Robbing Peter to Pay Paul

A 20-year-old San Diego construction firm called because their cash reserves would not allow them to finance projects they had already won. They had an $800K contract, with a projected 20% ROI, if they could just hold on through the negative cash flow. Revenues two years ago were $3.5MM and now $1.25MM; profits crashed from $250K to -$300K. Their bank called in their maxed out $125K line of credit, and the owner paid that off with a home equity loan. Their business coach recommended for a year they bring in a CFO Business Financial Strategist. CRS reviewed their financials, prepared projections, and worked through several cash flow scenarios to determine when they would need new cash, and when they could pay it off. But, deep analysis of the financials revealed inaccuracies in expense reporting, which changed their gross profit from 40% to -20%. They had been funding a vacuum with borrowed money. Ultimately, the business owner turned down that big project and kept the cash in the bank.

How much do real solutions cost?
Client Investment: ……… $25,000
Client Return: …………… $200,000
Return on Investment: … 700%



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