Case Studies - Fractional CFO

Manufacturing Company Moves to Larger Facility

A $7 million manufacturing company, experiencing continued growth, was running out of space to accommodate expected volume increases.

Challenges

  • Their facility lease, which required a 6 month notification, was expiring.
  • A year ahead of the expiration, the company began to evaluate their alternatives.
  • Possibilities included adding to the existing leased facility, building new or moving to an existing buildingThe estimated cost of moving to a different location included $200,000 to move and reinstall the manufacturing equipment.
  • Major considerations of relocation were the retention of a skilled workforce and staging the move to cause minimal disruption of customer deliveries.

Solution

  • The incumbent Lauber Business Partner, working with the management team, developed a financial model to evaluate multiple scenarios including various purchase options
  • Using the financial model, the bank was kept apprised of the financial ramifications of the various alternatives and how the move would potentially impact the loan covenants and cash flow.
  • An existing facility that met the size requirements was identified. The financial model was used to validate feasibility. A review of the employee roster indicated minimum disruption to the workforce.
  • The financial model was used to calculate the impact of the new facility on overhead rates and breakeven, as well as the impact on cash of adding equipment needed for future growth.

What this meant to company

  • The company was positioned for long-term future growth.
  • Setting up the new facility provided for a better workflow which resulted in improved productivity.
  • The company incorporated new technology to improve shop floor control.
  • Based on forward looking financial information, the bank was very supportive of the move and provided funding for the future equipment needs.

The value of a Part-time Lauber Business Partner

  • Extensive domain expertise in senior financial position.
  • A trusted adviser to owner/CEO on many matters.
  • Looks at business through perspective of maximizing competitiveness and long term enterprise value.
  • Extended tenure with clients helps develop stronger financial and business acumen for client’s leadership team.