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Print PageStrategic Consulting & Training FAQ's.
The following is an index of all the FAQs on this page:
- How are the High Profit Ratios Calculated?
- Do these figures represent averages for the industry?
- What is the internal opinions section about?
- Why is an answer of strongly agree to the question ""The strength of the business is based primarily on the strength of the personal relationships that the principals have with their clients"" seen as being undesirable practice?
- Does the high profit group represent best practice?
- What is the commentary section about?
- Won't these averages change all the time with each new questionnaire that is added?
- Are all ratios based on the full data set?
- Total Non Salary Expenses per Person in the Key Ratios Report has a slightly different average in the Expense Report. How is this possible?
- How are appointments per year and like ratios calculated?
- APR – Asset Productivity Ratio - (This ratio is sponsored by Asset Magazine).
- Any more questions?
Q How are the High Profit Ratios Calculated?
A
These ratios are based on the sample of businesses we identify as being high profit. A business is identified as being high profit if its ""Net Profit per Owner Workhour"" exceeds a predetermined amount (currently $110). This comprises approximately 25% of the database.
Q Do these figures represent averages for the industry?
A
The figures in this report only reflect the results of those that participate in the survey and are not necessarily representative of the profession as a whole.
Q What is the internal opinions section about?
A
We identified practice management issues that impact upon a business. We made a judgement about what was desirable practice with regard to each of these issues. We framed our questions so that in some cases an answer of strongly agree would indicate “desirable” practice, and in other cases an answer of strongly disagree would indicate “desirable” practice.
In reporting the answers to these questions we:
1. Organised the results into related groups (eg Dependence on Principals, Systems Effectiveness).
2. Allocated numbers to the answers so that a score of 5 would indicate desirable practice.
· Sometimes a score of 5 would result from an answer of strongly agree and sometimes it would result from an answer of strongly disagree.
· In your report an asterisk following the question would indicate that a score of 5 indicated strongly disagree and in all other cases it would indicate an answer of strongly agree.
The numbers prior to the statement in this section refer to the actual question number. You should read the full question when looking at the answers to these questions.
The easiest way to read this section is to consider that a score of 5 indicates the most desirable management practice in relation to the issue identified.
The results of this section do need to be treated with extra caution. What we have identified as being desirable practice is not necessarily desirable practice in all circumstances. The answers each participant has given are subject to a large degree of subjectivity and interpretation.
Q Why is an answer of strongly agree to the question ""The strength of the business is based primarily on the strength of the personal relationships that the principals have with their clients"" seen as being undesirable practice?
A
This is a question which will generate some debate. While an answer of strongly agree to this question does reflect very positively on the professionalism of the principals it also indicates that the business is too heavily dependent upon principals and its growth will be constrained by the availability of principals. Some principals may also argue that they get great satisfaction out of developing the personal relationship with the clients and would not wish to change this. This is a totally valid perspective provided that you realise that you may have a very secure and enjoyable job for yourself but may not have an effective business.
Similar issues also apply to questions 3,4,7 and 9.
Q Does the high profit group represent best practice?
A
The high profit group does not necessarily represent best practice. They do however represent businesses that have the best financially rewarded principals for the time involved. We therefore can get an indication from these businesses of some of the things associated with success.
Q What is the commentary section about?
A
The commentary section highlights some issues we believe you should investigate. It is important to note that these are only issues to consider because we generally do not know the full picture of your business or the special circumstances you face or the way you most effectively do business.
Q Won't these averages change all the time with each new questionnaire that is added?
A
We “close” the averages twice annually. All questionnaires received prior to these “close” dates (currently December and April) will be included in the reported averages.
Q Are all ratios based on the full data set?
A
There are two reasons why not all questionnaires will have an effect on the averages. Firstly, some averages are based upon information supplied only by those participants who completed an Advanced questionnaire. Secondly, some questionnaires are completely excluded from the averages because we have been unable to clarify “discrepancies” with the participating firm during our processing.
Q Total Non Salary Expenses per Person in the Key Ratios Report has a slightly different average in the Expense Report. How is this possible?
A
Only the advanced questionnaires collect a detailed breakdown of expenses and not all advanced questionnaires were complete. When we total the detailed expense items the result is based on those participating firms who have completed the advanced questionnaire and so has a slight variation from the Non Salary Expense item based on a full data set. All Expenses ratios need to be treated with extra caution and we have included them as a general guide only.
Q How are appointments per year and like ratios calculated?
A
For some ratios the questionnaire only collected information on a weekly or monthly basis. These have been multiplied by 52 or 12 to convert into an annual basis. The result is that we only have an approximation with some degree of variability.
Q APR – Asset Productivity Ratio - (This ratio is sponsored by Asset Magazine).
A
We wanted to develop a ratio that gave members an indication of how well they manage the key assets of FUM. This ratio provides an indication of the cost to manage each $1M funds under management. Therefore an APR of $10,000 indicates that it costs your firm $10,000 to manage each $1M FUM.
This is calculated by dividing the total expenses of your practice by your total FUM ($M). Total Expenses include an owners notional salary @ $50 per owner workhour. This ratio is relevant to firms concentrating on investment income and so for averages and high profit we have only included firms with over $20M FUM.
A
Do not hesitate to email us on dashboard@edashboard.com.au or contact us on (02) 9955 6222. Looking forward to supporting you and your future business development.