Make the cuts
Shortly after the SEC knocked on the door, Marcille realized that he had to make some drastic cuts internally and externally.
“The first thing we did was fire about three-fourths of our customers,” he says. “And the reason we did that was because in this business, revenue really lags, the cash conversion cycle from selling the gas to collecting the cash is longer than the payable cycle. We knew that if we got rid of some of our customers it would create positive cash flow.”
Once he got through that, he had to deal with another tough decision: letting people go. If you want to come back to life, sometimes you have to run with a skeleton crew. Even though the people at the company were legacy hires, Marcille still struggled with the process. In the end, he cut from 50 employees to less than 10 on one Friday.
“That was a very drastic maneuver that was very important for us to have credibility with the SEC,” he says.
It also gave the company more ability to acquire new customers after the original plan to generate cash.
“So we downsized the operation from about 50 to 7 or 8 people,” Marcille says. “We got rid of customers to generate cash flow going forward for a few months, and we used that cash to start acquiring new customers at a very slow rate because we could only afford a certain amount of customer acquisition costs, and used the money that we weren’t using for customer acquisition cost to pay our drastically reduced overhead, so this is classic checkbook, razor’s edge management.”
Marcille says a quick break with nonessential personnel is best for everyone involved. And who, exactly, is essential personnel when you have to run at roughly 20 percent capacity? It’s those people who understand the core things that have to be done to keep your business alive — those with an understanding of regulations, legal issues or other matters that, if handled incorrectly, could sink you.
“One of the most important things was to make sure there were people, even if it’s a skeleton staff, who understand not only the business but also the regulatory environment,” he says. “That was a critical priority, and actually, frankly, it was more important than sales at any given point in time because we could go out of business either because we lost our license or we incurred a substantial fine because we took our eye off the compliance ball — whereas we had a certain customer base at that time that was generating gross profit and we could manage that gross profit and not spend more than that.”
