The business was around 30 years old when the founder retired and handed over the management. The new owner had been working in the business for several years and once he took over, he set a course for growth. However, it needed more employees and more structure.
Amid this, a job went bad – too many cost overruns and an inexperienced team who lacked the skills to turn the job around. The business started losing money and staff was leaving as the new staff was coming on board. Cost blowouts continued and there was a lot of tension. The business owner approached us.
During our first meeting, we asked a series of information gathering questions that enabled the team, to quickly and accurately assess the situation, build a picture of the problems, and understand how those problems needed to be addressed.
We also reviewed all the numbers, paying particular attention to the processes attached to the jobs they were working on.
As a result of this review, we realised that the business was writing off huge amount in work that had been completed but not invoiced, and this was a significant reason to why the business was losing money.
The business needed to change processes, and from this point on we worked closely with their team to turn the business around to make it profitable.
We implemented Five key recommendations:
- Regular meetings to help the business owner connect the financials with the business growth strategy.
- Cashflow forecasting to accurately reflect the business’ cashflow position at any given time.
- Establish relevant processes to enable more accurate forecasting that would more accurately assist with cashflow projections.
- Tax & Compliance Reporting not just to ensure that it was done correctly, and on time, but to keep a close eye on the actual monthly and quarterly numbers.
- Debt Restructure to more favourable borrowing terms and to utilise the tax concessions and other tax-saving opportunities that were available to the business.
With sound financial management and systems that allowed the business owner to make confident business decisions, the business quickly became very profitable. The business owner was able to resume his business growth goal, which included adding a new product line.