December 2003              return to newsletter contents page

Time to Get Serious About Profit

These continue to be challenging financial times for most business organizations. With sales soft and margins under intensive pricing pressure, many management groups are struggling to make the right decisions to ensure the firm’s financial stability. At times like these, financial benchmarks are especially important.

AVDA can supply the benchmarks you need with the 2004 PROFIT Report. This unique service provides individualized consulting advice for the firm. It is designed around specific guidelines for improving financial results. It will not only present a profile for

the typical firm in the industry, it will outline the results obtained by the most successful ones. It will help identify a path for improving every firm’s bottom line.

Each participant in the PROFIT survey will not only receive a copy of the summary results, but also will receive two important tools to help in improving profitability. The first is a printed report comparing the firm to specific benchmarks. The second is a computer planning program. Both of these tools help management delve into the ways their financial performance can be strengthened over time.

The Profit Improvement Profile

Every participating firm receives an individual company report that compares their firm's results to similar firms. Such comparable firms may include those with the same sales size, in the same geographic region, or with the same product mix. The report, called the Profit Improvement Profile (PIP) also indicates how the firm compares to the industry's most profitable firms.

The PIP provides data for more than 100 different measures, ranging from sales per employee to inventory turnover to gross margin as a percent of sales. The report also includes all key financial ratios, and a complete percentage income statement and balance sheet.

In addition, each of the key measures is accompanied by a thorough discussion explaining why it's important to the business. In short, the PIP provides a detailed analysis of where the firm stands financially. However, it goes one step farther than just reporting history. It also indicates how the firm should go about improving performance. It lays out a complete game plan indicating what the firm should do and the profit results that can be expected. This combination of features makes the PIP an exceptionally valuable management tool.

Profit Toolkit Online—New and Improved for 2004

Benchmarks must be turned into action. The Profit Toolkit can help with that process. Beginning in 2004, two new features of this program will be implemented. The first is that it will be a web-based program available only to participating firms. The second is that the specific tools provided will change year to year.

For 2004, the topic is Developing a Financial Plan. The program is extremely user-friendly and requires only that the firm download the Profit Toolkit from the web. The program uses Microsoft® Excel, which most firms have readily available. After downloading, it is only necessary to enter a few select numbers and the firm can then develop a plan quickly, easily and accurately.

For firms that have never engaged in planning, it is an ideal way to start. For firms that do plan, but find the process difficult, time consuming and confusing, it is an ideal way to make the planning process meaningful.

What About Confidentiality?

A lot of firms are concerned about taking part in such a survey. They shouldn't be because the Profit Planning Group, the company that conducts the survey, holds all company data in complete confidence.

The Profit Planning Group is the largest firm of its kind. It conducts financial surveys in more than 100 industries each year and reviews over 10,000 financial statements annually. It has been conducting such surveys for more than 20 years and has never had a confidentiality problem.

Improved Profits—A Reality, Not a Dream

If you are interested in improving profitability, don't overlook the PROFIT survey when it comes in the mail. All you have to do is fill it out, which takes a minimal about of time, and send it in. It couldn't be easier. It couldn't be more important in improving your profit performance. Surveys will be mailed to all AVDA Active (Distributor) members at the beginning of February 2004.