You don’t know what you don’t know. Many of us believe we are a growth style business but in reality we are a life style business. A growth style business is managed by the numbers. Unfortunately, many IT Solution Providers do not know their numbers or what they should be. This presentation focuses you on the 10 most important numbers for your business to be successful, profitable and growing.

1. The 10 Most Important Numbers
to Watch in Your IT Business
By Larry Schulze
The Taylor Business Group

2. The Taylor Business Group
VAR/MSP Centric Professional Services
Consulting Firm
• Direct Consulting
• Accounting/Finance Management Services
• Workshops
• Business Improvement Groups
• Roadmap to Profitability Financial Dashboard

3. The 10 Most Important Numbers to
Watch in Your IT Business
“We are all self-made, but only the
successful will admit it!”
-Earl Nightingale

4. The 10 Most Important Numbers to
Watch in Your IT Business
Growth Style Business
versus
Life Style Business
What road are you taking?

5. Key Factors of a Growth Style Business
• There is a Vision
• Entrepreneurial - Willing to
Take (Calculated) Risks
• Believes in Plans not Hope
• Creation of a Sales Engine
• Invests in their Company and
their People
• Manages through People not to
People
• Manages by the Numbers

6. 10 Most Important Numbers
#10 – Product Margin
• Must be at least 18% overall
• Product must be a part of a
solution
• Clients versus customers
• HaaS/TaaS increases product
margin
• If you don’t ask, you will not get!
• Manages by the Numbers

7. 10 Most Important Numbers
#9 – Hourly Service Rates
• 4.5 times the hourly burdened
salary rate
• Requires a service organizational
structure
• Rates prior to volume or longer term
discounts

8. 10 Most Important Numbers
#8 – Sales Compensation
• 1/3 of every gross profit dollar goes to the
sales person; 2/3 to company
• Compensation plans must
drive objectives
• Compensation plans include:
– Salary
– Commissions
– Bonuses

9. 10 Most Important Numbers
#7 – Sales Expense
• Not to exceed 10% of total revenues
• Includes:
– Sales salaries
– Sales commissions and bonuses
– Marketing/Advertising
– Sales training
– All other sales related expenses

10. 10 Most Important Numbers
#6 – Administrative Expense
• Not to exceed 20% of total revenues
• Includes:
– Office and building expenses
– Benefits
– Payroll taxes
– Internal IT expenses
– Administrative salaries

11. 10 Most Important Numbers
#5 – Service Utilization
Definition:
Utilization – Percentage of Service Inventory
time that is billable per technician.
Utilization % = (Number of billable hours)
divided by
(Number of week days in
the month X 8 hours)

12. 10 Most Important Numbers
#5 – Service Utilization
• 75% Billable Utilization– 6 Hours per Day
Average
– 2 Hours per Day not Billable
– 1 Week per Month not Billable
– 3 Months per Year not Billable
• 25% of Time Accounts for hours paid but
not worked
– Vacation Time
– Sick Leave
– Personal Leave
– Bench/Administrative Time
– Training

13. 10 Most Important Numbers
#4 – Managed Service Agreement
Profitability
• Minimum of 65% gross profit margin
• Remaining 35% of revenue allocated to:
– Unburdened labor – 25%
– Tool expense – 10%
• Reasons for less than 65% GP
– Low pricing
– Inefficient processes and procedures
– Incapable service team

14. 10 Most Important Numbers
#3 – Service Salaries
• Not to exceed 33% of service
revenues
• Includes all service related
employees:
– Service manager
– Engineers and Technicians
– Help Desk
– NOC engineers/technicians
– Service Coordinator

15. 10 Most Important Numbers
#2 – Service Department Profitability
• Minimum of 55% Gross Profit
Margin
• You must price right and keep your
expenses in line:
– 33% Salary expense
– 5% Annuity Revenue COGs
– 3% Mileage expense
– 1.5% Parts expense
– 1% Training Expense
– 1% Meetings, travel and lodging expense
– .5% Miscellaneous expenses

16. 10 Most Important Numbers
#1 – Net Operating Income
• Minimum of 10% Net Operating Income
• Must achieve all of the above
benchmarks
• Service must be at least 60%
of total revenues
• MRR must be at least 50% of
total service revenue

17. 10 Most Important Numbers
• How do your numbers compare?
• Do you really know your
numbers?
• Are your financials/Chart of
Accounts detailed so you can
compare your numbers?
• Will you implement the best
practices to increase your
profitability?

18. 10 Most Important Numbers
Do you measure up?
Q&A