SCORE

By Tina Dettman-Bielefeldt

In last week's column, Mary Rebman, owner of Triumph Electric of Appleton, talked about her journey in taking over a business in 2005 that was $1.7 million in debt.

Working with SCORE mentor Tony Busch of the Fox Cities Chapter, Rebman turned the business around. In May 2012, the company was debt-free.

Busch, who saw the importance of cash flow management during his 30 years in the banking industry, was an excellent match for Rebman. The owner of Prior Cash Flow Management LLC, a business he founded in 2003, Busch says it's his goal to provide motivated business owners with the ability to apply the financial principles that will improve their business. He saw that motivation in Rebman.

"I was given the assignment for the first meeting with Mary through the SCORE office, and I missed it," Busch recalled. "When I rescheduled and showed up with doughnuts the next day, she said, 'Where were you? You were supposed to be here yesterday.' My first impression was she says what she thinks and is as honest as the day is long."

For Rebman, with no experience in running a business, Busch started with the basics. He saw a company that was in bad shape. Issues included unpaid bills, wasted money on employees, worked equipment, and negative cash flow.

"She had no idea how to write a business plan because all of her time was spent putting out fires. Everything was coming at her from every direction, and she didn't have time to sit down and make a plan. When we met, she was ready to get right to work," Busch said.

That meant crunching numbers and working out agreements. The biggest problem was cash flow; there was no money to pay bills. As Rebman worked out payment plans with vendors, Busch provided information on the importance of establishing direction. He asked Rebman what steps she was going to take to solve problems.

As part of the process, Busch provided the job profit estimator, a spreadsheet he developed and shares with SCORE clients. Rebman's company had strong sales, but many of the jobs were not profitable.

"Mary gave me a real case and I put the numbers in the estimator and added labor and materials costs and overhead. I asked what they needed to bid to get the job because they were losing money on many of the bids," Busch noted. "The jobs were adding to the debt. I didn't go in and give them an answer; I gave them a system."

This is an issue faced by many businesses that look at gross sales growth and not the bottom line. Busch recommends checking financials at least once a month. He says successful companies are looking at cash flow daily, and have developed disciplines to measure whether they are making money.

The financial projections are so important that Busch says they should be about 80 percent of a business plan. As a best practice, he advises starting with expenses first and working back to revenues. When that is completed, assumptions should be added to explain the thinking behind the numbers.

The rest of the business plan should be devoted to describing the nature of the business, describing management, a marketing plan, and an executive summary.

After Rebman had a solid business plan, Busch went with her to sell it to lenders. It took about a dozen banks before finding success, something he attributes to Rebman's character and diligence. Seeing her success was gratifying.

Busch said, "For that size of a business, this is one of the most extreme examples (of coming out of debt) I've seen. At times I had doubts, but as I worked with Mary and saw her determination, I believed she could do it."

Tina Dettman-Bielefeldt is co-owner of DB Commercial Real Estate in Green Bay and district director for SCORE, Wisconsin.