Privately-held industry leader with annual revenues exceeding $90 million
Market leadership was slipping. Twelve months of falling profitability including six consecutive months of losses. The Company’s culture and work ethic had deteriorated significantly as a result of poor leadership typified by complacency and ineffective management of strategic partnerships. The Company had no strategic goals or tactical direction, or “will to win.” Working capital management was out of control. A poor systems conversion remained a source of internal and external problems. Company-wide staff layoffs and indefinite salary reductions and freezes adversely affected employee morale. The CFO, assistant controller, and CIO resigned. The Company’s lender lost confidence in management. Cash was projected to run out within 90 days. Interlochen was hired to assess company’s viability.
After an analysis of the Company’s operations, Interlochen presented its findings and recommendations to the board of directors. The board approved the recommendations and hired Interlochen to implement the turnaround. Immediately instituted tight control of cash via careful management of all payments along with a clear, coordinated communications campaign with critical vendors. Implemented strict control and accountability for inventory purchases and sales contract approval. Increased product and service prices that were accepted by the market. Created a new budget for remainder of fiscal year. Established direct responsibility for performance goals. Implemented more incisive and comprehensive analysis of business strategies and tactics. Aggressively managed performance through monthly operating reviews and intra-month follow-up with groups falling behind budgeted performance. Sold idle assets. Communicated frequently with all constituencies: customers, suppliers, the Board and, especially, employees. Commenced retained search to complete the management team and board.
Company achieved the new budget goals for all eight months remaining in the fiscal year including a return to profitability within two months of Interlochen being engaged. Working capital investment reduced by $4 million and bank borrowings by 50% so the Company was restored to good standing with its lender. Avoided further staff layoffs. Employee morale, confidence and enthusiasm were restored. Employees embraced accountability and took ownership of their goals and responsibilities; they developed a positive, “can do” attitude toward business challenges. Key executives were hired. Despite significant early losses, the company achieved full year profitability.