In January of 2021 was at one of the lowest points I had faced in my career. I had COVID-19, was trapped at my house and ready to just sell the business. It seemed that no matter what we cut, what we did, profit remained a moving target. The only bright spot for the company was that we had just taken on a larger Fortune 500 Company as a customer, and they loved our service. So, picture me as a forlorn person with dwindling hopes that I could make this work, the phone rings and it is, Dan Brenner, Cogent’s salesperson, again. Dan had called earlier in December, I just put him off. I was so embarrassed by how badly we were doing that I just did not want to face it with an outside group. But this time I was sick, tired, and fed up with everything… what did I have to lose. It seems Dan had perfect timing.
Lucky for us, Cogent’s Merlin VanGerpen, a Senior Business Analyst had a cancellation and was able to come within a week or two. The three days he was here lasted for weeks, having someone point out all our mistakes was not easy to hear and hard to face. Merlin did not pull any punches, we had a had a lot of problems, but he firmly believed L YNC was fixable if we were willing to do the work. One of the questions he asked me was what do you want to see at the bottom line every month, I said $25,000… he gave me a weird look and my first thought was I asked for too much. It was way too low, he said to think bigger. He then outlined a path to profitability.
During this initial process it quickly became clear that LYNC suffered from the “this is how everyone else does it” syndrome. Freight brokerages in Chattanooga were usually started with the idea to grow, grow, throw bodies in, grow, grow, and sell for millions. When I started the company that was not my plan, but the best laid plans get derailed, and we turned into that company. Just chasing revenue and throwing bodies at the problem, repeating that drill, and looking for the opportunity to sell. Then 2020 hit and life changed. We cut staff, trimmed out all the fat of the budget, lowered salaries and still did not make a dent in the losses. The bottom line was still red.
The first realization Cogent brought to the table was not that all revenue is good revenue. When Jim Single, the Project Manager, got to our office he had already identified one of the biggest problems we had. Our margin percentage (the amount we keep after paying the trucking company) was way to low, we were running at about 6% or lower. Jim calculated our cost to move a load thru the system as around $70.00 (by the way this was considerably more than our first CFO had determined). With our brokers in the habit of taking all loads even if they were only making $25.00 on it, we were losing money before we even had it put it into our system.
Things waterfalled from there, we had brokers who were not producing enough to pay their costs (no accountability), orders stuck in unbilled status for lack of paperwork (we had not paid the trucking company, so we were not out anything, right), and then customers who were taking way over 30 days to pay (several large customers using us as their bank and taking over 120 days to pay). No wonder no matter how much we cut cost the color red was always going to be in our future. Jim spent a couple of days working on his computer and then there was a spreadsheet that showed the whole dismal picture. With the click of a button, like magic he showed us what the future could be if we made one tweak. We had to force the brokers to increase the percentage
of margin on each load, any percentage under 7.5% would cause the company to lose money even while the broker was being paid commissions on it. Just pushing that increase in percentages allowed us to put a five-figure number to the bottom line in February. In March we put a six-figure number to that same line. It happened again in April. This turn around happened only with the help of Cogent and Jim.
Sales is king in our business and honestly, we ignored the administrative departments in the company. We all know how important accounting is, they are the bearer of bad news, but receivables and billing. They do not add anything to the bottom line was our belief. Yes, it is important to get paid, but did ninety-day terms hurt us? We eventually got paid. Jim managed to explain to us how much our aged receivables were costing us and how much the unbilled orders or rebills added to our operational cost. Showing us was okay, but he gave us the tools to be able to see issues in real time, to be able to determine breakeven points with any decisions and to hold everyone accountable for their production.
Jim and Cogent helped us to determine what type of customer we want, what is important in that relationship (terms, margins, size of the company, etc) and how to exit a customer without them realizing (valuing our service and pricing accordingly). Jim came up with pay plans that incentivize the brokers to cover their costs and to maximize the margin.
We were running LYNC based on fear, every decision was made with fear at the forefront. Fear of failing, fear of making the wrong decision, fear of losing a customer or an employee. Cogent came in and immediately alleviated that fear. They stated if we did the right things, made the tough decisions, and followed the plan we would succeed. The company could scale quickly if the business grew or if it had to shrink but all the necessary information would be there to make the right decisions not the ” afraid decisions” . They provided us with the tools to evaluate every part of our business.
The best decision I made in a long time was to hire Cogent Analytics and to work with them to make LYNC successful.
President & CEO