Dog Grooming Business Turnaround – Case Study
The founder of a dog-grooming and boarding business with four locations was struggling to keep afloat. She is a very skilled groomer herself and had hired many others, but was working for long hours 6 days a week to try keep the doors open. Due to the complicated patchwork of bookkeeping records, the fact that she was not actually making ends meet was obscured. She did not have time to fully address the piling debt and other cash flow issues as well as keep up with maintenance, marketing, or hiring, motivating, and promoting employees.
Challenge
Behind on tax filings
Tax liens over $100,000 — IRS hold on bank account
Convoluted accounting, including two separate entities with no clear delineation of cost centers
No financial statements done for the previous 8 months
Vendor payments routinely late with exorbitant late fees tacked on
Behind on rent payments or make certain needed repairs
Retail space leases expired and month-to-month due to lack of attention
Behind on mortgage payments on seller financed grooming/boarding location and missing the proper legal documentation for the sale
Negative cashflow
Solution
Members of our team came in, did a deep financial dive, built a 13-week cashflow, and prioritized how to get the company back on its feet from multiple angles. We renegotiated her seller finance terms, got the proper documentation filed, worked out payment plans with the landlords of the 3 leased locations, and handled discussions with the IRS regarding the tax liens, so she could stay focused on her business. We engaged tax professionals and shortened their financial close preparation time from months to just a few days, so that timely information could be provided and better real-time decision made.
Our team members also analyzed the current accounting set up and established a plan for improvements and trained the current accountant to implement these critical improvements. We also reviewed all current expenses and cut out all unnecessary or incorrect autopayments, renegotiated utility and vendor contracts to better meet actual needs, and improved cashflow.
In addition, we worked with management to come up with and implement a new marketing plan which resulted in the company being voted “best of the best” dog groomers in the entire metropolitan area of 4 million people for 2019.
After stepping and implementing our restructuring plan, the business went from negative cashflow to $6,000 a month in net profit.
Ongoing Support
Although the company is doing beautifully on its own now, DSS still stays involved as a resource for legal, accounting, FP&A, tax, and marketing questions and issues that continue to come up on an ongoing basis.
