As a successful entrepreneur, you have led your business in a positive direction through proper planning, adapting to a changing environments and understanding your own strengths and weaknesses. When you find that growth has slowed, competition has increased, labor or technology issues have arisen or capital is required for growth, you want to work with someone who has experienced those challenges, knows your industry and can help in a practical manner. Speak with us to see how we can help.
Many companies experience early periods of growth reaching millions in revenue but then plateau for unexplainable reasons. Frequently investment in staff, marketing and inventory has preceded a period of unrealized sales growth, which may create cash flow issues. These situations can be addressed by a systematic examination of the single growth driver that propels revenue for every company. This analysis is combined with an analysis of pricing and distribution strategy to identify the most important cause(s) of flat revenue. In smaller companies an analysis of product/market fit is also required.
Client Engagement For a consumer products company using retail distribution, an in-store sampling strategy was recommended to determine customer acquisition cost and lifetime value of a customer. With these assumptions confirmed the amount of investment to achieve sales growth targets was easily determinable.
Frequently revenue targets are achieved but profit targets are not met and cash flow is below expectations despite top line success. To improve profitability requires a systematic analysis of gross margins and spending levels and a review of budgeted vs. actual performance. This analysis may be at the product, division or company level in order to unlock the key to better profitability. New budgeting systems may also need to be designed or staff may require further training in the preparation and use of budgets.
Client Engagement For an unprofitable telecommunications company an analysis showed that an $18 million dollar division was unprofitable and that the company lacked the proper control systems to achieve profitability. The division was gradually closed down, staff was absorbed in other lines of business and the company achieved break-even, positioning it for further growth.
Lost sales, excess inventory and customer complaints are some examples of the multitude of operating problems that affect profitability and cash flow. In such situations there are typically several inter-related problems that reduce performance further. Whether the product or service is physical or digital, a detailed examination must be conducted beginning with production and running through each step of the fulfillment process all the way to after sale customer service. Each of these steps can be optimized to improve performance and better manage costs.
Client Engagement For a computer company using an OEM in Taiwan, an analysis showed that orders were delayed by the order confirmation process, which resulted in an inability to advance buy components. A new process that gave the Taiwanese OEM greater transparency into the status of future orders enabled the OEM to advance buy components before orders were formalized and resulted in a lower product cost for the company.
When sales repeatedly come in below forecast and consistently result in losses, it is probably time to bring in an outsider to develop and implement a new plan to return to profitability. Experienced turnaround advisors approach the situation through a systematic process to analyze and correct business performance.
Client Engagement For a multi-division company with a net loss of $1 million per month, GHGA developed a three-part strategy to return the company to cash flow breakeven. One division was closed down, the sales force was expanded and professionalized through a system of monthly objectives and performance bonuses and customer service support was fully automated to improve response rates and track customer inquiries.
Every CEO needs to have a plan that is well thought out and detailed. Bankers, shareholders and employees all require that a vision become real and tangible in the form of a plan. A properly done business plan has three parts—an executive summary, a financial model and a detailed plan. The executive summary confirms the basic facets of the business, such as product(s), target customer, value proposition, geographic market and sales, marketing, pricing and distribution strategy. A financial model is then developed which raises many more detailed questions that give the plan better definition and confirm the range of capital that may be required. The greater detail from the financial model permits a long form business plan to be finalized.
Client Engagement For a pre-revenue medical device company preparation of the business plan showed that more capital was required than available from the doctors bootstrapping the company. This led the company to develop a strategy to pursue venture capital.