Can Commodity Product Producer Differentiate for Better Profitability?

Case Study Project Description

This California based company made doors. Doors are a dime a dozen. They are made from wood or metal or composite woods. There is not a lot of ability to price a door any differently than competitors. The manufacturer of doors also has to produce a high volume to make enough profit to make it worthwhile. Can a small manufacturer do anything to make their product stand out in the marketplace?

Project Problem

The door manufacturer made doors from recycled construction materials. He had developed a special method of process the waste material and purchased unique manufacturing equipment from Europe to press the material into doors. But would the market care? How was he going to get into Home Depot and Lowe’s to sell the doors? How could he get distribution into the market place? Could he get a regular source of material to make the doors?

Solution

The stark reality of the situation was that this manufacturer of a single product would not have much success trying to sell a door with unique properties into the consumer distribution system. While the owner was convinced that his recycling activity would help the environment and employees all thought they were contributing to something worthwhile, there was nothing about this fact that would cause buyers to spend more to buy his door over a competitors door. Was their another way to look at the market place.

Rather than attempt to find traditional distribution methods, we looked at who had waste streams similar to the door manufacturer’s raw materials, cared about the environment and already had a distribution channel that these unique doors could be easily sold through but they did not have a door in their product line. We found three potential partners through this method of looking at the marketplace.

Each of these partners had the potential to sell high volumes of the product. It would mean that the manufacturer would only be making the product, not selling it any longer.

Result

We brought the owner to three meetings with these potential partners. Unfortunately, the owner chose not to enter into a distribution arrangement where he would make the doors for them as he found their first price unacceptable and was unable to keep the relationship going well enough to establish a basis to do business. It takes a re-orienting of expectations and an ability to have difficult to discussions to manage joint venture relationships. Ultimately, if the company is unwilling to change how they do business to meet the needs of partners or customers, potentially lucrative target markets become unavailable to the company.

A 90 Year Old Manufacturer is Purchased and Downsized – Is There a Future ?

Case Study Project Description

The company had built its reputation on appliances, cookware and consumer durable goods. When a conglomerate bought them out, the senior leadership team left. The remaining managers were expected to determine how to pare down the product line and increase profits.

Project Problem

The remaining managers had never had to work through a downsizing exercise. They had been selected from middle management and put in a difficult situation to turnaround the company. Distributors relied on the huge variety in the product line to differentiate themselves in the market. When they heard their favorite products were going to be eliminated, they were told to step up sales or lose the line. The team needed help and guidance in how to execute this strategy without alienating their distributors and each other.

Solution

The team need to learn how to collaborate before they could discuss the new strategy. Times were difficult, tempers short, and this group had never worked together before. Not only did they not know how to have difficult conversations, each person was representing their functional area as ‘not needing to change’ but other functional areas ‘would have to change’ to meet the new requirements. Sales did not visit the Manufacturing floor, Marketing did not work in alignment with Sales, and Accounting did not track Gross Margin for any of the departments.

We worked simultaneously on clearing unfinished business between the individuals, acknowledging the difficulty of the situation and getting them to phase that all aspects of their company functions had to change including their own, in order to gain them the profitability they needed. Using their own experience of how difficult change can be helped them to understand their Distributors’ mind set and how to work through the inevitable show downs that were coming.

Result

Paring the product line down from 200 line items to 30 with the best gross margin took six months. Working through all the distributor conflicts, took another six months. The team would learn to work with our Smart Team tools to help them strategize which products and what approaches they would take to work with the distributors. Instead of leaving the difficult conversations to the Sales VP, because “that was his job” the team worked together to support the VP’s work and they visited distributors in teams. When the manufacturing floor struggled with the line change, the Sales VP would go with the Manufacturing VP and communicate the market needs as well as acknowledge the struggles on the factory floor.

Within two years of the acquisition, the company had become profitable enough that the conglomerate chose to sell them again for a profit. The team felt proud of their accomplishment, meeting the time line of their investor and the needs of the market place.

Software Tech Case Studies

Our CEO, Lorraine Rieger McGregor was formerly Vice President of Marketing for a software development company she co-founded from 1987 – 1990. Back then, software companies were not well understood. Today, the market is changed. Software must fit into a complex group of interrelated products and do something that is unachievable more easily with a different method. Today’s software company has to be high specialized, deeply rooted in niche markets and have big partners in the right places to get a foothold for growth in the market.

Software companies need smart efficient and fast growth strategies. Our philosophy is to get them joint venture partnerships with large companies that will gain market share by adopting their niche solution. Here is a partial selection of the kinds of companies we helped grow. Want to find out how to take your software company to the next level? Call 604-306-7707 to discover your options.

Software Case Studies

• How to Develop a Market Niche
• Breathing New Life into a Commodity ERP System
• How Do You Manage a Gorilla for a Partner?

Clean Tech Case Studies

Back in 1990 when we first started working with companies that environmental solutions that make business sense (our term), these products were called environmental technologies. Almost a generation later, Clean Tech is attracting millions in venture capital www.cleantech.com and governments are mandating their use. We have worked with more than 40 different clean tech solutions and companies over the last 18 years.

Clean Tech companies need smart efficient and fast growth strategies. Our philosophy is to get them joint venture partnerships with large companies that will gain market share by adopting a clean tech product and strategy. Here is a partial selection of the kinds of companies we helped grow. Have a clean tech company that needs more market leverage and is already revenue positive? Call us at 604-306-7707 to discuss where in the world we can help you grow to.

Clean Tech Case Studies

• Can an Alternative Energy Business be Built on a Nasty Waste Stream?
• Introducing New Consumer Products in a Highly Competitive Market
• Ocean Energy in Canada: Pathways to Commercialization
• Introducing Environmentally Smart Substitutes into Established Industrial Product Markets
• Greening a New Product in an Old Line Business
• Finding Joint Venture Partners/Buyers

Difficult People and Situations Case Studies

Frustrated with how some people are getting the job done? Don’t like how your people aren’t taking responsibility? Tired of the infighting, cliques or attitudes within and between departments?

As owners, your attitude sets the tone. Most of us don’t realize what attitude we are projecting on to others that results in a sea of conflict. The bad news is, that these situations exist for a reason. The good news is, you can do something about it. By changing how you view people, how you lead people and how you set performance goals, you would be surprised quickly the company culture, and therefore productivity and profitability starts to improve.

Got conflict? That’s the symptom. Read the case studies to understand the root cause and the effect that trying to weed out the conflict can have if you don’t address the real problems.

Conflict often means you are missing systems and processes needed to affect communications hand offs between departments: when people are in conflict, they stop talking. The customer’s message (what they hoped they were buying from you) gets lost in the communication chain through the company. Unsatisfied customers don’t tend to buy again.

Want a Turnaround Specialist on call with your team?

Call 1-800-557-9737 or info@spiritwest.com. Having us on retainer means you solve the problem in a fraction of the time instead of ignoring all the warning signs. Then your good people start leaving before your challenging people do.

Difficult People & Situations Case Studies

• It’s Not My Problem, He’s the Problem!
• We Can’t Fire Him, We Need Him
• The Boss Blames Others

Acquisition Case Studies

Ready to start acquiring companies? Already acquired a few and are wondering how to fit all the pieces together? Acquisitions are a great growth strategy. They also require a level of management and leadership as well as strategic thought that is much more complicated than running the original company.

What’s difficult? Making the right choices for your investments is only half the equation. Many companies erode the value they bought in the first three months by making decisions about how to integrate the company without first assessing impacts, checking assumptions and making a clear plan in consultation with the leaders of the acquired company. Just because your company is the buyer does not mean your methods are the best. Assimilation is not necessarily a smart business strategy.

Read on about how we’ve helped other companies learn to acquire and integrate companies successfully. Want to know your Acquisition IQ? Call 604-306-7707

Acquisition Case Studies

• How Do You Combine All the Products?
• Maximizing the Value Post Acquisition
• Cross Border Integration Irritants: You Change First

Growth Case Studies

All companies want to grow. Companies that make it to the $10 – $20 million mark often find themselves on a plateau. Revenues keep increasing but the profit margin does not. It is easy to paint a rosy picture but the more you grow the more resources you need to service that growth. Resources consume profit margin.

Managing costs is of course important. Of greater importance is understanding how to increase your gross margin and your offering to the market place. Can you say for sure whether your top ten customers will keep buying year after year from you? Do you know which products make you money and which don’t? Is revenue one off or reliable? Would your customers tell you if aspects of working with your company are a hassle?

There are opportunities for growth where you would never know to look. Want to find out how to rebalance your company and get off the plateau? Call 604-306-7707

Company Growth Case Studies

• Is there a Growth Path for a 20 Year Old Product
• We’re Growing Faster Than Our People Are
• How to Increase Distribution in a Fragmented Market

Spirit West Management Launches Seminar Aimed at Baby Boomer Business Owners

FOR IMMEDIATE RELEASE

Spirit West Management Launches Seminar Aimed at Baby Boomer Business Owners -

Will they get what they think the company is worth when its time to cash out?

July 14th, 2008–

There are 17 million businesses in the US and 1.7 million in Canada according to Dun and Bradstreet. 50% of them are owned by Baby Boomers. 7 out of 10 of these owners will want to sell their business over the next 10 years, according to the Association for Mergers and Acquisitions Advisors. The supply of offerings will continue to grow substantially.

According to anecdotal evidence from investment bankers and private equity investors, business owners are unaware of the work that must be done to prepare to sell their company. They have unrealistic expectations and have not done the preparation necessary to reorganize the company so it can operate and grow under professional management.

To help baby boomers adequately prepare for the day they do want to sell to investors, employees or other companies, Spirit West Management is offering a one day workshop on how to restructure a company so that it is exactly what investors look for. “How to Maximize Your Company’s Worth: The CEO’s Guide to Becoming Prepared for Investment” will teach owners how to see their company through the eyes of investors and lenders.

“A company might be operating just fine under owner management, but will it continue to operate successfully when the owner leaves?” says Lorraine Rieger McGregor, CEO of Spirit West Management. “There are many hidden issues that an investor sees and for every one that doesn’t have a solution, the value of that company is reduced. It can be a very humbling experience for business owners to come to this time in their life and think that they can sell in the next six months. It just doesn’t happen like that. Restructuring can take 2 or 3 years depending on the issues we are dealing with. Owners need to take the time to get the right advisors and consultants to help them get prepared for this investment transition.”

The one day seminar, open to company owners that did at least $7 million in revenue last year, will be held March 19, 2009 at the EagleQuest Coyote Creek Golf Club in Surrey, BC. Owners will have the opportunity to get a reality check on the state of their business, hear from other owners who are selling or who have sold, meet private equity investors and strategic buyers as well as learn the ins and outs of the mergers and acquisitions process.

Read More Information on the seminar

For Contact:

Lorraine Rieger McGregor

Spirit West Management, Ltd
events@spiritwest.com or Tel: 604-306-7707

Lorraine Rieger McGregor – Biography

Lorraine McGregor is the founder and a partner in Spirit West Management. With her partner and husband Rob McGregor, they have done pioneering work in how to grow a company. By focusing on the business as an interdependent system that founders or flourishes based on how well information flows amongst employees and leaders, they have achieved success for more than 100 clients since 1990.

Most consultants work in functional areas which reinforce the silo problem of us versus them that retards growth, performance and effectiveness. Lorraine looks at the company as a whole with many levers that need fine tuning, improving processes, exchange and strategy so the company achieves its goals. She and Rob use their Smart Team Toolbox which are the tools and techniques they developed to change how people think, lead and manage individually and in groups.

As one of the first people to work in the Clean Tech space, Lorraine made a name for herself in the US as a business development specialist by helping get technology for water, wastewater treatment, alternative energy and other environmental solutions to market.

As an Mergers & Acquisition specialist, she works with owners and shareholders to prepare their companies so they are actually saleable, worth their desired exit price and to be attractive to target investors.

Lorraine is the former President of the Association for Corporate Growth, Vancouver Chapter the leading M&A authority in North America. She holds a Masters in Business Administration from Simon Fraser University, a Marketing Diploma from the BC Institute of Technology and Design Arts Diploma from Seneca College of Applied Arts and Technology.

What’s Lorraine Been Doing Lately ?

• Giving a webinar for Community Banks on how to think like a buyer and make their bank more profitable and saleable. December 2011
• Co-author with Rob McGregor of the book and Playbook “Fast Track Secrets for Making Your Business Saleable” Published November 2011.
• Contributed to the development of “Secrets of the 1% Difference” an online training course and DVD on how to improve profitability through employee engagement.
• Wrote two articles as a guest columnist for BC Business Magazine (Dec 2008) and Business in Vancouver (Nov 24, 2008).
• Guest lecturer at Simon Fraser University on how to grow a company with an exit strategy in mind and how to develop a marketing strategy to grow a software technology company.
• Elected President in 2008 of the Vancouver Chapter of the Association for Corporate Growth, www.ACG.org
• Developed www.MakeYourBusinessSaleable.com, the first online website to provide video based learning for how to prepare a company so it actually will attract a buyer.
• Joined the board of A W.I.S.H, A World Institute for a Sustainable Humanity www.AWISH.NET which fosters sustainability projects around the world

Rob McGregor – Biography

Partner and People Performance Specialist. Rob is a founder, coach and senior consultant working with business leaders who want their companies to grow but are struggling with people management issues.

He is the co-developer of the Smart Team Toolbox which is what we use to help people learn how to change how they think, lead and manage to get the high performance results a business owner needs to move off a plateau.

Rob’s career has been devoted to helping people grow as leaders, managers and followers in the US and Canada.

As a former budget officer in a Government of Saskatchewan ministry he helped grow the ministry and then, with imposed budget restraints, he led a downsizing process that made sense for clients and the public purse. He understands that having the right indicators help to make the right decisions but it is leading and managing people effectively through the impact of those decisions that brings the rewards.

Rob has served the military and health care institutions as a Chaplain, taught and coached conflict resolution at the Justice Institute of BC and led leadership teams on numerous strategy sessions on how to motivate them out of sticky situations and into high performance. He has worked with CEO’s in manufacturing, engineering, construction, mechanical service industry, software, advertising, public relations, retail grocery, health care, and education.

Rob also manages our engagements to ensure our clients get what they need, when they need it, takes care of our valued associates and improves our own systems and processes.

Rob holds a Bachelor of Arts in Psychology, a Masters of Divinity, a Masters of Business Administration, and a Certificate in Conflict Resolution.

What’s Rob Been Doing Lately:

• Co-author of “Fast-Track Secrets for Making Your Business Saleable” published by Infinity Publishing November 2011 and available on Amazon.
• Coaching MBA students in the fine art of negotiation when the heat is on.
• Presented a paper at the Gallup Leadership Institute Summit on Leadership 2006 in Washington DC.
• Created the theory of Followership Intelligence (FQ): Leading so others can follow effectively; Following so leaders can lead effectively.
• Followership Intelligence was selected by the Gallup Leadership Institute in the University of Nebraska business school to be one of their international research projects.
• Co-authored a qualitative paper on Followership which was published in The Leadership Quarterly in 2010.
• Loving sailing his Catalina 34 and playing the electric guitar.

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