An IT company contacted Woodbridge & Co because they were making losses, despite being busy. They had spoken with their accountant but were still unclear about the core problem and how to turn things around. How did we make them profitable again?
INDUSTRY: IT
BUSINESS LOCATION: Hertfordshire
THE BRIEF:
This IT Support company asked Woodbridge & Co to undertake a detailed review of their finances. Although the company had a strong customer base, it was making losses. They wanted to address the problem before it spiralled any further into the red.
THE CHALLENGE:
Our financial review revealed that overheads were draining all profits and staff were the highest cost. The managers also had no hold over the day to day expenditure, so financial management was reactive, rather than planned. The company had also acquired debts which were adding to the financial burden.
THE SOLUTION:
Our investigation into the structure of the businesses suggested that there was scope to improve efficiency. All staff claimed to be busy, so a timesheet system was implemented, and this clearly showed surplus capacity. The decision was taken to reduce the size of the team and continuous monitoring has shown no reduction in service levels.
Debt was refinanced and company accounts were setup on Xero to enable more accurate reporting. This made it easier to manage the finances and providing real-time data which could inform decision making.
Clear information was provided on the turnover needed in order to meet the revised costs. Initially, a daily budget was set, which may sound like micro-management, however, it helped the owners regain control over the finances.
THE OUTCOME:
The business is now operating efficiently and profitably. They have altered the service model and this has allowed them to meet customer’s requirements without needing to maintain a large, full-time team.