Maximising Business Performance

Our client, a construction company, had been trading for 10 years when they approached us for assistance in improving the performance of their business.

Since its creation the business had consistently grown over the 10 year period but its working capital requirements had increased far more significantly than forecast. The success of growing the top line sales seemed to behaving a detrimental effect on the overall performance of the business. The performance was creating significant issues including serious cash flow problems and an escalating overdraft facility.

Our clients understood action needed to be taken to address the immediate short term issues but they also wanted to ensure the performance of the business was maximised for the medium to longer term.

We undertook a detailed review of the previous 4 years ensuring that we not only understood where the business was currently but how they had performed previously and the trends. We identified the actions that had been taken and the subsequent impact on the performance of the business. Our objective was to produce a joint action plan to address the immediate issues and the ongoing level of performance.

Following the review we held a planning day with our client to agree the action plan. This plan incorporated:

• Full Health Check illustrating the previous 4 years’ performance in areas of profitability and efficiency

• Financial Diagnostic of the business  

• Working Capital Cycle concentrating on Debtor Days, Creditor Days and Stock Days and advantages to be gained by improving these indicators

• Next 3 years’ growth projections and targets for this growth to produce positive cash flow results

• Credit control, Supplier credit and Inventory management

Following the implementation of the action plan the business achieved the targeted organic growth within the forecast budget. In fact the performance of the business improved to the extent that 3 years later our clients were able to accelerate their growth plans through acquisition in which we were pleased to advise.

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