A manufacturing and installation business with three trading divisions | UK
The business had passed from its founders to a new board, and within a year had lost its commercial lead. The directors kept it trading, kept the customers and kept the reputation, which was no small thing. But by the time I arrived it was seven months into the financial year and losing money, on turnover of around £8m.
Gross margin had slipped by four points. Each division priced its work differently, much of it held in people's heads. The factory was running at two thirds of capacity. A handful of accounts produced nearly half of the manufacturing revenue, the largest had more than halved over three years and nobody had asked why, and dozens of small accounts were consuming capacity they were not paying for. Sales had become reactive, with no outbound activity and no pipeline discipline.
What we worked on
My brief was to build the strategy, put the improvements in, reorganise the commercial side and leave. The first task was to show the directors where the business actually made and lost money. Once transport and plant depreciation were charged to the division that used them, the capital intensive manufacturing side barely washed its face even in a good month, while the service division, which used almost no capital, was the cleanest profit in the company. The installation division was losing money when fully costed. On the current cost base the company needed a little under £700,000 of sales a month to stand still, and most months it was not getting there.
That led to a commercial restructure. A business development role was created to bring in new accounts, rebuild dormant ones and take on the installation division. The sales director was repositioned to lead the domestic work, where his strengths lay and where the cash came in up front. The manufacturing sales role was given weekly accountability for the pipeline. Alongside this we put in a monthly board meeting with a standing agenda, a financial review that read the numbers in plain English, a sales target tracker with named prospects and an action matrix that was reviewed every month.
What changed
Within two months the business went from a loss of nearly £28,000 on £630,000 of sales to a profit of over £22,000 on £730,000, on a cost base that barely moved. The installation division, which had been loss making, posted a 35 per cent gross margin and was kept, under tighter management. Revenue is back on track, the business is profitable, and the pipeline is stronger than it was.
By month five the new business development manager was in post, the directors had a breakeven view in front of them every month, and they chose to carry on under their own steam. In and out. That is the point of the work.
"Practical advice, clear guidance, and strategic reports and recommendations that made a real difference." The directors