Failed Reselling SME Turnaround
Acquired through an MBO this failed SME was grown back to profit and sold into a larger same sector business.
Magic key?...No.
Hard work and focussed effort?... Yes.
Easy?... Definitely not!
The Problem
This small business had existed for more than three decades but had excessively focussed on two major customers. Not so much the 80:20 as the 95:5 rule!
The business had a huge number of account holders all trading on their distress and special purchases whilst placing the majority of their business elsewhere. It had found itself trapped in a Catch 22 ; no volume, no purchase discount, no purchase discount, no volume sales at margin!
Research confirmed that the company was perceived as “slow and dear”, but that the market did not hold its competitors in particularly good regard either.
As more and more dormant customers were encouraged to reconsider the new offer, widening the ranges offered added more of a one stop feel to the trade counter and express collection points (borrowed from retail) appealed to many account holders.
The Results
First step was to re-present the business to its wider marketplace locally. A new logo retained the established company name whilst using the “oldest new company in the city” tagline to announce change.
Whilst the business was largely defunct at the point of takeover it is fair to say that turnover was at least doubled and ultimately the business was able to survive the 2008 crash.
Perhaps the most critical aspect of this turnaround was the fact that there was no eureka moment, no point of innovation. The products supplied were all generic, the pricing market competitive but not exceptional.
What was exceptional, however, was the focus on customer need and exemplary service provision and ultimately this is what turned the thing around.
The management buyout that led to my ownership of the business was a tough process for both parties but ultimately provided the owners with an exit and gave the business another chance.