What was the net cash used by operating activities for Southern Steer in 2023?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
ber 30, 2024 and 2023 STATEMENTS OF CASH FLOWS
| 2024 | 2023 | |
|---|---|---|
| Operating activities: | ||
| Net loss | $ (360,405) | $ (600,483) |
| Adjustments to reconcile net loss to net cash | ||
| used by operating activities: | ||
| (Increase) decrease in: | ||
| Accounts receivable | (8,264) | (1,429) |
| Accounts receivable, territory | 20,000 | (20,000) |
| Inventory | - | 90,590 |
| Increase (decrease) in: | ||
| Accounts payable | 250 | (12,320) |
| Accrued expenses | (310) | 1,836 |
| Deferred revenues | (36,834) | 161,075 |
| Net cash used by operating activities | (385,563) | (380,731) |
| Financing activities: | ||
| Payments to stockholders | (1,411) | (3,500) |
| Payments from stockholders | 2,000 | - |
| Proceeds from sale of preferred stock | 365,000 | - |
| Payments to line of credit | (249) | (2) |
| Net cash provided by financing activities | 365,340 | (3,502) |
| Net decrease in cash | (20,223) | (384,233) |
| Cash, beginning of year | 43,717 | 427,950 |
| Cash, end of year | $ 23,494 | $ 43,717 |
NOTES TO THE FINANCIAL STATEMENTS September 30, 2024 and 2023
1.
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the net cash used by operating activities in 2023 was approximately $380,731. This figure reflects the cash outflow resulting from the company's core business operations during that year. It's important to note that this is not necessarily indicative of poor performance, especially for a relatively new franchise system.
Several factors can contribute to negative cash flow from operations, particularly in the early stages of a franchise's development. These may include initial investments in infrastructure, marketing, and support systems for franchisees. Additionally, the timing of revenue collection and expense payments can impact the cash flow statement. For instance, Southern Steer may have made significant upfront expenditures to attract new franchisees or establish its brand presence.
A prospective Southern Steer franchisee should carefully examine the company's financial statements and understand the reasons behind the negative cash flow from operating activities. It would be prudent to inquire about the specific factors that contributed to this outflow and the franchisor's plans to improve its operating cash flow in the future. Understanding the franchisor's strategies for managing cash flow is crucial for assessing the long-term financial viability of the franchise system.
Furthermore, potential franchisees should compare Southern Steer's cash flow performance to that of other similar franchise systems in the butcher shop or specialty food retail sector. This comparative analysis can provide valuable insights into the relative financial health and stability of the Southern Steer franchise opportunity. Consulting with a financial advisor or franchise consultant is highly recommended to gain a comprehensive understanding of the financial implications of investing in a Southern Steer franchise.