Copyright 2014, Morgan Marketing Solutions, Inc. Make better business decisions – gain peace of mind Richard P. Morgan CMC, FIMC Certified Management Consultant Morgan Marketing Solutions, Inc.

Copyright 2014, Morgan Marketing Solutions, Inc. You Need Balance “A business that is seriously out of balance cannot sustain profits, growth, or customer satisfaction in the long-term.” Richard P. Morgan CMC, FIMC in Marketing Facets

Copyright 2014, Morgan Marketing Solutions, Inc. What to Balance Balance Functions Marketing & Sales Finance & Administration Operations & Distribution Balance Resources Physical Resources Financial Resources Human Resources

Copyright 2014, Morgan Marketing Solutions, Inc. Some Signs of Balance Great reputation Sales growth Cash flow Productive culture – low employee turnover Receivables & Payables current Employee benefits, sponsorships Operating profits & owner peace of mind!

Copyright 2014, Morgan Marketing Solutions, Inc. Examples of Balance Lost Lack of working capital –Loss of supplier discounts - lower margin –Low marketing & employee investments Physical capabilities too small –Client service complaints, quality problems, lost customers Not enough capable employees –Client service complaints, quality problems, lost business Over-invested in facilities or employees –Greater interest & depreciation or high payroll expense %

Copyright 2014, Morgan Marketing Solutions, Inc. How to Gain & Maintain Balance Keep your eye on the ball! Develop a real operational business plan. –Consider outside facilitation of the planning & implementation process. Create a useful financial model –analyze results & make better future business decisions.

Copyright 2014, Morgan Marketing Solutions, Inc. Keep Your Eye on the Ball! Monthly management reviews – grueling –Harvard MBA - years of experience. Remained quiet until the end –Short, pithy comments. “Boys, you let events distract you. You took your eye off the ball. Focus on what’s important. Better results will follow.”

Copyright 2014, Morgan Marketing Solutions, Inc. Develop a Business Plan Operational business action plan You and your team must build the plan Get expert help the first time –All hear the same things. All contribute. Bond. –Action plans – dates, coordinators Periodic implementation reviews –Responsibility, accountability

Copyright 2014, Morgan Marketing Solutions, Inc. Financial Analysis is Key Maintain current operating statements! Break out variable costs vs. fixed expenses Use statements as management tools Break-even analysis – decision-making tool –Test impact before making major decisions

Copyright 2014, Morgan Marketing Solutions, Inc. Break-even Model Three factors determine break-even –Level of sales revenue –Variable cost to you of products & services you sell –Fixed expenses of doing business The three factors interact Left alone, all three factors go wrong! –Customers go; suppliers raise prices; expenses increase You must cope with constant change –Actively monitor and manage the factors!

Copyright 2014, Morgan Marketing Solutions, Inc. Break-even Model - Budget Case A: Budget Careful rearrangement of income statement Sales revenues $4,016,250 Cost of materials sold $1,497,600 Margin on materials %62.1% Other variable costs $ (labor, commissions) $848,055 Total variable costs $ $2,345,655 True contribution margin factor (margin/sales)41.6% Fixed expenses $1,173,608 Break-even point $ (fixed/margin factor)$2,821,452 Sales +/- break-even $ (sales– b-e point)$1,194,798 Operating profit (Sales +/- b-e X mar. factor)$ 496,987 Percentage profit/loss (operating profit/sales)12.37%

Break-even Chart Copyright 2014, Morgan Marketing Solutions, Inc. Revenue $4,016,250 Variable Costs $2,345,655 PROFIT Break-even $2,821,452 Budget Case A

Copyright 2014, Morgan Marketing Solutions, Inc. Break-even Model - Decision Case B – hire another salesperson? Sales revenue w/gain expected Cost of added materials sold % margin New total variable costs $ (materials + other variable costs) New contribution margin & margin factor (margin/revenues) New fixed expenses $ (added salary, taxes, T&E, benefits) New break-even point $ (fixed/margin factor) Sales +/- break-even $ (sales revenue – break even) New operating profit/loss (Sales +/- break-even X margin factor) New percentage profit/loss (operating profit/sales revenue) Break-even sales level for new hire = $154,000

Copyright 2014, Morgan Marketing Solutions, Inc. The Other Balancing Act Personal Business Family Can you have a life without sacrificing your business? Can you have a successful business still have a life?

Copyright 2014, Morgan Marketing Solutions, Inc. Where are you NOW? Can you truly make these statements? “I’ve got up-to-date business and personal plans based on specific goals.” “I’ve balanced my business, personal, and family life.” “I’m taking care of my family, my employees and myself.” “I’ve got all my bases and risks covered.” “I’m gaining peace-of-mind & I’m having fun!”

Copyright 2014, Morgan Marketing Solutions, Inc. Contact Information Richard P. Morgan CMC, FIMC Morgan Marketing Solutions, Inc. Two Galleria Tower, Suite Noel Rd, Dallas, TX telephone “Accelerating profitable growth by enhancing a team’s ability to create & deploy right actions right now!”