Growing Revenues and Profits Case Studies
Increasing Revenues 40% - Case Study
Key points:
- Improved operations 12X in 12 months
- Helped grow company 6X in 2 years
- M&A integration - increased revenue 50% and decreased costs 40% in one year
Remergenz's customer, a services company, was a $2M firm providing tailored eLearning courses. The company had been in business for over 5 years. The company had a unique scalable approach to building its eLearning courses which held the promise of significantly increased revenues and profits. Unfortunately, the revenues and incremental margin were just not coming as fast as the investors and management desired. In particular, some of the problems the company faced were that the company was unable to produce a product for less than its incremental costs, unable to retain a customer after the first sale and employees were turning over at a rate of approximately 8% per month. Their woes increased as they began to lose over $1.5M per quarter without an increase in the operations capabilities.
The CEO hired Remergenz, Inc. to help evaluate the situation and make the changes necessary to stabilize the business and make it profitable. During the next few months, Remergenz worked with the company's leaders to put some processes in place to control the developments, added processes to key efforts and helped guide the team to specific financial and schedule milestones. In three months, the company produced 3 times the output and in 12 months produced more in one month than the company did in the past year.
During this time, the company was able to raise an additional $7M in investment due to the high potential the company was able to demonstrate. With the help of Remergenz, the company was able to focus its sales on a key vertical thereby gaining traction in new business. The company grew 6x in 2 years and increased gross margins from -23% to +42%. Later in the second year with Remergenz’s continued assistance, the company purchased a competitor and integrated their operations into the company leveraging its economies of scale. The acquired company’s revenues increased 50% and costs were reduced 40% before the first anniversary of the acquisition.
Overall, Remergenz helped the company evaluate its situation and determine how it could work out of its financial dilemma so it could be a fast growing profitable company. These financial results provided the company 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.