Turnover dropped from 17m in 2011 – £7m in 2013. The business hemorrhaged cash for most of q1 and q2 2013., and revenue was 40% below breakeven. The management team has failed to manage the sales pipeline and or achieve monthly sales targets. Product pricing was inconsistent and key customers were being let down. Headcount was cut to reduce the breakeven to just less than £7m. The business balance sheet was £1.5m negative as funding was still geared to the 20m revenue level and working capital. The directors thought they could cope until they had a meeting with the bank in late May, it was clear the bank would no longer tolerate these losses. The business failed to retain attract or recruit effective staff and the 2 founder directors micromanaged the business intensely and undermined the staffs efforts. Historically the business had failed to achieve any forecasts, cash and financial governance and systems were not in place and teamwork ineffective. Tom adopted the role as chairman to get to grips with the governance and deliver the change top down as the 2 directors were so central to correcting the deep rooted management problem in the business. A realistic sales forecast was created, and profit and pricing per customer established.
Tom created a myopic focus on achieving a minimum of 600k monthly revenue and put the supporting management and team structure to return the business back to profit.
Impact on the business / bottom line
2 weeks after engaging in June 2013 the business achieved £640k revenue and returned a 10% profit (including restructuring costs). Tom engaged with the directors and completed an IBR to establish the financials and governance gaps. A sales director was appointed, and means of managing existing and new customers put in place. A turnaround plan was created to recover revenue back to profit which included putting in place the right organisation, educating the directors as to their roles, and how to interact with the team and new structure. An initial view of customer strategy was taken with pricing and profitability per customer targets and new business. A major supplier was engaged to simplify the procurement and manage the inbound supply chain more effectively, and reduce cost. The forward sales plan looked like it was possible to achieve £1m revenue in some of the upcoming months.
Overall contribution / achievement of objectives
The project started at the beginning of June, and the business was returned to profit by the end of June, with a recovery plan to improve the banks position by £1m cash by the end of 2013. The staff were fully engaged in achieving this and had the resources to do so. The process for new product introduction and engineering focal points were established to underpin the revenue pipeline moving forwards. The review structure and supporting teamwork was put in place to provide the ongoing means of achieving the plan, and check points put in place to manage the commercial aspects of new product introduction.
Completely focussed on correcting the governance and correcting the cash position by developing a highly motivated, high performance accountable team capable of achieving the plan
Leadership / people management skills
Strong motivational, capability assessment and delegation skills and lead at the top and cascade the change throughout the organisation.
After 3 weeks of working together, the directors considered they could run the business themselves.