A few simple changes helped TRJ Engineering increase profits, improve stability and diversify through the GFC.
Client:
TRJ Engineering
TRJ Engineering has been providing steel fabrication and engineering services to customers throughout Melbourne for over 30 years. We have expanded and updated our capabilities by purchasing state of the art machinery and assembling a team of skilled and qualified workers.
Task:
Reduce owners time working in the business, improve sales and increase net profit.
Business Owner:
David Murphy
After just 9 months of working with Zed, my sales have increased by 17% and profits have improved by an amazing 30%! I couldn’t recommend Zed enough. Give it a go—even on a trial basis. Just listen to him—you can’t afford not to. You’ll learn new and better ways of doing things and become open to new ideas. I don’t want to use anyone else!
Project url: trjengineering.com.au
INTRODUCTION
Working long hours, weekends and struggling to find time for family life are common problems that many business owners face and in 2005 David Murphy from TRJ Engineering was no exception.
Back in 2005 TRJ Engineering was an engineering firm with about 20 staff. Providing steel fabrication and engineering services to customers in a wide range of industries, the business was doing well but Mr Murphy was finding that he was constantly overstretched and couldn’t reduce his hours for fear of compromising sales and the business bottom line.
As the owner of the business, David was responsible for everything and struggled to find quality time to focus on the future of the business or its growth. The business, being in the manufacturing Industry, was subject to extremely competitive operating conditions and was subject to threats from competitors and outside influences. Tough trading conditions. In effect, David had no time to diversify his business (spread risk) or pay any attention to marketing or other growth strategies, which left the business very vulnerable.
In an attempt to regain some balance and grow his business, David began working with Zed Morrey from Zed Business Advisory. Together they set a number of key objectives including:
- To increase overall sales for the business
- David to be able to reduce his working days from six to five
- To build effective systems in the business
- To increase profits
- To reduce debt
- Regular holidays that didn’t leave David stressed about what was happening while he was away
This case study reveals how Zed helped TRJ Engineering expand his business, more than double his sales and reduce his working hours to five days a week.
In the seven years since they started working together, all this has been achieved with TRJ Engineering’s sales growing from $3m to $6.5m and added two more business units to the TRJ Engineering Group.
BUSINESS ISSUES CHALLENGES
Zed identified a number of issues that needed immediate attention when they started working with TRJ Engineering. These were critical for the business to be able to move forward and for TRJ Engineering to expand and reach its objectives. Some of the problems were more general industry-wide whereas others were specific to the business and its structure and processes.
Issue One – External Threats
The manufacturing industry is vulnerable to a number of external threats and it was acknowledged that the business needed a variety of additional income streams to help strengthen it against unexpected issues and build a more solid foundation. They decided to keep the general manufacturing and steel fabrication focus but also diversify into new areas including vandalism covers for earthmoving equipment, retail fittings and street furniture.
Issue Two – Internal Threats
The other issue was that one large client accounted for approximately 35% of the overall sales leaving TRJ Engineering vulnerable as without this client the business would suffer significantly.
Issue Three – The need to Diversify
Diversifying would also help to spread the risk and make them less dependent on the main client but with the amount of time David was spending on the day to day operations of the business meant that this was virtually impossible for him to take on as the business owner. David needed to find the time to focus on expansion and diversification and he also really needed to reduce his hours to a five-day work week. Which at the time seemed highly unlikely.
Issue Four – GFC
Another business issue, which at the time they were unaware of at the time was the fact that the GFC was on its way and this, would change the state of business substantially. The already competitive and unpredictable manufacturing industry would suffer in the GFC like many other industries and TRJ had to be ready.
Here's What We Suggested
COACHING STEPS & LEARNINGS
There were a number of steps that Zed took to help TRJ Engineering. The first one to was to look at time management and figure out exactly how and where David was spending his time and find a ways that he could effectively reduce his hours so that he was only working five days per week.
In addition to helping Mr Murphy better manage his time, the following steps were taken:
- More effective business systems were set up and employees made more accountable, which then took some of the pressure off David.
- Employees were provided with position descriptions and KPIs and certain roles were promoted so that staff took on more responsibility.
- Sales targets were introduced. Budgets were set and employees were given a better understanding of NET profit. The business started a sales pipeline (for the first time) to help them track and manage their sales.
- Existing business systems were streamlined – all policy and procedures were reviewed and put into one very easily accessible document.
- New income streams were developed, namely street furniture, anti-vandal covers for earth moving equipment and retail fittings. Website + Sales Representative were added. Promotional material + Trade Shows
One very significant move was the promotion of the Operations Manager to General Manager. This took a lot of pressure off David and not only allowed him to reduce his working hours but also gave him time to develop other income streams and business opportunities.
One very significant move was the promotion of the Operations Manager to General Manager. This took a lot of pressure off David and not only allowed him to reduce his working hours but also gave him time to develop other income streams and business opportunities.
TRJ Engineering entered the retail fittings market because David had the time to give it adequate focus on the successful purchase of Reward Metal Products whose client base included Target and Coles. This strategic acquisition has really improved business stability, overall profits and ongoing manufacturing opportunities.
RESULTS
Overall the results for TRJ Engineering and for David as a whole were extremely beneficial. In spite of the impact of the GFC on the manufacturing industry, the business was still able to grow and expand.
The new business opportunities allowed TRJ Engineering to maximise the efficiency of current operations and to successfully overcome most of their areas of vulnerability.
The GFC actually resulted in many positives for the business. Before the GFC, most of their sales were generated by incoming faxes and word of mouth referrals and little time or effort was required to be spent on marketing.
After the GFC, business slowed down and they had to take a more proactive approach to finding new clients and marketing themselves. The business was forced to develop and implement a marketing strategy which brought them a great deal of success and profitable long term clients. Because things were slower they were able to focus on their marketing and on revamping other areas of their business which they had previously not had the time or the incentive to make a priority.
As an additional benefit, streamlining his business systems and procedures and delegating tasks to his General Manager and other staff members has allowed David the time and freedom to purchase other businesses. This has led to further diversification among his income streams and increased stability and financial security.
As a result of working with Zed, the company’s sales grew from $3m to $6.5m with the introduction of a website and sales representative generating $2m + in additional sales. David was successfully able to reduce his working hours and enjoy the work life balance, which had previously eluded him.
Your first choice for precision metal fabrication and general engineering
TRJ Engineering has been providing steel fabrication and engineering services to customers throughout Melbourne for 40 years. It is an Australian owned and operated business which has grown to over 30 employees occupying over 3200 square meters in factory space in its current location in Hallam.