infocom webinar: healthy companies

Signs of Healthy Company:Time for a Health Check!

Frank Coker, MBA, CMCCEOCoreConnex, Inc.www.coreconnex.comfrank@coreconnex.com425-454-5006

Tom Stimson, MBA, CTSCEOStimson Grouphttp://trstimson.com/tom@trstimson.com214-553-7077

AgendaSigns of Healthy Company

• Industry highlights• Basics• Scenarios• Importance of BI• Analytics with BI• Tips

Industry Numbers

• Sales and GM looking great• What’s happening to cash?

LOB Mix Changing

• Integration is steadily gaining• Major drop in Product Sales

Basics – Info Spectrum

How am I doing:• Now?• Trends – historical?• Trends – future?• Actual / goals?• Actual / benchmarks?• Compared to other

similar industries?

EASY(low value)

HARD(high value)

Why trend analysis?

• Trends show direction• Trends are a strong indication of future

direction• Trends are easy to compare among

peers• Combining multiple trend lines shows

where underlying problems lie – can’t be seen in standard financial data

Performance Analysis

Trends

Goals Benchmarks

Ratios

Question

• Are rising revenues always a sign of good health? yes/no

• Are falling revenues a sign of poor health? yes/no

• When can falling revenues be healthy?a. When gross margin is falling faster?

b. When cash is falling faster?

c. When expenses are falling faster?

Trends – Revenue/Expense

Revenue

Expense

Unhealthy

Time

$

Revenue

Expense

Time

$

Revenue

Expense

Time

$

Healthy

Revenue

Expense

Time

$

Revenue

Expense

Time

$

?? ??

Magic of Trend Lines

• Shows direction over time• Smooths out ups and downs• Trend slopes are comparable• Long-term + Short-term = real story

Trends – Time Adjusted

Long-term

Short-term

Unhealthy

Time

$

Healthy

$

Time

$

Revenue Growth

Long-term

Short-term

Long-term

Short-term

Time

$ $

Time

$

Long-term

Short-term

Future Trends

Future Trends

Trends - Benchmarks

Revenue

Industry Benchmark

Unhealthy

Time

$

Healthy

Revenue

Time

$Industry Benchmark

Trends – Goals, Benchmarks

Trends – Revenue/Cash

Revenue

Cash

Unhealthy

Time

$

Revenue

Cash

Time

$

Healthy

Revenue

Cash

Time

$

Revenue

Cash

Time

$

Trends – Goals, Benchmarks

Trends – COGS/Overheads

RevenueCOGS

Unhealthy

Time

$

Healthy

$

Overheads

RevenueCOGS

Time

$

Overheads

Revenue

COGS

Time

$

Overheads

Trends - Variability

Revenue

Unhealthy

Time

$

Healthy

Revenue

Time

$

Trends – Goals, Benchmarks

Benchmarks

What we see financially is that…• Business owners don’t know when they

are off track• Opportunities go unnoticed• Markets fluctuate – its hard to ride a

wave when you aren’t looking

Why is financial analysis more important now?

• Technology costs and profits decreasing• Technology margins are smaller• Growing demand for products and services• Economic squeeze making buyers more cost

conscious• Workforce expectations/productivity gap• Old business processes no longer apply• Industry consolidation will favor the fittest

New Generation Analysis

Combines data from multiple sources– Internal financial data– Internal operations metrics– External market data– External market benchmarks

Result: Business Intelligence

What are your numbers telling you about your biz?

• Too fast when margins are shrinking• Too slow when not keeping pace with

markets• Fat when there is no leverage • Vulnerable when revenues are erratic• Many other important messages….

Business Intelligence

Internal Financial Data and Operating Metrics• For each “industry standard” LOB• Combined with goals• Evaluated monthly• Integrated into management process

External Market Data and Benchmarks• Updated monthly and quarterly• Integrated into analytical reporting

External BI Problems(from most common sources)

• Survey based – not accurate• Out of date – data gathered for past year• Does not integrate financial and operating data• Not granular – can’t drill down by business

characteristics• Not dynamic – usually not available monthly or

quarterly

The “usual” problems… But InfoComm is Changing all that!

Poll – questions

1. Does your team get information on financial performance?

2. Do they know your financial priorities?

3. Do they help find solutions to financial problems?

The best progress occurs when the whole team is on the same page!

Let the whole team see the same picture!

Getting your Team on the Same Page

https://infocomm.corelytics.com

The Team Process

• Need to do it every month• Minimize the time (30 min monthly)• Focus on “3 big priorities” per month• Get everyone involved

– On the same page– Finding solutions– Producing results

Life on an island can be limited!

Free Financial Health Check

Your Company, Inc.

https://healthcheck.corelytics.com/pub/sign_up.aspx

For More Informationhttps://infocomm.corelytics.com

Thank You!