You must use your operating statement to run your business, that's what it is for!
You must use % of sales on all of your most important numbers in order to compare them and see if you are getting better or falling behind.
Most people, when they get their operating statement, are too busy to take the time to properly analyze it. What I am going to show you will make it a lot easier.
You must concentrate on the 5 most important numbers: sales, material cost, labor cost, gross profit, overhead and net profit. The best way to understand these numbers is by % of sales to compare your performance now with your performance in the past.
I have found the format below, by far, the best way to accomplish this. It will give you all the information you need to run your business and you can analyze it in 15 minutes. I have included two examples: one with just the numbers and one with the numbers and % to show how important it is to use %. They show you where you have been and where you are going.
Each format includes:
- Operating statement numbers for the current month
- Operating statement numbers for year to date
- Operating statement for the same time period last year
Also, monthly breakeven volume and daily breakeven volume. Once you hit your breakeven, your gross margin % becomes your net profit.
Example: 50% gross $100,000 over breakeven net profit = $50,000
If you are interested in doing this, send me the following information and I'll get you started:
- March'21 statement
- Year to date through March'21 statement
- Last year to date through March'20 statement
