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.