Toy Distributor

Background

A family run £3.2m turnover company was left with huge debts, a lousy balance sheet and ongoing £50,000 annual losses after a failed attempt to hand over management to the younger generation was compounded by lack of supplier co-operation.

As a result the company was seven days off receivership, had no recognised management and the owner coming back into the business was 57 with a history of angina attacks.

Solution

The immediate decision taken was to buy time through negotiating improved terms with a leading supplier - this gained 30 days extra credit for 25% of turnover.

Having gained valuable breathing space a Business Review was swiftly undertaken resulting in :

Increased prices

Widening the product range to decrease reliance on one or two suppliers

Improved stock management to release cash

Revised distribution policy and customer focus

Introduction of a top customer loyalty scheme

Most importantly creation of a Management Team with clear responsibilities and accountabilities

Retention of Avocet on a monthly basis to ensure recommendations pushed through 



Outcome

Sales up 25%

Gross margins up 10%

Each month since leading supplier terms renegotiated , traded at a profit

Current financial year with one month to go will result in £200,000 pbt

Renewed illness of owner left business unaffected due to developing Management Team