CanadianSME Small Business Magazine had the privilege of speaking with Jessica Zavattin, the Managing Director at Robbinex Inc. Jessica emphasized the importance of business analysis as a pivotal strategy for revenue enhancement. Drawing a clear line between comprehensive operational scrutiny and revenue spikes, she cited examples of potential ‘gaps’ which, when addressed, can substantially boost revenue streams. For businesses keen on harnessing the benefits of meticulous analysis, Jessica offered insights on adopting a holistic approach to ensure no gap goes unnoticed. She recounted an instance where rigorous business analysis translated to significant financial gains, delineating the key steps and the types of shortcomings uncovered. To round off, Jessica provided a guide on prioritizing which operational gaps to tackle first and a roadmap for instituting changes rooted in the analysis findings.
Jessica joined Robbinex as a Managing Director in 2023 after many years of experience in marketing, bank financing, and her own private lending mortgage company. Jessica’s sales leadership roles have driven great results in terms of successful sales transactions and impressive client retention. Jessica’s skills are best presented in negotiating the best value add and managing ROI for her clients.
As a Managing Director at Robbinex, Jessica is the primary point of contact for prospective sellers who are considering Robbinex to sell their business. For files matched to her expertise, Jessica manages the relationship with a business owner from their early interactions with Robbinex, through the valuation, opportunities assessment, and marketing stages, up until the business is listed for sale. With her strong communication and critical thinking skills, Jessica works smoothly with everyone.
Skills: Sales Strategy, Business Consulting, Networking, Growth
Q. Can you explain how conducting a business analysis can serve as a strategy for revenue growth? What’s the connection between analyzing business operations and increased revenue?
Each business is unique, and we find that many owners are too involved in the daily operations to see the bigger picture for growth and enhanced profitability. As a result, they may fail to recognize opportunities that are in front of them. Bringing in a fresh pair of eyes can produce an increase in the value of the company.
The connection between analyzing business operations and increasing revenues is that weaknesses are exposed, and opportunities are observed resulting in recommendations being made. Also taking a fresh look at a business with a fresh perspective can help identify growth solutions.
Q. What are some typical ‘gaps’ that a business analysis might identify that, when addressed, could lead to an increase in revenue? Can you provide some specific examples?
Typically, our team approach uncovers value enhancement opportunities which are redirecting the owner’s duties, rebuilding the management team, and enhancing the competitive advantage for the business owner.
This involves taking the time to fix the problem(s) that are not contributing to the bottom line.
For example, we worked with a manufacturing owner who had rented 25,000 sf warehouse to house $1.5m of finished goods. The cost to carry the inventory was $250,000 a year and the products didn’t move for a year as it was designed for a large company who did not fulfill their original purchase orders. Robbinex brought a new customer to the owner and together we created a program to sell the excess inventory. A sales strategy was developed to offload inventory via pop-ups, and everything sold off in about 1 and a half months. The owner contributed $100,000 for advertising and reduced the price of inventory. The customer made a profit, our client freed up the $1.25m in cash that was tied up in inventory and operating expenses were reduced by $250,000 (warehouse rent, wages and interest saved).
Q. How should a business approach the process of business analysis to ensure it’s comprehensive and effective in identifying these gaps?
Sometimes it is necessary to take one step backward to take two steps forward. It is critical to take an honest look at the business while keeping the ego in check. It is important that the business owner is open to change and suggestions, especially in view of the rapidly changing world. Businesses also needed to take the time to develop knowledge of their customers, competitors, methods of selling, deficiencies in their own methods of communicating with their customers and how they service those customers.
For example, we convinced a client who did custom manufacturing for a customer that resulted in many short runs of each order on demand – – resulting in high production cost— an analysis of the products made over 4 years showed that there was a strong consistency of repeated orders. Our team recommended a serious meeting with our client’s customer and the result was a blanket order for the repeat products. That resulted in a longer production run with finished products stored in our client’s warehouse until needed, followed with next day shipments. The net result was a 25% decrease in production costs coupled with superior service to the customer.
Q. Are there any methodologies or frameworks that you would recommend?
Applying a structure to assessing the business owner’s situation is important. The basic starting point is to determine strengths, weaknesses, opportunities, and threats (SWOT) assessment. From there, you gain insight on areas deserving more investigation. A crucial step is to implement Corporate Value Metric’s VOP (Value Opportunities Profile) which carefully measures the alignment of the 8 critical functions of a business.
If further understanding of competitors is required, a review of Porter’s Five Forces model grounds that analysis. Internal operations are always a challenge. Documenting the status of eight core business fundamentals within your company allows you to see which area requires focus. For example, if an organization is weak in financial reporting it would be risky to implement an aggressive growth strategy before fixing that area.
Q. Could you share a case study or personal experience where conducting a business analysis led to significant revenue growth? What were the key steps involved and what kind of gaps were identified?
For Example, a manufacturer came to us with a desire to sell and after we visited his machine shop, and completed a comprehensive business analysis we learned that he was paying high rents for a facility that was not up to standard. This facility also made it difficult to fill orders on a timely basis due to production capacity created by both the facility and the lack of modern equipment. We found him a better building to buy, financed it for 125% so he could afford to buy some new machines to improve production capacity. As he started to make more money, then we put an advisory council together for him. A controller and plant manager were hired to free the owner to focus on sales growth.
We also structured the business for sale at some point in the future utilizing a family trust, along with a real estate holding company to own the building. Three years later, the sales had grown from $3.75m to $11m. We sold the business 4 ½ years after we started working with the client to a strategic buyer for almost $7 million with no taxes being paid. The client kept the building and enjoyed a rental income for 5 additional years at which time he sold that building for $3.5M.
The key step to success is to take the time and make the effort to completely understand the business owners’ goals, objectives, strengths, weaknesses, challenges, and then create a business plan to achieve the goals. Some plans can take two to five years to implement completely. A basic business valuation should be completed each year to measure the successes, and to adjust the plan as may be required.
Q. Beyond identifying the gaps, what’s the next step?
After completing a comprehensive business analysis, Robbinex’ team will develop an action plan with the best solutions and activities. Then, the owner takes the necessary action based on the recommendations. Also, we recommend using an Advisory Council, a group of knowledgeable professionals with various skills who meet with the business owner regularly to help take the business to the next level.
Q. How should a business prioritize which gaps to fill first and what’s the process for implementing changes based on the analysis?
Using the recommendations from the comprehensive business assessment, the owner will begin to understand what actions will have the largest impact on his bottom line. Focusing on those areas lays the groundwork for an increase in profits, which usually includes a strategy for growing revenue.
We must remember that financiers, buyers, investors, and banks look at businesses for three things: sustainability, growth, and profitability.
