In my last 2 blogs, I talked about “Why do business owners call us?”

It differs a bit from the question “what do you do?” and it requires more than a one-word response.
We are frequently called in to assist businesses facing out of control growth, chaos with their finances, and people problems that affect their profitability.

The bottom line is, they need more management horsepower to transform them from a flailing business to a thriving one.
In the third and final part of the series, I have another case in point for you.
The owner of a mid-size construction firm struggling with cash flow called us.
She was having a lot of problems, and she was, of course, stressed!

Some of the issues were:
1. Lack of control over cash flow. Every time her bookkeeper got a call from a vendor to whom they owed money, he would cut the vendor a check. That’s the squeaky wheel getting the grease right there!

The owner wasn’t able to predict and control cash flow, and the bookkeeper wasn’t able to prioritize what checks needed to go out when.

Additionally, she had a couple of jobs go bad a few years ago and had to take out loans to provide for working capital to make it through the slower season. Margins were thin, there was no contingency priced into the jobs, leaving no room for missteps or weather delays.

2. No cash projection. She needed a cash projection so she would know, in priority order, what needed to get paid and when. She has a successful business and a current pipeline full of profitable (cash-rich) jobs. But the jobs go through a request for proposal process and can take up to a year to be awarded.

Then, of course, the company has to perform the work and get paid. So, it can take a while to convert the pipeline of profitable jobs into cash!

3. Lack of analytical horsepower. The existing tools they had weren’t particularly helpful because they were over-engineered. No one understood how to actually utilize them to help make decisions in the business.

As for the bookkeeping system, they had implemented a new system about 18 months ago and the bookkeeper still wasn’t fully comfortable with it.

Time for the good part…so what did we do?
As far as cash flow, the good part was that she had been increasing the prices on her jobs to make up for prior job losses (including pricing in a built-in contingency, which she hadn’t done before).

But thanks to our discussions, she’s learning that she needs to do some things differently with those jobs in order to increase the company’s cash flow.
She also realizes that she needs help and is committed to making changes as we work together.

When it comes to pricing jobs, that’s as simple as putting in an allowance for contingencies and looking at the request for the proposal process to ultimately transform the business out of a cash flow crunch and back into profitability and reduced debt.

We’re working with her to prioritize which debts to pay off first. We’re creating a prioritization plan and cash projection that will help determine if she’s going to pay off debt balances now and risk not having a rainy-day fund, or if she’s going to incur interest expense on the installment plans to pay back that debt.

We’re redesigning her business tools to make them more user friendly so they can actually be utilized in their decision-making processes. We’re mentoring the bookkeeper and owner through those decision-making processes, as well as mentoring them on utilizing the new system to its fullest potential.

Lastly, we put together a budget and cash projection and are working to hold everybody accountable to those plans, so they can achieve their goals and get on a trajectory that’s leading the organization in the right direction.

Want what they got? Just call us and let’s talk about how we can make it possible for you.

Your CPA Shouldn’t Be Your CFO!

Put your name and best email address into the form below, and I'll send you “Why You Aren’t Growing Your Business: 5 Reasons Why Your CPA Shouldn’t Be Your CFO” absolutely free.

You have Successfully Subscribed!