2017

Porpoise Swim School

BUSINESS REPORT
IAIN WILLIAMSON

IAIN’S CONSULTING
Contents
Introduction ............................................................................................................................................ 2
Analysis ................................................................................................................................................... 3
Revenue by employee......................................................................................................................... 3
Revenue per class ............................................................................................................................... 4
Recommendations to the business ......................................................................................................... 5
Introduction

This report is designed to improve the profitability of Porpoise Swim School. We have outlined the
flaws in the actions taken by Porpoise Swim school in their own attempts to improve profitability in
term three. Our findings are as follows:

- Rachael and the low amount of revenue received

- Penguin and the low amount of revenue received

This report will discuss the failure of these above actions which were undertaken at the
commencement of term three to improve profitability.

Green indicates an excellent choice by the business.

Red indicates a poor choice by the business.

We have analysed:

- The revenue received by each employee

- The revenue received by each class
- Costs of each employee relative to the revenue they bring
- Costs of each class relative to the revenue they bring
 Analysis

Revenue by employee

At Porpoise swim school, there are seven employees with wages, all wages per class differ from
employee, wages are between 12 and 22 dollars per class, then Regina has a receptionist who only
works during a class so an extra 22 dollars must be included in the wages category of each class.
Meaning all classes are costing the business 34 dollars and 44 dollars per class.

Below is a graph which outlines the revenue received by employees with a comparison to the cost
each employee has incurred.

$16,000.00

$14,000.00

$12,000.00

$10,000.00

$8,000.00 Sum of Rates

Sum of Cost per Term
$6,000.00

$4,000.00

$2,000.00

$-
Claire Jamie Joanne Maryanne Rachael Regina Steven Tom

Tom is the highest performing teacher at Porpoise swim school, with his total revenue brought in at
around $15K. However, Tom is also the most expensive employee with his costs at 3.2K. Although
Tom is the most expensive employee he does bring the most revenue and his costs of 21% are which
is the exact average cost per employee.

On the other hand, Rachael who is said to boost the profitability and save the businesses is bringing
the second lowest amount of revenue with a cost percentage of 25% which is higher than any other
employee at the business.

Rachael was believed to be a better swim instructor she has failed to prove herself by improving the
profitability of the business, her higher cost percentage of 25%.
Revenue per class

Out of the nine classes at Porpoise swim school our analysis has confirmed that the two most
successful classes are Dolphin and Seahorse. Not only do they bring the highest amount of revenue
into the business they have the best cost percentage and obviously profit.

From this analysis, we have determined that Regina’s choice to introduce the Dolphin class was
successful as she is receiving an extra $11K in revenue as a result.

However, from looking at the figures Penguin is only bringing in $2.6K with a 25% cost percentage.
This is the highest percentage of cost with the lowest amount of revenue received.

This has led us to believe that the Penguin class was a poor decision made by the business.

Cost of class to Revenue of class

$12,000.00

$10,000.00

$8,000.00

$6,000.00
Sum of Rates
Sum of Cost per Term
$4,000.00

$2,000.00

$-

This graph above clearly outlines that Dolphin and Seahorse are the two most profitable classes with
the lowest cost percentages. And this graph supports that penguin is the lowest performing class
with the highest cost percentage.
Recommendations to the business

Rachael
After looking at the decisions made by the business we have concluded on the following actions
which will cause a higher amount of profitability in term four.

We saw Rachael as a liability to the business during term three. She had one of the lowest revenues
and the highest cost relative to how much revenue she brought in. Upon extra analysis, we saw that
Rachael was mainly receiving her revenue from Tadpole and Starfish, these were both mediocre
performing class categories with revenues of $6.4K and $5.7K respectively.

We recommend that Rachael is placed into the higher performing categories which already give the
business a good name. For example, the Dolphin program or the Seahorse program.

We strongly recommend Rachael is placed onto Dolphin or Seahorse to improve profitability and
reduce her relative costs.

Penguin
Penguin is a failed program within the swim school. As mentioned in the Analysis section the
penguin program is not brining nearly as much revenue compared to the other programs offered by
the swim school.

Currently the Penguin program costs $14 per lesson and has a small number of students enrolled in
the program with only 19 people enrolled in the program.

There are two options with Penguin:

We recommend cutting the losses on Penguin by cutting the program and allocating the left-over
time that the teachers have to the more successful programs.

OR

Raise the price on penguin and hope that the 19 customers stay at a $17.50 price, which we consider
to be unlikely.