Daniel

Daniel had been running his food manufacturing business for nine years. nineteen people producing specialty food products for retail chains, food service businesses, and direct-to-consumer online. the business had been growing steadily until input costs began to move. raw material costs increased 34% over eighteen months. two of Daniel's largest retail accounts were pushing back on price increases. he had been absorbing the cost increase rather than passing it on because he was afraid of losing the contracts.

the margin picture was severe. the two retail accounts he was protecting were delivering under 6% gross margin at current input costs. together they represented 44% of revenue. Daniel was effectively subsidising those two relationships with the margin generated by the rest of the business. he knew this. he had been telling himself the costs would normalise. they had not.

the production scheduling problem was separate but connected. Daniel was personally managing the production schedule around the customer orders of his largest accounts. when a large retail order changed at short notice (which happened regularly) Daniel rebuilt the schedule himself. his production manager had been in the role for three years. he had never been given the authority or the information to manage the schedule independently.

gross margin improved from 11% to 19% within two cycles. from the repricing, the exit of the undermargin account, and a pricing review of the remaining product lines that Daniel had never had the headspace to complete. Daniel took two weeks off in month nine. the production manager ran the schedule without contact. revenue dropped 8% from the exited account and recovered to previous levels within six months as the freed capacity was filled by better-margin direct-to-consumer and food service work.

protecting a large account at the wrong margin is not a commercial decision. it is a fear decision. the account Daniel had been protecting for two years was the single biggest drag on the business's financial health. exiting it was the moment the business became viable in a tough input cost environment.