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BUSINESS ACCELERATION CALCULATOR

NBT IMPACT CASH IMPACT

Human Capital Management - Right People and Right Seats

1 Number of Leaders not performing Average Compensation Multiple 5

2 Number of Team Members not performing Average Compensation Multiple 2.5

Vacant Positions –

# Monthly Open Positions

Average Compensation Multiple 2.5

Hidden Vacant

Position 1

Describe:

Compensation Multiple 2.5

Hidden Vacant

Position 2

Describe:

Compensation Multiple 2.5

Ways to improve revenue (volume or price)?

1 Last Year Revenue

Industry

Growth

Rate %

Your Growth Rate %

Target 3

Your Gross Prot %

Ways to improve direct cost as a percentage of sales?

Ways to improve overhead costs as a percentage of sales?

Ways to improve your billing cycle to enhance cash flow?

Ways to improve terms with vendors (payables) to enhance cash ow?

Ways to improve inventory cycle to enhance cash ow?

TOTAL

Eective Tax Rate:

0.00%

0.00

0.00%

$ 0

INSTRUCTIONS

OVERVIEW:

Understand that there is a structure hidden within this calculator. There are 21 ways to accelerate and grow the amount of cash

in a company:

Four ways to nd cash in the Income Statement

• Increase revenue price.

• Increase revenue volume.

• Expand gross margin as a percentage of revenue.

• Reduce overhead as a percentage of revenue.

Three ways to nd cash in the Balance Sheet

• Increase the speed in which you collect receivables.

• Reduce the speed vendors are paid. Be careful here.

• Reduce the days receivable you need to carry in order to achieve your revenue goals.

For all seven of those items there are 3 lenses you use to improve results. The worksheet is designed to help you capture them.

At the top of the page there is a place for tax rate. Even if you are a LLC or S-corp... someone pays taxes. If you do not

know the tax rate of all the shareholders estimate 20% for simplicity’s sake. This is a good estimate after people take all their

deductions and your accountant makes all the adjustments. This will adjust book prot to real after-tax cash prot.

HUMAN CAPITAL MANAGEMENT – RIGHT PEOPLE AND RIGHT SEATS

While human capital management (HCM) is an is

sue that aects acceleration and cash in all seven areas above, for simplicity we

capture the HCM opportunity in one section of the calculator.

There are three ways your human capital management processes may be holding your business acceleration back and reducing

cash in your business:

1. Leaders Not Performing (anyone who holds someone else accountable) – If you have the wrong leader(s), research

tells us that each wrong leader is costing you anywhere between 10 and 15 times their total compensation (including

benefits, taxes, stock options, etc.). For conservative purposes we use a cost multiple of 5 and simplify compensation to

only include base and all monetary incentives. To calculate the cost of a leader that is not performing (if you are using our

fillable form this will be done automatically for you):

(A) Input the number of leaders not performing.

(B) Input the average compensation (base + all monetary incentives) – do not get complicated here.

(D) Multiply (C) by (1-your effective tax rate) and this will give you the Cash Impact.

Example, 1 leader makes $100,000 and tax rate of 20%. (100,000 x 5 x (1.x .2) = $400,000.

2. Team Member Not Performing - If you have the wrong team member(s), research tells us that each wrong team member

is costing you anywhere from 5 to 10 times their total compensation. For conservative purposes we use a cost multiple of

2.5. In our experience this is the minimum. To calculate the cost of a team member not performing (if you are using our

fillable form this will be done automatically for you):

BUSINESS ACCELERATION CALCULATOR

(A) Input the number of team members not performing.

(B) Input the average compensation (base + all monetary incentives) – do not get complicated here.

(D) Multiply (C) by (1-your eective tax rate) and this will give you the Cash Impact.

3. Vacant Positions – If yours is like many companies and you have an operations plan that requires a specific number of people

to achieve your goals, then it is costing you money if you do not have those positions lled. If it is common for you to have

one or more positions open every month you need to capture the cost of that leak here. It will cost you the same 2.5 times

compensation because of your failure to have a good recruiting process. Follow the same steps as a Team Member Not

Performing.

WAYS TO IMPROVE SALES GROWTH RATE OR PRICE

1. We have found that a poor strategy is hindering at least 75% of companies, and that shows up in your volume growth

rate. Companies that have a great strategy have revenue growth rates of at least 3 times the industry average or 25%,

whichever is greater. If your company is not growing faster than 3 times the industry growth rate or 25%, then follow the

following instructions:

Example

Target Growth Rate (3x Industry Average or 25%) (A) 30%

Your Last Year’s or Most Recent Growth Rate (B) 5%

Gap from Poor Strategy (A) – (B) = (C) 25%

Last Year’s Revenue (D) 10,000,000

Gross Margin % (E) 50%

Gross Margin $ (D) x (E) = (F) 5,000,000

NBT Impact of Poor Strategy (C) x (F) = (G) $1,250,000

Eective Tax Rate (H) 20%

Cash Impact of Poor Strategy (G) x (1-(H)) $1,000,000

2. Consider the biggest mistake in your sales process that costs the most revenue because you have not eliminated it. This

is causing lost leads, lower close ratio, client turnover, etc. List this item in the lines remaining and place the gross margin

impact of xing this problem, and that is the NBT Impact. Now calculate the Cash Impact.

3. Consider one way in which you can increase price on a subset of customers, product line, or specic service you have been

giving away and should not. Now add this to the worksheet reecting your direct cost of sales. Now calculate the Cash Impact.

4. Consider one realistic way you can innovate how you generate leads or close sales. What is the one bottleneck that if you

changed it, you could multiply the number of sales you get each quarter by 10? What is that worth to you?

WAYS TO IMPROVE DIRECT COSTS AS A PERCENTAGE OF SALES

1. Consider the biggest mistake in your operating processes that is causing the most waste and the most damage to your

relationship with customers, vendors, and employees. What is the one measure that if you improved it can contribute most

to reducing your direct cost of sales? What is the bottleneck in the process? Add this to the spreadsheet in both the NBT

Impact and Cash Impact.

BUSINESS ACCELERATION CALCULATOR

2. Consider one realistic way in which you can change how you purchase, produce, construct, sequence, or automate.

Subtract the cost of producing this reduction, and this is your NBT impact. Now Calculate the Cash Impact.

3. Consider an innovation that could dramatically change the complexity of manufacturing or delivering your product or service

and would give you a wild advantage over your competition. Now add this to the worksheet reflecting your direct cost of

sales. Subtract the cost of producing this innovation, and this is your NBT impact. Now Calculate the Cash Impact.

WAYS TO IMPROVE OVERHEAD COSTS AS A PERCENTAGE OF SALES

1. Consider the biggest mistake in your administrative processes that is causing the most waste and is most damaging to

your relationship with customers, vendors, and employees. What is the one measure that if you would reduce bottleneck

in process, or cause a major reduction in cycle time, can contribute most to reducing your overhead cost? Add this to the

spreadsheet in both the NBT Impact and Cash Impact.

WAYS TO IMPROVE BILLING AND COLLECTION CYCLE

1. Consider the biggest mistake in your billing and collection processes that is causing the most waste and is most damaging

to your relationship with customers or is causing the collections cycle to be longer than it needs to be. What is the one

change that would reduce a bottleneck in process and cause a reduction in collection days? Add this to the spreadsheet in

both the NBT Impact and Cash Impact.

WAYS TO IMPROVE BILLING AND PAYMENT CYCLE

1. Consider the biggest mistake in your billing and payment processes that is causing the most waste and is most damaging

to your relationship with vendors and employees. What is the one measure that, if you improved it, would reduce bottleneck

in process, or cause a major reduction in cycle time that could lead to improving cash and maybe reduce cost? Add this to

spreadsheet in both the NBT Impact and Cash Impact.

2. Is there a way you can change terms with a major vendor that can put you in a position where that vendor is helping you

fund your business interest-free? Add this to the spreadsheet in both the NBT Impact and Cash Impact.

WAYS TO IMPROVE INVENTORY CYCLE TO ENHANCE CASH FLOW

1. Consider the biggest mistake in your inventory cycle that is causing the most waste and is most damaging to your

relationship with vendors, customers, and reducing your cash flow. What is the one measure that, if you improved it,

would reduce bottleneck in process, or cause a major reduction in cycle time that could lead to improving cash and

maybe reduce cost?Add this to spreadsheet in both the NBT Impact and Cash Impact.

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