From special management to a new strategic direction

Do we really understand where the leak is?

At first glance, one division actually appeared to be performing well: coloured paper was growing and showing attractive gross margins. But as experienced entrepreneurs know, reality can sometimes look very different from what it appears to be on paper. Especially in situations like this, where the survival of the company is at stake, the first priority is always to establish: Do we really understand where the leak is?

Tristan Arkesteijn therefore did not start with a new strategy, but with the question of whether the company truly understood its own business well enough. Together with the team, he recalculated margins, critically reviewed the cost structure and how costs were allocated, and mapped the working capital requirements. Not only from behind a spreadsheet. He also went into the operation itself to see how inventory, sales and processes worked in practice.

A different picture emerged.

The coloured paper division had thousands of SKUs, low inventory turnover and a substantial stock position, a significant share of which was obsolete. The activity therefore placed a disproportionate burden on working capital. The margins also turned out to be less attractive than expected. After realistically allocating commercial effort and operating costs, very little return remained. There was another issue: sales required a great deal of manual work and customisation and consumed a disproportionate share of the sales team’s capacity. At the same time, competition was increasing, including from Asian suppliers offering comparable products at significantly lower prices. The company had virtually no meaningful bargaining power with its customers.

The supposed crown jewel turned out to be considerably less shiny.

Less sexy, but more robust

At the same time, together with management, we discovered that other activities were actually stronger than expected. Corporate print may have been less spectacular, but it was more stable. Margins were not high, competition was manageable and customer loyalty, and therefore long-term customer value, was relatively strong by industry standards.

That provided a foundation to build on.

The sheet-fed printing division was also reassessed. By shifting the focus towards a more limited range of products for the online channel, a more realistic path to profitability emerged: lower indirect costs, more predictable volumes, better utilisation of the machinery and smarter synergies with existing customers. We also saw opportunities within the wholesale activities to use purchasing advantages more effectively as a lever for margin improvement.

The most difficult discussion was not about numbers

The biggest challenge, however, was not technical but human. One of the three owner-directors had regarded the coloured paper division as his personal mission for many years. Tristan guided the discussions around this with tact and sharpness. Not by trying to persuade people with PowerPoint presentations, but by working through scenarios and, together with the team, making the impact on cash and continuity transparent. Gradually, this created support for a far-reaching but necessary restructuring.

Within a few weeks, a new direction was in place

Together with management, we developed a number of clear choices:

• separating the coloured paper division, with a potential sale as a next step;
• repositioning corporate print, with a greater focus on customer value and differentiation;
• developing a transition path for sheet-fed printing towards the online channel and better capacity utilisation;
• repositioning the wholesale activities, using purchasing advantages as a lever for higher margins;
• and a concrete implementation plan, including the financial rationale and a risk analysis.

From pulling the plug to restoring confidence