Distribution Case Study
From Founder-Financed to Highly Profitable in Less Than Six Months
The Founder of a $20M regional distributor of janitorial, food products and hospitality supplies was locked into a common problem for many business owners: the company was not profitable thus he was financing the company from his personal assets to keep it afloat.
But he had a big dream: to transition the company to his son and daughter-in-law and finally retire to live the good life. Unfortunately, he knew his son could not assume the financing obligation of approximately $20K per month.
He tried expanding his business model by acquiring a coffee equipment and supplies company in the hopes of positive cash flow. Instead, he found that every coffee machine sold meant an upfront cost to his business, and a long payback period. The situation was getting worse.
The cross-functional team of 12 junior and senior members of the company enthusiastically bought into the 30 Day EBITDA Bootcamp and within 30 days ProfitU™ had completely paid for itself for the first year. The big breakthrough for this firm came when they learned how to use one of the key analytics scoreboards in ProfitU™ which not only shows which customers are behaviorally profitable vs those that aren’t, but also reveals where there are unexploited sales opportunities at strong margins.
The profitability ranking of their largest customers was a huge eyeopener, and when the team realized it was within their power to start guiding customers to shift simple everyday behaviors by placing more economically-valid orders and to teach them to use the online ordering system, costs went down and sales went up. They’d already received training and coaching to help customers do that when the online ordering application was launched – but until they saw how big a difference it meant to their new profit-sharing plan, they simply didn’t understand why they should bother changing the status quo. When they finally connected the dots and realized that immediate order and delivery confirmations made their customers happier than emails and voicemails piled up waiting for end-of day manual processing and next-day confirmation, their AHA! Moment was complete. When the company tackled the sea of opportunities that the long-entrenched sales representatives had been ignoring, sales and margins went up again.
Several senior members of the firm were also trained to conduct Value Creation Conversations with their customers. The CEO was a natural, and promptly started discovering even more hidden opportunities, but more importantly, hidden issues that were making the company vulnerable to the competition. When the team buckled down again to resolve those issues for good, they were able to adjust their pricing upwards in several value-add ways, and the company was, for the first time in many years, solidly in the black.
The CEO completed the handoff to his family, but found that his business was once again so much fun that he has remained involved as a customer ambassador, continually conducting Value Creation Conversations with an ever-increasing number of customers to spot and monetize new opportunities.
Within the first 30 days of working through ProfitU™ we added enough profit to our bottom line to fund the entire program. Within 3 months our margins were up 5% and individual sales were up 7-13% year-over-year, enabling us to hit breakeven. Within the first 6 months, ProfitU™ transformed our business from a loss of $20K/month to profits of $18K/month.
I’ve collected an unbelievable amount of information from the Value Creation Conversations. I’m amazed by how many opportunities there are to grow our business with our clients and easy fixes that can help improve our relationships with them!!!! In 30 years of business I’ve never had so much fun collecting this type of information, what a tool!
CEO, Family-owned Distributor of Hospitality Supplies and Equipment
As a newly-hired Sales Manager, I thought I would have to create the systems and sales rep accountabilities myself. I have never seen anything like the OCEANS Plan for focusing sales reps on hidden business opportunities. You made my life unbelievably easy.
Sales Manager, Family-owned Distributor of
Hospitality Supplies and Equipment