New Chart of Accounts Video

I am excited about my new, second video titled, "Chart of Accounts." I just viewed a rough cut and with only minor changes it is ready to post. I am hoping that it will be available before the end of this week.

If you haven't had a chance to view my first video on "Sales Per Employee" I encourage you to visit my website at: www.quickconsultant.com.

I have another video in the works that deals with "Key Financial Ratios," and a fourth video titled simply "Cash." This video takes a somewhat light-hearted, humorous approach at how a stack of $1,000 dollar bills is distributed to pay all the bills in a "profit leader" firm versus how these bills are paid by a "profit laggard" firm.

New Video on SPE

Good news, at least for me! I just finished the first of what I hope to be a series of short videos on specific topics of interest in the quick printing industry.

The first video is a bit longer than I had planned, but it deals with Sales Per Employee - what it is and how to improve it. Right now, it is available on my website at: www.quickconsultant.com.

I haven't figured out a way for it to just show up here. Sorry! Feedback is always welcome. I intend to shorten the intro part, or possibly eliminate it completely on future videos. Let me know what you think. Thanks.

New SPE Analysis is Revealing

Recently, we conducted a special analysis of financial data taken from the 2008 Operating Ratio Study and the results were quite revealing. First, we extracted all companies with sales between $700,000 and $3 million. Next, we sorted the data (representing approximately 209 companies)and then sorted the companies by their reported SPE. We then broke our sample data into four evenly divided quartiles and then calculated the corresponding owner's compensation for each of these quartiles.

Below is what we found:



The first line in each breakout represents averages while the second line shows medians. Note that the companies in the top quartile in terms of Sales per Employee(SPE) are achieving an SPE almost 70% greater than those in the bottom quartile. Even more relevant, however, is that the average owner's compensation of those at the top is almost twice that of those in the bottom quartile - 16% vs. 8.6%!

Causes of low SPEs are numerous, but essentially it comes down to the ability of one company to produce $1.5 million in sales with approximately 9 employees while a company with similar sales (and similar breakout of sales) could find itself employing 15-16 employees in order to produce the same $$$ volume and mix of work!

Some questions you might want to ask yourself are as follows:

Is your current equipment mix the best that it can be in terms of overall productivity, or have you been rationalizing that the "older stuff is still good and we still produce a lot of work with it."

Do you really need a full-time book-keeper, or that second DTP specialist?

Are you creating jobs for family or relatives that otherwise would not exist?

Are you making any attempt to track sales produced in key departments such as DTP or your pressroom? Without some formal tracking method for measuring output in these departments, the appearance of folks just looking busy or even harried can be very deceptive.

Of course, a company can have a very productive team of employees in place, but if the company fails to properly charge for this productivity it will definitely show up in lower SPEs as well as lower owner comp numbers!

Call me if you have any questions.

P.S. You can subscribe to this blog and read new entries as they are posted by subscribing using the button at the bottom right hand corner of this blog.