Case Study: How We Helped Grow a Family Business from $9M to $17M in Revenue

Last updated May 2022
By Glenn B. Hetzel, Owner of Glenn B. Hetzel & Associates

case study

I met Matt under unfortunate circumstances, at a funeral.

My client, at 92 years old, had passed away after decades of business success. At this same life event, Matt professed he had a thriving business, but his Accountant was grossly overestimating and underestimating taxes, which came with IRS interest and penalties.

As Steve Jobs equivalently put it in his famous Stanford commencement speech:

“Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new… Sorry to be so dramatic, but it is quite true.”


I too, am sorry “to be so dramatic.”

As a CPA (Certified Public Accountant) and CFO (Chief Financial Officer) spanning 40 years, I’ve compassionately witnessed clients, businesses, and processes pass away, and make way for “new Life.”

In the case of Matt, old business processes (“just how we do things”) had to die for Matt’s company to profitability grow past the $9M plateau and have a “new Life.”

You see, Matt had bought a very successful cabinetry manufacturing business from his father:

  1. They built marketing displays from the likes of Warner Brothers, Sony Pictures, Toshiba, and LinkedIn – to name a few.
  2. He took over the company with around $6M in sales, and had grown the company to roughly $9M in a decade.

When the company struggled financially, Matt relied on his “just go in there and sell more” failsafe. Fortunately this worked for Matt because of his superhuman sales ability and because the “displays” were highly profitable. Until it didn’t…

The “sell more” panacea started to fall apart past the $9M in revenue mark because Matt’s company was using the same “paper” accounting systems and staff that his father had cobbled together in the 1970s.

Does this sound familiar?

Poor Tax Planning

When executed well, tax planning can save businesses and their Owners $100,000 to $1,000,000 over a ten year period.

In the case of Matt, his previous Accountant had made the mistake two years consequently:


  • They grossly overestimated taxation, which meant they gave the IRS an interest-free loan.
  • This meant they could have used the capital they gave to the IRS to further grow their business.
  • Believe it or not, the IRS dislikes when you overpay taxes and they can impose penalties for overpayment.

What’s worse than overpaying for taxes?


  • They grossly underestimated taxation, which meant they OWED the IRS a substantial amount of money and created a disruptive cash flow situation.

Who wants to pay more than their fair share in taxes?

Nobody! That’s who.

I worked with Matt to implement our advanced tax planning strategies and used every legal means possible to minimize his taxation. He was quite pleased with the result:

  • Substantial tax savings
  • Peace of mind
  • No surprises at the end the year
  • No free loans to the IRS
  • No IRS penalties/interest

While I was initially brought in for tax planning, there was a DEEPER problem…

The Dreaded Event Most Owners Fear

Deciding whether to take the risk or not

Two year before I arrived, they had discovered that an employee had exploited Matt’s convoluted accounting system to form a fake company and embezzle $50,000 through fake invoices.

The amount stolen was insubstantial, but it left Matt and his team paranoid and conjuring up elaborate control systems for trivial gains. For example, during my tenure, they grew concerned that employees would steal a $20 tool, so they wanted to implement a $75,000 annual supervised cage system, for a $20 tool!

More than this theft issue, over and over again, Matt would say to me:

“If I keep the company around $9M, I’m profitable.”

Because when Matt tried to scale, they would end up with less profit on the bottomline.

They had become “penny wise, and pound foolish.” As they focused on saving $20 for a tool, they failed to realize the profits from growing the business to $10M, $12M, or $16M in revenue!

Poor tax planning, theft, and unprofitable scaling were just symptoms that Matt felt.

The actual problems, however, they were unaware of…

The Problem with Most Accounting Systems

Matt’s 1970s accounting system was meant for a $2M to $3M revenue company, and Matt was pushing $9M through it in the 21st century. He had the typical “after the fact” accounting system that went like this:

  1. Salespeople would enter the invoice into a Word Document (still paper).
  2. The company would fulfill the “invoice.”
  3. Then 6 months later, the client would pay the invoice.

The problem is that there was:

  1. Little to no planning
  2. A lack of ownership
  3. A loss of profits at every stage

Without planning, Matt’s Production Manager would over-order, pay the more expensive “air” freight for “urgent-need” materials due to lack of planning, and inevitably waste materials.

With the salesforce being both responsible for reviewing accounting documentation for the job and their sales commission, they were disincentivized to accurately report expenses because their commissions relied on the profitability of the “invoice.” Plus they were wasting time poorly executing accounting tasks, when their time and expertise would have been better allocated to closing more business.

Often, this disarray of expenses resulted in the client never paying what should have been the full amount of their invoice. Instead, the company absorbed the additional $100,000 in hidden COGs (cost of goods) every year! Poof! That’s 10% of their net profits gone, right from their bottomline like a bad magic show.

The Avant of The “Part-Time CFO”

Most Accountants fail to have the corporate experience to guide CEOs/Owners on how to implement more robust accounting systems and processes, so the business can scale while remaining profitable.

Furthermore, most CEO/Owners of small-medium sized businesses (SMBs) are unaware of the following:

That they can hire a “part-time CFO” (also known as “interim/fractional/outsourced/virtual CFO”) instead of paying upwards of $1.1M (including benefits and stock) for a full-time CFO in California.
That they only require a part-time CFO for a few hours on a weekly, monthly, or quarterly basis.

Nor do most CEO/Owners understand this…

The CFO’s Role

It’s a common misconception that CFOs just handle the finances.

My role as a CFO is to better manage:

  1. People
  2. Processes
  3. Technology

And to turn the accounting department from a liability into a profit-center for the entire company.

It Starts with “People”

As a CFO, I always start with “people” because as much as out-the-shelf accounting software would like us to believe their accounting software is automated, it’s “people” that operate the accounting software.

Like most small-medium sized businesses (SMBs), Matt’s “people” (accounting department) were under-staffed and under-qualified to manage a $9M operation.

So we immediately got to work and hired a Purchasing Manager to oversee every purchase for all job materials that came through the company.

The decision to hire a Purchasing Manager was easy because:

  1. It took pressure off the Production Manager
  2. It made salespeople responsible to accurately report expenses and profitability
  3. It put the necessary controls in place to reduce waste and any shrinkage (theft)

However, we had a deeper issue…

Over decades, Matt’s Accounting Manager grew from being an entry-level Administrator into a senior role with no formal accounting training/education.

The problem was, this Accounting Manager went by a book of instructions of steps (“accounting manual”) in order to record transactions. These steps were mostly built by non-Accountants, who failed to understand the accounting principles behind the methodology. Thus, if a transaction of a different nature came along, the Accounting Manager had no clue as to how to handle it, which meant there were consistent mistakes and little-to-no room for growth.

After considerable time coaching the Accounting Manager, we finally “accepted” their limitations and made a decision to part ways. It was unfortunate, but it gave “new Life” to a new Accounting Manager to lead a modern accounting department who had the accounting expertise and had worked for a CPA firm.

What did we do next to fix this mess?

Two’fer: “Processes” & “Technology”

Matt’s current ERP (enterprise resources planning) software system was so old that it was no longer supported by the vendor. Resistant to change, they turned to 3rd party vendors to address on-going bugs/patches, but eventually, they too stopped supporting the software. The result was an ERP software that was glitchy and required many time-consuming and error-ridden manual workarounds (processes).

After working with the client for a year, while gaining an understanding of how to address this “accounting manual,” I recommended a conversion to an ERP. This would replace the “manual” (processes) and technology in one shot.

We evaluated countless ERPs and chose Sage 100 because it was built for Matt’s business, which relied on 100% customization.

The ERP software provided a platform to capture transactions from:

– Proposal (estimate)
– Purchase of materials
– Tracking of materials
– Supplies and labor for job costing
– Process receipt of inventory
– Accounts payable (AP)
– Payroll processing
– Sales invoicing
– Accounts receivable (AR) management

This robust ERP, replaced the need for a separate accounting software (like QuickBooks), as it also produced:

-A general Ledger (GL)
– Financial statements
– A graphic management dashboard – so the Owner could easily track KPIs and other key metrics

It provided a platform to see how costs were accumulating in real-time, rather than waiting until 6 months after the job was complete to see if there were cost overruns. This gave us time to recoup any potential overruns by billing the client and saved Matt’s company an average of $100,000 annually.

How to Increase Technology Adoption

But the implementation of ERP technology is no easy feat, and the challenge is doubled when the legacy process you’re replacing is almost 35 years old!

We hired a Software Consultant to ensure a seamless transition and 100% company-wide adoption of the new ERP software.

Manual accounting processes were replaced with automated streamlined processes in the ERP software, which resulted in enormous labor savings for:

  1. Time/expense tracking
  2. Payroll processing
  3. Payable payment processing

This “process” and “technology” transformation took roughly 1.5 years, but it primed the business to really TAKE-OFF!

Reaping the CFO Benefits

Aviator Businessman With Jetpack On His Back - Startup Concept
With the right “people, process, and technology”, we were now able to plan every project, which allowed our production team to:

  1. Procure materials at wholesale prices (utilizing volume discounts)
  2. Minimize freight costs
  3. Institute an inventory management system
  4. Establish inventories for frequently used materials
  5. Account for all costs and ensure the client paid the entire invoice
  6. Reduce waste

Now that Matt and his sales team were no longer focused on accounting administrative duties and were armed with higher profitability, they had more time, cashflow, and confidence to bid on more jobs and WIN larger ones.

Very quickly, their sales smashed through the $9M ceiling and achieved $17M in PROFITABLE revenue within three years! 

Go team!

Now, Do You Need a CFO?

I trust that you now understand that:

  1. A part-time CFO can help your business like I helped Matt’s business.
  2. Your under-invested accounting department could be the key to company-wide success and profitability.

If you’re interested in CFO-driven efficiencies from “people, processes, and technology” that result in increased revenue, profitability, and growth, book a free CFO consultation here. We’d love to help.


About the Author

Glenn B. Hetzel is Owner of Glenn B. Hetzel & Associates. With 40 years experience as a CPA and CFO, he has provided advanced tax planning strategies, helping companies near Orange County, California to legally minimize taxation, optimize their profits, and grow their revenue. Book a free consultation now.

We’re the Interim Controller to Rescue Your Accounting Department.