1. Profitability
Project

2. Profitability Project
• History
• February 2006
• December 7-8 2006
• Group Two - December
2008
• Group Three - July
2012

3. Since Then...
• 20 Meetings
• More than 40
participating stores
• More than 30 stores
visited

4. Concept:
It’s the process, not the people

5. How does it work?
• Non-Compete
• Confidentiality
• Shared KPI’s
• Accountant (CFO Level) Kristin Sowa
• Online Software Reporting - Monthly
• Semi-Annual Meetings
• Accountability

6. What Do We Track?
• The K(Key) PI’s:
• Only Focused on Profitability
• Calculation Protocol is Crucial
• True “Apples to Apples” Comparison
(Different than the NBDA CODB Survey)
• Historical Data

7. What are KPI’s for P2?

8. Sales per Square Foot
The Formula:
Gross Sales/Total Square Feet
Use total revenue, and use the total square footage used in the business,
not just the selling area.

9. Gross Margin on Bikes
The Formula:
Gross bicycle sales less cost of bicycles
sold/Gross bicycle sales
Bicycles only.

10. Payroll Percentage of
Revenue
The Formula:
Gross payroll less owner’s gross
payroll/Gross Sales
Do not include payroll taxes or benefits like health care
and employee purchase discounts.

11. Bike Sales Percentage
of Revenue
The Formula:
Gross Bicycle Sales/Gross Sales

12. Inventory Turns
The Formula:
Cost of Sales / Average Inventory
(for bicycle and non-bicycle sales)
Use the cost of sales exclusive of shrinkage – the cost paid for the goods sold during the
previous 12 months, exclusive of freight and shrinkage.
Average inventory is computed by summing the last 13 months of inventory value at cost and
dividing by 13. Use 13 months of inventory data because it will include starting and ending
inventory.
Do this for bicycle cost of sales and average inventory cost, and for non bicycle cost of sales
and average inventory at cost.

13. GMROI
The Formula:
Gross Profit / Average Inventory
(for bicycle and non-bicycle sales)
Gross Profit is computed by taking Gross Sales less Cost of Sales, and average
Inventory is computed in the same way as above.
Do this for bicycle and non-bicycle sales

14. Gross Profit Margin
Percentage
The Formula:
Gross Sales less Cost of Sales / Gross Sales
Do this for bicycle and non-bicycle sales

15. Net Profit as a Percentage
of Gross Sales:
The Formula:
Net Profit / Gross Sales
Net Profit for our purposes is the sum of:-EBITDA (Earnings Before Interest,
Taxes, Depreciation, and Amortization) -Owner(s) gross pay.-Value of Benefits
owner(s) derive(s) from business Less-The Difference between rent paid and fair
market value, if building is owned.

16. Monthly Revenue
Change
The Formula:
(This year’s monthly Gross Sales less last year’s
monthly Gross Sales) / Last year’s Gross Sales
for the same month.
For example: (December 06 Gross Sales – December 05
Gross Sales) / December 05 Gross Sales

17. KPI Sample Report

18. KPI Sample Report

19. Has P2 Worked?

21. NBDA “P2 Group”
Members
• Mike Hamannwright - Revolution Cycles
• Dan Thornton - Free Flite Bicycles
• Chris Kegel - Wheel & Sprocket
• Beth Annon-Lovering - B&L Bike Shop
• Kristin Sowa - The Mann Group

22. Mike Hamannwright
• Wooden Hangers
• Focus on Where I am Not
Up to Par
• Seeing my Numbers Four
Weeks Earlier
• Tech Center Productivity
• Facilities Cost out of
Whack

23. Dan Thornton
• OTB
• Winning Ideas
• Cash Flow
• Inventory Control

24. Chris Kegel
• Star Trek, “Scottie”
• Benchmarking Against Peers Raises the
Bar
• The Master Mind Principle (Napoleon
Hill)

25. Beth Annon-Lovering
• Dollars per Square Performance as it Relates
to the Service Department
• Overall Growth
• Payroll % Decreasing
• Gross Sales per Full Time Equalivlament is
Increasing
• Staff is more Efficient and Productive. Their
Pay Increases and so does the Stores Profit

26. What YOU Can Learn
From P2
• Measure
• WHAT to Measure
• Measurement Protocols
• How do we FAIRLY compare the multi-
store vs the single store
• How can small stores be in the same
group as a large store?

27. How to get Started?

28. manngroup.net