Introduction to One Sherpa

8/14/2019 Introduction to One Sherpa

1/67

Copyright One Sherpa Pty Ltd 2008

THE WAY TO A BETTER FUTURE


2/67


Business leaders, carrying the load of responsibility for anorganisations performance often feel isolated;

and going alone is a lonely way to go.

THE ONE SHERPA STORY


3/67


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


4/67


At base camp youll meet one of our Business Sherpas, who will diagnose

the health of your organisation and determine whether it is ready to makethe climb to the fulfillment of your business vision.Your business sherpa will faithfully guide you to a confident future.


5/67


You are then equipped to make an informed choice to engage us in the exhilaratingexperience of helping you reach the pinnacle of your business success.

There is nothing quite like the view from the top.


6/67



7/67


Many people are lookingto get into business or arealready working in theirbusiness with a vision ofincreasing their financialwealth.

How to connect vision with your plan


8/67


9/67


SO WHY DONT THEY REACH THEIR VISION?



10/67


Why is it so hard to reach your business goals?


11/67



There are threeareas we have

identified

that prevent people achieving theresults they desire.


12/67


TRADITIONAL BUSINESSFOCUS

Business Plan

Sales and Marketing

Making Profit

OUR BUSINESS FOCUS

Business Model

Interaction with Customers

Increasing Cash Flow

These three differences means our focus is quitedifferent and allows us to use our unique tools

to assist business owners get better performance



13/67


Many businessowners have no

context fromwhich to make

their decisions

The analogy that holds the journey together


14/67


As a result they haveno way to make

clear cut decisionsnor measure the

results

The analogy that holds the journey together


15/67


The Financial Fence

Way of Thinking


16/67


Some people think if they just implement our techniquesthey will be as successful as we are. But those that try oftenfailyou have to address employees fundamental way ofthinking

Fujio Cho President Toyota


17/67


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


18/67


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

and measure its performance.und a business


19/67


Why use a fence?

1. Fences are made of two parts :A. Posts that anchor the fence into the groundat a point ANDB. 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 & CashFlow Statement.

4. Fences provide a boundary and security.


20/67


MILEST

ONE

MILESTONE

ACTIVITY

ACTIVITY

The Standard two rail fence


21/67


The Financial Fence

Equity

Capital Capital

Debt

Equity

Debt

THE TWO MILESTONES ONTHE FINANCIAL FENCE

Funding


22/67


The Financial Fence

Equity

Capital Capital

Debt

Equity

Debt

Interaction withCustomers

InfrastructureExpenses

Investment inBusiness

THE THREE ACTIVITIES ONTHE FINANCIAL FENCE


23/67


The Financial Fence

Equity

Capital Capital

Key Performance

Indicators

Debt

Equity

Debt




PERFORMANCE MONITORING ONTHE FINANCIAL FENCE


24/67


The Financial Fence



SINGLE DIRECTION OF MANY NONFINANCIAL EXECUTIVES

NETPROFIT


25/67


The Financial Fence

Equity

Capital Capital

Key Performance

Indicators

Debt

Equity

Debt




DIRECTIONS REQUIRED FOR TRADINGTHE FINANCIAL FENCE


26/67


Costing/Pricing

Documents

Theoretical

Outcome

Bank

Statement

Actual

OutcomeRun out of money

BUSINESS FAILURE


27/67


NETCASHFLOW

BALANCE SHEETAS AT

SALES

BALANCE SHEETAS AT

The conundrum for the business owner

EQUITY

LIABILITIES

ASSETS

EQUITY

LIABILITIES

ASSETS


28/67


NETCASHFLOW

BALANCE SHEETAS AT

SALES

BALANCE SHEETAS AT

The conundrum for the business owner

EQUITY

LIABILITIES

ASSETS

EQUITY

LIABILITIES

ASSETS


29/67


PROFIT & LOSS ACCOUNTFOR THE PERIOD

TRADITIONALBALANCE SHEET

AS AT

Contrast To Traditional Business Thinking

EQUITY

LIABILITIES

ASSETS


AS AT

EQUITY

LIABILITIES

ASSETSCOST

OF SALESGROSS

MARGINEXPENSES

NETPROFIT

SALES

NETCASHFLOW


30/67




AS AT


EQUITY

LIABILITIES

ASSETS


AS AT

EQUITY

LIABILITIES

ASSETSCOST

OF SALESGROSS

MARGINEXPENSES

NETPROFIT

SALES

NETCASHFLOW


31/67




AS AT


EQUITY

LIABILITIES

ASSETS


AS AT

EQUITY

LIABILITIES

ASSETSCOST

OF SALESGROSS

MARGINEXPENSES

NETPROFIT

SALES

NETCASHFLOW


32/67


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN

INFRASTRUCTUREEXPENSES

OPERATINGCASH FLOW

MOVEMENTIN FIXEDCAPITAL

NETPROFIT

NETCASHFLOW

FIXEDCAPITAL

WORKINGCAPITAL

EQUITY

DEBT

SALES

FIXEDCAPITAL

WORKINGCAPITAL

DEBT

The Financial Fence Way of Thinking


33/67


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATINGCASH FLOW


NETPROFIT

NETCASHFLOW

FIXEDCAPITAL

WORKINGCAPITAL

EQUITY

DEBT

SALES

FIXEDCAPITAL

WORKINGCAPITAL

DEBT



34/67


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATINGCASH FLOW


NETPROFIT

NETCASHFLOW

FIXEDCAPITAL

WORKINGCAPITAL

EQUITY

DEBT

SALES

FIXEDCAPITAL

WORKINGCAPITAL

DEBT



35/67


EQUITY

$265,000

COSTOF INTERACTION

-$1,400,000

NETPROFIT

$150,000

WORKINGCAPITAL MVT

-$140,000

CONTRIBUTIONMARGIN

$350,000


$200,000

OPERATINGCASH FLOW

$10,000

FIXEDCAPITAL MVT

-$25,000

NETPROFIT

$150,000

NETCASHFLOW

-$15,000

FIXED

CAPITAL$375,000

WORKING

CAPITAL$230,000

EQUITY

$415,000

DEBT$190,000

BALANCE SHEETAS AT


CASH FLOW STATEMENTFOR THE PERIOD

THE FINANCIAL FENCE

SALES

$1,750,000FIXED

CAPITAL$350,000

WORKING

CAPITAL$90,000

BALANCE SHEETAS AT

DEBT

$175,000

The Financial Fence - Example Company


36/67


EQUITY

$265,000

COSTOF INTERACTION

-$1,400,000

NETPROFIT

$150,000

WORKINGCAPITAL MVT

-$140,000

CONTRIBUTIONMARGIN

$350,000


$200,000

OPERATINGCASH FLOW

$10,000

FIXEDCAPITAL MVT

-$25,000

NETPROFIT

$150,000

NETCASHFLOW

-$15,000

FIXED

CAPITAL$375,000

WORKING

CAPITAL$230,000

EQUITY

$415,000

DEBT$190,000

BALANCE SHEETAS AT

PROFIT & LOSS ACCOUNT

FOR THE PERIOD


THE FINANCIAL FENCE

SALES

$1,750,000FIXED

CAPITAL$350,000

WORKING

CAPITAL$90,000

BALANCE SHEETAS AT

DEBT

$175,000



37/67


EQUITY

$265,000

COSTOF INTERACTION

-$1,400,000

NETPROFIT

$150,000

WORKINGCAPITAL MVT

-$140,000

CONTRIBUTIONMARGIN

$350,000


$200,000

OPERATINGCASH FLOW

$10,000

FIXEDCAPITAL MVT

-$25,000

NETPROFIT

$150,000

NETCASHFLOW

-$15,000

FIXED

CAPITAL$375,000

WORKING

CAPITAL$230,000

EQUITY

$415,000

DEBT$190,000

BALANCE SHEETAS AT


FOR THE PERIOD


THE FINANCIAL FENCE

SALES

$1,750,000FIXED

CAPITAL$350,000

WORKING

CAPITAL$90,000

BALANCE SHEETAS AT

DEBT

$175,000


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

Milestone check


38/67


39/67


EQUITY

$265,000

COSTOF INTERACTION

-$1,400,000

NETPROFIT

$150,000

WORKINGCAPITAL MVT

-$140,000

CONTRIBUTIONMARGIN

$350,000


$200,000

OPERATINGCASH FLOW

$10,000

FIXEDCAPITAL MVT

-$25,000

NETPROFIT

$150,000

NETCASHFLOW

-$15,000

FIXED

CAPITAL$375,000

WORKING

CAPITAL$230,000

EQUITY

$415,000

DEBT

$190,000

BALANCE SHEETAS AT


FOR THE PERIOD


THE FINANCIAL FENCE

SALES

$1,750,000FIXED

CAPITAL$350,000

WORKING

CAPITAL$90,000

BALANCE SHEETAS AT

DEBT

$175,000


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

Bottom rail check


40/67


PERFORMANCE MEASUREMENT

Lets look at a couple of ourmeasurements


41/67


RETURN ON SALES

R S l


42/67


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATINGCASH FLOW


NETCASHFLOW

FIXEDCAPITAL

WORKINGCAPITAL

EQUITY

DEBT


FOR THE PERIOD


SALES

FIXEDCAPITAL

WORKINGCAPITAL

BALANCE SHEETAS AT

DEBT

Return on Sales

ReturnSales

NETPROFIT

DEFINITIONNET PROFIT divided by SALES

Th Fi i l F


43/67


COSTOF INTERACTION

-$1,400,000

CONTRIBUTIONMARGIN

$350,000


$200,000

NETPROFIT

$150,000


FOR THE PERIOD

THE FINANCIAL FENCE

SALES

$1,750,000

The Financial Fence

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

ACTIVITY OF BUSINESSPROFIT TO SALES 8.6%


44/67


RETURN ON CAPITAL

The Financial Fence Primary measure


45/67


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN


OPERATINGCASH FLOW


NETCASHFLOW

FIXEDCAPITAL

WORKINGCAPITAL

EQUITY

DEBT


FOR THE PERIOD


SALES

FIXEDCAPITAL

WORKINGCAPITAL

BALANCE SHEETAS AT

DEBT


Return Capital

NETPROFIT

DEFINITIONNET PROFIT divided by TOTAL CAPITAL

The Financial Fence


46/67


EQUITY

$265,000

COSTOF INTERACTION

-$1,400,000

NETPROFIT

$150,000

WORKINGCAPITAL MVT

-$140,000

CONTRIBUTIONMARGIN

$350,000


$200,000

OPERATINGCASH FLOW

$10,000

FIXEDCAPITAL MVT

-$25,000

NETPROFIT

$150,000

NETCASHFLOW

-$15,000

FIXED

CAPITAL$375,000

WORKING

CAPITAL$230,000

EQUITY

$415,000

DEBT

$190,000

BALANCE SHEETAS AT


FOR THE PERIOD


THE FINANCIAL FENCE

SALES

$1,750,000FIXED

CAPITAL$350,000

WORKING

CAPITAL$90,000

BALANCE SHEETAS AT

DEBT

$175,000

The Financial Fence

KEY TOP LEVEL MEASURERETURN ON CAPITAL 24.8%

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

High level review


47/67


EXAMPLECOMPANY

High level review

RETURN ON SALES 8.6%

RETURN ON CAPITAL 24.8%



48/67


Which measure sounds best?


8.6%

or24.8%



49/67


Which measure encourages

the business owner to keepgoing?

Which measure helps thebusiness owner appreciate thereal value of what hes doing?




50/67


BUT also a far more powerful measurefor the business


FIXEDCAPITAL

WORKINGCAPITAL

Return Capital

NETPROFIT

RETURN ONCAPITAL BECAUSEOFTEN ITS BIGGER

Today we can only touch the tip of the iceberg


51/67


Today we can only touch the tip of the iceberg

The depthof ourbusiness

Todayspresentation

What is a Business Sherpa?


52/67



In the dictionary a Sherpa

has been described as:an expert chosen by a chief

executive to assist inpreparations for a summitmeeting.



53/67



A key quality of a Sherpa is aprimary concern with getting the

person they are guiding to the top ofthe mountain

Our Business Sherpas have alreadybeen up the business mountain

Our Business Sherpas have the skillsand experience to guide you to thepinnacle of business success


54/67

The value of walking with a Sherpa


55/67


g p

Many business leaders have

neither the knowledgenor the specific skillsto optimise the performanceof their business

Going alone is alonely way to go



56/67


g p

Engaging the assistance of

a Business Sherpa willassist you move your

business to its ultimateperformance

Going alone is a

lonely way to go



57/67


g p

Going alone is a

lonely way to goIt is virtually impossible to

reach the pinnacle ofsuccess if you try and take

the entire journey alone


58/67


Time to go to base camp

How to get started


59/67


The most effective way we have foundis by taking the live information froma business and putting it on the fence

This allows you to see first hand how itgives a completely different perspectiveon your business and its performance

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.

The Advantages To You


60/67


Understand the financial outcome ofinteracting with your customers

Make sure you get your fair share of thepie by not being squeezed by both

customers and suppliers Reduce your business risk as a result of

improved decision making

Maximize the cash in your pocket

Allows you to spend less time working in your business

ADVANTAGES

Some Typical Real Benefits


61/67


Peace of mind that your business isa great investment

More discretionary time to spendwith your family / friends /personal interests

Having the freedom to make decisions and not feelsqueezed by everyone

Dont feel like youre always the last in line to get paid

Having the freedom to do the enjoyable parts of your

business


62/67


The first step for you is The BusinessFinancial Fluoroscope Report

The Business Financial FluoroscopeReport is an in-depth look at thefinancial dynamics of your business,using The Financial Fence

The Report allows you to see whatsreally going on inside your business

and identifies areas for improvement.

Results from a Fluoroscope


63/67


Executive summary Forecast

Commentary and explanation of allthe indicators used in the analysis

Recommendations Personal consultation to explain theresults

Start with aFLUOROSCOPE

Do you know YOURFUTURE?


64/67


FLUOROSCOPE FUTURE?

Do you have a plan?

The Financial Fence


65/67


Inve

stinYourB

usiness

FutureNO

Wand

GETyour

FLUOROS

COPEd

oneTODAY


66/67



67/67


Contact usEmail: [email protected]

www.thefinancialfence.com

www.onesherpa.com