Many businesses reach a stage in their growth, where, due to scarce resources, growth is restricted. Often that resource is cash, but interestingly in this case it wasn’t, it was the MD’s time. The MD was inextricably involved in the majority of transactions, had no time to work on growing the company and preparing it for sale; he couldn’t see a clear pathway to retirement.
The challenge was to identify ways of freeing up the MD’s time and to start working on growth initiatives. The project duration was 36 working days.
Business Plan – the ultimate aim was to facilitate a sale of the business. Consequently, it was thought a useful exercise to go through the discipline of writing a business plan whose objective was to deliver a marketable company with a great growth trajectory in 3 years’ time.
Marketing Strategy – the exercise started by doing traditional research / fact finding; An internal survey of what the employees thought of the company, an external survey of the customers and what they thought, and a review of the competitors – especially those mentioned by our customers.
It revealed that customers rated the service provision highly, most thought the website was fit for purpose, and most wanted a slightly broader product range. On the downside, a new Chinese competitor was revealed with a very attractive offering. This was a wake-up call, but an opportunity to plan a future strategy.
Process Analysis – there was a quick investigation to see whether there were any quick wins. No game-changers came to light, and it was concluded that any meaningful change would need to be planned and executed carefully to avoid disruption to day-to-day activities.
Key areas such as stock control were good but the processes were sometimes convoluted and therefore time consuming; there were significant opportunities for process improvement (and some essential changes necessary) if the company wanted to double or triple it’s volume.
Sales and product financial analysis – this was surprisingly difficult because sales were unpredictable and came in project-based lumps. Nevertheless, the company now has some (smoothed trend) views of sales which give a measure of growth. Gross margin has been identified as a key metric to watch (Chinese competitor) and margin trend analysis is now part of the monthly reporting pack.
Rolling Forecast model – this is a dynamic forecast to reflect the key initiatives the business has chosen to make. (Production facility, Company acquisition, Sales Team build, Gradual process change) It is intended to be updated regularly. It shows the potential growth which itself reveals where other potential bottlenecks might appear.
Production Facility – On the back of the business plan it was decided to start an in-house production facility (previously this had been sub-contracted to a UK manufacturer).
Acquisition – In order to acquire the skills required for the production facility, the company is in the process of purchasing another company. This company also comes with a loyal customer base in a target sales sector which is an added bonus.
Sales Team – In addition, based on the potential volume growth it was decided to grow the sales team and a recruitment project was launched.
Monthly Accounts Pack – this is an excel based set of reports that links to the QuickBooks database and the Rolling Forecast so that monthly management reports can be quickly and easily produced, and progress monitored.
The Company is now confidently reaching for the next level; several key projects are progressing simultaneously, all of which will change the bottom line positively, and will increase the company’s marketability.
The processes are improving. It is not always easy to change the flows and processes, especially whilst they are being used on a day-to-day basis. However, by planning a series of small manageable steps the company can now make steady progress so that it will cope with a large factor change to sales volume.
In parallel, the company has started to build its specialist production facility. There are two strategic benefits here; the first is to combat the Chinese competitor mentioned above (having a production facility enables far shorter lead times than the Chinese) – and the second is to continue to develop an exclusive range of own-brand products.
There is now in place a senior sales manager tasked with creating significant sales growth in specific niche areas – namely the own brand products.
The company acquisition will start to broaden the company’s product offering significantly and more importantly, allowing it to continue to develop the products its customers need.
Ironically, the MD is working harder than he was before, but is now confident that he is working to a well thought out plan, and towards a light he can see.
“Jonathan has approached the somewhat diverse tasks with enthusiasm and positivity and he has been a pleasure to work on these projects. Where he operates at his highest level is with data manipulation, presentation and interpretation. We have historically struggled will cross referencing sales and financial data from our different applications, but now have a set of easy to update reports which combine information directly from the various databases, enabling us to be more efficient and insightful. His turn of speed in analysing and commenting on financial information has also been quite remarkable.” Eddie Hing, Managing Director
EFM Expert: Jonathan Price