Have You Set Targets for 2024?
DID YOU KNOW that profitable financial performance begins with establishing budgetary goals and targets? Here are some Key Budgetary Metrics:
- Revenue Performance
- Cost of Good Sold Performance
- EBITDA Performance
- Key Performance Indicators
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E-MAIL: info@BullsEYErn.com
Revenue Performance
Revenue is the money that a business makes; however, it only counts as revenue when the business actually collects the cash. Too many businesses operate by providing goods or services, issuing invoices, but not collecting their money, which is a form of charity, not business.
Cost of Good Sold Performance
Cost of Goods Sold (COGS) is like the cost of doing business for a company. It includes the expenses directly tied to making and delivering what the business sells, such as payroll and material costs. Other costs like rent and insurance, which a business would have even without making a sale, are separate overhead expenses. Knowing the COGS percentage is key to calculating the Gross Profit by subtracting it from the Revenue.
E.B.I.T.D.A. PERFORMANCE
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a crucial financial metric because it reflects a business's true financial health. When a business is being valued for a potential sale, EBITDA performance is a key factor. It's calculated by subtracting all overhead expenses from the gross profit. This metric significantly influences the business's multiplier, determining its overall value and potential sale price. Having strong EBITDA performance is essential for negotiations, providing a compelling case for a higher valuation and deterring potential buyers from making low offers.
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KEY PERFORMANCE INDICATORS
By solely focusing on high-level aspects, opportunities for improvement may be missed. Key Performance Indicators serve as crucial financial metrics, enabling a more precise understanding of how different factors contribute to overall performance. Financial improvement can become very challenging without the measurement and analysis that KPIs enable.
Some KPIs to Consider:
Customer Satisfaction
- Net Promoter Score (NPS): Measures customer loyalty and satisfaction based on the likelihood of recommending the business.
- Customer Satisfaction Score (CSAT): Measures overall customer satisfaction with a product or service.
Operational Efficiency:
- Operating Income: Revenue minus operating expenses.
- Return on Assets (ROA): Net Income / Average Total Assets.
Employee Performance
- Employee Satisfaction: Surveys or indices measuring employee contentment and engagement.
- Employee Turnover Rate: The percentage of employees leaving the company over a specific period.
- Employee Productivity: Measures the efficiency and effectiveness of an individual or team in completing tasks and contributing to overall organizational goals.
Cash Flow
- Operating Cash Flow (OCF): Measures cash generated by core business operations.
- Cash Conversion Cycle: The time it takes for a business to convert its investments in inventory and other resources into cash.
Sales & Marketing
- Customer Acquisition Cost (CAC): The cost to acquire a new customer.
- Conversion Rate: The percentage of leads that result in a sale.
Inventory Turnover
- Inventory Turnover Ratio: (Cost of Goods Sold / Average Inventory).
Project Management
- Project Completion Time: The time taken to complete a project.
- Budget Variance: The difference between planned and actual project costs.
HAVE YOU HAD A FINANCIAL ANALYSIS CONDUCTED ON YOUR BUSINESS?
What is a Financial Analysis?
Our Financial Analysis process is a surface level examination of financial efficiency over a period of time intended to identify any trends or value enhancement opportunities that can improve financial performance.
What information do I need to provide?
We work with the information that’s available; however, an ideal analysis would include the following information:
- This Year's year-to-date P&L
- The Last 4 Years of P&Ls
- This Year's year-to-date Payroll Summary Report
- Last Year's Annual Payroll Summary Report
What's In It For Me?
By the end of the consultation, you will have received:
- Managerial Accounting Overview: an overview of Generally Accepted Accounting Principles and how they apply to what you do in your business daily, to include Sales Revenue, Cost of Goods Sold, Gross Profit, EBITDA, Net Profit, Accounts Receivable, Accounts Payable, Asset & Liability categorizations, and Discounted Cash Flow.
- P&L Structure Understanding: An understanding of how the financial statement is structured and how its information can be analyzed and used to measure and control sales, purchasing and production efficiency.
- Value Enhancement Suggestions: Recommended courses of action to improve sales, purchasing and production efficiency problems identified during the analysis process.
How long is the Financial Analysis process?
Our analysis generally requires 1 hour for a high level overview. For a deeper understanding of that overview, we also offer consultative support when requested.
CLIENT TESTIMONIALS FROM THE PAST
Our Results are Tried & Proven in Financial Statements and the words of our Client Partners
Why is Right NOW the Best Time to Work Together?
Our Rates & Results are Miles Apart!
To provide context, below are some weekly invoices that reflect billable time for a larger consulting firm to a small business, although that firm doesn't provide the local support and resources that we do.
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Time vs. Value-Based Billing and Supply & Demand
- Time-Based: Method where services are charged based on the amount of time spent by a professional or service provider in performing a task or providing a service.
- Value-Based: Method where the cost of services is determined by the percieved value to the customer rather than the time spent, emphasizing the impact and outcomes of the service.
- Supply: The quantity of goods and services that produces are willing to offer and sell in the market at different price levels during a specific period.
- Demand: The quantity of goods and services that consumers are willing and able to purchase at various prices within a given market or timeframe.
We have an intentional time-based billing growth strategy at Bull's EYE Consulting as we build brand awareness and demand within the Colorado Springs community. As the financial results that we produce become known at a more widespread level within the community, our pricing approach will convert to a value-based pricing model based on the financial results that we become known for.
Current Clients of ours have the opportunity to grow their businesses with us while enjoying the lowest rates available in the market for the quantifiable financial improvement results that we deliver.
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