One of the goals of CFO Services is to make business owners aware of their opportunities for growth that exist in their existing financial strategy. In this case study, we demonstrate how our financial reporting plus excellent business advisory will guide your business development.
CFO Advisory
Quickbooks and Flowhub
Just like any other client that we work with, we started this project by doing an initial assessment of the dispensary. Without initial an assessment it can be easy to overlook key sore points that can affect most businesses: low profit margins due to high expenses and low sales, over payment of vendors, and over-payment of taxes. All of which can lead to lost opportunities to bank profits. During the initial assessment we identified that there were two key activities that we needed to execute with precision:
To achieve the results of higher of lower expenses and higher profit margins we had to do a deep dive of the company's financial condition. We started first by reviewing the dispensary's highest balance sheet accounts: Accounts Payable. In order to have accurate and timely information accessible on a weekly basis, we improved the system to reconcile invoices, vendors, and and payments. The effect was better transparency over the businesses cash flow forecast.
Second we reviewed income statement accounts and determined there was a weakness in sales. Our month over month analysis determined that the sales incentives currently in use were having an increasingly negative impact on sale. We knew from previous experience that changing sales incentives may not immediately result in an increase in sales. This presented three challenges:
Ultimately we recommended to management that they should limit their current incentives (discounts) to two days per week. During the other days, any customers that would purchase products would be entered in a raffle to win coupons they could cash in on predetermined days. The more products purchased overall, the higher the number of winners. Our recommendations, although fairly simple, were based in psychological principle: to create the feeling of being able to receive the same bargains while decreasing the amount of total discounts against sales.
More transparency over the business' cash flow forecast allowed us to negotiate better terms with vendors as well as maximize vendor incentives (2/10 net 30, 60, or 90). This led to realize a decrease of goods sold of 4%.
Initially, changing the sales incentives had a negative impact on sales. However, we believed strongly in our reccomendations. We knew the that missing feedback will usually cause incentive systems to fail; in other words, we wanted to let customers know exactly how many potential winners there could potentially be. After creating an electronic sign to be updated by staff on an hourly basis, we were able to realize an increase in sales of 16%.
The two overall results we were able to achieve:
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Our business advisors will help spark and guide your business development. You will be excited that your business is moving in the right direction.
We'd love to hear from you. Take some time to schedule a time to talk and fill out our brief questionnaire. This will let us research you industry and find hidden opportunity in your business.
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