1. Don’t Just Survive…. THRIVE!!
How to Start Growing Your Business Profitably in Tough Times
Presented by John E. Calia, Managing Partner June 25, 2009
2. Who is TATUM?
The largest consulting and interim management
organization focused on the Office of the CFO
37 offices nationwide
1,000 professionals primarily in the U.S.
Established in 1993
Click Here to Add Slide Headline
2
3. Frequent, rapid transition is the norm for business
today
Competitive Landscape
Changes
Merger?
Sale?
Acquisition? IPO?
Infrastructure upgrade
Organizational Financial Difficulty
Transitions
Click Here to Add Slide Headline
Product Expansion
Rapid Growth
Start Up
Revenues
LAUNCH
$0 $X.0 Billion
3
4. Tatum Survey of Business Conditions Summary
As of June 1, the Tatum Index of Business Conditions reached its
highest level since September 2007, just before the Recession
began. This is the 7th consecutive month of increase in the Index,
further confirming that business conditions, and the economy, are
beginning to recover.
The improvements are not dramatic, but they are consistent in overall
positive trend.
Click Here to Add Slide Headline
Financial markets have stabilized, and demand is improving broadly. Our Survey
detected the beginnings of the end of the Recession in the first quarter, and the
early indications continue to suggest that the Recovery will begin in earnest in the
second half of this year.
The strength in the outlook for employment and “Cap-Ex” shows a gathering
confidence that the worst is over and a recovery is under way. If the current and
recent trends continue, then we believe the recovery will ultimately be declared to
have begun in the second or third quarters, and that the third quarter will likely
have a positive rate of real growth.
4
5. Tatum Index of Business Conditions
Click Here to Add Slide Headline
5
6. “This economic crisis doesn’t represent a cycle. It represents a reset.
It’s an emotional, social, economic reset.”
Click Here to Add Slide Headline CEO, General Electric
Jeff Immelt,
November 2008
6
7. Decision making during uncertain times
Companies that have figured out how to
survive the economic crisis now must figure
out how to thrive
You can’t do business the same way you have in the past
Consumer spending behavior is adjusting to the economic times
Click Here to Add Slide Headline reductions in overhead expense
Compressed margins have forced
Capital is more expensive and harder to find
Good times have masked inefficiencies.
Customers, products, people and processes may not perform as
they have in the past
Downsizing doesn’t deliver growth
Government activity defines new market opportunity 7
8. What does a “Reset” mean to your business?
Re-evaluate to AddRe-focus your
Click Here Slide Headline Create a new Plan based
customers, team creating framework for upon objective
people, new systems of making measurements
processes and accountability & decisions
sales channels compensation
8
9. Let’s Review
Focus on Cash Flow Focus on improving margin
Change the corporate culture
Convert assets to cash
Reduce S,G & A
Growth
Profitability
Click Here to Add Slide Headline Time
Control
To
Analyze profit by segment THRIVE!!!
Identify growth opportunities
9
10. CONTROL -- The Tatum Approach -- 1Q 2009
Focus on your core business
Eliminate unprofitable or marginally profitable activities
Scour your balance sheet
Convert Assets to Cash
Make your workforce more flexible
Cross functional workforce
Click Obsess aboutSlide liquidity
Here to Add your Headline
13 week rolling cash flow forecast
Re-plan for ’09
Re-forecast often
Remember to lead
Your people need to hear the truth directly from you
10
11. PROFITABILITY -- Surviving to Thriving – Goals
Improve:
Gross margin
Cash Flow
Efficiency
Business valuation
Click Here to Add Slide Headline
Employee morale
Tie performance indicators to
performance
Capital availability
11
12. Case Study – Accounts Receivable Mgt. Company
US Subsidiary of Canadian Company
$50M Annual Revenue
22% Gross Margin ($11M)
Net contribution = ($2M)
45 Offices throughout the US
Click LargestAdd Slide Headline card and student loans
Here to clients were credit
Strategy based upon Zip Code distribution of
accounts.
12
13. Steps to Achieve RESET
Dig Deeper
Focus on Opportunities
Shake up the organization
Create new tools for making decisions
Re-plan
Click Here to Add Slide Headline
13
14. Dig Deeper
Recognize that good times mask inefficiencies
Segment and analyze profitability:
Markets
― Core markets are those that have an
expressed need for your product or
service
Customers
Click Here to Add Slidenot necessarily the best
― The biggest are Headline
― Profitability goes beyond gross margin
Products
― Product line profitability analysis is
essential to determining where to invest
resources
14
15. Focus on opportunities
Technology upgrade
Look for applications that improve quality
Supply Chain efficiencies
Outsource commodity services/products
Partner with niche players with unique
capabilities
Click New markets Slide Headline
Here to Add
Assess impact of government activity
― Healthcare, energy, financial services, primary
manufacturing
15
16. Case Study: ARM Company
Rethink the Strategy
Changing market for long distance service
New technology affordable for smaller businesses
Conclusion: consolidate operations
Review customer profitability
Largest customer (7% of revenue)
Click Here to Add Slide Headline to negotiated rate
Lower gross margin due
Disproportionate allocation of overhead
Conclusion: dump the largest customer
New markets
Banks in consolidation
Growth markets: healthcare and cell phones
16
17. Shake up the Organization
Analyze capacity to Lead not manage
Delegate and train subordinates to no longer
need their manager
Reduce complexity
― Binary decisions (go – no go)
― Day to day: what to blow off rather than what to complete.
“Good practices” not “best practices”
― Focus on sustainable processes and clear accountability
Click EvaluateAdd Slide Headline
Here to your team’s adaptability to the new culture
An ‘A’ attitude with ‘B’ talent prevails over ‘A’ Talent with ‘B’ attitude
Walk around
Solicit feedback from the front line
Identify the real process owner
Deal with the rumor mill frankly
Make change that is PHYSICAL and VISIBLE
17
18. Case Study: ARM Company
Closed 18 branch offices
Eliminated 200 jobs (from 700 to 500)
Terminated leases
Cut HQ staff in Montreal
Reduced US Headquarters staff
4 Vice Presidents
Click HereRegional ViceHeadline
1 to Add Slide President
Associated support and admin staff
Re-vamped sales organization
Increased commissions for new clients
Improved client results and grew revenue
Better focus at a branch level
18
19. New Decision Tools
Operations
Productivity improvement
Efficiency of overhead/infrastructure
Revised KPI’s
Organization
Accountability
Compensation systems that reward performance
Click Long term Add Slide Headline
Here to planning
Financing options
New markets
Strategic Alliances
Framework for making decisions
Tracking results vs. assumptions
Marketing/product development
19
20. Case Study: ARM Company
Before After
Revenue $50M Revenue $55M
Gr. Margin $11M Gr. Margin $13M
GM % 22% GM% 24%
S,G & A $13M S,G & A $7M
Click Here to Add Slide Headline
Contribution ($2M) Contribution $6M
20
21. Why Tatum?
Strategic perspective to assist the internal finance leadership, who
are often resource constrained and focused on daily urgent needs
Operating executives with senior level execution expertise in
finance and technology
Senior perspective means we are not influenced by best case
forecasts
Experience completing hundreds of assessments across all
Click industrialAdd Slide Headline
Here to sectors means we quickly get the job done
Help ensure success when capital markets are in turmoil for an
indefinite period
21
22. Solutions for the Office of the CFO
Interim management – Consulting – CFO Roadmap™
Click Here to Add Slide Headline
Tatum - create more value™
John.Calia@TatumLLC.com
954-654-7848
22
