Mike Andes examines a manufacturing business reporting $400,000 profit with a 13% margin, but Q2 lost money and the company is $500,000 short of projections. Large orders tie up cash, raw materials are constrained, and losing skilled installers costs $2,000 each to replace.
He's running on a 13% profit margin right now. They see $400,000 in net income. Like, that's amazing.
Q2 is not profitable. Q2 murders us. We're probably short about half a million in profits.
13%, if you are trying to grow and invest in this, can feel like nothing because you are making orders of $200,000 or $300,000 worth of lights and materials and they have a big manufacturing facility and like you might have no, no available cash and cash flow might be actually really tight.
Yeah, we just have 100 grand of raw materials and then we have our machines, which are everything for us. So we got to fix that. And that's where we lost. The half a million in profit.
We were losing good installers as well. There are $2,000 customer acquisition costs. We make no money on that.
I think there's about 6 months there that I hardly worked, if worked at all.
You might have no, no available cash and cash flow might be actually really tight at a 13% margin business. So we'll be interested to see what his goals are tomorrow. But I feel like a lot of this is going to come down to leadership and whether or not he can actually attract a team of managers that want to work with him.
