{"id":112624,"date":"2023-06-12t11:58:38","date_gmt":"2023-06-12t15:58:38","guid":{"rendered":"\/\/www.g005e.com\/?p=112624"},"modified":"2024-08-27t17:02:10","modified_gmt":"2024-08-27t21:02:10","slug":"how-to-react-to-trends","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/06\/12\/how-to-react-to-trends\/","title":{"rendered":"how to react to trends"},"content":{"rendered":"
<\/a>bonus: charts that put data into perspective.<\/strong><\/p>\n by ed mendlowitz<\/i> getting the information is useless unless it is used!<\/p>\n that is why trend analyses work \u2013 they involve a short, easy and quick way to absorb and to react.<\/p>\n more: <\/b>where is your firm in its lifecycle?<\/a> | wow clients with trend analysis<\/a> | 26 ways to wreck a financial projection<\/a> | three ways to run a break-even analysis<\/a> | price not always the top consideration in a sale<\/a> trends are always present \u2013 but they need to be recognized and uncovered to be of any use. and then that knowledge needs to be used to change what is being done. one method of illustrating the “do nothing” alternative is to project the business\u2019 current operations and trends.<\/p>\n following is an illustration of a “do nothing” scenario for bt manufacturing company.<\/p>\n when you look at the projections keep in mind that this is a good business. it is increasing its sales annually and is profitable.<\/p>\n <\/p>\n <\/p>\n the above business has \u201csettled\u201d into a niche and the owner has become somewhat complacent, not wanting to \u201cupset the apple cart\u201d with any kind of changes.<\/p>\n at 200,000 units per year the business is not losing unit sales, but if it is in an industry that is growing, then the company is losing market share.<\/p>\n additionally, the costs of sales and operating expenses are increasing at a faster rate than the sales. projecting the operations forward five years shows a loss on the horizon. left to its own equilibrium or inertia this business will run itself out.<\/p>\n the final result will be loss of income, assets and value, and a succession possibility.<\/p>\n now, what about businesses whose sales have dropped or who had a really bad year mixed in somewhere in that 10-year period?<\/p>\n following are two graphs depicting data shown on the above income statement summary. how much other information does anyone need to understand that the company is a loser?<\/p>\n <\/a><\/p>\n
\n77 ways to wow!<\/i><\/a><\/p>\n
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\nit is important for the business owner to understand that there are choices. doing nothing is a major choice and carries with it the natural consequences of that path.<\/p>\nillustration: the “do nothing” scenario<\/h3>\n
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\n bt manufacturing company<\/strong><\/td>\n<\/tr>\n \n income statement summary \u2013 years 1 to 11<\/strong><\/td>\n<\/tr>\n \n assumptions used:<\/td>\n % increase per year<\/td>\n<\/tr>\n \n sales<\/td>\n 3%<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n \n cost of sales<\/td>\n 4%<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n \n operating expenses<\/td>\n 6%<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n \n # units sold<\/td>\n 0%<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n \n (in thousands except price per unit)<\/em><\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n current year<\/strong><\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n \n <\/td>\n year 1<\/td>\n year 2<\/td>\n year 3<\/td>\n year 4<\/td>\n year 5<\/td>\n year 6<\/td>\n year 7<\/td>\n year 8<\/td>\n year 9<\/td>\n year 10<\/td>\n year 11<\/td>\n<\/tr>\n \n <\/td>\n actual<\/td>\n actual<\/td>\n actual<\/td>\n actual<\/td>\n actual<\/td>\n projected<\/td>\n projected<\/td>\n projected<\/td>\n projected<\/td>\n projected<\/td>\n projected<\/td>\n<\/tr>\n \n sales<\/td>\n $4,000<\/td>\n $4,120<\/td>\n $4,244<\/td>\n $4,371<\/td>\n $4,502<\/td>\n $4,637<\/td>\n $4,776<\/td>\n $4,919<\/td>\n $5,067<\/td>\n $5,219<\/td>\n $5,376<\/td>\n<\/tr>\n \n cost of sales<\/td>\n 2,400<\/td>\n 2,496<\/td>\n 2,596<\/td>\n 2,700<\/td>\n 2,808<\/td>\n 2,920<\/td>\n 3,037<\/td>\n 3,158<\/td>\n 3,285<\/td>\n 3,416<\/td>\n 3,553<\/td>\n<\/tr>\n \n gross profit<\/td>\n 1,600<\/td>\n 1,624<\/td>\n 1,648<\/td>\n 1,671<\/td>\n 1,694<\/td>\n 1,717<\/td>\n 1,739<\/td>\n 1,761<\/td>\n 1,783<\/td>\n 1,803<\/td>\n 1,823<\/td>\n<\/tr>\n \n operating expenses<\/td>\n 1,000<\/td>\n 1,060<\/td>\n 1,124<\/td>\n 1,191<\/td>\n 1,262<\/td>\n 1,338<\/td>\n 1,419<\/td>\n 1,504<\/td>\n 1,594<\/td>\n 1,689<\/td>\n 1,791<\/td>\n<\/tr>\n \n officer’s salary, pension, perks<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n 300<\/td>\n<\/tr>\n \n net income before taxes<\/td>\n $300<\/td>\n $264<\/td>\n $224<\/td>\n $180<\/td>\n $132<\/td>\n $79<\/td>\n $21<\/td>\n ($42)<\/td>\n ($111)<\/td>\n ($186)<\/td>\n ($268)<\/td>\n<\/tr>\n \n # units sold<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n 200<\/td>\n<\/tr>\n \n average selling price per unit<\/td>\n $20.00<\/td>\n $20.60<\/td>\n $21.22<\/td>\n $21.85<\/td>\n $22.51<\/td>\n $23.19<\/td>\n $23.88<\/td>\n $24.60<\/td>\n $25.34<\/td>\n $26.10<\/td>\n $26.88<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n