Sample Client Impacts R0


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A summary of client engagement experience with selected impacts

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Sample Client Impacts R0

  1. 1. Sample Client Impacts <br />- - -<br />Since 2003, the Principal of Apogee Business Strategies has been involved in client assignments serving in the role of either on-site senior consultant or the responsible Project Manager. More than forty engagements have involved enterprises with initial annual revenue ranging from less than $2,000,000 to $38,000,000. <br />A breakdown by business sector demonstrates the wide range of product and service providers able to benefit from our strategic planning and value enhancement services. The majority of clients have been in the manufacturing sector. About 35% have been involved in the creation of products that include construction materials, molded plastic assemblies, climate control equipment and automotive components. <br />Another 30% or so have been in the construction industry. Professional service providers account for another 15%. These have included information technology specialists, interior designers, architectural services and specialized shippers. The remainder have included retailers and non-profits. <br />The following Client Engagement Reviews are intended to provide insight on three projects that demonstrate typical situations encountered, engagement recommendations made, and project results. <br />ENGAGEMENT REVIEW 1:<br />Industry:Landscaping Services<br />Location:Florida <br />Annual Revenue:$7,200,000<br />Situation<br />The two co-owners were both devoting a tremendous number of hours to operating the business. They were competent, but there were major performance issues with other management team members. The son of one owner managed the irrigation system installation and service profit centers. They were barely breaking even in a business sector that should have been the most profitable. The individual brought into the company six months earlier to manage commercial landscaping projects was a major disappointment – scheduling was in disarray, client complaints had dramatically increased, and two key crew members were threatening to leave. In addition, the in-house nursery had invested heavily in several species of slow growing environmentally-conscious plants whose market value had declined and were now being sold at a loss. <br />Recommendations and Implementations<br />My investigation identified major flaws in the project bidding process for irrigation system projects. A new pricing model was designed and implemented to track true overhead and proposal development costs. There was no true inventory control system for the irrigation services sector. A new software package, supported and subsidized by a major vendor, was installed. The landscape project manager was transferred to lead a newly created profit center – Environmental Services. The move took advantage of his formal training, and the clients quickly received three significant projects. This also allowed the clients to salvage some of the lost plant investment. <br />Results and Impact <br />The following are the 2005 “base year” performance and 2006 results that include implementation of recommended operating practices: <br /> <br />2005 Net Profit2006 Net ProfitProfit MarginLandscape/ES$ 352,558$ 443,450 11.5%Nursery$ 85,548$ 94,5255.0%Irrigation $ 233,870$ 303,940 17.9%<br />ENGAGEMENT REVIEW 2:<br />Industry:Custom Metal Fabrication<br />Location:Texas <br />Annual Revenue:$4,300,000<br />Situation<br />The client purchased an existing company from the previous owner in 1995. The corporation deals in the manufacture and installation of high quality fabricated metal. They had built an excellent reputation in this specialty, and their work is prominently on display in the new Terminal D of the Dallas-Ft. Worth airport. However, the client felt they were still acting as a “Mom and Pop” company in many ways, without the means to really have control of the business. While business volume was slowly growing, profitability had decreased for three straight years.<br />Recommendations and Implementations<br />It was determined that the primary problem was in the fabrication shop. Specifically, production output had slowly decreased due to the retirement of two veteran “artists”. While their replacements were talented individuals, the focus on timely completion was lacking. Shop production schedules were refined and incentives were tied to timely completion. In addition, project quotes had not been adjusted rapidly enough to keep pace with vendor price increases on already expensive production materials. I determined that it would be cost effective to hire a second estimator to allow more focus on complicated but much more profitable projects. Also, more than 80% of revenue was dependent on the success of four general contractors that represented less than 15% of their customer base. A strategic marketing plan was developed and implemented to expand relationships with reputable general contractors. <br />Results and Impact <br />Within the first twelve months after implementing the recommended changes, annual revenue grew to $5,139,000. Net profit expanded from $250,100 to $492,500. <br />ENGAGEMENT REVIEW 3:<br />Industry:Cabinet Manufacturing<br />Location:Tennessee <br />Annual Revenue:$3,900,000<br />Situation<br />The client’s father had begun the business in the 1950s. Upon his illness and unexpected death in 1994, the business passed to the client’s mother, who has not taken an active involvement in the Company. The client had assumed operation of the company, but his mother was unwilling to invest retained earnings in new production equipment or product expansion. The sales staff was not motivated, and several were “tenured” – dating back to the father’s management team. <br />Recommendations and Implementations<br />A total product line profitability analysis was performed and three underperforming product lines were discontinued. The Chattanooga sales office was closed and the remaining sales team was placed on a profit-based rather than revenue-based commission structure. Obsolete inventory was sold to fund production improvements. A Lender’s Package, including pro forma and a strategic sales expansion plan, was developed and used to secure a working capital line of credit. <br />Results and Impact <br />Fiscal Year 2005 concluded with a net operating loss of 0.9%. Prior to the engagement, my client was on track toward a Fiscal Year 2006 loss of 8.5%. For the twelve month period ending in July, 2007, sales from the remaining three profit centers had improved 17%. Annual operating expenses had been reduced by more than $75,000 and net profit had improved to 4.5%. <br />