‘Steaking’ his claim to higher profits

by Tom Ryan

Dave knew the meat business cold, but needed help in restructuring the "business of the business" so that he could manage it more productively and profitably.

When Dave Alwan joined the family grocery business, which had been started by his grandfather in 1947 in Peoria, Ill., there was an expectation that he would just follow in his father’s footsteps. As the son of a Lebanese immigrant, Dave would be expected to grow up in the business so that one day he could help run it. And grow up in the business he did! As a teenager, he learned the business by wearing a white butcher’s coat and cutting stew meat by hand. There is no glamour in being a butcher, even when you are a member of the family who owns the business.

By 1957, his father and uncle took over running the day-to-day operations of the family grocery business, built a new building and changed the name to Alwan Brothers.

The brothers diversified their grocery business by focusing on the premium meat business and providing the best cuts of beef and pork to their customers, while offering a complete deli selection. Unlike the grocery chain stores offering neatly packaged pre-cut meats, the Alwan Brothers offered a full-service butcher shop to provide their customers with the best cuts of meat money could buy and the expert advice on cooking meat that only a familyowned business can provide. The Alwan Brothers became known for their steaks and hamburgers, and specialized in providing their customers with meat that was a cut above what could be found in the grocery chain stores.

Dave was the third generation in the family meat business who came of age with his cousin. But while the family’s reputation for top-quality meats helped grow the business, Dave had new ideas on how to expand the business.

He wanted to provide deer processing for all the area hunters. So in 1997, he and his cousin began a deer processing business where they would come out to a hunter’s home to dress the deer. But his father and uncle didn’t want to get into the deer processing business and deal with the oversight of government agencies.

In 1998, Dave decided to leave the family business, and with the unwavering support of his wife Dawn, struck out on his own to form Echo Valley Meats. Dave began by processing deer and making smoked deer, deer jerky and "slim jims" for local hunters. He then hired a sausage maker who was skilled in European techniques, and the business exploded.

However, as the business grew, Dave faced the headaches from the "business of the business." He ran into cash flow problems to pay his bills when it seemed like everyone owed him. How could this be? He was running a successful business but didn’t know if he was making any profit. All of this was unsettling to a man who could expertly dress a deer without blinking an eye.

He knew he needed help and turned to IPA for a business analysis. What he learned from the Senior Business Analyst was "an eye opener," Dave said. "I found out I had no tools, no measuring benchmarks to run my business," he said.

One of the first things IPA did for Echo Valley Meats was to break down all the costs and allocate them correctly in the business so that Dave could see what it cost to make his meat products. IPA came on board during the middle of Echo Valley Meats fulfilling a major order for 150,000 summer sausages for a well- known national brand. Dave was already licking his chops over a potential to supply 500,000 summer sausages to a national meat supplier.

But what the IPA analysis revealed shocked Dave into a business reality check—he was losing two to three cents a unit on his large national contract simply because he did not know his costs.

Alvin Toffler, futurist and author, once said, "Profits, like sausages…are esteemed most by those who know least about what goes into them."

What Dave realized was that while he knew what animal products went into his sausages, he didn’t know what costs went into his meat products, and therefore, did not know whether he was making a profit or losing money on the various products he sold.

While the Echo Valley sausages were passing the taste test with consumers, Dave was failing the management test for maximizing profitability simply because he didn’t know what to do. Dave knew the meat business cold, but needed help in restructuring the "business of the business" so that he could manage it more productively and profitably.

IPA consultants immediately went to work reorganizing the business with accurate cost information and more management accountability by setting up production benchmarks. Before IPA, Dave just accepted the difference in pounds of sausage produced by his employees from one day to the next as the normal performance variance one can expect workers to produce, often saying to himself, "Oh, they had a good day today, but they didn’t have a good day yesterday."

IPA installed a new foundation for his business that changed Dave’s entire approach to running the business, "Everything is measured today. There are production reports that are filled out daily and weekly. There are benchmarks which must be met. We have a baseline to measure employee productivity—so many pounds of sausage per hour, tons per day and pallets per week. And when employees are not hitting their benchmarks, we need to know why right away so we can take action to correct the problems, rather than waiting six months, only to find out we are not making any money," he said with the confidence of an owner truly in charge and in control.

IPA’s consultants also performed a productivity study of each employee, which Dave said was a "huge eye opener" when he found that the variance between employees ranged from a low of 55 percent to a high of 90 percent. Dave found that different people did better at different jobs, and not everyone at the time was in their most productive position. The new productivity sheets allowed him to "flip- flop" employees based on the numbers to provide a better realignment of company resources, making the company more efficient. Based on this review, staffing changes were made to maximize both accountability and productivity.

In addition, IPA created new productivity reports so that labor costs versus gross sales could be tracked and measured.

What IPA also found was that the growth of the business was causing cash flow problems for Echo Valley Meats, and Dave didn’t know how to solve it, caught on the merry-goround of chasing dollars. But IPA consultants knew just how to stop this carnival ride for entrepreneurs.

The IPA consultants put together a bank presentation and secured a line of credit so that Echo Valley Meats could maintain a positive cash flow while growing the business into new markets, such as catering for both businesses and individuals.

Today, Dave Alwan runs a successful business that is both profitable and expanding into new markets. The methods, systems and controls IPA installed in his business allow him to control his costs and manage his business to improve productivity. Dave has become more than an owner. He has become a proficient manager of his business with the charts and spreadsheets he needs to know what is happening in his business from both a production and financial point of view.

Dave talks enthusiastically about his new found ability to compare his production and costs month-to-month on spread sheets that can give comparative results for today against similar periods dating back to 2001. Dave says these reports (about 50 different IPA spreadsheets and worksheets) have become not only an integral part of how he manages his business, but an invaluable tool to determine what is "coming in and going out" so he can decide "what to trim back and how to manage my business more efficiently."

Dave uses the graphs IPA created sometimes several times each month. But more importantly, Dave is using everything he learned from IPA to establish a new business foundation to manage his venture into catering, which has a "big upside potential for growth," he says with confidence.

The benefits Dave has received from IPA’s help cannot be quantified in dollars alone. While Dave has doubled his business since IPA installed the new systems, from $900,000 in annual sales to over $2 million, the new structure, organization and accountability installed by IPA has given him more free time. Dave now has the time to expand into new markets, such as catering and a mail order business, while giving him the time to give back to the community in the same passionate manner with which he manages his business.

Dave and his wife Dawn have two children, a 6-year-old boy Jordan, and a 10-year-old girl Jessica. Jessica has Rett syndrome, which is a chromosomal abnormality, and she will never talk or walk.

Dave has become a board member for the local Easter Seals chapter and has been an ardent fund raiser. Dave said that without IPA’s help in putting a new management system and structure in place, he would not have had the time to devote to Easter Seals, where his efforts helped raise nearly $400,000 in the last two years.

Dave credits his wife’s support as the foundation for his personal success in life and IPA’s expertise as the foundation for his business success. However, in all that Dave has given to his family, his employees and his community, there is something Dave brings to the table on his own—his unmistakable passion for everything in his life.

In a speech he gave at an Easter Seals fund raising event Dave said, "Passion has its own energy. It is an energy that is observable and transferable. Passion can instill courage and faith beyond any limit you ever imagined you could possess. Passion gives us the gift of power and enthusiasm that can be used for the betterment of all. The power of passion, if truly experienced, enables us to overcome obstacles and to see the world with infinite potential."

For Dave Alwan, his passion not only defines him, but it is the fuel which ignites him to greater success for his family, his business and for doing good in the world around him.

If you listen closely, Dave’s passion is the echo you hear in the success of Echo Valley Meats!