is the result of managing an organization from a financial
perspective. This view is based on clarity with respect
and service profitability
and Service Profitability There are two aspects to assessing
profitability of products and services. First, determining
the baseline direct and indirect costs from a life cycle
perspective helps to identify ways that the labor, material
and other costs can be reduced. Second, examining the profitability
of products and services relative to one another establishes
the contributions of individual offerings to overall profitability.
Profitability Not all sales are good sales. Profitable
revenues come from "A" customers who accept products
and services that meet or surpass the mutually determined
quality, that understand the relationship between quality
and price (and don't nickel and dime), that pay on time,
that communicate effectively, and that become walking testimonials
to our businesses. Focused marketing [Link to growing revenues]
and effective controls [Link to controlling projects] enable
an organizational focus on profitable customers.
Control In controlling expenses our clients focus on two
areas: limiting the internal cost of production of our
goods and services while maintaining quality; and ensuring
that operating costs are kept to a minimum.
Forecasting There are several different techniques for
projecting sales: Historic-based extrapolations, customer-based
projections, sales force forecasts, regression analyses,
and expected values. Different techniques are suited to
differing situations. The value of sales forecasts is that
it enables various futures (scenarios) to be characterized
and planned for.
Analysis Financial metrics are one part of measuring
organizational progress [Link to measuring progress]. Effective
analyses start with selecting the appropriate set of financial
reports and ratios to report on. The value of the analysis
comes from understanding the data relative to past, forecasted
and industry numbers and making choices about how to change
the values of the indicators.
Needs The sales forecasts, scenario development and
cash flow forecasts help define whether the organization
has sufficient capital to accommodate sales or whether outside
funding is needed. Based on a determination of capital needs,
funding sources can be identified and suitable presentation
documents, such as Business Plans, can be prepared.
us if you need assistance in developing and/or implementing
your financial plan.