Copyright 1999-2015 Bonni Graham Gonzalez. All rights reserved.

UNDERSTANDING THE FLOW OF

CORPORATE MONEY

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Products solve problems

2

No one is going to fund you if you cant

show the problem you are solving
Problems can be big or small
Serious or silly
What problem are you solving?

Tech for the sake of tech doesnt sell much

Copyright 1999-2007 Manual Labour. All rights reserved.

7/21/16

Business Case
3

A business case with reasonable figures

is the mechanism to demonstrate our
worth:

Persuasive essay
Asserts a single point
Proves that point with good argument,
facts, and figures
Does not simply include hearsay and
wishful thinking
Copyright 1999-2011 Manual Labour. All rights reserved.

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Sample Business Case

4

Copyright 1999-2011 Manual Labour. All rights reserved.

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The Basics of Cash Flow

5

Revenue:
Income derived
from the sale of
goods or services.

Revenue
-

COGS

Gross Profit

For our purposes,

this is the only
corporate income
that matters.

Copyright 1999-2011 Manual Labour. All rights reserved.

G&A

Net Profit

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The Basics of Cash Flow

Cost of Goods/
Services Sold:
This includes all costs
directly related to
manufacture of a
product or delivery of
service:

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Raw Materials
Labor
Shipping
etc.
Copyright 1999-2011Manual
Labour. All rights reserved.

Revenue
-

COGS

Gross Profit
-

G&A

Net Profit

The Basics of Cash Flow

General &
Administrative:
Those costs incurred
whether one single
item ships or hour is
billed:

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Staff salaries
rent
utilities
taxes
etc.

Revenue
-

COGS

Gross Profit
-

G&A

Net Profit

Copyright 1999-2011Manual
Labour. All rights reserved.

The Basics of Cash Flow

Measurements:

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Gross Profit
The money left after
you subtract COGS
from revenue
Net Profit
The money left after
you subtract G&A from
Gross Profit

Revenue
-

COGS

Gross Profit

Copyright 1999-2011 Manual

Labour. All rights reserved.

G&A

Net Profit

Doc as Gross vs Net Profit

9

Gross Profit

Chargeback
Doc is counted as part
of the product
Doc budgets more
adjustable
Managers understand a
Cost Avoidance
argument (more later)

Net Profit

Overhead
Doc is counted as part
of ordinary operations,
like reception
Doc budgets less
adjustable--upward
Managers understand a
Return on Investment
argument (more later)

Copyright 1999-2011 Manual Labour. All rights reserved.

7/21/16

Return on Investment vs Cost Avoidance

10

Return on
Investment (ROI)

Spend money to
make money
Asking for new
dollars
Must show how long
before new income or
cost savings will
recoup new dollars
spent

Cost Avoidance (CA)

Make the most of

what youre already
spending
Asking to redirect
dollars already being
spent
Must show whether
dollars will actually
be redirected
(i.e., not spent
on their original
allocation)

Copyright 1999-2011 Manual Labour. All rights reserved.

7/21/16

ROI vs CA
Implications for Business Case
11

ROI

Can argue within

department
Best for process
improvements (i.e., can
work faster, meet
deadlines better, etc.)
results shown in units
of time

CA

Must argue to
management above all
departments involved
Best for information
improvements (i.e.,
fewer support calls,
reduced consulting
time or costs
results shown in dollars
or % of budget

Copyright 1999-2011Manual Labour. All rights reserved.

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12

Tangible vs. Intangible

Assets

Companies have a variety of assets:

Tangible assets are furniture, inventory, real

estate, etc.
Intangible assets are intellectual property,
customer goodwill, etc.

Intangible assets have a measurable

financial worth

Copyright 1999-2011 Manual Labour. All rights reserved.

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13

Internal vs. External

Customers

External customers read our manuals

Internal customers

Sign our paychecks

Help or hinder our information acquisition
Eat lunch with us
Support our initiativesor not

Copyright 1999-2011 Manual Labour. All rights reserved.

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Change is Threatening
14

People dont like change, especially

when it messes with their budget. You
must:

Identify with them

Soothe them
Treat them like you would a frightened user:
learn their language.

Copyright 1999-2011 Manual Labour. All rights reserved.

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Recommended Reading
15

Crossing the Chasm & Inside the Tornado,

Geoffrey Moore
The Goal, Eliyahu Goldratt
Business @ the Speed of Stupid, Dan Burke
What Your CEO Wants You to Know, Ram Charon
All books listed are available at:
www.manuallabour.com/symposia
Further questions: bgraham@manuallabour.com

Copyright 1999-2011 Manual Labour. All rights reserved.

7/21/16