Struggling to Reach the Next Level

Situation

Clover Super Foods, Inc. is a 17-year-old, family owned and operated food distributor that has grown to more than $6 million in revenue, yet had been experiencing a declining net worth. In 2004, management expanded to a larger facility — then lost a major customer. While the company had a solid reputation and a loyal base of steady customers, there were barriers to growth in its niche.

Challenges

• The size of the organization had out-stripped the entrepreneurial skills of the founder and CEO/owner.
• The rapid expansion of the new facility and payroll expenses created a serious cash flow problem, which was amplified by the key customer loss.
• There was no clear business plan for the future. The company would not likely survive another 12 months at its current run rate.

Solution

A new sense of urgency emerged after losing the company’s largest customer, as the owners realized that an immediate solution was
needed. In less than three weeks from an initial meeting, Platinum Group was hired in September 2005 in the interim management role of chief operating officer to reorganize the team, mentor leadership and provide strategic direction.With the CEO’s key strengths in sales and business development, it was determined that he would take charge of those areas and turn over the daily operations to a rising star within the organization. Platinum mentored both leaders in their new roles. New financial controls and business practices were established, which were communicated to the company’s bank for building trust and a stronger relationship.With Platinum’s involvement, the bank gained more comfort in the future outcome and decided to refinance the owner’s line of credit. A plan was developed to gain new business to
replace the lost customer and build customer loyalty through expanded offerings and services.

Results

The financial situation was stabilized within six months and the company is back on a profitability track. Operating income was recovered through improved inventory control and purchasing, in addition to a reorganization that reduced payroll and overhead. This also included locating a tenant to sublease excess capacity in the new facility. The focus now is on revenue growth. A new board of advisors is monitoring long-term growth.