1 / 13

CRB Business Building Seminar BUSINESS PHYSICS

CRB Business Building Seminar BUSINESS PHYSICS. Presented By: Greg Crabtree, Brandon Gray, Patrick Myers. Business Physics. What are the laws of Business Physics? Laws properly applied: Rental Equipment, Inc. Laws not applied: Outlet, Inc. Laws of Business Physics. Salary vs. Dividend

skah
Download Presentation

CRB Business Building Seminar BUSINESS PHYSICS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CRB Business Building SeminarBUSINESS PHYSICS Presented By: Greg Crabtree, Brandon Gray, Patrick Myers

  2. Business Physics What are the laws of Business Physics? Laws properly applied: Rental Equipment, Inc. Laws not applied: Outlet, Inc.

  3. Laws of Business Physics Salary vs. Dividend 4 Competing Forces of Cash Flow Taxes, Debt, Capital, Dividends Must be profitable to survive Million Dollar Profit Makeover

  4. Rental Equipment, Inc. Founded in 1991 1994: $200K LOC, Overdrawn $20K 2006: $0 LOC, $1.9M in cash

  5. Rental Equipment, Inc.

  6. Law: Salary vs. Dividend Ownership Structure: Active Employee / Investors Salaries based on market levels Dividends only paid according to the Laws of Cash Flow

  7. Law:4 Competing Forces of Cash Flow Taxes – Company has a “pay as you go” strategy Debt – $200K in 1994 ; $0 in 1999 Capital – $19K cash in 1994 ; $1.9M cash in 2006 Dividends – First issued in 2003

  8. Law:Must Be Profitable to Survive Marketplace change: 15% NOI reduced to a 0% NOI Company given “Salary Cap” Challenge – service more customers with less people Outcome – 25% reduction in payroll ; achieved & exceeded profitability target Side benefit – cost savings across the board

  9. Outlet, Inc. Founded in 1995 2001 1.1M in Debt, 300K in cash 2005 3.6M in Debt, 189K in cash 2006 – Out of Business

  10. Outlet, Inc.

  11. Law: Salary vs. Dividend Ownership Structure: Non - Employee Shareholders Shareholders paid little to no salary. Dividends paid based on shareholder discretion

  12. Law:4 Competing Forces of Cash Flow Taxes – Company never was profitable thus paid no tax Debt – $380K in 1995 ; $12M by 2000 Restructure in 2001 – change business model ; acquire additional capital Debt – 1.1M in 2001 ; 3.6M in 2005 Dividends (Return of Capital) – Paid throughout life of the Company - over 3.5M between 2001 and 2005

  13. Law:Must Be Profitable to Survive Switch to remainder product business model Applied Salary Cap – Not to total Company Challenge to increase gross margin to cover home office expenses Outcome – Increased profit margin ; Home office expense to high 2005 – Got away from remainder ; increased home office expense 2006 - Bankrupt

More Related