Joe Labdik is the CEO and founder of specialist medical equipment manufacturing firm, JSL Innovations. In this customer story, he tells us how Fathom showed that his business was in real trouble if he didn’t act fast.
I found it through the integration that Fathom has with Intuit’s QuickBooks. I'm the kind of guy who can watch a tutorial video and easily retain it, so I didn't have too many issues figuring Fathom out. And I found the initial onboarding and getting used to it super easy and straightforward.
Read more: Forecast hiring a new employee using Fathom
We were looking at hiring an employee and my fear point with that was our industry is very volatile right now, so we wanted to forecast that hire. Other pain points were finding which accounts were absorbing cash flow, and how to deal with those problem areas and find a better solution. So after watching some of your webinars and speaking to customer support, I started playing with Fathom to identify problem areas. And once I’d added in the historical data, I saw we were going to be out of business in six months.
We were going to be out of business in sixth months
It was the opposite actually. I'm the kind of person who likes to see the problem. Problems you can't see are terrifying. And once I saw the problem, I could then think 'okay, how do we fix it?'. It was an emotional and mental relief in a way because as a business owner, one of the things that keeps me up at night is worrying not about me and my wife and our dogs, but my employee's partners, their kids, their bills; those are the kinds of things that as owners we take responsibility for. Fathom really did save us. I would not have a company at the end of this year based on what I saw.
I had a bad feeling that there was a cash flow issue. Our sales were inconsistent, as was the way that we were spending cash and tracking that spending. We didn't have a robust spending plan or a method to identify these key areas and how they were going to affect us long-term and how they affected us in the past. I went into Fathom – and this is something I loved because though you can get reports out of QuickBooks, you can't visually see it – and created a custom report showing me the last 12 months. The ability to customise the visualisation of the data led me to identify three particular periods throughout 2020 where we had spent too much money and our sales were dipping and we weren't paying attention to that at the same time. As a small company, there's a lot of things going on and it's easy to get wrapped up in that and not pay attention to how much you're actually spending and how much you're receiving. And without seeing it in the way that Fathom presented it, I would have never found those three moments in time.
Read more: Understanding your Cash Flow
I was then able to take those accounts, pull them in and create a new forecast. That forecast involved the payroll burden that we expected, the sales that we were targeting and certain key budget amounts. Then I added our materials and tooling budget for each future month, laying these areas out and seeing where they were falling. And then I tweaked it little by little, and was able to make those tweaks on the fly to see four months down the road and ask ‘what do things look like now?’
I'm not an accountant, I pay one, but we don't pay them to do reports. So through us using Fathom, we've outsourced the basic accounting need for a much lower cost. Now we don't need their help as much because we can monitor these things ourselves. I'm a tradesman, I'm really good at making products, I'm not good at being my own accountant and monitoring these things. Fathom has allowed us to create very complex budgets, very easily, in ways that I wouldn't typically think to go about them. It’s also helped us create progressive goals towards organic growth and not forced growth. Lots of companies burn themselves out too quickly by trying to put too many things through the pipeline; Fathom allows us to monitor that constantly now. If we do project a bad quarter, we can say ‘let's make sure this is looking historically like we're going to go down this road again, what can we do to mitigate it?’ And being able to have a custom budget for a very short time allows us to survive any traumatic events as a company.
Read more: Fathom's guide to business KPIs
The reality of manufacturing today is we no longer really need to be down the street from all of our customers. Our main KPI is the cost of goods sold. Our accounts are all based off sub-accounts because of the way that our books were formatted when we built them. This means we're able to not only predict KPIs from the main account, because there’s also the ability to create those custom KPIs and we can set them for sub-accounts too. So, say we want to reduce our cost of goods sold by 5%. Well, there's a lot of combinations of accounts that we can work on to solve that problem, shipping, costs of materials, tooling. One of the things that we identified through identifying a KPI and looking at our cost of goods sold through Fathom was our shipping costs were through the roof. That was mainly due to things like rush ordering on tooling or rush ordering on materials which eats into the bottom line. Now that we have identified the issue, we’re more proactive on how we track money in those areas. Fathom will really figure out exactly where all your problems are and it's just a much easier way to look at them; that's really where I found the power in the KPIs.
The last time that I tried to do this, before Fathom, it took me over six hours and was a complete waste of time – I gave up. Six hours wasted attempting to find the problem. With Fathom, I had a clear picture in one hour; we had a budget that was survivable and was going to work for us long term. We were not able to do that in any other software. I don't even know what I would have used to create something similar to what Fathom gave us as far as the predictions and forecasting goes. I have no honest idea, it's not even something I could wrap my head around. So time savings wise, that's your number.
Read more: Fathom helps O’Brien Group save time and add value
But it's also the ability to do it 24/7. You wake up at two o’clock in the morning – like we all do as business owners – and go, ‘what about that money that we signed a check for?’ So you go downstairs, look at your laptop and run through the calculations. And you can see the feedback of what's going to happen, so you know that check is going to go out Friday, our cash flow is going to dip down to this number and that’s ok. That's something that allows me to go back to sleep. And that’s a great thing for a business owner.
Our thanks to Joe for his time. If you're a business owner being kept up at night by not knowing what's going on in your financials, get in touch with our support team today and start your free 14-day Fathom trial.