This is an epic story, not only of survival but of flourishing through the Covid-19 years of 2020-2022: a story of entrepreneurial success against the odds. On the one hand opportunistic, innovative, agile, lucky, chaotic, adaptative, fast-learning and on the other, persistent, thorough, systematic, also unlucky, but above all, talented, collaborative, and ethical.
My colleague David Halstead (Accounting and Finance) and I (Operations, Marketing and People) collaborating as Business Epic, were fortunate to guide and support what became a classic SME transformation of a declining business centred on its aging, founding specialist intimately involved in all aspects of the operation, to a fully independent, flourishing business. Our part in transformation of this (polyester resin products) business began in mid-2017 with assessing the strengths of the key people to then patiently deploy and utilise their strengths in the process of turning the business around.
Importantly, we discovered that the GM’s strengths weren’t in administration and managing people but were in marketing and sales. Consequently, control of operations and people had become weak, and the operations IMS corrupted by bad data.
Fortunately, the owner’s son, an IT software development engineer and manager, was persuaded to try working in the firm, initially as a part time contractor re-commissioning the seriously compromised operations IMS. That work was crucial to enable accurate, comprehensive information and timely, informative reporting and analysis, independently of owner’s idiosyncratic system. It involved purging bad data and fixing bugs until the owner began to trust the IMS as much and even more than he trusted his own heuristic system. The role became, in effect, Chief Information Officer (CIO) for both the original and the new company.
Another risk was the dependence on the owner’s personal specialist technical knowledge, inventiveness, and expertise which had been a main strength and market differentiator. However, finding a replacement was a long shot at best because all the primary manufacturers had migrated to Australia. Consequently, experienced local talent was rare or extinct. So, began the process of looking towards Australia to access that talent.
That led to exploring the feasibility of acquiring a comparable Australian firm in a trans-Tasman business partnership with an international raw material supplier, with the intention that it would be managed by the GM who initiated the possibility and had a good relationship with the supplier partner. That project proceeded to the point of waiting on the supplier partner’s decision to proceed.
Meanwhile the need for onsite dangerous goods storage was pressing. So, a potentially suitable greenfield industrial site was identified and scoped for a manufacturing and DG premises. At the same time, with a collaborating business broker, acquisition of a local competitor with existing suitable premises was explored. That opened the possibility of merging the declining industrial resin part of the operation with the acquired operation in a separate company, initially managed by the GM, leaving the retail products manufacture and export operation in the original company under owner and son’s management.
The international supplier was slow to move on the Australian venture and it was abandoned in favour of the more attractive, faster moving acquisition and merger with the local competitor. This turn of events interested the owner’s son who was now enjoying working almost full time in the firm.
The acquisition was concluded, and merger commenced at beginning of March 2020, just in time for the Covid-19 scare which complicated and prolonged the difficult knowledge transfer from the exiting owner and their idiosyncratic information and operating systems, exacerbated by their ongoing emotional attachment.
All manufacturing staff were retained, and the previous owner contracted for four months for handover, the GM assumed operations management, and the CIO began the complex 18-month long process of merging IMSs, with both IMSs running concurrently until the acquired system was eventually configured to take over. An additional industry experienced Sales Engineer was recruited and started in early March; a Management Accountant recruited and started mid-May; the Sales Engineer who transitioned from the owner’s original firm proved unsuited to the new business mode and exited in mid-July; and an Operations Manager/GM designate with strengths in goal focused General Management and Operations Management was recruited and started at end of July to support the GM’s planned move from administration into sales management to better utilise his strengths and prepare for retirement.
No sooner had the Operations Manager (OM) got his feet under his desk than the first Auckland Covid lockdown struck: 12-30 August 2020. The new firm was comparatively well equipped to meet this challenge, having excellent people in key positions. The slump in demand over the next five months from October through to February 2021, when sales resurged, allowed the OM and CIO and to work on improving manufacturing and information systems, and the special Government wages support enabled the firm to retain all its valuable staff.
That time was well spent because from March 2021 demand and sales then grew strongly and steadily for the five months while systems and capacity improvement continued. A Customer Services Officer was recruited mid-May, then July 2021 brought the first supply chain convulsions and ability to supply became the prime market advantage. By September, to insure against disrupted supply and meet the changed market, raw material stock holding was doubled with consequent drain on cash.
At beginning of October 2021, as planned, the GM stepped aside to Sales and Marketing Management and the Operations Manager stepped up to GM. Now the firm was well prepared with management and Board strengths well suited for tight control of operations and finance, and had spare manufacturing and storage capacity, technological expertise, and strong multi-supplier and customer relationships: all crucial to not only survive in that disrupted environment, but to seize market share to steadily grow sales by 60% over the 20 months March 2021 to October 2022 and maintain steady growth in operating profit.
To sustain that momentum through the previous GM’s mid-June 2022 retirement from Sales and Marketing Management, a second industry experienced Sales Engineer was recruited to start in early in June 2022, and a graduate chemist apprenticed to the owner in July.
The transformation is on plan to achieve a highly profitable, independent business, ready to sell and therefore ideal to continue to own. An epic entrepreneurial success against the odds.