1. © 2011 Bottom Line Up

2. Why Talk About Profits? © 2011 Bottom Line Up

4. The Power of Small Changes 1 + 1 + 1 = 19 © 2011 Bottom Line Up

5. Revenue $ 5,000,000 100% Direct Costs (COG) $ 2,500,000 50% Overhead (SG&A) $ 2,000,000 40% Net Income $ 500,000 10% © 2011 Bottom Line Up

6. Change Price +1% Revenue $ 5,000,000 100% $ 5,050,000 101.0% COGS $ 2,500,000 50% $ 2,500,000 49.5% SG&A $ 2,000,000 40% $ 2,000,000 40% Net Income $ 500,000 10% $ 550,000 10.9% Increase in Profit $ 50,000 % Increase in Profit 10% © 2011 Bottom Line Up

7. Revenue $ 5,000,000 100.0% Change COGS -1% $ 5,000,000 100.0% COGS $ 2,500,000 50% $ 2,475,000 49.5% SG&A $ 2,000,000 40% $ 2,000,000 40% Net Income $ 500,000 10% $ 525,000 10.5% Increase in Profit $ 25,000 % Increase in Profit 5% © 2011 Bottom Line Up

8. Revenue $ 5,000,000 100.0% $ 5,000,000 100.0% COGS $ 2,500,000 50% Change S,G&A -1% $ 2,500,000 50% SG&A $ 2,000,000 40% $ 1,980,000 39.6% Net Income $ 500,000 10% $ 520,000 10.4% Increase in Profit $ 20,000 % Increase in Profit 4% © 2011 Bottom Line Up

9. Revenue $ 5,000,000100% +1% $ 5,050,000 101.0% COGS $ 2,500,00050% -1% $ 2,275,000 45.5% SG&A $ 2,000,00040% -1% $ 1,980,000 39.6% Net Income $ 500,00010% $ 595,000 12% Increase in Profit $ 95,000 % Increase in Profit 19% © 2011 Bottom Line Up

10. Change Price +1% Revenue $ 5,000,000 100% $ 5,050,000 101.0% COGS $ 2,500,000 50% $ 2,500,000 49.5% SG&A $ 2,000,000 40% $ 2,000,000 40% Net Income $ 500,000 10% $ 550,000 10.9% Increase in Profit $ 50,000 % Increase in Profit 10% © 2011 Bottom Line Up

12. Start small and monitor © 2011 Bottom Line Up

13. How does 1% translate to the customer? $1 per barstool $2 per hour or © 2011 Bottom Line Up

14. Price increased from 99 cents to $1.29 on one-half of their songs = net of 15 cents per song 250 million songs per month X.15 = $37,500,000 per month or 1.25 million dollars per day © 2011 Bottom Line Up

15. And Re-training and Re-training and Re-training

16. Ask Rich and Mary © 2011 Bottom Line Up

17. Ben Franklin was Wrong…

18. Revenue $ 5,000,000 100.0% Change COGS -1% $ 5,000,000 100.0% COGS $ 2,500,000 50% $ 2,475,000 49.5% SG&A $ 2,000,000 40% $ 2,000,000 40% Net Income $ 500,000 10% $ 525,000 10.5% Increase in Profit $ 25,000 % Increase in Profit 5% © 2011 Bottom Line Up

19. Revenue $ 5,000,000 100.0% $ 5,000,000 100.0% COGS $ 2,500,000 50% Change S,G&A -1% $ 2,500,000 50% SG&A $ 2,000,000 40% $ 1,980,000 39.6% Net Income $ 500,000 10% $ 520,000 10.4% Increase in Profit $ 20,000 % Increase in Profit 4% © 2011 Bottom Line Up

20. Gross Margins: Leading Indicator of Profit

21. Gross Profit = Take Home Pay © 2011 Bottom Line Up

22. Current Decisions vs. Past Circumstances © 2011 Bottom Line Up

23. PATH DEPENDENCE

24. Time: Einstein discovers that time is actually money © 2009 Bottom Line Up

25. © 2011 Bottom Line Up 1.Mandate vs. manage – Get buy-in and involvement 2.Highly variable expenses like marketing, training, support, etc. – Look at long range effects 3.Across the board cuts – Be strategic! 3 Common Mistakes

26. © 2011 Bottom Line Up Make Expense Management A Profit Center Be Strategic:

27. Waste is Expensive With 10% Profit - Unnecessary Expenses of $1000 Requires Additional Sales of $10,000 © 2009 Bottom Line Up

28. Vendor discounts and agreements Compliance audits - vendors and employees Supply management ‘Shrinkage and theft controls’ © 2011 Bottom Line Up

29. One neck to choke © 2011 Bottom Line Up

30. Fixed Isn’t Always Fixed

31. Overtime Commissions Expense Accounts © 2011 Bottom Line Up

32. Eliminate Empty Calorie Spending

33. Re-bid Calendar © 2011 Bottom Line Up

34. $20,000 per week Price variance +/-25% Savings of up to $5000 per week © 2011 Bottom Line Up

35. The eyes can see anything but themselves When you’ve gone as far as you can internally – bring in outside experts © 2011 Bottom Line Up

36. What can I do? What can my dept. do? What can my company do? What “dumb things” should we stop doing?

37. Ask Rich and Mary © 2011 Bottom Line Up

38. Lucky 7 Challenge

39. $7 million open orders $7 million revenue $700,000 Bottom Line 7 7 7

40. How do we effectively manage costs and create ongoing profitability? The Four Hands Challenge The Four Hands Challenge BetterFasterCheaper

41. Global Resources Great People & Attitudes Training Up 1000% - $55,000 Salaries Up 40% - $2.05 to $2.9M Benefits Up 69% - $141,000 to $246,000

42. Human Resources Great People & Attitudes Prior Year India9 China8 Europe1 USA54 Total 72 Current Year 9 10 1 58 78

43.  Advertising, promotions, mailings, PR Prior yr -$168,000 Current year -$277,000 up 65%  Trade Shows – $ 1,000,000  Travel & entertainment – Crate / NYC  Materials (printing, Web sites etc.)  Market Development

44. Offices in India, China, and Brussels Travel to markets world wide Potential offices in Vietnam and Indonesia Samples shipped to clients Identifying factories Quality control Samples at shows including air freight Introducing New Product/QA

45. Controllable Costs – Great Examples Freight/Shipping Courier Fees Vendor Deposits Interest and Bank Fees, $329,000 down to $172,500 Rejecting ½ of a Container Processes and Systems Control Costs

46. THEY NAILED IT!

47. Great Cultures are Forged not Forced

48. What Will You Be Taking Away? © 2011 Bottom Line Up