As a SpeedPro owner, understanding your Studio’s financial metrics won’t just be about bookkeeping—it’s about taking control of your business’s success. The metrics you track offer vital insights that allow you to make smart decisions, boost profitability and achieve your entrepreneurial goals.
By regularly monitoring and analyzing key performance indicators (KPIs), you can identify trends, spot potential issues early and capitalize on opportunities for growth. Here are the top financial metrics every SpeedPro franchisee monitors to drive success in the large-format printing industry.
Revenue and Sales Performance: The Top Line
The most important metrics that a business in any industry should track involve sales—how much money your products and services bring in, and how those sales change over time. By examining gross sales and your business’s growth rate, you’re able to see how well your business is faring in the market by meeting, exceeding, or falling short of your revenue goals.
Gross Sales (Sales Revenue)
The gross sales metric is the total amount of money your SpeedPro Studio brings in from all your sales. This is the starting point for understanding your business’s financial health.
To analyze your gross sales, track your sales over time. Are they consistently increasing? Are there seasonal peaks and valleys? Understanding these trends helps you forecast future performance and plan accordingly. It can also help you identify what contributes to increases or decreases, like a marketing campaign that caused explosive growth or a new product launch.
For a broader picture, compare your gross sales to previous periods, your own financial goals and industry averages or other SpeedPro franchises, as referenced in the SpeedPro FDD. This can highlight areas where you’re excelling or where there’s room for improvement.
Growth Rate
Your growth rate tells you how quickly your sales are increasing (or decreasing) over a specific period. It’s a vital indicator of your business’s momentum.
To calculate your growth rate, you’ll need the initial and current value of your business. Use the following formula to get a percentage:
([Current Value – Initial Value]) / Initial Value) x 100
A positive growth rate indicates your business is expanding. Analyze what’s fueling this growth and uncover how you can sustain it. A negative growth rate requires immediate attention. Investigate the potential causes: Is it market conditions, increased competition, or internal factors? Develop strategies to reverse the trend.
Make sure to track your growth rate regularly to ensure consistency and identify growth plateaus.
Managing Your Costs: Keeping a Close Eye on Expenses
How much your Studio costs to operate is also crucial to keep track of. These costs will ultimate impact the profit your business enjoys. Fortunately, SpeedPro’s efficient business model is known for its low overhead, making it easier and less costly to run your Studio.
Expenses
Expenses are the costs associated with running your SpeedPro Studio, including rent, utilities, insurance, employee salaries, marketing expenses, and royalty payments.
Break down your expenses into different categories, like fixed vs. variable or operational vs. administrative, to obtain a clearer picture of where your money is going. Then, track each expense category over time and identify areas where you might be overspending or seeing cost increases to plan ahead.
Cost of Goods Sold (COGS)
COGS refers to the direct costs associated with producing the wide-format print products you sell, including materials, inks, and any other expenses directly linked to the creation of the final product. This is one type of expense and is useful in understanding which products are most profitable and identifying opportunities to optimize material usage.
Thanks to SpeedPro’s nationwide network, Studio owners enjoy economies of scale and national vendor pricing on their production materials. We do everything possible to keep COGS low for our franchisees, allowing you to maximize profit margin.
Profitability: The Bottom Line and Beyond
With sales and expense figures calculated, you’re better able to keep a close eye on the prize: Profit. Your Studio’s profit demonstrates the money you walk away with at the end of the day, to be reinvested in the business or distributed as earnings. Several profitability figures should be tracked.
Gross Profit and Profit Margin
Gross profit is your revenue minus the Cost of Goods Sold. This figure represents the profit you make from your core printing services before considering operating expenses. It can also be expressed as a percentage of sales, called the gross profit margin.
To calculate your gross profit margin, divide your gross profit by your gross sales, then multiply by 100:
([Gross Sales – COGS]) / Gross Sales) x 100
This percentage indicates how efficiently you’re managing your production costs and pricing strategy. A higher margin is generally better. Is it covering your direct costs adequately and leaving enough room for operating expenses and net profit? Track your gross profit and gross profit margin over time to see if your core profitability is improving or declining. SpeedPro has a record of having high profit margins year-year-over-year – near 70%!
Net Profit
Net profit is your company’s total earnings after deducting all expenses, including the Cost of Goods Sold, operating expenses, interest, taxes, depreciation, and amortization. It’s the true “bottom line” of your business—the actual profit available to you.
Consistent net profit is essential for the long-term sustainability and growth of your SpeedPro Studio. A healthy net profit allows you to reinvest in the business, such as adding equipment or expanding your marketing efforts. Track your net profit over time to assess the return on your investment in the franchise.
Owner’s Discretionary Profit (ODP)
This metric, calculated as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) plus the owner’s payroll, provides a clearer picture of the total financial benefit that you, the SpeedPro owner, derive from the business.
Tracking ODP helps you understand the true earning potential of your franchise, as it accounts for your compensation as the Studio’s operator. It can be useful when comparing the profitability of your Studio against others in the system, or in assessing the value of your business.
Take Control of Your Financial Future
Understanding and regularly analyzing these key financial metrics is not optional—it’s essential for the success of any business. By making these numbers your allies as a SpeedPro owner, you can gain valuable insights into your Studio’s performance, identify areas for improvement and make strategic decisions that will drive profitability and long-term growth.
And don’t worry—you’re not doing it alone! The SpeedPro corporate team offers support in setting up performance goals, tracking metrics, and examining the long-term health of your business, too. By joining our nationwide system, you’ll have help every step of the way.
Learn more about the financial opportunities that await in SpeedPro’s large-format printing venture to get started!