Cheryl Stewart, VP Finance
Finance Department There are three staff to handle routine, transactional tasks. I focus on the numbers and trends and look for where costs might be spiraling out of control. When I find that, I try to do something about it. The Solution We do a lot of things right – like redefining ourselves as a commercial player. And Marketing has reorganized around product lines. All good. The best thing to do now is to sit tight and wait for these initiatives take hold. I know, tough to do when revenue’s dropping. The Challenge Ahead While we’re not doing great, there are some positive signs. Decisions made to expire most of our long-term debt have helped. And cost-cutting has happened too, otherwise we would be facing much tougher times. We are not sitting on a pile of cash anymore and so the banks are hesitant to extend our operational financing until they see a more certain future for us. Management Team Brian is now finally paying attention to the warnings I’ve been giving in the last two years about shrinking margins and lower revenues. In the past our voice wasn’t heard. But now R&D, Marketing, and Manufacturing are giving us the attention we deserve. Financial Situation I figure at the current production and cost levels, we can operate for another 18 months, max. And if we wait for tougher cost controls, it will be too late to save ourselves.
Commercial Market Before entering the commercial market, we did extensive research which told us that superior technology would make us a premium producer with margins 25% higher than our competitors. However, what we learned is that users value features such as ease of use and aesthetics, which makes our competitors’ products more popular. Military vs. Commercial Military markets offer bigger margins because they reward research and development; commercial margins reward only development. The Problem There is no single problem in this company; there are a series of compounding problems. First of all, R&D and Marketing aren’t communicating. Second, Manufacturing has failed to address the cost issues, despite my efforts. They have to change their mindset from quality at all cost to quality at a set cost.
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