Background
A well-established flooring company with over £1 million in annual turnover approached us due to persistent cash flow issues. Despite a strong reputation, a wide range of services, and a large client base, they found themselves struggling to pay their VAT bill at the end of every quarter.
The Problem
On the surface, the business appeared profitable. With steady work and healthy sales figures, the directors couldn’t understand why cash was always tight. They had a good relationship with their accountant and bookkeeper, but something wasn’t adding up.
Our Approach
We carried out a full financial review, working closely with their accountant and bookkeeper to analyse their Profit & Loss statement and balance sheet in detail. What we uncovered was a critical issue: their gross profit margin was far too low, meaning that by the time overheads were covered, they were only just breaking even.
The Realisation
When we presented our findings, the director’s first response was, “Why didn’t my accountant tell me this?”
This is a common frustration. Accountants are often focused on compliance and year-end reporting, and may not have the time or remit to do a deep dive into operational margins. What’s needed is a commercial lens – someone who can translate financial data into actionable insights.
The Solution
We’re now working with the business to review and realign their service offerings. This includes:
- Identifying and focusing on higher-margin work
- Reviewing pricing structures
- Streamlining low-value services
- Tracking gross profit by service line
Our goal is not just to increase their gross profit margin, but to ensure that improvement flows through to a healthy net profit – and ultimately, sustainable cash flow.
Outcome (in progress)
The company is already making changes to how they price and deliver their services, and early indicators show a positive shift in profitability. With continued support, they are now on track to move from just getting by to generating meaningful profit and building financial stability. Get in touch with us to learn more!