How a Florida company changed their cash flow position to save their business
Being in a position of running a business takes energy, business savvy, and stamina. Often times, there are challenges and business mistakes that affect the financial position of a business and, interestingly enough, not all the time is that related to a loss of sales. Take, for instance, the story of Key West Key Lime Pie Company out of Florida. This story was highlighted in the hit show on CNBC, The Profit. Marcus Lemonis, an investor who specializes in helping struggling businesses, documents how he helped discover some weaknesses in this companies business strategy.
Key West Key Lime Pie Company bought the business over 10 years ago for $1,200, named best pie by the APC (American Pie Council) and selling over 1.4 million in sales.
They make 80% revenue from selling pies with 80-90% margins and 20% from other specialty items with very low margins.
$130,000 at the time the show was recorded.
The pies are made of a powder product for the pie filling, store bought key lime juice, and Keebler pie crusts – even though they make an award winning pie. They even sell their pies in stores such as Macy’s.
Other than their main store front, they run an additional location for shipping pies, as well as selling specialty items.
The owner micromanages employees, his resources are stretched thin, there is a loss of focus on the core business, 60% off their physical floor space is dedicated to 20% of sales with very low margins that account for only 10% of the revenue. Additional location loses $20,000 per year but is necessary for shipping operations. Additional store generates $65k per year and the operation costs are over $90k, giving this location a yearly loss of over $25k.
A cash infusion of $450,000k investment and strategy by Marcus Lemonis for remodeling and liquidation of store debt.
2.4 million people visit Florida Keys but this business sells only 40,000 pies. The focus is to turn this store into a specialty pie shop and eliminate the sell of specialty products. To eliminate the immediate loss, they closed the additional location, remodeled the store to be a flag-ship store and to sell only key lime pies. They Implemented a high performance, high reward, and incentive plan for each employee to reduce micro-managing practices. They also re-developed a proprietary recipe and involved employees in taste testing as well as sample customers.
Not all busineses need an investment strategy to revive their financial position. Most businesses owners have 2 things that hold them back from getting help: pride and intelligence. It is a humbling experience to admit that your plan is failing. This does not mean you are a failure it just means that your business plan is failing. The other thing that holds business owners to find help is that many are very intelligent people. They are strong willed and determined to figure out the problem on their own – that is just how many entrepreneurs are hard wired.
They key is to admit how this can feel and know there are professionals that care about helping business owners become more successful.
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