{"id":948,"date":"2021-05-04T20:00:35","date_gmt":"2021-05-04T20:00:35","guid":{"rendered":"https:\/\/www.b2bcfo.com\/rick-perrin\/?p=948"},"modified":"2023-04-18T21:57:28","modified_gmt":"2023-04-18T21:57:28","slug":"financial-strategies-for-2021","status":"publish","type":"post","link":"https:\/\/www.b2bcfo.com\/rick-perrin\/financial-strategies-for-2021\/","title":{"rendered":"Financial Strategies For 2021 Profitability"},"content":{"rendered":"

A CALL TO ACTION<\/p>\n

The Time to Act is Now!<\/strong><\/p>\n

Many good solid firms are struggling with the economy and post-COVID-19 effects and are waiting things out. They have cut back costs as far as possible but are at a loss on how to increase sales and profits.\u00a0 Here are steps you should be taking now to REV up Sales and Profitability:<\/p>\n

    \n
  1. First, understand your real profitability drivers.\u00a0 Do you really understand why you made (or lost) $X.xx last month?\u00a0 It is a combination of revenue levels, fixed and variable expenses, and some low and high margin customers and jobs.\u00a0 If all you have to explain your profitability is a long P&L listing of revenue and expense items, you don’t really understand your profitability and can’t take necessary actions to drive improvement.\u00a0 You must know your margins by individual product (or service), product line and customer, and understand your other profit drivers.<\/li>\n
  2. Re-calculate all of your overhead rates. In the past year, you have undoubtedly trimmed many costs and your other input costs have changed.\u00a0 Your overhead base (machine hours, consulting hours, service hours, etc.) have also probably dropped.\u00a0 Lower costs mean lower overhead rates.\u00a0 Lower base hours mean higher overhead rates.\u00a0 If you haven’t developed overhead rates to really understand the true cost of individual products or services, now is the time.\u00a0 You might be surprised that you can actually sell at lower prices now and pick up sales volume.\u00a0 Or, you could find that you are losing money with each sale because your costs have not come down in proportion to your “production hours”. Note this applies to service firms as well as manufacturers.\u00a0 (Service firms:\u00a0 do you know your hourly cost rates for direct, administrative, and overhead costs?).<\/li>\n
  3. Negotiate hard with vendors and show them how it can actually be good for them.\u00a0 If you can lower your costs and drive more sales, both you and your vendors will benefit.\u00a0 If your vendor won’t play ball, others certainly may.<\/li>\n
  4. Review your quoting model.\u00a0 Does it include your new, lower overhead rates and purchase costs?\u00a0 Does it show you your true cost of delivering your product or service?\u00a0 Does it show you the true effect on your company of winning the business?\u00a0 Your quoting model should break out incremental costs and show you the cash affect and overhead coverage and profit affect of producing or servicing the quoted business.<\/li>\n
  5. Use your new lower cost structure and quoting model to develop pricing strategies to drive new sales, and to evaluate your current business.<\/span><\/li>\n
  6. Analyze your customers using the above tools and an 80\/20 analysis.\u00a0 You may find you can reduce more costs by ridding customers that use many resources but don’t contribute much.<\/li>\n
  7. Develop detailed action plans to improve each of your main profitability drivers.\u00a0 Assign an action oriented leader to head a team to analyze and improve each profitability driver and write down the specific goals, tasks, due dates and follow-up dates required to ensure each profitability driver is improved.\u00a0 Set up a KPI (Key Performance Indicator) for each of your profitability drivers and chart its historical values vs. its new target values.<\/li>\n<\/ol>\n

    It’s time for a CALL TO ACTION!\u00a0 Instead of waiting it out, let’s get going now.\u00a0 If you don’t have these tools in place, let me show you how to quickly develop them.<\/p>\n","protected":false},"excerpt":{"rendered":"

    A CALL TO ACTION The Time to Act is Now! Many good solid firms are struggling with the economy and post-COVID-19 effects and are waiting things out. They have cut back costs as far as possible but are at a loss on how to increase sales and profits.\u00a0 Here are steps you should be taking…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[1],"tags":[48,47],"class_list":["post-948","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-pricing","tag-profitabiliy"],"acf":[],"yoast_head":"\nFinancial Strategies For 2021 Profitability - Rick Perrin<\/title>\n<meta name=\"description\" content=\"It's time for a CALL TO ACTION!\u00a0 Instead of waiting it out, let's get going now.\u00a0 If you don't have these tools in place, let me show you how to quickly develop them.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.b2bcfo.com\/rick-perrin\/financial-strategies-for-2021\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Financial Strategies For 2021 Profitability - 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