Fractional CFO Case Study

 

A new perspective boosts the bottom line

Many of our fractional CFO engagements are structured around set tasks—budgets and forecasts, monthly financial statement analysis with KPIs, industry comparisons and trends, 13-week cash forecasts, strategic planning, etc.—all specific, scheduled work primarily with the CEO or president and the accounting department. But recognizing and exploring opportunities beyond the predetermined path can pay off in a major way.

Cross-collaboration between the fractional CFO and other departments can lead to a re-evaluation of goals that make the whole company more productive and profitable. And Barnes Dennig fractional CFOs utilize this fresh perspective to optimize our clients’ overall operations, adding value and driving growth.

The challenge

One of our fractional CFOs was working with a client whose sales team was struggling to meet their goals. The sales manager was considering dropping prices to generate more sales. That may be a viable approach to increasing margin dollars, but the CFO wanted to take a deeper dive into their sales strategy.

The strategy

He talked with the sales manager, sharing that dropping prices by a defined percentage meant his team would have to sell x more units just to stay at the same dollar margin as before – more work for a lower payoff. This raised a series of questions:

• Was it realistic to expect unit sales to increase by those amounts given the proposed price drop?
• Could operations deliver on that increase, or would they have to make additional investments in personnel, equipment, training, and maybe even subcontracting some of the additional workload out?

After digging into the numbers, the fractional CFO realized that maybe dropping prices wasn’t the answer.

The solution

Further discussion also made it apparent that while this team was struggling to meet their margin goal, even that goal wasn’t sufficient to make the business model work in the long run. Was the dollar margin goal even in line with what was needed to help the entire organization achieve profitability? Adding up the total loaded cost of the sales group, plus a portion of overhead, plus a contribution to the bottom line, the CFO’s analysis determined that no, it wasn’t enough.

Armed with these new insights, the sales manager increased training, changed the product sales mix, and tasked his team with identifying changes to their target customers, all instead of dropping prices. With these efforts established and new goals set, their margin grew substantially.

Get a pro’s perspective

While structured, designed approaches to fractional CFO services are a must, this off-script collaboration with other departments uncovered inefficiencies and strategy misalignments – a powerful discovery that added value and helped our clients achieve the best results.

Wondering what we can uncover to add value to your organization? Contact us today for a free consultation – and find out what your business may be missing.

You might also be interested in the Fractional CFO Guide to Success – packed with ideas and insights to help you get the most from your fractional CFO engagement, reduce financial risk, and drive strategic growth. Get your copy now, and unlock the doorway to better business results.