Case Study:
Y + Z Marketing
Suffering corporate battle fatigue from years
in the advertising and marketing business in New
York City, the two principals of Y+Z Marketing formed
a small, manageable partnership to escape the grinding
time and labor intensive practice of juggling a
large portfolio of clients and huge staff.
In fact, they were turning away business in order
to avoid what seemed to be what they no longer wanted.
They asked The Pentucket Company to find them a
small 2,500 rentable square foot unit of top-flight
office space in The Flatiron District. Their intention
was to establish an aerie above the fray.
As the concept of turning away business has always
bothered us, we asked the client if we might suggest
a solution.
Given their aversion to daily staff management,
we devised the following strategy to grow and improve
their business:
(A) Working with the client’s accountant,
we devised a matrix that demonstrated how hiring
staff to handle the business that was being declined
could be enormously profitable.
If Y+Z could envision larger office space, fixed
costs per capita would decline for each successive
staffer hired while expanding gross profit would
far outpace increased variable costs.
(B) We recommended Y+Z hire a middle manager to
interface between principals and staff to eliminate
the perceived drawback of managing a large team.
C) We advised Y+Z Marketing to lease 6,500 rentable
square feet in a side-street loft on an as-is basis.
At less than half the market rate, this tax-advantaged
lease would “expense” the Tenant Installation
and leave room in the budget for Y + Z to hire the
additional professionals required.
The Y+Z Marketing partners studied, accepted and
implemented this strategy. After hiring twenty additional
employees and creating the middle manager position,
just one year later their profits soared and the
founders enjoyed being home for more family dinners
during the week.
Moral: “Check out the real situation.”
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