12Faces provides a template spreadsheet that you can progressively fill in as you move through the Optimise100 steps. This business optimise article provides a user manual on how to take best advantage of this spreadsheet template.
Getting Started with Business Optimise 100
If you do not already have access to your copy of this template, contact reception@12faces.business.
This spreadsheet is only provided in an online format, which allows us to keep your version of the spreadsheet completely up to date.
The spreadsheet has 3 tabs, which you can see at the bottom of the screen:
- “Your Data” tab – where you will put your own information and the progress report.
- “Progress” tab – you can update your progress through the steps of the O100 Campaign and add comments.
- “Example” tab – contains the same template spreadsheet but filled in with the data that is available in the online articles that are part of the Optimise100 course materials.
We suggest that you start by looking at the “Example” page to get some idea of how the spreadsheet can be used.
Example Sheet
You can see, in the example, that we have filled in the same data as appears in the article: C2.2 Introduction to Optimise100 Campaign.
We will now step through the basics of the spreadsheet so that you can see how it operates using this business optimise Case Study.
The very first stage of the Example spreadsheet goes through the various preparation stages:
Stage 1
Read the introductory materials that are available on the 12Faces website. Although you cannot see in the Example, if you move to the “Your Data” tab you will see that there is a column labeled “More Info”. By clicking on the “More Info” link, beside the particular item of interest, you will be taken to the appropriate Skill Module in the 12Faces KnowledgeBase.
You will see here that we are beginning our preparation by reading several sets of introduction material. Speed reading through this will give you an idea of how the Campaign is arranged and its various sub-components.
The second column along is headed “Stage” and the arrow in each cell drives a drop down box. By clicking on the arrow you can select one of the progress options:
- Pending – means you haven’t yet begun
- Progress – means you are working on it
- Completed – means you have finished the job
- Skip – means that you have chosen not to do this particular stage
By choosing one of these drop down alternatives, your team will have a visual indication of how your progress is going.
Rows
The various types of Business Optimisations are grouped into:
- Revenue
- COGS
- Overhead Costs
- Cashflow
Also provided at the bottom of the spreadsheet are:
- The present annual Profit of this business.
- The Potential Change from the application of the Optimise100 methodology.
- A revised Profit and Percentage Improvement.
This information gives you an up-to-date estimation of both the potential gains from Optimisation and the expected improvement after applying the probability of getting that full amount.
For each of the sub-groups in the sample spreadsheet, there are several lines that are drawn from the example in the articles on the Optimise100 strategy.
There is space to add your own additional suggestions if you want.
Because it is a spreadsheet, you can add further rows as you would to any spreadsheet.
Columns
Across the page, there are several columns.
To see how to interpret them, we will work across the first row of data:
- The first row in the Revenue group: “Pricing Changes”.
In this example, you can see that we have completed this task to our satisfaction.
- In the “Potential $” column:
We have placed the additional Profit that might flow from a 1% change to the $1 million of existing Revenue.
That is 1% of $1 million is $10,000.
- The next column “Probability”:
We have a “guess” at how likely we are to be able to achieve the full potential dollars; in this case $10,000.
We have assumed that we can increase Prices by the full 1% so it has a Probability of 10.
- The next column contains the “Expected Improvement”:
This is simply the Potential Improvement multiplied by the Probability of achieving it.
It gives us a more realistic estimate of how much Profit will change from what is potentially possible to what is more likely possible.
- The following column “Rank”:
This is a rank from 1 to x (depending on how many rows you have in each group).
The smaller the number, the greater the impact.
In this instance, Pricing changes ranks as 1 and has the greatest impact of all the potential changes we could make.
- The final column “Notes”:
Contains any notes which you wish to put in to remind you how you arrived at the data provided.
Business Optimise Comments
You may not need all rows that are provided in this example, as they may not apply in your particular business optimise case.
They represent fairly typical variables in your business that can be changed to optimise your Profitability.
Some changes are comparatively “lumpy”. You can’t, for example, have half of a leased premise in the normal course of events although it might be possible to sublet some of that space. This might also apply to some of the wages groups. You may have to do away with an entire person and salary because it can’t easily be reduced to a part-time.
The Cashflow group do not always provide additional Profitability directly. They simply improve your liquidity and thereby reduce your risk.
However, there may be some savings. For example, if you have an Overdraft this might be able to be reduced and therefore interest charged by the bank is reduced. In this case, that could go as a line in the Overhead Costs group.
Constraints
In each section, there is a row named “Constraints”.
You may recall reading about the Theory of Constraints in several places within this Campaign.
Go to the Skills Module introduction: SM5.0 Theory of Constraints (TOC)
There is generally only one bottleneck to improving the productivity of any part of your business.
This is called your “constraint“.
These lines are included in the business Optimise100 spreadsheet so that you can note any constraints that you have identified and indicate the dollar improvement that might arise from them.
Example:
You may have decided that the absence of a Sales Manager is costing you forgone Revenue.
In the Constraints section of the Revenue group:
- Put a potential dollar figure equivalent to the extra Revenue you would expect a Sales Manager to generate
- Minus the cost of their salary and other directly related costs.
Business Optimise Example Tab Wrap-up
At the bottom of the example spreadsheet, you can see the impact of the changes that we are suggesting here, both in dollar terms and percentage improvement.
This early planning will give you some indication of the return that you can get from actually undertaking these changes.
If it is only a small change, it may not be worth trying to optimise your business any further because it seems to be already in fairly good condition.
On the other hand, you might see that there is a fair bit of opportunity to improve the profitability of your organisation.
It is not uncommon, especially in businesses with low profitability, to see a doubling of Profit.
Your Data Spreadsheet
It is now the opportunity for you to move to the “Your Data” spreadsheet and begin to add additional information.
As we mentioned above, there is an additional column “More Info”.
- Clicking on any of these “More Info” tabs will take you to a written explanation of some of the opportunities.
If you are having difficulties using the spreadsheet, or if you can suggest improvements to make it more useful, please feel free to contact us at reception@12faces.business with your enquiry.
Once you have completed the “Your Data” tab, you can move to the Planning phase of the PDCA cycle or return to the Optimise100 Campaign introduction.
Go to the article: How the Plan Do Check Act (PDCA) Cycle Builds Important Routines
Go to the Campaign: C2.2 Introduction to Optimise100 Campaign
Keeping Track of Course Progress
There is a tab in the Planning Spreadsheet named “Progress”
A list of all the business optimise course material is provided here.
You can check off the readings as you complete them.
There are extra rows where you can add other readings as you do them.
Importantly, please add your Feedback in the space provided so we can improve the materials for those that come after you.
Thank you for helping with our Kaizen process (A Japanese word meaning continuous incremental improvement)