Case Study: (2010) QDI, Comprehensive Business Development

The Client

Quarries Direct International (QDI) was founded in June of 2005. They have since established themselves as a leader in the wholesale distribution of natural stone, marble, travertine, and other similar product lines to the construction industry here in Arizona and a number of neighboring states. The founder utilized his more than a decade of industry experience, his formal business education (MBA in Finance) and a very solid working relationship with various quarries around the globe to achieve the level of success that QDI had achieved. Even with the success of purchasing their own warehouse and office facilities by 2007 and the tremendous achievement of sustaining a constant revenue level with a very significant downturn in the construction industry, they realized more could be done. They also realized that they would need the expertise of third party business specialists to achieve the goals that had been set in place. After hiring two other consulting firms that made little to no real impact on the business, they hired Triton Business Advisors LLC in hopes of seeing the proper systems developed and implemented that they knew would help take his business go to the next level.

Diagnostic Process

Triton began the process with a comprehensive business analysis. This diagnostic analysis included: A four year cost analysis benchmarking the company against itself; A two year tax analysis; An evaluation of the companies processes and procedures; Inventory tracking and control; Key employee areas of responsibility and accountability; All avenues for sales and marketing. At the end of the analysis it was then identified that there were in fact areas that could be improved upon that would significantly improve the company. The areas that could be impacted were: Increased bottom line profit; Increased cash-flow; Stream line the companies efficiency; More accurate pricing strategies. Ultimately this would give the management of QDI more accurate information to make better informed business decisions.  There were also a number of “red flags” on the tax returns that the owner was not aware of along with significant tax savings opportunities.

Project Implementation

A number of areas were addressed (1) A meaningful chart of accounts that produced a gross profit per inventory item and showed profit by revenue or sales stream within a ”cash” basis. (2) A formalized company budget was developed with a variance reporting system to have the opportunity to control profitability, identifying and alerting of inconsistencies, and minimizing the opportunity for theft and embezzlement. (3) A process that enabled them to compile their invoiced amounts to clients, enter all payments to sales staff, release inventory against each customer and sales staff and develop a “sharing” agreement for overhead and liability planned reductions that augmented into a bonus or sales incentive system. (4) A sales projection and forecast system that takes variable and fixed costs to develop and forecast breakeven sales “cash” requirements that enable them to utilize a “selling price” versus “inventory” pricing model. (5) A weekly dashboard that shows key company reporting requirements, requiring sales and management to achieve a transparency towards often “conflict” items such as cash collect by client, outstanding A/R and “house accounts”, cash flow requirements, and other vital information.

Results

The agreed upon, realistic and obtainable goals for 2010 (1) A continued stable sales revenue even in an industry that is continuing to decline. (2) An increase of 6.1% Net Profit to the bottom line. (3) A better control of inventory, decreasing the inventory age by an average of 56% which dramatically impacts cash-flow.         (4) An average reduction in collecting A/R by 18% enabling them to pay down debt an average of 21% faster. (5) An immediate tax savings of about $20,000.

Case Study: (2010) Macrotherapy / Macromed, Comprehensive Business Development

The Client

Macrotherapy and Macromed are part of an integrative health community that provides individualized health solutions through a non-insurance and an insurance-based model.  This is a multi-disciplinary health provider that encompasses a diverse group of health professionals who cater to a diverse population.  Macrotherapy and Macromed work with individuals who range from early teens to early 90’s. They are an emerging clinic that desires to optimize their business performance, efficiency, productivity and profitability without compromising their patient’s quality of care and the results they accomplish.

Diagnostic Process

Triton Business Advisors conducted an overall evaluation of the business needs, functionality and viability.  The areas of focus were: All aspects of the daily office operations and conduct; Evaluation of staff, job descriptions, and areas of responsibility that impact office efficiency; An extensive review of all accounting systems and controls; Assessed current cash flow management systems and company budgets; Evaluation of any tax planning and other current strategies. After the evaluation, it was obvious that there were areas that needed significant change. These changes would immediately impact the offices overall efficiency and productivity. There were changes in personnel that needed to happen quickly. The accounting system was not adequate to minimize the effect of any impropriety or give them the kind of reporting that would help them elevate the company to the level that the owners desired. Their tax accountant also missed opportunities for significant tax savings. All of these areas would directly impact the clinics cash flow and overall profitability, in turn enabling them to serve their clients to a higher standard.

Project Implementation

There are many challenges in the health and medical industries that affect whether or not their business reaches its true potential and in some cases determines if they will even survive.  Most of these challenges have nothing to do with the quality of care or patient outcomes.  Health professionals strive to increase revenue streams and revenue cycles but this is only part of the challenge.  Knowing what to do with that money through effective money management tools, accurately tracking the revenue streams and ultimately protecting that revenue from many forms of impropriety and even extensive taxation.  However, these are often the most undervalued aspects of day-to-day operations in any medical facility. With this in mind we focused on: (1) Hiring a new front office staff as well as bringing in an in house bookkeeper. (2) Implementing a new accounting system in conjunction with their new billing software to give them daily, weekly and monthly information regarding A/R, A/P, balance sheets and other vital financial information (3) Customized financial reporting that identifies and tracks profit centers for all clinical services to better understand where profit is coming from (4) Established new checks and balances to minimize the potential for embezzlement (5) Establishing of company budgets that enabled profit and expense controls (6) A short and long term plan for debt consolidation and payoff (7) Partnering with a new CPA firm that assisted in the tax planning process. (8) Establishing of partnership agreements to protect all interests in the clinic.

Results

At this time, the project is in its final stages. However, the partners feel that the changes made will significantly impact the clinic in all aspects. The office efficiency has improved dramatically, they now have better understanding and control of their financial situation and are extremely optimistic of the clinics future and ability to succeed.