Category: CFO Services
Client: Engineering Firm
What happens when growth stalls? When revenue streams that had been swift and strong in years past, suddenly stagnate? The growing pains faced by older, established companies are, often, that they just aren’t anymore. Such was the situation that the partners of this 20-year old engineering firm found themselves when we first met. Their major pain points:
- Fairly stagnant revenue stream.
- Cash flow and profitability challenges.
- Financial strain: they had just ended the previous year with a loss.
- Pressure from their bank, which wanted additional partner guarantees on their loans.
- No forward-looking information or cash flow management processes in place.
And if that weren’t enough, the managing partner was responsible for the financial aspects of the business, including entering and managing financial information. He was devoting all of his time to an area at which he had no background or expertise – and the area in which he did have background and expertise fell by the wayside.
BottomLine told the managing partner to back away from the financials. Slowly. That’s it. Partners, owners, and CEOs need to have a thorough knowledge of their financial situation. But it’s also essential that they have a team that can deliver timely, accurate financials from which they can extract critical data. This way, they know what they need to know and where to find it – and they can get back to work! To help, we:
- Provided an overall financial assessment of the firm to analyze trends compared to like industry.
- Implemented an executive level financial package, including metrics.
- Mentored the firm’s accounting manager.
- Created profitability reports by key product lines.
- Worked with the management team to plan and produce forward-looking projections and a weekly cash management process.
We moved the day-to-day financials out of the managing partner’s hands and into the finance function. What will he do with all this time! “Grow the business” moved to the top of his daily to-do list. Other results:
- The Accounting Manager was able to take on more responsibility, so her skill sets improved.
- The firm’s bottom-line improved from a loss of $300K to a profit of $225K within a year of working together.
- After two years, the bottom-line profit doubled from the prior year.
- The firm had a monthly financial package with an executive summary that articulated the story behind the financials.
- We were able to work with the firm and the bank to remove all partners’ personal guarantees- this was huge for them. A year later, they were debt free.
- The firm’s owners are much more knowledgeable about the financial aspects of the business, including pricing and the impact of various lines of business.
When we met with the firm on the anniversary of working together, the managing partner said, “This was a total turnaround from where we had been,” and they were very happy with their company’s results. 20 is too young to slow down! They successfully recharged growth and reinvigorated their entire organization.