In 2018, all for-profit businesses will receive a significant capital infusion from the U.S. Government. Will you take advantage of these additional resources to expand your company and increase its value?
Important Questions to Consider:

1. Does your company exhibit red flags that indicate that there are operating/financial barriers restricting growth and profitability improvement in the company?
2. Can your company effectively absorb, organize and manage a significant increase in personnel?
3. Does your company perform an in-depth analysis of the impact on future net income resulting from major changes in strategic actions implemented by the company?
4. Does your company analyze net income by product line and/or service category?

Many businesses put a major effort on growth by focusing on increasing their gross revenue; expecting that any increase will proportionately be added to the net income. In many cases net income % does not grow and sometimes decreases. Projections are usually made as to future gross revenues based on a targeted % rate of growth and the net income is projected based on the historical % rates achieved to date. Sometimes those historical % rates erode and negatively impact the future net income even in a growth period. Businesses (which may be fixated on top-line growth) are sometimes not aware of the changes. Only when sales decline, do businesses become aware of a problem.
Profitability Improvement Challenges
When a company is going through a transition in operations (new product focus, implementation of new technology, new marketing strategy, new distribution channels & methods, changes in strategic direction, etc.) it is imperative that all changes are evaluated as to the resulting impact on the synergism of the entire business enterprise. This impact should be measured and projected into the future for Net Income. In many companies there is not an awareness that profitability improvement is being restricted by internal barriers in the company.
In domestic companies the following are some “red flag” symptoms that may indicate restrictions on net income growth.

1. Gross revenue has grown steadily meeting both $ and % growth goals but gross profit % has declined
2. Gross revenue has grown steadily but net income % is flat or decreased
3. S G & A costs have increased without any major change in products or business operations.

In companies that have international operations “red flag” symptoms may include the following:    

1. Loss of market share in the foreign country when the social and economic environment or other external factors have remained the same
2. Net income % on a local country currency basis is flat or declining
3. Incurring difficulty in negotiating local management employee contracts   
4. Local customers’ accounts receivable days outstanding is increasing (with no major change in local economic conditions)

If your company is implementing, or contemplating, major changes to products, marketing, distribution channels, sales incentives, etc., my suggestion is to perform an in-depth analysis of the future impact on not only gross revenues but also on net income, especially focusing on the potential erosion to the net income % resulting from strategic actions.
Use your capital infusion wisely!!
For further information please go to the Profitability Improvement Tab under SERVICES.
Bob Rivero - CEO

 

 
 
 

1.   Has your company reached a limit on growth and profitability due to competition or local economic factors?
2.   Have you ever considered expanding your operations into other countries to continue increasing company value?
3.   What has kept you from doing so?
You don’t have to be a Fortune 500 company in order to take advantage of growth into overseas markets. In recent years, there has been a significant increase in the number of companies much smaller than the Fortune 500 that have established a foreign presence.

If you are a senior executive, it is most likely that you have attended at least one (or numerous) time management seminar(s). It is also most likely that your time management challenge has not been resolved to your satisfaction. Why is that? Pick from the following list:

1. “I don’t have any direct reports to delegate to.”
2. “I can’t delegate my responsibilities to any of my direct reports because they are not developed enough.”
3. “My responsibilities are just so all-encompassing that they never end.”
4. “Once we get the business organized better, this crunch will end.”
5. “I am constantly running from one thing to the next”

At present, there is a shortage of professional employees aged 30 to 50 in companies which results in an inability to fill the significant gap of retiring baby boomers. This situation creates the need to have these younger professionals reach leadership maturity 8 to 10 years faster than past generations. In addition, current millennials are leaving organizations because of “insufficient opportunities to develop their leadership skills”.
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Businesses are hindered in helping the young professionals develop their leadership skills by lack of available qualified and interested mentors because: