Applying Profit Analysis to Your Business

In my previous articles, I discussed in point the fundamental principle of the Income Statement and How to Analyze a Profit and Loss Statement to Maximize Profits, along with a step by step process on How to Plan for Profits.  To pull this Business Profit article series together, I will give some examples of how good Profit Analysis and Planning made for success and the flip side of that scenario (and the reasons why the companies were unprofitable).  This article will show How To Apply Profit Analysis and Planning to real world business situations. I will present 3 scenarios of Manufacturing Companies which had good profitability, mediocre profitability and one which failed.  All three companies are in the same industry.

The Successful Company:  Company A

In examining Company A’s Income Statement, there are many clues as to why it was a successful company:

– Market:  Established a market by determining a market need and effectively filling that need. In a five year period sales grew from $11K to $60m in relation to a market that grew from $413M to $510M.

– Expenses:  Expenses were reduced as a percentage of sales over the years, with Engineering and Sales Expenses at year 5 three percentage points below the industry average. The lower engineering costs were attributable to high caliber engineers who designed a superior product which required fewer development changes and allowed employees to concentrate on innovation in the subsequent years.

– Marketing Costs were low due to using a network of Distributors to sell the products alternatively than using a large sales force and manufacturing reps. The small sales force was used to concentrate on high volume accounts, giving the company a big return for its investment in its sales people.  This exclusively added 7 percentage points to its bottom-line profits.

– Cost of Sales was maintained at 62% of sales during the 4^th and 5^th years of operation which provided a 38% Gross Margin.  This GM is about 10% above the average Break Even Point for similar companies, giving Company A a good cushion of profitability.

The Mediocre Company:  Company B

Company B was a six year old company and located in a region of the country that offered lower labor and overhead costs.

– Sales Success: Company B had very aggressive pricing strategies and undercut its competitions to achieve large volume orders. Profit was not the motive; dominance was the underlying strategy.

– Aggressive Pricing:  In relation to its closest competitor, Company B’s sales were three times larger, material costs 15 percent lower and labor 5 percent lower.

– Overhead:  This is where Company B made its mistake.  Overhead expenses were 27%, causing Cost of Sales to increase to 76%, leaving a Gross Margin of only 24%, which was Break-Even in the best of circumstances when accounting for Engineering, Marketing and G&A.  This was a ripple effect which greatly reduced Company B’s profitability, causing the parent company to sell it.  An acquiring company immediate corrected the Overhead issue and installed a new General Manager to establish better profitability controls, which helped it recover over time. 

The Company Failure:  Company C

Company C captured 27% of its market, yet failed to stay profitable.

– Management:  Plagued by severe management problems.

– Spending:  Flamboyant and expensive habits.

– Product:  Poor Design and low manufacturing quality.

– Staff Reduction:  As a result of poor management, financial losses and product failures, Company C reduced its staff of 600 to 400 employees.  The Company afterward fixed its design issues, increased its market share from a significantly lower share of 2% to 4% and grew employment to 150 employees.  The Company was climbing back and barely keeping its head above water.

– Turnover: Company C experienced severe top-management problems, and as a result, lower-management, along with the technical and production ranks, suffered from excessive employee turnover.  In a year period, employee turnover was over 100%. Company C as a result experienced a bad repute in the Region’s labor pool causing it major difficulties in attracting quality employees. As a result of its low quality labor force, Company C’s product quality declined and customers were lost. The high employee turn-over created a situation that made it impossible to reduce product costs. Company C was constantly in the training mode and the domino effect of ruinous events forced it to cease operations.

– The Numbers:  COGS amounted to 84%, leaving only 16% for Engineering, Marketing, G&A and Profit.  This is clearly out of whack by 20%.  Material Costs totaling 53% could not be reduced due to high employee turn-over, which created a loss of purchasing continuity and poor procurement strategies.  Slow payments to Suppliers contributed to higher material costs since the suppliers increased their prices to compensate for the added costs of doing business with Company C. Company C strove to make improvements, but the improvements were made in the wrong places. Labor Costs were reduced from 8% to 4% and overhead from 10% to 5%, using the same products and predicting inflation rate of 13%. G&A at 3% was reduced dangerously low. The combination of indiscriminate cutting of costs, poor labor quality, poor product quality and very expensive material costs ultimately united to doom Company C.

What can be Learned From Profit Analysis?

By showing how to apply Profit and Loss Fundamentals, Profit Analysis, and Profit Planning to real world business situations, a business owner can now take these applied principles and integrate them into his or her company profit analysis and planning. Seeing how companies successfully and unsuccessfully applied these Profit Principles, the business owner can now easily apply these profit strategies to company operations. The Profit and Loss Statement is an excellent place to initiate your Profit Analysis and Planning since it shows how a business has spent its cash in hand in years past and how to projects its spending to be in the future. Moreover, this profit process clearly shows the proportion of revenue stream to expense and cost levels, and whether that ratio is healthy and/or unrealistic.

By understanding what an Income Statement is telling you, how to properly Analyze it for maximal Profits and how to successfully and realistically plan for Future profits, you can significantly increase and sustain better Cash Flows.  However, the process should not stop here.  As you have planned to Maximize Business Profits and implemented it successfully through your company’s Business Plan, Cash Flow Management becomes the next step in the Profitability process. Understanding how cash moves in and out of your business is exremely important in running a profitable and sustainable business.

About this Article Author

Frank Goley is a business consultant, business turnaround consultant and business plan consultant for ABC Business Consulting. Frank is considered an expert in writing, developing and implementing business plans, business turnaround plans, business funding plans, marketing plans, strategic plans and web marketing plans. Frank offers comprehensive business consulting, business coaching, business turnaround consulting, along with web seo, web development and web marketing consulting, to small and medium size companies.. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles on business success strategies. He also writes the Business Success Strategies Blog.

The Cheapest Laptop and Most Powerful Enjoyable Pcs

Notebook computers are not only useful,effective, and easy to use, but they are also cost effective and some colored laptops are available in several different colors.  Some of the cheapest laptop computers are comparable to the most expensive if you shopcarefully.  Why waste your money a more expensive model when you can get the same speed and memory in a less expensive notebook. 

“The waste of money cures itself, for soon there is no more to waste.”
Famous Quote about money by M.W. Harrison

With the availability of cheaper notebooks a person could buy a computer that is adaptable enough to use anywhere in the home and durable enough to take on vacation. 

You can also consider buying one of the more posh colored laptops that are now on the market.  These colored notebooks come in a wide range of colors.  If you can’t find the color or style you like, there are many manufactures that will custom paint your computer in any color or shade you want.  They are available in metallic and pearl finishes and high polish or matte.  Your business or school logo can be blasted on the lid.

“A cheerful heart is good medicine…” Proverbs 17:22

I encourage you to add a little humor to the work day boredom by fetching some funny computer wallpaper from the internet.  Imagine, as a stressed fellow worker walks into your work space or cubicle, and he or she observes a humorous picture or animation.  It would surely lighten their load and deliver a little grin to their face and add some fun and creativity to the working environment.

“The purest and most thoughtful minds are those which love color the most.”  John Ruskin (1819-1900) British journalist, novelist and poet.

Do you get sick of seeing of gun metal grey, or matte black?  Finally, someone has conceived colored laptops! You are now able to be different from the multitude by selecting one of the new beautifully colored laptops that are on the market today.  Most of the major brands, Dell, Gateway, and of course the Mac’s are all available in a variety of colors.  And, if you have a vintage model, there are companies that will colorize it for you.

Be a wise shopper,  save money, get the most for your dollar when you buy the cheapest laptop on the market.  Don’t forget about style, look for a notebook that stands out such as a a colored laptop.  When your new laptop arrives, download some funny computer wallpaper to “make your heart merry” as well as your co-workers.

Toner and Ink Recycling

I started saving ink cartridges a while back after a local school group started collecting them to make some money (by recycling them). I put a bag on my office door and whenever I changedcartridges, I would just slip the old inkjet cartridge into the bag.

When the announcement came that it was time to hand in the inkjet cartridges we had collected, I removed the bag of cartridges from the door . I was surprised by how many cartridges I had collected . I checked ou the contents and found I had four HP 78 color ink cartridges and 9 HP black ink cartridges. This was in a 2 month period! Since I have a home office, I do business out of my home, so I probably use up ink cartridges faster than most homes , but it got me thinking about how much inkjet ink must be used just inthe United States alone. It made me regret to think that I had previously just thrown those old ink and toner cartridges into the trash, since I thought it would take too much time to do anything else. Now always buy reconditioned Epson refurbished print cartridges on the web.

At the present time, ink based computer printers and toner based copiers are a the devices we inherit . Nearly every home in America has a printer, and most of those printers use some kind of replaceable inkjet cartridge or toner . If you trhow those away, they go into our dumps and will stay there for a very long time , and will soon leak cancer-causing substances into the ground water .

So is there a reliable way to recycle inkjet cartridges responsibly? The most effective way is to find a local group that collects them. Suchgroups receive a little bit of money for each cartridge , so you support their cause , while they return them to large clearinghouses that refill them and then retail them as remanufactured inkjet cartridges. This saves everyone a lot of money and keeps the ink cartridges in circulation and out of our environment .

If you normally buy original brand ink jet cartridges like HP , Samsung  , IBM or Lexmark , make certain you do a little research prior to taking part in in their alleged recycling programs. Some investigators have determined that many of the big ink cartridge makers simplify sending your old cartridges back to them, but they do not recycle them. Instead they destroy the cartridges (usually by burning them!) so that they won’t dilute the market . This helps them sell more OEM cartridges . They make a lot more money that way. That’s not earth-friendly – so make sure you check it out beforehand .

The cost savings between original and refilled inkjet cartridges can be   enormous . My mom’s printer took the HP78 tri-color cartridge. I could have purchased a new HP cartridge for around $35. Instead I bought a HP 78 recycled cartridge for $18 . I saved some cash , a charity earned some money and I helped help the earth. My wife’s small business uses a Xerox Workcentre printer that has ink that is very expensive. By buying a generic brand, you can acquire the xeorox solid ink   for around 65% off each time we order. That’s a savings of a lot of money in printer ink alone .

Those who have a printer or those in charge of purchasing printing ink supplies as their job should research how to take advantage of ink jet cartridge recycling. If everyone contributes, it can help save our environment. Plus you will be increasing revenue. It may take a little more time to get it all set up, but it is best for the planet.

Making Money With The Paid Online Surveys

Paid Online Surveys For Some Extra Cash

It is very possible for you to earn some easy money online if you shall know just how to go about it correctly. When you know where to go online then you can make yourself extra income. There are so many people today earning money with the paid online surveys.

If you are wanting to start earning some money in your free time by getting involved with the online paid surveys, then all you shall need to do is know just where and how to get started with this type of online work.

One very popular way for these companies to get their information is by hiring and paying people through a paid survey. So your first step is to start a list of as many companies you can who are willing to pay for some of your opinions. Make sure that you do a broad search for these paid surveys that are online.

A good way for these companies to gather any information is through paid surveys that they provide to people who will submit their opinions for money. The first thing that you will want to do is make up a list of companies that pay you for your opinions. Be sure to put forth a good search as you can find many of these online paid surveys. Do not expect this type of work to make you rich as it is only for earning some extra cash. Make sure to stick with it and learn all you can learn about these surveys and its industry.

Try to begin by signing up with a well known source for these surveys. Spend some time and locate these companies. You shall then be able to learn just how long these companies were in business. You will also learn from them some other websites and the thoughts and opinions of what other people think towards them. They have put together a huge list of companies which offer these paid surveys and they will pay for your own opinions. The companies will also help you begin earning some cash immediately with these online paid surveys.

The success you have will depend on how much effort and focus you put at this kind of work. These surveys are quite simple and you will really earn some additional income whenever you have some spare time.

I trust that this article has been informative for you to resolve your problem, if you want to find more information that will help you, then click here!:online surveys , paid online surveys and surveys for cash scam

Texas Holdem

When starting with online poker there are couple things beginners must know besides strategy. The most important of them being rakeback. Not much beginners know any phrase besides „poker“ and „texas holdem“ when they start playing. Rakeback is important because it gives back a percentage of the fees that the player pays to the online poker room for arranging the games. This way you can maximize your profits or breakeven when you have a bad month.

Most people start with Texas Holdem because it is believed to be the most simple variation of poker. That is not true. Texas Holdem is something that has a lot of aspects which need to be learned. One of them is knowing how to use your position.

In Limit poker games you might face a raise which might seem small as it is only one bet and calling it is no catastrophy. In No Limit poker the raise can be multiple bets. Drawing hands and small pairs have to be folded in that case and you los eyour bet. This is the reason why in passive games these hands are only good in a late position.

Connected and cards of same suit need at least four or more players in a non raised pot to be profitable. You are only playing them to flop a straight, a flush or a draw. You flop a flush, straight two pairs or a set only once every seventeen times. Flush draw or a straight draw comes once every five times and when you have holed cards, like 9s-7s, then the straight draw hits you once every six times. In addition you need to check that the game would not be too aggressive. In an aggressive game even if everyone calls preflop then it might be hard to get the correct pot odds for calling with a draw on the flop.

In an early position you should play only premium hands, like AA, KK, QQ, AK and maybe JJ and AQ. Raising in an early position means that you have to have a hand which can withstand a re-raise.

With a pair of aces you win 80% of times against one player, 66% of times against two players, only 50% against four players and it only gets worse with more people in the pot. Normally by raising you get into a heads-up situation, pot is the same as with 4 limpers due to the raise. The standard raise in cash games is usually three or four times the big blind. This gets out the drawing hands but you still get some callers.

Lets go over the important things briefly. Definitely look for Noxwin Rakeback or even 888 Poker Rakeback as they are the easiest places where to start. Consider your position, always! Player only premium hands in the earlier positions and loosen up as your position moves towards the button. Do not go crazy! Try to make sense of your decisions and analyze them. Why did i do that? Why did i do it at that moment? And so on. Learn, adapt and win!