Tag Archive for: Profitability

We wish you a Merry Christmas…

…and a Happy New Year.

As 2023 starts to draw to a close, we would like to extend our seasons’ greetings. We hope you get to enjoy some relaxation and fun during the festive time. To all our clients, present and former, it has as always, been our privilege to support your businesses to reach and extend their potential. Our intention is always to work collaboratively with you to meet the goals and objectives for your specific business. We look forward to continuing our work with you in 2024. If you have not engaged our services this year, please know that the door is always open if you are keen to reinvigorate your business performance, as we enter 2024. We can be contacted at https://gibsons.com.au/contact/.

The Gibsons team.

Our services

As consultants each with a career lifetime of industry experience, there’s little we haven’t seen and little we haven’t dealt with in business. Each Gibsons business consultant, in addition to their personal area of career specialisation, has extensive, hands-on practical experience meeting challenges with solutions in a wide variety of scenarios, industry sectors and business model types. We are not theorists. We bring advice and assistance that has been “road tested” and known to deliver productivity increases, improved sales, and increased profitability in a business just like your own. We have a keen eye for the issues and opportunities that need actioning, and we’re here to help you build a stronger business right across the functions of peoplemarketingprocesses and profit.

Let us take the following tasks off your list:

  • Strategic analysis and business plans.
  • Becoming an Employer of Choice
  • Marketing and sales plans.
  • Brand development and promotion.
  • Business process modelling.
  • Improving systems and workflows.
  • Optimising organisational structure.
  • Pinpointing skills gaps and implementing training.
  • Reviewing financial performance.
  • Profitability improvement programs.
  • Managing organisational change.
  • Mentoring to develop executive leadership.
  • Business process modelling.
  • Mergers and acquisitions.
  • Technology strategy and implementation.

Our business pillars

Map out a better business with Gibsons. The first step on the road to success for any business is a strategic analysis. Our analysis reviews your current position, develops a vision for the future, and evaluates the strategy options available to take your business from where it is now to where you want it to be.

Once we’ve determined the best strategy, we’re able to develop a strategic business plan with you. This plan provides the detail needed across those key business pillars we always come back to – PeopleMarketingProcess and Profit.

People – Empower the agents of your success. Many people say their people are their most important resource, but do they act that way? Gibsons Business Consulting offers a range of people management services and capabilities to help you build a team that will drive your business forward.

Marketing – build a market-focused operation. Gibsons offers expert, tailored solutions beyond the scope of most marketing agencies because we approach marketing through the business-strategic lens. Whilst Gibsons excels at coordinating the tactical marketing activities involved in marketing promotion, we’re well known for strategic marketing which is the foundation that effective advertising, public relations and sales promotions should be built on. Ensure that everything about your business is meeting needs and reinforcing why customers should buy from you and not your competitors.

Process – build practical processes for greater productivity, efficiency, and profit. The primary reason for implementing business systems is to build consistency and, therefore, predictability into the quality of outcomes. Better systems and processes also establish the means for day-to-day operational activities to manage themselves, leaving managers with the time they need to deal with exceptions and to work on business development.

Profit – maximise business profit and cash flow. The aim of any business is to generate sustainable profit and positive cash flows consistently. If a business is unprofitable or isn’t cash positive, it can’t survive. It isn’t a viable business. We make sure you have the right measures and review processes in place so you can take informed action when you need to and keep your business on track.

Structure and process change to turnaround business performance.

It’s rare that we are approached by a company requiring assistance where there is clarity about why business performance is not as expected, and what should be done to fix this. Often, there is an understanding of the problem – a drop in sales, financial targets not being met, limited growth and so on – but the ‘why?’ of the issue is not clear, nor are the actions required to turn things around. We may enter our work with a client having been given one brief, only to find that other issues come to light as we investigate the problems that are taking place.

A manufacturing and installation company supplying the construction sector reached out to us for support with cited business performance issues. Sales levels were falling, and the company was experiencing a sharp decline in their Earnings Before Interest and Tax from a level of over 10% to only 2.5% of sales. We conducted a thorough review of the business’ operations and in addition to the problems with sales levels and EBIT, identified an issue with their margins for quoting and pricing. The company simply were not running at a level of margin that was long-term sustainable. They had significant quality and warranty issues which were cutting into profit margins, and there was poor labour management and supervision in place.

Without the right business structure and processes in place, it becomes very difficult to identity the ‘why’ when things go wrong. Clarity is missing, and as such appropriate actions are unlikely to be taken to turn things around.

Our business review identified the key areas to address, and we initially focused on implementing management review practices and reporting within the business to build an understanding of why these difficulties were occurring. We provided training and coaching to the company’s accountant to better analyse and report issues as they arose, and to make appropriate and timely recommendations to the management team. Management and supervision practices were established within production and management teams, and training and coaching of key management staff was enabled. Project management processes were also set up for all new projects initiated. A thorough review of the sales team and sales processes was conducted, and we established a sales management program with a priority to refocus the sales team. Alongside this, pricing and quoting margins were reviewed with a new pricing and quoting policy agreed.

After 6 months of working with this organisation we saw sales return to their normal levels, and after 9 months of sustained implementation of our recommendations, profits returned to 12% of sales. No significant quality issues have occurred for 6 months, and margins are stronger than ever with labour efficiency dramatically improved. The company now has high accountability throughout the management team, reduced stress, and happier staff with more satisfied customers.

Business change takes time, and modifying structure and processes doesn’t immediately impact the bottom line. It is with consistency and perseverance that business transformation is possible.

The question we often get asked is “why can’t a company just do this for themselves – why do they need an external advisor?”. In the case of this company, the management structure and processes were not in place to support the company to prevent these issues occurring. Without a significant and appropriate change to company structure and ways of working, change was not possible. Often it takes someone outside of a business to identify the change required, and once initiated, it can be easier to align with business priorities to meet, and often exceed, performance goals and success indicators. It’s also never an easy and quick fix.

Find out more about our strategic approach to unearth the challenges within your business and set you on the right path for success. Reach out for a no obligation, informal chat with one of our Senior Consultants today to chat about how we could help you and your business, call us (07) 3025 3220 or email [email protected].

[Photo credit: Minku Kang]

What’s holding your business back?

When you’re looking to grow your company but it’s ‘stuck’ it is useful to conduct a full strategic analysis to determine what’s going on. It might not be what you think. Far too often, businesses will make assumptions on the issues preventing their company meeting goals and achieving desired outcomes. These assumptions are rarely based on anything substantial, or there’s a focus on one key issue at the exclusion of all others. To truly understand what’s holding your business back, an objective analysis of all the issues, and the company overall are essential. This can be tricky to conduct in-house, where objectivity can understandably be somewhat clouded. You may believe that you have the right structure in place and the right team to achieve the profit margins you’d like, but often this is not the case.

Take the example of one of our clients – a small manufacturing and installation company operating within the construction sector. Gibsons were approached to conduct a strategic and business plan, with the objective of determining the issues at play that were preventing sales and profit growth. As soon as the planning process was in full swing, we discovered key factors that were holding the company back. Primarily these centred around people and processes. Key staff were modelling poor values and performance, there were manufacturing and installation process inefficiencies, and there was the absence of clear and consistent communications across the business and the management team. People were unsure who was accountable for what, they were disengaged, and were struggling to see a distinct company direction.

Once you have the right people in the right place doing the right things, a business can tackle operational and process issues that might also be holding them back. But you must get the people bit right first.

In our experience, people issues are often the cause of the most serious business problems and can be the most challenging to resolve. However, if ignored they can significantly endanger a business, or at the very least, leave it with a performance and success level far below true capability and potential. We often see attempts to ‘fix’ staff issues which in turn create more problems as structure and processes are used to ‘work around’ people difficulties, which rarely resolves the concerns, and instead adds significant cost and time to the situation.

To address these challenges, Gibsons conducted a thorough review of management practices to build a culture of understanding and a process of consistent and regular review. Next, we helped the company to develop the right business structure to support continuous improvement and accountability throughout its personnel. Progressive review of performance of key personnel alongside the company’s management team enabled the rationalisation of staff via retraining, mentoring, role changes to better suited skill sets, and in some cases, retrenchment. A complete review of operational processes and factory layout was then enabled with confidence that the recommended changes could be acted on with best immediate effect.

Build an effective business structure that puts the right people with the right skills into roles that best suit them, is key to ensuring a business with long-term and enhanced profitability.

The results of Gibsons’ work speak for themselves. Over a 3-year period, working closely with Gibsons, this business increased its profit on sales by 8-10%, culture and customer engagement improved, and there was a $10m rise in turnover. Importantly, the owner is now in charge of a highly self-motivated team with an appropriate structure to support the continued growth of the business.

Find out more about the Gibsons’ approach to ensuring your business is on the right path and your team are focused on what matters, through our in-depth strategic review.

Business growth through sales culture change

It would be understandable to think that issues related to sales are down to the sales process, pricing and the overall sales strategy. This is after all what drives a business’ sales levels and its approach to selling in the marketplace. However, dig a little deeper, and you’ll see the massive impact the culture of your sales team has on the implementation of your strategy. Perhaps the sales strategy is strong and appropriate for your offering, but how is it being executed and how is this being managed?

We were engaged by a major player in the Australian construction landscape to implement changes to their sales process and pricing structure to optimise margins. Our client’s construction reinforcing product had been used in most of the iconic structures in Australia including the Sydney Opera House, Melbourne’s Westgate Bridge and freeway, and Brisbane’s Gateway bridges. The company was well known and well established (100 years).

It initially appeared that the issues impacting sales and ultimately margins were related to the sales strategy. However, after a period of discovery, it became clear that sales performance was impacted primarily by the people within the sales team. While dedicated and committed, the sales team were agreeing to meet every customer requirement. There’s nothing wrong with putting the customer first and focusing on customer needs, but in this case, it resulted in unclear accountabilities. If you agreed to everything, who is going to follow through with the requests, and importantly can / should they be met? Inefficiencies were the result, as the team lacked clarity on what to prioritise and how.

Develop an effective sales strategy that is fully understood by staff to ensure consistency and accountability, but that also supports an effective management of performance.

In this case, there was no ‘organisation’ behind the sales team effort. To address the culture and performance inequities, Gibsons worked to embed processes and practices designed to clarify accountabilities, and to manage sales performance both company wide, and for sales team personnel. In total, 6 improvement programs were established and implemented over a 6-month period. This phased roll out started with the company’s Queensland team and are being progressively implemented across the rest of the business.

No matter how astute a management team is, often there are issues that from the inside are easy to miss, or people are too ‘close’ to the challenges, to effectively manage them. A Gibsons Senior Consultant who lives and breathes business improvement, will quickly get a feel for your business and be able to identify areas for improvement.

With accountabilities now understood and aligned across the entire sales process, these improvement programs have enabled the sales team to be more focused. An ‘achievement’ sales culture that the company was seeking has been established and revenue targets are being exceeded. The business growth potential identified has been enabled through this sales team reinvigoration. As is often the case, it’s not always that a strategy is wrong for your business. Often, the processes in place for implementation and management are not there; or are misunderstood or inappropriately executed by your team. Ensure your people know what they are accountable for and set up ways to manage this. Support your business’ potential by providing clarity in roles and expectations, and transparency in how this aligns with your overall company objectives.

As with many projects Gibsons work on, the reason we are called in is not always the cause of the challenges being faced. A Gibsons consultant is accustomed to scanning operations from a more objective viewpoint, with the benefit of deep experience gained from scores of business improvement projects. They can almost immediately spot problem areas that you may not be aware of. Find out more about the services we offer to support businesses and let us take the following tasks off your list:

  • Strategic analysis and business plans
  • Becoming an Employer of Choice
  • Marketing and sales plans
  • Brand development and promotion
  • Business process modelling
  • Improving systems and workflows
  • Optimising organisational structure
  • Pinpointing skills gaps and implementing training.
  • Reviewing financial performance
  • Profitability improvement programs
  • Managing organisational change
  • Mentoring to develop executive leadership.
  • Business process modelling
  • Mergers and acquisitions
  • Technology strategy and implementation

$2.5 million sales growth in only 2 years

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.

Maximising your returns through full product utilisation.

Clients often reach out to us when profit levels don’t match expectations and when there is a sense that the business could be doing more. Inviting a knowledgeable and experienced third-party consultant like Gibsons in, provides the opportunity for a deep dive into what is happening in your business.

strategic review of your business provides insight into opportunities that could be exploited and how. It provides reassurance of risks to mitigate against and the steps needed to do this.

Frequently, when we first engage with a new client, we will take them through a strategic review. This may be a company-wide review which is designed to unravel key business concerns and to determine why things are not working as they should. If the business has a specific goal in mind, we will instead conduct a more specific strategic review designed to evaluate the business and the market; and to outline the steps required to move the business in the direction required. This was the case with SSS Strawberries, a producer of fresh berries who were facing the challenge of how to best utilise their non-premium quality and end-of-season fruit.

SSS Strawberries were not maximising potential returns over the entire growing season and was looking to change this. The owners had identified that freeze drying the fruit would enable an increase in revenues and margins but looked to Gibsons to identify how best to enable this. We were commissioned to develop strategic; business and feasibility plans to advance this new product line and take it to market.

We identified 3 stages to bring this product to market: a research and design phase, capital investment, and finally full production with future growth as sales increased and capacity levels were met. We handpicked a team of specialists across the areas of branding, food product commercialisation and packaging, to support the research and design phase for bringing the product to market. This phase focused on determining a name – Gina’s table, brand identity and packaging for the product.The results of this research were crucial as they would go on to shape the entire marketing and sales approach. They would also provide confidence that the direction and decisions made were appropriate, before significant investment in capital took place.

To determine the feasibility of bringing freeze dried fruit to market, we looked firstly at the target consumer – what were their motivations to purchase and their buying behaviour, what competing products did they already purchase, why would they choose this product over others and how could we influence this. In-store research regarding purchase behaviour tracking and Q&A sessions supported this. We looked at the marketplace – what products or competitors were already selling similar products, what consumer needs were being met, price points and packaging. We went on to consider product positioning in the market along with packaging, Point of Sales materials, merchandising, channels to market and the overall brand – tone of voice and brand personality (essentially the look and feel of the brand).

To successfully determine the feasibility of a new product launch, you must fully understand the product and how it will better meet the needs of consumers than competitors. Without extensive research and clarity around your product’s positioning in the marketplace, as well as a strong and consistent brand identity, you are unlikely to succeed.

It was concluded that the product would be marketed to 3 consumers: wholesalers (for sale to end consumers and processors), retail distributors, and online direct to end consumers. The next steps in taking the product to market is capital investment as well as the development of a robust marketing plan to promote the product nationality through all relevant channels. Expansion and conversion of premises as well as the installation of new freeze-drying capacity and pre and post processing equipment to package, store and ship the product are required. Once production is up to capacity and as sales demand grows, further expansion is possible to include a variety of fruits, herbs and food for sale under the company’s own brand or by other processors. Marketing would be ramped up in support of this.

Preparing SSS Strawberries for a national food product launch and extending its product line was no small feat. It is a great example of the full breadth of experience and expertise that Gibsons Consultants provide to clients across business strategy, human resource management, marketing, process development and profit building. For a guiding hand with your business, contact us for a no obligation chat with one of our experienced consultants.

Webinar invite: Join us as we chat with Fabric Solutions (22 Oct)

Join us in an AME (Association for Manufacturing Excellence) hosted FREE online ‘Fireside’ Chat this Friday (22nd October 11am-12pm AEDT). We’ll be talking with Rohanna Abberton, the General Manager for Fabric Solutions Australia, about our transformational work with them over the past 3 years. Learn about how we’ve supported their business to improve operations – enhancing the company culture and profitability levels, as well as enabling the owner to progress down the path to succession. Specific areas that we’ll be discussing include our work in:

Register your place and find out more at: https://www.ame.org.au/email/8ca7da1f-7036-4bd9-b5c1-7175a511dd68/e8178aaa-ff4a-4d5e-82c0-b70f1646f71e?fbclid=IwAR0AGSby86uAoNnsEyI2U_m70tJw2sogESgam97D1fopcflH7UHMQ4xxb4c

Why strategic thinking was a $10m game changer for this client

Even when your business is going well, spending time to take a step back and address the current market climate, and your company’s strategic priorities and direction is a must do for any senior manager. But when turnover is growing and profit margins are good, it can be very easy as a manager or business owner to fall into the trap of becoming too hands on. You end up spending your time focused on the day-to-day business operations without giving much thought or time to the company’s future strategy.

Without a strategy for the future of your business, the company and its management will be ill prepared to address issues as they may arise. A lack of direction and clarity in the company’s focus and objectives can result in poor decision making and inappropriate business systems and processes.

A lack of strategic direction is very common and will undermine the real potential of any business. Without a plan and a deliberate focus on where your company is going and how it will get there, it’s unlikely ever to be achieved.

Gibsons was engaged to support a heavy earthmoving equipment company with exactly this challenge. Involved in the repair, overhaul, field service and spare parts for heavy earthmoving equipment, the company’s National General Manager had become too involved in the business’ daily operations. He had no time to work on high priority strategic concepts for the business. He saw the benefit of having an experienced person to act as a sounding board to challenge and discuss his ideas in helping the business prepare for the future.

The company had built a reputation for high quality services and parts across a diverse portfolio of sectors with another division planned. Turnover was at $8m but the company was keen to grow. The need for an external expert with extensive experience in business improvements was sought. Gibsons was able to bring confident insights, ideas and techniques from decades of experience in supporting clients develop the most appropriate business strategies. Stimulating and challenging management team thinking, and ensuring the best approach was actioned.

Gibsons developed an aggressive growth strategy underpinned and supported by significant organisational changes. A management review process was implemented; and mentoring and coaching for Senior Executives commenced. A new Human Resources structure was embedded into the organisation accompanied by a change in company culture. Several process improvements were initiated to streamline operations and provide staff accountability. The resulting impact of strategic change to this company – a growth from $8m to $18m in only 4 years.

During a period of change management, it is essential to get the structure right – management, Human Resources and processes. This is even more significant during a period of growth.

During Gibsons’ work with this company, a significant risk was identified. The company had a large customer who was contributing a third of the organisation’s turnover. The impact on the company of losing this client was significant, and at the time of Gibsons’ engagement no strategy was in place to mitigate this risk, or what to do if it was realised. With Gibsons’ help, the dependency on this one client was reduced over time and measures were put into place should the client be lost. As a result, when the client did leave years later, the company was able to compensate for the loss due to this extensive planning and preparation work.

Gibsons Senior Consultants bring with them decades of experience and are valued for their extensive knowledge and insight into business improvement initiatives. Providing ideas, tools and techniques to challenge the status quo and enact considered change as needed, Gibsons continues to be an indispensable business advisor to this company.

How a robust business review can support sales growth and profitability

It seems obvious enough. If you fully understanding what’s happening in your business, then you are well placed to exploit your company’s strengths and tackle any key issues appropriately. Yet despite this pretty simplistic notion, many business owners do not have clarity on the financial health and operating complexities within their companies. When sales and profitability levels fall, it can be all too easy to focus on the wrong things particularly if you are a very hands-on owner.

All too often we see business owners taking a cut to their salary and operating their business more from a survival standpoint rather than taking a step back to see where the gaps and issues are. This was the case for a small manufacturing business whose Earnings Before Interest and Tax had dropped to -12%, with a turnover of $1m per annum.

Gibsons helped this manufacturing company to access government funding which enabled a rigorous review of the business.

Through Gibsons’ strategic review the key strengths of the business were clear to see – a small and highly skilled team headed up by an owner with a high level of technical understanding, and a satisfied and very loyal customer base who were not sensitive to changes in price. Customers valued the products and service provided by the company and the owner was very passionate about the business.

The strategic review brought to light some fundamental issues to the company’s operations. No financial performance reviews, coupled with little or no understanding of costs in estimating, were central to the profitability issues the company was experiencing. The owner was only taking a very modest salary and was unable to fund any growth to the business as a result. The company had experienced a poor financial performance for the previous 3 years. However, with no financial review being conducted, the specifics and an understanding of why this had taken place was not immediately clear.

Gibsons set into place some key actions to overturn this downward profitability trend and address the issues identified. An effective system for costing and estimating was developed and implemented, with staff trained in its use. Administration support was clearly defined and set up to better support the owner. Freeing up the owner’s time, he was better placed to focus on sales, estimating and overseeing production. Regular accounting and financial review processes were established so the company was better positioned to respond promptly as issues were identified.

Within a short timeframe, these actions moved the company from -12% to 15% EBIT and increased their turnover by $0.8m p.a. The owner was able to take a market-based salary. Gibsons continued to support the business as necessary to enable this level of performance to continue.

Without clarity on your business’ operations and financial health, it is hard for any business owner to take the appropriate actions needed to overturn a drop in profitability. An independent third-party advisor can bring an objective insight to identify and support the changes needed to enable sales and profitability goals to be met.

Culture has a BIG influence on profits…

…and good culture starts with good management.

No matter how skilled and experienced your staff, without a sound management and accountability structure in place, you’re setting your business up for failure. It is commonly assumed that if a business is made up of a group of highly skilled, degree qualified professionals, that the operation and people should be able to self-manage. This is rarely the case.

Management is a skill and discipline in its own right that is essential for every high performing business.

Without good management practices in place, staff are unlikely to contribute equally, enthusiastically and consistently over a period of time. This can slowly chip away at a positive business culture creating dissatisfaction and disillusionment amongst your team and undermining even the best-laid plans.

As a business consultancy with years of experience and extensive expertise in strategic management, Gibsons is well placed to provide invaluable, objective insight into an appropriate management structure for your business. We provide the support needed to meet your business goals and align with your company values as well as setting up meaningful accountability processes and systems.

An effective management structure with appropriate decision-making mechanisms in place, will support the business structure needed to generate profit, accountability and a healthy company culture.

In demonstration of this, Gibsons was approached by a large and well-known firm in the Professional Services sector to help them deliver a Strategic and Business Plan. With no decision-making mechanisms in place, and little understanding of management as a separate area of expertise and skill, the business had started to develop an unhealthy culture.

It became clear during our engagement that a number of staff were underperforming in their roles, lowering the organisation’s efficiency. With the absence of performance measures and little management of expected standards, there was limited accountability throughout the company.

To overcome these challenges, Gibsons implemented its Employer of Choice program to engage staff, align them to business goals, and to build a culture of accountability based on core values. Personal leadership mentoring for the company’s CEO as well as the mentoring of supervisor staff took place. Select staff were provided with soft skills training around people management, personal performance and project management to upskill. An effective board structure and practice along with sales management practices, Key Performance Measures and a management reporting regime were all initiated.

Changes to management structure and processes can take place quite quickly whereas cultural change within an organisation is something that takes time to have positive influence in decision-making processes. The turnaround in this Professional Services company took 4 years and resulted in an EBIT improvement from 10% to 15%. For a Professional Services firm in its particularly sector, this was a significant increase. The improvements made in the company’s staff engagement, culture, human performance and morale which increased customer satisfaction were able to become entrenched in the business and sustainable.

Never underestimate the importance of having all your people working towards the same goals to shared and agreed standards. People and their synchronised alignment with business goals is at the core of business success.

How to ‘win’ in a market that isn’t growing

How Gibsons helped Pro Powder grow its profit by 600% in 10 months. 

Profit is the one metric that matters most, for nearly all businesses. There are a number of measures that each business should be keeping an eye on, but deciding which ones are more critical for YOUR business requires getting under the bonnet to find out what really makes it tick.

A thorough examination of a business’s operational processes, human resource function, sales and marketing activities, core value proposition and key business drivers is required. While many tried and true theories of business management can guide you on this, the reality is often more fluid, unexpected, and industry specific.

When you are completely immersed within the operations of a business, it can be difficult to see what is actually going on. You are in effect too close to the issues to see them clearly; especially if you, like many business owners, have fallen into the trap of doing too much yourself.

Our work with Pro Powder is a stark example of the great improvements that can be made when a business invites an objective and experienced third party in to help.

A powder coating business, Pro Powder was achieving a $1.4M turnover at the time they engaged with us, but profits were barely reaching the $20K mark. The company’s owner was stretched and feeling that so much hard work just wasn’t paying off.

Despite the company operating at full capacity, its profit margin was still too low to be sustainable without burning out the owner. 

Pro Powder provided our Senior Consultant, Graham Pridham, with full access to the business: its staff, operations and procedures. We assessed financial information alongside insights from discovery sessions, staff engagement and a review of business processes. Because of our extensive experience in supporting manufacturing companies, we could identify how best to support the company very quickly, saving discovery time.

Armed with practical solutions to ensure the team was fully utilised and with insights into more appropriate marketing and sales tactics, Pro Powder were able to invest more time in sourcing and targeting more profitable work. They were able to determine their “ideal” client profile to successfully reposition themselves; as well as focus on sales efforts and accountability.

It can be difficult for businesses like this to choose to invest in getting help when profit margins are so limiting, but the decision to do so can be empowering. The business is now positioned to do well, the owner feels on top of things, and the financial return on investment from third party assistance is very clear.

These are the results Gibsons strives to achieve for its clients, every time, no matter what their size at that time in their journey when they connect with us. We have helped countless businesses to grow and become more profitable, well beyond their own expectations.

Improving businesses is in our DNA.

Improving Profitability

One of the major concerns that shows up in surveys of business owners is how to improve and maintain profitability levels. Competition levels always seem to be on the increase and margins are continually being squeezed. The end result is that we work harder for less profit.

Here are a few thoughts on how to protect your profit margins:

  1. Know your numbers. Regularly measure how your business is travelling financially. Too often we find business owners who think that they are not capable of reading and understanding financial reports and use this as an excuse not to regularly review their financial position. Sorry, if you are responsible for a business, then knowing how it is performing is in your job description and it is not difficult to learn how.
  2. Use your financial reports. There is a goldmine of information in a Profit and Loss (P&L) report if it is structured to provide management reports rather than just as a means of providing input for a BAS or an income tax return. Your balance sheet can also help you manage your cash.
  3. Manage your gross margin. Your gross margin is the difference between what you sell something for and what it costs you to buy it or get it out of the factory ready for despatch. It will mean that you are managing your selling prices and input costs.
  4. Manage your selling expenses. Summarise your expenses into meaningful groups such as communications, vehicles, property, employment costs etc., so that you are looking at a manageable P&L statement. Set targets for each group relative to your revenue.
  5. Eliminate waste. The average amount of time spent value adding to a piece of raw material from the time it enters a factory until it is a finished item ready for sale is less than 10%. The rest of the time is one of the seven categories of waste identified in Lean Manufacturing theory. They all add to your cost and reduce profit margins, but none of them show up on your P&L. The concepts are equally valid for office environments. Understand what they are and work to reduce them.
  6. Hold your staff accountable. Develop a culture where people care about what they do so that they provide great customer service but are conscious of costs. Provide them with targets/budgets and outcome reports. Have a performance management system and a recognition and reward process that is linked to your values.
  7. Aim for continuous improvement. Implement formal systems to continually be looking to improve how you do things. The first time that you analyse a process for improvement you may be able to halve its cost, which may significantly improve profitability. The tenth time you may only be able to reduce it by a few cents per unit. Even though the slope of the improvement curve diminishes, we can always look to improve with a view to maintaining and increasing profit margins.

Improving profitability is one of the key tasks of the business owner or manager and will require time spent working on the business, not just in it.