And Lifts EBITDA from 0.07% to 6.44%
In 18 Months By Working With Rob Hanly
When the privately held company first reached out, it was in dire straits.
Reports from the owner-operator showed that cash flow had almost entirely dried up, debt was mounting, and profits had disappeared.
But just 18 months later, everything was different.
The company had increased cash flow, dramatically increased EBITDA, paid down debts, and successfully adjusted its strategy in the middle of the COVID-19 economy.
Read on to discover how it achieved these results.
▲ 27.09%
GROSS PROFIT
MARGIN
Was 41.12%, now 52.26%
▲ 6.37%
EBITDA
MARGIN
Was 0.07%, now 6.44%
▼ 22.34%
CASH CONVERSION
CYCLE DAYS
Was 82.15, now 63.79
▲ 960%
RATIO OF REVENUE TO
OPERATIONAL CASH FLOW
Was 1.54%, now 16.33%
DIAGNOSIS
& OPTIMISATION
The first step was to analyse the company's performance and identify what was being done wrong.
Once the root cause was identified, we could fix the root issue begin to restore performance.
MAXIMISATION
OF OPPORTUNITY
Once the issues in the system were identified and fixed, we began to scale our efforts and maximise profits.
This focus on doing more of what works reduced stressed, and increased confidence.
EVOLUTION
OF BUSINESS
While the business was producing profits and cash was in the bank, the economy was changing.
With my 100 Day Planning process, we quickly adapted to the COVID-19 economy and increased performance year on year.
(Please note that due to agreements, I cannot share the client's name publicly)
Identifying where a business is broken can be overwhelming.
That's why I first walked the owner of the company through a proven, proprietary process.
DIAGNOSIS PHASE ONE: THE CONSULT
The first half of the diagnosis process is qualitative.
In a free, 60 minute consult we discuss the business, using my 144-point checklist as reference, we zero in on likely issues and problems.
Based on our discussion, I believed I could successfully solve the anecdotal problems.
The next step was to get into the numbers.
DIAGNOSIS PHASE TWO: THE NUMBERS
The second half of the diagnosis process uses proprietary software to analyse the business' historical financial performance.
Exploring trends and relationships, I identified how observed issues were affecting financials - eating up profit, destroying cash flow, and putting the business at risk.
The only question was - what was causing this?
DIAGNOSIS PHASE THREE: THE RESULT
What I discovered through this process was that internal systems and controls were slipping, resulting in a financial performance drop.
Specifically I discovered three core issues:
- Cash Conversion Cycle was improperly managed, which ate into available cash and forced the company to take on debt to cover its costs
- Weak Profit and Loss Management resulted in bloating COGS and runaway Operational Expenditures, eating up potential profits and cash
- The company lacked an efficient and effective management system, creating a lack of alignment in the team - and confusion about what really matter
As a result of this issues, the company had lost profitability and its ability to produce cash - and was at an increasing risk of going bankrupt (based on its Altman Z-Score).
We had found the root cause of our issues. Now it was time to get to work.
To really understand where a business is broken, you need to assess both observations from the owner and the financial reporting
"Rob was the first one who didn't act like he already knew the solution.
Instead, he spoke with me, and then jumped into the financials and took a look.
From there, it was basically "Let's start here, let's make sure the business is healthy. And we'll build up from there."
- The Client
After identifying the core issues with the company, I set to work advising the owner on how to solve them, and providing the specific tools and systems they'd need.
STEP ONE: FIXING CASH CONVERSION CYCLE
"Revenue is vanity, profit is sanity, but cash is king."
To keep the company solvent, the first step was to get cash back on track.
To do this, I guided the owner through my cash flow projection tools, teaching him how to use it in his business.
This gave him greater clarity about the future of the business' cash, and confidence in decisions across accounts and inventory.
By following the given advice, the client was able to improve sales throughput and cash flow management, reducing his Cash Conversion Cycle by almost 25% - contributing to an increase of 10x in operational cash flow
STEP TWO: FIXING EBITDA
Once cash flow was addressed, we began to identify the profit killers within the company.
By guiding the owner through a deeper income statement analysis, we found the profit problems in the company. From unprofitable SKUs to non-revenue producing line items that had gotten stuck on the balance sheet, we began to remove anything that threatened efficiency.
We also began holding expenses to greater accountability, ensuring we got the maximum return possible from each.
As a result, EBITDA began increasing - eventually shooting up from 0.07% to 6.44%.
STEP THREE: ADDRESSING MANAGEMENT
The final issue we faced was a lack of an efficient and effective management system.
Goals weren't clear. Staff didn't know exactly what success looked like in their job. People were not being held accountable in a predictable, consistent fashion.
And as a result, chaos reigned supreme.
By introducing a handful of high-impact, low-complexity management structures and rhythms, we were able to get employees on the same page.
The result was a less stressful, more confident and more focused team.
Understanding the root problem isn't enough. Once you've addressed it, you need to fix it.
"Through our work, I was beginning to be able to see into the future and know "oh, okay, there's cash in there, and it's coming back."
Rob was able to tell me what to look at to know whether the business was doing well. And when you see that, you can sort of "let go" and start focusing on the future."
- The Client
Understanding the root problem isn't enough. Once you've addressed it, you need to fix it.
"Through our work, I was beginning to be able to see into the future and know "oh, okay, there's cash in there, and it's coming back."
Rob was able to tell me what to look at to know whether the business was doing well. And when you see that, you can sort of "let go" and start focusing on the future."
- The Client
After identifying the core issues with the company, I set to work advising the owner on how to solve them, and providing the specific tools and systems they'd need.
STEP ONE: FIXING CASH CONVERSION CYCLE
"Revenue is vanity, profit is sanity, but cash is king."
To keep the company solvent, the first step was to get cash back on track.
To do this, I guided the owner through my cash flow projection tools, teaching him how to use it in his business.
This gave him greater clarity about the future of the business' cash, and confidence in decisions across accounts and inventory.
By following the given advice, the client was able to improve sales throughput and cash flow management, reducing his Cash Conversion Cycle by almost 25% - contributing to an increase of 10x in operational cash flow
STEP TWO: FIXING EBITDA
Once cash flow was addressed, we began to identify the profit killers within the company.
By guiding the owner through a deeper income statement analysis, we found the profit problems in the company. From unprofitable SKUs to non-revenue producing line items that had gotten stuck on the balance sheet, we began to remove anything that threatened efficiency.
We also began holding expenses to greater accountability, ensuring we got the maximum return possible from each.
As a result, EBITDA began increasing - eventually shooting up from 0.07% to 6.44%.
STEP THREE: ADDRESSING MANAGEMENT
The final issue we faced was a lack of an efficient and effective management system.
Goals weren't clear. Staff didn't know exactly what success looked like in their job. People were not being held accountable in a predictable, consistent fashion.
And as a result, chaos reigned supreme.
By introducing a handful of high-impact, low-complexity management structures and rhythms, we were able to get employees on the same page.
The result was a less stressful, more confident and more focused team.
Once the company had been optimised, maximising efficiency, it was time to begin increasing the company's overall performance.
Because the diagnostic stage had created a clear picture of the business model, it was clear to see where the levers of growth were.
First, to scale sales, the company began to implement new sales training and tools.
By directing the revenue they generated through the optimised business, the dollar value of profits and cash began to rise.
With a sales team in place and humming, the company then began to search for new sources of revenue.
This lead to the introduction of new marketing channels, which in turn further increased the dollar value of profits and cash.
Where the diagnosis and optimisation steps required analytical attention to find out what is wrong with the business and fix it, the maximisation stage required consistency.
By using the tools and systems he had been introduced to, the company was able to effectively manage the growth of his company - without forgoing profits and cash.
At this stage, the company was finally healthy. But we weren't done yet.
Once the business is operating efficiently, it's time to begin scaling what works and removing friction points
- The Client
A business can never rest on its laurels.
After an existing model or opportunity has been maximised, it must continue to evolve and adapt.
Normally, this takes on a fairly conceptual path. Looking for acquisitions, expanding into new products and markets, taking advantage of new technology.
And while that is challenging enough, this client needed to evolve in the face of something far more difficult:
- The COVID-19 pandemic hit, completely altering the spending and lifestyle habits of the economy
- The primary sales channel - retail - was in turn adversely affected, threatening to cripple sales and adversely affect the business
This meant that - almost overnight - the landscape for the client had changed.
However, because the company had engaged with me, they were using the 100 Day Effectual Planning process.
And as a result of this process, instead of seeing their sales demolished, they were able to quickly establish new sales channels and break revenue goals.
This process is not complete, however.
Now that the company is healthy and thriving, we keep doing what works - using the tools and techniques that have made them successful as part of our arrangement.
Business is about making money. To do that, we need to continually find and take advantage of opportunities in dynamic environments. The best way to keep a business evolving is with a proven process.
- The Client
December 2020
Business is about making money. To do that, we need to continually find and take advantage of opportunities in dynamic environments. The best way to keep a business evolving is with a proven process.
- The Client
December 2020
A business can never rest on its laurels.
After an existing model or opportunity has been maximised, it must continue to evolve and adapt.
Normally, this takes on a fairly conceptual path. Looking for acquisitions, expanding into new products and markets, taking advantage of new technology.
And while that is challenging enough, this client needed to evolve in the face of something far more difficult:
- The COVID-19 pandemic hit, completely altering the spending and lifestyle habits of the economy
- The primary sales channel - retail - was in turn adversely affected, threatening to cripple sales and adversely affect the business
This meant that - almost overnight - the landscape for the client had changed.
However, because the company had engaged with me, they were using the 100 Day Effectual Planning process.
And as a result of this process, instead of seeing their sales demolished, they were able to quickly establish new sales channels and break revenue goals.
This process is not complete, however.
Now that the company is healthy and thriving, we keep doing what works - using the tools and techniques that have made them successful as part of our arrangement.
The results in this case study were achieved by using the D.O.M.E. framework.
Developed in the trenches of real businesses, and proven generating real results, the DOME Framework transforms your businesses into a high cashflowing asset that you can be proud of...
Giving you more time, security, and peace of mind.
It achieves this because the DOME Framework gives you clarity on what's creating friction, and what you need to do about it.
To date it has been proven in industries including supplement sales, information publishing, media, insurance brokerage, screenprinting, direct response marketing, and design.
To apply for a no cost, no obligation consultation about whether the DOME Framework can help your business, click the button below and answer a few short questions.
Other case study results include:
- Reversed falling revenues in a niche supplement company in 30 days - and then delivering their best ever month of sales within just four months - after identifying the one strategic element was missing
- Injected millions of new revenue into a publishing company in under two years (at a 50% profit margin) by identifying the one marketing mistake it was making, and addressing it
- 10x'd the monthly revenue of a fitness company in under 60 days by making one change to their sales process (this also lead to a 4x increase in their subscription based revenue)
- Found tens of thousands of extra dollars in profit for an executive coaching company in under 20 minutes - and all they had to do to secure it was send two emails in the next 48 hours.
Rob has forgotten more about marketing and business strategy than most business owners will ever learn.
Connor Grooms
Founder, BaseLang
Rob's an expert at finding hidden money and untapped profit sources in businesses. That's why I've been hiring him for years.
Craig Ballantyne
Owner, Early To Rise
Under Rob's guidance, we10x’ed our monthly revenue, 4x’ed our membership subscriptions, paid off all debt, and secured a government contract with US Army Special Forces.
Jordan Smothermon
Atomic Athlete