“My need was to get a clear immediate picture of the Company's cash flow while building a way of projecting what the future cash flow would be as the company is continuing to grow sales, and facing the requirements of funding additional inventory growth. I utilized Barry as an "extension of my CEO desk" to help me build a tool that I could utilize to project and monitor my company's performance.”
—H. Austin Kravik, President
EF Bailey Company
Seattle, WA
 

Case Study Company H: EF Bailey

Company Profile

Company H was founded in 1945, and since that time has been stocking and distributing quality industrial supplies to the manufacturing industries of the Pacific Northwest. They have continued to grow and evolve to meet the ever-changing needs of their customers. Their customers tell them with their unique ability to deliver on time, their extensive products selection and Integrated Supply Programs, Company H is able to consistently lower their customer's cost of manufacturing.

Company H represents approximately 400 of the highest quality manufacturers of industrial tools and supplies in the United States. They support their commitment to these manufactures with a multi-million dollar local inventory, which enables them to emphasis value-added service and support to their customers. Company H's large customer base ranges from small machine shops and fabricators to some of the largest aerospace and manufacturing concerns in the country. Company H currently has integrated supply programs and/ or electronic order entry and inventory management computer linkups in place with many of their customers.

Currently Company H is leading the way in customer service and advanced supply management systems. This combined with experienced and knowledgeable sales professionals allows them to offer their customers the technical support they require.

Annual Revenues: Available upon request
Employees: Available upon request
Locations: Available upon request

Situation

The CEO of Company H had spent the past 6 years reorganizing the company and introducing innovative approaches to product delivery and inventory management to its customer base. During that period of time the company growth was modest until 2006 and into 2007. The growth was all organic and funded by profitable operations and normal cash flow. In early 2007 Company H's sales to current and new customers were requiring Company H to increase its inventory in order to support the increased demands from its customers. This was putting increased demands on the existing cash flow of the business making it necessary for the CEO to set up line of credit with its current bank. In addition, the owners of the company were beginning to think about selling the business. The CEO did not have any cash flow forecasting tools or business valuation models that would allow him to analyze his future growth, cash flow requirements and establishing an eventual selling price for the business.

After completing the initial financial modeling project the CEO had CEO-Services help him develop a strategic plan, work with his management team implementing the plan and also had CEO-Services develop sales account plans for the company's most important customers.

Solution

Barry MacKechnie, founder of CEO Services, initiated his proven methodology and process for helping CEOs and business owners analyze their businesses using custom built analysis and modeling tools developed and implemented by CEO Services.

MacKechnie worked with the CEO and reviewed the current financial operations and trends of Company H. In addition, the CEO provided MacKechnie with his projections for growth in sales, operating expenses, profits, Accounts Receivable collections and vendor payments. MacKechnie merged this information into the CEO Services rolling 12 month cash flow projection tool. The cash flow projections provided the CEO with a view of how his business was projected to operate over the future 12 month period based upon current and historical information. With the cash flow projection completed the CEO negotiated a line of credit with his bank that provided Company H with adequate safe guards to assure the company maintained operating capital levels sufficient to support the continued profitable growth of the company. At the end of each month the CEO and MacKechnie would update the cash flow projections with actual data. Each month they fine-tuned the projections to a point where the latest month projection was at 99.95% of the actual cash flow for the current month of operations.

In addition, MacKechnie built a simple market valuation model for the CEO so that he could analyze the impact of continued growth in revenues and profits on the potential market value of the business. This provided the CEO with a framework to guide the stockholders through their discussions and expectations from a potential sale of the business.

MacKechnie then met with the executive team and developed a strategic plan (5 year goals) and tactical plans to be implemented in 2009. MacKechnie worked with each of the executive team members to implement the 2009 objectives throughout the company. Each employee developed a list of critical tasks that they could complete that would help the company achieve its business goals for 2009.

Client Comments

“My need was to get a clear immediate picture of the Company's cash flow; both monthly and quarterly. While building a way of projecting what the future cash flow would be as the company is continuing to grow sales, and facing the requirements of funding additional inventory growth. ”

“This information needed to be in a visual format that was suitable to communicate with both our Board of Directors and our lending representatives.”

“Mr. MacKechnie was able to accomplish this goal in a very short period of time, in a format that was very straight forward. Most importantly the information presented was very factual, and in just a few months has given us a very realistic future picture of our up-coming cash flow and cash flow needs. We now have the resource information available to make intelligent future financial plans as to the growth requirements of the company.”

Sales Account Planning
“The enthusiasm I have for creating Customer Account Plans is because they enable both our Account Managers (outside sales) and the Customer Service Representatives (inside sales) to focus their combined efforts on the individual customer needs and the opportunities that are available to us, that is team work. I see this program being a big part in securing our future growth.”

Team Coaching
“Barry, what I thought would be a very negative meeting this morning, due to my lack of performance, turned out to be quite positive and motivating. I will put the lessons learned into practice. Thanks for the coaching!”