When Earth and Sky Services was a small company and with a single location and a single manager everything ran relatively smoothly.
When they grew up and started operating in diverse markets with managers from diverse backgrounds and varying levels of experience, expertise and commitment it was a new ball game all together.
They now had 10 branch locations and all of them were set up as separate entities and all of their P & L’s carried a corporate overhead to pay for the central operating leadership and back office. We were sitting with Roger the owner and CEO looking at his financials for the previous 3 years. The company had been consistently making losses. Roger was scratching his head trying to figure out what was wrong with his operation.
Slowly we delved deeper and deeper into his financials to see what they could tell us. It was obvious from looking at his financials that they were not set up the way they should have been.
They were not even consistent from branch to branch. We had a lot of work to do. However, we intuitively felt that we could potentially make the company profitable simply from streamlining operations, reducing costs and significantly improving their financial reporting practices.
After going through several discussions with Roger’s branch managers we developed a process that we thought could get us the results. We implemented the process over the next 2-3 months and just as our intuition had predicted found enough cost savings to create a 5% profit margin for the company.
With further streamlining of operations coupled with improved reporting we were able to bring that number up to 15% by the end of the year. Things were looking up again for Earth and Sky!