Case Overview – Lost Art or Missing Data:

Industry:
Home Building & Remodeling

Original Client Focus:
RML was invited to script a 5 Year Growth Plan. The client stated a perception that “something” was not working and could not determine the cause of the distress. Believing and coping sociable recommendations from fellow home building executives, a 5 year plan as a subject was solicited by this client.

Background:
The preexisting conditions for this owner can be viewed as one who grew and expanded his business in phases over several years in response only to external events. The firm started as an individual entrepreneur, growing to multiple craftsmen, then to multiple craftsmen with company vehicles, then to the owner engaging as an executive manager of his operations spending most of his time in the office. Educational background, however, did not keep up with the progressive stages of success the firm was perceptually enjoying. The owner was bringing in more business as far as quantity of jobs and viewing stated job value as his measure of success.

Strategic Evaluation:
RML accepted the assignment to create a 5 year plan under the original agreement parameters. One of the strategic elements for evaluation revealed that the client was financially overextended having too many loans. Further evaluation concluded that no financial evaluation was ever thoroughly conducted and accountants were used to script end of period data only. There was also no management oversight or understanding of what the existing data revealed, so no questions were asked. RML’s financial evaluation revealed that there was no need for a 5 year plan as requested for the client had only 6 months until cash flow utilization was totally depleted. Survivability was the issue to address, not a 5 year plan. Thus, the agreement was restated to instruct and facilitate the firm into financial balance by addressing each department, its contribution, and instruct the owner how to overcome this dire condition.

Strategic Core Issue:
The bottom line core issue was the firm’s inability to recognize the supporting factors of cash flow management. Job costing was calculated without factoring in any overhead component, a practice that management was engaged in for years. Effectively, the client did not understand what was included in overhead costing and thus never addressed it as a cost factor. The results were simple… an abnormally high quantity of jobs selling at or below cost. The result was just as the strategic evaluation demonstrated. Cash flow was being funded by an ever increasing job base, however, this practice was not sustainable.

Resolution:
Create a system for full job costing; i.e. all the basics; material, labor, and overhead. Establish a computer matrix program to be used by each approving authority to determine true sale price for each job which includes overhead, commissions and required profit. Now the client has a true win… 1) the client has benefited from a strategic evaluation, 2) the client’s bank and suppliers have benefited from timely payments, and 3) the client’s customers get what they paid for with the full attention and service they expect.

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Case Overview – Interpreting the Solicitor and
Defining Market Potential:

Industry:
Multi-National, Fortune 500, Military Contracting

Original Client Focus:
RML was invited to evaluate a US Army solicitation for services and determine if this solicitation, if undertaken, had sufficient economic merit for the client. The client also had a concern for it could not determine the political or decision maker structure of this government entity when it came to establishing a proactive sales relationship. Thus, the client was unsure of its ability to accurately respond to this solicitation.

Background:
This client is a very reputable organization having earned a number one position in manufacturing and service in its field for over 8 decades. The growth of this organization has been through solid passive sales and distribution, passive being defined as a distribution of product primarily through independents dealers and distributors for product sales and service. Current government sales through this passive distribution has been slightly declining over the past few year with projected sales at less than $4 Million. The client’s management desire was to reevaluate its government business growth component coupled with the unsolicited US Army request. This presented a unique opportunity for the client to initiate a market evaluation based on this solicitation.

Strategic Evaluation:
RML accepted the agreement to conduct market research on the US Army solicitation, to determine the breadth of the government market in quantity and dollar volume, and prepare a management presentation of results and recommendations. Our evaluation commenced with a review of source data for units fielded and units in combat reserve. Immediately it was determined that the units and service solicited were needed for our troop in Iraq and Afghanistan. However, the magnitude of the solicitation was not comprehended by the client.

Strategic Core Issue:
The bottom line core issue was the inability of the client to understand the authoritative difference between line and staff functions within military structure. The client received a valid solicitation from the engineering department of this unique US Army command. The issue was finite to the perspective and power base of this engineering solicitor, but what was not conveyed was that the tasking, once resolved through solicitor’s R&D department, would open a massive opportunity for direct, multi-year governmental sales. The issue for client decision making… Know thy customer.

Resolution:
RML created a detailed Marketing Plan to respond to the initial solicitation and identified follow on opportunities, both in measurable quantities and dollar volume. Also provided was an infrastructure of government decision-makers (practical & political) along with the current and future business relationships of competition to the US Army solicitation. This strategic process evaluation also provided for the client an even deeper insight to the impact of acceptance on other corporate departments and practices inclusive of future R&D. The Marketing Plan provided the ability to evaluate an opportunity for an additional $143 Million in government sale… definitely a strategic win.

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Case Overview – How Observant Is Management:

Industry:
Regional Plumbing Contractor

Original Client Focus:
RML was invited in by the owner to determine if his monetary compensation was sustainable based on company sales and cash flow reserves. Inherent in the request was the question of what amount and how often should the owner receive compensation. The owner passingly stated, however, he just wanted to be sure all was as good as he perceived.

Background:
The client’s company is a very reputable, community based business. The owner had completed a buy out of the company moving from partial to 100% ownership a year prior which was conducted seamlessly to the public. Excellent union relationships continue to be enjoyed for all employees, craftsmen, and management. At time of the client request, the owner was receiving full compensation at the end of the firm’s annually tax reporting period.

Strategic Evaluation:
RML agreed to undertake a financial evaluation of this client. It was quickly determined that all financial ratios and cash flow measures were positive, some to an extreme. This was primarily due to cash being held in underutilized reserves and compensation being released annually. However, as RML has continually stated, the original request never seems to marry the hidden strategic concerns. During a second site visit and during an interview with management, the owner’s sole subordinate presented her notice of resignation. At that moment, RML initiated an open discussion to relieve tensions and investigate the symptom this issue presented. What quickly surfaced was a loyal employee unable to honor her increasing time requirements, and seeing no relief, was willing to submit her resignation. Family responsibilities and children were the basis of this decision, but external employment was still an economic necessity.

Strategic Core Issue:
The core issue here was that the work load of the owner’s direct subordinate had never been evaluated as the business expanded. Appreciation for valued service provided was not perceived, nor was the impact on family life due to expanding position responsibilities understood by management. This pattern had existed for over a year and presented itself within the owner’s willingness to investigate the firm’s performance and intuitively the owner’s original instincts.

Resolution:
A new, full time position of Office Manager was created with RML conducting the interviews. The owner’s trusted subordinate was provided a 30 hour per week part-time position with benefits. This secured no loss of corporate knowledge, clearly demonstrated excellent and respectful employee relations, and made the position training easier, well staged for more business growth. The nature of this full firm strategic review demonstrated the firm had the capacity to easily invest in additional office personnel and simultaneously engage in monthly owner compensation. A strategic business analysis thus clearly demonstrates the ability to make decisions viewing the full breadth of a firm’s assets and innate talents. A strategic evaluation always directs one clearly to real options, true resolution of core issues, and more room for growth… no exceptions.

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