The business started in 2008, growth over the last few years had flatlined, no proactive sales activity, just beginning to lose customers. The business had a lean structure, with a history of being unable to retain people. The existing team were made up of contractors and inexperienced graduates without clear accountability.
The CEO was a big 4 trained accountant. The business was making 0% GM yet spending 30% of revenue on misdirected product development activity, as well as using product giveaways to recruit new customers. The CEO was very busy having fingers in all the operational pies and preferring product development rather than sales/commercial activity.
Their original commercial plan was to grow product 1. However, that product had a negative gross margin and despite the tempting ‘golden handshake’ this deal would have taken their eye off the core business and given away their IP, threatening any further investment and or future collaboration. They had become blind to their value-add for clients and means to resolve their complex challenge – taking it for granted. They lacked the confidence to stick to pricing, reverting straight to discounting.
Their customer recruitment tool: free product taster was their “highest seller”: giving away £360k revenue, undermining their proposition, gleaning and learning nothing.
The financial model
The business opportunity
The business could reverse the loss-making situation by charging for their giveaway product increasing their GM by 360K, zero basing their product development increasing GM by £200k. Underpinned by sticking to pricing and selling their value add. The bunce was to realign the pricing and value add, and difficulty replicating the key aspects of their existing products.
The challenge
The financial actions were clear, but the underlying roadblock was more subtle and lay in the CEOs thinking. So, the CEO was completely unaware of what had created this situation, the roadblock or what was driving his strategic decision making.
The challenge
These were their words:
- “Product will become commoditised in the future”
- “We need growth”
- “Must create standard products for Scalability to simplify the business”
- “Must have a platform when x,y,z happens”
- “Forget £2.4m development spend to date that’s done”
- “I’m cautious”
The outcome
The CEO began to develop an inkling of how their thinking was preventing them from moving forwards and the opportunity. So they had an appetite to run the winningthinking.uk session with their executive team.
Having addressed this thinking and agreed on the objectives these actions were simple and immediately actionable by the EXISTING CEO. The target cash return from that session was £560k from their existing customers without further growth in overheads or complexity.
That’s a substantial growth in revenue with no increase in complexity in a niche market. By realigning future product development to customer requirements from a zero-cost base, these new products would create the contribution to enable the CEO to put the right structure in place. This would enable the CEO to refocus on their strengths and build a team around them.
This CEO was too busy, making no money so these actions would break this deadlock!
Target ROI from the 1-day winningthinking.uk Bootcamp
This 1-day winning thinking project has a target cash ROI of 50x over 12 months.
So, we agreed that this 1-day winningthinking.uk Bootcamp was worth doing…
