Doubling the profits and getting back in control
Over ten years, a burglar alarm and CCTV installation business had built up an annual turnover of around £1.5 million. But the business had a substantial overdraft and the owner, who was still personally fitting alarms, was worried that his profitability was low and decreasing.
We had to gain an understanding of the cost and profit drivers in the business, and then implement a plan that would generate profitable, sustainable growth.
What we did
An examination of the accounts showed that our client wasn’t allocating his costs and income against his different types of business. We set up a new system to allow him to break down the numbers into his key business areas.
As a result, it became clear that one business area was unprofitable. We set up a plan to phase out the unprofitable business over six months and this was implemented.
We established a system of chasing overdue debts, and gave the responsibility for this to one person. This resulted in an immediate improvement and reduced the need to use the overdraft facility.
An examination of the sales process revealed that the key sales person, due to a heavy admin load, was only spending 45% of his time in the field selling. We reallocated admin responsibilities. The proportion of his time spent on selling went up to 70%, and sales improved within the first two months.
We produced a business development plan. This included expanding the business to cover multi-room music and video systems, since the wiring and installation requirements were almost identical to those the client provided through his existing business. He could therefore offer this added-value service at a highly competitive but profitable rate and establish a clear advantage over local competitors.
Finally, we introduced a weekly and monthly monitoring and control system to check and correct progress against plan.
Within 12 months the client had cleared his overdraft, got his debtors under control, secured three major new contracts, increased turnover to £2.2 million and doubled his profits.
“Looking at the results that TCii were able to generate by working for us for two days each month, it is clear that I should have done this years ago. With a small business like ours we cannot afford to employ top quality managers, but through TCii we now have cost-effective access to the skills we need to drive the business forward.”
Clive Bailey – Managing Director and Owner