Problem faced by the client
Our Client was the MD and CEO of a generational Textiles Business. They were into manufacturing apparel for kids. Their business was in a steady decline. Revenues declining YOY for more than 3 years and no hope for sustenance. All these were symptoms only which required deeper insights into what was the cause of all this.
Identifying Root Cause
During the visits to their factories, we noticed a general lack of motivation and enthusiasm in almost all employees. They were employing many people past 60. On looking into their books of accounts, we found that there were no new customers in almost 18 months. They had a business concentration risk with more than 80 percent business from top 4 customers. No new product launches or design innovations. No in-house design team.
Solutions Proposed
In the extensive report we handed over to the client, we detailed all steps which needed to be taken to ensure a successful turnaround and make sure the business grows consistently into the future. Some of the recommendations we made :
– Start an in-house design team to constantly churn new designs because, fashion relies solely on latest trends which the business should adapt to and cater.
– Move a few existing employees managing sales to a dedicated marketing team which will need to bring in new customers
– Optimise expenses and slash all unnecessary ones
– Convert all 60 plus employees to advisory roles or retire them with a one-time retirement benefit
– Focus on retaining customers who are regular with payments and cut-off all supplies to those who have payments pending for more than a year
– Make investments in hiring new talent and reward existing performers to promote growth mindset
– Modernise equipment and invest in automation of manufacturing processes to streamline production
– Review all processes personally weekly to ensure implementation and progress
Outcome
About 6 months into the implementation, the business saw its first QoQ increase in revenue albeit a slight one.
One year into the implementation, we could clearly see the growth. 30 percent revenue from new customers, 45 percent uptick in revenues, 10 percent increase in EBIDTA (due to the investments made).