Rain Dance Property Solutions, Inc.

Fletcher, Linda Pickthorne ; Helms, Marilyn M. ; Willis, Marilyn 等

CASE DESCRIPTION

When Porter Raulston, the CEO of Rain Dance Irrigation and Lighting Company, met with Jack Hatcher, the principal partner in Hatcher-Deerfield, Inc., a consulting firm specializing in organizational planning, development and governance, he was interested in a new venture. Hatcher's idea was to combine Raulston's business with two other businesses landscaping and construction--to form a new entity to serve as a one-stop shop for the homeowner. Their new company, Rain Dance Property Solutions, would merge the three companies and entrepreneurs and could even result in a template for future franchising in other markets beyond Chattanooga, TN. The case explores the merger process as well as strategic planning, mission statement development and goal setting for the new entity.

CASE SYNOPSIS

The primary subject matter of this case concerns issues faced when merging three entrepreneurial companies. Secondary issues examined include ways to value merging companies, issues in combining operations, employees, and managers into one entity, and personality issues involved in such an endeavor with traditional entrepreneur/owners. The case has a difficulty level of three and four--appropriate for junior and senior-level undergraduate students. The case is designed to be taught in one class period and is expected to require one to two hours of outside preparation by students.

INTRODUCTION

In May, 2006, Porter Raulston, the CEO of Rain Dance Irrigation and Lighting Company, made an appointment with Jack Hatcher, the principal partner in Hatcher-Deerfield, Inc., a consulting firm specializing in organizational planning, development and governance. Raulston and Hatcher had been acquaintances for many years and Hatcher had been a long-time client of Raulston's company, the state's largest residential and commercial sprinkler system and outdoor environmental lighting enterprise.

When scheduling the appointment, with Hatcher, Raulston indicated he was searching for a new entrepreneurial venture and needed help identifying, formulating, and implementing that idea. Raulston did not know precisely what he had in mind for a "new entrepreneurial venture," but he had maximized the financial potential of his current business and was interested in making changes. In his early fifties, Raulston was a personable, low-key individual who had started his business over twenty years ago. His primary role had always been external, focusing on sales and customer relations. Raulston relied on his employees to oversee the operations of the company while he provided only cursory oversight activities.

Ralston had come to the right person. Hatcher, in his late forties, was the epitome of a successful entrepreneur. Before starting his own business, he worked in a variety of industries to gain practical business experience, ultimately holding key management positions in the Jack Eckerd Corporation, the Chicago Tribune Company, and Salem Carpet Mills, Inc. With a background that included both staff and line positions and many intrapreneurial accomplishments for his former employers, Hatcher opened his own consulting firm in 1999 focusing on organizational development products. His firm's stated purpose not withstanding, Hatcher took advantage of his entrepreneurial skills by starting more than a dozen new ventures that ultimately were profitably harvested.

During their May, 2006 meeting, Hatcher helped Raulston develop an in-depth analysis of his business in terms of potential opportunities. During the next few months, which were typically during his busy season Raulston had little time to do more than review the information and strategies that resulted from his conversation with Hatcher.

In September, 2006, completely independent of his conversations with Hatcher, Raulston received a telephone call from Ed Britton. Britton, also in his early fifties, was the founder of River City Lawn and Landscaping, Inc., a commercial landscaping and exterior maintenance company. Britton had been Raulston's vendor on numerous projects and the two were well acquainted both personally and professionally. In addition to his landscaping company, Britton created www.ChattanoogaHasBids.com, an Internet based site connecting qualified exterior maintenance contractors to a list of potential customers in the local Chattanooga, TN area. He had a number of customers in the more affluent Lookout Mountain community. Prior to his current business, Britton had started several companies that provided a variety of maintenance-related services. All had experienced limited success and were of a short-term nature. In addition, all were primarily "virtual" operations that relied heavily on subcontractors. Other than a minimum amount of capital equipment, these "virtual" businesses required almost no physical infrastructure.

Britton came straight to the point. He wanted their companies to merge to create a comprehensive one-stop residential and commercial lawn care and landscaping service. Britton's proposal echoed one of the entrepreneurial strategies Hatcher had previously suggested to Raulston. The two decided Hatcher was the logical resource to help them develop their new enterprise. The first meeting was in October 2006, followed by three monthly meetings during October, November and December focusing on designing the new venture.

The Concept

Based on the independent comments of all three principals, their first few meetings were only relatively productive. Their conclusion: "we were all over the place." Raulston and Britton had difficulty envisioning a business that extended beyond their current functions. They were accustomed to limited seasonal activities. Hatcher's vision was far more comprehensive as he continued to stress the importance of a portfolio business model offering high-end homeowners and selected commercial property managers a package of connected products to provide one-stop shopping for the property owner. Hatcher was convinced that the one-stop shopping concept would be successful only by adding construction services to their product mix. He envisioned that property maintenance would include not only routine items but also renovation and expansion. Hatcher thought the addition would be a key service for homeowners who wanted a consultation regarding their home's structural issues just like commercial property received. For their high-end customers, these services would free them from the day-to-day rigors of home maintenance. Their consulting idea for homeowner maintenance would be like the services a financial planner provides to customers in managing their investment portfolio. As the three continued to unsuccessfully debate the exact nature of their enterprise, they did manage to agree on its name: Rain Dance Property Solutions, Inc. This decision--a variation of the name of Raulston's existing business--was designed to capitalize on the latter's reputation and name recognition.

Despite Ralston's and Britton's lack of enthusiasm for his entrepreneurial concept, Hatcher decided to pursue his idea. In November 2006, Hatcher privately initiated an informal conversation with Stuart Bickley, the owner and founder of Bickley Construction Company. In his late thirties, Bickley had experimented with a variety of occupations. Bickley had worked in his father-in-law's retail business, several marketing jobs and finally a temporary stint in the finance office for the then-Governor of Tennessee. Then Bickley started his construction firm believing he had found his niche.

At the time Hatcher approached him, Bickley was involved in a major remodeling project on Hatcher's residence. This provided Hatcher with ample opportunity to discuss the Rain Dance venture idea with Bickley. Their conversations convinced Hatcher that Bickley could supply the missing operational piece needed to make the new company succeed. In addition, Hatcher believed Bickley could bring a needed leadership role to the new business.

After talking to Raulston and Britton, the two agreed Bickley should be invited to the next meeting in early December to explore the possibility of his joining the venture. At this point, Raulston had been named President and Britton had the title of Vice President of Sales for Rain Dance. Raulston's office assistant, Casey Adcock, began attending the meetings to provide administrative support.

For the first meeting with Bickley, Hatcher had prepared a lengthy agenda. There was much to be decided. As President, Raulston presided over the meeting but it was evident he had difficulty conducting a structured business meeting. Once again, much was discussed but little was accomplished. Despite the unproductive, frustrating meeting, Bickley was impressed with the potential of the Rain Dance concept. In subsequent private meetings with Hatcher, Bickley agreed the new company faced two challenges--finding the right person to market Rain Dance and finding the right person (i.e., President) to direct the launch of the enterprise. Both believed these two problems could be resolved and Bickley agreed to add his construction business to the Rain Dance venture. Hatcher was confident he had conceived an idea that not only would be financially successful but would also continuously grow into an entrepreneurial venture of widespread importance.

By general consensus, Hatcher was asked to run future meetings. The four began meeting two to three times each week throughout December 2006 to meet their goal of officially organizing Rain Dance by January 1, 2007.

THE MERGER

Each of the four principals brought something to the table. In general, Raulston, Britton and Bickley had business experience, but only in their specialized niche areas. None had ventured beyond their areas of expertise, either in terms of new and unrelated businesses or expanding the scope of their current enterprise. Initially, Hatcher's role was as a consultant, but his involvement in the organizational and governance process became more extensive, all agreed he should become a minority owner.

Raulston's contribution to the merger was liquid assets and a strong base of loyal clients. He had been in business for over twenty years. The company had 700 residential customers under contract with a database of an additional 1,200 former and/or occasional clients. Twenty licensed and experienced employees would be available to support the broader activities of the new company, especially during the landscaping off-season. In addition, Raulston anticipated he would be able to contribute income of about $70,000 from prepaid contracts to offset their initial operating expenses. Rain Dance would incur deferred liabilities associated with this income as well as other financial obligations of Raulston's current business. Raulston assured his new partners his debt was minimal.

Britton's strength was his experience in commercial landscaping and exterior property maintenance along with some of the area's largest commercial accounts. His company had a very limited infrastructure because he relied exclusively on subcontractors to service his customers. Britton's contribution primarily would be capital equipment. His relationship with the numerous vendors was a secondary, although intangible, benefit.

Bickley's position as the owner of a custom design and remodeling firm was the strongest of the four principals. With a valuation of $1.3 million, his company was debt-free and profitable. His employees were all long term, seasoned individuals who were supported by a fully stocked central warehouse and shop facility. Bickley was in the midst of his busiest and most profitable fiscal year since he started his company. In contrast to the traditional seasonal construction industry model, he scheduled exterior work for the summer and fall months and interior work for the winter and spring. Far from being seasonal, there was a continual, year-round demand for his services. A twelve to eighteen month waiting period to begin a new project was not unusual, and the length of the waiting period continued to grow. Bickley's contribution from his current business activities would be $40,000 to $50,000 a month.

All the information was verbally provided by each principal. At this point, an extended or external review of each individual and their company as a form of due diligence was not even considered. Relying on this information, the four decided to tentatively allocate ownership of the company as follows: Bickley (40 percent), Raulston (25 percent), Britton (25 percent) and Hatcher (10 percent). The final percentages would be determined after the merger was completed.

Implementing the Merger

With the concept of the merger agreed upon, Rain Dance Property Solutions was incorporated in January 2007 as a Subchapter S company in Tennessee. The specific details of the merger, however, had not been resolved. Numerous issues had to be addressed such as: defining the exact scope of the new company's operations/services; reconciling and combining the accounting records of the three businesses; determining the per share value of the stock; finalizing the ownership percentage of the four principals; formalizing the officers of the new organization--and their responsibilities; and developing and implementing a strategic plan with goals, objectives, and outcome measurements for the new company.

The group decided to tackle two issues simultaneously the development of a strategic plan and assessment of the potential financial condition of the new company. Hatcher led the strategic planning process, which resulted in the following mission statement (see Exhibit 1) and four key objectives for Rain Dance, as shown in Exhibit 2. Each objective was supported by strategies (i.e., action plans).

Exhibit 1
Rain Dance Property Solutions Mission Statement 2007

Rain Dance Property Solutions is the premier one-source provider
of all maintenance and construction services to both home and
commercial property owners.

Our trained staff is licensed, insured, and independently
skill-certified.

We are an employee-owned corporation that fully guarantees
customer satisfaction.

Exhibit 2
Rain Dance Property Solutions Key Objectives 2007

1. Define and Create New Rain Dance Organizational Structure

2. Execute Marketing Plan to Assure New Sales

3. Establish Operations-Side Protocols

4. Attract Investors

Raulston volunteered to combine the financial records of the three companies. His office assistant had been using an accounting software program in his business and had the time to devote to the project since the winter months were his company's off season. Unfortunately, during their numerous meetings in December 2006 and January2007, Raulston did not demonstrate a sense of urgency for completing the accounting analysis. More to the point, Raulston had not gained even the most fundamental financial or accounting experience from his own business. Every aspect of those functions had been left to his office staff. Consequently, he had no understanding of the scope or the purpose of the assignments. It was clearly beyond the capabilities of the Rain Dance accounting software program.

Raulston, as President of Rain Dance, had failed to comprehend his responsibilities, further compounding the situation. Raulston had the responsibility of assuring the combined enterprises simultaneously maintain their individual businesses, introduce and transition their employees to the functions of the combined companies, and generate the type of new business envisioned for Rain Dance.

This combined lack of understanding became increasingly apparent during the group's meetings. Subsequently, several of the principals privately observed that the meetings were more of a "Management 101" exercise rather than policy-driven discussions. Frustrations increased and the meetings became untenable. By the end of February 2007, little progress had been made on the financial analysis of the merging companies and none had been made on the other issues. As the owners later concluded, not all of the participants had started with a clear idea of what to do and how to do it. Moreover, only Bickley and Hatcher had prior experience with many of the key issues to be resolved.

In the words of one of the owners, Hatcher "had an epiphany" for solving the stalemate: change the roster of officers. After a brief discussion, all four agreed that Bickley's obvious strengths and experience made him the logical choice to become president of Rain Dance. Hatcher attempted to limit Raulston's role to that of secretary. Unfortunately, he was unable to convince the other principals that the job of Chief Financial Officer should be assigned to someone external with substantial experience in the field. Despite his efforts, Hatcher realized that the other principals were equally deficient in financial analysis skills and did not understand the potential problems that Raulston could create. He acquiesced to Raulston's role and privately decided that he would monitor Raulston's activities. Thus, Raulston, the former President, would assume the position of secretary and chief financial officer. Britton would be the vice president of operations and Hatcher would hold the general title of vice-president. The principals hoped these changes would allow the company to move forward more quickly.

Resolving the Issues

The next priority for the company was financial. The accounting records of the three companies had to be consolidated and the value of the new company had to be established. Rain Dance's stock had to be apportioned among the owners and the share value of that stock had to be calculated.

The company's charter authorized 25,000 shares of Corporate Treasury Stock and allowed for the initial issuance of 10,000 shares to the four principals. For tax purposes, the initial stock distribution to the founders would be determined by their individual aggregate contributions in creating Rain Dance Property Solutions, Inc. The remaining 15,000 of unissued shares would be retained by the Corporate Treasury for future sale or acquisition, an event that would dilute the percent of initial ownership of the principals. The charter further provided for an annual revaluation of the stock.

The partner's prior experience with Raulston's attempts to assemble the financial data and consolidate the accounting records of the three merged companies prompted the decision to retain a CPA with experience in the construction and related service industries. The accountant's task was to review the books of the three companies as of December 31, 2006, to create an accounting basis for the new company, and suggest a formula for stock allocation among the owners.

In the meantime, and without waiting for the accountant's report, Hatcher suggested to the principals that they should devise a method for establishing--on a preliminary basis--(1) the value of Rain Dance and (2) the per-share price of the stock. Hatcher believed that this would result in a more realistic (i.e. higher) valuation of the venture than that calculated by an accountant. He recommended using an ad hoc approach based on two factors. The first was the combined total of the aggregate sales of the three combined companies as of December 31, 2006 ($1,620,000). The second was the projected gross profit ($1,750,000) of the new venture at the end of its first year of operation (December 31, 2007). The latter had been calculated by Hatcher and essentially was an optimistic and "best case scenario." No one questioned the use of the two different measures to determine the company's value. They further did not question that the projected gross profits for 2007--the supposed result of their synergic merger--was based on little more than a hypothetical conclusion. The combined total of the two factors ($3,370,000) was divided by the number of shares to be issued (10,000). The resulting per share value was $337.

The accountant's report to the owners revealed Raulston had significantly understated his company's total debt which included unpaid balances on credit cards and other unsecured obligations that were to be transferred to Rain Dance. There were no corresponding assets linked to these outstanding liabilities. As a result, the allocation of the initial stock issue would have to be reconsidered or future shareholder distributions would need to be modified. The owners agreed to a reallocation of the stock. The formula recommended by the CPA for redistributing the initial stock allocation included the following criteria: cash flow, goodwill, options, contracts, and capital. The dollar amount in each category would be calculated from the financial records of each of the three companies and assigned a weighting factor based on the importance of each category. The application of the criteria to the existing companies would determine the revised allocation of the initial stock issue. The principals were charged with the task of defining each of the five criteria and the factor by which each would be weighted.

The process resulted in the following stock distribution of Rain Dance Property Solutions, Inc.: Bickley (48 percent), Britton (24 percent), Raulston (18 percent) and Hatcher (10 percent). The reallocation of ownership was accompanied by a change in responsibilities. Bickley continued in his role of President. Raulston would supervise his former office assistant, Casey Adcock, who would perform administrative and accounting functions for the new company. In addition, Raulston would make sales calls to potential customers. Finally, Raulston would determine the cost of Rain Dance services provided to its clients.

Britton was placed in charge of all landscaping and lawn functions. He now supervised both his and Raulston's employees and all related subcontractors as well as coordinated the combined functions of two former businesses. Bickley would continue his operation independently of Raulston and Britton. Hatcher's role had evolved into one of management oversight. Much of his effort was spent in keeping Bickley, Brittan and Raulston focused on three essential goals: (1) the "mastery of skills", i.e., developing a base of skilled workers and subcontractors to deliver the company's services, (2) the integration of all employees into a unified work force and (3) the creation and implementation of an effective marketing plan.

By July 31, 2007, six months after the company's organization, there were both encouraging results and obvious problems to resolve. The new venture had $1.5 million in sales and expectations were that sales would double to $3 million by the end of 2007. Net profit for the first six months was approximately $100,000. That figure would have been larger if not for the amortization of a major portion of the debt assumed by the company and the one time startup expenses incurred by the new venture. Hatcher estimated for the same time period and assuming the three companies had not merged, they would have generated a total of $900,000 in sales and $60,000 in profit. It was clear to the principals the synergistic effect of simply combining the three organizations into one entity had created higher levels of income. But more than synergy would be needed to attain and fulfill the potential of the venture.

Along with the positive financial results, there remained several potentially debilitating problems. Since its inception, Rain Dance had parceled its operations between the three separate locations. The scattered logistics resulted in a lack of coordination of resources, the inability to cross-train employees in the services offered by the company and the unnecessary expense of maintaining duplicate facilities.

In addition to these obstacles, Hatcher had become aware of a more serious situation that could undermine the fundamental concept of Rain Dance. Once again, the problem involved Raulston. For many years, his company was the "only game in town." Without competition, Raulston was able to succeed with little regard to how he ran his operation. His casual management style, which reflected this competitive advantage, could be seen in his employees.

The fact the new company demanded discipline and additional expertise of all its employees had created problems for Britton in managing the employees and building a multi-skilled work force. Compounding this was Raulston's attitude toward his new responsibilities, which included making eight to ten sales calls a day. Rarely was he in the office and he regularly cancelled or rescheduled appointments that had been arranged for him. Even more problematic, Raulston's oversight of the financial affairs of the new company had, at best, been cursory. Accounts Receivable had been allowed to grow to unacceptable levels and other routine accounting records reflected numerous inconsistencies.

Hatcher was increasingly concerned about Rain Dance's apparent stagnation. He began to meet with the other three, both individually and jointly. Of the three, Bickley appeared to be the only one to grasp the basis of Hatcher's concerns. Despite his efforts, little was done between July and December 2007 to achieve the original objectives of the venture. Hatcher had devoted as much time as possible to the company. He was now in the position of having to spend more time with Rain Dance, to the detriment of his own responsibilities with his consulting firm. By the end of 2007, Rain Dance had recorded only a marginal profit. The income was not attributed to a consolidated venture but rather the three (theoretically) combined units continuing to operate as separate entities. While profitable, this approach defeated the entrepreneurial purpose of the merger. Hatcher decided there still was the potential for success. He would try once again to put the company on the originally conceived track.

At Hatcher's strong urging, the Rain Dance principals agreed to participate in a second strategic planning process. The purpose would be to establish the company's direction for 2008 and identify and solve the venture's long-standing problems. Hatcher led the discussion. A new Mission Statement and revised Key Objectives were developed (see attached Exhibit 3 and 4). The group also prepared a series of "Statements" that (1) assessed the present state (2007) of Rain Dance, (2) described the desired state for 2008, and (3) presented a SWOT--Strengths-Weaknesses-Opportunities- Threats analysis (see attached Exhibits 5, 6, and 7).

The New Rain Dance

The Mission Statement was changed, but the key objectives for 2008 were not materially different from those for 2007. The additional series of "Statements" largely mirrored the initial 2007 goals and objectives for the company. As the strategic planning meeting continued, Hatcher began to wonder whether the other three principals understood or even wanted an entrepreneurial venture. He thought they might perhaps simply prefer the status quo of separate businesses units functioning under one legal structure. But for Hatcher, the status quo was unacceptable. He decided that 2008 would be a pivotal year.

For Britton, 2008 also proved to be a pivotal year. He had become frustrated with his role in Rain Dance. The "commercial services" portion of the business had been eliminated by the 2008 Mission Statement, thus reducing a major part of Britton's responsibilities. His second primary function of supervising the employees and subcontractors could not be carried out because of the lack of physical consolidation of the company. Britton decided to leave Rain Dance, selling his interest in the venture to the three remaining principals. Hatcher redoubled his efforts to find a location for the physical consolidation of all Rain Dance operations. In the latter half of 2007 he located a building that he thought was ideal for this purpose. All agreed on the site but, the move to the new facility still had not been made in July 2008, after fifteen months of discussing it. Numerous other issues continued unresolved. In short, little of either the 2007 or 2008 strategic plan had been implemented.

From his perspective, and despite the continuing marginal profitability of Rain Dance, Hatcher could no longer ignore the situation and his ever-increasing time commitment. How could he extricate himself from Rain Dance without forfeiting his investment? Was it still possible to salvage some aspect of the Rain Dance concept through some other entrepreneurial effort? Hatcher was determined to quickly resolve his dilemma

Questions for Students:

1. Is there a potential market for the services of Rain Dance?

2. Is the business a good idea? Support your answer.

3. What mistakes were made that could have been avoided?

4. What are the limitations of having multiple partners?

5. Would a looser supply chain or referral program be preferable to linking the companies together?

6. Could joint marketing or promotions achieve the same objective?

7. How is the formation different from traditional entrepreneurial start-ups? Are these differences advantages?

8. What are the opportunities and threats of combining businesses in general? What about these three in particular?

9. Do you agree with their mission statement and key objectives for 2007? 2008?

10. Prioritize the SWOT analysis variables provided. Are some issues in the wrong category? Discuss.

11. What should their new marketing strategy be?

12. Will Rain Dance survive? Why?

13. Is this business one that could be franchised?

Exhibit 1
Rain Dance Property Solutions Mission Statement 2007

Rain Dance Property Solutions is the premier one-source provider
of all maintenance and construction services to both home and
commercial property owners.

Our trained staff is licensed, insured, and independently
skill-certified.

We are an employee-owned corporation that fully guarantees
customer satisfaction.

Exhibit 2
Rain Dance Property Solutions Key Objectives 2007

1. Define and Create New Rain Dance Organizational Structure

2. Execute Marketing Plan to Assure New Sales

3. Establish Operations-Side Protocols

4. Attract Investors

Exhibit 3
Rain Dance Property Solutions Mission Statement--Revised 2008

Rain Dance is the first and only provider of comprehensive property
maintenance for the affluent homeowner, replacing the traditional
multiple contractor nightmare.

Our limited, member-only approach guarantees quality care for your
most valued investment, performed by certified experts.

Exhibit 4
Rain Dance Property Solutions Key Objectives--Revised 2008

1. Become Fully Consolidated

2. Market and Sell Home Contracts

3. Refine Organizational Model

Exhibit 5
Rain Dance 2007 Present State *
(Including Values)

1. On track with good product

2. Creating our market

3. Ground floor opportunity but bugs not all worked out

4. Unique product with a large market that will guarantee sales

5. Much talent is in place--systems are being perfected and
documented to manage delivery as we sell and grow

6. Several key openings--Irrigation Leader, Construction
Superintendent, Commission Sales Manager

7. Bad labor hiring model

8. Homeless, awaiting new building

9. No training, employee manual

10. Three companies are financially consolidated and
transitioned into one accounting system

11. We are consolidating

12. Pricing structure too low

13. Customer relations are not polished, penetration not explored

14. Too many "one-service" customers

15. Need better, consistent internal communications

16. No CEO

* unranked/brainstormed

Exhibit 6
Rain Dance 2008 Desired State *
(Including Values)

1. Focus all our efforts on strategic initiatives: a) consolidation,
b) contract sales, c) accountability

2. Be a marketing-driven company

3. Clear replicating processes that we all follow

4. Installed into corporate headquarters

5. Long-term, dependable revenue

6. Clear-cut role and job for Britton

7. Clear-cut organization for irrigation (Raulston's role)

8. 250 signed accounts on contract

9. At least 50% toward our New Business Plan goal

10. Study cost-side reduction

11. Control assets and their security (parts, tools, inventory)

12. Process documentation in "manual" format

13. Effective and efficient system to allocate labor to job

14. More responsible and prioritized C.F.O. role

15. Bill in real time

16. Increase our prices

17. Better regulate cash flow

18. Sales function that assures perpetual and predictable revenue

19. Accurate sales budget for 2008

20. Two carefully selected new partners

21. Proactive business, not reactive. Be embarrassed by emergencies!

* unranked/brainstormed

Exhibit 7
Rain Dance 2007 SWOT Analysis

Strengths

1. The one and only company offering this
product

2. Effective combination of experienced and
successful entrepreneurs

3. Strategically-planned company

4. Documenting our entire processes

5. Almost debt-free

6. Have a corporate headquarters identified

7. Have 650 contracted irrigation customers and
1,300 book customers, not yet called upon

8. Immediate acceptance of contract product

9. Name recognition/logo

10. Loan worthiness (credit)

11. Solid vendor relationships

12. Business is consolidated--technically

13. Increasing clarity of mission, purpose and
accountability of partners

14. Record sales for combined companies

Weaknesses

1. Margin too low (under priced and not good
cost controls)

2. Customer follow-up is poor

3. Organizational flow is ill-defined

4. Process documentation is incomplete

5. Standard operating procedures are not fully
developed

6. Policy manual needs revision

7. Need balanced personnel to fill gaps in abilities

8. Equipment is outdated

9. Training (subcontractor/employee/new hire)
and cross training need development

10. No sub-contractor manual

11. Inventory/equipment controls need to be in
place

12. Marketing plan/materials needs development

13. Sales team/training to be identified

14. Winter projects (investments) to balance work
flow

15. Sales order entry/fulfillment system
incomplete

16. Need financial controls

17. No CEO placed to execute the Strategic Plan

18. Success stories not gathered

19. We all wear too many hats--defined role
absence

20. Britton's role

21. "One-service" customers vs. recurrent-service
customers

22. Lack of communication from partners to
company

23. Contract plan not exercised

24. We are cash poor

Opportunities

1. Housing market depressed, encourages
remodeling

2. Boomers-aging population

3. Lack of competition (our product)

4. Manpower availability

5. Virgin market

6. Aging houses--Chattanooga area

7. Availability of acquisitions, due to revising
building economy

8. Broad Street location 9both visibility and real
estate opportunity)

9. Success stories (marketing, newspaper story,
visibility)

10. Available capital/investors

11. Franchise opportunity

Threats

1. Bunker mentality

2. No barriers to entry for competitor copy-cats

3. Concept protection, in general

4. Housing market declining

5. Dependence upon key personnel

Linda Pickthorne Fletcher, University of Tennessee at Chattanooga

Marilyn M. Helms, Dalton State College

Marilyn Willis, University of Tennessee at Chattanooga