tailieunhanh - Practice Made Perfect 19

Practice Made Perfect 19 is the ideal opportunity to spend quality time with the best financial-advisory business consultants in the country. You get tips, tools, and worksheets to ensure that you can manage your practice to become the business success you want it to be. This book will be your new best friend—guaranteed | 158 Practice Made Perfect feel fine until you blow a gasket. And when you do you re more likely to become disabled than to die. Monitor these relationships and you ll discover the root cause of most of your practice problems. Operating Profit Margin The operating profit margin is calculated by dividing operating profit by total revenue. For example if your operating profit is 150 000 and your revenues are 1 000 000 your operating profit margin would be 15 percent. Expressed another way you would be generating 15 cents of operating profit for every dollar of revenue generated. A declining operating profit margin is a sign of one or more of these three problems A low gross profit margin Poor expense control Insufficient revenue volume When expenses as a percentage of revenue are increasing it should set off alarms especially if you have a growing business. Expense control is a function of attitude. Manage expenses according to your budget and be disciplined about writing checks or authorizing purchases that were not contemplated in the budgeting process. Often after a firm has a good year or two operating profit declines because advisers go into a spending mode spurred by past success. Buoyed by the belief that the recent past will repeat itself owners may spend money on new equipment salaries or rent. inevitably if business does not continue at the same pace advisers find that they cannot support the new infrastructure with the revenues they re generating. As a rule the gross profit margin in a financial-advisory firm should be in the range of 60 percent and operating profit margin operating profit divided by revenue should be in the range of 20-25 percent. This means that direct expenses should not exceed 40 percent of revenue and overhead expenses as a percentage of revenue should not exceed 35 percent. In the event that your expenses do exceed these numbers take steps to protect against further deterioration understand the economics of your practice and make sure