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Read how the Financial Scoreboard helped these companies succeed
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Success Stories of Financial Scoreboard™ Users...

Jack Markle's Story (Owners)
Tom Hood's Story (Business Unit VP)
Chuck discusses Investment Analysis (Corporate Board Director)
Tom Hood's Comments (CFO)
Steve Osborne's Story (CPA)
Chuck Kremer's Story (Business Consultant)

"Over ten years we grew & sold my business for the highest multiple paid in our industry."

Jack Markle, President, Center Rental and Sales Company

Jack Markle's Story

"Jack Markle credits the Financial Scoreboard™ software and the learning that came to him as a result of using the software for playing a key role in helping him. He was promoted to president of one of our big equipment rental companies here in Denver and he didn't have a clue about managing the financial statements. He recognized this weakness and he used us to not only learn it, but to master it. He then used his software on his own as part of his strategic planning process.

During his years as president of this organization, he fostered expansion into four states (originally he was just front-range Colorado). He was president of this organization in good economic times and bad. He was able to survive in bad economic times, and obviously thrive in good economic times. Ultimately he was part of a sale of the company to Atlas Copco, a Swedish based organization, and this president did early retirement as a result of all the good moves he was able to make. Here's a quote from this president: 'before your class I thought I was a pretty good manager - after your class I was able to attain a level of understanding that was unimaginable!'

What was so invaluable for Jack Markle was that he was able to use all his financial statement information and understand the financial big picture of his organization in a way that fit his need for a common sense approach. He didn't need to become a finance guru. The Financial Scoreboard approach communicated in a language that he could handle as a layman - an intelligent layman - and any intelligent business person can do what Jack Markle did with his financial statements!"

"Most businesses don't fail because they are not profitable, they fail because they run out of cash."

Tom Hood, President, Maryland Association of CPAs, and Chairman for the Vision Team of the American Institute of CPAs

Tom Hood's Story

"I come out of business and industry as a CPA where I was a CFO of highway construction company in the Baltimore-Washington marketplace. We were about a fifty million dollar heavy highway asphalt contractor, with about 400 employees and three asphalt plants around the state of Maryland. We were highly leveraged in the construction business because of our heavy investment in fixed assets. Primary work was from state governments and developers - private and public work was a balanced approach.

I actually used the predecessor of Financial Scoreboard software, which was called Mobley Matrix; at that point it was just rolling out in a beta format.

We were experiencing a severe downturn in our market, the highway market in Maryland at that point was going through a massive downturn. There was a big Northeast real estate recession, and we had a government moratorium on public works. So literally the market turned down in our business by almost seventy percent in a two-year period. Asphalt tonnage, for which we had about a 20% market share, went from 15 million tons of hot mix per year to 3 million tons of hot mix per year in statewide demand. So we had to ride that curve down, and it ultimately resulted in severe competitive pressures and huge operating losses. At that time, again, we couldn't get rid of fixed assets because they were worthless in the middle of that recession, every construction company in the region was trying to get rid of equipment and so it just flooded the auction blocks; there was no value.

We had to ask 'how are we going to survive through this piece?' We did all the standard stuff of layoffs, thinning out things, kind of throwing overboard everything that wasn't nailed down but then realized we had to find a source of cash.

The banks were obviously not going to extend us more credit, and we had to ask 'so what are we going to do about that?' Then we used this (Financial Scoreboard™) software to actually model our business, and we did a five-year history. We looked at it and did 'what ifs', and we found out that if we could significantly cut down our contract receivables, that cash flow would actually sustain us even if we had large operating losses - that was kind of a real eye opener.

So we played around with that; we started to set targets, and we effectively then went to our bank with a direct cash statement - prior to that our audits had always used an indirect cash statement - and we converted to a direct cash statement based on the analysis we had done and went to the bank and said 'what do you think about this? If we can show you significant movements of this kind of a goal against our contract receivables, here's the cash flow and all the cash flow will go to pay down debt and/or give us operating cash', and they went along with that. For the next two and one half years we basically lived off of our contract receivables and continued to get support of our bank and bonding company with keeping our credit lines intact as we managed through that crisis."

"When some people use Financial Scoreboard™ for forecasting forward, they will do an optimistic forecast, a realistic, and a pessimistic forecast. The whole purpose for the pessimistic [forecast] is risk management to protect your downside."

Chuck Kremer - Creator of Financial Scoreboard™
and co-author of Managing By The Numbers

Chuck Kremer discusses Investment Analysis

"The Financial Scoreboard™ will help you with investment analysis by looking at one company standalone, and in that context, a Venture Capitalist can take the financials of an applicant and put those financials into the Financial Scoreboard format and determine what the return on assets and return on equity on an annual basis are showing in the applicant's projections. The venture capitalist can also analyze profit dollars and maybe something that the applicant didn't furnish, and that's the embedded cash flow projections that Financial Scoreboard will actually calculate. With this the VC will be able to verify that the financials do in fact tie together. Going beyond that, once all those investment tests are passed, if he or she decides that the underlying assumptions are too optimistic, the VC can then "save as" a copy of Financial Scoreboard, and can change assumptions to reduce some of the sales forecasts, and then do some of the expense forecasts and then do the same analysis after changing those assumptions.

If the VCs feel like they can't live with the downside that they've forecast, then they can go back and they can change their business model, business plan, or their assumptions - they can change something.

And as a result they end up feeling like their own assumptions have been quantified, integrated, and analyzed. Once the venture capitalist then has the resulting dollars and ratios coming out of this forecast, he or she can then combine that with the other considerations that a smart venture capitalist will consider to decide whether or not this is a project worth funding. So there are some investment applications that help a VC look at the investment in a single company with the Financial Scoreboard."

"After using Financial Scoreboard -- the way people think now is that they are automatically thinking in a more balanced, or what I would call holistic approach to our whole financial structure. And this means every decision that gets made, in my opinion, will be made in a much better way."

Tom Hood, President, Maryland Association of CPAs and Chairman
for the Vision Team of the American Institute of CPAs

Tom Hood's Comments

"The diagnostic piece is the tool for the CFO or the finance group to do the heavy 'OK, how do we engineer the balance sheet, income statement, cash strategies.' But then once you understand 'OK, here's how we can make this work,' then it's about 'OK, now how do we get the team to buy-in and do it?' The communication piece is where the significant benefit is.

Having it simplified down to that little one-page format made it very easy to communicate. When I could show them that we could actually continue to make a good return on equity or on assets by working our balance sheet - that's a mind shift!

Until those guys (operations) understood that cash flow was as important or more important than profit, they were not going to change their behavior.

Cash flow became part of our language. Most operating people only are tuned in to profit - either revenue or profit. Now having that third angle of cash flow relates to balance sheet management. So we've got an active team proactively looking at a balanced three bottom line approach."

"The future of the CPA is to become more than a mere auditor, he (she) is to become a key player in the team - and can become that partner with the business by using this tool."

Steve Osborne, MBA, CPBA President, Mentor Plus

Steve Osborne's Story

"Hello, this is Steve Osborne, we have been using Financial Scoreboard with a specific application, and that has been Certified Public Accountant (CPA) firms using it with their clients as a precursor to talking about performance measurement in general.

And the basic message is that here's a way of looking at your financial statements in a different format, looking at more than just the one bottom line, and broadening their perspective about what use their financial statements are to them.

Having them understand that they should probably be looking at more numbers in their organization [these are CPAs talking to their clients]. They should be looking at more than just net profit, and they should be looking at more than just financial numbers even though The [Financial] Scoreboard is pretty much oriented around financial numbers only.

It's a bridge if you will between what they are doing now and where we were teaching them where to go. So that is the specific application.

Where Chuck [Kremer] and I first started this process was from a financial literacy perspective. And as you know there has been a lot of controversy regarding financial reporting - financial literacy is becoming quite a topic now.

[As a result of corporate scandals], it's a good talking piece for CPA's today. Probably 9 times out of 10, when the CPA presents the financial statement to a small business owner, the small business owner doesn't know what the heck the CPA is talking about unless the CPA is a really good communicator.

And even then the business owner doesn't understand how the financial statements may all fit together. They may understand what their margins are, or what their return on investment is, or their inventory turns or their receivable turns - those kinds of things.

They may understand those individual things, but how the whole thing fits together in the Financial Scoreboard does a really nice job of presenting it on one page and linking all the three financial statements together.

So that's basically where it fits in with what we do, and we've used it in the past as part of our toolkit in a three day training that we give on performance measurement. It's a part of an integrated system, part of a toolkit that we have other components to, and it's just one piece of that.

We have a whole system that's an integrated system for an accounting firm to provide their clients with performance management and measurement services."

"There is no way that a business person can manage cashflow if they don't understand how the balance sheet, the income statement AND the cash flow statement all fit together as part of the puzzle."

Chuck Kremer - Creator of Financial Scoreboard™
and co-author of Managing By The Numbers

Chuck Kremer's Story

"So many business people tell me repeatedly that of the three financial statements, the income statement is the only one that they get any value from, and yet they're challenged with having to manage profit and cashflow. The income statement will frequently lead you in the wrong direction in terms of cashflow. Many companies have grown broke thinking all they had to do was grow sales and grow profit and that would automatically take care of cashflow, when in fact that may have been what was destroying cash flow.

You cannot get from the income statement to the cash flow statement without understanding and managing the balance sheet. Those people who are trying to use their standalone financial statement information and think they understand the income statement are just totally intimidated and lost with the balance sheet and the cash flow statement standalone. They are like shooting the Grand Canyon rapids with one eye bandaged. They may be able to pull it off, especially at certain times of year when the water is not too bad. But when they get into the real turbulent stuff with a handicap like one eye shut, they're really challenging the rapids!"

"She is just exuberant over Financial Scoreboard thinking and the Financial Scoreboard™ software as a tool that she is using for historical analysis and forecasting. Her company was a thriving company that is now trying to survive some difficult management transitions."

Chuck Kremer - Creator of Financial Scoreboard™
and co-author of Managing By The Numbers

Listen to another of Chuck's success stories

"In terms of cashflow analysis and cash flow management around Financial Scoreboard™ software is a client that came to me as a result of work I am doing with The Executive Committee (This is an organization extremely strong in the US, though active worldwide). They sign up memberships with CEOs of small and mid-sized companies, and help these CEOs continuously improve their companies in numerous ways.

One of those CEOs asked Chuck for special help. She was able to create an income-statement budget for her company for the year 2003. It was a monthly budget and she did a good job with that part of the process.

She also tried to create a cash flow budget (this is before she knew anything about the Financial Scoreboard software). She did not know how to adjust for accounts receivable, inventory and accounts payable; her cash budget was dangerous. A little knowledge is sometimes more dangerous than no knowledge at all. She thought she knew where she was going to be with cash at the end of the year, based on a flawed process. Then as a result of using the Financial Scoreboard software, she was totally able to analyze her 2002 financial performance monthly - dollars and ratios, including profit and cash flow. For the first time she really understood the difference between her net profit and her operating cash flow. She's now going to the next level, and she's working with me to create a Financial Scoreboard forecast for the year 2003 so that she'll be able to really know where she is going to end in terms of operating cash flow and cash in the bank as of end-of-year 2003 based on best assumptions - she's got a good process now."