5.15.80: CREATING BASIC METRICS - THE 80% - WILLIAM EASTMAN

PROFIT RADIO - "A Network of Entrepreneurs for Entrepreneurs"

Introduction
​We introduced the 5.15.80 Model at the beginning of the Season. It was a combination of research into small business performance and our practical experience from the last 2 decades. You could go to any area around the global with a market based economy and randomly select 1,000 companies, here is the distribution you would find: 5% or 50 companies that own their markets, 15% or 150 companies that are making money, and 80% or 800 companies that are barely surviving.

This series is about how to move from one level up and our concern in this series is the 80%, the focus now is how to make the business perform and viable.

LISTEN > ENGAGE > APPLY

Show Objectives
Today we finish Discipline 1 of the 9 Disciplines of Success. It is part of the 3 Basic Disciplines to Stay in Business.  are the beginning disciplines that will move a successful business to a market dominator.

Disciple 4 is the first in the sequence and starts with ways to improve market and sales performance. 

Discipline(s) 7, 8, and 9.

• D9 Processes Under Control
• D8 Distinctify the Offer

• D7 Professionalize Leadership & Management

Key Issues - Owner Perspective:

1. What should I do make this business viable?

What Do I Need To Know

FINANCE =	OPERATIONS +	CUSTOMERS +	PEOPLE
Revenue, Earnings, net investment	Scheduling, Efficiency, Waste	Marketing, Sales, Service	Leadership, teamwork, Mastery
INVESTMENT OF CHOICE	LOWEST COST PROVIDER	RAVING FANS	DISCRETIONARY PERFORMANCE

What You Need to Do
Scheduling (Build to Schedule)

• Actual Production Volume / Scheduled Production Volume (how much can we do) - how accurate are you at scheduling people, equipment, raw materials AND creating customer expectations - what you delivered divided by what you planned over a period of time (weekly, monthly, etc.) - used to determine accuracy of longer forecasts;
• ​Actual Scheduled Mix / Scheduled Mix (how well do we share resources) - because resources are finite, scheduling requires using the same people, equipment, materials at multiple locations within a confined time span, how well did you blend several project or job demands to maximize the use of resources - used to determine accuracy of shorter forecasts;
• Actual Sequence as Schedule / Number of Sequences (how much your processes are under control) - once you have made the schedule for sharing resources, it is a comparison between your scheduled mix of resources against what actually occurred - used to determine efficient use of resources across projects or jobs.

Efficiency (Use of Resources)

• Actual Processing Time (what is possible over planned period) - given this step in the project or the job, how much time is available - used to determine the percentage of available time;
• ​Shift Time (what is scheduled in project plan) - given this step in the project or job, how much time is scheduled - used to determine how the available time is used;
• Finished Units (what is actually completed within shift time minus defects) - given this step in the project or job, what was produced or achieved during that period - used to determine what is actually completed or accomplished in the given time.

Waste (First Time Thru)

• % of Scrapped Units (can’t use) - materials or work thrown away because it couldn’t be used or broken tools – used to measure effectiveness of material ordering, inventory storage, and preventive maintenance; 

• % of Returned Units (done wrong) - returned to the person who did the job because it was done wrong and not usable as is – used to measure first time quality;

• % of Repaired Units (done over) - tasks that must be immediately done over because it doesn’t work – used to measure first time quality.

Next week we start Disciple 2: Distinctify the Offer & Focus on Your Offer - What You Sell

How to build or improve your business with IBGR

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