GOALS: To increase profitability and reduce the hours worked by the business owner
BUSINESS IN PROFILE: A small construction company doing refurbishments and minor building works, with a strong emphasis on electrical work. Most work other than electrical is subcontracted
THE CHALLENGES: The business owner was working long hours but despite having a reasonable amount of work was unable to take any money out of the business. The long hours were taking their toll, but worse he was juggling cash to pay suppliers and tax bills, and was unable to take money from the business to support his home and family. A further challenge occurred around his one staff member being too dependent upon him, which took more of his time away from running the business.
THE STRATEGIES: A full cash flow plan was developed which identified that the revenues were too low to sustain the overheads of the business. A number of steps were taken to increase the pricing both of regular and ad hoc work, which had the immediate effect of improving cash flow. A closer look at the overheads found a number of cost reduction opportunities.
The next step was to look at the tasks being undertaken by the business owner to determine how to reduce the hours he is spending in the business, and who should do that work instead. Additional electricians were sought to enable the owner to concentrate on the other aspects of the business.
THE OUTCOMES: The business now has a positive cash flow and the owner has a clearer understanding of the finances going forwards. The next step is to find ways to reduce the hours being worked by the business owner in order to enable him to focus on growing the business from its current position.
QUOTE: “I’ve only been working with you for three months but already I understand my business better and am making more money. I’m looking forwards to growing my Company with confidence”