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Team Business Development

A unique approach to rapid business transformation

TBD return on investment example

TBD's highly motivational multidisciplinary team planning process has a unique ability to improve all four profit-drivers at the same time. Sales volume, sales price, unit cost and overhead can each improve without adversely impacting any of the other three.

The multiple impact of all the different improvement projects across all four profit drivers has a powerful compund effect on profitability. This multiple improvement factor then impacts the capital value of a business exponentially.

Case example of how you can achieve over 60 times ROI on a TBD rapid business transformation programme

Case example of a printing firm with £5 million turnover, 40% unit costs
and a net profit of £100,000 per year. After tax this equals £72,000. With an average multiple of four times net profit this values the company at £288,000. That is not much of a return for owners who have spent twenty years building up their business.

Four profit driver quadrant

Increased Sales Volume

Improved reliability of quality and delivery enables the sales team to reduce time spent on troubleshooting and devote an extra 25% of their time to new sales. Improved delivery reliability also reduces the impact of client attrition. Result: 5% organic growth in sales to £5,250,000 pa in the first year.

Increased Sales Prices

Team based problem solving improves pricing, quoting and more accurate invoicing. Improved quality and delivery means less discounts. Result: An overall increase in prices achieved of 5% adding a further £262,500 directly to the bottom line.

Reduced Unit Costs

Improved team working, planning and problem-solving speeds up job set-up time, and job turnaround time. Scrap generation and rejects are also reduced. Result: 5% reduction in unit costs to 35% of new sales volume - £1,837,500

Reduced Overheads

Team based process mapping and value stream mapping improve efficiency of the Sales Order Processing systems: Result: 2% reduction in overheads to £2,900,000, despite increase in sales.

New net profit:

Total sales revenue:   £5, 512,500
Total unit costs  £1,837,500
New gross profit  £3,675,000
New overhead costs  £2,900,000

New net profit   £775,000 (£558,000 after tax)

New capital value:

With increasing sales, combined with a sound management structure and a coherent strategic plan for the future, all backed up by robust and accurate financial forecasting, the company can now improve the valuation multiple to four and a half times net profit up from four previously. The result is a new capital value of £2.5 million an increase in value of over eight times.

In terms of ROI on the investment in the TBD programme this equates to over 60 times.

 

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