Introduction to One Sherpa Pty Ltd

© Copyright One Sherpa Pty Ltd 2008

THE WAY TO A BETTER FUTURE


Business leaders, carrying the load of responsibility for an organisation’s performance often feel isolated; and “going alone is a lonely way to go”.

THE ONE SHERPA STORY


Our Relationship Managers guide you to ‘base camp’, the first step up the mountain; by assisting you complete an ‘x-ray’ of your business using our unique proprietary business fluoroscope.


At ‘base camp’ you’ll meet one of our Business Sherpas, who will diagnose the health of your organisation and determine whether it is ready to make the climb to the fulfillment of your business vision. “Your business sherpa will faithfully guide you to a confident future.”


You are then equipped to make an informed choice to engage us in the exhilarating experience of helping you reach the pinnacle of your business success. “There is nothing quite like the view from the top.”



Many people are looking to get into business or are already working in their business with a vision of increasing their financial wealth.

How to connect vision with your plan


They have visions and aspirations but

work incredibly hard for returns that

continually disappoint them



SO WHY DON’T THEY REACH THEIR VISION?



Why is it so hard to reach your business goals?



There are three areas we have identified

that prevent people achieving the results they desire…….


TRADITIONAL BUSINESSFOCUSBusiness Plan

Sales and Marketing

Making Profit

OUR BUSINESS FOCUS

Business Model

Interaction with Customers

Increasing Cash Flow

These three differences means our focus is quite different and allows us to use our unique toolsto assist business owners get better performance



Many business owners have no

context from which to make their decisions

The analogy that holds the journey together


As a result they have no way to make

clear cut decisions nor measure the

results

The analogy that holds the journey together


The Financial Fence®Way of Thinking


“Some people think if they just implement our techniques they will be as successful as we are. But those that try often fail…you have to address employees’ fundamental way of thinking”

Fujio Cho President Toyota


• Many people who see The Financial Fence® have thought it is simply a new technique and way of reporting the numbers.


• It is however a completely different way of thinking about the numbers which changes the paradigm around how you

and measure its performance.fund a business


Why use a fence?

1. Fences are made of two parts :A. Posts that anchor the fence into the ground at a point AND B. Rails that carry the fence over a distance.

2. Fences incorporate Milestones (Posts) and Activity (Rails) in the same analogy.

3. Financial statements have these two parts :A. “Milestones” - Balance Sheet. B. “Activity” – Profit & Loss Account & Cash

Flow Statement.

4. Fences provide a boundary and security.


MILESTONE

MILESTONE

ACTIVITY

ACTIVITY

The Standard two rail fence


The Financial Fence®

Equity

Capital Capital

Debt

Equity

Debt

THE TWO MILESTONES ON THE FINANCIAL FENCE ®

Funding



Equity

Capital Capital

Debt

Equity

Debt

Interaction withCustomers

InfrastructureExpenses

Investment inBusiness

THE THREE ACTIVITIES ON THE FINANCIAL FENCE ®



Equity

Capital Capital

Key PerformanceIndicators

Debt

Equity

Debt




PERFORMANCE MONITORING ON THE FINANCIAL FENCE ®





SINGLE DIRECTION OF MANY NON FINANCIAL EXECUTIVES

NET PROFIT



Equity

Capital Capital

Key PerformanceIndicators

Debt

Equity

Debt




DIRECTIONS REQUIRED FOR TRADINGTHE FINANCIAL FENCE ®


Costing/Pricing

Documents

Theoretical Outcome

Bank Statement

ActualOutcome

Run out of money BUSINESS FAILURE


NET CASHFLOW

BALANCE SHEET“AS AT”

SALES


The conundrum for the business owner

EQUITY

LIABILITIES

ASSETS

EQUITY

LIABILITIES

ASSETS


NET CASHFLOW


SALES


The conundrum for the business owner

EQUITY

LIABILITIES

ASSETS

EQUITY

LIABILITIES

ASSETS


PROFIT & LOSS ACCOUNT“FOR THE PERIOD”

TRADITIONALBALANCE SHEET

“AS AT”

Contrast To Traditional Business Thinking

EQUITY

LIABILITIES

ASSETS


“AS AT”

EQUITY

LIABILITIES

ASSETSCOST

OF SALESGROSS

MARGINEXPENSES

NET PROFITSALES

NET CASHFLOW




“AS AT”


EQUITY

LIABILITIES

ASSETS


“AS AT”

EQUITY

LIABILITIES

ASSETSCOST

OF SALESGROSS

MARGINEXPENSES

NET PROFITSALES

NET CASHFLOW




“AS AT”


EQUITY

LIABILITIES

ASSETS


“AS AT”

EQUITY

LIABILITIES

ASSETSCOST

OF SALESGROSS

MARGINEXPENSES

NET PROFITSALES

NET CASHFLOW


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN

INFRASTRUCTUREEXPENSES

OPERATING CASH FLOW

MOVEMENTIN FIXEDCAPITAL

NET PROFIT

NET CASHFLOW

FIXEDCAPITAL

WORKING CAPITAL

EQUITY

DEBT

SALES

FIXED CAPITAL

WORKING CAPITAL

DEBT

The Financial Fence® Way of Thinking


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATING CASH FLOW


NET PROFIT

NET CASHFLOW

FIXEDCAPITAL

WORKING CAPITAL

EQUITY

DEBT

SALES

FIXED CAPITAL

WORKING CAPITAL

DEBT



EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATING CASH FLOW


NET PROFIT

NET CASHFLOW

FIXEDCAPITAL

WORKING CAPITAL

EQUITY

DEBT

SALES

FIXED CAPITAL

WORKING CAPITAL

DEBT



EQUITY$265,000

COSTOF INTERACTION-$1,400,000

NETPROFIT

$150,000

WORKINGCAPITAL MVT-$140,000

CONTRIBUTIONMARGIN

$350,000

INFRASTRUCTUREEXPENSES$200,000

OPERATING CASH FLOW$10,000

FIXEDCAPITAL MVT-$25,000

NET PROFIT

$150,000

NET CASHFLOW-$15,000

FIXEDCAPITAL

$375,000

WORKING CAPITAL

$230,000

EQUITY$415,000

DEBT$190,000



CASH FLOW STATEMENT“FOR THE PERIOD”

THE FINANCIAL FENCE ®

SALES

$1,750,000FIXED CAPITAL

$350,000

WORKING CAPITAL$90,000


DEBT$175,000

The Financial Fence® - Example Company


EQUITY$265,000


NETPROFIT

$150,000


CONTRIBUTIONMARGIN

$350,000




NET PROFIT

$150,000


FIXEDCAPITAL

$375,000

WORKING CAPITAL

$230,000

EQUITY$415,000

DEBT$190,000





SALES


$350,000



DEBT$175,000



EQUITY$265,000


NETPROFIT

$150,000


CONTRIBUTIONMARGIN

$350,000




NET PROFIT

$150,000


FIXEDCAPITAL

$375,000

WORKING CAPITAL

$230,000

EQUITY$415,000

DEBT$190,000





SALES


$350,000



DEBT$175,000


$90,000 + $350,000 = $440,000$175,000 + $265,000 = $440,000

Milestone check


EQUITY$265,000


NETPROFIT

$150,000


CONTRIBUTIONMARGIN

$350,000




NET PROFIT

$150,000


FIXEDCAPITAL

$375,000

WORKING CAPITAL

$230,000

EQUITY$415,000

DEBT$190,000





SALES


$350,000



DEBT$175,000


$265,000 + $150,000 = $415,000

Top rail check


EQUITY$265,000


NETPROFIT

$150,000


CONTRIBUTIONMARGIN

$350,000




NET PROFIT

$150,000


FIXEDCAPITAL

$375,000

WORKING CAPITAL

$230,000

EQUITY$415,000

DEBT$190,000





SALES


$350,000



DEBT$175,000


$175,000 - - $15,000 = $190,000

Bottom rail check


PERFORMANCE MEASUREMENTLet’s look at a couple of our

measurements


RETURN ON SALES


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATING CASH FLOW


NET CASHFLOW

FIXEDCAPITAL

WORKING CAPITAL

EQUITY

DEBT



SALES

FIXED CAPITAL

WORKING CAPITAL


DEBT

Return on Sales

ReturnSales

NET PROFIT

DEFINITIONNET PROFIT divided by SALES



CONTRIBUTIONMARGIN

$350,000


NET PROFIT

$150,000



SALES

$1,750,000


$150,000/$1,750,000*100=8.6%

ACTIVITY OF BUSINESSPROFIT TO SALES 8.6%


RETURN ON CAPITAL


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATING CASH FLOW


NET CASHFLOW

FIXEDCAPITAL

WORKING CAPITAL

EQUITY

DEBT



SALES

FIXED CAPITAL

WORKING CAPITAL


DEBT

The Financial Fence® Primary measure

Return Capital

NET PROFIT

DEFINITIONNET PROFIT divided by TOTAL CAPITAL


EQUITY$265,000


NETPROFIT

$150,000


CONTRIBUTIONMARGIN

$350,000




NET PROFIT

$150,000


FIXEDCAPITAL

$375,000

WORKING CAPITAL

$230,000

EQUITY$415,000

DEBT$190,000





SALES


$350,000



DEBT$175,000


KEY TOP LEVEL MEASURERETURN ON CAPITAL 24.8%

$150,000/($230,000+ $375,000)*100=24.8%


EXAMPLE COMPANY

High level review

RETURN ON SALES 8.6%

RETURN ON CAPITAL 24.8%


•Which measure sounds best?


8.6% or 24.8%


•Which measure encouragesthe business owner to keepgoing?

•Which measure helps thebusiness owner appreciate thereal value of what he’s doing?



BUT also a far more powerful measure for the business


FIXEDCAPITAL

WORKING CAPITAL

Return Capital

NET PROFIT

RETURN ON CAPITAL BECAUSE OFTEN IT’S BIGGER


Today we can only touch the tip of the iceberg

The depth of ourbusiness

Today’spresentation


What is a Business Sherpa?

• In the dictionary a Sherpa has been described as:“an expert chosen by a chief executive to assist in preparations for a summit meeting.”


What is a Business Sherpa?

A key quality of a Sherpa is a primary concern with getting the person they are guiding to the top of the mountain

Our Business Sherpas have already been up the “business mountain”

Our Business Sherpas have the skills and experience to guide you to the pinnacle of business success


The most famous Sherpa• The most famous Sherpa is Tenzing Norgay who

climbed Mount Everest with Edmund Hillary for the first time in 1953.

• Tenzing and Hillary were the first people to conclusively set their feet on the summit of Mount Everest.

• Tenzing stressed the unity required for climbing teams but disclosed that Hillary was the first to put his foot on the summit.

• He concluded: "If it is a shame to be the second man on Mount Everest, then I will have to live with this shame."


The value of walking with a Sherpa

Many business leaders have neither the knowledge nor the specific skills to optimise the performance of their business

“Going alone is alonely way to go”



Engaging the assistance of a Business Sherpa will assist you move your business to its ultimate performance





It is virtually impossible to reach the pinnacle of success if you try and take the entire journey alone


Time to go to base camp


• The most effective way we have found is by taking the ‘live’ information from a business and ‘putting it on the fence’

• This allows you to see first hand how it gives a completely different perspective on your business and its performance

How to get started

• Until you take this step, your journey is educational but theoretical.

• Until you see your own information on the fence it is impossible to have a business experience with the fence.


• Understand the financial outcome of interacting with your customers

• Make sure you get your fair ‘share of the pie’ by not being squeezed by both customers and suppliers

• Reduce your business risk as a result of improved decision making

The Advantages To You……

• Maximize the cash in your pocket

• Allows you to spend less time working in your business

ADVANTAGES


• Peace of mind that your business is a great investment

• More discretionary time to spend with your family / friends / personal interests

Some Typical Real Benefits ……

• Having the freedom to make decisions and not feelsqueezed by everyone

• Don’t feel like you’re always the last in line to get paid

• Having the freedom to do the enjoyable parts of yourbusiness


• The first step for you is The Business Financial Fluoroscope Report

• The Business Financial Fluoroscope Report is an in-depth look at the financial dynamics of your business, using The Financial Fence®

• The Report allows you to see what’s really going on inside your business and identifies areas for improvement.


• Executive summary• Forecast• Commentary and explanation of all

the indicators used in the analysis• Recommendations• Personal consultation to explain the

results

Results from a Fluoroscope


Start with aFLUOROSCOPE

Do you know YOURFUTURE?

Do you have a plan?



Invest in Your Business F

uture NOW and

GET your FLUOROSCOPE done TODAY



Contact usEmail: [email protected]

www.thefinancialfence.comwww.onesherpa.com