Blue Frog Quadruples Profits by Tracking Key Performance Indicators

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Client Challenge:
Blue Frog is a $5 million contract screen printing and embroidery company that creates specialty clothing and goods for customers. Founded 10 years ago, the company has consistently demonstrated sales growth above the industry average and continued to grow until there were more than 90 people on the payroll, although their profits remained below average.

As the company continued to grow, its cash flow problems continued to be a problem. The company consistently had trouble generating enough cash on a regular basis to meet payroll and other expenses. Blue Frog Founder and CEO Mike Givvin knew he had to find a way to improve his cash flow and increase profits, but he couldn’t identify the problem within his operation. Sales continued to grow and business was brisk, even in a poor economy, so why couldn’t he improve his cash flow?

With the help of Pacific Crest Group’s CFO-for-hire services, Blue Frog was able to quadruple its profits and solve its cash flow problems. By honing in on those Key Performance Indicators (KPIs) that affect the company’s bottom line, Pacific Crest Group was able to create a KPI report that Givvin could use to manage his day-to-day operations and be sure of his profits, and cash flow.

The PCG Solution:
Givvin is a one-man executive team, and a master at building his company’s sales and running the manufacturing operation. However, he clearly needed help sorting out his financial strategy, since incoming cash wasn’t arriving in a timely manner and his tight cash flow was killing his operation.

Givvin decided to retain Pacific Crest Group to provide outsourced controller services, and TJ Van Voorhees, co-founder of to fill the role of interim Chief Financial Officer to help him streamline operations.

The first step was to assess Blue Frog’s financials. This meant reviewing their entire accounting process and reorganizing financial data to make it consistent for analysis. By re-categorizing expenses and making modifications to the data entry procedure, Pacific Crest Group was able to create a realistic financial model.

After making an assessment of Blue Frog’s P&L, TJ determined that the revenue-to-staffing ratio was off. With staff costs making up almost 66 percent of the company’s overhead, overestimating head count by even a few employees would make the difference between profitability and negative returns.

By reducing the payroll-to-revenue ratio to a simple formula, Givvin now has the means to manage his cash flow, refining his operating expenses to arrive at a critical operating number that serves as his optimal performance ratio. Since adjusting his payroll to bring it more in line with revenue, Givvin has been able to increase his profits four times over in the last year. Now Givvin knows when his business is going to be profitable. As he says, “I don’t go home with headaches anymore.”

Where PCG Created Value:
• Provided outsourced CFO services to assess operational expenses against cash flow as they related to long-term goals.
• Provided outsourced controller services to assess P&L information and create a unified, consistent view of profits and expenses.
• Identified Key Performance Indicators (KPIs) where management could have the greatest impact on monthly P&L line items and profits.
• Created a Key Performance Indicator report for Blue Frog founder Mike Givvin to allow him to track KPIs against P&L and adjust course as necessary to maintain positive cash flow and improve profits.