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Case Studies 5

[fa icon="calendar'] 19-Oct-2016 07:59:38 / by Gary Livermore


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 Steve the business savvy sparky.

Steve is an electrical contractor with ambition, he wanted to build a company that hopefully one, or all, of his children would continue to grow when he decided to spend his semi-retirement boating and fishing.  Electrical contracting, like all parts of the construction sector, is competitive, especially if you wish to engage in high dollar value projects….the higher the dollar value the more competitive and risky it gets.

Steve wanted to grow his business to around an $8m turnover, he figured that this would be the right size to get economies of scale to deliver a nice profit but still be small enough to not lose control.  Steve did not want to participate in the rat race of main stream competitive project tendering so to achieve his turnover and profit goals he needed to grow his business in a smart way, he needed a business advantage…somewhere somehow.

 

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Steve was very aware of the shift to LED lighting and the associated energy and maintenance cost savings.  His company had also provided electrical services at the headquarters of a national automotive parts and products company, they had 768 warehouse outlets across the country averaging 3000 sq metres each outlet.  Steve had heard that the auto company was investigating the replacement of all lighting in all warehouse outlets with more environmentally friendly LED light fittings.  Steve decided to be proactive and commenced preparing a very good proposal for the replacement.

 

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Steve knew he had the following:

  • A competitively priced workforce
  • Solid technical capabilities, and
  • Excellent contacts within the company that would endorse his work

What he now needed was high quality light fittings at a very very good cost price.

Whilst 90% of the warehouses were standard, he needed a fairly broad range of products to suit the technical lighting requirements.

In lighting there are the very top shelf well-known brands that are sold at a premium price, there are high quality copies of the well-known brands…and then the quality starts to slide down to rubbish product.

Steve provided the technical data sheets of a range of light fitting products to Found in China and engaged them to find a supplier of equal quality products with comparable specifications.  Within 10 days Found provided Steve with three types of fittings, all with equal or better specification and lighting characteristic.

case52.jpgSteve made his light fitting selection and had samples of the range that he needed sent to him so he could touch, feel, play with and try them.  He was super impressed with the quality and with an 80% mark-up Steve would be 25% under the best buy price of the top branded equivalents.

 

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Steve’s proposal model was based along:

  • Found was able to secure 60-day trading terms for Steve by using a Chinese credit insurance company
  • Steve arranged for payment of the light fittings within seven days of them being delivered to each warehouse/outlet
  • Steve’s replacement labour was paid 30 days after invoicing, which happened immediately the light fitting replacement was completed at each warehouse

Steve’s proposal was financially cash flow positive at all stages.

Steve has now subsequently developed a financial model whereby he arranges funding for his customers through a finance company for the full light fitting replacement cost and the funding is repaid through cost savings in energy and maintenance cost.  It is a simple decision for customers to choose Steve’s company as there is no added cost changeover.

Steve now has a turnover of $10m and his company is known for its warehouse and commercial lighting capabilities.  His company has great growth potential but Steve is letting it grow slowly and organically whilst keeping his hands firmly on the steering wheel.

 

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Please email me if you wish to talk about your success story.

 Best wishes with whatever you are doing.

 

 Gary Livermore

Chairman Found Limited

 Visit:     1208/1209  No.400 Zhejiang Lu  Shanghai, Huangpu 200031 China

Ph:               +61 7 5564 6000

Email:      gary.livermore@foundlimited.com 

Web:       www.foundlimited.com 

 

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Topics: Top 5 Most Damaging Sourcing Fails in China, Sourcing Tips, import from china

Gary Livermore

Written by Gary Livermore

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