Case Study: A Distribution Company

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Case Study: A Distribution Company

Case Study: A Distribution Company

Challenge

cs-distrib-200A Distribution company reached out to New Direction Capital during its 10th year in business. The economy had impacted the growth of the business and revenue was flat for the past 3 years. It was a viable business and doing well, the owner needed to figure out how to grow over the next 3-5 years.

Inconsistent cash flows had made his planning difficult and due to the economy his customers were not paying him as fast as they once did and his bank was having difficulties as well. He also needed to secure his physical location. He had been renting for several years and had a large investment in the location but did not own the bricks. With the landlord considering selling, he needed to work through purchasing the business.

Approach

First, New Direction Capital met with the client to understand their vision for the business and understand challenges, together we chose to target four specific areas: 5 year Growth Roadmap, Finance Plan to handle irregular cash flows, Forge a new bank relationship, and secure his location.

Results

5 year Growth Roadmap:

NDC virtual CFO worked with client to prioritize opportunities, cost modeling, and developed a map to handle the rocky economy for the next 5 years. We created a roadmap that saved clients time in evaluating business decisions and saved money by allocating capital to the areas that were going to grow the business.

NDC previewed the value of the business and was able to craft a plan to increase additional revenues over the next 3 years.

Finance Plan to handle inconsistent cash flows

Through analysis and research with the client, NDC was able to find a solution to their cash flow inconsistencies. This plan was developed and communicated to the client’s customers and to the bank. NDC as CFO was able to cut down on the time with bank relations and also have confidence and peace of mind moving forward. We were able to secure a line of credit that would handle larger cash needs in off months and the bank was able to understand the business justification in why the larger line was needed.

Forge a new bank relationship

The client’s bank was having very difficult times and had stopped lending but still was working with client to maintain their business deposit relationship. NDC saved the client time and money by developing a new banking relationship with a bank that was healthy and would work with them over time with additional capital when needed. NDC as virtual Chief Financial Officer worked with the bank to educate them on client’s business model and timing of cash flows. We were able to save the client time by researching the bank and coming up with a final few candidates to select.

Secure his location

The client and landlord had close relationship over the years. NDC as CFO was able to work with advisers and counsel to negotiate and structure the purchase of the location which included negotiations of a private note. During this process, NDC saved client over 30% in the purchase price and was able to secure the note at 4.5%; well below the offered bank rate. This secured the location, added collateral to the client’s net worth and he was able to improve his net worth at the time of closing.

Testimonials

New Direction Capital - Virtual CFO Services
“I was referred to New Direction Capital by a family friend. For the past 10 years we have been leasing a large location for our business. Our location is strategically important to our business and is needed for the continued growth. New Direction Capital worked with us to build a plan to save funds for a down payment and also help us with financial targets so our financials would be in good shape when it was time to finance. About a year after working with New Direction Capital, our building’s owner approached us about purchasing the building. New Direction Capital was able to work through the best financing for our situation.
I now own the building, have a working line of credit for the slow months and could not be happier. There was a tremendous amount of information and business planning that was needed. New Direction Capital made this process easy for us and saved us tons of time and effort. They also worked on our behalf to make sure we received the best pricing with vendors and low cost financing. These results do not do justice to the level of support I received from NDC during this time. Mike was there every step of the way to ensure a smooth process, often available after hours to ease my concerns. I would highly recommend New Direction Capital for your business ventures. Their dedication and experience make the process seamless. On top of that, they are very nice and kind people."
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