Focus
on Profit Improvement
A force to be reckoned with in the flooring industry, Floorscapes Inc. provides and installs a complete line of flooring products, including hardwood, laminate, cork, carpet, ceramic, stone, and slate flooring to a wide range of residential and commercial customers.
The Challenge
Despite 8 years in business, Floorscapes found itself literally at the ground floor of its business with:
Stagnating sales
Low profits, if any
Minimal shareholder’s equity
No bank willing to provide financing
In short, the company had little value and was no more than a job for the owner.
The Action Plan
BusinessWorks was engaged by Floorscapes to develop and implement the following processes:
Profit improvement planning sessions to identify and quantify the amount of hidden profits in the business
A review of pricing and profit margins of major profit centres, leading to significant pricing adjustments
The development of detailed financial targets for sales, income, cash flow, along with debt and equity levels
Preparation of a financing proposal for potential new lenders
Development of a system to measure and monitor actual vs. planned results
Periodic management guidance, advisory services and support
The Results (eighteen months later)
15% increase in sales volume
800% increase in net income
618% increase in shareholder’s equity
A favorable refinancing arrangement with a new lender
Debt to equity ratio reaching a very respectable 2.8 to 1
An owner who could sleep at night and who could see the future of his business changing
After
eighteen months of implementing the plan, Bryce noted that “business
has never been better” and how excited he is by what lies ahead for his
business. His current challenge is deciding just how big Floorscapes
should grow and over what time period!