Controlling for Small and Medium-sized Enterprises · 2014. 4. 29. · Controlling for Small and...
Transcript of Controlling for Small and Medium-sized Enterprises · 2014. 4. 29. · Controlling for Small and...
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Controlling for Small and Medium-sized
Enterprises
Prof. Dr. Wilfried Lux Prague, April 25, 2014
Competence Center Financial Management & Controlling
Institute of Business Managemnet (IFU-FHS)
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Agenda
1. Introduction to Controlling in Small and Medium Sized Enterprises
2. Financial aspects: Profit and Cash Flow
3. Non-financial Aspects in Controlling
4. Setting the right Selling Price
1. Product Calculation
2. Target Costing
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Usage of Strategic Controlling Instruments in SMEs
Source: KMU Barometer Controller Services 2006
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Relevance of Strategic Controlling Instruments in SMEs
Source: KMU Barometer Controller Services 2006
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Usage of Cost Accounting Instruments in SMEs
Source: KMU Barometer Controller Services 2006
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Relevance of Cost Accounting Instruments in SMEs
Source: KMU Barometer Controller Services 2006
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Controlling Instruments in SME
Source: Ebner/Becker/Mayer/Ulrich 2013
Contribution
margin
accounting
Cash flow
accounting
Key Performance
Indicators /
Systems
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2. Financial Aspects: Profit and Cash Flow
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Income Statement (yearly, monthly) - Example
Small Swiss plumbing and tiling company
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16
Profitability and Liquidity
Nourishment for the company
= Profitability
(long-term goal)
Oxygen for the company
= Liquidity
(short-term goal)
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Liquidity Planning and Control
…Excel
Source:
www.heenemann.de
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The view ahead – Order entry
…Excel
Source:
http://www.controller
spielwiese.de/index.h
tm?Inhalte/Toolbox/b
erichte.htm
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Financial Key Performance Indicators
Profitability
Liquidity
Safety/
Risk
Efficiency Growth
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How important are KPIs?
• «My wife took part in an accounting course; since then we calculate
some financial figures.»
• «I rather accept an additional order than spending time on
calculating figures.»
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Most frequently used financial KPIs
• Sales Growth – dependent on industry and economic conditions
• Return on Sales (ROS): Industry: 4-8%; Trade: 2-3%; Min. 0,1%;
Median 8%; Max. 43%
• Return on Investment (ROI): good is 25-50% above interest rate for
long-term debt; Min. 8%; Median 14%; Max. 30%
• Equity Ratio: Industry: above 40% good; Trade: above 30% good; Min.
8%; Median 39%; Max. 100%
• Collection Period: 50% longer than due date (45 days); Min. 6 days;
Median 43 days; Max. 120 days
• Quick Ratio: above 100% is good; Min. 2%; Median 107%; Max. 285%
If Cashflow Statement is established:
• Free Cashflow: should be positive
• Cashflow-Margin: Min. 2%; Median 10%; Max. 67%
Source: Performance Barometer
St. Gallen 2008
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Frequently used non-financial KPIs
• Customer Satisfaction: Min. 71%; Median 84%; Max. 96%
• Complaint Rate: Min. 0%; Median 1%; Max. 2%
• On-time delivery (outbound): Min. 71%; Median 95%; Max. 100%
• Scrap rate: Min. 0%; Median 2,5%; Max. 17%
• Employee satisfaction: Min. 3%; Median 8%; Max. 80%
• Fluctuation rate: Min. 3%; Median 7%; Max. 17%
• Absenteeism rate: Min. 3%; Median 4%; Max. 19%
• Value creation per employee (in Euro): Min. 82’000; Median 143’000;
Max. 795’000
Source: Performance Barometer St. Gallen 2008
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Why do I have to pay for my filet mignon in
Germany Euro 20,- and in Switzerland CHF 45,-?
+ +
= € 20,- ≠ CHF 45,-
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Example: Calculation in a small furniture firm
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Calculation for a restaurant (fictive)
Meat CHF 10,-
Other ingredients CHF 5,-
Labor costs CHF 20,-
= Direct Costs CHF 35,-
+ Overhead surcharge (20%) CHF 7,-
= Cost of Goods CHF 42,-
+ Net Gain CHF 3,-
= Selling price CHF 45,-
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What if the market only allows CHF 40,-?
Selling price CHF 40,-
- Net Gain (reduced) CHF 1,60
= Target Costs CHF 38,40
Meat (Negotiating with butcher) CHF 8,-
Other ingredients (leave away the topping) CHF 4,-
Labor Costs CHF 20,-
= Direct Costs CHF 32,-
+ Overhead Surcharge (20%) CHF 6,40
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Which levers do I have?
• Cost-side
• Negotiating with suppliers
• Purchasing cooperatives
• Cut wages and salaries
• Make fixed to variable costs (e.g. freelancer instead of fixed
employees)
• Cut the portfolio(maybe quality reduction)
• Accept smaller gains
• Sales-side
• Increase quality in order to justify the higher price
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Questions & Discussion
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Contact
Prof. Dr. Wilfried Lux
Competence Center Financial Management and Controlling
Institute of Business Management (IFU-FHS)
FHS St.Gallen – University of Applied Sciences
Rosenbergstrasse 59
9000 St.Gallen
Tel.: + 41 71 226 13 84
Fax: + 41 71 226 13 81
Email: [email protected]