business essentials budget, strategy & human resources

Owner Manager TrackSponsored by:

Business Essentials: Budget, Strategy

and Human Resources

Presented by:Marcel Newell & Jody Culbertson

Session Outline• Budget Strategy

– Budget Basics– Key Performance Indicators– Know your numbers & Putting them to work– Management Tools (work ON your business)

• HR- Human Resources Process– Recruitment – Hiring – Orientation– Performance Management

Tools to Stay ON Track

Job Well Done:

Job Well Done:Know the Rules, WIN the Game!

As yourself the Right Questions!

Work ON your business, NOT in it!

Know where to Focus!

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 2

Level 2

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Level 3

Level 3

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Level 3

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Level 3

Level 3

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels

State of Retailers

Plateaus

State of Retailers

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 2

Level 2

Level 2

Level 2

Level 2

Level 2

Level 3

Level 3

Level 3

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Level 3

Level 3

Level 3

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels

Stuck at $180K - $250K

State of Retailers

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 2

Level 2

Level 2

Level 2

Level 2

Level 2

Level 3

Level 3

Level 3

Level 3

Level 3

Level 3

Level 3

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels

Stuck at $450K-$600K


State of Retailers

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 2

Level 2

Level 2

Level 2

Level 2

Level 2

Level 3

Level 3

Level 3

Level 3

Level 3

Level 3

Level 3

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels




State of Retailers

Which one are you?

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 1

Level 2

Level 2

Level 2

Level 2

Level 2

Level 2

Level 3

Level 3

Level 3

Level 3

Level 3

Level 3

Level 3

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels




State of Retailers

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels

3 Levels

Grow

th

+5%, +10%, +20%

State of Retailers

Year 1

Year 1

Year 2

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

Flat Line

10 – 20 years?

State of Retailers

If we are lucky, continual growth!

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels

Inflection Point #1

Inflection Point #2

State of RetailersReality is…• Working 6 days a week• Best installer in the company• Best sales person in the company• Business will die without the owner• Feel stuck, not sure what to do to grow• Not getting the results we were

expecting

Is this you?

State of Retailers6 days a week:

Who here is working 6 days a week?

State of Retailers6 days a week:• Average work month is 176hrs

(40hrs/week)

• Retailers work 208 hrs (60hrs/week) +15%

• What has happened?• Bought yourself a job• At risk for $150K in inventory• $50K to $200K debt

State of RetailersBought yourself: JOB

Earning $11/hr to $29/hr

State of RetailersJob Offer:• Low pay, GREAT conversation• $150K cash upfront• Must sign ALL personal

guarantees• Pay you went we can, if we can?• We hope everything works

out…Sign Here: _____X_____

State of RetailersHow was your day yesterday?

How do you describe it?

How was last Saturday?

What needs to change?

SubjectiveLearn how to make it measurable!

#@$%@#@

Example

Time for Change is NOW!

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

$900,000.00

3 Levels

Inflection Point #1

Inflection Point #2

Budget Strategy

• Know your numbers• Financial Statements

• Budget Form

Tools to stay on track

What you need:

How often do you look at your Financials?Monthly 30 – 45 days, Yearly 365 – 485?

Fill in Page 1

Budget Strategy


• Budget Form

Boring…

What you need:

Budget Strategy


• Budget Form

Overwhelming…

What you need:

Budget Strategy


• Budget Form

Simple & Easy

What you need:

Budget Strategy

G.P.S.Goals + Performance =

Success

Budget Strategy

GPS: Goals + Performance = Success

Budget

Measurement

Budget Strategy


Budget

Measurement

Example

Budget StrategyPlan:

A plan will always change, but a business with a plan will go the

distance.

Know your NumbersBusiness Model

Burn Rate:$_____ (month)

Break-even: $_____ (month)

Gross Margin: ___% (product)

Gross Margin: ___% (install) Fill in Page 1

KPI’s (Key Performance Indicators)

Traffic:______

Sales:$______ (per day)

Avg. Sale:$______

Close Rate: ______%


Budget Components:

A. Revenue

B. Costs

C. Profit

Vanity

Reality

Sanity

1. Variable: COGS2. Fixed: G&A


Costs:1. Variable: COGS

Cost of Goods Sold• Product• Installation Labour• Credit Card Charges• Warranty

2. Fixed: G&AGeneral & Administrative

• Facility Rent/Lease/mortgage• Utilities: heat, lights & electrical, water• Insurance• Advertising• Banking• Salary

No Sales = No Costs

Costs Regardless

Start with Reality

Fixed Costs – G&A

Page 2



<<

Fix

ed

= R

eality

>>


Fill in Monthly Expenses for Each MonthGeneral & Administrative

Code Description Amount50100 Employee - Salary/Wages $ - 50110 Employee - Salary/Wages Incidentials $ - 50120 Employee - Benefits $ - 50130 Employee - Payr.oll Pentalties $ - 50210 Subcontractor - Accounting $ - 50220 Subcontractor - Creative/Marketing $ - 50310 Professional Fees - Legal $ - 50320 Professional Fees - Accounting $ - 50330 Professional Fees - Training $ - 50340 Professional Fees - Memberships/Dues $ - 50410 Auto - Lease $ - 50420 Auto - Fuel $ - 50430 Auto - Insurance $ - 50440 Auto - Taxis/Parking $ -

Jan Feb Mar Apr $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -


Total Expenses for Each MonthGeneral & Administrative

Code Description Total Jan Feb Mar Apr50100 Employee - Salary/Wages $ - $ - $ - $ - $ - 50110 Employee - Salary/Wages Incidentials $ - $ - $ - $ - $ - 50120 Employee - Benefits $ - $ - $ - $ - $ - 50130 Employee - Payr.oll Pentalties $ - $ - $ - $ - $ - 50210 Subcontractor - Accounting $ - $ - $ - $ - $ - 50220 Subcontractor - Creative/Marketing $ - $ - $ - $ - $ - 50310 Professional Fees - Legal $ - $ - $ - $ - $ - 50320 Professional Fees - Accounting $ - $ - $ - $ - $ - 50330 Professional Fees - Training $ - $ - $ - $ - $ - 50340 Professional Fees - Memberships/Dues $ - $ - $ - $ - $ - 50410 Auto - Lease $ - $ - $ - $ - $ - 50420 Auto - Fuel $ - $ - $ - $ - $ - 50430 Auto - Insurance $ - $ - $ - $ - $ - 50440 Auto - Taxis/Parking $ - $ - $ - $ - $ -

---- ------- ----- ---- ---- ---- -------- ------- ----- ---- ---- ---- -------- ------- ----- ---- ---- ---- ----

Total ---- ---- ---- ---- ----

Burn

Rate


Burn Rate = Monthly Fixed

What is your burn rate?

Does it match Page 3 number?

$10K - $20K - $30K


Once you know your Burn rate, now you can Plan and Set Goals.

Know your numbers…

#1 = $10K - $20K - $30KLet’s look at three real businesses…Expenses = Reality = Burn Rate


Retailer Snapshot:A. Medium A Retailer @ $780,000/yr.B. Small Retailer @ $264,000/yr.C. Medium B Retailer @ $680,000/yr.

Which business would you want?

A – B – C Vanity?


Medium Retailer A @ $780,000/yr. or $57,859/mo.

Burn Rate: ?

Gross Margin: ?

Profit: ?Break-Even Number?



Burn Rate: $32,615

Gross Margin: 62%

Profit: 6%Break-Even Number?

Know your Numbers!



Burn Rate: $32,615

Break-even: $52,605

Minimum Sales per Day: ?

How many days open?


Medium Retailer A @ $780,000/yr.

Burn Rate: $32,615

Break-even: $52,605

Days open per month: 26



Medium Retailer A @ $780,000/yr.

Burn Rate: $32,615

Break-even: $52,605


Minimum Sales per Day: $2,023Break-even each day


Daily Break-even Sales Numbers

Monday Tuesday Wednesday Thursday Friday Saturday $-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Daily Sales

SalesGoal

Axis Title

When is the best time to know our performance?

Today or Next Month or Two Months from now?


Small Retailer @ $264,000/yr. or $21,948/mo.

Burn Rate: ?

Gross Margin: ?

Profit: ?Break-Even Number?



Burn Rate: $3,372

Gross Margin: 41%

Profit: 26%Break-Even Number?

Know your Numbers!



Burn Rate: $3,372? Agree or Disagree?

Depends what they do with their installers when it is slow.

Break-Even = $3,372 + $3,850



Burn Rate: $7,222

Break-even: $12,350


How many days open?



Burn Rate: $7,222

Break-even: $12,350





Burn Rate $7,222

Break-even: $12,350

Day open per month: 26

Minimum Sales per Day: $475Break-even each day

Know the Rules, WIN the Game!


Daily Break-Even Sales Number

When is the best time to know our performance?Today or Next Month or Two Months from now?


$100

$200

$300

$400

$500

$600

$700

Daily Sales

SalesGoal

Axis Title

Average Sale: $800 (3-4 times average)


Measurement: The importance of measurement can’t

be over-emphasized. If you can’t measure it, you can’t understand

it. If you can’t understand it, you can’t control it. If you can’t control

it, you can’t improve it.-James Harrington


Business ModelBurn Rate: $_____

(month)

Break-even: $_____ (month)

Gross Margin: ___% (product)

Gross Margin: ___% (install)


Traffic: ______Sales: $______

(per day)

Avg. Sale: $______ Close Rate: ______%

Know your Numbers!

Medium Business B


Business ModelBurn Rate:

$15,289Break-even: $53,410Gross Margin: 32%

(product)

Gross Margin: 47% (install)


Traffic: ______Sales: $______

(per day)


Medium Business B




(product)



Traffic: ______Sales: $2,055

(per day)


Medium Business B




(product)



Traffic: ______Sales:

$2,055 (per day)

Avg. Sale: $273 Close Rate: ______%

Medium Business B




(product)



Traffic: ?Sales:

$2,055 (per day)

Avg. Sale: $273 Close Rate: 50%

Medium Business B




(product)



Traffic: 15Sales:

$2,055 (per day)


Medium Business B

Eight Numbers




(product)



Traffic: 15Sales:

$2,055 (per day)



Key Performance Indicators are those variables that can affect significantly the overall financial

position of your company.

Lead vs. Lag Indicators


Traffic: 15

Sales:$2,055

Avg. Sale: $273Close Rate:50%

Medium Business B

<<< Lead Indicator

<<< Lead Indicator

<<< Lead Indicator<<< Lead Indicator

Real-Time Performance

Vs. Financial <<< Lag Indicator


Traffic: 15

Medium Business B

<<< Lead Indicator

Count it every day.

Probably not every day...

My habits?

Frequency of financial review?


KPI’s = Performance

In Sports, WHEN do we know the score of the GAME?

At the end of the season?At the end of the game?

Real Time?


KPI’s

Real Time!


KPI’s

When the team is behind, what does the coach do?

Time OUT!

Change Play

Change Players

Inspire


KPI’s Time OUT!

Change Play

Change Players

Inspire

Does the coach suit up and play?


KPI’s

How many of you suit up?


Must know our Performance in Real Time


$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Daily Sales

SalesGoal

Axis Title

?

?

?

Ask yourself the right Questions?


Must know our Performance in Real Time


$50

$100

$150

$200

$250

$300

$350

Average Sale

Avg SaleGoal

Axis Title ?

?

Ask yourself the right Questions?

Scorecard or DASHBOARD

Headbands?

Monday Tuesday Wednesday Thursday Friday Saturday0%

10%

20%

30%

40%

50%

60%

70%

80%

Close Rate

Close Rate

GoalAxis Title? ?


Why is our close rate so low on Friday & Saturday?

How was your day today?

It is not subjective anymore?

Monday

Tuesd

ay

Wed

nesday

Thursd

ay

Friday

Saturd

ay0%

20%

40%

60%

80%

Close Rate

Axis Title

?


How was your day today?

Missed Goal

Made Goal

Exceeded Goal


The Right Questions?What was our Performance yesterday?Do we want these results to continue?

Yes = Do more of what we are doingNo = Change/Stop/Improve what we are doing

0%

10%

20%

30%

40%

50%

60%

70%

80%

Axis TitleScorecard

or DASHBOARD


Three Retail StoresBiz Model Small Medium A Medium B

Revenue $264,000 $780,000 $680,000

Burn Rate $7,222 $32,615 $22,134

Break-even $12,350 $55,000 $53,410

Profit $67,416 $39,096 $0.00


Three Retail StoresBiz Model Small Medium A Medium B

Revenue $264,000 $780,000 $680,000

Burn Rate $7,222 $32,615 $22,134

Break-even $12,350 $55,000 $53,410

Profit $67,416 $39,096 $0.00

KPI’s Small Medium A Medium B

Traffic 2 18 15

Daily Sales $7,222 $32,615 $22,134

Average Sale $800 $214 $273

Close Rate 70% 55% 50%


Pick ONE?Biz Model Small Medium A Medium B

Revenue $264,000 $780,000 $680,000

Burn Rate $7,222 $32,615 $22,134

Break-even $12,350 $55,000 $53,410

Gross Margin 41% 37% 30%

Profit $67,416 $39,096 $0.00


Traffic 2 18 15

Daily Sales $7,222 $32,615 $22,134



Vanity?

Biz Model Small Medium A Medium B

Revenue $264,000 $780,000 $680,000

Burn Rate $7,222 $32,615 $22,134

Break-even $12,350 $55,000 $53,410

Gross Margin 41% 37% 30%

Profit $67,416 $39,096 $0.00


Traffic 2 18 15

Daily Sales $7,222 $32,615 $22,134



Products Line Intelligence



How do you Grow?Biz Model Medium B

Revenue $680,000

Burn Rate $22,134

Break-even $53,410

Gross Margin 30%

Profit $0.00

KPI’s Medium B

Traffic 15

Daily Sales $2,055

Average Sale $273

Close Ratio 50%

Increase Performance

Set New Goals

Track Daily



Revenue $680,000

Burn Rate $22,134

Break-even $53,410

Gross Margin 30%

Profit $0.00

KPI’s Medium B

Traffic 15

Daily Sales $22,134

Average Sale $273

Close Ratio 50%

Which goals to improve?



Revenue $680,000

Burn Rate $22,134

Break-even $53,410

Gross Margin 30%

Profit $0.00

KPI’s Medium B

Traffic 15

Daily Sales $22,134

Average Sale $273

Close Ratio 50%

>>> 35%

>>> $350

>>> 20

Reasonable?

What would you DO?


Growth Strategy:

Increase Gross Margin from 30% to 35%

Increase Daily Walk-in Traffic from 15 to 20

Increase Average Sale from $273 to $350

Hint: Job Description Objective Above

Net Success Results?


How do you Grow?Biz Model Today +1 +2 +3 +4

Revenue $680K $819K $1.09M $1.09M $1.41M

Burn Rate $15,289 $15,289 $18,000 $18,000 $25,000

Break-even $53,410 $53,410 $57,410 $57,410 $70,410

Gross Margin 30% 30% 30% >35% 35%

Profit (year) $0.00 $54K $111.6K $166K 200K

KPI’s Today +1 +2 +3 +4

Traffic 15 15 >20 20 20

Daily Sales $2,048 $2,625 $3,500 $3,500 $4,550

Average Sale $273 >$350 $350 $350 $350

Close Ratio 50% 50% 50% 50% >65%


Fractional Improvements

Biz Model Before After

Revenue $680K $1.41M

Burn Rate $15,289 $25,000

Break-even $53,410 $70,410

Gross Margin 30% 35%

Profit (year) $0.00 200K

KPI’s Before After

Traffic 15 20

Daily Sales $2,048 $4,550

Average Sale $273 $350

Close Ratio 50% >65%

Daily Scorecard

Real Time


Without daily measurement...

Monday

Tuesd

ay

Wed

nesday

Thursd

ay

Friday

Saturd

ay $-

$1,000

$2,000

$3,000

$4,000

Daily Sales

SalesGoal

Axis Title

...it’s like driving a car using the rearview mirror!


Running my business like this...

...makes for a tough ride.Need to be looking forward!


Running my business like this...

...is open road.Need to be looking forward!


Real Time

Forward Looking DASHBOARD


DASHBOARD • Real-time data• Daily Improvements• Whole team can align• Grow your business• Helps you sleep at

night


Fractional Improvements



Burn Rate $15,289 $25,000

Break-even $53,410 $70,410

Gross Margin 30% 35%



Traffic 15 20



Close Ratio 50% >65%Monday

Wed

nesday

Friday

$- $1,000 $2,000 $3,000 $4,000

Daily Sales

SalesGoal

Axis Title


Service called DASHWORX



dashworx.avidworx.com

GPS: Goals + Performance = SuccessTrue Story....


DASHWORX first used by Chad Fos, Southern Tint•Wanted to give up•Pack it in!•I’m DONE!•With-in 90 Day•Turned his business around•With-in 6 months•Buying his building•NOW knows what to FOCUS ON


Working ON your business:– Budgeting Best Practice

• Review Financials 10th – 15th of the month• Have income statement to measure against

budget

– Know your Numbers• Model (burn rate, break even, gross margin)• Revenue, Costs, Profit• Lead (real time) indicators

– Traffic, Sales, Average Sale, Close Rate

• Get a DASHBOARD for your business


Review Financials 10th – 15th of the monthBudget vs. Actual



What gets measured, gets managed!



Guess what we will do? Then measure actual.Adjust next month goal, based on what we now know.



It takes 17-27 times to build a habit.It’s your money, no-one else is going to MANAGE IT

RepeatRepeatRepeat


What to FOCUS ON?

How much does it DRIVE Value?


Traffic: 15Sales:

$2,055 (per day)


Human ResourcesProcess• Recruitment• Hiring• Orientation• Performance Management

What are you looking for?“A” Players!

Human ResourcesStart with a.....Job Description– Create a Job Post– Interview and hire– Performance Manage

How many have them?

Human Resources

Job Description Recruitment Orientation PerformanceManagement

Human Resources


45-60mins

VisionMission

Core ValuesOur Way

Do it!

Human ResourcesJob Description Scorecard Structure:• Outcome

What is it that I am here to do?• Responsibilities

What am I responsible for?• Job Well Done

What does good performance look like?

Human ResourcesJob Well Done

What does good performance look like?

S.M.A.R.T.Specific, Measurable, Attainable, Realistic,

Timely

Know the rules, WIN the gameNo one comes to work

to fail!

Human ResourcesExample:

Telephone reception: answer the phone using standard script on third

ring, transfer or take message as required.

Know the rules, WIN the game

Specific, Measurable, Attainable, Realistic, Timely

Human ResourcesExample:

Order Desk: online order administrative processing

Good Performance Looks Like:– orders processed and shipped within 72hrs– client order status requests responded to with

one contact instance within 24hrs– orders are shipped 100% complete

Must be realistic!

S.M.A.R.T?

Specific, Measurable, Attainable, Realistic, Timely

Human ResourcesOutcome

Example:

Sales Person?

Outcome:

I am here to do what?



Burn Rate $15,289 $25,000

Break-even $53,410 $70,410

Gross Margin 30% >35%



Traffic 15 >20




Human ResourcesOutcome Example:

Sales Person?

Outcome: Increase gross

margin from 30% to 35%, avg. sale from $273 to $350, close

rate from 50% to 65%



Burn Rate $15,289 $25,000

Break-even $53,410 $70,410

Gross Margin 30% >35%



Traffic 15 >20


Average Sale $273 >$350



Human Resources


45-60mins

VisionMission

Core ValuesOur Way

Outcome

Responsible

Good Performance

Look Like

Insert JobDescription

Sell IT!!!!!

Pre-Screen

A-Players

Scorecard

Personality Testing – Call us

Human ResourcesHow to do Performance Management:• Copy the responsibilities onto a sheet• Put ___ or 10 beside each one• Ask team member to score themselves• You either agree or offer your score

and give corrective feedback to getting them on track

• Monthly or Quarterly


Human ResourcesPerformance Management Example:• Telephone reception: ____ of

10• Order Desk: ____ of 10• Customer Service: ____ of 10• Sales: ____ of 10


Budget Strategy


Budget

Measurement


KPI’s

Real Time!


Drive you business like you drive a car

Forward Looking DASHBOARD


DASHWORX


Booth #935

Questions?

Please Remember to Thank ourOwner Manager Track Sponsors:

business essentials budget, strategy & human resources

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