AUSTRALIA
Importer and Manufacturer of Rail and Service Equipment
The backstory
The company was part of a larger subsidiary group which was sold to the new Directors. With the formation of a new company, there was no credit history resulting in banks refusal to lend credit to the company. They were not in a financial position to be able to fund the business and discussions of a voluntary administration were had. We were appointed to assist with the merger acquisition. However, turnaround work was required first to stabilise the company. With as little as $10k in the bank and $3M in Creditors plus more in loans, $300k in Debtors with no sales pipeline – Directors were ready to call it a day.
01
The challenge
- The obvious challenge was the severe cash flow problems and insolvency situation.
- There was no organisational structure as a result of the takeover of an already existing business.
- Highly reactive environment with poor decisions made on gut feel rather than evidence and figures.
- Economic slowdown affecting machinery sales and a demand for more second-hand equipment.
- Lack of strategic clarity and alignment.
- Foreign exchange rates unfavourable against the dollar eroding gross profits.
- Old antiquated systems.
- Operational inefficiencies and lack of consistency with processes.
- Focusing on low GP customers.
- No internal controls, policies and procedures.
- Lack of employee accountability and responsibility. Low employee productivity due to lack of monitoring and little leadership.
- Financials required greater sophistication for analysis, reporting, risk mitigation and control.
- Financial reporting was basic and did not provide enough information to make informed decisions promptly or with confidence.
- Manufactured equipment projects were unclear during production causing internal issues with the lack of interpretation of job builds. Over delivering more than the customer wanted and undercharging making lower gross margins.
- Warranty for inventory was rarely recouped or monitored with the supplier which costed the business money.
- Manual based processes creating inefficiencies. Day to day operations were unproductive and objectives everchanging.
- Service jobs were loss making and quotes were always underestimated.
- Debtors were not chased and invoiced promptly causing more delay in cash inflow.
02
Our Solution
03
Results
$26.5M
sales contribution
$5M
R&D Grant
5X
Net profits
- Increased 5x Net Profits under 18 month period.
- Sales contribution of $26.5M from networks, tenders, presentations, selling obsolete stock and equipment.
- Greater accountability achieved from Sales team R&D Grant successfully received of $5M.
- Increased gross profit margins to targeted budget and more.
- Sold products into new markets and targeted customers more strategically with greater Gross Profit margin per product and customer.
- Sold part of a business to an international buyer – which was no longer part of the clearly defined business strategy.
- R&D Grant successfully received of $2M.
- Improving job costing and reducing direct costs by 60%.
- Reduced indirect costs by 75%.
- Recouped warranty claims of $120k in 8 months.
- Acquired and merged a company which aligned to the core company vision and product offering.
- Expanded branches in other states and created 3PL opportunity to test the market.
- Reduced employee head count with improved productivity and change in manufacturing processes resulting in a saving $1.8M per annum of salaries and wages.
- Provided real live data allowed Management to take action instantly and deal with issues proactively.
- Improved customer service and satisfaction through systemised and consistent processes that were streamlined across Divisions. Confirmed with customer feedback, reviews and increased sales.
- Structured systematic approach to operations with a positive financial impact.
- Greater productivity due to clearly defined roles, responsibilities and accountabilities monitored through KPI reporting and performance appraisals.
- Clearer leadership approach for the Management team and improved culture.
- Improved employee performance and engagement with nurturing leadership and a constructive culture.
- Realigned employee benefits and streamlined all Award Wages to obtain unity and saving $150k per annum.
- Growth accelerated with strong foundations and confidence to continue on their journey with the team well equipped to achiever great heights.
- Established a Hire Rental business that is extremely successful.
- Opened Branches in three states across Australia and one manufacturing plant offshore.
- Improved Management reporting delivery from 14 days to 3 days and with greater detailed and summary insights that were meaningful.
- Successfully passed ISO9001 compliance audits.
