Defining the route to profitable growth for an Asset Finance company

The Problem

Our asset finance client was one of four parts of a wider UK-based finance group.  It had struggled since the economic downturn to make sustainable profits and to play a significant part in supporting the wider group.

The purpose of the business was confused.  This was exacerbated because it structured its business lines by a combination of product, and market sector, and origination channel.  This reflected an historic business mix rather than being a positive strategic choice.  In short, the business did not have clear direction.

The group’s COO (our sponsor) said he was looking for “an exciting business, something sustainable which he could say had a clear purpose in the market”.

Our task was to identify areas of profitable growth to deliver a coherent strategy and then assess the organisational implications.  We needed to recommend how to secure the business’s future in the market and within the group.

Our Solution

We used our view of ‘best in class’ performance to estimate the headroom for improvement and demonstrate what we thought the business could achieve; we call this the case for change.

We worked with the sponsor to build a framework to evaluate potential growth options against a set of ‘strategic filters’.  These filters tested options for market, financial and cultural fit.  Defining the filters precisely was critical; they were the articulation of what the client wanted to achieve.

We used our experience and industry knowledge to analyse the current business and the market opportunities to identify a sensible mix of sectors, products and channels to grow (or shrink in some cases).  We then ‘poured’ these through the strategic filters to test that it met the criteria the COO had set.

This allowed us to identify the most suitable options for the business to grow in a controlled and profitable way.  To complete this work, we worked with the finance team to test the strategy delivered the expected financial results.

We worked with the management team of the business to agree the strategy and most importantly the impact it would have on the organisation.  We defined a set of changes which would need to be made to achieve the transformation.  We also identified a set of critical factors which they would need to get right.  This allowed us to develop the plan to transform the business.

Client’s Benefits

We showed that a clear sector and asset strategy differentiated our client from other ‘mixed mode’ equipment finance organisations.

We illustrated the drawbacks of defining the company by product, sector and channel.

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