Ask your team to start listing your main “buckets” of revenue.
List your Cost of Goods Sold (COGS)
Explain: Revenue minus COGS equals Gross Profit
List your Expenses
Explain: Gross Profit minus Expenses equals Net Profit.
Draw a one-dollar bill on the left. This represents one dollar of Revenue.
Fill in how much your company keeps (bottom line) from every dollar.
Compare your numbers to the market. What are your competition and industry peers doing? Who are the low, mid, and high performers?
With a Critical Number of 10% Net Profit, ask how many dollars we have to sell to get a dollar on
the bottom line. Now calculate your own Revenue multiple, replacing x with your Net Profit.
(1/x = revenue multiple).
Gain Line of Sight. Can everyone in the company see where they can affect lines on the Income
Statement? Ask: Where can I make the biggest impact? What are the lines I can own? What are my
"Annual employee turnover has shrunk to about 2% in an industry that averages 50%."