About The Client
NOTES: This client engaged us in 2009 and was in the program for 2 years
OWNER GOALS: Business Growth and Financial Improvement
Scenario: Mark had come to us with a strong desire to grow his company. They were hovering around the break even mark and each time they experienced a win it seems to be followed by a quick backwards step return to the same place.
Mark was in his late 30th’s with 3 kids and big dreams. He was the CEO of the family business, which had been in business for about 30yrs. His family was more engineers than business people but still had managed to grow a reasonably successful company. Mark was a shareholder along with his father, uncle and brother.
Marks goals were focused around financial improvement. His end game was to be 100% owner and dramatically grow the company.
Here’s how it went …
Mark was extremely receptive to the ideas and strategies we bought to the table. Our first steps were to get a really good handle on the numbers. As you’ll see from Mark’s testimonial below we used some proprietary software that gives us tremendous insights on past financial decisions, future trends, what-if scenarios, and literally transforms the numbers in a way that makes everything extremely transparent and obvious. Mark loved it.
Once we could see how things were performing we were able to get some quick wins through tweaking Accounts Receivable processes and inventory management. The extra cash flow certainly put a smile on Mark’s face.
It is important to point out that Mark new his numbers. He was quite savvy when it came to financials and their management. What was lacking was some meaningful reporting and measuring. Once we determined the right things to measure and report on, it allowed Mark and his team to make more informed and subsequently better decisions.
Having stabilized some cash flow, we turned our attention to sales and marketing. Before putting strategies in place we took stock of how things were operating now. The things we measured were lead sources, conversion rates, 80:20 of customer and product mix (measuring which customers and products accounted for 80% of revenues and profits. It is always the minority and we needed to know this to know where to focus our efforts on sales and marketing. Once we knew what the top customers look like we could market for more of them).
Through the process of examining how sales were performing we learned two things:
- One of the key problems was actually workflow and bottlenecks in production and ordering – not sales. Often they would have the leads coming in but be unable to deliver because they lacked capacity in the shop.
- There was considerable resistance from some of the team around the work we were doing. This did not come as a surprise to us. Through our interactions we had seen Mark did not have a very cohesive team. And there were a couple of reasons for this.
- Some just were not the right people – their behavior and actions were continually sabotaging the team.
- The father and uncle were still physically present in the business and while their intentions were good, often their interactions and behavior were not aligned with Marks efforts.
We knew that we’d have to address the team issues before any pro-active strategies would bear fruit. Once we addressed this with Mark, he knew we were right. Deep down he had known for a long time but never acknowledged the size of the problem.
Aligning the team … and doing some flushing
We held a full day off-site team day where we presented and discussed many issues. Our goal for the day was to educate the team on success principles in a fun way and give them better tools for communication and understanding each other. We facilitated in developing some standards they were agreed upon and could use as a team and be held accountable too. Mark also shared his vision for the company and we talked about specific goals.
While all this can seem a bit coom-by-yah, it is amazing how the ‘right people’ soak it up and those who probably should work somewhere else stood out like a sore thumb. It become crystal clear what needed to change for the team to go to the next level.
Over the next 6 months, some people left and were replaced with those who fit the new culture. To find the right people we helped Mark and his team to develop a new process around hiring. Our ‘Superstar Hiring System’ enabled Mark and his team to greatly increase the success rate in hiring the right person the first time and also drastically reduced the time that was being invested in hiring. For more information on hiring superstars, click here to download our free PDF report.
Creating the right team certainly didn’t happen overnight, it is a process that took time and to this day is something that Mark still works on. What was critical in getting the wins around the team was making sure the standards they had agreed upon on the team day were kept at the forefront and everyone worked by them and held each other accountable. Mark did a tremendous job leading the way here.
The next 6 to 9 months were really focused around workflow, systems of operation, and general streamlining of the organization. To do this they embraced our planning system and had a theme for 90 day period. The theme and subsequent strategies gave them huge amount of focus and steady progress was made.
Back on to sales.
Now that we had the right team in place and the shop working well, we could come back to focus revenue growth.
It is critical to point out at this stage that while Mark’s goals were growth and financial performance we were now 12 months in the process and had not grown the top line by single dollar. Working on things such as productivity and team building can seem like the wrong focus when a business owner wants to make more money. Obviously as you read this you can see that it makes sense, but being in the business day-to-day it can be so tempting for the business owner to want to focus on sales. I’m sure it took Mark a lot of self restraint
To drive revenue and more importantly profit, we focused on creating a solid marketing plan. Some of the strategies we used were:
- Mark making customer visits
- Strategic directory placement
- Google ad words
- Proactive referral strategies
- More frequent customer touch points
- Website content and SEO
- Direct mail with phone follow-up
Gradually it all came together and we started to see progressive growth in sales. One other key strategy was recruiting a new internal salesperson and some good sales training. This alone equated to a 10% increase in conversion.
Mark really wanted rapid growth. While that is an admirable goal, our experience has been that it is much better to make very consistent small steps, rather then swinging for the fences. Slow and steady always wins. This was our advice to Mark and although I’m not convinced he liked it, he adopted it.
The reality is that Mark needed to grow his leadership before he was ready for massive growth. The steady growth in revenue and profits has given Mark the platform to become the leader who will be ready for massive growth. And we have upmost confidence in Mark’s ability to get there. When he does, we look forward to being there with him.
On the business ownership side, Mark got the financials strong enough to support a buyout of the other family shareholders. This worked really well for everyone and put Mark exactly where he wanted to be.
“I’ve been in and around businesses my whole life and consider myself to be a reasonably sophisticated business owner. Bringing in someone from the outside is not something I’d done before in business so engaging with Jamie felt like a bit of a leap of faith.I’m pleased to say it has worked out well. Jamie really has helped me in many areas of my business – not all of which can be articulated in writing. One example that comes to mind was a time when we had some cash flow issues. Jamie ran our numbers through his proprietary software and showed us through some small tweaks in our inventory and accounts receivables how we could generate a significant swing in our operating cash flow.
It’s funny because managing the balance sheet is a concept I was familiar with but having Jamie point it out in such a clear, concise and real way was eye opening. Seeing the hard numbers on the page was like a smack in the face and prompted us to action.
Right then we brainstormed some strategies to act on the information and subsequently saw some better numbers in the bank.
I truly believe that when we think we know things, that in itself can make us blind. Jamie has been instrumental in helping us see the important things clearly and developing the plan to act on those things. That combined with the follow up and accountability has led to massive changes in our business.”
CEO Pegasus Glass