Untangling the Knots: How eeCPA Revitalized a Struggling Ribbon Company, Shifting Plans from Sale to Growth

January 25, 2024

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The journey to building a thriving business is a significant achievement, but the greater challenge often lies in keeping it successful over time. This requires not only steady persistence and a lot of hard work but strategic outside guidance to get and stay on track.

eeCPA played a crucial role in transforming a ribbon manufacturing company’s challenges into a success story, leading the owners to rethink their exit strategy, and focus on growth and prosperity.

State of the Company

Founded in 2007 by two sisters, this reputable wholesale manufacturer of fine ribbons caters to high-end clients. Its ribbon products have adorned prestigious venues, including the White House, for numerous years.

Despite the popularity of their ribbons and general goodwill of the brand, the company faced internal financial struggles behind the scenes when first referred to eeCPA.

While they generated a solid 7-digits in sales, profitability remained elusive. Burdened with debt from being overextended, they had also maxed out their line of credit.

Although they employed a bookkeeper and contracted both an outside accounting firm and a pension advisory firm, the books were neither updated nor accurate and failed to provide an insightful view of the company’s financial health.

To top it off, the business operated on a standard QuickBooks account, which frequently crashed due to the excessive number of SKUs managed by the company.

Streamlining One Step at a Time

To improve the company’s prospects, eeCPA took a deep dive into the company’s expenses and began a series of cost-cutting initiatives to steer the business toward a solid path to profitability.

This entailed taking a serious look at the company’s finances, leading to the rightsizing of the staff roster, renegotiation of vendor contracts and a comprehensive overhaul of their product lineup.

Right People in the Right Places

Initially, the company employed as many as 14 sales representatives nationwide. But based on sales numbers, existing customers and employee performance, it was clear the sales department was larger than what the company needed.

Rightsizing the sales function led to a more efficient team of four sales representatives who received training to improve outreach and performance, proactive customer engagement and boost sales volume.

This effort also reduced the number of external contractors from 14 to four, significantly improving the company’s bottom line.

Renegotiating Contracts

Looking outside the company, many of its vendors failed to meet critical timelines and couldn’t fulfill orders, requiring the company to incur costly air freight shipping costs that eroded their profits. To address this, vendor contracts were redesigned to cut costs and incorporate stricter terms, holding vendors accountable for their commitments.

Additionally, eeCPA helped renegotiate existing leases for the company’s three showrooms located in Phoenix, Dallas and Atlanta.

Simplify Product Offerings

The company’s extensive product offerings needed to be examined with a fine-toothed comb. In an effort to provide the largest collection of ribbon in the U.S., they stocked an exorbitant number of SKUs, many of which did not sell enough to warrant their inventory costs. Margins for each product were scrutinized, leading to a reduction of the overall catalog.

The result was a smaller, more focused range of products with higher margins, comprised of proven bestsellers. This freed up the company to purchase high-volume options at lower costs, and in the same vein gave them the opportunity to sell these items at higher prices — simultaneously cutting costs and improving sales.

Redesigning Administrative Systems

The final piece of the turnaround strategy involved addressing administrative expenses, which included redesigning the company’s retirement plan, resulting in significant annual savings.

An owners’ retirement plan was established, allowing the owners to loan money to the company as necessary. This approach allowed it to save on borrowing costs and take advantage of interest tax deductions.

Changing the way they paid vendors and making other administrative changes, like switching from biweekly to twice-a-month payroll, led to much-needed improvements in cash flow and simultaneously reduced costs, resulting in increased EBITDA.

Lastly, the company’s entire accounting platform received an overhaul, which helped improve financial reporting. The new platform allowed for fully automated web orders, eliminating redundant data re-entry and improving the speed of customer order fulfillment.

The Results

eeCPA’s extensive efforts yielded significant fruit. The company emerged stronger and more stable. Beyond eliminating all company debt, sales grew by 80% from 2018 to 2023. Additionally, long-sought profitability was achieved with the company generating over 7-digit profits in 2022 and 2023.

By putting in the hard work over the past few years, the company is on a stronger financial footing, staffed with the right people, focused on the right products and equipped with the right systems to achieve further success.

Choosing Growth Over Sale

The transformation brought about by eeCPA’s interventions led the owners to a pivotal decision — rather than selling, they chose to continue growing the business they had passionately built.

This shift from a potential sale to reinvestment in the company marked a significant turning point in its trajectory.

Ready to Transform Your Business?

If your business is facing challenges or you’re considering your next steps, let eeCPA help you navigate the path to success.

Contact us to learn how we can help you achieve your business goals and possibly rewrite your company’s future.