business (LOB)

Standard LOBs:– Monthly Service Agreements– Time & Materials– Project– Product – Other

What Can You See?Combined

T&M LOB Product LOB

Service LOB

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.

Benchmark Performance

• Leading indicators & evolving trends

PBM

Benchmarks(S-L IndexTM)

LOBs

Goals

Know Your Trends

Gross Margin for each LOB

PBM

Benchmarks(S-L IndexTM)

LOBs

Goals

Know Your Forecast

Gross Margin by LOB

PBM

Benchmarks(S-L IndexTM)

LOBs

Goals

Scenarios

Monthly Process

• 30 Minute Monthly Action Plan

Close Books

Upload

Data

Review Leading Indicators

TOP 3ACTION ITEMS

assign ownership

Learn More

https://dashboard.corelytics.com