Pop Sheet No 5 - Profitability Orientation

Pop Sheet No 5 -  Profitability    Orientation

1.  What is a business?

     Business is an entity that creates customer.  Our products, marketing, our expenditures must focus on creating customers.  No customers no business

2.  Basic equation of business  .  Sales - Cost=  GP

     All business must endeavor to increase sales and reduce cost, to increase

              GP.  GP or what we term as contribution to profit and overhead

              are simply future costs -  that will cover the shock of losses as 

              in calamity or pandemic

              You must always find out your value in the organization:  are you

              increasing revenue or reducing cost

             IF NOT YOU ARE JUST A COST AND A BURDEN TO THE ORGANIZATION

3.  Ways to increase revenue:

    Can selling price be increased

    Can the value of the product be increased

    Can we sell more of the same units 

          1.  Increase outlets (geography)

          2.  Increase sales force

          3. Increase ad spend (awareness)

          4.  can we add new products

4.  Ways to reduce cost

       1.  Reduce cost of goods sold

            1.  Reduce labor cost

            2.  Reduce material component

            3.  Value analysis and engineering

           4.  Can we outsource to low labor cost country

           5.  Can we improve quality (reduce defect which increases cost

           6.  Productivity -  shorten time to produce, transport, sell

        2.  Reduce selling expense

           1.  Use cost effective ads -  TV, logistics company

           2.  FB ads, piggy back 

        3.  Reduce admin cost

             1.  Can we use bpo

             2.   Can we centralize admin:  r & d

5.  ROI   Return on investment or return of investment

     1.  Parable of the talents  -  seek to multiply yourself and knowledge

         The best investment is investment in yourself

    2.  The parable of mustard seed.  All big things have humble beginning.

          A single mango seed can yield hundreds of bushel of mangoes

   3.  A small investment must yield revenues to recover working capital and produce profit  (Unlike the experience of Cebu Pacific c/o Lance Gokongwei - to produce millions you have to invest billions

   4.  Good ROI depends on:   

              Patong -   Margin     Net Income/Sales

              Paikot   -   Turn over   Total sales/total assets

              Laway  -    Leverage     Total assets/Total Stockholders equity

             When we cancel out common terms we are left with NI/TSE

6.  Cash is king.   Where is our cash?

     1  Cash in banks  

    2.  Our receivables -  petty cash fund, IF, RF

    3.  Installment Contract Receivables

       1.  Where are they?   Are the PPA properly filed and accounted for

       2.  Are they in ledgers?  Are their postings updated?

       3.  Is there an aging?

       4.  Are collection letters sent

       5.  Are forfeitures being undertaken?

  4. Inventories

      1.  is regular inventory being done?

      2.  Are inventories kept in warehouse under lock and key

      3.  Are there withdrawal slips being executed when used?

      4.  Who keeps the lock and keys?

      5.  Are security guards doing their roving properly

7.   To survive the pandemic is profitable all ready.

      1.  Are we collecting enough?

     2.  Have we pivoted  to products and services that people need

           INTERMENT SERVICE

           FUNERAL SERVICE

          CREMATION

          ASH CRYPTS