Hospitality

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Doubling Revenue and Boosting Profitability for a Hospitality Business

The Challenge:
A hospitality business generating $600K–$800K in annual revenue for five consecutive years struggled to grow due to operational inefficiencies, high reliance on subcontractors, and lack of financial visibility. The owner believed they lacked the capacity to scale, while competitive pricing pressures squeezed margins. Key issues included:

Disorganized warehouse operations – A 15,000 sq. ft. warehouse with an inefficient layout, leading to wasted labour hours and difficulty locating inventory.

No inventory management system – Resulting in over-purchasing, obsolete stock, and excessive storage costs.

Over-reliance on subcontractors – High costs, quality inconsistencies, and an overwhelming workload on the owner.

Manual invoicing & no cost tracking – No insight into job profitability, labor costs, or trucking expenses.

Frequent product damage & high shrinkage – Due to poor packaging, leading to 15% inventory loss and increased costs.

Sourcing limitations – No process for importing products at competitive rates, making it difficult to compete on pricing.

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The Solution:
To optimize operations, increase profitability, and create a scalable business, we implemented a strategic transformation:

Remapped and reconfigured the entire 15,000 sq. ft. warehouse, improving workflow, reducing labor time, and increasing efficiency.
Implemented an inventory management system to track stock levels, prevent over-purchasing, and eliminate unnecessary storage costs.
Developed high-quality, custom packaging solutions, reducing inventory shrinkage by over 15% and protecting products during storage and transit.
Introduced new revenue streams by leveraging existing products into a rental line—offering higher margins and recurring income.
Enhanced job profitability tracking by setting up a structured chart of accounts and financial systems to properly charge for labor and trucking.
Transitioned from subcontractors to an internal workforce, improving service quality, reducing turnover, and lessening the owner's workload. \
Created an international product sourcing process, allowing the business to import inventory at lower costs, making them more competitive in pricing.

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The Outcome:

Revenue went from $800K to $1.8M within three years.
Gross profit margin increased from 30% to 65% through cost optimization and operational efficiencies.
Warehouse efficiency significantly improved, reducing labour time and allowing faster order fulfillment.
Shrinkage reduced by over 15%, saving the business thousands in lost inventory.
Lowered sourcing costs by importing products directly, enhancing competitiveness.
Reduced owner dependency—with a structured team and systems in place, the owner no longer had to manage every aspect of the business.
Company became highly attractive for acquisition—after two years, the owner successfully sold the business at a 4X EBITDA multiple.

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