Below are some examples of issues we’ve been relied upon to address. To learn more about how we can help you with your organization and it’s challenges, we invite you to schedule a free consultation.
Inventory Issues
A company thinks they have an inventory issue: inventory is piling up. We look into it and find the root cause lies with the purchasing process. The purchasing process is inconsistent and does not relate to a sales forecast. We prescribe a process where sales determine what can be sold at target margins and at what point in time, and task purchasing with making sure the product is in the right place at the right time and the right cost.
Capital Issues
A company has working capital issues: they are growing quickly but are running out of cash and unable to accept large orders. Bad debt write-offs were minimal, and large order production was contracted out. We prescribed a policy requiring deposits on large orders when they were placed, and another progress payment upon shipment. Large orders could be accommodated by placing deposits at the manufacturer, and the cash cycle was shortened.
Sales Costs
A company had noticed sales costs were growing faster than revenue. The compensation plan was complex in an effort to smooth seasonal compensation and reward for bringing in new clients. A deep dive uncovered several issues including revenue not meeting budget, and bonuses being paid to underperformers. The solutions: a new compensation plan controlled for seasonality, required budget to be met before bonuses were paid, and guidelines implemented for incentives to be accomplished.
Surprise Bills
A company had a significant amount of surprise bills to be paid urgently, and the cash position was unknown. The company was effectively living hand to mouth and only knew what the bank website said they had for cash. The payable process was changed to track all invoices, manual checks were eliminated, and cash was reconciled timely. A cashflow forecast was put in place. Cash strapped purchase and required-re-purchase decisions were replaced with knowledgeable “buy it once buy it right” type decisions.
Cost Structure
A company was struggling with managerial and strategic decisions. They had invested borrowed money into creating capacity, but the business was not generating enough revenue to realize the efficiencies. We looked at their books and found a bookkeeping error which allowed 30% of debt to go unrecorded. We dissected their costs, and found the structure had more fixed costs then they realized, which in turn required more customer purchases to cover. We forecasted customer transactions for the remainder of the year. We made recommendations on how to change the mix of fixed and variable costs while matching capacity to expected volumes.
Customer Profitability
A company was struggling with a big strategic decision. They were in the red, and wanted advice how to get into the black. We took a look at their books and helped determine the customer acquisition cost, and the cost of servicing that revenue. We also considered their customers’ repeat purchase rate. While customers were acquired at a reasonable cost, the contribution margin from the largest line of business was smaller than expected. We turned numbers into knowledge, and as a result, the company was able to shift its focus to the types of customers that were more profitable, who also frequently repurchased and generated referrals. The company founder gained clarity and the business was reinvigorated.