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Platinum Group
March 2011
The Platinum Group Newsletter
Transition Tips
Ideas that inspire action for business owners and leaders in transition
 
Driving Business Forward After A Setback: Dealing with Loss of Major Customer – Part II
By Bruce Mallory, Partner

You’ve just lost a major customer — now what? Here are some specific steps to proactively manage the transition:

Evaluate your workforce to lower fixed costs. A good exercise at this crucial time is to rank the effectiveness of all your employees. Think about it like this: If your business was moving to another city, who would be important enough for you to pay the moving costs? The answer will help you decide whether to say goodbye to some and reassign others.

Consult with experienced bankruptcy counsel. If your customer filed for bankruptcy, it’s essential to follow proper procedures and maximize the speed and amount of your claims. For example, claims tied to recent shipments immediately prior to the customer’s bankruptcy filing receive special priority treatment. In addition, post-bankruptcy shipments need to be clearly separated into a new customer account for filing with the court.

Make it difficult for your competitor. You have proprietary knowledge of what it takes to service this lost business. Review and use it to your advantage. For example, tooling and other fixtures bought for this customer may not be released to the new vendor until all outstanding invoices have been paid. Information about that customer’s formulas, procedures, supply sources, and quality inspection checks do not need to be shared with the competitor. The new vendor may stumble in servicing this customer, which may result in this business returning with a greater appreciation of the added value you can provide.

Contact me if you have questions at Bruce.Mallory@thePlatinumGroup.com

Platinum in the News
Learn When to Apply Operations Improvement Tools

Platinum Member John Hehre wrote a recent review on the book that should grab the interest of operations managers. It’s called Velocity: Combining Lean, Six Sigma and the Theory of Constraints to Achieve Breakthrough Performance - A Business Novel by Dee Jacob, Suzan Bergland, and Jeff Cox. The book offers a variety of situations where one of the three methodologies is more appropriate than another. The review ran in a publication of the Manufacturers Alliance.

Velocity is about a fictional company, Hi-T Composites, which has been purchased by a firm with an almost zealous devotion to Lean and Six Sigma. Hi-T had been successful before the acquisition, with improvements credited to using Theory of Constraints. Then, the new owners bring someone in to implement Lean and Six Sigma tools. Many very successful projects are completed, but the performance of the company starts to decline through ever-increasing inventories and higher operating costs. In the end, the key managers begin to understand situations where each of the tools is appropriate to use, and adjust their improvement activities accordingly.

Platinum in the Community

 

Pilot’s Service Helped One of America’s Wounded Warriors
By Tom Ahonen, Platinum Managing Partner

I was privileged to assist Sergeant B., an Iowa National Guardsman who faithfully served in many different missions for over a decade.  His engineering unit was called to Iraq to find and clear improvised explosive devices (IED). Ironically, despite the danger of his mission, it wasn’t an IED that changed his life. In 2005, he and his team had just returned from a patrol when, suddenly, there was incoming: A 107mm rocket hit his unit’s position. Sergeant B was badly injured.

Fast forward through the years of evac, trauma care, a purple heart and rehab. The recent treatment at the Minneapolis VA allowed for occasional visits home to Iowa. Enter the Veterans Airlift Command (VAC), which provides free air transportation to wounded veterans and their families for medical and other compassionate purposes, through a national network of volunteer aircraft owners and pilots.

I was blessed to handle Sergeant B’s return flight from Iowa to Minneapolis in mid-January for his continuing therapy. You might think that a man such afflicted by the horrors of war would be bitter or angry; not so. Sergeant B is one of America’s finest: Those who protect and serve without regret or complaint, despite the consequences of their service. As we talked during the flight and subsequent drive to the VA, not a single negative word was heard regarding his circumstances or how they came to be. “I was just doing my job,” he said. If anything, Sergeant B went out of his way to thank me and other VAC volunteers. But the sacrifice of any VAC volunteer pales by comparison to the sacrifice borne by these wounded warriors.

  

For more information on the Veterans Airlift Command, visit www.veteransairlift.org.

Lesson Learned
Don’t Go Alone
By Steve Coleman, Platinum Partner

As I near the end of my third decade advising business owners on ways to grow their businesses, the accumulating evidence is pretty clear: It gets lonely at the top. The more successful a business becomes, the less time an owner seems to have for talking with other owners. As the business becomes more valuable, the stakes are greater — both in winning and losing — so the pressure increases on getting things right. And at a time wisdom and experience is becoming a real asset, there is seldom growth in sharing or passing this along to younger owners and leaders.

On a recent visit to Florida, I connected with a client over dinner with his wife. During a delightful conversation with a tenth-story view of the Gulf of Mexico, his wife thanked me for some advice I had offered persistently over a couple years. “Don’t go alone” was my consistent theme for developing and using an advisory board. This client is a visionary, creative leader. He owns a core business that performs well when managed with tight reins, but this had drawn his creative, entrepreneurial talents away from his larger vision to form a new business with global opportunities. He needed objective guidance and input from sources outside his business.

A three-person advisory board of seasoned business thinkers was recruited. The simple test: “Will you listen to their advice?” An invitation to serve for one year was extended with the promise of minimal pay, good meals and an extraordinary chance to influence the formation of a potentially big and exciting new business with significant ecological impact. The three advisors agreed and a meeting agenda was formed around high-level strategy and organizational structure. The resounding direction given to my client was: “Go for it, and hand the reins to a seasoned veteran in the core business.”

Two years later, a recently promoted president has freed up the owner to focus on launching his new business. His wife is thankful he is now able to concentrate on his passion, and is a happier owner coming home at night. While this advice was not initially acted upon, it has firmed my resolve to consistently urge business owners: “Don’t go alone.”

Steve Coleman offers in-depth experience to clients pursuing strategic growth, new business development, sales planning and post-merger integration. As more ‘Boomers’ age, he helps owners with exit strategies, which sometimes includes planning a succession or business sabbatical.  He facilitates a monthly Transition Forum for leaders who are wondering:  “What’s next?” Contact him at Steve.Coleman@thePlatinumGrp.com .
Platinum Group
952.829.5700
9855 W 78th Street
Eden Prairie, MN 55344
www.ThePlatinumGrp.com

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