Multi-Unit Franchisee Magazine Issue I, 2014 | Page 91

AdIndex namely, why would anyone in their right mind do this? For now, let’s be clear on the action steps. First, you need 3 years of financial statements (or as many as you have). Second, you need to lay out your statements in a spreadsheet format (which is nothing more than putting all the financial data on one sheet, side-by-side, by year). Third, use the same spreadsheet format to calculate your financial ratios. Take a few minutes to read and study the ratios in the table, how they’re derived, and what they measure. Note that the ratios are broken down into three functional areas: 1) balance sheet ratios, 2) profitability ratios, and 3) asset management ratios. We will be looking to develop financial “balance,” since no individual ratio is the entire story. Taken together, however, we can now begin the process of analyzing your performance—and more important, planning for the future. In general, there are three ways to use these ratios to analyze your business. The first is to compare your current performance with your performance in previous years (trends). The second is to compare your present performance with others in your industry (I’ll provide some industry figures next time). And third is to compare your ratios with your plans in developing a workable operating strategy. You operate and manage your firm with limited resources, management, capital, and time. You can’t fix current problems or spot developing ones unless you know where to look. This “Fiscal Physical” process I’m describing is merely an efficient, effective method to keep your finger on the pulse of your company. Steve LeFever is the founder and chair of Business Resource Services (BRS), a Seattle-based consulting firm that provides financial management education, network benchmarking, performance group facilitation, and bookkeeping services for closely held businesses under its Profit Mastery brand. Learn more at www.profitmastery.net. or contact him at 800-488-3520 x14 or [email protected]. Advertiser Page 2014 Conference Calendar Back Cover 81 2014 MU II Advertising Deadline 2014 MUFC Save the Date 71 2014 Multi-Unit Buyer’s Guide 77 39 Black Bear Diners Brixx Wood Fired Pizza 39 BullsEye Telecom 23 Burger 21 73 Captain D’s 35 Checkers 3 Denny’s IFC Dunkin’ Brands 7 East Coast Wings & Grill 41 East Of Chicago Pizza 73 Empire Builders IBC Feed America 51 Firehouse Subs 71 Forever Yogurt 25 Franchise Learning Academy 13 franchiseIQ 53 Franchising.com 91 57 FRANdata Corporation Fuddruckers Inc. 51 29 Fuzzy Peach Golden Corral Buffet & Grill 73 Grow to Greatness 49 Hungry Howie’s Pizza 31 Hurricane Grill & Wings 14, 15 International Franchise Association 55 J.D. Byrider Systems, Inc. 49 Jake’s Wayback Burgers 41 Jersey Mike’s Subs Custom Insert Jimmy John’s Gourmet Sandwich Shops 9 Johnny Rockets 37 71 Kennedy’s All-American Barber Club Mama Fu’s Asian House 37 Massage Envy Spa 43 Massage Heights Corporate, LLC 35 McAlister’s Deli 43 Moe’s Southwest Grill 31 Newk’s Eatery 73 Papa Murphy’s 75 PATRIOT CREATIVE GROUP 45 PET SUPPLIES PLUS 33 Red Mango 1 Robeks 51 Sears Hometown & Outlet Stores 45 Snip-Its Haircuts for Kids 75 Sport Clips 29 SurePayroll, Inc. 19 33 sweetFrog Premium Frozen Yogurt The Coffee Beanery 75 Togo’s 75 Watermill Express 5 We Love Franchisors 85 We Love Suppliers 83 Wingstop Restaurants Inc. 47 Wok Box 10, 11 ZIPS 47 Multi-Unit Franchisee Is s u e I, 2014  89