It was early October 2008 when an electric company based in Little Rock, AR requested our help to stop the financial bleeding that had been going on for years. There clearly was an acute sense of urgency and we immediately started mapping the operations step by step to identify major gaps and inefficiencies. The outcome showed 18 areas of improvements that had to be addressed right away!

One of them was the lack of adequate management control processes in place to monitor the field crews’ productivity during the day. That prompted a labor productivity study that revealed how employees were taking advantage of the current loose management style to work at a fraction of their capacity while still receiving the full pay. We then proceeded to modify the existing workflow, implementing radical changes that saved the company $265,000 in labor costs.

We also realized that the owner of the business, in charge for estimating new jobs, was using an unscientific methodology. Such method, based on our preliminary study, was producing a negative gross margin in more than half of the bids. We then created a cost-based calculator that accounted for all direct costs and factored in the proper overhead absorption rate to obtain the break-even price per each job. The calculator then allowed the business to plan for a pre-determined profit percentage before presenting the recommended price.

A revised accounts receivable collection procedure, an inventory control system (they didn’t have one), an improved procurement process, a new set of metrics to measure and monitor the business’ performance, and brand new rules of engagement in the field to improve efficiency and productivity were other key deliverables that we provided to the client during the engagement.

The client, after years of losses, saw a profit in 2009 thanks to a managerially savvy, operationally efficient and organizationally effective business.

A recently purchased pharmacy decided to hire us to improve the bottom line and to streamline the operations.

This independent pharmacy located in a small town seemed to have reached a plateau both in revenue and in profit, especially in light of the increasing competition from the national drugstore chains (CVS had just opened one block away).

After only a few hours onsite, we immediately noticed a few critical issues:

• The store coverage was way above what it was required based on traffic and revenue
• More than half of the pharmacy’s retail floor was dedicated to gift and home décor items; still, the pharmacy had no Point Of Sale system to track sales by category and therefore measure the performance by square footage
• The backroom was overfilled with obsolete inventory
• The pharmacy, although a McKesson’s customer, wasn’t part of the Health Mart network yet
• No mail-in prescription service was provided to customers

We then focused on addressing the aforementioned opportunities, in addition to putting together a strategic marketing plan that properly addressed the local competitive landscape, and a comprehensive, self-funded incentive plan to drive productivity while boosting employees’ morale.

A new operating workflow for pharmacists and technicians was developed, saving 30% of the time involved in processing prescriptions. A new store coverage model was created to revise the existing schedule and improve productivity by 40%. A series of financial tools were created to enhance management and measurement capabilities. A viable plan to dispose of the excess inventory was implemented without delay. The necessary steps to install the McKesson POS system were taken and a series of other interventions aimed at increasing the pharmacy’s profitability were performed with the highest degree of quality.

Thanks to our efforts, the pharmacy saved more than $395,000 and is projecting for 2009 a net profit of almost $1M.

This fun spot in the Minneapolis metro area was one of the very few local alternatives for the residents when it was established many decades ago. Today, it can count almost 200 competitors in a 5 mile radius. Company’s sales started eroding over time and the owners’ inability to manage costs and expenses led to bottom line losses during the past few years.

We noticed the lack of use of basic (yet absolutely critical!) restaurant management control tools. The ownership wasn’t performing any plate costing calculation to monitor the profitability of the items on the menu; the bar inventory was performed only monthly, instead of daily (or even after every shift) and was improperly done; no reporting was in place to calculate the average ticket per server and therefore measure the wait staff’s performance; the company didn’t use a budget to establish levels of income, costs, expenses, and to pre-engineer a profit.

Additionally, while onsite for several days, we observed an extremely low traffic between the opening time (11 am) and 3 pm. Further study of historical sales figures by hour for the past 12 months confirmed that the restaurant was in fact spending a significant amount of money keeping its doors open for 5 hours from Monday through Thursday just to satisfy a handful of patrons.

Additional marketing and strategic considerations suggested that the business needed to rethink its branding approach to find a more targeted niche, given the now wide presence of competitive alternatives in the area.

We then developed a new business plan focused on a very specific value proposition that differentiated the restaurant from its competitors. The plan also called for a reduction in the hours of operations, a revised menu, live entertainment during weekend nights, and an innovative and more targeted marketing and advertising plan to re-launch the restaurant and capture a larger market share.

By creating and installing all of the necessary programs and tools they needed to effectively manage their operations, we enabled the owners of the restaurant to save $118,000.

By sticking to the budget we developed together, they expect to achieve a net operating profit of $200,000 in 2009 after years of losses.

The eventual implementation of the re-branding initiative further increased this number and, most importantly, set the stage for a new season of profitable growth in a saturated market.