Case Study: How Monthly Financial Reporting and Accountability Turned Around a Bakery Business’s Performance
For the last couple of months, our focus has been on the power of regular accountability meetings and monthly financial reporting and how businesses can use them to achieve better financial outcomes. We wanted to share the details of how we helped a client improve their performance using these strategies. One of our bakery clients, with whom we work closely on a monthly basis, has faced significant financial challenges in the last six months.
The Problem
In the first six months of the financial year, the bakery was falling short of its financial goals. Gross profit margins were declining, costs were rising and the effect on profit was disastrous. After further analysis, we identified issues with their cost of goods, unexpected pricing changes in key ingredients, wastage problems and rising wages costs.
The Solution
We met monthly with the business owners to review their monthly financials and discovered rising ingredient costs, such as flour, that hadn’t been passed on to customers. The business was absorbing these costs, leading to reduced profits. We advised the owners to implement a 5-7% price rise on most of their products. Although hesitant at first, within 3-6 months, the bakery saw improvements in gross profit margins, and their Gross Profit Percentage began to come back to the expected COGS / GP% ranges for the business. And because the remainder of the business expenses were unaffected, this increase in margin dropped straight to their bottom line profit. As a result, their financial position stabilised and began to improve within weeks of implementation.
Shopfront Wastage
One of their shopfronts also had a lower gross profit than other locations. Upon review, we found that ineffective management was leading to increased wastage and poor purchasing decisions. Stock with shelf lives of 4 or 5 days was being wasted daily. We reviewed and changed the timing of stock into pie warmers. We also reduced the ordering of slow-moving/high-waste items. By working closely with the manager, we helped reduce wastage, bring the cost of goods back in line, and transform a loss-making shopfront into a profitable one. Watch our video on minimising waste and improving profit here.
The Outcome
Thanks to proactive financial analysis, monthly reviews and accountability, the bakery was able to take swift corrective action, improving profitability and ensuring long-term stability. This case highlights the critical value of regular financial reporting, asking the right questions, and acting on advice to solve business challenges. And acting in a short time frame, rather than delaying literally saved this business tens of thousands in lost profit.
The power of monthly financial reporting and accountability means staying on top of your numbers, helping you avoid financial pitfalls and positioning your business for growth. If you want to improve your financial outcomes, regular reporting and expert advice are key to success. As the saying goes, “If you measure it, you can manage it”.
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