Pulling out of a nosedive
May 11, 2009
Bud Tomlinson was finally starting to feel pretty good about things again. Business was turning around. But the last eight months or so had been a real wake-up call...
Back in July his firm, Tomlinson and Pearson, was doing pretty well. Not as good as they did in 2007 (a record year) but the backlog was strong, cash flow decent, and profitability in the double digits. Then the rug got pulled out from under them! There were more projects cancelled than they had ever seen. And new proposals going out fell off so sharply it seemed as if the sky was actually going to fall in. Bud’s ulcer started flaring up, and when he went in for his annual physical in December, his blood pressure— normally 90-something over 60-something, was 148 over 98! The stress was getting to him.
But Tomlinson didn’t get where he was in life by riding along and letting his success be dictated to him by the economy. He was NOT about to get his butt kicked by this recession, so he went to work and did what was needed to turn things around. Some of those steps included:
Getting his founding partner, Jeff Pearson, to retire. It was time. Jeff— a great guy and at one time a close personal friend— had pretty much decided years ago to retire on the job. He had a lot of hobbies and other business interests, and as those expanded, his ability to focus on Tomlinson and Pearson decreased. But Jeff liked his name on the door and having an office and getting all the perks that he received. Not to mention the $200K per year and all the benefits. But the bottom line was they barely saw him at the office most weeks and his cost was greater than his value at this point. It was time he retired. Bud had a long talk with him and it was decided he would simply be a BOD member for $50K per year from now on. Even though the $50K was too much for what he did, it allowed Jeff to save face and still saved the company $150K annually.
Close down the Piscataway office. That thing had never made money. The only reason they had it was Jeff’s nephew, Homer Pearson, wanted to live there. So they opened an office around him. But it never made money— ever— and Bud Tomlinson had grown weary of the complaints about overhead allocation and other company policies that Homer Pearson constantly made. Dealing with this office was sucking the life force out of Tomlinson. With Pearson no longer active in the company, it was time to cut this marginal operation loose. Tomlinson offered it to Pearson, but he didn’t want it so Tomlinson shut it down.
Bud made some strategic cost cuts. Executive pay had gotten out of hand. Too many non-billable trips were being made (and paid for by the company). There were too many executive lunches, too many recruiting trips to alma maters, too many unpaid design competitions, too many unproductive meetings... and Bud put a stop to all of it. All told, about $100K per month in savings were easily identified and put into effect. And it worked.
Bud re-energized the firm’s marketing program. He refocused all business development on existing clients, past clients, and the top 20 most interesting potential clients. He got back into insisting the brand be used properly, repainting all company vehicles in dark green and gold like their company logo, and using project signs on every job. It immediately caused a stir in their local communities and the work started to flow again.
None of this stuff was revolutionary at all. In fact, it was all pretty much commonsense. But that didn’t mean there wasn’t plenty of opposition from some of the other principals to doing these things. “Damn the critics,” thought Tomlinson. “I’m too old to lose it all and too cantankerous to work for someone else. Success is the only option!” And so it was.
Originally published 5/11/2009
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