Questions? Call us now at 609-688-0428

Anything for a Buck

by Trilogy Partners on Apr 01, 2019 10:58:28 AM

Entrepreneur: a person who organizes and operates a business or businesses, taking on greater than normal financial risk. So how does Trilogy Partners help manage potential risk? We help owners fully understand the financial story of their business including the danger of “Anything for a Buck”.

It starts with an idea, for a product or service that you can do better than anyone else. This idea will make you more money than you’re earning now PLUS, you make the rules and set your schedule.

So, you make the leap. You buy the domain, create a website, and hang out your shingle. You are open for business.

The phone rings! It’s a friend who needs X. Now X isn’t exactly what you do but after a brief conversation, you accept the work because you’re just starting out.

Then you get an email from someone who needs Y. Y also isn’t what you do but it’s close enough, so you write a proposal.

Time passes and you take on work that is within your strategic plan and some that’s not. You are working hard, putting in more hours than planned, yet the ROI isn’t there. Your vision of working smarter, not harder, isn’t panning out and you’re not sure why. What went wrong?

Instead of committing to your vision, you decided to do anything for a buck.

Consider my very first client, AFAB, aka “Anything For A Buck”. That was their business model and it didn’t work. Here’s why.

AFAB tried to do a bit of everything for anybody. Every time they quoted a job, they were starting from scratch and that takes time. They couldn’t build on experience, because every job was different and required new and unproven resources and processes. In a nutshell, they were guessing. Often, they would lower their quote to secure a project, minimizing the value of their brand. Also, by not specializing, the quality of their work suffered, and they did not stand out from the competition.

Stick to your vision. You know what you do well and why it adds value. You’re passionate and that passion shows. Every time you deviate from that model, you are spending time and money trying to reinvent a wheel that someone else has already invented, someone who is passionate about that wheel. Your time IS MONEY. Taking a lower rate of pay or a lower gross margin is a false positive. On paper, it looks like the business is making money, but unless you’re taking a fair market salary for what you’re doing, profits are overstated.

At Trilogy Partners, we understand how difficult it is to turn away a customer, especially a paying one who you genuinely want to help. But learning how to measure which clients and work are profitable is essential to the health and sustainability of your business. We can help you define your strategy and design a financial plan to support your vision. Call us at 609-688-0428 and let’s get started.

Trickle Down Metrics© and Why Companies MUST use Data to Drive Growth

by Trilogy Partners on Sep 06, 2017 11:59:14 AM

How do you stay competitive and manage growth? Trilogy Partners encourages its clients to rely upon data to analyze business trends. The purpose of data is to create an ongoing analysis of intelligence and the outcomes can provide impactful insights for decision making. I maintain that the key for any owner is to be able to clearly identify which Trickle Down Metrics© are the most critical drivers for their business and to focus their limited resources on monitoring these for the best outcomes.

The Trickle Down Metrics© of a company are the key performance indicators that permeate throughout all aspects of a business and drive the company towards the ultimate goals of the CEO and the organization.

Consider ABC Company, an application development company that creates custom software and applications for small-to-medium businesses at a fixed fee rate. The CEO built the company up to $2MM in revenue and $200K in annual net income within a few short years with grit, direct sales, and gut calls. His goal is to expand his team and diversify product offering within two years by increasing revenue, maintaining or increasing profitability, and reinvesting those profits into the new revenue channels.

Before acting, ABC Company identified its Trickle Down Metrics©, the data that would be used to drive decision-making:

  • Utilization Rate of Direct Labor – the percentage of a person’s total hours used to generate revenue and how much money is lost via unutilized hours
  • Booked Sales – total value of contracts closed within a given period, more pertinent to long term business health and long-term cash flows
  • Gross Profitability by Project – the gross profit of each project available to satisfy overhead expenses (total billed per project less all direct costs)
  • Billed Sales – total of value of contracts billed within a given period, more pertinent to short term cash flow

The CEO analyzed billable versus non-billable labor hours and found that his Utilization Rate of Direct Labor was around 90%, higher than industry average and an indicator that they would soon be overwhelmed. The CEO used this knowledge to confirm his decision to hire new direct employees.

The CEO then hired a VP of Sales and a Sales Administrator to ensure that his new employees would have consistent work. The two new hires spent six months closing an acceptable number and revenue of Booked Sales, however they mistakenly miscalculated the fixed fee contract.

This pricing error began to eat into Gross Profitability of Projects and some of the smaller projects weren’t profitable at all! However, by monitoring the issue over time, the CEO could isolate the issue and act before it worsened. The CEO hired a project manager sooner than originally planned to handle the estimation duties and keep labor costs down.

Billed Sales had increased 40% to $2.8MM, but ABC lost slight profitability in the short-term due to the estimation issues. Outside this slight bump, they are on track towards their goal of maintaining profitability and reinvesting cash into new revenue channels.

At Trilogy Partners, we believe that with data, decision making is focused and deliberate rather than subjective and arbitrary. If you’d like to like to learn more about using Trickle Down Metrics© to drive growth in your business, contact me at jbruno@gettrililogypartners.com or (609) 688-0428.

Keeping Financial Balance Shouldn’t be a High Wire Act

by Trilogy Partners on Aug 29, 2015 8:08:17 AM

In 2008, director James Marsh released Man on a Wire.  The documentary chronicled Philippe Petit's 1974 high-wire-walk between NYC's twin towers.  The award winning film showed Petit's courage to take on whhigh_wireat many considered impossible ' and crazy ' while staying true to his convictions. 

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How to Handle Excess Profits

by Trilogy Partners on Apr 17, 2015 11:20:00 AM

maximizing-profits

Imagine your business is pushing out excess profits.  Business owners often dream of such times.  Every now and then, we get an owner asking us what to do now that they find themselves with a robust bottom line. 

Here's an approach we've seen work across many companies and industries.

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