Author Topic: Forced to become my parents' manager  (Read 1054 times)

MrYuro

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Forced to become my parents' manager
« on: August 11, 2017, 06:42:30 AM »
Hi to all the beautiful mustaches around here. I come to you in my search for wisdom.

I'm a 23 yo polish male.
My parents used to have a construction company. Basically selling windows, doors and accessories.
Everything was great. I took care of myself and my education. We had money and were relatively wealthy. Until...
My father had decided to confide in a wrong person and without proper research built an office in Netherlands. He rented a big ass house, luxurious offices and a warehouse.
It all went down in a great struggle. Next to no customers and a lot of overdues. The great debt cast a shadow upon us.

I was naive enough to let my parents reopen the company on me. They stated bankruptcy and carried on with what they did before but more cautiously.
Now the company is in a bad shape again and they came to me to fix it. There was so much overwhelm that I failed at my regular job and got fired. My parents want me to take charge and reduce themselves to just shift-workers.
Now I decided to dedicate myself fully to the company and rebuild it. Because of many reasons, I am unable to shut it down, so it would be on the back of my head anyway.

Right now the company consists of:

Here are the strong points of the company:
-equipment
-good contracts and discounts from suppliers
-my father's knowledge and experience
-overall good reputation
-large base of customers in the region and abroad


Here are the challenges:
-my lack of experience and leadership skills
-lack of motivation and burn-out on my parent's side
-lack of dedicated and qualified full-time assembly team - most of the workers flee to Norway and Germany
-no schedule whatsoever
-outdated methods of running the sales, the warehouse and the office (very low computer literacy at my parents' side)
-no method of keeping track of the company's progress.

Possible solutions:
-using EU programs to educate parents and workers
-making an agreement with the local technical school to recruit potential long-term workers
-outsourcing the installation (longer waiting time)
-creating an online shop, focusing on accessories, making tutorials for the customer to enable assembly on his side (more and more popular option in Poland)

What I've managed so far:
Partially decluttering the office and warehouses.
Reducing the times of the tasks in the office.
Reducing the costs of accountancy and bookkeeping.

In progress:
Introducing basic logistic solutions to the warehouse.
New website, FB, linked.in and marketing strategies.
Proper way of scheduling the work and keeping track of the financial results.
Introducing new goods and getting rid of the outdated/non-profitable options.

Could you give just few pieces of your own knowledge, experience or opinion?
It all seems quite overwhelming. I need someone else's perspective.

« Last Edit: August 11, 2017, 06:47:29 AM by MrYuro »

GeorgeWood

  • 5 O'Clock Shadow
  • *
  • Posts: 19
  • Location: Germany
Re: Forced to become my parents' manager
« Reply #1 on: August 11, 2017, 12:00:06 PM »
I'm not sure I understand the primary problem here - is it declining revenues or a lack of efficiency (not being able to fulfill orders in a timely manner and with a profit)?

You say you have a good customer base and problems in operating efficiency (no proper software for warehousing & sales, lack of motivated and skilled employees). Yet you take measures aimed at increasing revenue (website, online marketing, web shop, online tutorials). Are you sure you aren't tackling second tier problems? More customers might even mean more trouble further down the road if your operations aren't up to the higher volume - if you can't fulfill the additional orders in time or provide post-sales support, you might damage your reputation, leading to customer loss (both new and old).

Do you have an overview of the performance of the dutch operations? For how long has it been going? If it isn't generating a profit, you might want to consider closing it down, even if it means a loss of revenue. Have you gotten rid of the house and rented a cheaper office?

I think you have already done a very good job in getting some solutions on the way. From my experience in auditing construction materials trading companies, it is extremely important to get a good inventory management software running - you need to know how much of what products is in stock, and for how much you purchased it how long ago. Seems you are getting this started. Get rid of as much slow-selling stuff as possible (windows in special dimensions, etc), it's probably eating your working capital.

Also, you need to know exactly where you stand financially. Good to see you're on your way. Not sure how large your business really is, but be sure to install cost center (what department or location (NL) is generating/eating my profits?) and cost unit accounting (what products generate/eat my profits?) if you can.

If you feel overwhelmed and unprepared, how about hiring an external manager - if even just temporarily to get things improved? Also, you say a full-blown sale of the business is out of the question. How about selling a minority or 50% interest and setting up a joint venture with one of the larger competitors? Maybe even an international player wanting to break into the Polish market? They might be able to help with improving efficiency of operations.

Best of luck!

MrYuro

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Forced to become my parents' manager
« Reply #2 on: August 11, 2017, 02:10:15 PM »
I mixed things up too much sorry. The situation is new for me and I am but at the beginning of my road.

1. This is a very small business. The office consists only of me(manager, salesman, it, everything...), my mother (sales person and order manager) and my father (contact with subcontractors, team leading. And there is the assembly team (constantly changing, people come and go).
2. All the investments in the Netherlands are closed. We only operate from Poland.
3. The situation on the job market changed drastically. The cost of the assembly team is getting a lot higher. There are also fewer and fewer specialists in my region.
4. Competition is trying dumping strategies. It spoils the market.
5. Now I see that the main issue is the inefficiency of the processes. I need to fix that before I can approach new customers.
Thank you for showing me that.
6. The larger companies are only interested in selling us stuff and using as a subcontractor. They don't care about our inside matters.



Goldielocks

  • Magnum Stache
  • ******
  • Posts: 4583
  • Location: BC
Re: Forced to become my parents' manager
« Reply #3 on: August 11, 2017, 02:59:24 PM »
I worked in business analysis / industrial engineering for warehousing and logistics.  The following are what I find most helpful, for most businesses:

A)  Inventory, space, time, wastage --efficiency improvements
Vigorously reduce inventory -- the number of skus, packaging types, and sheer variety first, followed by the quantity.   In terms of quanity, try have just enough to fill this month's orders, to sell the inventory before you you have to pay your supplier for it.

To do this, YOU should "dump" to clear out under-performers, non-fast moving stock, over buys, etc.   I would start by sorting your product line into thirds -- top movers, middle, bottom -- by volume and then by profit.   Dump the bottom third unless they are essential to selling other topline items.  Think about dumping half of the middle group, too.  Sell at a steep discount - any money now is better than no money later when you have to put it into a rubbish bin and pay to have it taken away.

This literally frees up space, allowing you to downsize your rent or to simply move your production line much faster.  So much wasted energy and money and time is related to inventory, and most of it is often dead stock, or nearly so, that you keep driving around in the warehouse.

B)  Single piece / small batch flow -- Try to almost eliminate WIP, setting items down before complete, working on stock before an order is in, etc.   WIP only works for highly seasonal companies (think patio furniture, turkeys, A/C fans, etc.). 

C)  If you have trouble keeping employees, have you looked into hiring those that do not speak the most common language in your area?  New immigrants, in other words.  If you can start to hire from a single specific language group that is common in your area, but not the local language, then you are more likely to get better educated people, happy for FT shifts and resistant to moving on.   Provide benefits and consistent schedules.  Hire an interpreter for your HR role, and write out instructions in dual languages.  For Poland, right now, I would also try advertising in England to see if you could get anyone interested in moving back.   Give a bonus if they stay for 2 years, etc.   Consistent staff that show up to work are a huge benefit in this industry.  And a huge nightmare in safety and supervisory time if it is not working out / turn over, etc.

D)  Differentiation strategy.  Some customers highly value the ability to order today at 4pm and have it shipped out before 9am tomorrow.   It is not easy, but with a streamlined efficient facility can be done.  I have worked with two very successful businesses that based on this strategy.  e.g., last minute and late orders with very fast fulfillment cycles.  They did not charge more, but got more orders and consistent customers.   If you get it right, it hardly costs you more than a 24hr cut off time.
« Last Edit: August 11, 2017, 03:01:59 PM by Goldielocks »

electriceagle

  • Bristles
  • ***
  • Posts: 405
Re: Forced to become my parents' manager
« Reply #4 on: October 04, 2017, 08:02:43 AM »
I mixed things up too much sorry. The situation is new for me and I am but at the beginning of my road.

3. The situation on the job market changed drastically. The cost of the assembly team is getting a lot higher. There are also fewer and fewer specialists in my region.

Before you do a lot more work, a fundamental analysis might be worthwhile. Sometimes markets change irrevocably.

Are all of the companies in your area struggling (fundamental problem)? or is it just yours (management problem)?

Pull out the spreadsheet. If you achieved 90% of the benefit from your proposed efficiency improvements, would the company be able to pay its debts, pay the manager/employees salaries, and produce an actual profit?