Business Consulting Case Studies
Case Study: The Bank and The Company Working Together to Solve a Problem
$100 Million Trucking Company
A historically profitable $100+ million provider of temperature-sensitive transportation services lost a major customer. Coupled with the downturn of the oil and gas fracking industry, the Company had severe liquidity issues.
Through various financial analysis and working with the management team, $6.1 million in profit improvements were identified and implemented. Through negotiations with each secured lender, the annual principal and interest payments were reduced by $5.3 million or $442 thousand per month. The Combination of profit-enhancements and principal re-amortization provided sufficient liquidity and resulting profitability.
Case Study: Dominant “Partners” almost Kill the Business
$30 million Packaging Company
The two largest customers, representing 86% of revenue, dictated the pricing of a $30 million Specialty Cheese Packaging business. One of these customers also supplied 71% of the raw cheese purchased used in production. These dominant “partners” were putting a stranglehold on the business resulting in lackluster performance and drained liquidity.
The first step was to improve operations – implementing various manufacturing efficiencies, reducing production capacity, and eliminating non-essential personnel. Next, it was time to convince ownership to push back on the major customers, one of which was supplying a majority of the raw cheese. Either our “partners” would allow us to make money or would lose a good supplier and, in one instance, also a good customer. The Company entered into a tolling arrangement with the largest customer and negotiated price increases with the second largest customer. These steps would dramatically increase margins and eliminate a significant amount of cash required to pay for product. Through these restructuring actions, the Company’s’ operating deficit was reversed the following year.
Case Study: Two-Weeks turned into One-Week Notice
$30 million distributor to the Construction Industry
The Controller for a $30 million distributor gave her two-week notice. The following day the owner called his lender for advice. The Lender recommended Sutker Advisors. That next day, he gave us a call to hear what we were all about. The following day, he called us back and asked if we can sit with the ongoing Controller to assess the position. We went there the next day, which was already Friday!
We are experts in financial management. So, we told the owner there was nothing out of the ordinary and quoted him a fee which was substantially less than the cost of his W2 employee.
Skeptical about our permanent outsourced model, he hired us as the temporary controller where we onboarded the position for the one week the outgoing Controller had remaining. Proving our model, we, now, are the permanent Controller providing timely and accurate financial statements, managing the staff, and addressing accounting issues as they arise.
Case Study: A Bank Prospect: A Burgeoning Business with no Financial Plan
$120 Million Cell Phone Wholesaler and Distributor
A high-net-worth individual started a turnkey cell phone wholesale and distribution company with three interconnecting companies. He self-funded the rapidly growing company with $10 million as the Company reached $40 million in annual revenue.
Confident about the upward trajectory of his business, the owner reached out to a Chicago-based bank to provide a working capital loan to fund the growth. However, to this point, the accounting was done “out of a shoebox” and there was no financial information supporting his working capital line request.
With a complicated turnkey business model that has thin margins, the Bank needed to gain comfort with the business and what the true capital need was.
The lender referred us to their prospect. We assessed the business and developed a financing memorandum that thoroughly explained the model and provided financial projections that mapped out the initial working capital need.
With a satisfactory comfort level, the Bank approved a less than maximum working capital line with the understanding of a six-month revisit to determine if additional capital was needed.
Sutker, then, developed processes and procedures to provide timely and accurate financial information to the owner and lender which led to formally becoming the Company’s Outside CFO and key member of the management team.
Now, a year-and-a-half since the start of our engagement, the Company’s current run rate is $120 million with a projected $2 million in net income with additional working capital support from its Lender.
Case Study: Hands-On Advice Coupled with Solid Financial Management
$10 million Designer/Distributor of Woman Apparel
A growing, but under-capitalized designer/distributor of women apparel hired Sutker Advisors to take responsibility for the financial end of its business. Sutker Advisors reduced the Company’s financial department cost by 60% while taking on the CFO role through the accounts payable functions. Through collaboration with other members of the management team, the Company is poised to have its best year ever.
Case Study: “Team Approach” Allows Company to Continue on Profitable Path
$7 million Maker of Home Décor Products
The CFO of a home décor company left soon after the Company’s controller retired, leaving a large void in the financial/accounting department. Sutker Advisors took on a leadership role, quickly assessing and understanding the Company’s financial systems and operations. As a result, the accounting department continued without disruption. Sutker Advisors generated timely and accurate financial statements and identified areas for profit enhancement. Showing its value, Sutker became the Company's permanent CFO/Controller.
Case Study: Relentlessly Finding the Right Provider
$15 Million Service Provider of Administrative Services
A middle-market service provider’s personnel were classified as a certain type by its long-time insurance broker. Ownership felt this classification was incorrect and costing the Company money. The broker insisted there were no alternatives. Sutker Advisors searched and found many brokers who agreed with the incumbent, but we found one who didn’t and who worked tirelessly to get the classification changed, saving 30% on the Company’s workers’ compensation insurance.
Case Study: Does this Business Really Work?
$20 million web-based furniture maker
One of the two owners of a Company that was in the very mature age of its business cycle but cash flowing began to invest in a start-up business in a potentially burgeoning market. After several years of consistent losses and several million dollars invested, both owners questioned the viability of the business model. Sutker Advisors helped construct a working senior management team and “locked arms” with them to make significant restructuring moves. These moves included eliminating a low profit, resource-draining royalty relationship, non-productive sales representatives, as well as identifying and converting excess inventory into cash. Even though Sutker played a small role in Company’s future success, we are proud to say we helped the management team build the foundation to allow it to have doubled in size and consistently generate millions of dollars in annual profits.
Case Study: Analyzing the Facts and Making a Decision
$18 million Global Marketing Service Organization
A middle-market marketing organization began to service an overseas client and wanted to build an organizational presence there. Sutker, as the Company's CFO, gathered and analyzed the start-up and ongoing costs required to support this endeavor. Based upon an expected gross margin percentage, Sutker provided management with the revenue requirements in order to break-even, expected payback period, as well as projected profitability at various revenue levels, all of which management used to make its decision.
Case Study: Lack of Information Made it Difficult to Run Business
$60 million Commodity Product Broker
A growing, profitable commodity-item broker never knew how its year would come out as it always had last-minute, year-end surprises on its financial statements. Furthermore, the paper trail of transactions, essential to a brokerage business, was in disarray.
Sutker reorganized administrative processes, allowing for a clear delineation of duties that resulted in the efficient and accurate processing of transactions. We also developed comprehensive monthly projections, complete with accruals that allowed ownership and management to understand and anticipate its financial circumstances; Standardized the closing process, improving the timeliness and accuracy of the financial statements; Developed a monthly gross margin analysis by customer, product line, and customer order to help understand profitability; Finally, Sutker provided a monthly detailed analysis of results, including the Company’s performance versus projections.
Case Study: Beginning With the End in Mind
$100 million printer
A multi-division printing company wanted to develop an operating plan for its upcoming fiscal year.
Sutker introduced its results-oriented business planning process which included surveying key personnel regarding the marketplace, operations, personnel, and organization, working with the Company’s management team to, based upon the survey results, identify and analyze key company attributes, weaknesses, and opportunities. Based on this assessment, Sutker helped the team develop strategic goals. Then, “drilled down” to specific action steps to attain these goals as well as determine key result measures to assess their progress.
Case Study: Finding a Lender Who Fits Better
$12 million Engineering Services Firm
An engineering-based, construction-related firm had a really bad year due to poor non-core investments and excess overhead as anticipated revenue did not materialize. On its own, the Company shed the investments and right-sized its operations to match its anticipated revenue. However, their lender, already adverse to construction-related companies, no longer wanted to bank them. Furthermore, their Controller resigned during this period.
Sutker took on the interim Controller tasks. Sutker also developed a comprehensive refinancing package that including a detailed financial analysis showing the Company’s path from an unprofitable year to its projected profitable year, as well as presented their upcoming working capital needs. Confident about the credibility of the Company’s plan, Sutker reached out to several lenders who were not averse to the construction industry as well as whose customer base and culture matched that of the Company. Sutker negotiated the lending agreement with the new lender on behalf of the Company.
Case Study: Sutker’s Role Changes as Exponential Growth Continues
$40 million Façade Construction Company
Sutker became the outside CFO for a flourishing construction company, instilling processes and developing analysis that helped the owner and management team manage the Company’s growth. As the Company expanded vertically and horizontally, more financial management was needed.
Sutker sought and identified a full-time CFO and transitioned into a more business advisory position.
Case Study: One Giant Black Hole
$18 million Global Marketing Service Organization
A marketing services firm had a vast organization of talented individuals who priced potential opportunities based upon their own experiences, causing disparity amongst the quotes. Furthermore, these estimates were never compared to the actual cost incurred, resulting in uncertainty regarding job profitability and the validity of the estimates, themselves.
Through extensive interviews and analysis, Sutker developed a consensual, standard pricing template that was used for all estimates. With the estimates’ standardized, Sutker, working with the Company’s IT Department, developed a labor tracking system that mirrored the estimating template, allowing for relevant actual vs. estimate analysis. Proving its value, Sutker became the Company's outsourced CFO.
Case Study: Costing Analysis Key to Reinstating Profitability
$12 million plastic injection molder
A $12 million injection molding company was minimally profitable mainly due to the inability to pass through significant material price increases.
Through a zero-base exercise, eight unnecessary positions were identified and eliminated for a net annual savings of $450,000. We also conducted a lengthy activity-based cost analysis and discovered opportunities for $750,000 in annual price increases. A minimum order requirement was established for non-major customers, eliminating unprofitable short production runs. In addition, activity-based set-up charges were instituted to encourage major customers to order in larger lots.
Case Study: Competition Erodes Enviable Market Position
$75 million plumbing parts manufacturer
A third-generation, family-owned $75 million plumbing parts manufacturer had long enjoyed a commanding market share and steady profitability. When new competition forced the company to reduce margins, management was slow to react.
Through extensive interviews of all levels of management, we helped to assemble a less complacent, more cohesive hands-on management team. We then guided the new team to take action – consolidating departments, eliminating shifts, and discontinuing unprofitable product lines.
Case Study: Too Many Products Cause Sizeable Loss
$12 million framed picture manufacturer
A third generation, family-owned $12 million framed picture manufacturer was losing money. For many years, these losses were buried within the overvaluation of obsolete inventory. Burdened with a large overhead structure, the company sold “all things to all people.” The excessive product lines and sizeable customer base created inefficiencies within the plant and confusion within the marketplace.
We analyzed each category within each product line, and each product within each category, and recommended a 40% reduction in SKUs. Selective price increases were implemented for the remaining products. In addition, we scrutinized each non-direct labor position, resulting in over $400,000 of savings from job eliminations. Finally, by narrowing the product base and instituting an inventory reduction program, the space required to support the operations was reduced, allowing for one of the three operating facilities to be sold.
Case Study: Building Financial Acumen Leads to Competitive Advantage
$80 million distributor to the Construction Industry
A middle-market construction-related company seeking to increase its competitive advantage eliminated its controller position and hired Sutker Advisors at significantly less cost to prepare and analyze monthly financial statements, attend monthly management meetings, and provide guidance when financial-issues arise from time-to-time.
Sutker Advisors develops, in conjunction with other senior management, the company’s annual operating plan, provides monthly analysis on customer and product line profitability, as well as variances to budget. In addition, Sutker reviews administrative expenses, recently being instrumental in reducing the company’s corporate insurance by 40%.
Management Saw Roadblock Ahead and Changed Course
$18 million Global Marketing Service Organization
After a very successful year, a project-based international marketing firm invested in its infrastructure -- started a regional office, hired a senior sales executive, etc. After developing the monthly financial projections at the beginning of the new year, Sutker, as the Outsourced CFO, reforecasted the projections monthly incorporating updated potential projects and changes in the expense structure. Starting in July, Sutker/Management saw softening in the backlog for the 4th quarter and into the following year. This softness increased when Sutker reforecasted in August. Seeing the financial impact to the reduced business, both in profits and liquidity, Management took proactive steps to reduce its expense structure in anticipation of the lower 4th quarter revenue.