Summary:

Spotlight on helping a UK family business with dedicated hard working founders manage their way out of a difficult financial situation by right sizing the cost base, removing complexity and focusing on marketing, engaging customer service and an inspiring product range.

 

Key Solution:

PPG helped the founders become closer to the daily running of the business with a remarkable improvement to the business financials and business success.

PPG (Paolo Peretti Group) is proud of the difference it has made to a Café in the North of the UK supporting a distressed business in need an injection of new ideas, refresh, change and adapt to changing times.

Background

• PPG was contacted to support a family business running a continental café business in Yorkshire. The chain grew to three locations before being forced to close one location and liquidate the associated company. Originally produced bakery products on site but then moved to bought in products.
• The family business then focused on operating at two locations with a manager overseeing day to day business.
• PPG was brought in to consult and advise since it was not trading particularly well in either location with main store looking tired with too much wasted space and an incoherent confusing customer journey. The product range was not particularly inspiring and poorly was displayed.
• There were financial issues which were significant in relation to size of company, with a debt pile which included asset financing (with personal guarantee), HMRC and assorted suppliers
• PPG was also asked to support the duo with management information and the creation of a viable business plan with a look forward cash flow which gave the founders a starting point with regards to managing the situation as they were previously left wondering how to make a start on taking things forward.
• The hard working, dedicated Founders were tired, stressed and somewhat (understandably) demoralised by recent events. PPG identified that the Store manager was underperforming and looking to step down to team member. There was lots of infighting amongst the team and a lack of moral which was not helping the situation.
• The Stock room and process re just in Time deliveries needing reorganising with new system since while it was large it was disorganised and oversupplied with too much stock and holding equipment surplus to current requirements.

Initial Meetings

 The Team at PPG including CEO Paolo initially met with the founders at a neutral venue to discuss and get a better understanding of the situation. This was useful to take the Founders away from the stress of their daily role and free to talk openly about what changes and adaptations they felt they would welcome.

• The Second meeting took place on site location to spend a day getting a feel of the business and meeting some of the team which was useful.
• It was important that the founders went back to first principles and focused on what had originally made their brand a success.
• PPG spent a lot of time looking at the situation, wanting to be clear about the ability of the business to trade its way out of the situation and ensuring that the founders and the self-belief to execute the plan.

Ways of working keeping in touch and supported throughout the change planning and implementation 

• PPG supported the collaborative effort with the founders to include a weekly meeting and setting up of a WhatsApp group
• Ad hoc phone calls as and when needed took place offering guidance and allowed both parties to keep in touch weekly.

The Plan 

• The Plan implemented the founders becoming more involved in the daily running of the business, taking over as the manager to be more involved in the daily running and boosting morale of the team. Some Team members were replaced to get some fresh enthusiasm back into the business.
• Ensuing that the operation was settled and that it moved quickly away from fighting in order to enable the founders to focus on new products which increased sales from increases the number of customers, frequency of customer visits and spend per visit.
• The closure of the second location was done quickly since it was not contributing positive cash flow and was a distraction to the main business site.
• The Operations were refreshed and sharpened up to increase visual appeal and feel of the store with a minor refresh and an upgrade in marketing assets along with a rethink on the customer journey and display. The culture of the family business instantly felt positive with everyone in the team on board supporting one another in a upbeat manner.
• A new schedule was created which listed the debt by supplier with several meetings focusing on a strategy to create sustainable payment plans for all. PPG and Client did a lot of work discussing to best deal with the creditors which gave the founders confidence when looking to agree payment plans.
• A new budget was created and agreed which linked to projecting cash flow KPIs  with monthly reviews on performance. The aim was to understand how much the business could afford to pay back on a monthly basis. The budget focused on ensuring the numbers of the was the right sizing the team for optimum performance, morale and cost effectiveness.  PPG also undertook a full review of costs to ensure that the business ran leanly. It wasn’t all about cost savings, PPG also wanted to focus on driving sales, initially through improved delivery sales and in store service.
• The reorganization of the stock room instantly made running the business easier and more profitable. Disposal of surplus equipment to raise cash and a plan in place to sell though surplus stock was easy to sort. This ensured that there was no overordering of products due to being unable to find things and also helped reduce cash flow as stock was sold through. PPG also thought carefully as to what was needed to achieve this budget.
• The Tech stack was simplified and ordering was taken on by founder for optimum control. There was also a move to reduce the number of suppliers with numerous benefits from saving time,  efficiency of the Business Operations and improved profit margins.
• New Pipeline products were reviewed and the team started to consider how sales could be improved through the introduction of these new products with increased customer insights and engagement.
• PPG also spent time focusing on supporting the founders through what was a stressful situation and at times being a sounding board for ideas.
• PPG & Client worked collaboratively to ensuring that every small success was acknowledged. PPG is proud of its approach taking baby steps and dealing with one problem at a time. The Team at PPG were passionate about keeping the founders motivated and focused this was an important critical part of the project. It also helped to be realistic about the road to recovery, there was never going to a be a linear path out of the situation.
• PPG put in solid process for monthly management information, checking it was fully analysed and that the bank account was reconciled back to the look forward projecting cash flow. PPG did not want to focus too much on weekly numbers, partly because it a simple business and relatively easy to control and partly because we wanted the founder to focus on lead indicators rather than lag indicators.

Outcomes So Far 

• The performance of the café is much improved and the first month’s budget was comfortably exceeded.
• Sales are increasing and there is positive feedback from customers on both product and service. The return of the founders to the business has been appreciated by the customers and staff morale has largely improved,
• The Small, low-cost refresh is largely completed and the café looks better for it.
• Some additional cash has been raised to help clear part of the debt.
• Creditor meetings have gone well to date and repayment plans are in place for each of them.
• The Month end cash position are ahead of the projections.
• The hard working, dedicated Founders are feeling more positive and focused on keeping to making improvements for the future.
• Some new products have already been introduced with more in the pipeline for the future.

Looking Forwards 

• PPG & Client recognised the business in the North of the UK is by no means out of the woods but are quietly optimistic about the future.
• The café is running well with the odd blip as expected, the founders have divided responsibilities and in this way are able to complete the required tasks.
• There is a good understanding as to what the ideal store financial model looks like and whilst we are not quite there yet, progress is being made towards this.
• In Summary, PPG and client feel there is some tentative thought as to the future and how the founders (at the appropriate time) can slowly move away from the day to day running of the business knowing it is in safe hands.

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