Construction - Trade2
In the year prior to meeting this company, the company had its highest sales volume and profit in its history. The current year was a different story. Several of their customers had fallen upon difficult times and the company was almost insolvent.
We immediately improved the company’s collections procedures and policies and helped negotiate more favorable terms with the company’s vendors. These measures began to help cash flow, but there were other profitability challenges that needed to be addressed if the company was going to survive.
This company’s rapid growth encouraged them to grow overhead without disciplined regard for what was best for the company. We helped guide the company through several changes in its overhead structure and have seen productivity improve dramatically, which has helped improve cash flow. The company’s estimating process was not well-defined and lacked sophistication for ensuring the right amount of overhead and profit was added into each project. With new estimating procedures in place, the company is bringing in more successful projects. With job budgets now in place, the field operations are managing the projects more profitably.
With improved processes creating more efficiency and the slow-down with some of its customers, the company consolidated most of its operations down to one person from three, and they have not missed a beat. The owners are now able to focus on finding new customers, and sales have begun to increase again.
The financial statements for the company were not accurate and failed to give any meaningful information to the owners or the company’s bank. We implemented cost of completion accounting procedures to correct the financial statements and established monthly procedures to ensure the financial statements were issued on time every month. In addition, we installed a budgeting process so the company could track its progress relative to its plans for growth and hold itself accountable for sales growth and overhead spending.
Enter and Exit Successfully
The owners of the business are concerned with building an enterprise that had sustainable value. We have worked to enhance their business model that will allow them to form joint ventures so they can grow and accomplish their objectives.
After a pretty rough year the company is back on track. It is growing profitably, improving its solvency, and becoming healthier than it has been in a long time.