Business Restructuring Leads to Printing Money

Challenge

A certified public accountant introduced GrowthLab to a medium-sized commercial printing business. The business had over 30 years of history and was in need of business restructuring. The business was fighting duel battles. They were experiencing a market based contraction as customers began to pull back on print spend over the prior two years. Moreover, the company faced the difficult challenge of restructuring internal operations while working with capital providers. 

GrowthLab faced a three-prong challenge starting with upgrading and modernizing antiquated accounting systems and processes that were difficult to scale. As the market contracted we had to manage through fixed operational costs in an environment with limited access to liquidity since working capital constraints challenged the financial state of the business. 

Solution

Working tightly with the management team, we negotiated with their bank to do a full restructure of the loans. We also worked with unsecured creditors to improve overall operations and cash flow. GrowthLab’s first step forward was to give customers, vendors, and bankers the confidence that the existing management team possessed the capability to weather this storm without adding additional financial risk to the company and its capital partners. 

Elevating the accounting, understanding and managing short-term cash flow, and right-sizing the workforce and overall operations gave management confidence in our business restructuring strategy. We elevated their accounting by introducing the company to cloud-based accounting and financial management technology, reducing manual and double entry. This improved timeliness and elevated the financial management.

Simultaneously, we focused on short term, 13-week cash flow management. We dove deep into the accounts payable and accounts receivable and met weekly with management to plan collections and vendor payments. And, through all of this, we understood the business needs enough that we could right-size the overall operations and HR strategy. All of this showed the bank that management had the financial rigor and cadence within our financial operations and overall company strategy to weather the storm.

Results

The business restructuring improved the business’ accounting, managed vendors, accessed additional capital, and improved working capital. The upgraded accounting processes, procedures, and systems provide greater visibility into financial performance (at a fraction of the cost from the 5 years prior). In addition, the company’s books are now closed timely on a consistent monthly cadence (with supporting working papers for the balance sheet and ensuring regulatory compliance).

We expanded their financial flexibility by working transparently with customers to drive timely collections. We also worked with strategic vendors to give them the confidence they would get paid. This work focused on positioning the company for sustainable operations.

We introduced the company to the workout and restructuring officers at the bank in order to bring the bank along in the turnaround journey. Ultimately, the bank saw enough confidence in the management and the business — based on our hard work of wrangling accounting, vendors, customers, and people — to expand their line of credit to support the drive toward greater sustainable operations.

Today the company is best positioned and right sized to manage through the downturn. At its peak, this company was a premiere printing business and it can boast that it is now one of the last standing independent commercial printing businesses in the region. The business is now right-sized and well prepared to capture future growth driven by the ongoing industry consolidation. Said another way, the pie is shrinking in this market, but the commercial printers that remain are capturing bigger pieces of the pie.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.