The company had been growing steadily over the last few years, however it had an issue with a large contractor.
This caused its revenues to shrink and so a revised plan was needed to help the company expand.
The company is a highly successful business in the construction industry, concentrating on providing MEP services for several large contractors.
During the previous year, they had a dispute with a major customer over the variations on a contract. This dispute forced the company to reassess their relationship with this customer and they decided to pull out of all the other contracts with that contractor, thereby losing substantial revenues. With negligible other orders in the pipeline, the company faced significant cashflow challenges.
The drop in its revenues and squeezing of liquidity forced the company to assess its overheads and a series of cost cutting initiatives were implemented to re-size the company for the current level of business activity. As well as cutting unnecessary running costs, the company reduced its employee base back to basics and retained enough to keep the company going.
The team also started looking at their opportunity base, began establishing new relationships with other companies in the same sector and subsequently started getting new orders in.
The other major challenge that the company had was a lack of financial expertise in the company. Their day to day financial compliance was being done, but they lacked having someone who could prepare business plans and help guide the company and its board of directors.
The company realised that to be able to overcome the shortfall in revenues, not only did it have to seek new customers to work with, it will also need to explore offering other services and hence grow its services portfolio.
It also recognised that it needed to get someone with more financial expertise to help create management information for the Board of Directors.
Initially, EFM were brought into help the company finalise their year-end accounts, prepare a business plan & cashflow forecast, and help navigate the various supports available for surviving through the Covid-19 pandemic. The Managing Director came across a grant being offered by Hertfordshire County around business expansion and business development as part of a £3.28m package of business support measures to help mitigate the impact of COVID-19.
This appeared ideal as the emphasis was on companies growing and expanding into new sectors.
The first thing the directors did was to contact the department that was handling the grant applications locally and go through the business ideas on the phone. This was done so that we could ascertain our chances of getting this grant and the department were very enthusiastic. The Managing Director was encouraged to submit an application, together with a business plan.
EFM helped create the business plan to support the application. Projections were done for the next 3 years, including a detailed 3-year profit and loss account, together with a cashflow. The company had already done quite a lot of the research as to what it would require in terms of plant, vans, and staff. This plan was submitted together with the application form to the department handing the grant in record time.
How the client felt:
The directors felt pleased with the speed with which the business plan was constructed and even more pleased when they were awarded with a six figure grant towards the business expansion. Plans are now underway to develop the other revenue streams. Furthermore, with EFM’s help, the company now have a strategic business plan and effective cashflow forecasts which will help with the reporting and monitoring of actual results.
EFM Expert: Hitesh Purohit