Archive for the 'Case Studies' Category

Family Operations – Letting go to Nonfamily Management Team

January 7, 2013

Family run operation had never shared information with employees other than the individual projects to be worked on. The owners had a hard time sharing what they considered personal financial information with managers & employees. The result – department managers did not have a clue of what it took to run the organization outside their small world and everyone was making their own purchases; there was no one looking at overall purchases and cost savings so expenses just kept going up and up. The owners realized that they could not grow any larger until they let go and allowed others to be involved in the management of the company.

I was hired mid-year to set up financial information on a departmental basis in order for managers to be held accountable. I analyzed all the information for the current year and reclassified expenses to their respective department. Next I prepared a current year budget for each department based on the current activity and the expected activity for the remainder of the current year. The owners and managers assisted int he finalizing of these budgets.

The next step was educating all the managers in how to utilize the reports and I sat down each month with each manager to go over their monthly P&L to show what actually happened versus what we thought would happen. Starting in October, together, we began the process of preparing each department’s budget for the next year. Each manager had a hand in creating the budget that they would ultimately be held accountable to. The first year they would still be learning so they would not be held accountable financially; but ultimately, they would get bonuses based on their performance.

The managers now get together monthly to review financial information, they know where the organization is going and they are helping to get there. They now feel as if they have some input into how the organization is run, the owners value their input and the company is on even more solid ground than it was before.

The company is now expanding internationally with the same management team in place all because they shared vital financial & operating information.

Moral: You can only do so much all by yourself. You need to trust others and educate them on the management of your company and then let them manage with you. When you get the right people in the right seat on the right bus… let them do what you hired them for!


Budget Watch

December 12, 2012


Large privately run organization prepared extensive annual budgets by each revenue/expense center (departments). Their process was extremely cumbersome and took many months to complete. Unfortunately, no one ever really analyzed the budgets themselves other than to approve them – if they showed a profit they were good to go; even though the budgets (and actual data) showed declining profit margins year after year.

I was hired to analyze the budgets: I analyzed seven years of data (the five prior years, the current year ending and the following year budget). Both actual and budgeted data was analyzed and graphed. The trend showed that although they were still making money, their expenses were growing at a much faster pace than their revenue was. This clearly showed that at some point in the future, if they did not change something, they would start to lose money. The analysis also showed that those trending lines were not the same for budgeted and actual data; which indicated a disconnect in the budgeting process.

The project was extended to monitor the Budget versus Actual analysis internally prepared each month to help the owners understand the analysis and to ensure the controls were operating as designed. The Budget Watch project lasted about 13 months until the owners were confident in their new control processes.


Don’t wait until you start to lose money to look into your trending data. It is all right there, you just need to really look at it.