Sometimes, borrowing is the wrong answer for all parties – Consultancy allows you to explore options without debt!
1. AN ESTABLISHED ENGINEERING FIRM:
Everything looked good with the customer – a second-generation engineering firm running lean with 5 staff – they even had their own product which was selling well.
Despite this they were constantly against the wall with cashflow – often missing payments and even acquiring a couple of judgements against them.
With the fresh view of an outsider it was fairly easy to see what the problem was – they were so busy engineering & selling that they had forgotten to run their business. The admin, historically managed by the wife of the founder was now well beyond her capabilities, and everyone else was too busy to take it on.
Aware that cash was an issue, our fist step was to dig deep into the cash ‘hidden’ in the business. Obviously debtors but many other places too. This is the rewarding bit, as it puts money into the bank.
We then set about putting in place some simple processes and controls to ensure that cashflow remained a top priority. We introduced them to a reasonably priced book keeper who operated on Xero Cloud, which enables good, fluid reporting (she isn’t afraid to tell them!)
With just one week on site they went from a good company in a bit of a mess to a good company.
2. AN AMBITIOUS IMPORTER.
This was introduced as a trade finance transaction – however their tight margins and means of selling made this impossible.
They agreed to see us for just 2 days to see how we could help.
The underlying problem here was the furious drive for sales and the rapid movement of stock which was effectively turning them into busy fools.
Their purchasing was good, as was their stock turnaround, however they were failing badly in their quest for big deals with good customers – having established their minimum viable margin, this was effectively their price, no matter what the underlying terms were.
The huge challenge was to temper their enthusiasm for turnover and to challenge their absolute belief that a big customer was a good customer.
Being honest, after the allotted 2 days I thought I had failed. Until they called me back to look at their new terms – which they were negotiating with customers existing and new – and which made the business work!
It isn’t just about orders – it is about terms!