Rock Around the Block - The Blog of Rock LaManna

How We Turned This Valuation Report into a Breakthrough Strategy

Posted by Rock LaManna on Thu, Jul 19, 2012 @ 09:07 AM

How We Turned This Valuation Report into a Breakthrough Strategy resized 600

A financial strategist I work with believes a company’s financials should “talk to you.”  My question to you:  As a CEO of a printing business, are you listening to what your numbers are saying? If you are, you’re going to hear about which direction you need to go – providing you have an accurate valuation report.

I was recently working with a client, and we took a careful look at his cash flow and financial ratios.  We determined the business had an urgent need for cash injection, and that the demand notes for his loan were out of compliance.  

We then produced the following strategies:

  • Focus on cash – My client’s top priority was to accurately track his cash-flow.  He needed to plan what he could expect of the next 12 months, and then update it weekly.  
  • Conserve cash – Once my client got ahold of where his money was headed, he needed to reduce his outlays.  What’s important here is that we could determine exactly how much he had to reduce his expenses to appease his creditors.  This provided him with a clear-cut picture of what exactly he needed to cut, and made the task less overwhelming.
  • Communicate with creditors – It was extremely important for the client to be in touch with his bank.  I cannot underestimate the importance of establishing good communication with the lender, and explaining exactly how you’re going to pull out of the crisis.  These people react to numbers, and if you can show them a credible, concrete plan, they’ll stick with you.
  • Focus on the accounts that count – Because we could analyze the most profitable accounts, it was easy for the client to switch his focus off the less profitable accounts and move to the profit centers.  
  • Improve efficiencies on under-performing accounts – If an account was on the bubble but had potential for profit, we could target the printer’s processes for lean manufacturing improvements.  This would help us move them into the category of “accounts that count.”
  • Communicate crisis to the staff – Nothing crushes morale like uncertainty.  Conversely, nothing rallies people like a clearly defined challenge, and establishing a goal to overcome it.  By communicating the gravity of the situation, I expected my client’s people to respond and do what was necessary to save their jobs.

None of the items I’ve listed here are ground-breaking in their aim, scope or intent.  The importance is that these strategies were exactly what the client needed at this point and time to save his business.  Financials will do that for you – if you’re listening.

Photo by: kenteegardin


Topics: Valuation Report

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