Profit = Income - Expenses.
how business owners measure success. The bottom line.
Where we want to start and finish in any business.
a straightforward equation.
Want to improve profitability?
It’s a straightforward
solution. Increase income, reduce expenses or both.
But as every agency owner knows, it’s not always
as easy as it sounds. Analyzing where your profit comes
from, (and where it goes) will give you greater insight
into business strengths and weakness, and how to
Transformation Advisors, Inc., has developed
of profit analysis tools to help you look at your
results from an entirely different perspective—or
several different perspectives.
Pre-tax profit is just the beginning.
Look at the profitability
of each department, cost center or line of business
and understand the contribution each one makes to overall
profitability. Each department should be able to stand on its own. If not, why
not? And what
should you do about it?
Look at producers as profit
centers. Each producer should be generating a return on the investment
by the agency. That means producing more
revenue than it costs to service and support the book of business. Information
through this analysis becomes the basis for producer compensation planning.
at operating profit—excluding carrier contingent
a better picture of the agency’s ability to meet expenses out of
operating income. Changes in the industry and the effects of fires and
operating profit the real benchmark for any business.
Look at pro-forma
pre- tax profit, for a better indication of return on investments,
as it removes discretionary expenses – excess compensation,
bonuses, perks etc. – expenses that would not be paid if the
business were owned by a third party managing the business. To understand
with pro-forma pre-tax profit.
And to avoid analysis paralysis, we'll
provide "What If" scenarios
to show the results of planned changes.
It’s a proven fact
that what gets measured gets done. Industry averages can give
you a place to start, but to see your opportunities for
you need to build your own benchmarks based on where you’ve
been & where
you want to go. Once you understand the economic drivers, you
can focus your improvement activities to achieve the right results.
To take financial analysis to whole
new level. To get a better handle on maximizing profitability.
To create your agency’s
standards of excellence...
Fill out our on-line
form or call Transformation Advisors at (530)