Case
study 1
Premise
In June 2007, In the Black
began working with a firm of landscape gardeners. From the
beginning, it was clear that they had a good business concept
but were generating losses and had been for some time.
The
Need
The first step for In the
Black's accountants was to fully understand the business,
their clients and what set them apart from their competitors.
They were clearly good at what they did, landscaping gardening
and had satisfied clients with sizable budgets to spend
on achieving the perfect contemporary garden. They had good
staff who were qualified and highly skilled. Yet,
as landscape gardeners had been generating losses for some
time, this impacted on their cash flow and they had fallen
behind with a number of payments to their suppliers and
HMRC.
The Solution
In the Black's accountants
established a business plan for the revised business model
to include full budget financials, profit and loss, balance
sheet and cash flow forecast for three years.
From this, we were able to
set out a realistic payment plan to repay all of the outstanding
creditors over a 12 month period while operating a profitable
business.
From analysing the business's
pricing structure, it was clear that they were not charging
enough for the services they provided. The company was working
in the high end market, yet charging average prices. This
had to change. They began quoting and winning work at rates
three times higher than they were originally charging.
While sorting the pricing
structure, it was also necessary to analyse the company's
overheads and strip out any unnecessary costs to make the
business leaner and operate the services that gave the greatest
return.
To ensure they were on target
throughout the year, In the Black measured performance against
budget and continually updated the budget to reflect any
changes that have taken place.
The result has without question
been an amazing success, turning a struggling business into
a profitable thriving business with a stable platform to
achieve further growth in the future.
Case
study 2
Premise
A rapidly expanding firm of
architects, who had grown their business to a certain size
without any financial expertise, were aware that to make
the most of the expanding market and their own profitably,
some form of financial expertise was necessary.
The
Need
To improve the efficiency
of the organisation and ensure they were maximising their
profitability through client billings, it was necessary
for In the Black to install a proper job costing system.
This would guarantee that all chargeable hours were billed,
any additional requests from clients were clearly identifiable
and any expenses and disbursements could be easily recharged.
As is typical with many small
firms, the architects' firm was only using a small part
of the accounting system they had in place. This system
needed to be updated, rationalised and properly utilised
to obtain good management information to assist with the
efficient running of the business.
In addition, the firm did
not have regular monthly management accounts, so they didn't
know exactly how the business was performing on a day-to-day
basis.
The Solution
In the Black quickly established
a system of regular management accounting; this has been
further refined in order to provide the necessary information
to shape the business in a clear and easily digestible way.
The reporting provided within the business now measures
the performance against the same month from the previous
year as well as to budget, ensuring that they are on track
to continually improve performance.
Cashflow becomes an issue
in many businesses and it has been necessary to evaluate
various methods for improving cashflow and working capital.
As the 'credit crunch' has
taken hold, it has been necessary to have all of these measures
in place to maintain the profitability by adjusting the
business model and understanding the changes that need to
take place. The reporting has also played a part in maintaining
the support of bankers and other external organisations.
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