This client owned a very successful chemical manufacturing company, but it had hit a ceiling. Revenues were not growing as fast as the owner wanted, in part because the company had hit its internal capacity — not in manufacturing capabilities but in internal operations, including sales, accounting, purchasing and inventory planning. Our team spent about eight months analyzing the company’s internal processes and made recommendations that led to significant improvements in its order-to-shipment process, eliminating several redundant or unnecessary steps. We were familiar with their the ERP system they were using, and we discovered that this company was not using many of the tools already available in their system. We instituted more than 10 new functions within their system, which eliminated the equivalent of three full-time employees. With their employee resources freed up to do more, they were able to accelerate their growth. At the end of our first year working with them, they were successful in achieving an EBITDA higher than ever recorded.
This client was on the brink of bankruptcy when we were contacted to help turn the company around. When we began working with the company they were consistently losing money every month. In fact, this had been happening for five straight years. They finally reached a point where they had used up all cash resources and had a choice to close down, sell or find additional investments. Because their financial performance was so poor for five consecutive years, selling the company or finding investors was not successful. The alternative was to redevelop the company and demonstrate success. Since they owned about a 50% market share in their niche industry, they had something worth saving. We identified product categories that were losing money and others that were not earning a margin to allow for profits. We quickly concluded that they were not set up to be successful in manufacturing their own products. Within three months, we sourced two viable contract manufacturing companies to manufacture for them at a 15% improved gross margin.
This is a great success story of a client who manufacturers items in Southern California. This company has been in business for more than 15 years producing products for the construction industry. In recent years their revenues grew from $3M to $10M. However, as revenues continue to grow, their profits continue to shrink. With our help, we identified the key areas within the organization that were causing significant margin erosion. The causes we found were unacceptable scrap loss, poor planning that led to overtime pay for many of the workers, poor pricing policies, and long delays due to poor communication throughout the various departments. During our first six months working with them we were able to improve many of the key metrics that we helped them develop and this had a significant positive impact on the profits. The chart to the right demonstrates the financial improvements that resulted from these changes.
This client was very dependent on government decisions that affected their industry, including the continued funding of the Medicare system and the looming changes of the Affordable Care Act. This company was relatively small in comparison to its large, publically traded competitors. The owner of the company was certain that if they didn’t change how they operated and grow rapidly, a reduction in Medicare reimbursements would put them out of business. When we began working with them, they relied heavily on paper documentation and their field staff clocking in and out at the office each day. Fast forward a few years: We coached them to improve their overall operational process, helped them select and implement a state-of-the-art electronic health record, and opened four additional field offices throughout Southern California. They are now a much larger player in the industry and revenues have more than tripled, even as the number of employees have only doubled.
Most companies, small and large, often find themselves using a variety of Excel spreadsheets to run their business. Huge companies might use spreadsheets because it’s an easy way to begin managing data and almost everyone knows how to use Excel. But before you know it, your spreadsheet grows more and more complex until it turns into a full time job for someone to edit, update and retype data on a daily basis. We were introduced to a freight company that ran their entire $20 million-plus business entirely on Excel. It became apparent to us that this company needed a better system. In the end, we found a cloud-based software to run their business that did everything they needed and much more. The tool had several automated functions that eliminated the work of several people. Their business productivity nearly tripled overnight.