Welcome to We Fixed It. You're welcome. The show where we take over companies, you come along for the ride, and we try to put them back better than we found them. This is a special episode of We Fixed It. You're welcome. And that means we have a special guest who will get to you in a moment. Now you probably know how our show works. Every episode we take on a company in the public eye that's facing some challenges and we fix it. We can't help ourselves. It's what we do for a living. Under the pressure of a ticking clock, we apply our thinking, professional expertise, and the insights of our guests, and we work our way into a solution. And you're with us every step of the way. At the end, we tell the company to their face how we'd fix the situation. Then we hand the company right back, give ourselves high fives all around, and job well done. Now the fixes we propose on the show are all in good fun, but we try to do some real good too. We've explored how leaders can show up better, how professionals can navigate tricky business situations, how companies falling out of relevance can evolve, even how we could all be better as a society. That's got to be worth something, right? Well, out of all of us, only our guests is qualified to put a number on that value. If you caught our Bowflex episode, you've heard them before. If you've ever typed the word accounting into LinkedIn, you've definitely seen them. Please welcome Lucas Sundahl. Hey, Lucas. Hey, how are you doing? Thanks for having me. Yeah, thanks for coming back with us. So Lucas, you've done a lot of things that are financial related. Why don't you share a little bit about yourself for everybody? Yes, so I've been in the accounting space for about 15 years. It's funny because, I talked about Bowflex earlier, I was the personal trainer before changing my careers. But in that time, the last five or six years, I've been more heavily involved in leadership roles from the finance and accounting perspective, CFO, controller, all those type of things to really not only deliver the financial results, but talk through and help companies and the leaders plan out their strategy to grow, continue to operate efficiently and make sure they're managing costs and how to like grow revenues and a lot of different financial metrics and tying those back into the operations. Very cool. Thanks, Lucas. Can't wait to quantify some things with you. So let's get into those dollar signs. So our show is fixed a few dozen companies by now, and they should be thanking us. It's in the name of the show. But the question that we got to talking about is what exactly should these companies be thanking us for? What is the real, quote unquote, hypothetical value of our fixes? So you're going to walk us through some examples, right? Yes. Yeah, I picked three examples from the episodes through this point in the show. And I'll talk through those next year. Okay, let's do it. All right. Laura's yours. All right. So the ones I picked, the viewers that are just listening to this, or the people listening to this, they don't have the visuals, but anyway, I'll talk through it. So the companies I picked for this example, and these financial scenarios with Southwest Airlines, Hardee City, and Jaguar. So as we know, Party City does not exist anymore. But I still wanted to quantify what could have been had they maintained being in business and what that could have been like for not only the company itself, but also for consumers to still, if the company is still in existence. All right. So the first one is Southwest Airlines, a company that's well known for people like traveling, well known, well, especially with their customers and their company, how it was run with the founder, very customer focused and the experience trying to differentiate themselves from other airlines. And one of the things recently, as I talked about in the show as well, was what happened with their morning, like, did charged fees for bags and kind of like moving away and shifting from their thing that differentiated them from the other airlines. And so one of the things I did was taking notes from the show. I also brought in some financial analysis. So what we do a lot of times when we're building out projections for companies for the forward looking, let's say 12, 18 months, as we build a base case, that's like the middle kind of the road, we'd expect things to be like a worst case scenario, let's say sales tank, they go down like 10% and then the best case. And so what this allows us to do is kind of really make a plan for things with sales revenue, if it goes up 10%, whatever some things we can do operationally, maybe you have more capital for capital expenditures, buying more equipment. And so that's what I kind of applied with the Southwest Airlines company first is just seeing like what it would have been how to do like with some of these bag fees, implementing them and avoiding company and churn, if you will. So things they could do to make sure that customers stay loyal to the brand, while still bringing in the fees for the said airline. So what I have on the visual here is talking about so the bag fee, if they did the bag fees, they could bring in additional $350 million of revenue or EBIT. So for a quick aside, EBIT is Earnings Before Interest and Tax. It's a common metric for not only financial professionals, but business peers, they look at EBIT and EBIT DAW numbers that kind of help them quantify how they're performing against other companies in the industry. And then talking through and listening to the show notes, I can't have the conclusion that in the worst case scenario, having the bag fee uplipped, so bringing in the bag fees, they're still doing things that were mentioned on the show to preserve the culture, preserve the customer experience, avoid customers churning and going to other airlines. The worst case scenario, it still brings in $354 million. So there's a way to still charge the bag fees without completely alienating your customers. A lot of times, companies understand that costs go up, fuel costs operational, but it's how you communicate it to your stakeholders, your customers. I mean, I understand as a consumer that costs are going up. We've seen that. So it's all about how you deliver the message. It's not just day one, like, oh, by the way, you have to pay these fees now and we're taking away your preferred seating arrangements. So with this, I have the worst case. Especially because that's what their brand was built on, right? So do Max, buy, breathe, right? That was always part of their deal. So thank you for sharing this. Yeah. Yeah. You know, when you see people with phones with crack screens and you think, whoops, they weren't careful? Well, that's something you can see on the outside. But what you can't see is how careful they're being with their online data. Because whenever someone goes online without ExpressVPN, it could mean trouble, like passwords and logins all out in the open. If a screen cracks, you can fix it. But once your personal data is out there, it's out there. You can protect your own data with ExpressVPN and feel great about it. ExpressVPN creates a secure, encrypted tunnel between your device and the internet. You can use it on your phone, tablet, and laptop at its lowest price ever with plans starting at around 12 cents a day. It matters to me that your data is protected. I love fixing problems and this one's easy to solve. And it's rated number one by top tech reviewers like CNET and The Verge. Secure your online data today by visiting expressvpn.com slash fixed. That's ex p-r-e-s-s-vp-n.com slash fixed to find out how you can get up to four extra months. Expressvpn.com slash fixed. Yeah, and to offset it, we were talking about if the bag fees were a revenue driver or a necessary evil or a pass through to the customer. We did find ways to offset that, at least from a messaging standpoint and a value standpoint and say, well, here's all the reasons rationale behind it. Seriously, if consumers said yes to that and got on board, which we're seeing play out, we're looking at numbers of what the implications could be. Yeah, so this is kind of assuming that customers were on board with the change. But still staying like basically my assumption was always bringing in the bag fees, but keeping everything else operationally the same. That's been like the Southwest standard, the Southwest way. So what I have found is like it leads to additional either worst case scenario of a $354 million uptake for the company. Phase case is $382 million. And then the best case scenario is $458 million. So again, all that to say, there's ways to kind of still keep the Southwest methodology without alienating their customers and avoiding them like jumping to Delta America and some of the other competitors out there. $354 million worst case is not a bad place to be. Exactly. So yeah, some of these cubbies are so large that even the worst case scenarios are a dream for a lot of other corporations out there. All right, so Party City, this one that hits for me because I have young kids. And now what we have like birthday parties or other things, trying to find like a local store that has the things you need for party supplies, costumes are pretty easy. There's other costumes stores that pop up, Spirit Halloween, if you will, probably was jumping into these empty Party City locations. For sure. But what I took the show notes again, talking through and similar to like what happened with other retailers in this same kind of space, Toys R Us, for instance, is they really kind of just really focus on making the shopping like an experience. That's what could have been with Toys R Us Party City as talked to you at the show. Is this having like the experience in the store and not just around Halloween time or Christmas time, but all throughout the year, different destivities, birthday parties are throughout the year. But there's different ways that they could have more localized inventory. Some of the stores did an okay job with that. But I feel like more room could have done better with keeping their inventory localized to like sports teams, the town, like what the city of the US like or wherever it is, what it kind of represents like geography, those type of things, and then having like community tie-ins. There's so many things for these chains that they can still offer things that were interesting to the people in the community. You could go with like the like this time of year, you've got Friday night football games for local high schools. So there's a way throughout the year like coming up on things in autumn, pumpkin patches, all that kind of stuff. So there's so much that they could have done. Have they stuck with what you all talked about on the show? And so what I did in my analysis is I took their annual net sales and I did like a comparison with their EBITDA. And so taking what everyone talked about on the show and applying it to the financial model, the worst case scenario is that they could have had like a $43 million savings and like still been in operation. So they could have brought in, they could have like had a $43 million lift in their company, still pay off all their debts and everything and still be in operation. So in the base case was $86 million and then the best case is $130 million. So had they done all these things that we talked about on the show, increased the foot traffic, localized inventory, all those community tie-ins, the company was still been in operation and this has been their their outtake and their sales and like the EBITDA to help continue to fund their operations. Going online without ExpressVPN is like driving without a seat belt. You might be careful but if something risky happens wouldn't you want to feel more secure? 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So even in the worst case the $43 million you always have to think about the worst case scenario first right? So even if $43 million would have bought them some time allowed them to go potentially into financial turnaround and they could have done that potentially hypothetically by doing some community callouts. So a party city in Michigan is different from a party city in Austin Texas because you feel like the location where you are there's a embracing of the community we talked about maybe maximizing the footprint of the store and optimizing that maybe using it after hours for party actual throwing parties at a party city who knew. So if they'd gone into those types of revenue models because they had a little bit of breathing room to carry those out. So you're saying worst case they'd be sitting at $43 million. Best case the fix is again on a hypothetical $130 million. Exactly. That's the one thing too. I wonder if there's an issue with the how big an organization is versus the franchise right? So like when you look at something like party city like for the ability for them to pivot to some more regionalized localized different seasonality based on where you're at. So right now it's homecoming for most of the high schools and colleges. So like that's a great opportunity for them to do you know all the homecoming banners and things like that. But it feels like party city I hate to say this but I feel like they were kind of not in a mind space of they were just drowning. So they weren't even really thinking about like what could we do to pivot to try and then like a corporate type of setting is regionalization and looking at different types of things throughout the season just is that seem too minor right. So it's interesting that they actually ended up failing Lucas right based on what you're providing because I feel like it seemed like common sense when we talked about party city and and yeah and we also had one of our panelists who said like she exclusively would go to party city like physically go. So there definitely had a loyal customer base and foot traffic. It was just that the inventory within a party city is so large like every single color of paper plates and every you know what you know it's just it's it was a lot. So I appreciate seeing it with these hard numbers because it makes what we're doing seem more real. I know that we're espousing our opinions on what we think they can do to fix but this is this has been really helpful to see it this way. Yeah another thing I just think of also with party city is mylar balloons sometimes now like where do you go now to get your like balloons and flare that you buy for a birthday party or any other activity or event that you have. So there's so many things like like you mentioned that they could have done to increase and that's the thing too sometimes with these turnarounds is if you can like show like some changes that you're making are making the improvements then your creditors you can renegotiate terms bringing some like other investment partners that maybe kind of give you a lift at least to get you to that like turnaround point really make it successful. Yeah that bridge alone. Yeah exactly. Yeah and that's where you bring in the right investors not just the ones that want to gut you for parts. Yeah exactly ones that are yeah watch you to be around in five to ten years and not just the quick cash out. All right so the other one that was very interesting was Jaguar talking about their electric vehicle and I'm talking through like what was discussed on the show and I think a lot of times like it's one thing to have electric vehicles that's great but you don't want to move away from the heritage of the brand and also they kind of like they kind of lost the trust with their end consumer and customer there's also like the creativeness fire with marketing and whatnot so I kind of took all that detail and I brought it into some of the sales analysis and then also like doing like different margin projections and so with Jaguar these are the numbers that I came up with on like with the marketing sales rebuilding the customer loyalty and branding is the worst case scenario it still would have brought them $35 million best case $91 million or a base case I'm sorry 91 million and then the best case scenario $179 million so again not pocket change at all with Jaguar there's a different ways to go about like what you will do electric vehicles but you can still tie to that racing heritage those kind of things that the customers the company is known for and you can do different marketing but you also you can change marketing a little bit but you don't want to alienate your base customers so that's the thing that you can kind of experiment see what works but yeah I just I found it interesting to the their change with the electric vehicles inventory pricing everything so I'm curious like what you all think about these numbers from the Jaguar perspective I mean it's it's interesting it's uh and because it's interesting they keep doubling down on their existing strategy right and the the CEO and the company from everything I've seen they just maybe they know something we don't maybe you know when when EVs were new they knew it was going to take a long time for consumers to come around and they just had to train consumers into a new a new category and out of something that they already knew and you know now you've got to shift your mindset now you're everyone's going to be buying EVs well okay all right well tell me in 10 years right but now yeah EVs are are a point of preference for a consumer so maybe Jaguar's on to something that we haven't seen play out yet um on the worst case the 35 million that could come and go and and add dollars you know I hate to say it but they could they could be spending that to get market adoption uh 170 million on the best case that's pretty substantial like they could make some serious company decisions and pivots and and change the trajectory of where they're headed that's they could be putting that to work for them so yeah what do you all think yeah you know I'll go ahead Kebker. Well I'm just very briefly I was going to say I mean I think the number is whether it's the worst case or the best case uh for any of these examples is you know speak to the power of the pivot and knowing you know like we've gotten a little bit too far down the pike and it's okay to turn it's okay to go back it's okay to take a couple of steps you know in the other direction I mean we know these are um again based on kind of our assumptions and opinions and all these things but wow right it's pretty amazing to see these numbers on screen based on our fixes I also think and I love what you said about the power of the pivot Kedira Kedira's always bringing things up the power of the playbug power of the pivot I love all those things I want t-shirts for all of them uh but I I guess I question to Erin if it's doubling down because they made a decision and that was the campaign they were going with versus listening and assessing and hearing and kind of being like whoa we're not getting the traction we thought we were going to get or the excitement and enthusiasm around EV vehicles and Jaguar it seems like a perfect fit and it's not hitting right and sometimes I feel like the the folks at the table and I think this is sometimes we direct you know here on this podcast we try to direct this to um them is listening right and actually assessing what's really going on because to me base case scenario that Lucas has shared here 91 million dollars that's that's great that's fantastic yeah I don't think it would take that much because their brand was so is so strong right and so like what they've done is kind of diluted something that is a strength of theirs their brand is their strength and you could make the EV sexy you could make it powerful you could make it all these things that they've kind of like said oh well now we have an EV and it's not that different than you know Tesla whatever whatever and you know all the issues they have with these so I guess I really feel like I wonder too Erin if it's not that they you know think that their campaign is going to be great but I think it's kind of just not having hubris not understanding that like goodness you kind of need to take the power in the pit right right absolutely you need to like see what's going on and and seeing the campaigns that are successful like of the brands you know like why is you know so and so why is Audi's working I'm not saying it is but let's pretend or whoever else you know and and do some like comparison assessment right and I mean that's the the customer's voice is very important and so it feels very like they're they're being very deaf about it and they're not really taking advantage of what they should be yeah well unlike so many others what we called them out for it's great great brand great company heritage brand they change too much at once they change their their product line they change their image they change their campaign to something that didn't didn't have much of any substance to it and and consumers said where's our jaguar and they didn't have an answer for that and they haven't come up with an answer for that now it's pretty simple we've seen other companies where they say we sorry we changed too fast we did something you didn't like we're back and then the price you know surges like they get the audience back and their their sales surge they haven't done that and all they'd really have to do on probably to get to the worst or maybe the base case is say you know what we're we're bringing back the jaguar classic and you can have the classic you can have the classic EV and then we're going to do more experimental EVs or or modern futuristic EVs and those are going to be jaguars too they have a chance to maybe still have a chance to do that people are still watching what they're doing yeah and that's the baffling move about all this now i think it's a good point and i've basically said they can still make the change make the turnaround and like i said come back to the customers and showcase like hey we've made a change too fast i think a lot of these companies too that made a huge jump to EVs maybe made it jump too fast but also could bring in more of the hybrids and still like hey like still got that jaguar under the hood but we also are like working on things to promote environmental consciousness and kind of meld it together so there's so many different options but yeah that's why i like that's why i liked quantifying what you've all talked about because you lost some great ideas and it was it was fun to really put numbers to it and kind of see like what they could like have achieved like using some of your feedback input this is great thank you yeah they still might we'll see but those are three three great examples and you looked at all of ours right yeah so i went through all the episodes i try to pick ones that i feel like were well-known brands but also very relevant and the current like i think part c just recently went out of business jaguars are recently like it's a very hot topic right now and then southwest airlines that's so well known i mean all the episodes are great but i feel like these are three really well-known brands that have been in the news and very relevant recently nice thank you yeah if you yeah no really if you're listening so it's the jaguar episode the party city episode and the southwest episode or three to revisit because you can put these back in context from what we talked about initially and i appreciate this because from a you know from a marketing perspective of course you you get into financial modeling and projections and balance sheets and all those things and sometimes you want to be shielded from it you want to have a creative process and you want to say don't tell me the numbers like it's going to distract and it's going to pull us off course and and it's we're going to wind up watering down what we set out to do so i don't tell me what you know we'll celebrate someday but don't tell me the implications right now so it really helps to bring this you know this side of the equation into the table i like it a lot i think you know of course i'm biased i'm really you know i came in and preceded in two and i've just i think the the thing that separates us is exactly lucas what you've been able to pull out right is that we talk about the the challenges we talk about the issue but our focus is on the solutions right and they are real they're tangible and you just showed they're quantifiable right so i mean that that is just so amazing to see um you know definitely for our listeners you know if i was thinking about this the other day that you know sometimes when you're you're thinking about maybe engaging you know and we all of course are out there working with clients and in different spaces i would actually think about this podcast almost as like an intro session you could pick up any one of our episodes and you know listen to our approach listen to some of our recommendations and again you can see that there's actually a real value here to what we're suggesting so you know again i've got a little bit of bias there because you know we we're this panel of fixers but you know lucas you really have helped to kind of bring this home and like put a rubber stamp on how i've been thinking about it in the short time that i've been here that like this is this is real right like we're not just sitting around kind of dreaming about this this is stuff that we do every day um in their real world solution so thank you again this was this was excellent to see yes i totally agree and i also want to thank erin because i think erin one of the the one one of the hallmarks of this podcast has been really focusing on a company more brand um because there are times there are lots of hot topics out there that we could we could cover but i don't think people are as interested in hearing just our opinions and hearing us just talk about something in general and when you actually talk about a specific company like a party city like uh american a like starbucks you know that really kind of is much more specific in what the fixes could look like yeah i think it's really uh to me that's the feedback i've received from listeners this is and the audience has been they've really enjoyed it being something that's more tangible than just commentary um which all of us have a lot of that too we could do that too if we want yeah no thanks for the say yeah we we all have opinions and strong ones sometimes right but uh but grounding it around a company at least as a jumping off point gets us talking and and thinking about you know not we we're of course going to fix the company we set out to fix or the situation but we get into other you know pretty weighty topics along the way too and yep yep thank you yeah no thank you um all right well that's going to do it for a very valuable episode of we fix it you're welcome uh luke it's great to see you again and i always appreciate how generous you are in sharing your financial tips and insights online and you actually make sense out of complicated principles which is something we try to do here too um if our listeners want to keep up with you how do they find you so the best place to find me is uh active on minkvind so you can search i luke sundell out on minkvind posting content about accounting and finance articles news updates those type of things so for me this is a lot of fun i like i geek out of numbers so this is like it's fun good diving into your episodes and really trying to extrapolate the potential savings and whatnot fantastic thank you so much um alissa kadira it's good to know what our fixes could actually be worth i'm gonna go cash some hypothetical checks how about you to ting to our listeners our fixaholics as always thanks for listening and we'll see you next time we hope you enjoyed this episode of we fixed it you're welcome we go into every episode somewhat cold 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