Case Study – Put the spark back into your cash flow

The Problem

A large electrical contracting business had grown from $4M p/a revenue to $11M revenue, while having their profit go from $1M p/a to $70k p/a. They were investing in another larger commercial building for the business to move into and had a $1.5M renovation/building bill to pay over 9 months and were struggling with cash. 95% of jobs were now losing money, mainly due to the incorrect pricing and small to no margins on the work. The business budget was simple and not really understood and there was NO cash flow constructed at all.
The business was struggling and heading towards bankruptcy (without the owners realising it) and creditors were only 2.5 months away from knocking on their door and closing the business down.

The solution

The owner asked me to help them construct a budget and a cash flow from scratch. Using his business knowledge and allowing an objective look at the businesses past performance, we constructed a very specific budget with workings and assumptions. This allowed us to gather real information and enable us to progress forward.
We created a cash flow document based on reality and discovered a number of periods in the short and medium term we needed to address. We worked over a 5 month period and the owner looked into his business like never before with many “light bulb” moments and changes of opinion going forward.

The result

With the clear knowledge of what the “real situation” was and the “extra time” the owner now had to save the busness, the owner;

  • Received $2M funding from a private investor and saved the business from closing
  • They focused intently and converted $15M of new work at 15% margin within 3 months
  • They extended the building project from 9 months to 15 months
  • They saved themselves from losing the business 100%
  • They saved their family home from the banks as this was the guarantee of the business debt on their major projects

new MOG

6 thoughts on “Case Study – Put the spark back into your cash flow

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