- February 29, 2020
- Posted by: SosAdmin)
- Category: Uncategorized
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Managing Director was utterly disappointed
He finished reviewing the financials of YEAR 2019
with other BOARD MEMBERS
Below is the summary of the financials:
◼️Sales: $14.3mn
◼️Gross Profit: $3mn
◼️Net Profit: $0.43m
Though the company made profit of $0.43mn.
It was way below the expectation.
Despite increase in sales by 16% over the previous year, the profit infact came down by $0.29mn
There was lot of soul searching to do
Keeping their emotions aside the board asked their CFO to come with TURNAROUND PLAN.
Few days later…
CFO laid down his plan starting with following statement
“ No doubt the company made significant progress as far as growth is concerned, but this has to be sustainable, keeping this in mind, I present to you my turnaround plan”
The turnaround plan is going to be divided into buckets.
One is short-term wins and other one long-term goal.
Following will be covered under short-term win :
1.Repaying all the high interest cost loan that is eating away the profits
2.Going hard after the customers, where debts have been outstanding for more than 60 days-Recovery needs to be made at the earliest or no business with them
3.Availing the tax incentives offered by the government, this will increase profits by 1.5% and cash-flow
4.Stop all the planned expenditure, where we do not see revenue in next two years
Following will be covered under long-term goals:
1.Pursue the strategy to reduce the material cost by 15% in two years’ time
2.Investing in automation wherever possible, we will create a special fund. This can reduce the people cost to the tune of 35%
3.Measuring the results at the product segment level
Tight budgets, no more expense unless it is justified with increase in revenue or increase in efficiency
He concluded his presentation if execute the above,
I estimate that company turnover will be around $27.14MN by financial year 2022 and we will have healthy profit of $2.71mn
What’s the message?
The above example is a classic case of a CFO leading the TURNAROUND of the company.
If you get a good CFO, you are lucky, because he can turnaround the fortunes of the company
In reality most of the companies do not have CFO in board citing the cost as the major reason
Now you can have the same turnaround plan implemented for your company with Soatech Virtual CFO Service
Before you decide to transform your business, we would suggest to have a discovery call with our Senior CFO
This will help to identify areas of opportunity in your business to improve
