G Squared Partners

Case Study

How Margin Analysis Helped a Manufacturer Nearly Double Its Gross Margin

How G-Squared Partners helped a growing manufacturer find where it was losing money and turn that insight into a more profitable business.

Services

  • Outsourced CFO
  • Financial Modeling
  • Product & Customer Profitability Analysis
  • Monthly Close & Reporting
  • Audit & Tax Coordination
  • Transaction Support

Overview

In one of our first conversations with the founder of a growing manufacturing company, he asked a direct question: why does a company like his need an outsourced CFO? He later told us our answer was the first intelligent one he had heard.

More than a decade later, the better answer is the work itself. We built the financial model his team updates each quarter, found the products and customers that were costing him money, supported the company through a downturn that hit its industry hard, and today, serve as its full outsourced finance team.

The Challenge

Growing Sales Without Knowing Where the Money Was Made

The company was founder-led and growing, and its finance function had not kept pace. Leadership faced several issues:

  • Unreliable Financials

    The numbers leadership was working from needed review and correction before they could be trusted for decisions.

  • Thin Margins

    Gross margins sat around 25%, low even for a manufacturing business.

  • No View of Product and Customer Profitability

    The company sold a broad mix of custom and standard products to a wide range of customers, but it could not see which ones were earning their keep.

  • Limited Forward Visibility

    Without a reliable financial model, planning was largely guesswork.

The company needed a finance partner who could bring discipline to the numbers today and dig into the underlying economics of the business when the time was right.

Our Approach

Building a Strong Foundation, Then Going After the Margin Problem

Our work started with the foundation. In the early days, our CEO, Gene Godick, met with the founder once a quarter, and G-Squared Partners built a financial model to help guide decision making. Over time, that work steadily made the numbers more reliable and gave leadership a model to plan around.

As the company started to scale, the relationship grew significantly. It engaged G-Squared Partners as its full outsourced finance team, and we took on the monthly close, accounting, financial modeling, and coordination with its auditors and tax firm.

With reliable numbers in place, we could go after the bigger question: why were the company's margins only around 25%? We built product-level and customer-level profit and loss statements to find out.

We started running product and customer P&Ls because I wanted to understand why the company wasn’t making money. We pulled the data from the inventory and accounting systems so we could match products to customers and margin, and what we found was that a large share of the product line and customer base was losing money. We built the analysis and showed him that if he walked away from those customers and products, he would be a smaller company but a far more profitable one. He did exactly that. He went back to those customers, pushed through price increases, and began changing the business.

Gene Godick Gene Godick Founder and CEO, G-Squared Partners

The Results

Margins Nearly Doubled

Within a year, the company’s margins had climbed to nearly double where they started. The result carried through the following years, leadership has stayed focused on gross margin by product ever since, and it remains a core part of how the company evaluates its offerings.

The project drew attention beyond the company itself. A member of its board, who ran a manufacturing business of his own, saw the results and hired G-Squared Partners to carry out a project at his plant.

When the pandemic hit and demand for the company’s products dried up, the company drew on the financial foundation it had built. G-Squared Partners supported it through the downturn as it secured government-backed financing and raised convertible debt from its investors.

A Long-Term Partnership

A Full Outsourced Finance Team

Today, the company relies on G-Squared Partners as its outsourced finance team, with a single resource in house. Our work includes:

  • Monthly Close and Reporting

    Closing the books each month and delivering the numbers leadership needs.

  • Financial Modeling

    Keeping the company’s forecasts and analysis current.

  • Audit and Tax Coordination

    Working with the company’s auditors and tax firm.

  • Accounting and Transaction Processing

    Supporting day-to-day accounting operations.

  • Strategic Transaction Support

    When leadership evaluated strategic options, we worked with an investment banker and supplied the analysis they needed.

Our true value is that we get the numbers right and give him everything he needs, and it’s much more affordable than anything he could put together himself.

Gene Godick Gene Godick Founder and CEO, G-Squared Partners

Toward the Future

Continued Support for a Growing Business

The company’s story is a reminder of what a close look at the numbers can do for a manufacturer. G-Squared Partners continues to support its leadership team as it develops new products and works toward its next stage of growth.

We are proud to have been part of this company’s journey for more than a decade, and we look forward to what comes next.

Do you know which of your products and customers make you money?

At G-Squared Partners, we serve as an extension of your leadership team, digging into the numbers behind your business and building the forecasts, reporting, and analysis you need to make decisions with confidence. Contact us today to learn how we can support your growth.

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