Emerging Businesses Case Studies
Direct Reseller of Retail Technology - Case Study
Key points:
- Reduced investment needed from $1.25M to $300K
- Helped produce nearly $2M in revenues first year
- Helped establish metrics, goals and processes to grow company
Remergenz's customer, a direct reseller of retail technology, was an early stage venture created to resell discount consumable goods to retail businesses. The founder and a large potential investor had expressed an interest in this concept and wanted to start a company together. The founder’s background was in sales in the distribution industry, and he wanted to launch a business with investors that would do the same effort. While the founder had extensive experience in the market, he also lacked the business experience needed to launch an early stage company. The investor was seeking a business plan with some analysis and financial projections which the founder was having a difficult time assembling due to his lack of knowledge of what was needed.
The investor hired Remergenz to refine the concepts by the founder and put them into a business plan while filling in the gaps in the logic. Remergenz helped refine the overall strategy and financial assumptions of the entity, thereby reducing the initial investment down from $1.25M to $300K if the company followed three key tenants: (1) Sell high volume consumable goods, (2) Turn over inventory 12-15 times per year and (3) Get paid before you pay. The company was launched and started producing revenue within 30 days.
By the end of the seven-month engagement, the company’s revenues were approaching an annualized run rate of $2M per year, the company reached positive cash flow and was targeting returning 40% to the investors – all in their first year of operations. Finally, a few months after the engagement was completed, the company signed up a large customer that should increase its revenue 10x during the next 3 years. At the time, Rememergenz was retained to help find a key financial and operations executive to carry on the work by Remergenz.
Overall, Remergenz helped the company launch its business, build its revenues and implement key processes and methodologies to operate efficiently. These financial results provided the company and the investors with a ROI (Return on Investment) for retaining Remergenz in excess of the 10x target set by Remergenz at the onset of the effort.
Disclaimer: Not all companies will achieve this level of turnaround and in this short period of time.