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using-offtoa:scoreboard [2016/05/28 16:19] mdavis |
using-offtoa:scoreboard [2016/05/28 16:27] (current) mdavis |
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| * All red: Your company could have a big problem; it never achieves enough revenue to compensate for the expenses it incurs. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | * All red: Your company could have a big problem; it never achieves enough revenue to compensate for the expenses it incurs. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | ||
| * Red, then yellow or green, then red: The company started off well, but then your expenses got out of control. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | * Red, then yellow or green, then red: The company started off well, but then your expenses got out of control. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | ||
| - | Retained Earnings: | + | |
| + | ====Retained Earnings:==== | ||
| Colors indicate whether the company has retained earnings or accumulated deficit to date. Here is what colors mean specifically: | Colors indicate whether the company has retained earnings or accumulated deficit to date. Here is what colors mean specifically: | ||
| * Red light means that at fiscal year end, the sum of this and all previous years' earnings after tax is negative. | * Red light means that at fiscal year end, the sum of this and all previous years' earnings after tax is negative. | ||
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| ====Gross Margins (aka Gross Profit):==== | ====Gross Margins (aka Gross Profit):==== | ||
| - | Colors indicate whether the start-up's products have healthy gross margins. Here is what colors mean specifically: | + | Colors indicate whether the company's products have healthy gross margins. Here is what colors mean specifically: |
| * Green light means gross profit/revenues for the fiscal year is within 20 percentage points (plus or minus) of industry averages | * Green light means gross profit/revenues for the fiscal year is within 20 percentage points (plus or minus) of industry averages | ||
| * Yellow light means gross profit/revenue for the fiscal year is less than 20 percentage points below industry averages. | * Yellow light means gross profit/revenue for the fiscal year is less than 20 percentage points below industry averages. | ||
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| * Green bang light means gross profit/revenue for the fiscal year is more than 20 percentage points above industry averages. | * Green bang light means gross profit/revenue for the fiscal year is more than 20 percentage points above industry averages. | ||
| Here are some typical sets of indicators and what they mean: | Here are some typical sets of indicators and what they mean: | ||
| - | * All green: Typical of most start-ups. | + | * All green: Typical of most companies. |
| * Red, then yellow, then green: In some industries, it might take a year or two for a company to obtain volumes necessary to achieve healthy gross margins. | * Red, then yellow, then green: In some industries, it might take a year or two for a company to obtain volumes necessary to achieve healthy gross margins. | ||
| * Yellow, then green: In some industries, it might take a year or two for a company to obtain volumes necessary to achieve positive gross margins. | * Yellow, then green: In some industries, it might take a year or two for a company to obtain volumes necessary to achieve positive gross margins. | ||
| * All red, then yellow: This company is struggling. It is doubtful that it will be able to achieve enough gross profit with its current assumptions to cover its fixed costs of doing business. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | * All red, then yellow: This company is struggling. It is doubtful that it will be able to achieve enough gross profit with its current assumptions to cover its fixed costs of doing business. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | ||
| - | * Any green bang: You will have to understand why you believe you can achieve better efficiencies than the competition and be able to explain this to investors. Otherwise, they will not believe you. | + | * Any green bang: You will have to understand why you believe you can achieve better efficiencies than the competition and be able to explain this to investors and lenders. Otherwise, they will not believe you. |
| ====Current Ratio:==== | ====Current Ratio:==== | ||
| - | Colors indicate whether the start-up can cover its short-term debt payments. Here is what colors mean specifically: | + | Colors indicate whether the company can cover its short-term debt payments. Here is what colors mean specifically: |
| * Red light means current ratio at the end of the fiscal year is less than or equal to 0. | * Red light means current ratio at the end of the fiscal year is less than or equal to 0. | ||
| * Yellow light means current ratio at the end of the fiscal year is less than or equal to 1. | * Yellow light means current ratio at the end of the fiscal year is less than or equal to 1. | ||
| * Green light means current ratio at the end of the fiscal year is greater than 1.\\ | * Green light means current ratio at the end of the fiscal year is greater than 1.\\ | ||
| Here are some typical sets of indicators and what they mean: | Here are some typical sets of indicators and what they mean: | ||
| - | * Yellow, then green: Typical of a start-up company. It might take a year or two for a company to stabilize. | + | * Yellow, then green: Typical of a start-up company or a company making a major change to its direction. It might take a year or two for a company to stabilize. |
| * All green: This is also possible (envious, but possible). | * All green: This is also possible (envious, but possible). | ||
| * Never turns green: This company is struggling to stay afloat. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | * Never turns green: This company is struggling to stay afloat. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | ||
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| ====Net Working Capital:==== | ====Net Working Capital:==== | ||
| - | Colors also indicate whether the start-up can cover its short-term debt payments. Here is what colors mean specifically: | + | Colors also indicate whether the company can cover its short-term debt payments. Here is what colors mean specifically: |
| * Red light means net working capital (NWC)/revenue at the end of the fiscal year is less than or equal to 0. | * Red light means net working capital (NWC)/revenue at the end of the fiscal year is less than or equal to 0. | ||
| * Yellow light means NWC/revenue at the end of the fiscal year is less than or equal to .1 . | * Yellow light means NWC/revenue at the end of the fiscal year is less than or equal to .1 . | ||
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| * Green bang light means NWC/revenue at the end of the fiscal year is greater than .25 . | * Green bang light means NWC/revenue at the end of the fiscal year is greater than .25 . | ||
| Here are some typical sets of indicators and what they mean: | Here are some typical sets of indicators and what they mean: | ||
| - | * Red, then yellow, then green: Typical of a start-up company. It might take a year or two for a company to stabilize. | + | * Red, then yellow, then green: Typical of a start-up company or a company making a major change to its direction. It might take a year or two for a company to stabilize. |
| * All green: This is also possible (envious, but possible). | * All green: This is also possible (envious, but possible). | ||
| * Green, then green bang: This company is holding on to too much cash. Ideally, the cash should be reinvested in the company. Otherwise it could be used for dividends or for repurchasing stock or repaying loans. | * Green, then green bang: This company is holding on to too much cash. Ideally, the cash should be reinvested in the company. Otherwise it could be used for dividends or for repurchasing stock or repaying loans. | ||
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| ====Net Cash from Operations:==== | ====Net Cash from Operations:==== | ||
| - | Colors indicate whether the start-up's business is generating cash. Here is what colors mean specifically: | + | Colors indicate whether the company's business is generating cash. Here is what colors mean specifically: |
| * Red light means the net cash generated from operations (NCGFO) for the fiscal year is less than or equal to 0. | * Red light means the net cash generated from operations (NCGFO) for the fiscal year is less than or equal to 0. | ||
| * Green light means NCGFO / revenue for the fiscal year is greater than -0. | * Green light means NCGFO / revenue for the fiscal year is greater than -0. | ||
| Here are some typical sets of indicators and what they mean: | Here are some typical sets of indicators and what they mean: | ||
| - | * Red, then green: Typical of a start-up company. It might take a year or two for a company's business to generate cash. Until then, cash is generated from loans and/or investments. | + | * Red, then green: Typical of a start-up company or a company making a major change to its direction. It might take a year or two for a company's business to generate cash. Until then, cash is generated from loans and/or investments. |
| * All red: This company's core business never generates cash. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | * All red: This company's core business never generates cash. Use the analysis tools of <php>echo $conf['comp_name'];</php> to solve the problem. | ||
| - | * All red: This could be acceptable for a start-up company that has no intent of ever generating cash from selling product, but instead is validating a technology with the expectation of being acquired by a third party. | + | * All red: This could be acceptable for a start-up company that has no intent of ever generating cash from selling product, but instead is validating a technology with the expectation of being acquired by a third party. No chance of attracting loans. It might be a good candidate for grants or perhaps high-risk investments. |
| ====Net Cash at End of Year:==== | ====Net Cash at End of Year:==== | ||
| - | Colors indicate whether the start-up has cash at the end of the fiscal year. Here is what colors mean specifically: | + | Colors indicate whether the company has cash at the end of the fiscal year. Here is what colors mean specifically: |
| * Red light means the cash at the end of year is less than or equal to 0. | * Red light means the cash at the end of year is less than or equal to 0. | ||
| * Yellow light means cash at the end of year / revenue for the fiscal year is less than or equal to .2 . | * Yellow light means cash at the end of year / revenue for the fiscal year is less than or equal to .2 . | ||
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| Here are some typical sets of indicators and what they mean: | Here are some typical sets of indicators and what they mean: | ||
| * Last few years red: If your company is expecting to attract outside investors, it will need a lot of work using the <php>echo $conf['comp_name'];</php> problem solving tools. At this point, it is highly unlikely that it will attract investors. It also might indicate that you (the entrepreneur) are being greedy. | * Last few years red: If your company is expecting to attract outside investors, it will need a lot of work using the <php>echo $conf['comp_name'];</php> problem solving tools. At this point, it is highly unlikely that it will attract investors. It also might indicate that you (the entrepreneur) are being greedy. | ||
| - | * All red: If this is a lifestyle company, you might not care if it attracts investors. | + | * All red: If this is a lifestyle company, you might not care if it attracts investors. You still might be able to attract loans. |
| - | * Last few years yellow: This could be an attractive investment for some investors, but only if they have strategic or personal interests. | + | * Last few years yellow: This could be an attractive investment for some investors, but only if they have strategic or personal interests. You will certainly not have difficulty attracting lenders assuming you have collateral and/or a good financial history. |
| * Last few years green: This could be a very attractive investment for some investors. It shows a nice IRR for all investors if the liquidity event occurs after the company matures. | * Last few years green: This could be a very attractive investment for some investors. It shows a nice IRR for all investors if the liquidity event occurs after the company matures. | ||
| * All red or yellow, with one year green. This is a very strange situation, but it means you should set your planned liquidity event to occur during the green year. | * All red or yellow, with one year green. This is a very strange situation, but it means you should set your planned liquidity event to occur during the green year. | ||
