Case Study: Altacrest Capital Portco Gains Strategic Clarity and Operational Discipline with Chief Outsiders

“We really appreciate what Chief Outsiders has done for our Barton Watch investment, and so we've brought them in on another portfolio company.”

Brien Davis, Partner, Altacrest Capital

Altacrest Capital (Altacrest) invests in small companies, often founder led. Looking to grow their Barton Watch Bands (Barton) portco more profitably, they sought outside expertise, engaging Chief Outsiders, Fractional CMO, Dany Sfeir, to lead their marketing effort. Applying his deep experience in retail and e-Commerce, the scope of the project quickly expanded to include aspects of operations. Working onsite and remote, Sfeir quickly brought strategic clarity and operational discipline, controlling costs and greatly reducing inventory. Now, Barton finds itself on a clear path to profitability.

Background

Entrepreneurial Endeavor

Coming from larger financial services businesses, Brien Davis and two partners formed Altacrest Capital six years ago. “We wanted a more entrepreneurial endeavor and to work with small companies to take them to the next level,” related Davis.

Growing and building small companies, requires help from time to time. “So, we got to know the Chief Outsiders folks,” he continued. “We appreciate the strategic thinking and level of expertise they bring to their engagements.”

Lacked Strategic Element

Altacrest bought Barton Watch Bands (Barton) in 2018. “The founder wanted to move on, so we brought in a CEO and began growing the business with new product strategies,” Davis stated. “As we looked at our team, we had needs that weren't being addressed.”

Barton primarily relied on Amazon and its website for distribution. “We were good at the blocking and tackling of digital marketing, but we didn't have the strategic element,” Davis related. “We brought in Chief Outsiders to help us grow our website sales.”

“We needed to professionalize the marketing strategy and up our game with our content strategy in how we were segmenting our customers. In talking to Dany at Chief Outsiders, we liked the fact that he had done this for several different brands successfully.”

Profitable Growth Challenge

The growth had always been there within Barton's core brand. “The challenge became continuing to grow but doing it profitably,” Rick Sukkar, Partner, explained. “We needed additional expertise to use the right channels and the right strategies to be as profitable in that growth as possible.”

Barton tended to bring on a lot of new products and lacked discipline with its marketing budget. “We weren't doing a great job of sunsetting some that needed to go away,” Sukkar explained. “As a result, our collection became difficult to navigate online.”

Options

Davis looked at bringing someone on full-time vs going outside with a full-service agency. “We've worked with agency partners in the past and haven't always had a good experience with what they brought to the table,” he reported. “Typically, they're more of a one trick pony.”

He wasn’t sure if either would be at a high enough level on strategy to drive the profitable growth he wanted. “So, given the background of the folks at Chief Outsiders, it was a great fit for what we needed,” he explained.

Then, based on his background, Clay Spitz, Managing Partner, Chief Outsiders, asked Dany Sfeir, Partner and Fractional CMO, to assess the situation. “I interviewed with the Altacrest Partners,” reported Sfeir. “They liked my experience and that I was in Dallas, so they brought me in to fill the managing director role.”

Growth Strategy

Stop the Hemorrhaging

Sfeir met with the team weekly and held virtual meetings frequently. “This is a very hands-on engagement,” he reported. “Initially, the scope was managing the marketing team of one person and several vendors.”

In addition to marketing, Sfeir became the de facto business unit manager, overseeing inventory, personnel, and financial planning, as well as forecasting and product design. “I was asked to stop the hemorrhaging and get them into making money,” he related.

Cutting SKUs and Costs

He began with a major move to cut costs. Barton sold more than 16,000 SKUs on the website. “We got it down to 4,800 without negatively impacting the business,” Sfeir reported. “That cut down on inventory and cash, reduced confusion on the website, and improved the performance of the media on both Amazon and Google.”

Now, marketing is not allowed to exceed a monthly budget, bringing discipline in spending and in meeting the numbers. “I instituted the philosophy that incremental spend is only for incremental sales, and we adhere to our goals,” he related.

Financial Accountability

Sfeir also cut down on Barton’s vendors and partners. “But we instituted rigid financial accountability, process discipline, and know how that helped in managing the cash,” he added. “Every month, we know upfront how much we spend and how much we're bringing in.”

“Chief Outsiders helped a lot with the investment in Barton,” reported Sukkar. “Reducing the SKU count created a curated view of our top products that helps drive growth. They've been very supportive of the CEO in helping not only with marketing, but also some operational aspects, making sure that the efforts in marketing come to fruition.”

Skills to Address Strategy and Personnel

Davis worked with Chief Outsiders to not only set the strategy but also reinvigorate the team. “There may be people who are not in the right seat, and we need to fill some holes,” he explained. “Chief Outsiders has the expertise to bring in a team and reshape it for the environment that you're trying to achieve.”

“For a well-defined marketing strategy, you need someone who’s been there and done that and has operated within different channels in wholesale, retail, or e-Commerce. And the folks that we've dealt with at Chief Outsiders have great experience that they bring to bear.”

Altacrest gave Sfeir the latitude to do what he needed to do. “They foster the human ability to do the right thing for the business,” Sfeir explained. “They opened the books and my opportunities and helped me succeed at cleaning up the business. They are good strategic leaders.”

Results

Discipline Leading to Profitability

Sfeir’s reductions to inventory and other measures resulted in a 50% average reduction in outside cash required to run Barton. “We went from 16,000 down to 4,800 SKUs,” reported Sfeir. “So, close to 50% of the inventory is gone. We're even downsizing the space we need.”

“We're running a significantly tighter ship where we don't exceed the allotted monthly marketing budget,” he continued. “We've brought structure, discipline, and financial accountability to the business.”

The SKU rationalization project cleaned up the catalog. “That improves the conversion rate by making it easier to find the product,” added Davis. “It also helps us monetize some inventory and allocate those resources into more fruitful areas.”

Enjoying their early wins, Barton will ultimately achieve profitability. “I just finished a financial forecast model, and that shows that things are heading in the right direction,” Sfeir confirmed.

Invaluable Experience and the Right Tools

The seniority of the Chief Outsiders CMOs sets them apart from other groups Davis has worked with. “Especially in e-Commerce where it tends to be young brands that don't have the diversity of experiences that the folks at Chief Outsiders have,” he confirmed. “That's been invaluable!”

“It could be anything from media channels or content strategy down to segmentation of email lists,” he continued. “We found that Chief Outsiders has folks that are more experienced than most and have the tool set to handle all the different tasks that need to be done.”

Sleeping Better with Strategic Clarity

“As an owner of brands that sell via e-Commerce, you're constantly worried because it's highly competitive,” Sukkar concluded. “You must fine tune product development and your marketing strategy together with the operational aspects that you're good at.”

“Not all businesses are great at all operating aspects, and so you have to know where you can win. And you need to have a high-level strategy that works for your business. Chief Outsiders helped us craft that strategy. It helps us sleep better at night knowing that we all believe in the direction we're rowing the boat.”