Don\'t Just Survive... THRIVE!!!


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How to Start Growing Your Business Profitably in Tough Times

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Don\'t Just Survive... THRIVE!!!

  1. 1. Don’t Just Survive…. THRIVE!! How to Start Growing Your Business Profitably in Tough Times Presented by John E. Calia, Managing Partner June 25, 2009
  2. 2. Who is TATUM? The largest consulting and interim management organization focused on the Office of the CFO 37 offices nationwide 1,000 professionals primarily in the U.S. Established in 1993 Click Here to Add Slide Headline 2
  3. 3. Frequent, rapid transition is the norm for business today Competitive Landscape Changes Merger? Sale? Acquisition? IPO? Infrastructure upgrade Organizational Financial Difficulty Transitions Click Here to Add Slide Headline Product Expansion Rapid Growth Start Up Revenues LAUNCH $0 $X.0 Billion 3
  4. 4. Tatum Survey of Business Conditions Summary As of June 1, the Tatum Index of Business Conditions reached its highest level since September 2007, just before the Recession began. This is the 7th consecutive month of increase in the Index, further confirming that business conditions, and the economy, are beginning to recover. The improvements are not dramatic, but they are consistent in overall positive trend. Click Here to Add Slide Headline Financial markets have stabilized, and demand is improving broadly. Our Survey detected the beginnings of the end of the Recession in the first quarter, and the early indications continue to suggest that the Recovery will begin in earnest in the second half of this year. The strength in the outlook for employment and “Cap-Ex” shows a gathering confidence that the worst is over and a recovery is under way. If the current and recent trends continue, then we believe the recovery will ultimately be declared to have begun in the second or third quarters, and that the third quarter will likely have a positive rate of real growth. 4
  5. 5. Tatum Index of Business Conditions Click Here to Add Slide Headline 5
  6. 6. “This economic crisis doesn’t represent a cycle. It represents a reset. It’s an emotional, social, economic reset.” Click Here to Add Slide Headline CEO, General Electric Jeff Immelt, November 2008 6
  7. 7. Decision making during uncertain times Companies that have figured out how to survive the economic crisis now must figure out how to thrive You can’t do business the same way you have in the past Consumer spending behavior is adjusting to the economic times Click Here to Add Slide Headline reductions in overhead expense Compressed margins have forced Capital is more expensive and harder to find Good times have masked inefficiencies. Customers, products, people and processes may not perform as they have in the past Downsizing doesn’t deliver growth Government activity defines new market opportunity 7
  8. 8. What does a “Reset” mean to your business? Re-evaluate to AddRe-focus your Click Here Slide Headline Create a new Plan based customers, team creating framework for upon objective people, new systems of making measurements processes and accountability & decisions sales channels compensation 8
  9. 9. Let’s Review Focus on Cash Flow Focus on improving margin Change the corporate culture Convert assets to cash Reduce S,G & A Growth Profitability Click Here to Add Slide Headline Time Control To Analyze profit by segment THRIVE!!! Identify growth opportunities 9
  10. 10. CONTROL -- The Tatum Approach -- 1Q 2009 Focus on your core business Eliminate unprofitable or marginally profitable activities Scour your balance sheet Convert Assets to Cash Make your workforce more flexible Cross functional workforce Click Obsess aboutSlide liquidity Here to Add your Headline 13 week rolling cash flow forecast Re-plan for ’09 Re-forecast often Remember to lead Your people need to hear the truth directly from you 10
  11. 11. PROFITABILITY -- Surviving to Thriving – Goals Improve: Gross margin Cash Flow Efficiency Business valuation Click Here to Add Slide Headline Employee morale Tie performance indicators to performance Capital availability 11
  12. 12. Case Study – Accounts Receivable Mgt. Company US Subsidiary of Canadian Company $50M Annual Revenue 22% Gross Margin ($11M) Net contribution = ($2M) 45 Offices throughout the US Click LargestAdd Slide Headline card and student loans Here to clients were credit Strategy based upon Zip Code distribution of accounts. 12
  13. 13. Steps to Achieve RESET Dig Deeper Focus on Opportunities Shake up the organization Create new tools for making decisions Re-plan Click Here to Add Slide Headline 13
  14. 14. Dig Deeper Recognize that good times mask inefficiencies Segment and analyze profitability: Markets ― Core markets are those that have an expressed need for your product or service Customers Click Here to Add Slidenot necessarily the best ― The biggest are Headline ― Profitability goes beyond gross margin Products ― Product line profitability analysis is essential to determining where to invest resources 14
  15. 15. Focus on opportunities Technology upgrade Look for applications that improve quality Supply Chain efficiencies Outsource commodity services/products Partner with niche players with unique capabilities Click New markets Slide Headline Here to Add Assess impact of government activity ― Healthcare, energy, financial services, primary manufacturing 15
  16. 16. Case Study: ARM Company Rethink the Strategy Changing market for long distance service New technology affordable for smaller businesses Conclusion: consolidate operations Review customer profitability Largest customer (7% of revenue) Click Here to Add Slide Headline to negotiated rate Lower gross margin due Disproportionate allocation of overhead Conclusion: dump the largest customer New markets Banks in consolidation Growth markets: healthcare and cell phones 16
  17. 17. Shake up the Organization Analyze capacity to Lead not manage Delegate and train subordinates to no longer need their manager Reduce complexity ― Binary decisions (go – no go) ― Day to day: what to blow off rather than what to complete. “Good practices” not “best practices” ― Focus on sustainable processes and clear accountability Click EvaluateAdd Slide Headline Here to your team’s adaptability to the new culture An ‘A’ attitude with ‘B’ talent prevails over ‘A’ Talent with ‘B’ attitude Walk around Solicit feedback from the front line Identify the real process owner Deal with the rumor mill frankly Make change that is PHYSICAL and VISIBLE 17
  18. 18. Case Study: ARM Company Closed 18 branch offices Eliminated 200 jobs (from 700 to 500) Terminated leases Cut HQ staff in Montreal Reduced US Headquarters staff 4 Vice Presidents Click HereRegional ViceHeadline 1 to Add Slide President Associated support and admin staff Re-vamped sales organization Increased commissions for new clients Improved client results and grew revenue Better focus at a branch level 18
  19. 19. New Decision Tools Operations Productivity improvement Efficiency of overhead/infrastructure Revised KPI’s Organization Accountability Compensation systems that reward performance Click Long term Add Slide Headline Here to planning Financing options New markets Strategic Alliances Framework for making decisions Tracking results vs. assumptions Marketing/product development 19
  20. 20. Case Study: ARM Company Before After Revenue $50M Revenue $55M Gr. Margin $11M Gr. Margin $13M GM % 22% GM% 24% S,G & A $13M S,G & A $7M Click Here to Add Slide Headline Contribution ($2M) Contribution $6M 20
  21. 21. Why Tatum? Strategic perspective to assist the internal finance leadership, who are often resource constrained and focused on daily urgent needs Operating executives with senior level execution expertise in finance and technology Senior perspective means we are not influenced by best case forecasts Experience completing hundreds of assessments across all Click industrialAdd Slide Headline Here to sectors means we quickly get the job done Help ensure success when capital markets are in turmoil for an indefinite period 21
  22. 22. Solutions for the Office of the CFO Interim management – Consulting – CFO Roadmap™ Click Here to Add Slide Headline Tatum - create more value™ 954-654-7848 22