I received a call in 2016 from a 25 year old steel fabrication company that made consumer products that they sold through dealers and direct to consumers. While the company had an amazing reputation and a great fan base, they were losing $250,000 a year and in danger of going under.
Part of the problem was declining sales due to market conditions. I scheduled a trip to their facility, held sales meetings and brainstorming sessions with sales and line personnel. We effectively stopped the bleeding immediately as far as sales were concerned. Sales since then have been flat to slightly up even as their industry continues to decline.
Not all of my customers are quick to share their financials. I had asked this owner to send the financials on several occasions. After 9 months, and having smoothed out the sales problem, the company was still on the verge of closing up due to having no cash.
The client called in desperation and talked about finding an angel investor. I once again asked for the financials. This time they were provided.
It was easy to see the issue. The company was spending 6% more on COG labor than they had historically. As they consistently worked against a seven week backlog, I told the owner that they had no excuse for COG being out of control. Changes were made.
They were also running about 7% higher than historically on their overhead. I recommended solving that problem as well. They immediately made changes and within 30 days were breaking even.
There was no chance this company was going to get VC funding. After a quick review of the options, I suggested that they use Equity Crowdfunding. While this approach was only a year old, and only 87 companies had attempted this in 2016, I felt this was their best chance to get the cash they needed.
The company decided to use StartEngine.com for the effort, and they raised $220,000, effectively recapitalizing the company for the next six months or so.
During the course of the year I had recommended a number of new directions for both line extensions and new distribution channels. During that time, the company has worked hard on a new line of products that has the potential to double their sales in 2018. The early response is excellent, and the company is planning a KickStarter campaign to launch this new approach.
The company has relied on direct to consumer channels and some dealers, primarily in Asia. I have recommended a number of ways to expand the distribution channels. With the new cash injection, the company is looking towards leasing their products in college markets, offering the product in big box stores, and expanding their dealer base in the US using some type of consignment based selling.
While these were the big steps taken, we were also able to help them with day-to-day marketing efforts in social media and traditional approaches.
The owner would be more than happy to speak with anyone considering using Randy Kirk and Associates to help with marketing their business. Contact me at RandyKirk77@gmail.com and I'll be happy to put you in touch.