While most business owners know the importance of an effective strategy for their company, it is also very easy to be drawn into the day-to-day operations and lose sight of the larger picture. As an owner, you can find yourself becoming far too hands-on and create a position where you are completely indispensable. Without you, things just don’t and can’t happen effectively. This can work initially, but over the longer term, what happens when you go on annual leave, or want to expand the business, or are ready to retire?
This was the situation a construction supplies business found itself in. The owner was looking to retire but the business was not able to operate effectively without him. The owner had focused on daily operations and as a result, over the years, operational health and safety, quality, good processes, organisational structure, and human resource management frameworks had been overlooked. The 3% Earnings Before Interest and Taxes the business was returning was insufficient for the invested efforts.
Business structure and the people in your business are key to any company’s success. Get the structure right, and people in the right roles operating well and cohesively with each other, and the business to create a winning situation.
Our role was to look at appropriate strategic planning with the development of a business and succession plan. The company’s current processes and structures had created a divide among management and production teams, very much to the extent of an ‘us and them’ culture. There was low engagement and limited accountability, with the business reliant on just a few individuals. While functioning, the business was in a fragile state.
Turning this $7 million business into a $9.5 million one, was a 2-year project with Gibsons advisors involved throughout. The first step looked to address the management structure. Existing roles were firmed up, some roles were moved, and others recruited. A new General Manager was appointed, and a mentoring program established to ensure close guidance and a sounding board in the implementation of other improvements. A better framework for management meetings as well as performance reviews and reporting were established. Improvements such as the Gibsons Employer of Choice program designed to invoke culture change and accountability, were actioned.
Get your team right and a structure to support this and you set your business up for success. Don’t, and you find yourself working hard without seeing results.
With the right people in place, doing the right things, the second step was to improve production processes via the establishment of a Production Success Team and the implementation of 5S processes and practice on the floor. Next, we addressed sales and marketing to build awareness of the company offering and to grow their market. Customers were interviewed to determine easy wins and long-term improvement opportunities. A rebrand was recommended and initiated.
The results were a $2.5 million sales improvement (to $9.5 million) with an increase in Earnings Before Interest and Taxes to 12%. Operational performance greatly improved and there is capacity to maintain this performance. Further growth is predicted, and the owner can consider retirement in the knowledge that the business now has a highly accountable and functioning team, management structure and strategic direction.
Find out more about the Gibsons approach to strategic planning to set your own business on the path to success.