Category Archives: LIPA

8. Your Financial Management Style Needs More Clothes

Big Data, Core Renewal, Index, Line Item Profit Analytics, LIPA, Profit Analytics, WayPoint Analytics

In the early ’70s, distribution trade associations started offering Financial Survey Reports to participating members. Back then, “financial management” was KING.  You wanted to achieve the financial averages of the “Top Quartile” performers (even though those averages blended different strategy outcomes and the top 5% – true innovators – dragged up the average for the next 20%).

The reports evolved. New ratios like – GMROI, Turn-Earn, Personnel Productivity Ratio (PPR), etc. – all had their moments of fame. Analytics software packages started arriving in the ‘90s to slice, dice and graph “the numbers”.  Because financial numbers and their derivatives are downstream symptoms of upstream, hidden, root causes for profitability, interesting data was not actionable for sustainable success.

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6. The Seven Purposes of Profits

Index, Line Item Profit Analytics, LIPA, WayPoint Analytics, , , ,

Distributors that have Line-Item, Profit Analytics (LIPA) can see and use seven different purposes for Profits to then grow them sensationally.

Economists See Three Purposes for Profits

  1.  Profits are a Cost of Capital.  Shareholders want a return on their money in the business. The  more risk a shareholder has of not getting their money back, the higher the return they expect. Most  distributors don’t earn a competitive, (after-tax) Return On (Shareholders’) Investment (ROI). Non-employed, minority shareholders would sell for “book value” in a heartbeat and do better reinvesting in muni bonds.

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3. Let a Thousand Profit-Improvement Innovations in Distribution Bloom

Index, Line Item Profit Analytics, LIPA, Profit Analytics, ,

Distributors with “Line-Item, Profit Analytics (LIPA) Management” capability can:

  • Go “Open Book”
  • Put all employees on bottom-line, gain-sharing incentives
  • Watch everyone grab newly visible ways to increase customer value and/or lower service costs
  • Pay big bonuses out of even bigger profits
  • Work less and cheerlead more!

Continue reading 3. Let a Thousand Profit-Improvement Innovations in Distribution Bloom →