Monte Zwang - cloudfront.net
Transcription
Monte Zwang - cloudfront.net
7/3/2009 FINANCIAL PLANNING IN 2009 1/3 PLANNING, 1/3 REACTION, 1/3 PLANNING TO REACT. Monte Zwang WHAT HAPPENED? Our current economic situation is like tidal wave that has rocked us to our core. We have been given a challenging test, an opportunity to grow and navigate through uncharted territory. 1 7/3/2009 A LITTLE ECONOMIC HISTORY… 1797–1800; Recession, 1800–1807; No Recession, 1807–1814; Recession, 1814–1819; No Recession, 1819–1824; Recession, 1824-1937; No Recession, 1837–1843; Recession, 1843–1857; No Recession,,1857–1860; Recession, 1860– 1873; No Recession, 1873–1879; Recession, 1860–1873; No Recession, 1873–1896; Recession, 1896– 1929; No Recession, 1929-1939; Recession, 1939–1957; No Recession, 1957–1958; Recession,1958–1973; No Recession, 1973– 1975; Recession, 1975–1980; No Recession, 1980–1982; Recession, 1982–1990; No Recession 1990–1991; Recession, 1991–2001; No Recession. 2001–2003; Recession, 2003 – 2007; No Recession, 2007–present; Recession! REMEMBER THE BUSINESS PLAN ? 2 7/3/2009 Increased 337% Increased 159.5% Increased 100% GROWTH IN THE NUMBER OF SPAS AFFECTED REVENUE PER LOCATION Dropped from $1.04M to $847K (15.6%) Increased 82.3% from $60.69 to $110.66 3 7/3/2009 ISN’T THIS HOW IT FEELS? WHAT IS HAPPENING TODAY 4 7/3/2009 HOW ARE WE REACTING? REMEMBER THE BUSINESS PLAN ! 5 7/3/2009 MAINTAINING THE SANCTUARY WITHIN – KEEPING THE OUTSIDE WORLD OUT. It’s crazy outside. Our Guest’s financial lives are in turmoil The come to us for sanctuary Our spas are the line in the sand. Regardless of what is happening business-wise, Our doors are where the outside world stops. FINANCIAL 9-1-1 This market is unforgiving. You are operating without a safety net. Going forward without a budget is not going to provide the targets you need to operate. 6 7/3/2009 THE 6 NUMBERS YOU NEED TO KNOW 1. 2. 3. 4. 5. 6. Breakeven Sales Labor Cost Gross Profit Margin Overhead Expenses Net Profit Debt Service THE PIECES OF THE PUZZLE Net Profit 2,700 5% Indirect Cost 15,000 30% Other Direct Cost 10,500 21% Direct Labor 16,800 34% Retail Purchases 5,000 10% Direct Labor Retail Purchases Other Direct Cost Indirect Cost Net Profit 7 7/3/2009 BUDGET….. Identify Operational Issues Forecast Future Cash Needs Monitor and Adjust Your Plan In Real Time Evaluate Financial Options. Keeps You On Track Understand Where You Are Financially Look At All Options Honestly. Bring The Pieces Of The Puzzle Into Balance Adjust The Budget To The Reality Of Your Situation USE YOUR TOOLS YOUR POINT OF SALE SYSTEM….. Sales Planning Cash Control Daily Labor Cost Inventory Control How you did yesterday. 8 7/3/2009 9 7/3/2009 BREAKEVEN IS VITAL If you don’t know what it is, you can’t hit it GLOSSARY breakeven sales 1. minimum sales volume required (cash collected) every month to cover all direct costs, indirect costs and debt without experiencing a financial loss. 2. discussed in terms of number of treatments (services) required 3. no one is in business to breakeven, we are in business to exceed breakeven. 4. the lower your breakeven the longer you can weather this climate . 5. overhead expenses + debt service ÷ gross margin = breakeven 10 7/3/2009 DIRECT COSTS – LABOR COST What is your labor cost? Evaluate your compensation plan – It absolutely cannot exceed 42% of Service plus Product sales. Front Desk labor needs to be less than 10% of Service plus Product Sales. Are tools in place to monitor them? Daily labor reports from your POS System GLOSSARY direct costs - cost of sales 1. 2. 3. 4. costs that directly relate and fluctuate with sales largest category of expenses on your Income Statement. should be no more than 30 – 35% of Service plus Product Sales examples a. direct labor b. subcontractor (1099) labor c. front desk labor d. payroll taxes e. employee benefits f. back bar, professional product g. operating supplies h. inventory purchases 11 7/3/2009 GROSS MARGIN – PROFIT MARGIN Is there at least a 30% to 40% margin in your business? GLOSSARY gross margin on sales, gross profit margin 1. Service plus Product sales (or collections) (minus/ - ) direct costs 2. first indication of whether you are making money or not. 3. expressed as a percentage of Service plus Product Sales. 4. should be 30% to 40% of Service plus Product sales 5. must be adequate to pay overhead and debt service 12 7/3/2009 YOUR LEASE & LANDLORD The bubble has burst on commercial real estate. Market rate when you signed you lease is not market rate today. GLOSSARY indirect costs – overhead 1. costs that do not fluctuate with sales 2. occur every month 3. should not be more than 35% of Service plus Product Sales 4. examples a. rent b. utilities, telephone c. insurance d. office supplies e. repairs & maintenance f. advertising & promotion g. administrative salaries & payroll taxes h. professional fees 13 7/3/2009 PRE-EMPTIVE RE-NEGOTIATION Dealing With Debt Debt is… Accounts Payable, Notes, Loans, Credit Cards, Leases, Lines of Credit Evaluate Debt Separately from Business Operations. If you can’t afford it, don’t buy it. Any contract, lease, bank note, equipment lease and credit card payment can be re-negotiated Debt service should not exceed ½ of Net Profit (Working Capital Before Debt Service) W ORKING CAPITAL - AM I PROFITABLE? M ONEY IN: SALES (COLLECTIONS) (Minus) M ONEY OUT: DIRECT COSTS Equals GROSS M ARGIN (Minus) M ONEY OUT: INDIRECT COST Equals WORKING CAPITAL (BEFORE DEBT SERVICE) (NET PROFIT , FEASIBILITY) WORKING CAPITAL (B EFORE DEBT SERVICE) Plus B EGINNING CASH POSITION - (TOTAL OF ALL A CCOUNTS) (Minus) MONEY OUT: DEBT S ERVICE Equals WORKING CAPITAL AFTER DEBT SERVICE (THIS IS WHAT YOU GET TO KEEP.) 14 7/3/2009 Blue sheet “The rumors of my death have been greatly exaggerated “ – Mark Twain 15 7/3/2009 RECALIBRATION It's all about balance. TOUGH LOVE: THE DOLLAR HEART 16 7/3/2009 INVOLVE YOUR TEAM TIMELY REVIEWS DAILY MEETINGS AFFORDABLE, LUXURY 17 7/3/2009 YOUR EXIT IS PART OF PLANNING YOU BOUGHT THE TICKET . . . 18 7/3/2009 Throughout the conference, I am available to meet with you, to work on your business and answer any questions. MONTE ZWANG 206.963.1017 Wellness Capital.com Monte@WellnessCapital.com 19
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