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Using an Interim Manager – Problem Background and Cost (3/3)
Engaging an Interim Manager – Goals Set Forward for the Following Three Months
Convinced by these figures, the owner no longer had doubts about the multiple benefits of the interim manager.
From the calculation of the expenses for an interim manager, it is clear that he costs around 1.000 € per day. The contract was signed for a period of three months, or some 65 work days, plus travel expenses of 3.000 € a month. The total amount agreed was 74.000 €.
From another calculation it is obvious that the gross margin for newly concluded deals in the first three months of the interim manager's work, extrapolated to a yearly level, would amount to some 65.000 EUR.
From this we can conclude that the costs for the interim manager's three months of work were almost entirely paid back already through the yearly gross margin of the newly concluded deals (a more precise calculation of profitability depends on the ratio gross margin/net margin). Into a more detailed evaluation of the work of an interim manager, we should also include the improved liquidity of the company, resulting from the significantly improved collection of payments, as well as the overall decreased business risk, owing to the introduction of the manual of authority.
Taking all of this into account, the owner decided to prolong the contract with the interim manager for another three months, assessing that three days a week will suffice for the remaining improvements. This also
suited the interim manager, who thus had the possibility of working for another project which did not require his full-time attention.
The first three months were mainly used for the exercise of damage control measures, aiming to divert immediate danger to the company's business (for example, the question of liquidity), as well as for the implementation of clear business processes, the reversal of the negative trends of the main business figures and the establishment of a more efficient inner organization.
The interim manager proposed to the company's owner to concentrate on the future in the next three month period, focusing on business sustainability as well as the further development of the skills and knowledge of his son.
The plan for the coming three months included the:
- company's vision and strategy for a five-year period
- definition of all necessary resources (financial, human, infrastructural)
- modes of securing all necessary resources
- strengthening of the company's human resources
- significant improvement of security aspects of the business with dangerous materials (fuels)
- introduction of a highly professional sales management
- continued development of knowledge and skills of the owner's son
Today, this family business is one of the leading distributors of its region, with 20 employees and a 220% higher turnover than before the interventions of the interim manager.
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