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The Top-Line Management System™ Count • Measure • Predict A Systematic Approach to Improving Company Productivity There is a difference between accounting, and “counting”. Top-Line Management (TLM) is a counting system. It was first created during Steve Firszt's time as president/owner
of a 4-store electronics retailer. Its purpose then, as now, was to provide high-level reporting of the most important performance
metrics of the business. Top-Line
Management is also a measure & predict system.
Because it quantifies the significant components of company productivity, it becomes possible to establish realistic
performance targets for each of those components. This allows executives to strategically manage each component for its impact
on the ultimate outcomes of productivity – bottom line profitability, and surplus cash flow. By quantifying, measuring, and predicting the key elements of profitability and cash flow, business owners are
better able to manage for improved productivity, and long-term prosperity. That is the promise of the Top-Line Management
System™. The TLM disciplines represented by the Prosperity Pyramid are explained in more detail below, left. Resources to help companies learn and implement TLM disciplines are listed below, right. Key innovations of TLM worksheets are the summary information "dashboards"
about profitability and cash flow. Example reports are available for you to view.
Read more at bottom of page. |
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The Prosperity Pyramid The disciplines of the Top-Line Management System™ are
represented by the Prosperity Pyramid™. The
foundation of good counting is solid bookkeeping practices. Most of the integration companies reviewed over
the past five years do not “count the money” as efficiently or effectively as they could. Poor bookkeeping fails
to illuminate the key measures needed for improving productivity
The
Top-Line Management System™ is so-named because virtually all its key measures are tied to top-line performance. Accurate
top-line measures are thus a huge part of the TLM process. Historical measures
allow managers to realistically "predict" future outcomes. Along with TLM bookkeeping practices, the ability to
measure and predict top-line performance has proven to help integration companies add 5 to 10 actual points of gross profit,
the first year they use the system*. *This may seem an immodest claim, but it has proven true across dozens of implementations. There is, of course, great
motive for a business owner to do what it takes to make TLM work. 5 additional points of GP is $50,000 in a $1 million/year
business. The cost of implementing TLM is far, far less.
The third component of company profitability is cost management. While
not as much fun as sales and margin management, operating measures are required
to properly predict and control company costs.
By illuminating accurate measures of top-line performance and operating costs, TLM enables business managers
to create a company-wide operating plan with monthly income predictions. These
predictions form the basis for specific management strategies and actions. Monthly review of actual performance
vs plan completes the TLM management cycle of Plan • Act
• Review.
The final key to financial strength is developing monthly cash
flow predictions. This is the “other half” of company productivity management: planning and measuring
the use of company assets and financing. One of TLM’s greatest innovations is its ability to test multiple cash flow
scenarios. Cash flow predictions
greatly enhance the ability of business owners, bankers, and investors to assess the potential "risk/reward" of
a business plan. It is the ultimate weapon in any plan for long-term Prosperity. |
Fast-Forward offers
numerous resources to help you learn and implement the Top-Line Management System™. A few are listed below. Additional
resources can be found on the TLM Tools & Resources page.
Solid Bookkeeping Practices Fast-Forward’s QuickBooks
for Integrators™ course provides 6 hours of on-screen instruction, along with numerous tools and resources,
on how to best configure and use QuickBooks for the TLM system. (click here for more info about the course)
Top-Line Measures & Predictions Fast-Forward’s TLM Sales Manager Worksheet
is free, and helps you quickly create an annual sales plan based on historical results. The Top-Line
Manager & Labor Productivity worksheet is a powerful tool for helping integration companies manage both
their top-line projections, and billable labor productivity and efficiency. These and other TLM worksheets can be found on
the TLM Tools & Resources page.
Operating Measures & Income Predictions Fast-Forward’s CFO Group Productivity Workshop
& Coaching Program is a 3-month crash course that shows you how to master
the "measuring & prediciting disciplines of TLM, using the incredibly powerful TLM
Productivity Manager Worksheet. (click here for more info about the workshop) Balance sheet projections & Cash Flow Planning Fast-Forward offers CFO services
to company’s desiring to work from a comprehensive financial plan. For more information on how Fast-Forward can help
to optimize both profitability and cash flow for your company, contact Steve Firszt directly at 314-918-0338, or e-mail to
steve@ffbizcoach.com. |
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Innovations
of the TLM “Counting & Planning” System
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Profitability The components of profitability are fundamental: sales revenues,
margins, and costs; as measured by the company income statement (P&L). It is not informative enough to have these components
presented as single line items on the P&L. Nor is it useful to present an executive with pages of detail about myriad
income and cost accounts. TLM organizes income, COGS, and expenses into meaningful categories, providing management with a
single-page report that highlights significant TLM productivity measures: §
Sales by major revenue category (for integrators: Equipment, Parts, &
Labor) § Sales Mix § Gross Margin by major revenue category §
Direct Labor Cost §
Labor Productivity (billed hours vs payroll hours) §
Payroll productivity §
Fixed costs §
Variable costs §
Operating margin & breakeven This valuable operating information is provided directly from the EXEC SUMMARY page of the TLM
Productivity Planning Worksheet
NOTE: The information in the Exec Summary report is derived from the TLM-configured P&L, without job costing.
At the executive level, this "global" data is more accurate, strategic, and actionable than the per-job data provided
by job-costing practices.
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Cash Flow While profitability is quantified at some level even in the smallest
of businesses, the components of cash flow are less well-understood by most business managers. As a result, little “planning
and counting” is done around the key assets and liabilities on a company’s balance sheet. Yet the productivity
of company assets and liabilities has everything to do with cash flow. TLM provides executives with simple measures for the productivity
of their balance sheet. Because these measures are tied to top-line revenue performance, it becomes easy for the manager to
plan future asset and liability balances. This illuminates the flow of funds into and out of the business, and allows responsible
planning of the most significant measure of company prosperity – distributions of cash to company owners and shareholders. The EZ LOOK tab of the TLM
Financial Planning Worksheet allows executives to view a one page summary of their 12-month financial plan, showing all key
operating and financial assumptions, and their resulting effect on profitability and cash flow.
Click here to see a sample pdf of the TLM EZ LOOK financial summary report
For more information about TLM and management coaching services,
call Steve Firszt at 314.918.0338, or e-mail
steve@ffbizcoach.com |
