Case Study

Increasing Revenue and Customer Value for a Non-Core Business Unit

Company

Iowa-based agriculture and sustainability non-profit.

Challenge

The client had developed a revenue-generating environmental testing division to meet significant demand from customers, but the division was a drag on the organization's financial resources. Management sought to turn the division into a self-sustaining practice or profit center.

Intervention

Bâton Global (B|G) conducted a business canvas-based analysis of potential pathways for increased customer value, accompanied by financial modelling of break-even and profitability scenarios.

Results

The leaders established a clear pathway to a profitable and self-sustaining division which includes additional revenue streams they could pursue, cost savings that could be made among their current process, and how they could better leverage resources of other units of their business.

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The scope of this project includes four main areas of activity:

Insight

A current-state analysis of the division and its external environment was performed to establish a baseline of the division’s performance and opportunities in the market.

  1. A review of historical financial performance and budgets was conducted, and decision-friendly financial statements were custom-built.
  2. B|G benchmarked the division’s product offering and distribution strategy to competitors and leaders in adjacent industries.
  3. External factors poised to influence the division during planning were delivered to leaders
  4. B|G conducted a workshop that clarified the division's external value proposition, key customers, and how to better serve their market.

Innovation

A future-state analysis of the division was performed to identify multiple pathways to profitability.

  1. B|G developed a bespoke financial model to facilitate forecasting, scenario analysis, and economic decision-making.
  2. Financial modelling focused on differentiating variable and fixed costs which accurately demonstrated how growth would impact profitability.
  3. A business model canvas was created to project what the division would look like with scenarios from the model.

Integration

B|G delivered the new model and financial scenarios to senior leadership and supported the pursuit of initial initiatives.

  1. A final financial model and business model were presented to leadership and will be used by the division for future forecasting, planning, and analysis needs.
  2. B|G supported the early-stage development of initial initiatives including hiring key resources, pursuing new clients, and expanding the division’s involvement in their customer’s community.

Impact

B|G delivered clarity in how senior leadership could bring profitability to their division and create more value for customers.

  1. Financial modelling delivered a sound understanding of changes that needed to be made to improve profitability.
  2. Initial initiatives kickstarted the division to pursue outcomes that would result in greater efficiency, generate new revenue, and create more impact for customers.