My team at MACKEY™ took a busi­ness that was at a loss of $385,000 in April of that year and by the year end had a prof­it of $160,000. No, it wasn’t a loan. It wasn’t an unpre­dictable spike in the econ­o­my. It was the result of strate­gic imple­men­ta­tion that was rec­om­mend­ed by my team that result­ed in an exten­sion of a line of cred­it and a cus­tom designed Finan­cial Oper­at­ing System™.

With this new sys­tem in place, their busi­ness-growth goals and annu­al per­son­al goals were accom­plished in 3 years by reach­ing a 7‑figure bot­tom line. You can read more about their sto­ry in a snip­pet from my up and com­ing book.
Daniel start­ed We Make, LLC, a spe­cial­ty man­u­fac­tur­ing busi­ness, in his mid-for­ties, dur­ing an eco­nom­ic down­turn, and after los­ing his job with anoth­er com­pa­ny in a sim­i­lar indus­try. For three years, he focused on one pri­ma­ry objec­tive: build­ing a sta­ble rev­enue pipeline. It was slow going at first, but things looked pret­ty good—so good, in fact, that he made enough prof­it to have an unex­pect­ed tax bill.

Daniel came to see us with plen­ty of mon­ey in the bank. As a spe­cial­ty man­u­fac­tur­er, he col­lect­ed deposits on all jobs in advance. About 60% of each job was sub­con­tract­ed. He paid sub­con­trac­tors in arrears, which gave him about six­ty days of free cash flow. If he was grow­ing his top line, the math was sim­ple: he built cash. The mar­ket­place was begin­ning to soft­en for the first time since he’d start­ed the busi­ness. He wasn’t an accoun­tant, but he knew to be con­cerned. What would hap­pen if his growth were to slow down? Would he be pre­pared? He wasn’t sure.

As we talked with Daniel about his goals, they fell into two buck­ets. His short-term goals dealt with cash and sub­con­trac­tors. He had to have enough cash to make it through this down­turn. He had great sub­con­trac­tors who’d giv­en him good terms. Would he be able to keep his rela­tion­ship with his subs healthy if he paid them late? He didn’t want to find out. He need­ed a sol­id short-term cash flow plan, and he need­ed it quickly.

His sec­ond-tier goals involved improv­ing his finan­cial acu­men. Hon­est­ly, he didn’t under­stand or always trust his finan­cial state­ments. Was he mak­ing mon­ey? Was he mak­ing enough mon­ey? How could he grow his busi­ness with finan­cial confidence?

His last and most impor­tant goal for the long term was to make more mon­ey. He had a grow­ing fam­i­ly and that meant grow­ing per­son­al cash flow needs.

The MACKEY™ team jumped in to under­stand the qual­i­ty of the finan­cial infor­ma­tion and get our arms around the cash flow issues. Dig­ging into the pri­or year’s oper­a­tions, we dis­cov­ered that the prof­it that year was pri­mar­i­ly dri­ven by one large and very prof­itable job. This year, while Daniel had enjoyed lots of busi­ness, the mar­gins were low, and he was indeed los­ing mon­ey every month. The cash drain from loss­es was going to reach a crit­i­cal stage in a few months with­out intervention.

As a first mea­sure, we helped Daniel extend his line of cred­it. The MACKEY™ team then went to work on estab­lish­ing bet­ter con­trols over job accep­tance cri­te­ria, terms, and mar­gins. We Make, LLC, went from a loss of $385,000 as of April 30 to a $160,000 prof­it at year end. This was enough to keep Daniel in busi­ness, pro­tect his sub­con­trac­tor rela­tion­ships, and allow him to build a cash reserve for the next time busi­ness was slow. It wasn’t enough to solve his need for more income on a per­son­al lev­el, how­ev­er. This would become his pri­ma­ry objec­tive over the next few years.

Dur­ing the eight months we worked with Daniel and his man­age­ment team, we helped them build most of the tools nec­es­sary for a com­plete Finan­cial Oper­at­ing Sys­tem™ (FOS) tai­lored to We Make, LLC. While they were still learn­ing how to use the tools, their finan­cial acu­men was quick­ly increas­ing. We were con­fi­dent that with the FOS in place, con­sis­tent prof­its were in their future.

If you would like to under­stand a finan­cial oper­at­ing sys­tem that could help your busi­ness, con­tact Sarah, Adam, or Rob. Give us a call at 859–335-7755 or reach us via Email.