By Verne Harnish
When the COVID-19 pandemic hit, Tom Smith’s company Alltite suddenly had to pivot. Alltite’s team, based in Wichita, Kansas, was mainly doing on-site calibration of industrial equipment at the time—a business model that was helping it grow quickly, thanks to the recurring revenue. With COVID-19 spreading, however, servicing customers inside their place of business was no longer an option. “They didn’t want people to come on-site anymore,” says Smith.
Working with Scaling Up certified coach Rob Garibay, Smith and his team looked for a related service they could offer under lockdown conditions. Reaching out to customers in the still-healthy renewable energy industry, Alltite’s salespeople asked what other help they could use. When several mentioned they needed bolt testing on their wind towers, Alltite decided to bid on a project in that area. “We ended up winning the bid and had to work like crazy to step into the bid and expand into the work they wanted us to do,” says Smith.
It was a big shift, but using the Scaling Up system for growing a company allowed Alltite to pull it off. Alltite has seen so much demand for its bolt-testing service that Smith doubled the size of his staff from 50 to 100 people since COVID-19 arrived. He expects to double 2019 revenue, which was close to $10 million, by the end of 2021.
Here is how Smith turned adversity into a chance to scale forward.
Seizing a fresh opportunity
When Alltite reached out to its wind industry clients to offer its bolt testing services, the company found plenty of takers—all over the country. Excited by the potential for growth, Smith and his leadership team ramped up hiring and training and invested in safety gear. The company quickly secured a Paycheck Protection Program loan, which helped to cover some of the company’s salary costs. Fortunately, Alltite didn’t have to make a big investment in equipment. “We’re using the same tools to do the work,” says Smith.
Updating a BHAG
When the pandemic arrived, Alltite was working hard to achieve a Big Hairy Audacious Goal (BHAG) of getting 50 vans on the road to do on-site calibrations by 2025. That goal was no longer relevant so Alltite has replaced it with a new one: 10,000 onsite service execution visits a year for each of the next 10 years, on average. “We decided to combine the calibration business with the bolt testing business,” says Smith.
Working with Garibay, Smith and his leadership team cleaned up the company’s operations. Reducing lost inventory through better tracking was one major initiative that bore big results. In 2014, Alltite lost $400,000 worth of inventory. Last year, losses only totaled $9,000.
To incentivize team members to throw their energy behind goals like this, Alltite is using Jack Stack’s Great Game of Business profit-sharing plan. Alltite was profitable at the close of 2020. “Everyone was super proud of that,” says Smith.
Shrinking the cash conversion cycle
With growth a priority, cash is king. Every day, Smith, his vice president of finance and his vice president of sales review a cash report. In addition to the company’s cash position, it highlights the company’s top 10 late-paying customers.
“We got our sales team involved in collections,” says Smith. “As soon as something goes past due, they’ll call their customer contact.”
To reduce the cash conversion cycle, the company actively encourages its team to invoice more quickly, tracking “days to invoice” on a continuing basis. Every team member is aware of how their actions contribute to speedier invoicing. “If the folks on the shipping and receiving dock take a day to open a box and delay work in progress, it sets us back a day,” says Smith.
Alltite has also stopped printing payment terms on its invoices and instead lists a due date. “We used to say ‘net 30,’” says Smith. “Now it’s due on March 20.”
Ultimately, the company reduced its cash conversion cycle from 222 days to 94 days while working with Garibay, who began coaching Alltite in 2017. “We track it every single month,” says Smith.
It’s too soon to tell exactly what 2021 will hold for Alltite, but the company is now well-positioned to make the most of new opportunities and ride through any unexpected challenges. As Garibay puts it, “Our mental attitude or mindset determines everything. Life just happens. It’s how we respond to adversity that determines where the victory or lack thereof lies.”