1. Herradura, Costa Rica WELCOMES YOU TO

2. Welcome Manage by numbers

3. The 5 Laws That determine all business outcomes 1.The Law of Vision – Vision allows companies to tap into direction and depth 2.The Law of Frequency – Fail Faster. Course correct frequently. You cannot manage or control that which you cannot or do not measure 3.The Law of Perception– Reality is not reality, perception is reality 4.The Law of Accountability – A culture of owning results will adapt faster and be more profitable than a company that blames anything external to them. 5.The Law of Leadership – Aggregating ideas and insights and honoring organizational diversity trumps individual brilliance every time.

4. Purpose Learn how to better use numbers and KPI’s to manage your business and achieve better business results.

5. Objective of Managing by the Numbers 1.Increase the speed in which critical decisions are made in the business. 2.Increase the accuracy of decisions. 3.Learn to use the numbers as a primary measurement for organizational accountability. 4.Learn where to focus management attention.

6. The Language of Numbers Universal Language of Comparison and Relativity Percentages give a more complete picture Trends tell the best tale

7. Manifest Management

8. 7 Rules for Increasing Organizational and Individual Frequency 1.Establish measurements in advance. 2.Eliminate sacred cows. 3.Test unproven theories. 4.Measure results frequently and course correct as needed. 5.Reward creativity and contributions 6.Harness the IQ and power of others. 7.Don’t be afraid to test new ideas. (Fail Faster)

9. ACME Widgets, Corp. Financial Statement Sales$950,000 Cost of Goods Materials$300,000 Labor$250,000 Freight In $40,000 Total COGS$590,000 Gross Profit$360,000 Indirect Expenses Sales and Mktg $95,000 Maint/Repair $35,000 Total Indirect Exp.$130,000 Fixed Expenses Rent $36,000 Owners Salaries $40,000 Admin Wages $26,000 Depreciation $18,000 Office Expenses $14,000 Misc Costs $9,000 Total Fixed Exp$143,000 Net Profit $87,000 $996,000 $327,000 $245,000 $42,000 $614,000 $382,000 $105,000 $22,000 $127,000 $35,000 $45,000 $24,000 $14,000 $16,000 $8,000 $142,000 $113,000 Last Year 100% 31.6% 26.3% 4.2% 62.1% 37.9% 10.0% 3.7% 13.7% 3.8% 4.2% 2.7% 1.9% 1.5% 0.9% 15.0% 9.1% 100% 32.8% 24.6% 4.2% 61.6% 38.4% 10.5% 2.2% 12.7% 3.5% 4.5% 2.4% 1.4% 1.6% 0.8% 14.2% 11.3% Budget %Budget $ $1,100,000 31.0%$294,500 24.0%$228,000 4.2% $39,900 59.2%$562,400 40.8%$387,600 11.0%$104,500 2.5% $23,750 13.5%$128,250 $36,000 $45,000 $25,000 $18,000 $10,000 $5,000 12.8%$141,000 14.5%$159,500

10. Flash Reports Key indicators on a daily or weekly basis Measure across major business areas (financial-p&l and balance sheet, marketing, sales, production, quality) Micro problems vs Macro problems Revolutionary vs Evolutionary Threads

11. Fair Market Value – factor in obsolescence, Uncollectability, depreciation Multiple of earnings – Stability, recurrence, marketing engine, operations without owner, management team. Usually 2 to 6 times earnings. Kicker on earnings.

12. Industry KPI’s 10 companies participated.

13. Industry KPI’s Expenses

14. Balance Sheets

15. Org/Marketing Numbers

16. Revenue by Profit Center

17. Revenues and Costs By Sector

18. Sales Numbers

19. Maintenance Contracts

20. Service Rates

21. Marketing Cost/Lead

22. Owner’s Duties