From $7m to $9.5m in 2 years
This construction supplies business has built a great platform for continued growth.
At the time we first connected with this $7m business their stated need was for strategic planning including a business plan and chiefly, a succession plan. The owner was wanting to retire, but the business wasn’t in a state where it could function well without him. A focus on the day-to-day over the years had led, as is not uncommon, to neglect of common hygiene factors such as OH&S, Quality, good processes, structure and human resource management frameworks.
Furthermore, at 3% EBIT, the business was not returning sufficient profit for all the invested efforts.
Without these structures in place the business had fallen into an “us and them” culture between management and production leading to low engagement and accountability. The success of the business was highly dependent on just a few individuals. The business was functioning, but fragile.
Turning the business around was a 2 year project, with Gibsons advisers involved throughout. The first and most important step was to put in place an effective management structure. This involved some firming up of existing roles, moving of others, and recruitment, specifically, a new General Manager, and establishing a better framework for monthly management meetings and performance reporting.
Having established a mentoring program for the new General Manager the company was then able to receive close guidance and a sounding board in the implementation of other improvements, such as the Gibsons Employer of Choice program; a performance improvement framework designed to invoke culture change and lift accountability across the staff body.
With the right people in place, doing the right things, we were then able to move on to improve production processes via establishment of a Production Success Team and implementation of 5S processes and practice on the floor.
Once the organisation was functioning well, it was time to build awareness of their offering and grow the market. As part of our Sales and Marketing Program we interviewed their customers to identify easy wins and long-term improvement opportunities, and put in place a Sales Manager. This project resulted in a rebrand.
Within 18 months sales improved to $9.5m with a 12% EBIT. Operational performance had improved greatly, along with a capacity to sustainably manage and maintain that performance, and growth of the business had required a move to a larger facility.
The owner is now in clear sight of retirement, knowing the business is in excellent hands, shepherding a high-performing, highly accountable team. Further, significant growth is inevitable for this business as they have all the right ingredients in place under good leadership.