Establishing Focus in a Family Business

TypeFixing Stuck Companies
Quick Facts$65 million manufacturer of disposable packaging goods (“StorageCo”) with 3 plants and 2 divisions. Family-owned, third generation.
ChallengesStorageCo had a number of interrelated issues:
  • limited growth over a number of years
  • marginal profits, weak cash flow
  • unnecessary complexity in manufacturing
  • conflicting family opinions about long-term direction and focus
  • family members in wrong roles
  • overall the management team was weak
  • poor communication throughout the company
  • 3 of 5 business segments were flat and had tired products
  • multiple product lines created unnecessary complexity
  • old systems, weak processes
  • a need for outside objectivity
ApproachWe organized and completed a comprehensive planning process that identified the key strategic, operational, and financial action steps that were needed to establish a new direction, increase profitability and build greater shareholder value for the family.
ResolutionPeople worked better together with more focus and determination. Profits increased substantially. This strategic planning project caused StorageCo to:
  • sharpen its short and long-term focus and direction
  • aligned management team around growth market segments
  • consolidate manufacturing locations from 3 to 2
  • divest a non-core product line that contributed to the manufacturing bottlenecks
  • invest sale proceeds in needed capital assets
  • change business processes to be more responsive to customer needs
  • eliminate significant costs; dramatic growth in EBITDA
  • introduce new information technology
  • realign the roles and responsibilities of the management team
  • improve customer service and quality

The successful implementation of these many initiatives ultimately enabled the owners to successfully sell the business. The company continues to prosper in a difficult environment.
Links to the other fixing stuck company cases:
  1. Less is More: Downsizing to Increase Profits
  2. It’s Only a Matter of Time Until Sales Take Off

To view a list of all McHugh & Company Case Studies, click here.