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Monticello Capital can show you how to change your view of cost control and to understand the true nature of costs. Successful companies manage cost by establishing a focus on effectively managing their internal business and operations processes.
These are the activities that support the delivery of goods and services, such as: Procuring material, paying a supplier, scheduling staff, or inspecting a part. These processes determine the companies' ability to respond to their customers. To that end, we assist our clients in understanding how their internal activities commit the company to acquire valuable resources including raw material, labor, capital, and technology.
Case Summary
The partnership was notable for its youth, enthusiasm, and success. Market demand for the client's technology kept increasing. The CEO won a prestigious "entrepreneur of the year" award. Multiple rounds of debt and equity financing had closed in record time. Research and development prospered - new products were being invented and selling quickly at high margin. The company was debating new strategies, including acquiring some of its competitors, bringing Monticello Capital into the picture. The investment bankers' first reaction was alarm. Cost control was non-existent. We predicted two fiscal quarters until the inevitable "cash flow death spiral" of inadequate ability to service debt, pay trade creditors, or make payroll. No more external investment would be possible. As corporate advisors Monticello Capital's principals convinced the Board and management that if they did not institute radical cost-constraining measures now, a Bankruptcy Trustee would later. Every aspect of the business and its internal culture had to change. Staff was cut severely. Every project was subjected to productivity and profitability measurements. Every person was judged on a profit producing basis. Advanced quantitative measures were developed, started, and enforced. The result was a lean and productive organization with revenue continuing to grow but at a much slower rate, the profitability percentage almost tripling, and a successful new commercial debt financing closing as the next round of investment.
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