Walt Gorsey • MBA,CPA 

The Company is a world leader in the specialized fabrication of complex sculptures for the leading contemporary artists of our time.  

 

Issues: The Company had grown dramatically in a short span of time. Both owners had expertise in creative fabrication but neither had experience managing an enterprise. The Company experienced growth in sales, but not in profit.

 

There were multiple causes for this; Each project required the initial creation of a prototype prior to being able to produce the finished product. The nature of prototypes is that it is not feasible to project a precise final cost due to the unknowns. However, management in its eagerness to attract business was willing to agree to a fixed price contract under these circumstances.  As a result, almost every contract was underpriced. In addition, real time project costs were not available.

 

From an HR standpoint there was minimal communication between management and the production staff. Many errors and unnecessary costs were created by the lack of communication.

 

 

MN Solutions:

- The model was changed so that work was contracted in stages and billed on a time and material basis. This allowed more accurate future cost estimates to be generated, while also permitting customers to withdraw along the way if the estimates exceeded their budgets. This also insured that the Company was paid for all of their time devoted to the project. Interestingly, this change in practice did not result in the loss of business.

 

 

- A tracking system was implemented so that there was real-time information available for each project;

 

 

- An HR department was created and regular and effective staff meetings were held;

 

 

Results:

As a result of these changes, record revenues and profits were earned;  The original founder opted to downsize and restructure so that he was in sole control. The original founder's Company is thriving and continues to use the new business models previously put in place.

 

In addition, we are now working together on new development projects.