ABC Company, an event company specializing in marketing initiatives, suffered a loss of a major client and had payroll issues with various states.Solution:
- Reduce staff and cut non-essential spending.
- Direct conversation with all taxing authorities to understand issues and settle outstanding obligations.
- Refocus sales effort to identify new clients.
After initially losing money through the first quarter, the company was able to post breakeven results in the second quarter through cost reduction. By the third quarter, the company’s sales initiative led to three new clients and the company posted a net profit for the whole year. Since our involvement, sales have increased 65% and earnings have gone from losses to a profit of over $250,000 per year.
WINE Co., a national distributor of wines, was faced with tremendous cash flow issues. Profits were constantly below expectations and vendors were threatening to stop making deliveries. The company tried various lending institutions but could not get any financing.Solution:
- We procured a short-term loan from a private investor group. This allowed the company to meet its short term obligations.
- Complete evaluation of pricing. The analysis showed that the company was taking certain costs into its pricing matrix and as a result margin were 1000 basis points below projection.
- Refocus on customer mix. The company refocused its sales effort to those locations that were obligated by law to pay outstanding invoices within 30 days. This improved the company’s cash flow.
The company was able to reduce its debt by over 50% within 6 months. Gross margins improved from just over 20% to just under 30% over the same time period. Since our involvement sales have increased over 50% and the company is now profitable with net margins of roughly 8% of sales.
XYZ Company was experiencing a shift in business. One area of the company was experiencing slower growth while the company’s online business was beginning to show excellent growth. The company’s accounting firm was unable to provide guidance or a plan to grow the business and management was frustrated with the lack of information to make certain business decisions.Solution:
- Instituted a financial calendar. Budgets were created and after each month actual results were compared to budgets to determine changes that were needed to the business model.
- Evaluation of product sales to determine which items should be discontinued and which should see increased capital commitment.
The business showed outstanding growth. Due to the data and the in-depth analysis, management was able to realign its strategic focus and concentrate on areas that were highly profitable while at the same time de-emphasizing sales of lower margin product. Sales grew 30% since our involvement and net margins have improved by almost 5%.