Using Competitive Insights to Catapult Past the Competition

Financial Analysis Firm in Texas

Top performing businesses assess their strengths and weaknesses and where they hold competitive advantages or disadvantages against their competitors.  Research and actionable information increase the odds of outperforming the competition.  Take a look at the following financial benchmarks implemented for vcfo clients and consider how you can achieve similar results in your organization.

Increasing Cash Balances through Effective Receivables Management

A client CEO, acquired by a PE firm, was struggling to achieve adequate cash from operations. After benchmarking against top performing competitors, it became clear that their average days sales outstanding, (DSO,) at 53 days was 20 days higher than their nearest competitors.  This company was tying up $197,000 per day in accounts receivable which could otherwise have been converted to cash.  DSO improvement represented a $3.94 million opportunity for this company to meet its working capital requirements.

How Fast is the Competition Growing?

The Sustainable Growth Rate (SGR), provides a quick measurement of how quickly sales can grow before cash becomes a limiting factor.  Stated another way, SGR is the rate of change in sales that a business can self-fund.  A client CEO looked at this measurement and determined he was maxed out for organic growth and required another round of financing to grow top line revenues as he wanted to.  He also determined through this process that the top performers in his space are able to sustain a sales growth rate of 30% per year given their current profitability and financing mixes.  All of those areas represented opportunities for improvement to support the achievement of the sales goals the CEO targeted for his company.

Repairs and Maintenance Costs – Are you investing optimally?

A CEO providing residential and commercial HVAC services found they were spending approximately 2.25% of annual sales on repairs and maintenance of their fleet.  Top competitors in the same industry spend less than ¼ of one percent on similar maintenance expenses.  A deeper dive into the details resulted in a plan to change policies and procedures to bring their repair costs closer into line with top competitors. Although they remained higher than the industry average, they determined they were getting more life out of their fleet and that it was more cost effective overall to maintain the fleet longer than it would be to accelerate the purchase of new vehicles to support driving the lowest maintenance cost.

Are you a Destination Employer?

Attracting and retaining talent by maintaining competitive wages and benefits is one of the top issues business owners face.  To see how you’re doing, count your full-time equivalent team members (FTEs) And divide your total compensation expense by this headcount.  Then compare that result to the stats of your top performing competitors to see if you are competitive with your compensation.   Compensation per headcount at the company level is a broad indicator.  You may want to follow that up with a detailed compensation study for your key positions.

How efficient are you in utilizing staff?

Take the FTE number you calculated above and divide it into your annual sales.  Then compare your result to that of your top performing competitors.  If you have a big variance this is an area to dive deeper and try to figure out where you are more or less efficient and why.

Connect with a vcfo Consultant today for an analysis to find out how you compare to your competition and use the information you get to enhance your 2019 plan and beyond. Contact us to begin your consultation at or request a consultation here.