Partner Blogs | B2B CFO

216 partners in 40 states
6,474 years experience

Fill out the form and receive for FREE The Discovery Analysis (a $1600 value)

David Ebenstein - Sep 2, 2010

Posted by: Steven D. Friedman in Testimonials

Top qualities:

Great Results, Expert, High Integrity

“There are many people you meet in life some good, some bad and some family. Steve Friedman is a special kind of person. He genuinely wants to help and cares about the people he works with. His insight into business is extraordinary, his ability to communicate and make people understand is beyond the norm and he does all this in a calm and quiet manner. He speaks his mind and lets you know just where you stand. To just recommend Steve is an injustice to people that need his help. Even if you think your business needs some advise get Steve in as soon as you can.” August 18, 2010

David Ebenstein

Does your company have organizational cancer? - Aug 25, 2009

Posted by: Steven D. Friedman in Articles

Does your company have organizational cancer?

Part I - Workforce

Like the human body, companies’ need all parts of their operation to work together in order to function effectively. When one part of the organization is not working properly, it can affect the entire business. If there is a problem with the warehouse shipping on time, it will effect sales, accounts receivable, cash flow, customer relations and on down the line. A simple act of delaying a customer shipment for a week due to inventory or other internal problems, can have huge consequences.

A successful company continually monitors its organizational structure and procedures, than changes/tweaks them. The new adage is if it ain’t broke, you haven’t looked hard enough. These changes are based on a variety of factors, including outside influences, and should be addressed early, before they affect the whole company. In this economy especially, it could mean a variety of different changes including:

Employment/Employee Benefit Reductions

New policies and procedures

Inventory Reductions

Pricing

Customer relationships

Accounting

Marketing/Advertising

Banking

During these difficult times, many businesses are focused on short term issues: making payroll; collecting accounts receivable; cutting expenses; etc… losing sight of the deeper issues that might be affecting them, and preventing them from long term success. To be sure, survival in the short term is a necessity to thrive over the long term. However, this puts lot of stress on the workforce to implement unpleasant and difficult tasks.

Some people cannot and do not understand the reasons behind these tough decisions, and they sour on the organization. Even in good tim....

Take that loss on inventory - Jul 21, 2009

Posted by: Steven D. Friedman in Articles

During these difficult economic times, business owners are looking for creative ways to raise money. However, many businesses that have inventory refuse to liquidate the inventory at a loss, or even at a big discount. Somehow the owner feels that the inventory will eventually be sold for a price that will yield a good margin. In short he/she has fallen in love with the product.

This is a big mistake, as obsolete and outdated inventory will continue to depreciate in value, and will eventually be liquidated or discarded. Aside from the obvious costs associated with carrying the inventory: Interest, storage, overhead, etc.... There is an even larger lost opportunity cost.

For example, if a business manufactures and wholesales tables, and has $100,000 of tables at cost that are odd quantities and/or damaged. Historically, the $100,000 would have sold for $200,000. However, in the current state no one in the sales force want to even attempt to sell them, and the warehouse people probably could not readily ship them. So the anticipated revenue from these tables in the normal course of business is $0.

There are a variety of ways companies can liquidate this inventory: warehouse sale, customer discounts, consigning to customers, liquidator, auction, etc.... Each has different benefits and costs. For example, a warehouse sale might yield the highest gross return, but would require a significant amout of effort from the company. Conversely, the liquidator would be able to immediately remove the product, but at a big discount. The options need to be evaluated to determine the needs of the business.

However, the business owner needs to move this inventory and convert it to cash as quickly as possible (even at a loss). If for example this inventory netted $50,000 ($50,000 loss), the company could utilize this to manufacture new product with that working captial for product it knows will move to its existing customer base. If the inventory turns are 90 days. Then this simple transaction could yield $400,000 more revenue in a year's time ($50,000 x 2 times markup x 4 turns in the year).

The leverage of doing this can be pretty significant. Generating $200,000 more gross profit in the year ($150,000 after the $50,000 loss), cleaning up old inventory in the warehouse, having a larger selection of new products to sell to name a few.

Of course, each situation is different, however, I believe there will also be a reluctance on the business owner to sell at loss. I know of business owners who have tapped their retirement plans for liquidity, but refused to sell their old inventory at a loss. Sounds silly but it is true.