Module 4 Lesson 3 Your Instant Assessment Instant Assessment - - PowerPoint PPT Presentation
Module 4 Lesson 3 Your Instant Assessment Instant Assessment Actual Actual % PF% PF$ (Bleed) (Fix) Top Line Revenue $548,303 Materials & Subcontractors $147,545 Real Revenue $400,758 100% 100% Profit $0 0% 10% $40,076
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Your Instant Assessment
Instant Assessment
Actual Actual % PF% PF$ (Bleed) (Fix) Top Line Revenue $548,303 Materials & Subcontractors $147,545 Real Revenue $400,758 100% 100% Profit $0 0% 10% $40,076
Owner's Pay $133,799 33% 35% $140,265
Tax $0 0% 15% $60,114
Operating Expenses $263,894 66% 40% $160,303 $103,591DECREASE
More than 80% have this action item
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Two Types of Expenses Just like not all debt is created equal, not all expenses are created equal.
Expenses that change or vary based on how much
more classes you have the higher your coaches expense
Variable
Expenses that are the same amount regardless of income or
Fixed
Expenses that allow you to produce value i.e. Box Programming, Mentors, Online Training
Productive
Expenses that don’t add to your ability to produce value. i.e. Eating Out
Not Productive
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Productive Expenses
Productive Expenses
Generates Immediate Income Serves Clients Supports Systems that Serve Clients Saves Time (If you can afford to leverage money for time) Anything Absolutely Necessary to Keep the Business Open
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Analyze Expenses
The Magic Process
Gather Bank and Credit Card Statements for Last 12 Months
Draw a Box Around Any Labor Costs
Salaries, Commissions, Bonuses, Payments to Coaches, DO NOT include payments to owners
Highlight All Productive Expenses
Refer to Previous Slide, but basically if it generates immediate revenue
necessary to keep the business open
Circle Repeating Expenses that will Continue
Monthly, Quarterly, Annually. *some expenses will be circled, and highlighted, and boxed
Add Up All Highlighted, Boxed, and Circled Expenses
Then divide that number by 12. This is the amount you decided is your monthly nut. How does that compare to the instant assessment?
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Still Analyzing Expenses
Look to Cut Down or Eliminate Completely any Commissions and Bonuses
Stop All Automatic Withdrawals from Your Bank Account
Except for the ones you highlighted or marked as keepers
Call Credit Card Company and Reissue a New Card with a New Number
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Analyzing Labor Expenses
7 Steps to Reduce Labor Costs
If you have to cut expenses, you can’t afford to have any team members that aren’t “A” players.
Identify any that aren’t “A” players
If you are overstaffed, then means you are the most underused employee
Re-evaluate Your Involvement
Is each role mandatory for operations to continue (not the person, but the role)
Evaluate each Role
Which roles must stay in house no matter what, which roles could be outsourced, and which ones can your box survive without
In-house or Outsource
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Still Analyzing Labor Expenses
What roles can and should you take on
Be Involved
Starting with your best team members, which remaining roles can they cover
Place “A” Players
Don’t do pay cuts. Layoffs are better. Then tell the remaining team what you have done and why
Plan the Layoffs
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Cutting Expenses
Simple Questions that Need to Be Asked
Is there another way to achieve the same
spending money? Is there another way to get the same result by spending less money? Are you getting value from the payment? Does the expense serve your top clients or top services?
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Still Analyzing Expenses
Look to Cut Down or Eliminate Completely any Commissions and Bonuses
Stop All Automatic Withdrawals from Your Bank Account
Except for the ones you highlighted or marked as keepers
Call Credit Card Company and Reissue a New Card with a New Number
Go Through All Circled Expenses and See if You Can Get Rid
Renegotiate Everything Else
*Start with Smallest
Go Through All Other Expenses that Haven’t Been Marked at All and Cut Them