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Fractional CEO: Increased Revenue $8.2 Million and Improved Cash Flow Resulting in $9 Million Savings

Situation

A third-generation family-owned manufacturing company faced financial troubles due to bad hiring decisions and mismanagement. The company was about 45 to 60 days away from total insolvency and was supplementing their finances with their own personal bank accounts. Their key challenges included:

  • Overhead payroll expenses
  • Overstaffing in one department and understaffing in another
  • Over-processing of a product leading to $8-$9 Million in opportunity costs
  • Inefficient collection of accounts receivable

Actions

  • Reduction of payroll overhead by $274,000 (without any negative impact on the company)
  • Movement of two employees from an overstaffed department to an understaffed department resulting in a minimum of $23,000 per shift
  • Stopped over-processing of a product, leading to $1.2 million in additional revenue per quarter
  • Improved collection of accounts receivable

Results

  • Increased revenue by $6.4 million per year by moving two employees
  • Increased revenue by $1.8 million per year by stopping over-processing
  • Improved cash flow with almost $9 million in the bank, includingpayment of past-due accounts payable
  • Solved insolvency issues with efficient management of finances and operations

Conclusion

MetaExpert Carl’s engagement with the manufacturing company as a fractional CEO led to significant improvements in the company's financial and operational performance. The solutions implemented by Carl helped increase revenue, solve insolvency issues, and improve cash flow for the company.

$1.2 million in additional revenue per quarter from stopping over-processing.

 

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