January 11, 2021
Turnaround During COVID in the Security Installer Market
In May 2019 we started working with a niche family-owned and managed regional security installer. The business’s reputation was strong. The team’s commitment to delivering quality and high customer experience was evident.
However, with turnover of £1.2m, profitability lagged that of competitors. In fact, they had for some time been experiencing financial difficulties. Though they thought they were breaking even, they were actually making heavy losses and consuming cash. In our view, they were 6-12 months from bankruptcy.
Questions the management team was asking:
- How can we increase profit?
- How can we improve cash flow?
- How can we create a competitive pricing strategy and increase our growth margins?
- How can we improve financial management?
How we helped address the challenge:
Working with the management team of four, we focused on profitability to quickly identify key issues and potential quick wins. Pricing and credit collection emerged as top priorities. So too did the need to address (1) an absence of regular business reviews, (2) lack of monthly financial reports and operational KPIs (3) ineffective digital marketing.
Within the first month, together with the team we:
- drafted and documented a Profitable Growth Action Plan. This set priorities, timelines, and clear accountability for implementing the actions. This became the team’s roadmap, which they bought into and owned completely. As part of the Action Plans,
- instigated and facilitated monthly business and financial reviews
- developed clear pricing strategies and supported successful implementation of price increases
- agreed how to improve cash-flow and embed disciplined business controls
- proposed and then successfully secured additional cashflow through R&D tax credits
- introduced the team to a digital marketing partner to freshen lead generation strategies and increase sales.
The business has transformed its financial results during this 18-month engagement, despite COVID lockdowns and challenges
A £100K overdraft in May 2019 has turned into a £173,000 positive bank balance by October 2020.
Net losses of £170,000 for the year ending October 2019 have been turned around to net profit before tax of £210,000 for the year ending October 2020