What is Power Of 3?
The Power of 3 is about the balance of three elements: revenue growth, cost control, and cash flow stability, working together to create financial strength. When a business keeps all three aligned, it stays profitable, adaptable, and resilient. It is the simplest formula for long-term financial control.
Why do we use it?
The Power of 3 helps businesses stay grounded in financial clarity. It’s concise performance management into three essentials, growth, cost, and cash. By aligning these, companies can scale without losing control, sustain profit even under pressure, and make decisions rooted in data rather than guesswork. It is a simple yet disciplined framework that keeps leaders focused on what truly matters for long-term stability and success.
How to Calculate a Power Of 3?
- Identify your total gross revenue for the period
- List all direct costs or cost of goods sold (COGS) related to sales
- Subtract COGS from gross revenue to determine gross profit
- Add up all operating expenses, including salaries, G&A, and rent
- Subtract total expenses from gross profit to calculate net profit.
- Adjust each of the three drivers (sales, COGS, operating expenses) by a chosen percentage, commonly 3%.
- Compare the original net profit with the adjusted net profit to see the compounded effect of these small improvements.
Power Of 3 Formula
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