The client in this case was requested by its lender to work with a Turnaround Management consultant because it had tripped a covenant on its loan and had lost the confidence of that lender. While this is a classic turnaround situation, this client had lost its way due in large part to marketing, sales and top-line issues. Overall, there were 4 specific winners in this turnaround case:
- The Middle Market, US based Consumer Company that is the direct Client
- The Clients’ lender
- The Turnaround Management (TM) firm on the case
- Michael Roth Advisors (MRA)
The Company in this case has long been one of the leaders in its niche and had been on a steady and profitable growth trajectory for many years. Despite a down trend in the Company’s industry in 2008 – 2010, the Company increased top-line revenues. However, in 2011 and 2012 the company made a series of costly mistakes and lost several key sales and marketing executives as well as several key customers. In addition, aggressive competitors stole share from the company and sales abruptly declined.
After a brief period of analysis, the TM firm with MRA’s assistance stabilized the business and its cash flow through: cost cutting, re-forecasting and by implementing a new pro-active sales and marketing plan. The sales and marketing plan found top-line opportunities in multiple areas, all without the need for new or incremental spending.
The multiple areas of growth that were found for the company were in new products, new distribution, sales force effectiveness, web based marketing and in store marketing opportunities.
The plan was based off of the analyses that MRA completed for the company. That fact based plan indicated that the company could grow without the need for new capital by:
- Representing its stable of new products that were not effectively launched in the prior year
- Improving its in-store marketing approach and consumer take-away by redirecting existing COOP budgets
- More aggressively using B to B and B to C web based communications and selling
- Launching a new distribution drive in target new and lapsed old accounts
- Line and SKU rationalization
- Sales force productivity initiatives
- Improvements to the use and leverage of existing advertising funding
The plan began to be implemented almost immediately after submission and it has had some immediate impact. In the two most recent months, the company has significantly improved prior year’s sales and is on track to achieve double digit growth in the current fiscal year.