We have a philosophy that all business owners need to ‘understand their numbers’ to be able to make good strategic decisions for their business. Below is some insight in relation to a recent case study with one of our clients, who through close monitoring of their figures have been able to achieve some fantastic results.
Strong business in the construction industry with historically stable profit margins. The business had been in rapid growth and entered a period of declining profit. The business was producing more but making less profit.
We were able to review in depth the current business profit margins with historic data and through detailed analysis identify the issues causing a decline in profit. Through further investigation it was identified that there were errors in the timing of price increases from suppliers and lag time to adjust this in quoting system; additional ‘add-ons’ sold to customers were at cost only by their sales team; and inefficiencies on site resulting in blow out of productive labour costs.
To gain further control we implemented a monthly management dashboard to enable the Directors to meet monthly to discuss the prior months actual results compared to budget, allowing them to debrief on what went well for the month and any changes required for the month ahead to achieve their desired financial goals.
As the business had good quality financial data and systems the owners were able to implement changes immediately to their quoting system, sales processes, and delivery on site. Within a matter of months, the business net profit has increased and is consistently achieving the owners net profit goals.
Furthermore, they have added value to their business due to improvement in business systems and formalizing regular financial and KPI reporting tools for the business.