Case Studies

Printing and Sign Company – Tallahassee Florida

Welding Supply Company – Nashville Tennessee

Mechanical Contractor – Richmond Virginia

Mechanical contractor – Upper Peninsula Michigan

Fixed Base Operator (FBO) – Little Rock Arkansas

Tallahassee Sign and Printing Company

Original Concerns: The company was profitable, but not sufficiently so, nor was it growing, despite a high positive visibility within the marketplace. Also, all employees reported directly to the President, leaving him no time to plan or really manage the business.

The company’s financial records were maintained by a part-time bookkeeper who worked from home. Although competent, she was not available for questions or to provide needed analysis.

Actions: We revised the company’s basic concept as a “sign” company to a “visual communications” company. Through this change, they began to offer a far wider range of products and services to a far wider customer base.

Also, we created a traditional organization chart, reflecting the functions and levels of the employees. This permitted staff members a better understanding of their responsibilities and authorities. By reducing the time spent handling internal operations questions, the President was able to spend more time seeking new customers and planning.

The part-time Bookkeeper was phased out and replaced by a qualified full-time accountant, who was sufficiently experienced to provide advice for the President.

Results: Revenue doubled within 18 months and profit dollars increased by 60%. Business improved so much that the company was forced to seek new quarters, effectively doubling their floor space.

Nashville Welding Supply Company

Original Concerns: The Company was owned by a 75-year old man with three sons, each of whom worked in the business. Two of them were competent but the oldest, the Sales Manager, had no managerial skills and had several personal issues with his father, which frequently precluded him from acting in a rational manner. The father knew he had to pass the company to his children, but the conflicts among the sons, along with his understanding that the oldest son was not competent to lead the company, gave him great cause to hesitate. In addition, the oldest son did not want the position of General Manager, but insisted that his youngest brother, the likely selection, was not competent to do the job.

Actions: We made the change and the oldest brother continued to insist that his brother was not competent. He did not, however, have an alternate suggestion, such as bringing in an outside talent, since he realized that such an action would likely dilute whatever authority he retained.

The youngest brother turned out to be quite competent to handle the job.

We also added a senior sales person to the four-person sales staff, and this provided an impetus to sales.

We provided management training to the senior staff and others, in addition to installing a more aggressive receivables collection system.

We also instructed the group on budget principles, and they were able to prepare their initial budget, even though they had revenues of $9 million. We installed a series of position descriptions, evaluation programs and an incentive system.

Results: Revenues increased by 75% through the system of taking over accounts that were poorly serviced by a larger national company. Profits increased accordingly, and the oldest son still insisted that his younger brother was not capable of managing the company. Everyone else ignored him.

Mechanical contractor, Richmond, Virginia

Original Concerns: Three siblings inherited a mechanical contracting company from their father, who passed away unexpectedly, and without naming a successor, even all three worked full-time in the business. They were very close and none wanted to be the “pushy” one and take over the company. None of them really had the talent to do so, either. They needed a structure that would work for them, and keep the company profitable.

They also had some internal problems that had existed for quite some time, involving the cost structure for estimating, cash control, and productivity. In addition, since they were cautious in dealing with each other, they were also cautious in dealing with their production staff.

Their sheet metal costs were out of line, and delivery from their sub-contractor was erratic and caused them embarrassment at times.

Actions: We created an Office of the President, which allowed each of the siblings to exercise control in specific areas of the company. Even though this is not a system we would ordinarily use, they wanted it and vowed to make it work. And they did.

We installed a 12-week rolling cash flow management and projection system, which allowed the Business Manager to be more prudent about spending money, and also provided them with credibility with their banker.

In addition to providing Position Descriptions for managers and supervisors, we developed Evaluation forms for each. No one had ever previously been evaluated at the company. This led to an incentive system based on performance among the various production teams. This in turn led to a significant increase in production levels.

We installed a comprehensive Labor Burden analysis that showed management the true cost of production staff. This was then tied into their Estimating system and they were awarded more work, at better prices.

We encouraged them to purchase the assets of the company that was doing their sheet metal work on a sub-contracting basis, since the owner was unreliable.

We also developed a marketing program for their small Service Department, which led to an increase in work and the need to hire additional staff.

Results: The “Office of the President” worked out fine, since everyone involved played by the rules they had agreed to. Their cash levels improved and they obtained added respect from their banker. This resulted in lower interest costs.

Supervisory skills improved resulting in fewer “re-do’s” and better adherence to schedules. The production staff, understanding the cause and effect of their incentive programs, improved production and overall costs were reduced.

Service revenues increased and were more profitable.

Mechanical Contractor, Upper Peninsula, Michigan

Original Concerns: Three plumbers purchased a Mechanical Contracting company from the man they worked for. They were unaware, however, that the owner had stopped bidding on new work, leaving them with little new business and even less cash flow. To make matters worse, none of the three new owners had any management experience beyond supervising a project.

The company had no management meetings, cash control was non-existent, and they had no idea what their real labor costs were. They also used two computer systems, which did not electronically interface with each other.

Actions: When we arrived, they had secured two contracts, both of which were larger than the largest project any of the new owners had ever been involved with. To make matters worse, they were 50 miles away from the Home Office. They had no time line schedule or job cost system. We installed a Project Management system and activated the Job Cost module in the accounting system. We also led the conversion to a single accounting system.

Management training sessions were instituted to give the owners some idea of what their roles should be in the company, as well as management meetings with an agenda so they were able to think about ythe65ytjrjhuy meeting prior to their arrival. The cash management and projection system was installed and they had a better fix on that aspect of the business. The Labor Burden system was installed so they had a much better fix on their labor costs, and the Estimates they produced were more realistic.

More importantly, we worked with the President (40% owner) on how to be a Company President.

Results: The Company was able to complete both large projects profitably and on-time. They were also able to obtain a continuous flow of new work, enabling the company to be on a better footing.

Profits were satisfactory in their first year of operation, even though the new owners thought they would be in a losing position.

Fixed Base Operator – Little Rock Arkansas

Original Concerns: The company had been successful, but there were several issues, some immediate and others somewhat longer term. One of the major problems was the aging of their Accounts Receivable – customers were taking far too long to pay their maintenance bills. Also, their attitude towards new business was somewhat cavalier – we are the only game in town, so they have to come to us. The company offered a wide range of services to the marketplace – flight school, maintenance for both jet and propeller planes, on-field services – fueling and light maintenance for aircraft arriving from all over the country, charter service and aircraft sales. However, there was no Marketing officer, and none of the profit centers worked with each other to determine how they could sell other services to the customers. There was also no overall plan for the company, nor any individual plans for the profit centers. In addition, there were serious concerns about the line of succession within the company, due to the commitment levels of members of the following generations.

Actions: The problem with the receivables was directly related to the length of time it took for invoices to be sent to customers. This was due to delays in transferring data from the purchasing department to the billing department, thereby resulting in a delay in the preparation of invoices. This was addressed and corrected. We assigned a competent individual to the position of Marketing Director. He was in charge of the effort to cross-market the database of various profit centers of the company to other divisions. Business plans for each of the profit centers were developed and reviewed by top management. We worked with members of the next generation of the family, intended to become owners.

Results: Invoices were sent out much more promptly and over a three-month period, collections were improved by 20 days. Revenues in all profit centers improved as a result of cross promotions. During the development of the business plans, management was able to uncover significant problem areas that they needed to address, and they did so. These resulted in significant improvements in several areas of the company. As a result of working with members of the younger generation, we were able to generate a higher level of interest and commitment. This result in major revisions in thought and process related to succession planning.