START-UP
Each company begins its operations as a business and usually by launching new products or services. During the launch phase, sales are low but slowly (and hopefully steadily) increasing. Businesses focus on marketing to their target consumer segments by advertising their comparative advantages and value propositions. However, as revenue is low and initial startup costs are high, businesses are prone to incur losses in this phase. The profit cycle lags behind the sales cycle and creates a time delay between sales growth and profit growth.
Our team is comprised of CPA's (or equivalents), using best in class techniques to make 'crooked lines straight' and optimize the accounting system. This translates to higher rates, but lower hours, and a significantly higher quality product and service that can scale seamlessly as needed. (One of my clients is now pushing $35M in revenue on the system I built out for them when they $100k in annual revenue. Begin with the end in mind).
GROWTH
In the growth phase, companies experience rapid sales growth. As sales increase rapidly, businesses start seeing profit once they pass the break-even point. However, as the profit cycle still lags behind the sales cycle, the profit level is not as high as sales. Finally, the cash flow during the growth phase becomes positive, representing an excess cash inflow.
We achieve this is by maximizing the functions of the software, and essentially bringing down to smaller, private companies the best practices used by public companies to report against an SEC and GAAP compliant environment. (During my tenure with Johnson & Johnson, we closed the company's books by the end of the 3rd day of the subsequent month).
ARRIVAL
When the business matures, sales begin to decrease slowly. Profit margins get thinner, while cash flow stays relatively stagnant. As firms approach maturity, major capital spending is largely behind the business, and therefore cash generation is higher than the profit on the income statement.
Businesses are now by reinventing themselves and investing in new technologies and emerging markets. Companies are repositioning themselves in their dynamic industries and refresh their growth in the marketplace.
There's many ways to reverse engineer a close, strip out unnecessary steps, and by reworking the financials or underlying reports, etc. Most firms just go account-by-account focusing on the easy accounts, and never understanding the big picture, or business model. This creates a close where people just try to work faster, and cover more volume, in a low value way. We focus on the overlaying accounting cycles for the business and layer these in.
TURNAROUND
In the final stage of the business life cycle, sales, profit, and cash flow all decline. During this phase, companies accept their failure to extend their business life cycle by adapting to the changing business environment. Firms lose their competitive advantage and reinvent themselves to avoid exiting the market. In extreme cases, a Chapter 11 reorganization may be required, or a company opts to liquidate their company through a Chapter 7 liquidation.
Our approach focuses the underlying business and accounting cycles to build out the reporting surrounding those pieces.... which provides high transparency and visibility into the business, and our discussions focus on the business, not on the accounting (but we'll call-out accounting issues as needed). Auditors focus on risk and risk area, not individual accounts, so our approach ensures that we're looking at the financials from the auditor's perspective, which also folds into the needs of mgmt, the bank, and the board.
TURN-
AROUND
RENEWAL
A renewal approach to strategy refreshes the vitality and competitiveness of a firm when it is operating in a harsh environment. When circumstances are so difficult that the current way of doing business cannot be sustained, changing course to preserve and free up resources—and then later to redirect toward growth—is the only way to not merely survive but to eventually thrive again. Hence, the renewal approach is characterized by two distinct phases: survival and pivot to growth.
These pieces then provide us the foundational knowledge to partner with the client as needed. This can lead us into some interesting areas such as cash flow mgmt, business planning, forensic accounting, support for board/investors presentations, fund raising, working the banks, attorney's, through M&A activities, you name it. Sometimes this is part of the first steps, sometimes it's added along the way, but ultimately, we love partnering for the long-term, and while we crush all the above bullet points, it's the areas in this bullet point that really make it fun.
