Financial Projection and Analysis
Successful management teams utilize a financial roadmap to help guide them through the ebbs and flows of running their business.
Based upon management’s strategic and operational plan, Sutker develops comprehensive monthly financial projections to determine anticipated profits, as well as working capital and cash needs.
Monthly, Sutker will then rollforward and reforecast the financial projections based upon the latest Company information in order to determine the current trajectory of the business.
Case Study: Mapping Out the Solution allows for a Triumphant Return
$10 Million Restaurant Group
COVID-19 and the resulting capacity restrictions brought a successful restaurant group to its knees. Ownership as well as the group’s lender questioned its viability.
Working with ownership/management, Sutker Moran developed financial projections for each restaurant, modeled to easily evaluate various scenarios given the uncertainty of the situation. Sutker, then, analyzed various components of the operation which was used by management to identify cost reductions. After incorporating these reduced costs into the projections, Sutker modeled the payment deferrals it needed from its lender and landlords in order to survive. Armed with a plan, Sutker was able to negotiate and agree upon a deferred payment plan from its lender as well as its landlords. These deferrals allowed the restaurant group to survive until obtaining government relief and the eventual lifting of capacity restrictions.
Management Saw Roadblock Ahead and Changed Course
$18 million Global Marketing Service Organization
After a very successful year, a project-based international marketing firm invested in its infrastructure -- started a regional office, hired a senior sales executive, etc. After developing the monthly financial projections at the beginning of the new year, Sutker, as the Outsourced CFO, reforecasted the projections monthly incorporating updated potential projects and changes in the expense structure. Starting in July, Sutker/Management saw softening in the backlog for the 4th quarter and into the following year. This softness increased when Sutker reforecasted in August. Seeing the financial impact to the reduced business, both in profits and liquidity, Management took proactive steps to reduce its expense structure in anticipation of the lower 4th quarter revenue.
Case Study: A Bank Prospect: A Burgeoning Business with no Financial Plan
$120 Million Cell Phone Wholesaler and Distributor
A high-net-worth individual started a turnkey cell phone wholesale and distribution company with three interconnecting companies. He self-funded the rapidly growing company with $10 million as the Company reached $40 million in annual revenue.
Confident about the upward trajectory of his business, the owner reached out to a Chicago-based bank to provide a working capital loan to fund the growth. However, to this point, the accounting was done “out of a shoebox” and there was no financial information supporting his working capital line request.
With a complicated turnkey business model that has thin margins, the Bank needed to gain comfort with the business and what the true capital need was.
The lender referred us to their prospect. We assessed the business and developed a financing memorandum that thoroughly explained the model and provided financial projections that mapped out the initial working capital need.
With a satisfactory comfort level, the Bank approved a less than maximum working capital line with the understanding of a six-month revisit to determine if additional capital was needed.
Sutker, then, developed processes and procedures to provide timely and accurate financial information to the owner and lender which led to formally becoming the Company’s Outside CFO and key member of the management team.
Now, a year-and-a-half since the start of our engagement, the Company’s current run rate is $120 million with a projected $2 million in net income with additional working capital support from its Lender.
Case Study: Finding a Lender Who Fits Better
$12 million Engineering Services Firm
An engineering-based, construction-related firm had a really bad year due to poor non-core investments and excess overhead as anticipated revenue did not materialize. On its own, the Company shed the investments and right-sized its operations to match its anticipated revenue. However, their lender, already adverse to construction-related companies, no longer wanted to bank them. Furthermore, their Controller resigned during this period.
Sutker took on the interim Controller tasks. Sutker also developed a comprehensive refinancing package that including a detailed financial analysis showing the Company’s path from an unprofitable year to its projected profitable year, as well as presented their upcoming working capital needs. Confident about the credibility of the Company’s plan, Sutker reached out to several lenders who were not averse to the construction industry as well as whose customer base and culture matched that of the Company. Sutker negotiated the lending agreement with the new lender on behalf of the Company.