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Case Studies

Business Planning

The owner of a medium-sized business wanted help with his annual plan after two years of losses. After reviewing his data and the economy, I had to tell him that the economy had only caused a small portion of his sales decline; the bulk of the drop was a loss of market share. After we explored his cost problems, I told him that his cost-accounting system was not reliable.

The owner was discouraged by my assessment of his problems, but I told him this was good news because both his sales problem and his cost accounting problem could be solved. He used a good sales consultant to dial up his team’s performance, and a cost accounting expert showed him that bids could be lowered and still be profitable.

Eight months after my initial work, his company had ramped up sales, was running at capacity, and about to call up employees previously laid off. I did not solve his problems, but I provided the direction needed to address these challenges. My clients are generally good executives who benefit from outside insights about where they focus their attentions.

Business Model

A financial services firm was entering a new market. In its home market it employed a dense branch network. The CEO asked for advice on where to set up its branches. I offered to work on the topic at the zip code level, but suggested other experts would be better at deciding street and intersection targets. The CEO agreed.

As I proceeded to understand the customer segments they intended to serve, I began to doubt the wisdom of duplicating the company’s strategy in the new market. I spoke with the CEO about this early in the project and was told, “Follow your nose. If you have a contrary opinion, let me know.” I investigated alternative service models used by other firms in other markets and applied that experience to the company’s target clientele. I concluded that the company could service its customers as well or better using a lean branch model. One main office should be opened, plus one branch in a particular community that had unique needs. With some training (provided by the company’s internal training department), the staff could provide good service using the new delivery methods.

The CEO asked me to present my findings to the board of directors, which asked good, hard questions and then followed my advice. In the years since, the company’s new region has done well, and the capital expenditure and operating costs have been much less thanks to the new delivery model that I recommended.

Bank Lending Environment

A company had grown profitably using a business model based on heavy use of bank credit. In the 2008 financial crisis, the company’s bank reduced the credit line and tightened up loan covenants. The company’s return on equity was severely hurt, leading the CEO to wonder about the long-term viability of the business model. I was asked, “Should we wind down the business and return capital to our investors, or wait for a return to old bank lending standards?”

I began with an historical study of bank lending cycles. Even though the 2008 cycle was far more severe than most business cycles, I concluded that banks would reverse, at least mostly, their credit tightening, and I provided a time range for this to happen. I developed a set of indicators that would show the likelihood of banks easing credit standards and provided these to the CEO monthly.

Despite my optimism about the eventual turnaround, the company’s largest investors decided to wind down the business. Then the management team formed a new business, with new investors, that implemented the old strategy. By the time that they had organized and secured an equity investment, bank lending standards had loosened up and the new company enjoys good returns. My research was fundamental to the management team pursuing this business opportunity successfully.

Regional Markets

The CEO of a middle-market company was considering entering one or two new metropolitan areas. She had identified six potential areas and asked for my help at identifying the long-run growth potential of each. I collected economic data on population, employment, major industries and real estate, then conducted interviews with people in each area. My report to the CEO highlighted two metro areas likely to grow rapidly and a third that should be entered only if they could do so at fairly low cost. The remaining areas offered little benefit over the current areas served by the company.

A decade has gone by since this project, and my top picks did grow faster than the other areas. The company acquired a business in the first-choice area, but ran into unforeseen problems with the acquisition, delaying profitability for a few years. The company entered the third market after finding a person with industry experience in that area, allowed the low-entry-cost strategy. That office proved profitable early on.

The business has since been acquired, and its presence in the two additional markets was definitely a plus in valuation. This project illustrates two important lessons. First, that regional growth can be forecasted with enough accuracy to guide business development decisions. Second, there’s more to business success than economics. Good acquisitions and good management are still important, even in fast growth areas.

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  • The Labor Market Is Tight Despite High Unemployment February 19, 2021
    Finding workers is hard despite the high unemployment rate, because many jobless folks don't match the skills needed, don't want to shift occupations or prefer to collect unemployment. Business focus on retention should be top priority.

Testimonials

On multiple occasions we have engaged Dr. Conerly to facilitate, and more importantly, stimulate strategic planning sessions. He artfully brings the complexity of economic consequences to light, and is also is a veteran voice of objectivity. And his ability to inject humor keeps the energy and teamwork a priority!
Greg Newton, CFO, Cascade Bancorp
We asked Bill Conerly to look at one of the major factors limiting the growth of our business. He pulled together data from a wide range of sources, as well as his own extensive business knowledge, to give us an insight into when conditions would improve and how we could be ready to capitalize on better times. He did so in a straight forward, easy to understand manner. A year later it was clear that things had evolved just as he had forecast. Ever since then he’s been my go-to guy on how the e…
Len Ludwig, former CEO, Vencore Capital LLC
Thank you for a wonderful presentation. Everyone who heard your presentation was impressed with your analysis, and strong command of facts and theory. More importantly, your ability to weave together substance with humor, in a very dynamic way, meant our attendees learned and retained more information than we would have typically expected. You made economics fun and you left our members with powerful insights on trends and issues to consider as they prepare for the future.
John Aguirre, Oregon Association of Nurseries
As you know, it can be difficult to find economists who provide good substantive information who are so entertaining and engaging. I received many enthusiastic comments from members and others in attendance. I was very pleased with Dr. Conerly and have recommended him to NCSTAE, our national organization.
Molly Steckel, Idaho Telecom Alliance
Bill did a great job! There were many in the audience who liked him and many in the audience who loved him! Bill shared pertinent and timely information with our audience of commercial real estate professionals and added interesting stories and a funny sense of humor twist.
Jana Knoll, BOMA Boise
AgFirst Farm Credit Bank has benefitted from Bill Conerly’s unique insights and perspectives several times over the past five years…his materials consistently cover the points that we agree on…he has been very well-received by our groups, and we look forward to having Bill with us again in the future.
Ronnie Hucks, AgFirst Farm Credit, Columbia
You are a master at your craft and a favorite of our audience.
Jim Parker, UBS Financial Services
Bill Conerly has been an invaluable resource to our executive team and ownership by delivering superior, well-founded ideas that are critical to navigating the current economic climate within the construction industry. Bill assisted O.B. Williams Company with developing a strong business plan that we implemented 18 months ago. As a result and together with Bill, we are improving our position within our highly competitive market segment. We understand that navigating this current economy is indee…
David Wick, CEO, O.B. Williams Company
Every time you spoke, we got business.
Chris Rasmussen, Washington Trust Bank, Bank of the Northwest
It can be difficult to find economists who provide good substantive information who are also entertaining and engaging. I received many enthusiastic comments about Dr. Conerly from members and others in the audience.
Molly Steckel, Idaho Telecom Alliance

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bill@conerlyconsulting.com

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