financial outcomes as well as calculate the related earnings that would support debt financing for the acquisition. The acquisition was only including the purchase of AR that was 60 days or less old, inventory, and equipment; there was no earnings premium payout. Such a fact made justification of the investment less challenging and risky.

What we did
We secured the under lying data from the to be acquired business and analyzed it to determine cost savings and revenue opportunities. Since the acquired business had been run into the ground and was being forced into bank liquidation it was clear that the current ownership didn’t care about the business anymore. We created a cross over map of the to be acquired GL account structure to our client’s so data could be loaded into the data warehouse tool allowing for a comprehensive analysis within the ongoing operations of our client. By doing so we were able to call out how the acquired business was going to impact the client’s existing business. Our reports were a mix of operational  analysis and bank credit support.

Outcome
Our analysis demonstrated that through a combination of real estate moves and consolidations in conjunction with administrative staff reductions that the acquisition made financial sense. Since the previous ownership had neglected and “milked” the business, plus the fact that management had several years early entered into lease agreements for very expensive warehouse locations and added to the top of that extensive spending on vehicles and cosmetic items, it was no surprise when performance fell apart. Our analysis couldn’t predict all possible issues in the grand scheme of the purchase, but it accounted for the most significant and riskiest pieces. Plus the acquisition gave our client a larger customer base without a premium and knocked out one of the largest competitors in the same market.

We reviewed their bookkeeping processes, including all the items used for billing and costing along with the physical process of entering, recording and managing the flow of data through their system and the related amount of detail. We spent time with their bookkeeper to better understand the processes. They were very helpful in uncovering time wasting activities along with bringing to light the improvement opportunities.

Our conclusions were that their processes entailed far too much duplicate data entry and management. We recommended a reduction in the complexity of the item list based on billing history which supported that the client was really only using 20% of the billing items. Since the devil is in the details our recommendations were focus on the 20% and then make the 80% bucket a smaller list but allow for the memo line to contain detail. Since the majority of their work was custom the needed for detailed items was less relevant on a macro level.

Our process improvement recommendations reduced workload by an estimate 30% in the end giving the administrative function more time for analytical work

Growing a business is more than getting growth for the sake of growth, it’s about creating and executing strategies that will drive true profitable growth at a bottom line. To that end accelerating growth is an important factor, but not to the point where it puts too much stress on an organization’s quality of customer service, which if bent to much can derail even the most well thought out and executed strategies.

CUSTOMER VALUES

To accelerate business growth in a profitable fashion one must understand what the customer “values” in the purchasing decision, and likely these drivers can be different, but we’d say that is a “need” or “want”. Countless articles have been written on the topic of enhancing business performance and I am sure we could debate this issue over and over and find reason to agree that there are likely several foundational strategies that in the end drive profitable business growth. In the many years that I’ve been involved in roles as a business analyst one constant thing seems to stick in every organization, managing costs and driving those down to the lowest level possible. While I agree that managing costs to a low level is a good idea, it can kill a brand and potentially distract management from a far more powerful approach, namely managing gross margin dollars in conjunction with being efficient and effective on operating expenses. Since labor is the typically the single biggest costs in a business that’s where organizations try to control cost by driving down salaries and benefits without thinking through the resulting quality of work output they get in return. This concept runs wild across North American companies and arguable those employees typically get less economic benefit compared to most industrialized nations in my opinion.

VALUE CREATION

I’d argue that accelerating profitable business growth requires a fresh look at a business cost model that emphasizes value creation and performance rewards for team members that drive the value. In service organization this likely has a more meaningful impact, but since manufacturing organizations deal with quality and defect issues in a more direct and glaring way it shouldn’t be underestimated as to the value of matching performance rewards with organizational accomplishments. In a privately held organization this is a far more achievable goal than in a public one where shareholders have a very short term focus.

I’ll discuss continuing concepts on this topic over the next few months.

The acquisition was only including the purchase of AR that was 60 days or less old, inventory, and equipment; there was no earnings premium payout. Such a fact made justification of the investment less challenging and risky.

Action
We secured the under lying data from the to be acquired business and analyzed it to determine cost savings and revenue opportunities. Since the acquired business had been run into the ground and was being forced into bank liquidation it was clear that the current ownership didn’t care about the business anymore. We created a cross over map of the to be acquired GL account structure to our client’s so data could be loaded into the data warehouse tool allowing for a comprehensive analysis within the ongoing operations of our client. By doing so we were able to call out how the acquired business was going to impact the client’s existing business. Our reports were a mix of operational  analysis and bank credit support.

Outcome
Our analysis demonstrated that through a combination of real estate moves and consolidations in conjunction with administrative staff reductions that the acquisition made financial sense. Since the previous ownership had neglected and “milked” the business, plus the fact that management had several years early entered into lease agreements for very expensive warehouse locations and added to the top of that extensive spending on vehicles and cosmetic items, it was no surprise when performance fell apart. Our analysis couldn’t predict all possible issues in the grand scheme of the purchase, but it accounted for the most significant and riskiest pieces. Plus the acquisition gave our client a larger customer base without a premium and knocked out one of the largest competitors in the same market.

So if the cause of poor service stems from employees not caring or caring less, then what do organizations do to fix the issue? Changing attitudes of employees and their view of work is not something is likely easily fixable. More pay, better benefits, or something else? Partly the issue is likely due to changing views on work and attitudes. But purchasing patterns are seemingly changing as more people buy stuff online. There’s also likely a disconnect between how things are priced and what people are willing to pay, which in turn drives gross margin available for payroll. Higher gross margin gives an organization more options in resource availability.
If performance goals are tied to meaningful rewards that employees are attracted to then outcomes will likely be stronger service, happier employees and more repeat business. Then it becomes an exercise in uncovering the intangible rewards that the employees value. A look at the list of the top ten most admired companies to work for is excellent measurement tool for what has worked in another environment. Granted not all environments are created equal, nor is it likely reasonable to conclude that from market to market rewards carry similar value, but it’s a starting point.
What seems to be missing is this focus in the retail sector. There are a few larger companies that come to mind as leading the service initiative, including Nordstrom, J Crew, Starbucks, REI and Verizon Wireless. Granted it may not always be easy to find someone, but when you do they seem ready to jump in and help. On a recent visit to Dick’s Sporting Goods I literally had to wonder around the store to find someone to help me and when I did they seemed like it was a major request. When I asked for help with shoes and they never asked me if they could go get a size, I had to ask them. It’s crazy. But so many retail stores are non-commission and people aren’t paid well and the work hours can be a drag. As a counter example I was recently trying to get more detailed product information on protein bars. I had purchased product from Target of course, lots of luck finding someone to help you and when you do they just say “aisle 9”, never mind to show me. Since I was still confused about which products from the vendor I want to consume when I decided to call Nestle. It was an incredible experience. The people I spoke to were friendly and knowledgeable. I am a big advocate of quality products and I’ve long tried to purchase them where possible. For example Cliff Bars, but every time I call no one answers. On contrast Nestle appears to have invested in people to help consumers. It feels like more effort to call them, but I hate the sales pitch from some stores (e.g. GNC). After my Nestle experience I am switching brands. I think some companies like to think a high price equals better quality but that’s not always the case.  Some examples here are Hard Mountain, Polo (along with comparable brands), Audi, Under Armour, Life Time Fitness, Rolex, etc. It really seems like a mixed bag experience though with price, quality and service. In great brands like Honda Craftsman, etc. have had product / service issues. In the end it’s how organizations deal with the problem that makes a huge difference. I do think 80% or more of a purchase decision is based on either past experience or a recommendation from someone we trust.

So small things really do matter and for companies the key is to figure out how to capitalize on them and execute over and over. It’s harder than it seems since human behavior is involved. The biggest take away is that organizations that get their employees involved and listen to them will generally garner the greatest success in execution. To that end it also means the managers who are responsible for front line, customer facing employees, must reinforce the customer service qualities that matter. If customer service is a primary objective it seems generally reasonable to extrapolate that financial performance will follow. But there are different environments, high end, mid-range and low end. If we shop places like Wal-Mart we really can’t expect the same service as say a Trader Joe’s. This is why there’s no single approach that works well, but I am not sure consumers understand that higher service means higher prices to support that level of service. To that end smalls things matter more in specialized or niche market players, but even some of those organizations are getting bigger.

to ensure profitability metrics were maintained while allowing quick and efficient access to data related these items for future job quoting considerations.

Action

We analyzed the methods in place for accounting and reporting to determine what solutions might be implemented to address the client’s need without creating a lot of extra work effort.

After completing our business a case analysis and research we considered several options and presented them to the client for consideration. The result selected by the client was to setup separate items called “Extra ___”, which would rollup to a master item titled rollup

Result

The client had significantly great visibility and access to “Extra” items, allowing for better planning an decision making in future.

A signed NDA with the selling organization gave us access to confidential data related to the business results to be used in our analysis of the book of business as a potential fit.

In modeling our results we had to make base line conclusions and assumptions about what the business might look inside the buying organization and how to improve results without doing anything and combine that with an evaluation of the financial situation of the selling organization. Since the seller was in financial trouble with significant debts compared to assets any sale was going to be at a discount.

The end result was inconclusive on a tangible level but the products in questions fit into an existing portfolio and the chance to build the business at a discount was compelling enough to warrant a bid that set realistic goals to creating a ROI in excess of the cost of capital to finance the project.

“Competitive analysis isn’t a cut and dry activity. It involves risk like every decision and it isn’t always possible to ascertain the risks within existing relationships (customer, vendor, etc.) Some of this can be mitigated but not all”

User Requirement Specifications – Customized Query

Project request was to build a user requirements specification document and present to the vendor to construct a data extraction file from the phone system to query data for specified fields, phone numbers, etc. to be utilized in creating an analysis and charting document for reporting on abandon calls which impact customer service and staffing.

A current process involved numerous manual steps to extract, manipulate data and eventually create charts to present the data in a meaning way to analyze operations and make staffing decisions.

We estimated that creating a new customization data extract file would save an estimated 3 to 4 hours every two weeks or around $10K in annual labor cost. These were opportunity cost hours that could then be allocated to other more meaningful value add activities.

I wasn’t about to touch the stock as an investment because I felt it was overpriced and I really didn’t see how one could value it at around $100 billion. It made no sense. I read a lot of articles and not one could change my mind—granted most couldn’t even muster enough data to justify purchasing the stock at the price that FB listed on the high end. What further surprised me was that Mr. Zuckerberg retained such a large portion of voting stock in the company and why the market would tolerate and support this (although I am sure there are other examples). So many things stunk on this deal that I was amazed to see it issue where it did, but there was no surprise as the stock sunk after a few hours and has continued to show weakness.

Much of the media and press on this deal and what amounted to potential issues that likely violated securities laws just don’t seem to be positive. I’ve started wondering myself what I get out of FB on a personal level and why I even bother spending my time there as a person. If I want to buy something I go to Amazon (or maybe a specific vendor site). I’ve never clicked on an advertisement. FB does provide a neat way to like a brand and follow people and companies. But is it really any wonder that millions of people are Apple and Starbucks fans? For new businesses, products, and events I can see some value in FB, and perhaps companies are seeing an increase in revenue / penetration as a result of FB. But on a personal level I am not sure what I am getting out of FB and given that maybe 7% of our network sees postings, why bother? So from that point of view it just seems odd that the site grabs so much attention and time. Given that the press indicates that Zuckerberg is more about social media than business it’s a curious factor on how the company will monetize the business to justify the lofty valuation and provide the catalyst for growth. Clearly there are opportunities and not a day seems to go by where we don’t some story about social media. But as the media points out this whole issuance was about raising money, not awareness. Lots of the money went to early investors and insiders. The company apparently already had a large cash cushion, the largest of a US company holding cash in the United States according to one article I read. Needless to say it’s a wonder why a company with so much cash would really need equity financing and given what I’ve heard about Mr Zuckerberg’s personality and control issues it just makes me pause.

So we could probably go on and on with examples of greed, covering all sorts of examples of CEOs, securities offenders (Enron, Worldcomm, etc.), and the like. But the question becomes where does the greed get checked at the door and who in an organization should be responsible for administering controls and procedures to address the problem? One could say it’s senior management and others might say the board of directors. Either way there’s a problem here and even the best of the class organizations fall victim to the easy way out mentality-just think of the Pinto and how the car was allowed into production with the known issue of the flammable rear end gas thank. When looking at the IPO market  there is a wide range of successes and failures. With so much hype and the promise of supposedly “quick and easy money” it is easy to understand the market dynamics and the near feeding frenzy seen with high profile listings. So if you show a rabbit a carrot how would you not expect the rabbit to not want to eat it? This principle would seem to apply to investing in high profile stocks. In end money and the potential of making money really seem to have a remarkable impact of behavior and actions.

The resulting model proved to be a highly visible presentation tool that gave executives a meaningful review of historical results, expected synergies, and plan going out two year by location. It helped avoid potentially costly mistakes in over bidding on the business based on a “business as normal” basis, whereby the buyer excluded revenue enhancing benefits, like adding their own lines, adding to the sales force, and lowering costs.

Action

We constructed a database query connecting several different tables to analyze data related to each promotion and defined the query limits to control the data outcomes. We copied the results into Excel where charts and graphs were used to present and analyze the findings so that the client could understand the resulting impact on the business.

Result

We were able to demonstrate to the client where promotions potentially impacted sales positively. Although making a direct correlation wasn’t intuitive or directly correlated since other factors can always be at play—in this case weather is a factor. In some promotions the sales volumes picked while in others there was no change or even in one case a decline. Since this was a new approach for the business this project was a ground floor foundation for future promotions to help build the business.

“Forward thinking analysis is often more beneficial and predictive than a backwards looking approach”