your dealership’s furniture profitability metrics jim heilborn jim heilborn associates
TRANSCRIPT
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
JIM HEILBORN
JIM HEILBORN ASSOCIATES
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• Standard measurements • Current Ratio – Current assets/current liabilities=current ratio• Quick Ratio – (Current assets-inventory)/current liabilities=quick ratio• Gross Profit – Revenues – cost of goods= gross profit• Gross Margin – Net sales – cost of goods sold=gross margin percentage• Net Operating Expense – Gross margin – SG&A = net operating profit• Net Profit – (Net operating profit+ income) – (other expenses + taxes) =
net profit
Gross profit ratio, Pretax profit
ratio, Sales-to assets ratio, etc.
etc. All important…but............
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
THE KEY COMPONENTS
SALESADMINISTRATION
OPERATIONSFINANCE
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KNOW YOUR NUMBER 1 KEY
INDICATOR• THE RESTAURANT
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
LEADING INDICATORS VS.
TRAILING INDICATORS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KEY COMPONENT
SALES
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• Value -
What customers and investors are willing to pay for, that employees are willing and able to provide. In a public, for-profit enterprise, sustainable value requires all three groups. Value must be worthy to those paying and those providing or it will not endure.
Mickey Connolly and Richard Rianoshek, Ph.D.
The Communications Catalyst
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• Every product or service you can provide is one less reason for your customers to talk to your competitors.
• Every product or service you provide is one more reason for your competitor’s customers to talk to you.
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
Customer Name Customer Expectation
Score
1 - 5
Comments
Sales
Product & Design
Order Administration
Associated Services
Delivery & Installation
Customer Service
1= Low 5 = High
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• KEY INDICATORS SALES• SALES ACTIVITY – SEE CHART• BID LISTS
– NUMBER OF BIDS PLACED
– PERCENTAGE OF SUCCESS ON BIDS
• DOLLAR VOLUME OF QUOTES• NUMBER OF ACTIVE CUSTOMERS• NUMBER OF NEW ACCOUNTS• NUMBER OF NEW ORDERS• AVERAGE GROSS MARGIN/PROFIT• GROSS PROFIT PER DAY• DOLLARS PER REP• BACKLOG• SALES TO PLAN
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• SALES ACTIVITY
GOAL TASK/OBJECTIVE TIME FRAME
Average monthly gross
sales = $
Average daily sales = $ Within next ___months
Average monthly GP
dollars = $
$___________ Within next ___months
Number of calls needed per day =
Number of appointments needed per day =
Number of orders needed per day to equal daily average of $________=
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
GOAL TASK/OBJECTIVE TIME FRAME
Number of orders needed per day to equal daily average of $__ GP dollars =
$____________
Ratio of appointments to orders =
____ appointments to ____orders
Average dollars per sale = $____________
Average GP dollars per sale =
$____________
Average Number of calls to make per week =
____________
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
GOAL TASK/OBJECTIVE TIME FRAME
Average Number of calls to make in next 30 days = ___________
30 DAYS
Average Number of calls to make in next 60 days = ___________
60 DAYS
Average Number of calls to make in next 90 days = ___________
90 DAYS
Number of new accounts to open in next 30 days =
___________
30 DAYS
Number of new accounts to open in next 60 days = ___________
60 DAYS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
GOAL TASK/OBJECTIVE TIME FRAME
Number of new accounts to
open in next 90 days = _____________
90 DAYS
Sales Mix
Number of orders/dollars generated from new Accounts per month =
_____/________
Number of orders/dollars generated from established ongoing accounts =
_____/________
Review of Top Ten & rolling forecast to identify and focus on opportunities and activity
On a weekly and monthly basis
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
GOAL TASK/OBJECTIVE TIME FRAME
Product Mix
Number of orders/dollars generated with primary vendors per month =
$_____________
Casegoods dollars
$_____________
Seating dollars
$_____________
Systems dollars
$_____________
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
FORECASTING -
A CRITICAL METRIC
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
TARGETING PLANName Date
Top Ten Hot List/Close/Dollars Top Ten Target List1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. Lead Sources
Prospecting Plan30 Day Booking Forecast - 30 Day Billing Forecast -
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
ACCOUNT VENDOR BOOKING MONTH
$’S BOOKED GP% / $’S BILLING
MONTH $’S BILLED
GP% / $’S ABC, Inc. United 1. Nov. 40,000 34/13600 1. Nov. *20,000 34/6800
Hon 2. Dec. 15,000 28/4200 2. Dec. 40,000 34/13600
Seatability 3. Jan. 6,000 35/2100 3. Jan. 15,000 28/4200
Cowabunga United 1. Nov. 32,000 31/9920 1. Nov. *9,000 35/3150
Global 2. Dec. 27,000 33/8910 2. Dec. 32,000 31/9920
Kimball 3. Jan. 19,000 25/4750 3. Jan. 27,000 33/8910
1=CURRENT MONTH
2=NEXT MONTH
3=MONTHAFTER
NEXT
$ TOTALS:
1. 72000
2. 42000
3. 25000
$ TOTALS:
1. 23520
2. 13110
3. 6850
$ TOTALS:
1. 29000
2. 32000
3. 42000
$ TOTALS:
1. 9950
2. 23520
3. 13110
* Represents booking from previous forecast .
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
STRATEGIC PARTNER OR ABUSIVE MATE?
SELECTING YOUR PRIMARY
VENDORS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
PRIMARYSECONDARY
TERTIARY
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KEY COMPONENT
ADMINISTRATION
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• KEY INDICATORS ORDER PROCESSING– TIMELINESS– ACCURACY– INTERNAL PROCESSING COSTS– ERROR RATE– COMMUNICATION
INTERNAL
EXTERNAL
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• KEY INDICATORS HUMAN RESOURCES– Productivity– Contribution– Participation– Dependability
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KEY COMPONENT
OPERATIONS
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KEY INDICATORS OPERATIONS
• SELLING SERVICE AS A PERCENTAGE OF YOUR BUSINESS
• PROFITABILITY OF SERVICE OFFERINGS• DELIVERY TIME AND COMPLETION• INSTALLATION COMPLETION• PUNCHLIST• SERVICE CALLS – COMPLETING ON THE FIRST CALL• FINAL SIGN OFF
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
Meeting the test• Determine the need for the product or service
Is it a long-term sustainable need?
• The cost of providing the product or service
• Level of service you and your company can provide
• “Implementability”
• Impact on your current business
• R.O.I – Return on Investment
• Measuring for results
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
The Cost of ServiceLabor - Wages, Taxes, Benefits
Space – Taxes, Utilities, Rent/Mortgage,
Insurance, Office Equipment & Supplies,
Maintenance
Equipment – Tools, Machines, Maintenance,
Supplies, Vehicles, Insurance, Phones
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KEY COMPONENT
FINANCE
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
KEY INDICATORS FINANCE/ACCOUNTING• ACCOUNTS RECEIVABLE
– 75/10/10/5 RULE
– DSO
• ACCOUNTS PAYABLE– DISCOUNTS TAKEN/OFFERED
– LINES OF CREDIT AND LINE DRAWN
– VENDOR RELATIONSHIP
• CASH FLOW– WORKING CAPITAL - DOLLARS AND RATIOS
• BANKING RELATIONSHIPS• BOOKED TO BILL RATIO
YOUR DEALERSHIP’S FURNITURE PROFITABILITY METRICS
• BENCHMARKING– OFDA– BIFMA– MANUFACTURERS– INDUSTRY ORGANIZATIONS