ANALYSIS OF STAGE V PERFORMANCE with Scott Geller

Scott Geller - "The CFO Perspective"

​SHOW NOTES

1. Show: ANALYSIS OF STAGE V PERFORMANCE 
   1. Financial perspective of your Stage V business
   2. Do we Reinvent
   3. Thought process
   4. Decision process to address what is next and making to Stage IV
2. What are the starting points and what do you need to know first ...
3. The decision to reinvent, Why exactly did we NOT sell when top dollar was possible. Obviously there was a compelling end game envisioned during the decision process.
   1. Point of selling
   2. Lifestyle business - "cool" approach is to sell, but it's ok ...
4. Made the decision so what next ...
   1. Retained earnings available for internal growth investment. How much of this can we self-finance, and how much should we?
5. Amount credit available. Don't know where you are but it is time to gain leverage from your success and stop financing everything from your pocket.
6. Sources of additional capital for growth. This choice is for larger purchases that are beyond normal financing and consider manufacturer financing or leasing.
   1. Discuss those sources and uses of credit
7. Example decision point
   1. Low on cash with a parent
   2. Wrap up the business and re-emerge with the parent ... ie sell
   3. Reinvigorate the business -
      1. Capital needs for platform
      2. Rebuilt the platform for easier use and connection
      3. Had a restructure and promotions
      4. Looked at the sales staff ... compensation, direction, process, leadership involvement
   4. Looked for capital and decided on the parent and pushed through to reach the Stage IV
8. Making the Decision on What to Reinvent.
   1. Not necessarily mean a new company
   2. Make changes to continue growing or increase profitability​
   
   
   
   
   
   
9. Giving your analysis in Stage V success with maximizing Capacity, Margin, and reducing Fixed costs;
   1. Capacity - Operating
      1. Ability to sell more
         1. products or services
         2. automate,  time efficiency, working through and getting rid of non-value added steps, processes
   2. Margins - levels of margins; know them; what impacts them
      1. Gross profit and margin
      2. Operating Margin at EBITDA
      3. Net Margin at NI
      4. Project, product, divisions, LOBs margins
   3. Fixed costs - reduce, leverage, do MORE with same or less fixed
      1. Insource, outsource 
10. What were the results of the Root Cause Analysis: the 5 M's - Methods, Manpower, Materials, Machines, and Management;
    1. Methods - processes and procedures
    2. Manpower - Who, how much time, right person, right position, knowing the skills or interests or needs
    3. Materials - outsource / insource; RFP and evaluate every few years
    4. Machines - build vs purchase vs lease
    5. Management -
11. How to make the decision on: which initiatives to engage in, which to pay for internal, which to seek outside funding.
    1. Sources of funding
    2. Funding from investors
    3. Credit options
       1. Line of credit - working capital
       2. Loans - growth and purchases
       3. Leases - equipment,
       4. A/R Lending - support inventory
       5. Subscriptions
12. Shift the Analysis to Market Share, Market Penetration, margin per Product & Service Line, margin per Customer - anything being left on the table?
13. RECAP: 
    1. Decided not to SELL
    2. What to do with the business now
    3. Credit options
    4. Walked through steps to take
14. TOPIC #3 - WHAT YOU NEED TO DO
    1. ​Phase I: Capacity vs. Sales
       1. Capacity (ability to produce more) or Sales (ability to sell more) - which has the greatest variance between what was possible and delivered in Stage V.
          1. The rule of 25% - how much imbalance can you allow in the short term? Expand capacity by 25% over current sales and upgrade speed of capacity growth to match the selling cycle.
          2. Based on #1 & #2, prioritize your list of what must happen for Capacity Improvements.
    2. Phase 2: The Offer
       1. Does our current Product and Service Lines need an upgrade to remain competitive?
       2. Does our current Product and Service Lines need an upgrade to gain more market share?
       3. Does our current Product and Service Lines not match what the customer would buy today or in the near future?
       4. Does our current Product and Service Lines fail to compete against new offers from competitors?
       5. Based on #1 - #4, prioritize your list of upgrades or new offers that must happen for greater market share and penetration.
    3. ​Phase 3: The Decision
       1. Compare the lists and indicate relationships between Capacity & Sales with Upgrade or New Offer.
       2. Prioritize the list starting with the most critical - holding market share.
       3. Estimate the funding requirements for each - fully funding each item to determine budget, then determine what can be done.
       4. Apply the entire financial picture ... cost, savings or additional revenue (generating?)

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