Profit Performance Assessment Tool

Acquire an Understanding of the Business

1. review overall business goals and objectives
2. perform interviews with key employees
   1. senior leadership team
   2. marketing/sales
   3. manufacturing/purchasing
   4. finance
3. examine all product lines, subsidiaries, partnerships, etc.
   1. identify critical markets, competition and customers
   2. review individual business goals and related strategies
4. review relevant financial and business information

Perform Analytical Review of Business

1. enhance and create key metrics and trends
   1. includes both financial and operational information
   2. focus in on critical performance data to identify areas of concern
   3. metrics must be simple and sustainable
2. perform product-line profitability analysis
   1. determine each product line’s true contribution to the business
   2. ensure proper overhead allocation
   3. ensure overlapping products do not mask performance issues
3. dissect income statements, margin rates, key metrics and trends
   1. identify root causes of poor performance
   2. verify and test findings via discussions and confirmations
4. major objective is to determine areas of the business not meeting expectations and to learn “why”

Report on Major Issues Affecting Profitability of the Business

1. create Profit Performance Assessment Report which includes:
   1. detail description of assessment process including the methodology utilized and interviews conducted
   2. thorough identification and explanation of issues contributing to poor profit performance. Such issues could relate to:
      1. business or product-line strategy
      2. sales trends and growth strategy
      3. pricing policy and trends
      4. product/project cost
      5. overhead cost levels
      6. business process concerns
   3. recommendations for corrective actions
      1. detailed corrective action plan for each of the issues identified
      2. explanation of how these actions will improve performance
      3. corrective actions could include the following:
         1. business strategy adjustments
         2. pricing policy changes
         3. internal business process changes
         4. cost reduction guidelines
         5. modified sales and marketing focus
         6. enhanced performance objectives and monitoring
   4. creation of sustainable follow-up procedures to ensure success of corrective actions.