Dear Mr. Logic: In a year's time, give or take, TAVA has to get 500 people doing something at least as profitable as Y2K work - not the low margin stuff they were doing in the old days. If they are supply constrained, the top management foc
YEP, you are right. JJ has realized that from the beginning which is why he has been so damn PARSIMONIOUS in his hiring. He stated PUBLICLY some time ago he would NOT hire anyone he didnt have a position for AFTER 2,000. In my judgement, that is why he hasnt hired as many, as fast, as I would have preferred. Ie I wouldnt have limited myself to 18 or so very large Companies. I would have taken everyone AT THE RIGHT PRICE hired WHATEVER I needed and picked and chose the people I would keep later. Those I let go if business didnt need I would have given a nice GOLDEN PARACHUTE in the form of a big goodbye bonus. I think that people wouldnt have minded that. Must be a lot of older people near retirement who would like a way out by working a couple years. I suggested that idea a year ago but never got a reply.
Based on JJ's most recent comments that the consulting division would grow from 15 to 100 in 12 mos time I suspect that accounts for a good hunk of the 500 you mention.
As to gross margins and profitability. Two things come into play here. First off, fixed and semivariable costs dont fluctuate much once they get OVER THE HUMP which they certainly are now and ought to continue to be basically what you have is only the variable-LABOR.
I suspect that Labor and related expense probably approximates about 40% of Revenue so the additional business beyond break even ought to yield nearly 60% pretax. So the key is volume IMHO. You cant even BEGIN to compare the client list from even a year ago to that of today and tomorrow. Ought to be able to squeeze a lot of volume out of that. Secondly, we have the Data Base which by then will be all paid for AND expensed. So any use of it is nearly 100% pretax profit. JJ says he has a use!! Finally, I have been thinking something may happen that we havent factored in here. Lets suppose the Y2K problem is as bad as some people seem to feel it will be. Plants, Utilities etc etc shut down or operating inefficiently--How DESPERATE do you think those people will be?? How much will they be willing to pay TAVA to end the problem ASAP? Who is better suited than TAVA to immediately identify the problem and get things going again? We are thinking NOW is the Golden Egg--Maybe POST 2,000 is the REAL GOLDEN EGG.
As to good shape, good people companies you mentioned. A lot of good people start small companies and due to lack of financing, business experience, etc etc they just dont grow. They might like very much to join a Prestigious company like TAVA. JDN |
