Sales, marketing and profit for an electronics company
The company produced a unique product but had lost money for the past three years. Its accountant was trying to help it to raise finance by remortgaging its factory. The company’s sales were down, and we were asked to meet the MD with a view to running a sales drive.
Before meeting the MD of the client company, we collected the detailed accounts from the accountancy firm and noted that the business was running at breakeven level only!
When we met with the MD we advised him that it was essential to analyse the profitability of his products before embarking on any sales drive.
What we did
As existing business performance measurements were limited, we started from scratch. First, we talked to the production manager, who was able to produce information on costings. We also set up a spreadsheet showing the last sales prices and the calculated margins. We then ranked the products by margin. This revealed that 47% of all products sold in the previous six months had been sold at low or negative gross margins!
We reviewed the production plan on orders booked for the next two to three months. From this information we drew up an action plan per client and product.
We trained the MD and his team on negotiating and raising prices, and identified opportunities to change specifications and reduce costs where possible.
Customer negotiations started immediately, and within a few weeks price increases were secured.
We then reviewed the features and benefits, marketing literature, website and mailshot enclosures. We also worked with the MD on clarifying his accounts and putting in key performance indicators.
The order book improved. The company went into profitability within weeks. Six months later, at the year end, the company had covered its losses and achieved a small annual profit.