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Real Results Case
Study 2: This company's management thought all they needed was more financing. With declining sales and increasing losses, that wasn't possible. And it wouldn't have solved the problem anyway. We cut a computer reseller's break-even point by 40%; despite temporarily decreased sales, and the bottom line improved from loss of 5% of sales to a profit of 10%.
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The Company A
computer reseller in a niche market. Rapidly advancing technology
and generally declining prices caused the company's margins to
shrink drastically. Although
sales were good, revenues were not supporting the company. Much
of the financing was being done involuntarily by suppliers. The
major lender was owed more than $3,000,000 and was about to call
the loan. Management of the company began looking for replacement
capital. However, because of the company's financial condition,
the more obvious sources of new funds were not available. Goldberg
was engaged to locate financing. Goldberg
surveyed the company's situation and suggested that outside capital
would not be the best answer, even if it were possible. Because
of the entrepreneurial management and a lack of operational focus,
systems throughout the company were inefficient and ineffective.
Goldberg worked with management to refine the warehousing, administrative
and service functions, negotiated with the major lender and other
creditors, and provided sales and management training to the company's
employees. The
break-even point was reduced by 40%, and the lender forgave more
than half the debt. At the end of the engagement, the improved
systems were continuing to make the company more profitable.
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