Chapter 110: Restructuring
Hollen gave a thoughtful nod.
The last three years had been profitable beyond anything either of them would have considered realistic when they first started experimenting with soap recipes behind the forge.
Most merchants saw Helmarte Soap Works.
Some knew about Helmarte Machine Works.
A handful understood that the personal care division was quietly becoming one of the fastest-growing businesses in the kingdom.
Very few people understood what all of them looked like together.
Ernest walked toward the blackboard and began writing figures beneath each company name.
Helmarte Soap Works generated roughly four hundred eighteen million riels in annual revenue and retained nearly two hundred million in profit.
Helmarte Machine Works brought in another seventy-six million in revenue and twenty-seven million in profit.
The personal care division added one hundred twenty million more, with margins healthy enough to generate another sixty million annually.
When he finally wrote the final number beneath the others, the room fell silent.
Combined cash reserves: 470 million riels.
Even after reviewing quarterly reports for years, Hollen still found himself staring at the figure for several seconds longer than necessary.
Three years earlier, Victor Teucher had worked long days at the forge for barely nine thousand riels a month. Now their businesses generated more than that in the time it took to finish a conversation.
Hollen slowly lowered himself into his chair.
"When you write it all together like that, it stops feeling real."
Ernest glanced back at the numbers.
"It probably stopped being normal a long time ago."
The older man rubbed his forehead.
"I still remember arguing with coal suppliers over fifty riels."
"And I still remember negotiating for my eighteen-thousand-riel salary."
That earned a laugh.
"You nearly gave me a heart attack that day."
"You hired me anyway."
"The best financial decision I’ve ever made."
Ernest smiled before returning to the blackboard.
"Mining changes the scale of everything, though."
He began writing projected investment figures beneath a new heading while Hollen watched quietly.
Land preparation, excavation equipment, worker housing, transport roads, engineering surveys, and reserve capital quickly pushed the mining budget to roughly eighty million riels. The timber operation required another twenty-eight million for logging equipment, sawmills, transport wagons, and worker settlements close to the forests.
Hollen did the arithmetic almost immediately.
"One hundred and eight million."
"Just under a quarter of our reserves."
The forge owner leaned back in his chair and considered the numbers in silence.
Several years earlier that kind of investment would have sounded impossible. Today it sounded expensive, but achievable.
Eventually he nodded.
"Do it."
Ernest raised an eyebrow.
"That was easier than I expected."
Hollen snorted.
"We’ve worked together long enough for me to understand how these conversations end. If I say no, you’ll spend the next three hours explaining economics until I agree anyway."
That accusation was difficult to dispute.
The older man pointed toward the blackboard.
"So how exactly are we organizing all of this?"
That question made Ernest pause because it touched on the real problem.
The businesses had grown much faster than the structure holding them together.
Soap manufacturing had very little in common with heavy engineering. The engineers designing boilers and steam engines shared almost nothing professionally with chemists developing perfumes and toothpaste. The telegraph division was already consuming engineers faster than they could train replacements, while mining and timber operations would soon introduce entirely new industries into the equation.
And somehow all of it still ultimately answered to two men sitting inside a single office.
That wasn’t sustainable.
Ernest erased a section of the board before writing a new title across the top.
Teucher Industrial Group.
Hollen frowned immediately.
"What’s that supposed to be?"
"A holding company."
The older man looked even more confused.
"You’re going to have to explain that one."
Ernest drew a large box and wrote the name inside it before adding several smaller boxes beneath.
Helmarte Soap Works.
Helmarte Machine Works.
Helmarte Personal Care.
Royal Telegraph Company.
Teucher Mining Company.
Teucher Timber Company.
Lines connected each company back to the larger organization above them.
Hollen studied the diagram for nearly a minute.
"So instead of one company, we’re creating a group of companies."
"More accurately, we’re acknowledging that the group already exists."
That answer earned another thoughtful look.
"The soap managers don’t understand steam engines," Ernest continued. "The engineers don’t understand perfumes, and the alchemists don’t understand mining operations. We’ve reached the point where one company is slowly becoming six companies pretending to be one."
That explanation landed immediately because Hollen had noticed the same thing himself.
The machine works managers rarely interacted with the soap division unless they needed funding approvals. The alchemists spoke an entirely different professional language from the engineers, while the telegraph researchers increasingly behaved like a separate organization that merely happened to occupy the same buildings.
"Each division needs leadership that understands its own business," Ernest said.
"So managers?"
Ernest shook his head and answered. "Executives."
The unfamiliar word immediately caught Hollen’s attention.
"Executives?"
Ernest nodded and wrote several titles beneath the diagram.
Chief Executive Officer.
Chief Financial Officer.
Chief Operations Officer.
Chief Technical Officer.
Hollen stared at the board.
"I recognize none of these."
"The CEO oversees strategy and long-term direction. The CFO manages finance and investments. The COO handles operations across the group, while the CTO supervises engineering, research, and technology."
The forge owner studied the titles for a moment before narrowing his eyes.
"That sounds suspiciously organized."
"That’s generally the idea."
A few seconds later realization struck him.
"Oh no."
Ernest looked up.
"What?"
"You’re making yourself the CEO." Hollen pointed accusingly toward him. "All of our fortunes are because of you, you are the one who came up with all of this."
Ernest laughed. "True. It was all from me. But I don’t think of myself to be the CEO, I rather focus on operations because I am the one with the technical know-how and you know business more than I know. But of course, since I will run the operations and also the research for future development and expansions, I only demand that my shares be significant."
"But, we have an investor, a consortium of merchants from the merchant guild," Hollen said.
"That’s only in the Helmarte Soap Works, not in our new industries. In fact, why don’t we buy their shares so we can control it fully? I mean, they are just profiting and are not doing anything other than help us expand from the start."
"Yeah, they are getting rich from the dividends," Hollen pointed out.
"So make a proposal to buy the shares and as for our structure...I want to be the majority, 70-30."
"70-30?" Hollen repeated. "I get thirty percent of the company?"
"Suppose we make 1 billion annually, you’ll get 300 million and I’ll take 700 million. It’s justified because like you have previously stated, that I am the one that made this all possible, and I deserve it. So, what say you?"
Hollen rubbed his chin as he contemplated, and then nodded. "You know what. Okay, I’d still make a lot of money plus all of this is because of your genius and ingenuity."
"Great, that went easier than I expected. So, that’s it, I’ll prepare the creation of the company, you buy the shares of those merchants and look for suitable candidates that will manage our enterprises."
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