EPISODE A6.002 Analysis of Stage V Performance

Introduction
New week, same perspective with greater conviction.

After being attentive to the weekend news about the continued arbitrary government response to COVID19, there is only one course for the business owner - ignore their word salad of concern and work around it. 

Being passive and waiting for the right decision will put you out of business. There are only two ‘people’ who have that right - you and the customer.

IBGR is committed to your success and our programming is for legal aggression (OK, I’ll make it nicer - assertiveness) to open, stay open, and be profitable.

Unlike the rest of society - we have your back.

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Show Objectives
​​As a Business Owner I need to understand what happened from a financial perspective during our successful attempt to grow the business to it's full potential (Stage IV).

Now that the decision has been made and implemented to sell or not sell the business (if you are reading this - we didn't sell), the issue is what investments do we need to Reinvent.

The second decision, and challenge, is how to make it happen. This is very different than anything encountered to date because the future is being placed into the hands of a mixed (internal & external) project team to innovate and produce the future. Sounds like Mr. Toad's Wild Ride.

The Big Decisions:

1. 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.
2. Retained earnings available for internal growth investment. How much of this can we self-finance, and how much should we?
3. 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.
4. Sources of additional capital for growth. This choice is for larger purchases that are beyond normal financing and consider manufacturer financing or leasing.

What You Need to Know
Making the Decision on What to Reinvent.

• Giving your analysis in Stage V on Stage IV's success with maximizing Capacity, Margin, and reducing Fixed costs;
• What were the results of the Root Cause Analysis: the 5 M's - Methods, Manpower, Materials, Machines, and Management;
• How to make the decision on: which initiatives to engage in, which to pay for internal, which to seek outside funding.
• Shift the Analysis to Market Share, Market Penetration, margin per Product & Service Line, margin per Customer - anything being left on the table?

What You Need to Do
​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.
   
2. 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.
   
3. Based on #1 & #2, prioritize your list of what must happen for Capacity Improvements.

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.
   

​Phase 3: The Decision

1. Compare the lists and indicate relationships between Capacity & Sales with Upgrade or New Offer.
2. Repriorize 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.
   

Next Show
Episode A6.003: Review Stage VI Plan - focus on Planned Investments - Equipment, Platform, People.