Is Your Plan Taking You in the Right Direction or is it Time to Reinvent

We are coming through a recession/depression that has caused us to reactively do many things.

1. With lower revenue, we had to cut costs.
2. As we cut costs, we looked at our use of employees vs. technology vs. outsourced services vs. part time contractors.
3. We are reexamining benefit plans with changes coming, our commitment to health and retirement plans are changing.
4. We are considering “leasing employees” or PEO’’s to handle human resources and benefits.
5. We are going more virtual – into S.A.A.S. structure and reducing costs and complexity of I/T.
6. We are reducing our need for office space, as remote worker technology and video conference power spreads.

We are reexamining our business and business plans, as we see either lower sales for a time (or permanently) or margins in a falling circumstance.

Anecdotally, tell a story about a current assignment that shows this happening.

Recapitalizing an existing business to strengthen its financial condition to go forward.

1.  Multi-purpose home store – includes bedding, kitchenware, furniture, hardware and accessories.
   1. Serves a small resort based town.
   2. Big box retailers – 10-15 miles away
   3. Family business – lots of loyalty
   4. Established brand in the area.
2.  Sales down significantly and losses incurred.
   1. Second home communities and tourist destination.
   2. Depends on turnover of housing and refurnishing with ownership change.
   3. Needs active traffic flow from residents and tourists.
   4. Decline in both has hurt.
   5. Internet has disrupted margins
   6. Many items in store, cheaper on line.
3.  Financing no longer available or on onerous terms.
   1.  Banks not lending to company.
   2. Need for new capital intense.
4.  Run a business plan with new equity added.
   1.  Current margins assumed, although under attack.
   2. Kept costs down and did not add back with extra sales.
   3. Assumed new capital would replenish inventories and replace bank.
5. Conclusion was increase in value created by adding new capital did not work.
6. Must change business plan.
   1.  Have to add net margin additions without capital cost of inventories and physical store.  Internet Sales.
   2. New business plan had to add internet presence to survive.
7.  Conclusion – change or close!