Construction - GC
We were approached by two men who were interested in starting a construction company. Between the two of them they had over 50 years of experience in executive and management roles in large and well-respected construction companies. They acknowledged their lack of expertise in accounting and finance as well as their need for a seasoned a CFO to join their in start-up.
We went to work on a written business plan and supporting financial model that helped us secure over $1,000,000 in start-up financing. With our cash flow projections in hand, we had a clear picture of how much time we had to grow the firm into positive cash flow and we set a clear plan to accomplish this in well-ahead of time. We implemented billing, collections, and payment systems to ensure we maximized the amount of cash our customers and vendors were willing to extend us.
As the company commenced operations, we diligently prepared, reviewed, and discussed the monthly financial statements of the firm. Procedures were put in place to correctly recognize the appropriate amount of revenue each month so we could see our real performance. This performance was measured against our original plan – we used this to track our progress and make adjustments as needed. We implemented a weekly dashboard report to allow the owners to understand changes in the critical performance indicators of the firm.
By selecting, correctly setting-up, and implementing the best accounting software for the company, no time was wasted on changing or redefining the processes and systems of the company. With a CFO leading the accounting and finance functions, the owners were able to focus on making and keeping the promises they made to their new customers. The results – the firm grew to over $4 million in sales in its first year and over $14 million in sales and a significant profit in just its second year of operations.
The two founders had a vision for their firm, but they really did not understand how everything was going to work financially. We worked diligently to define all of the key components of their new company and created a plan that shed clarity on the situation. We now knew exactly how much cash we needed and we needed to win our first contract. We understood how much backlog of work we would need to sustain the company. Clear goals were set, and the firm has surpassed all of them to date.
Enter and Exit Successfully
With a CFO onboard from the beginning, everything related to the start-up of this company contemplated the future exit of the owners and their objective to share part of the company with other key employees. This includes a stock-option program among other succession planning tools employed.
Having realized significant value from our services and solutions, this company looks forward to continuing its relationship with CFOwise to help with the challenges and complexities that come from growth, new customers, and an ever-changing economic and competitive environment.