Prometheus Research Case Study

The full case study is here:  http://nyti.ms/tmYz82.  Thank you to The New York Times and Prometheus Research for making it available.

Prometheus is faced with the same dilemma as many other entrepreneurs.  While we are experts in our chosen craft, we aren’t necessarily experts in every other field required to head a flourishing business.  Bringing in outsiders can be difficult.  Especially if we feel that we have a ”good enough” grasp on the on things.  Credit to Dr. Rozenblit for understanding that in order to achieve the company’s goals, he was going to have to bring in sales expertise from outside the organization. 

The development of an operating budget would have helped Prometheus with this important decision.  By thoroughly scrutinizing its sales and expenses for the coming year, they would have understood better what the impact of a senior salesperson was compared to a junior.  In addition, specific sales goals could have been generated knowing exactly what was needed to justify this position. 

Assistance from ImperoCo with costing would have also been beneficial.  A review of their existing costing system along with the implementation of activity based costing would help ensure that they are pricing their product appropriately.  This is especially critical for a company in Prometheus’s position because of their start-up nature and the commitment they have made to the salesperson regarding salary and commission.

With the addition of such a highly compensated sales professional, it would also be advantageous for Prometheus to monitor revenue variances.  Revenue variances can be due to pricing, volume, product mix, market size, and market share.  By understanding exactly why goals were (not) met, Dr. Rozenblit can work more effectively with his new hire.

Based on the $4 million annual revenue figure specified in the article, the previously mentioned services from ImperoCo would quote as follows¹:

• Operating budget, activity based costing, and revenue variance service –
  • Down payment of $974.46 with eight monthly payments of $365.42.  Or…
  • An immediate cash payment of $3,422.77.  This represents a savings of $475.06, or 12.2%.

To conclude, ImperoCo could have helped Prometheus ascertain the most appropriate salary and incentive package to pay their new hire.  Additionally, ImperoCo could help them appropriately evaluate performance after the salesperson is hired.

¹ Pricing quote as of November 14, 2011.  Pricing is subject to change at any time.

KB