Think Globally, Act Locally
Driving Results with Knowledge Based Creativity
Executive Summary. Company CEO and owner found himself trapped by the recurring cycle of feast or famine with little profit cushion to ride through some of the slower parts of the sales cycle. Also, it was a company-wide myth as to how seemingly profitable projects did not translate into company-wide earnings. Advisor implemented a multi-prong restructuring plan where company's debt was refinanced and a line of working capital was put in place to weather the ups and downs of sales cycle. Company's overall pricing strategy was revised and contract pricing structure adjusted to increase and stabilize profitability throughout the contract life of future projects. Operations were streamlined to gain productivity by fine-tuning what the company did best and outsourcing lower competency areas. The company's sales increased 75% and profitability increased multi-fold during the first year of implementation.
Background. 30-year-old planning and design company was founded by a building and design master revered by its community. His creativity in solving building problems with the end result of increasing projects' return on investments (ROI) was second to none in the area. However, these talents did not translate into sustained profits for the business as the company got caught up in price wars. Owner also was not sure why seemingly very profitable contracts did not translate into company-wide profitability.
Years of sales cycle of feast of famine stressed the company's systems and staff. Morale was low and stress level was high throughout the company. Debt continued to build further putting stress on the financial system. Company CEO lost track of its vision and his market positioning and got caught up in the number of contract wins instead of total profitability and suitability of projects.
Business Support Plan
1. Replaced company's CPA with a more mission-friendly CPA and supplemented accounting/bookeeping support to bring the company's books and records up-to-date. We also added financial projection competencies for cash flow planning purposes.
2. Repositioned the company as the gem in planning and design for builder-clients who wanted to maximize the return on investments of their commercial projects as opposed to rendering services for commodity CAD drawing with generic designs. Immediately increased pricing to levels commensurate with company's value-add. Retargeted company message and marketing efforts to be consistent with the new positioning.
3. Restructured contract templates to increase profitability at the tail-end of each future contract to account for incidentals and contingencies that historically dragged the contract profitability down.
4. Analyzed core value-add and competencies of the business and began to find outsource partners that not only could co-market/cross-pollinate for new businesses for the company but also take over fulfillment areas outside of client's core competencies.
5. Began discussions with respective parties on a comprehensive financial restructuring plan that allowed the company to tap lower-cost capital and to establish a working capital line to poise for growth again.
Benefits to Business Owner.
The company's sales increased 75% and profitability increased multi-fold during the first year of implementation. Stress was relieved in both the financial and operational systems of the company and moral improved tremendously. Owner was able to find more time to devote to family and leisure.