Starting situation
The business development intervention began in 2015 and involved a Polish company, a manufacturer of garden games. It has been in operation for 6 years already, has consolidated modest sales and a small profit, but is struggling to grow.
The Italian ownership, believing that there was untapped potential, entrusts me with the task of supporting the local manager-very good salesman, but with less management experience-to impart significant development to the business. The collaboration is still ongoing.
Business Development Commercial and Production
Although the initial budget did not have large sums of money, they began, from the very beginning, to recover whatever they could and allocate it to business development, focusing mainly on the European market. As early as the first year, people started exhibiting at 2 fairs, and this provided immediate feedback in sales.
Having gained confidence in the responses the products had in the market, the question of how to support, with the modest forces at hand, volume growth was addressed.
The analysis identifies which strengths of the enterprise:
- The commercial ability to understand market demands
- The technical knowledge needed to translate requirements into product designs
- the “finish,” as the center of the customer’s perceived product value.
Therefore, a course of tertiarization of low value-added production activities was started, concentrating the production department only in the finishing and assembly part. Reliable suppliers were found who could supply semi-finished products with the expected potential. Starting from scratch, in 5 years we have reached an outsourcing rate of more than 90% of these steps.
There has, in addition, been investment in the strengthening of the technical-design structure in order to be able to provide customized products to different types of customers and meet the different needs of the local markets served, as well as for commercial needs for product differentiation.
These choices proved to be key and the company was, thus, able to sustain volume growth from 2016 onward.
Acting otherwise, it would never have been possible to grow volumes to this extent and with this speed, for reasons of space, scarcity of properly trained manpower and organizational impact. Instead, the outsourcing of production has freed up internal resources, which have been allocated to production in house.
Another successful business initiative was the launch of an e-commerce, modest in size for the purpose of testing the results of this sales mode in the domestic market and training staff. The experience proved to be positive and was the useful premise for further, more ambitious development plans in the digital channel that are being implemented.
Management Control
From the very beginning, management by budget was adopted, building together with management a document that was rational and coherent, and that made explicit not only sales targets but also any foreseeable expenditures-a true budget. On a monthly basis, variances between budget and final forecasts are checked, adjusting forecasts as necessary; in November, a pre-consensus for the year is calculated.
Management has also evolved to accompany the growth; in the beginning, accounting was handled externally; today there is an ERP, an in-house administrative manager, and a completely revamped chart of accounts.
Human Resources
The main focus has been to train the in-house professionalism of the young and motivated, but limited-experienced team. So, plenty of room for mentorship, indication and training on best practices, not just the general manager.
The search and selection of a number of key figures was also taken care of.
Among the management innovations made was the adoption of an annual bonus plan linked to personal performance and business results, which introduced a factor of objectivity in salary management and allowed the structure to follow high growth without tears.
Results and Future Business Development
The numbers achieved do not need much comment; the strong growth in sales, quadrupled compared to 2015, is accompanied by a now consolidated double-digit EBITDA, which reached a level of around 18 percent in 2020, and a gross profit not much lower.
What was a micro company is now a pmi, but the ambitions of the ownership and management are not exhausted: the program for 2021/2022 is dense with projects.
A three-year development plan 2022-2024 will be drafted, which will be the rational basis for discussion of medium-term development and the structural tool for the execution of planned investments.
During the year, a new brand exclusively conveyed by e-commerce will be launched and the foundations for industrial accounting will be laid to achieve complete cost control.
