Stawowski McGill and Partners work with many clients who have particular confidentiality requirements. We have respected those needs and have created composite examples which cover the work which we have done but which are unattributed.
Mr. Owner is a business owner who is facing the typical challenge encountered when businesses grow quickly:
Profits are good but Mr. Owner knows there has to be a better way to manage his growing business.
Through our unique process, we sat down with Mr. Owner and helped develop systems and processes that were scalable as the business grows. Further, a roadmap was developed for his corporate and personal goals so everyone had an idea of where Mr. Owner wanted to end up with his business. Out of this analysis, a series of issues that were truly restricting the growth of the business surfaced.
The first issue identified was a frustrated bank that kept calling every month to discuss offside loan covenants and what the plan was to get back on side. Sales were great so Mr. Owner didn't know how they could be offside with the bank, let alone how to fix this problem. In this instance, with Mr. Owner's input, SM&P created an integrated monthly financial forecast showing Mr. Owner and the bank the plan for the company for the next 12 months and when the company expected to be back within covenant.
In meeting with the bank, SM&P was able to show the bank that the company required a larger Line of Credit and/ or a Working Capital Loan to support the growth the company had achieved and more importantly, was forecasting. Understanding the situation better, as well as recognizing that management was looking harder at the numbers, the bank became much more comfortable with the company because it understood where it was going and it knew Mr. Owner understood also. The phone calls stopped.
With the most time sensitive issue dealt with, Mr. Owner wanted help getting a better handle on the pulse of his business and better information to make decisions on. SM&P worked with Mr. Owner and management to identify and track key performance indicators in the business. Now Mr. Owner could look at select metrics and know if each area of his business was on track. When Mr. Owner proposed or made a change in the way the company did something in the business, he was able to see either a positive or negative impact quickly by analyzing how the decision affected these monthly key metrics.
A few of the key metrics tracked drivers in his Sales & Marketing department. His business invested great quantities of cash into different marketing initiatives and salespeople but he had no sense of which were working and making him money and which were simply costing him money. By constantly tracking these key metrics, he was able to identify and cut any poor performing marketing initiatives - saving him money while having very little effect on company sales.
Mr. Owner's business, while growing in sales, was actually becoming less profitable every year. More work for less money - it was not adding up. A review of the salesperson performance plan revealed that each salesperson was being remunerated based on gross sales. "This is how it was done when I was a salesperson long ago, I don't see any problem with the way we are doing it now". After a couple meetings with Mr. Owner, he quickly came to realize that the salespeople would be inclined to sell his product at almost any price so they could make their commission. Looking at his customer base it could be seen that he had all kinds of customers, some who only bought when prices were heavily discounted and would tend to cause the most issues when they weren't serviced immediately.
Mr. Owner made a conscious decision to raise prices to these discount customers thereby eliminating customers who were only interested in the lowest price, not the best product. A very difficult decision. It was also decided to remunerate the salespeople on different metrics than overall sales thereby aligning their compensation with actions that would more evenly benefit the company and the sales people.
The result of looking at his business a different manner and setting up new processes:
Overall, a new recipe for success.