S YS TEM
UL 1316 Listed Doublewall Retrofit
All Fuels Compatible
Eliminates the need for C.P.
30 Year Warranty
Cost Less Than Tank Replacement
Tank Replacement Alternative
The gross margin increases from 29.0 percent to
29. 2 percent, an achievable number that reflects the
realities of the competitive situation in the firm’s
market. Combined with the increase in sales, the gross
margin goal becomes $2,187,080.
Finally, the plan provides for a 5.0 percent increase in
payroll expenses—that’s 2.0 percentage points lower than
the projected increase in sales. This concept, commonly
called a sales-to-payroll wedge, assumes a reasonable level
of productivity during the year. At the same time, it recognizes that some increases in labor will be necessary.
The final two items in the plan can be calculated
simply enough. Total expenses will equal gross margin
minus profit. Non-payroll expenses, by definition,
equal total expenses minus payroll.
When implemented correctly, the profit-first plan
has two advantages. First, this approach tends to
produce much more realistic performance goals. That
allows the firm to get into a mode of making plans that
can and will be achieved. The process has a positive
impact throughout the organization.
Second, the planning process is no longer just
a series of make-believe “what-if” exercises that
are transformed into a plan. The profit-first plan
seeks to improve profitability in a consistent—and
There is a genuine need for improved financial
performance in companies involved in the distribution
industry. A properly developed and well-executed
financial plan can be an integral part of the process.
However, in a fast-paced world, managers often try
Facing the Unknown