About this Presentation
Why change? More than 50 banks rejected the company, Colovos, after defaulting on its loan. The existing bank hired a turnaround firm to start liquidating Colovos. What to Change? A shortage of cash to buy products from its Asian vendors drove Colovos’ poor performance. Inventory turns dropped as low as 1.5 times. What to change to? A simulation showed that the $3 million in cash that Colovos so desperately needed, was tied up in its inventory. Within 3 months inventory was reduced by 20%, releasing $1 million in cash. This progress secured outside investment of $500 thousand and a partial refinancing loan while the turnaround plan continued. Inventory was then further reduced to more than 50% or $3 million (from $6.1 million), which allowed for full refinancing. How to cause the change? This was the BIG problem: how does one convince a bank to stop liquidation proceedings with a turnaround plan that reduces the bank’s main asset and precious collateral (inventory) by more than half?
What Will You Learn
To help you get the most value from this session, we’ve highlighted a few key points. These takeaways capture the main ideas and practical insights from the presentation, making it easier for you to review, reflect, and apply what you’ve learned.
Instructor(s)
Kobus van der Zel
Kobus van der Zel a senior consultant at MorrisAnderson, operating as a Certified Turnaround Professional (CTP) in companies facing liquidity or transition challenges. Kobus holds mechanical engineering and MBA degrees, and is a qualified TOC Jonah (1999). Since 1999 he has tied his turnaround fees to monthly profitability or cash flow results, in order to create a pull system for truly understanding the obstacles for higher business and people performance. Coaching and interim CEO engagements over a span of 16 years in South Africa, Canada and the USA has enabled him to summarize the forces preventing higher performance in his book The Forces of Progress (www.lulu.com/spotlight/globalturnarounds). “When I engage with a new underperforming company I am always surprised at how so many weak people could have gathered in one company” Kobus says. “Eli helped me to understand that people are inherently good, and that it was the company that made the people weak – which is great news, because it means the process can be reversed to make them strong again!” Kobus’ system for people development is at the root of his turnaround strategies by using the online accelerator www.YourSensei.org – which combine the best of TOC, lean manufacturing and people development processes to ensure optimal cash flow generation when it is needed most.