Business Turnaround of Family-Owned Business in Telecommunications Parts Industry
The Client
- 2nd Source, a leading-edge, wireless telecommunications equipment distributor located in Northern Kentucky that sells second-generation used equipment and offers replacement services
- Client on the verge of bankruptcy; faced rapidly declining revenues and liquidity as a result of the telecommunications industry collapse in 2001
What the Client Wanted
A top-to-bottom assessment of the business and assistance with strategic planning initially; after the telecommunications industry collapse a turn-around strategy was needed.
Challenges
- Stopping the bleeding and turning around a company involved in a sudden industry down turn like that which hit the telecommunications industry in 2001
- The mounting financial losses and cash flow issues
- Various financial covenants with lenders broken as a result of downward spiraling sales and performance
- Creating, developing and implementing business applications that would help the company recover and rebuild
LÛCRUM’s Solution
Helped to reorganize the company in order to save them from extinction:
- Established an effective financial planning model
- Worked through financing negotiations with the CEO and CFO; assisted in renegotiating their lendors’ inventory financing
- Provided a new software system to align with this new inventory financing
- Designed and implemented a customized CRM system
- Re-engineered sales processes and sales commission system (which drove the right behaviors and attitudes)
- Developed a very focused, effective compensation system
- Helped restructure client’s commercial loan
LÛCRUM’s Approach
- Quickly recommended a series of strategic investments to enable the firm to gain control of key “broken” processes—the first being a sophisticated inventory modeling system that enabled 2nd Source to accurately value and manage its inventory
- Served as a sounding board and helped to create alignment of their executive team and the strategy that would allow them to dig out of their dilemma
Efforts
- Strategic planning session: three months
- Execution of the plan: two years
The Benefits
- Zero debt
- Streamlined business processes
- Improved operating performance through lower costs
- Improved decision-making
“We have worked with LÛCRUM for more than three years…three years in a very tumultuous industry. We’ve not only survived, but we’ve now enjoyed nearly four years of profitable growth during a time when we’ve seen our competition fail. I can easily attribute this success to the strategic planning initiative we executed with LÛCRUM.”
- Mike Grubbs, CEO of Airway Technologies (formerly 2nd Source)
