Regaining relevancy in the market
How this data services firm got out of a business crisis and returned to profitability.
Technology has continuously made it easier for consumers to access services that would otherwise be outsourced. A good historical example of this was when office printers were introduced in the market. These printers affected the business of print shops as it took away the need for their services. The print shops had to adjust to the changing markets and specialize in services that office printers couldn’t deliver.
Market shifts affect all types of businesses, large or small. The challenge for small businesses is that they don't usually have deep pockets to withstand a shift in market for any period of time. Our client in the data services industry was experiencing a market shift. New technologies allowed their customers to inexpensively bring in-house services that was previously outsourced. Our client shifted from a mature market to a declining market as they were losing customers. This negatively affected their revenue and staff. With banks not wanting to participate, the company was being funded by the current ownership out-of-pocket. Funding was being used to pay liabilities without any plan for a way out of the crisis.
“We were plummeting and didn’t have a way out of this”
- Previous CEO, Data Services Company
Stop the bleeding
With the failure to react to the changes in the market, the company entered a critical phase of running out of cash. At that time, nothing was more important than repairing the balance sheet and generating positive cash-flow to stabilize the company and avoid bankruptcy. We stabilized the company by helping them get an investment of cash and this bought us time to do a full-market review. We reviewed their services and products to categorize cash gainers vs. cash losers, product cycle, development, demand; and if there was sufficient financing available so the plan had a chance. We helped develop a new product focus which helped them regain relevancy in the industry.
RKH Services Employed
RKH helps companies recalibrate their strategies to be more successful. Through AI assisted business situation analysis, RKH quickly analyzes market, company and competitors trends.
Creating strategies to eliminate cash flow and liquidity issues that threaten businesses viability.
“This was not complicated, but it required detailed planning and coordination - execution in the shift was key”
- CEO, Services Firm
Achieving growth through business model recalibration
The new CEO took immediate steps to stabilize the company through emergency procedures, and followed the medium-term plan. Where to re-position the company was a little less obvious and required detailed market analysis to align with market demand. We decided to focus on higher margin complementary services that required hiring new staff with different skills. At the same time an initiative was undertaken to shutdown an underused 2,000 square foot data centre, which was replaced with a single server.
The associated reduction in power, maintenance and square footage partially funded the turnaround efforts. The changes resulted in better financial results and increased relevancy. Eventually the company was sold and aligned with a complementary service company.
Return to Profitability
First profit in 9 years
Surpassed highest revenue point in 9 years after 24 months
Within the next 6 months