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  • About Us
    • Nick Setchell – RealTime CEO
    • Vistage & TEC WorkshopsNick Setchell has been working with Vistage, the world’s largest CEO organization, since 2001.
    • NewsSee what’s happening with RealTime CEO.
    • Economic Update Report
    • Contact UsReach out to us. If you’re interested in booking Nick to give a keynote address or workshop at your conference, please include the date and location.
  • Concepts
    • Fiscal Focus Financial Statement AnalysisUnlock the hidden numbers in your P&L and balance sheet to see how you’re performing in 11 vital metrics.
    • Should We? / Can We?View, in real time, the actual financial impact of the hundreds of business decisions your team makes every month.
    • 24 Month Rolling ForecastingBlend your trailing twelve months with a rolling 12-month forecast to get a complete financial picture of your business.
    • J Curve ManagementTrack the number of investments you’re undertaking, the 3 phases of each, and the 5 rules for managing them.
    • Return on Operations – ROOView your return on operations percentage — your ROO % — the most powerful number to measure business success.
    • CEO Performance AnalysisBenchmark your performance as a private-company CEO against others in your industry.
  • Resource Center
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RealTime CEO Blog


Sensitivity Analysis

Date: 27 August 2013
Category: RealTime CEO
Tags: 3W Accountability, Sensitivity Analysis

Sensitivity Analysis helps you decide which action will have the biggest impact on your business

In our blog 3W Accountability we discussed how we hold people accountable for actions being completed. It’s all very well to decide what action you’re going to take but how do you ensure that you’re allocating your scarce resources in the most effective way? In this blog, we’re going to look at sensitivity analysis as a way of helping you decide which action will have the biggest impact. Sensitivity analysis enables you to determine which one percent change to any of those levers will have the most profound impact on the business’s strengths and weaknesses.  

Sensitivity Analysis Table

– Sensitivity analysis calculates the impact of changes to each RealTime lever
– Highlights areas of high impact – inevitably price
– Also highlights areas of low impact – inevitably variable indirect costs.

In the diagram above we demonstrate how a one percent change to each of eight Fiscal Focus levers will impact your profit. Fiscal Focus levers are things that executives can change in order to influence the performance of the business. As you can see, the lever that has the biggest impact is price. But it’s interesting to note that variable indirect costs has a lower impact than many other levers, something to think about if cost-cutting is one of your main strategies.

Sensitivity analysis shows you how to allocate your resources

Sensitivity analysis shows you how to allocate your scarce resources to where they’re going to have the biggest impact. An analysis of your business will clearly show what is most effective at creating value and improving your performance. How much easier would it be to make business decisions if you knew how effective the changes would be before you made the decision?

Contact us on how to get specific information on a sensitivity analysis for your business.

Join us again next time as we look at the Mathematics of Pricing. (This one may surprise you! 😯 )

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